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Palladium construction lawsuits costing panel millions

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The cash-strapped Carmel Redevelopment Commission has spent more than $6 million since 2009 “responding to, defending and settling” legal claims from contractors involved in construction of the city’s Palladium concert hall, according to filings in Hamilton Superior Court – and the meter is still running.

Commission members last month approved a $575,000 settlement with Bloomington-based Crider & Crider Inc., a subcontractor that filed suit three years ago alleging it had not been paid for excavation work it did in 2008.

But that deal does not resolve a related dispute with Hagerman Construction Corp., the concrete contractor that hired Crider for the project. Fishers-based Hagerman says it’s still owed more than $650,000 from the CRC (plus interest), which the CRC denies.

“Any amount owed by CRC to the plaintiff is offset, in whole or in part, by the amount owed by Hagerman to CRC for poor workmanship or other failures … in performing its obligations,” commission attorneys wrote in response to the allegations.

And then there’s the ongoing battle with Michigan-based Steel Supply & Engineering Co., which the CRC is suing over Palladium roof defects that halted construction for three months in 2009 amid concerns about a possible structural collapse.

The delay set off a chain reaction of scheduling problems that disrupted the project, CRC attorneys say in court filings, leading to a flurry of contractor claims for lost time and other damages. The estimated cost to the CRC at the time: $6.1 million.

Steel Supply, meanwhile, says it’s not to blame for the faulty design that resulted in a rip in the structural steel web supporting the venue’s domed roof. It maintains that contract documents and industry standards make that the responsibility of the project’s engineer of record, which is not a defendant in the lawsuit.

Its attorneys have asked Judge Steve Nation to rule on the responsibility question now, potentially avoiding a bench trial scheduled for late this year. A hearing on the matter has been set for May 5.

Whoever is at fault, neither party is disputing the fact that the roof-support system’s design was flawed. It has quite a load to bear: The 110-foot dome is fo

palladium-factbox.jpg

rmed by a steel frame covered with 12-inch-thick concrete planks, court records show.

Crews spent three months fixing the defects discovered during construction, and the $119 million Palladium opened in 2011. Still, roof problems persisted. Early last year – during a review conducted as part of the Steel Supply litigation – structural engineers found new problems with the roof trusses, prompting $140,000 in repairs.

The CRC hired Houston-based structural engineering firm Walter P. Moore to identify the technical deficiencies and recommend a fix, and said in a December court filing that the company also found additional issues with bolts in eight connection points and “various additional connections that are defective and which will require remediation.”

Although the CRC’s roof lawsuit did not target engineer-of-record Lynch Harrison & Brumleve Inc., the commission reserved the right to pursue related claims against the Indianapolis-based firm in the future.

It had a similar tolling agreement with project manager Shiel Sexton Corp., but in November struck a deal that calls for letting the Indianapolis contractor off the hook in exchange for the company’s forgiving more than $200,000 in promissory notes from the CRC and the Palladium.

The settlement also calls for Shiel Sexton to provide up to 240 hours of project-management services during the investigation and remediation process at no cost; any additional services will trigger a $167.50-per-hour charge.

The deal is a way to avoid the expense of litigation and “really, to facilitate the continued professional relationship” with Shiel Sexton while the Palladium roof is repaired, City Attorney Doug Haney told commission members Nov. 21.

Buried in the fine print is an acknowledgment that the hold-harmless agreement does not apply to any potential claims tied to the Crider & Crider litigation.

Crider sued Hagerman and the CRC for $747,342, the amount it said it still was owed after an $808,768 payment in October 2009. The excavation project was more costly and time-consuming than expected, the lawsuit says, because a stockpile of fill dirt Crider was supposed to use was not suitable for its intended purpose.

Hagerman laid the blame with the CRC, which it said had overseen a mass excavation on the site under a separate deal with another contractor. And since that work delayed the start of Hagerman’s concrete project, the company also is seeking reimbursement for “significant additional costs” incurred to meet construction deadlines.

The CRC responded in court filings with the criticism of Hagerman’s work and an assertion that nothing else was owed: “CRC has made all payments … pursuant to its agreement with Hagerman.”

Mayor Jim Brainard, who has participated in settlement talks since the resignation of CRC Executive Director Les Olds last year, called the Crider deal “a fair outcome given that the work was completed.”

And the $575,000 settlement – payable in three installments by the end of next year – is a bargain compared to the $1 million-plus value of Crider’s claim and accrued interest.

