No 'Sovereign Immunity' for Agency From Contractor Payment Lawsuit
A Texas appeals court ruled April 3 that Dallas Area Rapid Transit is not protected by sovereign immunity from a $37-million breach-of-contract lawsuit, because contractor plaintiff GLF Construction Corp. followed contract terms to seek payment it claimed in a long-running project dispute.
DART filed the accelerated appeal with the appeals court in Dallas after a lower court also said it was not immune from the lawsuit.
At issue is a $50-million contract between the Miami-based construction firm and DART on the Northeast Corridor (Blue Line) light rail extension signed in 1999. The project involved grading, paving concrete, building retaining walls and other work for 18,600 ft of twin track.
The Blue Line extension was an estimated $188-million project, which opened in 2012.
GLF claims its costs associated with the project totaled $70 million, with increased costs "due to DART’s inadequate project administration.”
Project plans were prepared by a DART consulting joint venture of Lockwood Andrews Newnam and STV, which served as the designer and construction manager.
Nearly half of the original drawings were replaced or modified, the company said.
Members of the design team became members of DART’s senior management team, creating conflicts of interests resulting in “unfair, and often vindictive project administration,” GLF claimed in a court filing.
"GLF encountered literally hundreds of instances requiring changes to the design, additional information from the designers, rework and disruptions to the work," the company said in a lawsuit. "The consequence was delay of completion of the job totaling 349 days," the complaint said. "Yet DART failed and refused to add a single day of time extension."
GLF sought equitable adjustment through the contractual process, but DART’s contracting officer denied the claims in 2005. The decision was appealed to an administrative law judge who did not issue an opinion until 2011. Another decision came six years later.
“Today, after nearly 15 years of dispute resolution procedures, there is no agreement on the effect of the ALJ’s opinion, such that the parties disagree on who would be owed money if the opinions were applied,” GLF said in a filing with the court.
During what GLF called “the black hole” of DART’s administrative process, the Texas legislature passed a law that retroactively waived the sovereign immunity of entitles such as DART under signed contracts.
The company also asserted a claim for the transit agency's failure to comply with the federal Prompt Payment Act.
DART’s attorneys did not respond by ENR. press time.
GLF’s attorney Mike Piscitelli of Vezina Lawrence & Piscitelli PA, Fort Lauderdale, said DART may appeal the decision to the Texas Supreme Court.
“Assuming there is no reversal by the Supreme Court, it will go back to the trial court to hold a trial,” Piscitelli said.
The significant issue there will be whether the case will start over or whether GLF must prove that the DART administrative law judge's findings of fact were arbitrary or capricious, he said.