Free Opening Brief in Support - District Court of Delaware - Delaware

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Case I. (a) PLAIIF 1:04-cv-00163-GMS
DONAL M.

DURN CONTRACTING,
Boulevard,
Liste Plaintiff BU

d.vn.. V1", 'ilIUVC CVi' 1n.i'VNVI.) Document 306-4 DEFENDANS CITY OF Page 1 of 25 Filed 10/25/2006 NEAR, HAOLDF.
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1310 Industrial .
(b) County ofResidence of First

Southampton, PA 18966
(EXCEPT IN U. S.

INC. . Suite 20.0

JOHN H.

FARLL, IV, JERRY CLIFTON, KAL G.
of First Liste

GODW

. KABA HER, DAVID J. ATHEY,
JR., CHRISTINA REWA,

PLA CASES)

UR CORPORATION County of Reiden NE CASTLE (I U. S. PLAF CASES ONLY)
NOTE: IN

FR J. OSBORN
LOCATION OF

LA CONDEMATION CASES, USB TH LA mvOLVE,

(c) Attorney

Paul A. Logan, . Esquire

s (Finn Name, Address, and Telephone Number)

Attorneys (If Known)
:J

Powell Trachtman Logan CarrIe & Lombardo

475 Allendale Road, Suite. 200;
n. B

IS OF JUDICTION

of

ru

(pla an "X"

in On Box Ony)

m. CITNSHI OF PRICIPAL PARTI8(lacean

(For Diverity Caes Only)
This State 0 I 0
Incorprated

0.1 . U. S. Govermet

Plainti
o 2 U. S. Goverment Defendant

o 3 Feder Question .
Qg 4

Citi of

. DEF
20

an

dant) .

' lali
Xl 4

(U. S. Governmet Not Ii Par)

or Prncipal

of Busess In Th State
Citi of Another State 0
Incorporte and

Diverty
(Idicate Citiship
in Ite ID
of Pares

Prncipal Plac XI

ii

. f" - I

of Busess In Another State
Citize or Subject of a

50

Foreign Nation

IV. NATU OF SUI.
o 110

Inur

CONTcr

(place an "X" in One Box Onv)
TORTS
PERONAL INJURY 310 Ailae
315 Airlae Prduct

FORFITENAL
Per Jnmy
610 Agcultu
620 Other

BANKRUPTCY
422 Appe 28 USC 158

OTHR STATU
0 40 Stte Reapprtonmnt

PERNA INJUY
0 362

120 130 Mir Act
o 140

150 Recry
151 Med o 151

Nestible Intrnt of Overpaym

Libilty
320 Aaaut,

365

Per

Med Maract
Inj\I

625

Dr Relate Seiz

Foo & Drg

Enme oflud
Act
faulte

Re\'

0 . 330 Feder Emloye

Slde

LIl &

Prdut Liabilty

ofPr21 use

423 Witdrwal
28 use 157

0 430 Ban an Bank
0 450 0 460 0 470
0 S1

0 410

Antit

0 368 Asbeto

Perona

o 153

(&L Veterans) Re\' ofOvelJaym

Stt Loan
Stlde'

Liilty

Jnur Pruct

Libil
0 370

340

345 Mare Pruct

PERSONAL PROPERTY

630 Liqllr Laws 640 R.R. & Trk 650 Regs. 660 Ocupationa SafetlHealth

Ai

PROPERTY RIGH
820 830 840

Detion
Exhae

CoCC Ras/etc.
Ortins

LiDit

160 Je 1 195

Coct

\)Contr
PROPERTY

of Veteran s Benefits Sw't

350 Motor Vehicle

355 Motor Vehle
360 Oth

Tr in 0 380 Ot Pernal
0 37
385

OIrFrud

690

Ttderk

Coyr Palt

Rate Inuencd un
SeesCommditi
Cume Chene
Conut Seec Sece

0 850 0 875 0 0 0 0 0 891 892 893 894 895

RE

Pr Libil

Pruc Libilty Pernal Inur

Pr Dame PrpcDamge
Pruc Liil

LABOR
710 Fair Labo Act 720 Labogm Relations
730 LaborlMgmRert
& Dilosur Act

Strd

SOCI SECU
861 HI (139511 862 BIac1 (923) 863 DIWClIW (40500)

Lu

210 La Coemtion 220 PoresW" 130 Ret Le & Bjectmt o 24 Tort to

CID. RIGHT 441 Voti
442 BI10ymnt
443

PRIONER PE'IONS
0 510 MotiOl to Vacate

864 SSID Titl

865 RS (4000)

En of . Frm
Jus
St Sttu

Ec Matt Bnvi
Aloction Act

Agcul Acts

12 use 3410

StbDiztion Act

Inrmtion Act

Hous

Acclltins

Ha Corpus:
0 530 0 535

740 Raway Lar Act
790

FEDERA TAX SUIS
0 870 Taxes(U. S.

