Contractor Lashes Out at Surety as Projects Go Awry
A Pittsburgh general contractor is feuding with Travelers Casualty and Surety Co. of America over a Pittsburgh school conversion and a road contract in Ohio, blaming the surety, a school district and a subcontractor for its troubles on the projects.
Whether that’s true or the contractor is the cause of its own troubles remains for now obscured in the legal haze, only a small part of which is explained in Reginella Construction Co.’s July 26 complaint against Travelers in federal district court in Pittsburgh. It accuses Travelers of breach of fiduciary duty and interfering with a Reginella contract.
Travelers was Reginella’s surety from June 2009 through June 2011, the contractor says in its complaint.
The first job in question is Reginella’s contract in Pittsburgh to convert the Moon Area School District’s former high school into a middle school. A school district spokeswoman said she would not comment on the matter due to possible litigation.
From August 2010 through April 2012, Reginella worked on the $45-million school project without incident, the company claims, finishing 80% of the project. But by mid-June 2012, the school district had not paid the contractor for almost 60 days, Reginella claims. So the company terminated the contract on June 11, accusing the school district of breach of contract.
On June 25, the Moon Area School Board terminated Reginella.
Reginella's problems with the Ohio Turnpike Commission involve a Dec. 2010 contract worth $9.9 million for construction of service plazas at Mahoning Valley and Glacier Hills in Pittsburgh for the Ohio Turnpike Commission.
In Reginella’s complaint, the trouble started after Reginella hired 21st Century Construction, Inc., to provide concrete slabs for the project. The subcontractor didn’t perform its work and breached its subcontract, Reginella claims, so the contractor terminated 21st Century in Nov. 2011.
In December, 21st Century submitted an affidavit to the turnpike commission asserting a lien against the project for $533,226 (later amended to $485,000). Reginella said the lien was bogus and inflated, and contested it in court.
As the new year began, the turnpike commission began to withhold the amount claimed by 21st Century from payments due to Reginella, according to the company’s lawsuit. Withholding the payments prevented Reginella from paying amounts legitimately billed by and owed to other subcontractors and material suppliers.
“Although Reginella explained to OTC that it was contesting 21st Century’s bogus and inflated lien and requested release of the withheld payment, OTC refused to release the payment to Reginella without a Lien Over Bond,” Reginella's lawsuit states. Reginella requested that Travelers provide a Lien Over Bond, but Travelers refused, says Reginella.
For its part, Cleveland-based 21st Century Construction says the blame belongs with Reginella. Patrick Butler, president, says it is no "coincidence that Reginella terminated" 21st Century two days after 21st Century placed its lien.
"I was encouraged by OTC to make the lien because we hadn't been paid in over three month," he says.
"It's my opinion the project was seriously mismanaged by Reginella," he claims.
Reginella’s lawsuit seems to portray Travelers’ actions as retaliatory.
According to its complaint against Travelers, Reginella sought but was denied by Travelers a reduction in the level of personal liability for Reginella’s president and family members. Travelers wouldn’t consider the reduction, so Reginella began to work with a new surety that offered more favorable terms, including the reduction in personal liability, says Reginella.
Travelers officials couldn’t be reached for comment before press time.
Reginella has been in business more than a quarter century and its website gives no hint of trouble. Company officials could not be reached for comment about the projects, the accusations against Travelers or Reginella’s financial condition.
