Along legal struggle between contractors and a school district near Fresno, Calif., has come to a costly end as an extensive mold abatement project begins this summer at a 10-year-old high school complex. The work follows discovery of the mold in 2000 and an $8.2-million settlement last fall that roughly doubled the value of a defects claim against the contractors, according to sources involved with the case. The insurers for 13 contractors and suppliers subsequently decided to settle.
The fighting started after the $30-million Buchanan High School complex opened in 1993. The project's general contractor, Lewis C. Nelson & Sons, Selma, filed an acceleration claim against the Clovis Unified School District in Merced County Superior Court in 1995. After a jury trial in 1998, the court entered a $1.02-million judgment against the district. Another $645,000 covered fees and costs.
|BREATHE DEEP District shut down high school complex for a week two years ago.|
The school district had filed a counterclaim for about $2 million against Nelson and its subcontractors for defective work, mainly for water intrusion through the walls and window frames of the multibuilding school complex. Its buildings have plaster-covered tilt-up panels. At that point, the contractors' insurers preferred not to settle, says a source familiar with the case. The lead insurer, United National In-surance Co., Bala Cynwyd, Pa., could not be reached for comment.
But as the school district prepared its defect claim in the discovery phase, some consultants discovered mold in the walls. Alarmed district officials decided to close the school for a week in September 2000, while scientists conducted tests. The three types of mold found in the school "pose potential health hazards" under some conditions, the district reported. When no immediate danger was found Buchanan's 2,640 students returned to classes.
At that point, the school district added a new lawyer to the legal team, San Diego-based McGregor & Garrie. It has extensive experience in building defect and mold cases. In the spring, the school district filed an amended complaint. The cost of any repairs was increasing quickly, but could not be set in stone, sources say. Roger Oraze, the school district's assistant superintendent for facility services, says settlement terms prohibit the parties from commenting.
Meanwhile, the school district succeeded in overturning the contractor's acceleration award, and its petition to the California Supreme Court was turned down on Sept. 26, 2001. Last November, insurers for the contractors and the school district reached the terms of a settlement. Insurers for Nelson and for Pierce Lathing Co., the plaster subcontractor, were assigned $2.2 million and $2.3 million of liability, respectively. Window and sheeting metal contractors also ended up with million-dollar-plus liabilities under the settlement.
Oraze says there had been no claims of allergy by any students. During the abatement involving various contractors, buildings will be encapsulated with plastic sheeting, and stucco and plaster will be peeled away so any mold can be removed. Work will continue until June 2004, forcing students to use portable classrooms.
Sources familiar with the firms involved consider the case "a real sad story for the contractors." They suggest that water intrusion could have come from faulty maintenance. "Mold became a rallying cry, and the insurers became nervous," says one observer. "There's more mold in the air outside than in the school."