0 9OApea ofFee Detenntion

Otr Labor Litigatin
Seurty Act

245 Tort Prouct Uabilty 290 All Oter Real1'pe

0 44 Welf
:I 440

Otr Civil Rits

540 & Oter o 550 Ci Rits
o 555

Ma

Deth Penty
791 EmL Rot Inc.
0 871

or

Pla Defunt)

Und Equa Accs to

0 950 Cotuonality of
0 890 Othr Sttury Actins

iRTh Par
26 use 760

Prn Cotion

V. ORIGIN

(pLACE AN "X" IN ONE BOX ONLY).
Removed from
Reinstated or

Trasfer frm
another distrct

Appeal to

li 1 Orginal 0

VI CAUSE OF ACTION

Reded frm 0 4 Pring State Court0 3 Appellate Court fi
un whb yo ar (Cite the U. s. c, Sttu Do not cite judionahtatu unes dlvCtty.

0 5

Reopened

(specify)

o 6 Multidistrct
Litigation

7 Judge Magistrte

DIStrct from

1udgmt

and wrte brif statemet of caus.

reach of contract,. civil
VB. REQUESTED IN

rights. violation: '"

42. . USC' .

19

. 28, usc. 1332 .
100 000
CHECK YE only if demaded in complaint:
JUY DEMAD:

CHECK IF

TH IS A CLASS AClON

COMPLAIT: UNDERF.

23 over
DEMAND

Yes ONo

vm RELATED
DATE

(See

IF AN NONE
I . & USE ONLY

CASE(S) intrctions):
DOCKET

NUMER

3/16/04
RB

AMOUN

APPLYING IF

JUB

MAG.

JUB

Case 1:04-cv-00163-GMSUNITED STATES DISTRICT10/25/2006 Document 306-4 Filed COURT IN THE

Page 2 of 25

FOR THE DISTRICT OFDELA WAR

DONALD M.
INC.

DUR CONTCTJNG,
I CJV

ACTION NO.

.. 0 4 - 0 1

6 3

1310 Industral Boulevard , Suite 200 Southampton, P A 18966
vs.
CIT OF

. .:aif' .

'$ S
:C

NEWAR

220 Elkon Road P. O. Box 390 Newark, DE 19715- 0390

P'
(J :3

. C'

-fW

HAom F. GODWI
Mayor , City of Newark, Delaware

c.

;f.

\i

)OHN H. FARLL, IV
Council Member, City of Newark, Delaware

JEY CLIFON
Council M mber, City of Newark, Delaware

KAG. KAACHER , City of Newark , Delaware
Counci Member

DAVIJ. ATHY
Council Member, City of Newark, Delaware

FR J. OSBORN, JR.
CHRTIA REWA
and
URS CORPORATION 1200 Philadelphia Pike Wilmgton, DE 19809

Council Member, City of Newark, Delaware

Council Member, City of Newark, Delaware

COMPLAI
KOP:269634v3 3514-0

Case 1:04-cv-00163-GMS

Document 306-4 Parties

Filed 10/25/2006

Page 3 of 25

tiffDonald M. Durki Contracting, Inc. (' 'Durki'' ) is a Penylvana
corporation, with its pricipal
offce located

at 1310 Industral Boulevard, Suite 200

Southampton, Pennylvana 18966.
Defendat City of Newark (" City") is a political subdivision of the State of

Delaware, with its offces located at 220 Elkon Road, P. O. Box 390 , Newark, Delaware 197150390.

Defendat HaroldF. Godwi is an adult individual who , at all times relevant
hereto , sered and contiues to serve as the Mayor of the City of Newark, Delaware.
Defendant John H. Farell,

N is an adult individua who , at al ties relevant

hereto , served and contiues to serve on the City Council representig Distrct 1 of the City of
Newark, Delaware.
Defendat Jeny Clifton is an adult individua who, at all ties relevant hereto

served and contiues to sere on the City Council representIg Distrct 2 of the City of Newark
Delaware.
Defendat Karl F; Kalbacher is an adult individual who , at all ties relevant

hereto , served and contiues to serve on the City Council representig Distrct 3 of the City of
Newark, Delaware.
Defendant David J. Athey i an adult individual who, at all ties relevant hereto
served and continues to serve on the

ity Council representig Distrct

4 of the City of

Newark,

Delaware.
Defendant Fran
J. Osborne ,

Jr. i an adult individual who, at all ties relevant

KOP:269634v3 3514-04

, .

Case 1:04-cv-00163-GMS Document Mayor as a 10/25/2006 Page 4 hereto , served and continues to serve as Deputy 306-4 andFiledmember of City Council of 25
representing Distrct
5 of the City

of Newark, Delaware.

Defendant Chrstina Rewa is an adult individual who, at all times relevant hereto
served and continues to serve on the City COtUlcil representing Distrct 6 of the City of Newark

Delaware. .
10.

The Defendants identified and named in paragraphs 3 though 9 , inclusive, shal

be hereafer refen:ed to as, "City Council.

Defendant UR Corporation ("URS") is a business corporation incorporated

under the laws of Delaware , with a pricipal

offce located

at 1200 Philadelphia Pike

Wiltgtn, Delaware 19809.
Jurisdiction and

Venue
A.

12.

