Insurer to Pay $17.5 Million in Conn. I-84 Faulty Construction Claim

March 23, 2007

The insurer behind the performance bond for part of the troubled Interstate-84 construction in Connecticut will pay $17.5 million to settle claims involving installation of defective drains, according to an agreement worked out with state officials.

The payment from United States Fidelity & Guaranty on behalf of L. G. DeFelice, Inc. allows the state to begin repairing the defective drains along a three-mile stretch of I-84 in Cheshire and Waterbury.

Under the agreement, the state retains the right to sue L.G. DeFelice for additional funds.

Conn. Governor M. Jodi Rell, Attorney General Richard Blumenthal and Department of Transportation Commissioner Ralph J. Carpenter announced the $17.5 million settlement.

“This money will help finish the job — redoing and repairing incompetent or possibly corrupt work — but we will aggressively act against anyone who should be held accountable for this construction debacle,” Blumenthal said. “Only the insurer is paying today. Others responsible will be targeted and pursued for recovery.

In early 2006, after DOT uncovered defects in the project’s drainage system, L.G. DeFelice of North Haven, the primary contractor for the project, walked off the job. The contract with the Maguire Group, Inc., of New Britain, hired by DOT to inspect the project and ensure contract compliance, was subsequently terminated.

State officials said that the DOT will now craft a contract to repair the drains so work can begin as quickly as possible. The majority of the repairs are expected to be completed this year.

While the state says it may bring future lawsuits, USF&G has itself already sued DeFelice. In a lawsuit filed in U.S. District Court, the insurer has accused officials from the North Haven contractor of transferring money to other family-controlled interests and even buying luxury cars with company resources.

An attorney for the contractor denied the accusations and maintained all of its financial transactions complied with the law, in a statement to The Associated Press.

USF&G says it bonded DeFelice projects, including a $54 million widening of I-84 in Cheshire and Waterbury, with the understanding that it would be reimbursed by the contractor for any claims.

Many of the defective drains lead nowhere, some are clogged with debris and others were apparently connected with substandard, cracked and leaking pipes. Original estimates by the state said it would cost $27 million to repair them.

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