Hagerman is seeking about the same amount. Brainard said that claim has not been settled “because we feel the monetary request is inflated.” He declined further comment on the pending litigation.

Hagerman Group Chairman Jeff Hagerman is hopeful a resolution is near despite years of negotiations that have gone nowhere.

“It has been extremely disappointing we have not been able to resolve issues that are now over three years old, let alone receive final payment for work completed,” he wrote in an email to IBJ.

That’s not for lack of trying. City Councilors Rick Sharp and Luci Snyder—immediate past president and finance committee chairwoman, respectively—went to the mayor early this year with an offer: Settle the Crider/Hagerman litigation for a total of $1 million, and the council would use money from the city’s Rainy Day Fund to pay the tab.

“We thought it was in the best interests of the city as a whole that these lawsuits be put behind us,” Sharp said. Allowing the litigation to drag on “is creating a bad image of Carmel in the construction community. And it’s quite a drain on the redevelopment commission. The only ones benefiting are the attorneys.”

The mayor “expressed appreciation” but declined the offer.

Hagerman hasn’t given up. “We are hopeful the mayor will accept the terms of this negotiated settlement recommended by his team,” he wrote in the email.

Without access to the Rainy Day Fund, the CRC has to come up with the money for the Crider settlement (and any others). The first $250,000 is due within 30 days of the final signature on the deal; the next $250,000 by Jan. 31, 2015; and the last $75,000 by Dec. 31, 2015.

CRC Finance Committee Chairman Dave Bowers told the council the commission will have to “rearrange some things” in its 2014 and 2015 budgets.

The commission is still adjusting to the new reality of pinching pennies after borrowing $240 million over the past decade to support redevelopment projects like the Center for the Performing Arts, Carmel City Center and the Arts & Design District. Revenue from the city’s tax-increment financing districts pay the bills.

Sharp worries that obligations like the Crider settlement will jeopardize its ongoing redevelopment work, given the CRC’s tight finances.

“Expenses already are barely covered by the increment,” he said. “If anything goes wrong with the CRC, the city is going to have to step in and bail them out.”•

This story originally ran in the Indianapolis Business Journal.

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  1. I have been on this program while on parole from 2011-2013. No person should be forced mentally to share private details of their personal life with total strangers. Also giving permission for a mental therapist to report to your parole agent that your not participating in group therapy because you don't have the financial mean to be in the group therapy. I was personally singled out and sent back three times for not having money and also sent back within the six month when you aren't to be sent according to state law. I will work to het this INSOMM's removed from this state. I also had twelve or thirteen parole agents with a fifteen month period. Thanks for your time.

  2. Our nation produces very few jurists of the caliber of Justice DOUGLAS and his peers these days. Here is that great civil libertarian, who recognized government as both a blessing and, when corrupted by ideological interests, a curse: "Once the investigator has only the conscience of government as a guide, the conscience can become ‘ravenous,’ as Cromwell, bent on destroying Thomas More, said in Bolt, A Man For All Seasons (1960), p. 120. The First Amendment mirrors many episodes where men, harried and harassed by government, sought refuge in their conscience, as these lines of Thomas More show: ‘MORE: And when we stand before God, and you are sent to Paradise for doing according to your conscience, *575 and I am damned for not doing according to mine, will you come with me, for fellowship? ‘CRANMER: So those of us whose names are there are damned, Sir Thomas? ‘MORE: I don't know, Your Grace. I have no window to look into another man's conscience. I condemn no one. ‘CRANMER: Then the matter is capable of question? ‘MORE: Certainly. ‘CRANMER: But that you owe obedience to your King is not capable of question. So weigh a doubt against a certainty—and sign. ‘MORE: Some men think the Earth is round, others think it flat; it is a matter capable of question. But if it is flat, will the King's command make it round? And if it is round, will the King's command flatten it? No, I will not sign.’ Id., pp. 132—133. DOUGLAS THEN WROTE: Where government is the Big Brother,11 privacy gives way to surveillance. **909 But our commitment is otherwise. *576 By the First Amendment we have staked our security on freedom to promote a multiplicity of ideas, to associate at will with kindred spirits, and to defy governmental intrusion into these precincts" Gibson v. Florida Legislative Investigation Comm., 372 U.S. 539, 574-76, 83 S. Ct. 889, 908-09, 9 L. Ed. 2d 929 (1963) Mr. Justice DOUGLAS, concurring. I write: Happy Memorial Day to all -- God please bless our fallen who lived and died to preserve constitutional governance in our wonderful series of Republics. And God open the eyes of those government officials who denounce the constitutions of these Republics by arbitrary actions arising out capricious motives.

