Forney pays $2 million to settle road contractor's lawsuit
- Published: March 22, 2013 10:35 PM
The Forney City Council agreed to settle a road contractor's lawsuit for $2 million this week, stopping the legal process short of an April 30 date in court.
Pate Transportation Partners sought $50 million in damages when it sued the city in 2011. The city filed a countersuit contending that Pate's missed deadlines were delaying $40 million in reimbursement from the Texas Department of Transportation.
The focus was narrowed during the suit. The company had sent the city a letter in 2010 saying it was open to a mutual termination of the contract for over $3 million. The city did not challenge that it owed $1.2 million in invoices for work done but not paid.
"PTP has always maintained the claims described in the suit have merit," said Michael Grimes, spokesman for the company. "This has been reinforced by rulings made and orders entered throughout the process."
Forney officials say that the settlement will not force tax rates higher and that the much-needed roadway projects were accelerated in spite of the suit.
In 2006, Forney voters approved bonds for three separate projects on state roads — a U.S. Highway 80-FM548 interchange and widening and other improvements on FM740 and FM741.
As rapid growth in western Kaufman County was putting pressure on Forney's roads, the city opted to borrow the money and be gradually repaid by the state.
"We weren't building so much for future capacity as we were for capacity needed now," City Manager Brian Brooks said.
Though TxDOT acknowledged the need, Brooks said, the projects estimated at $50 million were eight years from being on the state list, with no guarantee of funding even then. In March 2007, Pate entered into a contract with the city to do the work.
The state's repayment of the city is dependent on completion of the projects. That is why city officials say missed deadlines became such an issue.
In late 2010, the city asked the company to consider mutual termination of the contract. Then, in its last regular meeting of 2010, the City Council voted to terminate the contract whether the company agreed or not.
"Breaking the contract was really a non-issue with us," Brooks said. "We knew we were responsible for $1.2 million."
In December, a judge ruled that the city had failed to comply with the termination clause in the contract and set the April 30 trial date to determine damages.
The other $800,000 in the settlement is to cover related expenses incurred by Pate. Forney also dropped its countersuit.
TxDOT took over the projects for a short while until a new construction manager was hired. The interchange and FM741 projects are now completed.
City officials said the roadway bonds will be paid off 10 years early, saving $5.9 million.
The settlement also secured Pate's assistance in identifying and gathering records requested by the Federal Highway Administration as backup for audits in connection with a $5.6 million federal Bottleneck Grant for the U.S. 80 interchange. Those documents arrived in Brooks' office Friday.
The third project, work north of the highway on FM740, has a groundbreaking scheduled for Tuesday.
"Our goal from the beginning was to get these roadway projects completed on time and on budget," Mayor Darren Rozell said.