Delaware City to Appeal $38M Contract Breach Judgment

Newark, Del. officials are anxiously awaiting word from the city’s insurance company on how much of a $38.4 million settlement will be covered, but plan to appeal last week’s judgment by a federal jury in a contract dispute.

The City Council met in executive session Monday night to discuss options. Mayor Vance Funk, who was not in office at the time of the contractor’s dismissal, said the city also planned to seek a reduction in the amount of the award.

In a lawsuit involving construction of a new reservoir, a jury sided 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 last week awarded Durkin Contracting $38.4 million, well above the city’s $30 million annual budget. Durkin received $13.4 million for being fired improperly from working on the city’s reservoir in February 2004 and an additional $25 million for violation of the firm’s constitutional rights.

In a separate claim, the jury ordered Newark to pay $567,000 to reservoir designer URS Corp. for unpaid bills and legal fees related to the reservoir.

The original project cost was $19 million.

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.

Council member Paul Pomeroy assured residents that no matter what the final award is, they won’t lose services.

“Newark is going to stay open for business,” he said.