PKD Contract Examined

I got a copy of the PKD contract in full, plus the three changes that were made to it.  The documents are linked below.  I think now we can look at the $127,000 settlement  with some facts at our side.  It appears that the county has been taken to the cleaners on this, and I quite frankly am scared to answer why.  Let me give some background from my perspective.

In August of last year, Julia Rietz decided to fire the Chicago law firm of Duane Morris in the area of mold litigation.  She then hired Urbana attorney Joe Phebus who is one of the County's best litigators.  I was initially pleased at the hire, despite the obvious political connections of Phebus, because I thought we needed someone who was local and good.  Phebus fits that.  But I also heard from some people that were concerned that the cozy relationship between Rietz, Phebus and Beckett would impede the search for the truth in the nursing home mold situation.  I'm afraid that fear may have been well founded.

I had never met Joe Phebus until I ran into him at Brookens in September of last year.  I took the opportunity to ask him some questions.  I asked whether the contract with PKD prevented us from making a claim against them on the mold problem.  He said that it did not.  Then I asked whether all the parties to arbitration could be put together in one case.  He said he wasn't sure, but that he would be trying to do that.  Then I asked about joint and several liability in an arbitration case.  He said he had not yet researched that.  I left the conversation with the distinct impression that we would be actively seeking to arbitrate against all parties at one time.  Litigators could explain this better, but I think it is pretty well accepted that when multiple parties have wronged you, that you try them all together to avoid each party escaping with an amount of liability that falls short of 100 percent.

So now we come to the settlement with just one party in this case, PKD.  The amount falls far short of the $1.8 million cost of the mold remediation.  I have heard that the negotiated settlement was so low because PKD had an out in their contract which holds them harmless for mold problems.   Look at the top of page 17 of the PKD original contract for that clause which was especially added at PKD's request. 

Amend 4.6   Add the following sentence to the end of the paragraph: The Owner shall be responsible for hiring a qualified Environmental Engineer for the inspection, quantification, estimating, contracting, and the removal of hazardous materials.

This is a nice little out for PKD, (And why did our negotiators on the contract, Denny Inman and Steve Beckett, agree to the clause on environmental problems?)   but it shouldn't have stopped Phebus from trying to get more out of PKD.  This is not about the mold alone.  It's about PKD's negligence in keeping us appraised of the actions on the worksite and perhaps for failure to maintain proper site conditions. Look at these provisions in the contract:

2.3.13 The Construction Manager shall determine in general that the Work of each Contractor is being performed in accordance with the requirements of the Contract Documents, endeavoring to guard the Owner against defects and deficiencies in the Work

2.3.11.3  The Construction Manager's certification for payment shall constitute a representation to the Owner, based on the Construction Manager's determinations at the site as provided in Subparagraph 2.3.13 and the data comprising the Contractor's Applications for Payment, that, to the best of the Construction Manager's knowledge, information and belief, the Work has progressed to the point indicated and the quality of the Work is in accordance with the Contract Documents.

I think it is clear that PKD did not meet their obligations to properly oversee this project. 

One of the critical elements in this case is also the responsibility for weather protection.  If you look at the change order on the contract from February 2004 you'll see that PKD has at least partial responsibility for weather protection (at least we agreed to pay them $50,000 for that).

We are now left with an arbitration hearing in which we are asking PKD to point their finger at Otto Baum regarding the mold problem, but for which PKD has no incentive to relieve themselves of any responsibility.  Otto Baum will be placing all the blame on PKD.  Any amount of blame that the arbitrator assigns to PKD over and above the $127,000 which we have received is money that you and I are going to eat as taxpayers.

The big winners here are Steve Beckett and Denny Inman.  This settlement clearly points to the idea that there were communications between Inman and/or Beckett and PKD which implicate the County.  With this settlement, it seems that those communications will never see the light of day.  PKD gets a sweet heart deal and Denny Inman skates again.  You, the taxpayer, are going to get the shaft.