Jury Rules Newark, Del Should Pay $38M for Breaching Reservoir Contract

October 10, 2006

Newark, Del. taxpayers may have to dig into their pockets after a federal jury ordered the city to pay $38 million in damages in a lawsuit involving construction of a new reservoir.

“Oh, my God,” Mayor Vance Funk III said after learning of the jury award. Funk, who said an appeal was likely, did not know whether the city’s insurance would cover the full award.

“It is possible this could be a burden on the taxpayers if the decision is upheld,” he said.

The jury deliberated for about five hours before siding with Donald M. Durkin Contracting Inc., which accused the city of breach of contract.

U.S. District Court Judge Gregory M. Sleet determined before trial that the city had breached its contract with Durkin when it fired the company without giving proper notice in February 2004. The jury had only to determine the amount the company was due.

The jury award included $5.5 million for work performed before Durkin was fired, $6.2 million for expenses related to the project after the company was fired, and $1.7 million in legal fees. The jury also awarded $25 million in damages after determining that Newark’s actions violated the contractor’s constitutional rights.

Newark attorney Paul Cottrell said the city terminated the contract because Durkin Contracting refused work on certain aspects of the reservoir while URS Corp., the designer of the reservoir, assured Newark the reservoir design was sound. Cottrell accused Durkin of underbidding the $9.7 million contract for the reservoir, then attempting through the lawsuit to submit an $11.6 million change order.

Durkin attorney Paul Logan said the company did the job well, and no expert at trial disputed that.

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