The Modesto Irrigation District's $27M Construction Defect Case: Who Is Liable to Pay?


The Modesto Irrigation District’s $27M Construction Defect Case: Who Is Liable to Pay?

We scanned the internet for news in the construction defect field and we came across an interesting article that discusses The Modesto Irrigation District’s (MID) $27 million construction litigation case profiled in the Modesto Bee on May 3rd.

A little background on the case tells us that The Modesto Irrigation District says it will cost $27 million to repair allegedly shoddy work that was in the water treatment plant that was contracted back in 2005. The MID is going after two construction industry giants to pay for it. The work was originally contracted because the city’s ratepayers saw their water bills jump as much as 70 percent, and the MID agreed to expand the plant to supply more water to Modesto.

After the work was completed in 2009, MID staff found numerous design flaws and construction defects in the filter basins, walls, piping, valves, the ozone system and roof structures built for the second-phase expansion. In lawsuits filed in federal court in Fresno, the MID is seeking $11.2 million from plant designer and construction manager Black & Veatch of Kansas and $15.8 million from Denver-based Western Summit Constructors.

If the lawsuits are not successful, Modesto’s 77,000 water customers would be expected to pay

How will the court determine liability in this matter?

It’s possible that the actual Modesto Irrigation facility was built exactly to specification; however, after the infrastructure of the treatment system was in place, something went awry.

Several questions can be asked to get a better understanding such as:

Was it due to defects in the construction of the facility itself as a building structure?

Were defects noticed once the plant was up and running? (i.e. the defective design and installation of equipment could have been a co-factor?)

Reports show that no fewer than 15 attorneys from nine different law firms are representing the litigants, so the legal costs are expected to soar into the millions of dollars as the cases move through court. Wow what a nightmare this will be in the accounting department!  JDi

Data’s Vendor Cost Control System (VCC) was made specifically for cases just like these.

VCC facilitate immediate solutions with real time reporting and time saving techniques that provide allocation reconciliation during construction defect complex litigation like MID’s.

Our Vendor Cost Control team assist in complex litigation administering carrier funding requests, paying vendors and reporting proprietary information to all parties involved in the case through our secured web accessible client portal. I’m sure all parties in this case will agree that having real time info on reliable and readily available to them will bring fewer headaches.

An interesting issue is that this matter is being litigated in federal court vs california state court, which would undoubtedly complicate matters for everyone involved! It will be interesting to see how this case plays out, and the final decisions made on who will be responsible for what amounts are owed.