  3. From back in the day before secularism got a stranglehold on Hoosier jurists comes this great excerpt via Indiana federal court judge Allan Sharp, dedicated to those many Indiana government attorneys (with whom I have dealt) who count the law as a mere tool, an optional tool that is not to be used when political correctness compels a more acceptable result than merely following the path that the law directs: ALLEN SHARP, District Judge. I. In a scene following a visit by Henry VIII to the home of Sir Thomas More, playwriter Robert Bolt puts the following words into the mouths of his characters: Margaret: Father, that man's bad. MORE: There is no law against that. ROPER: There is! God's law! MORE: Then God can arrest him. ROPER: Sophistication upon sophistication! MORE: No, sheer simplicity. The law, Roper, the law. I know what's legal not what's right. And I'll stick to what's legal. ROPER: Then you set man's law above God's! MORE: No, far below; but let me draw your attention to a fact I'm not God. The currents and eddies of right and wrong, which you find such plain sailing, I can't navigate. I'm no voyager. But in the thickets of law, oh, there I'm a forester. I doubt if there's a man alive who could follow me there, thank God... ALICE: (Exasperated, pointing after Rich) While you talk, he's gone! MORE: And go he should, if he was the Devil himself, until he broke the law! ROPER: So now you'd give the Devil benefit of law! MORE: Yes. What would you do? Cut a great road through the law to get after the Devil? ROPER: I'd cut down every law in England to do that! MORE: (Roused and excited) Oh? (Advances on Roper) And when the last law was down, and the Devil turned round on you where would you hide, Roper, the laws being flat? (He leaves *1257 him) This country's planted thick with laws from coast to coast man's laws, not God's and if you cut them down and you're just the man to do it d'you really think you would stand upright in the winds that would blow then? (Quietly) Yes, I'd give the Devil benefit of law, for my own safety's sake. ROPER: I have long suspected this; this is the golden calf; the law's your god. MORE: (Wearily) Oh, Roper, you're a fool, God's my god... (Rather bitterly) But I find him rather too (Very bitterly) subtle... I don't know where he is nor what he wants. ROPER: My God wants service, to the end and unremitting; nothing else! MORE: (Dryly) Are you sure that's God! He sounds like Moloch. But indeed it may be God And whoever hunts for me, Roper, God or Devil, will find me hiding in the thickets of the law! And I'll hide my daughter with me! Not hoist her up the mainmast of your seagoing principles! They put about too nimbly! (Exit More. They all look after him). Pgs. 65-67, A MAN FOR ALL SEASONS A Play in Two Acts, Robert Bolt, Random House, New York, 1960. Linley E. Pearson, Atty. Gen. of Indiana, Indianapolis, for defendants. Childs v. Duckworth, 509 F. Supp. 1254, 1256 (N.D. Ind. 1981) aff'd, 705 F.2d 915 (7th Cir. 1983)

  4. "Meanwhile small- and mid-size firms are getting squeezed and likely will not survive unless they become a boutique firm." I've been a business attorney in small, and now mid-size firm for over 30 years, and for over 30 years legal consultants have been preaching this exact same mantra of impending doom for small and mid-sized firms -- verbatim. This claim apparently helps them gin up merger opportunities from smaller firms who become convinced that they need to become larger overnight. The claim that large corporations are interested in cost-saving and efficiency has likewise been preached for decades, and is likewise bunk. If large corporations had any real interest in saving money they wouldn't use large law firms whose rates are substantially higher than those of high-quality mid-sized firms.

  5. The family is the foundation of all human government. That is the Grand Design. Modern governments throw off this Design and make bureaucratic war against the family, as does Hollywood and cultural elitists such as third wave feminists. Since WWII we have been on a ship of fools that way, with both the elite and government and their social engineering hacks relentlessly attacking the very foundation of social order. And their success? See it in the streets of Fergusson, on the food stamp doles (mostly broken families)and in the above article. Reject the Grand Design for true social function, enter the Glorious State to manage social dysfunction. Our Brave New World will be a prison camp, and we will welcome it as the only way to manage given the anarchy without it.

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