CITY OF SANDY SPRINGS PUBLIC FACILITIES AUTHORITY FILES COUNTERCLAIM TO HOLDER CONSTRUCTION GROUP’S LAWSUIT ALLEGING NON-PAYMENT
The City of Sandy Springs Public Facilities Authority (PFA) has filed a counterclaim in a lawsuit brought by Holder Construction Group in Fulton County Superior Court over the PFA’s right to withhold payment until all work is successfully completed.
In its counterclaim to the lawsuit filed by Holder in August 2019, the PFA is seeking damages from Holder for breach of contract, negligent construction, and fraud.
Holder was selected in June 2015 as Construction Manager at Risk to build the City Springs development, a $229M project that includes the Sandy Springs Performing Arts Center, City Green, an underground parking garage, and municipal offices. Holder contends the City failed to pay sums due to the company between September 2018 and January 2019.
“The PFA is concerned at the amount of non-conforming work discovered within the project. Aside from its right to retain adequate funding to correct faulty work, the PFA is obligated to ensure that the citizens of Sandy Springs receive the quality work Holder was contracted to provide,” said Sandy Springs City Attorney Dan Lee. “It’s the PFA’s fiduciary responsibility to do so.”
The PFA maintains that its contract with Holder allows the PFA to retain sums adequate to assure the project is completed according to contract specifications. In its counterclaim, the PFA asserts that Holder is in breach of contract for defective and non-conforming work. The counterclaim details several examples, requesting recovery of repair costs, costs of additional fees for consultants, inspectors, architects and engineers, and extended maintenance costs.
“While these deficiencies represent only one percent of the overall project, we want 100 percent of the work done correctly,” added Sandy Springs Public Facilities Chairman Rusty Paul. “The City Springs project remains a tremendous success for Sandy Springs; however, after Holder filed a baseless lawsuit while discussions and negotiations were on-going, the PFA is forced to seek recovery on behalf of Sandy Springs’ citizens by means of a counterclaim.”
The PFA cited several examples in its counterclaim. Among them were:
- Substandard welding found in the theatre that required the City to take corrective action outside the contract.
- The low-voltage wiring systems in the building and plaza areas installed by Holder used unspecified, substandard materials, rendering the systems inoperable. Repair and replacement of all systems are required and are underway. Though Holder knew of the defects, the firm requested payment from the PFA and represented to the PFA that the work was installed according to the contract. In addition, the PFA believes Holder’s installation subcontractor submitted reports and certifications indicating that the low-voltage systems were fully operational when it knew they were not. These certifications and reports prompted the PFA to make payments and execute the Certificate of Substantial Completion prematurely. The PFA is seeking recovery of repair costs and punitive damages.
- The facility’s cistern is another cited example of subpar work. An underground cistern captures rainwater across the site for irrigation, fountains and other water needs, while reducing stormwater runoff from the location. The contract required Holder to build a suitable and sustainable water retention facility for these needs. After the opening of City Springs, structural deficiencies were discovered in the cistern. While investigating the full scope of the problem and required repairs, the PFA determined that the installed system was substituted without following proper processes for making such a change. Not only was the substitution improper, but Holder also constructed a defective cistern that will require repairs exceeding $750K.
“Frankly, the PFA was surprised and disappointed when Holder filed suit since we believed we were making solid progress with Holder in negotiating a resolution to these issues,” said Chairman Paul. “Throughout, the PFA and the City have simply insisted that these construction-related issues, even though a small portion of the total project, be completed according to the terms of the contract the parties executed. That contract gives us the right to withhold adequate funds to ensure work is completed properly, which we are doing, and our community expects us to take every appropriate step to safeguard its investment.”
In conjunction with the counterclaim, the City filed suit against Rosser International, alleging breach of contract and professional negligence in architectural services provided by not sufficiently supervising these activities.