Texas Court Awards Zachry $20M in Contract Dispute Reversal
A December decision by a state appeals court in Houston to uphold a $20-million jury award to Zachry Construction Corp. in a long-running contract dispute with port officials in that city will increase competition for public-sector construction projects in Texas, says an official of the San Antonio contractor.
The court on Dec. 16 reversed its 2012 decision to deny the jury award after it was overturned by the Texas Supreme Court, which said the Port of Houston Authority was not immune from litigation under a 2004 wharf construction contract. The firm proposed to build the 1,660-ft structure in the dry by constructing a U-shaped earthen wall to seal out Galveston Bay from the worksite. Zachry would freeze the wall with piped-in chilled brine. The port accepted the bid, which included a 332-ft extension, largely due to the wall’s environmental benefits, the appeals court said. At issue was the authority’s subsequent refusal to approve the “freeze wall” design, citing concerns about adjacent structures, and then requiring Zachry to submit a revised plan.
Zachry claimed the contract allowed it to control construction means and methods. The firm switched to building the wharf in the wet but sued the authority in 2006 for breach of contact, seeking cost differences and return of liquidated damages. After a three-month trial, a jury awarded Zachry $19.9 million. The appeals court reversed the award, but the Texas high court overturned that decision. In a second review, the appeals court said all evidence supports the jury verdict that the freeze-wall plan was not subject to the port’s “revise and resubmit” process. Says a Zachry spokeswoman, “This opinion is a win for fairness in contracts, both for contractors and government owners.” A port spokeswoman declined comment.