A $146-million reservoir project in Florida that was once the pride of utility Tampa Bay Water and engineer HDR Engineering is now the focus of a high-stakes, increasingly public legal battle between the two parties.
The dispute has gone public lately, with HDR creating a website, www.tbwlitigation.com, that includes court filings and a "spin checker" to debunk TBW's claims. Behind the public dispute are insurance-driven legal strategies involving tens of millions of dollars.
In a federal lawsuit tentatively scheduled for trial in 2012, Tampa Bay Water seeks $97 million from HDR Engineering, Omaha, to help fund interior embankment repairs in the six-year-old, 15.5-billion-gallon C.W. Bill Young Regional Reservoir. TBW plans to rip out the existing reservoir's interior and replace it. The agency hired Kiewit Infrastructure Group South, Peachtree City, Ga., to handle $121 million in repairs, even though TBW and HDR agree the most significant cracking is limited to only 6% of the embankment area.
Earlier this year, the utility's board approved but then rejected a $30-million mediator-initiated settlement offer. In announcing the rejection, the utility stated the proposed deal "is not representative of HDR's liability and does not represent a good deal for ratepayers."
October's 9-0 vote rejecting the offer came after TBW had announced in September a 4-3 vote approving the deal. Less than 24 hours later, TBW lawyers declared the vote was invalid, citing a requirement for at least five affirmative votes to approve a legal settlement.
HDR believes TBW wants a costly do-over on the reservoir engineering and has shifted to a legal strategy as a way to finance the new work. In Florida, there is no cap on a designer's liability. The ramifications may be significant for HDR's insurers, which the firm declined to name, and the firm's ability to win future work.
Timothy Connolly, the executive vice president for HDR, sounds ready to fight. "Our position is, there's no way they're going to recover what they think they're going to recover," he says. "We'll go to court. We've got good scientific data."
The squabbling parties agree upon little, including the cause of the damage, its extent and what's necessary to correct it.
Essentially, Tampa Bay Water alleges that HDR's deficient design is the cause of significant or "highly unusual" cracking in more than 70% of the reservoir's embankment and requires complete reconstruction of the facility's interior.
The engineer alleges that Tampa Bay Water is misrepresenting the problem to get the engineer to pay for a higher level of function, not just necessary repairs. The reservoir originally was designed to accommodate the drawdown of 66 million gallons per day, while the rebuilt facility would be capable of a 160-mgd rate.
"They [TBW] want this to be an engineering problem," Connolly says, "because [then] it affects the entire perimeter of the reservoir, and they collect 10 times what it would cost to take care of two small areas."
The engineer notes that Florida sets no limit on liability for designers. TBW settled with its contractor and construction manager for a total of $6.75 million. Both firms were included in the project's owner-controlled insurance plan. "They clearly have somebody else's insurance to go after," alleges Connolly.