Jursdiction is predicated upon 28 U.

1331 and 1343 ,

in that ths is a

civi1.action arsing under the Constitution , laws , and treaties of the United States. Jursdiction is

also prediate upon the doctre of ancil
13.

and pendent jursdiction.

Jursdiction is

fuer predcated upon 28 U.S.

A.

1332 , there being complete

diversity between al plaitiffs and al defendats , and the matter in controversy, exclusive of

interest and cost, is in excess of $1 00, 000.
14.

Venue in ths Distrct

is proper

pursuant to 28 U.

A.

91(a) and (b).

KOP:269634v3 3514-04

Case 1:04-cv-00163-GMS

Document 306-4 Facts

Filed 10/25/2006

Page 5 of 25

Events prior to Biddine 2id contractinu
15.

At some time prio to Januar, 2002 , the City retaned the. serVces ofUR for the

puroses of analyzing the feasibilty of, and thereafter preparg professionally engineered design
and constrction

documents for, the constrction of a water supply reservoir. (''Project''

16.

The Project was intended to provide for the constrction of an "off-stream
with the capacity of approximately 318

pumped storage reseroir"
17.

millon gallons of water.
the City, with a work area

The reservoir was to be situte
inter alia,

on proper owned by

in excess of 60 acres , adjacent to
18.

Old Paper Mill Road Newark, Delaware.

At all ties relevant hereto , includig the design phase for the Project, the City
adjacent

and URiktew that the Project and the water supply reservoir was located imediately

to a densely populated residential area.
19.

Because of the location of the water supply reservoir, at all ties relevant hereto
were acutely aware that (1) the safety of the residents

the City;md UR

ivig adjacent

to the

reseroir and the public

in gener, and (2) the long-term integrty of the water supply reservoir
could

were imperative considerations , especially since a failure of the water supply reseroir
imperil the life and safety of the persons and propert
workig on

the Project, and risk the safety
with potentially

of the residents in the suroundig area, includig

multiple occupied residences ,

catatrophic consequences in term of loss of life and propert.
20.

The City and UR were alo fuly aware tht for the safety and protection of those
, the design for

workig in and around the reservoir durg constrction of the Project

reservoir and for the overall Project had to address site safety at all ties

durng the

constrction

KOP:269634v33514-04

Case 1:04-cv-00163-GMS phase of the Project.
21.

Document 306-4

Filed 10/25/2006

Page 6 of 25

At all ties

durg the desigt phasefot the Prbjectand prior to constrction, the

City and UR also knew, and specificaly understood, that the Project was subject to competitive

bidding by contractors pursuant to the public bidding laws in the state of Delaware, and that all
relevant inormation known by the City and UR

respectig the Project neeed to be disclosed

and either provided, or at least made available, to the bidders prior to submitting the bids.
22.

At all ties durg the design phae for the Project and prior to constrction, the
and rely

City and UR knew that the bidders would utilie

upon the pre-bid information

disclosed by the City as the basis for, among other thgs , selectig the parcula mean and

methods of constrction to be employed anticipatig
accounted for durg

the conditions to be

encountered and

consction, the intial fiing

of the

reservoir and the maintenance of the
was

reseroir durg

the period of contractor responsibilty, all of which

taen into account and

factored into the pricing of the Project work.
"23.

At all ties

durg the design phase for the Project and prior to constrction,
maner of constrction and

the

City and UR

were aware tht soil staility, the sequence and
the essential

safety

inormaton was among

inormaton necessar for bidders to fuy evaluate the scope

and complexity of the Project work.
24.

At all ties

durg the design phase for the Project and prior to constrction, the
the contractor

City and UR also knew that all bidders , and ultiately

who was awarded the

contract for the Project, would rely on the adequay of the plans, drawings and specifications

and also would reasonably presume that URS had completed all testing, analysis and evaluations

to determe the constrctabilty and adequacy of the design.

KOP:269634v3 3514-4

Case 1:04-cv-00163-GMS theDocument 306-4the Project10/25/2006 constrction, the Filed and prior to Page 7 of 25 design phase for At all ties durng 25.
City and UR knew that bidders w fe not obligated to conduct any independent investigation

into the adequacy of the bid documents or the constrctabilty of the Project design, but would in
fact rely upon the City and URS to provide a design which was complete in all materal respects
and could be

constrcted utilizing ordiar

and customar

constrction technques and mean

and methods of constrction.

26.

At all ties prior to the lettng of the Project for competitive biddig,

the City

and

UR specifically knew that they had the afative legal obligation to disclose all relevant
inormation to al prospective bidders, and that non- diclosure of any material inormation would
be a consctive or
27.

actu fraud on the bidders.
durg the design phase for the Project. and prior to consction, the

At all ties

City and UR expressly and impliedy waranted the adequacy of the design for the Project, the

copleten ss of the bid and contract documents , and tht
known relevant inormation respectig the Project.
28.

the City

and UR had disclosed all

Durki avers, upon inormation and belief, that prior to the solicitation of bids for
reseroir and presented

the Project, UR prepared an intial design for the water supply
City for review and consideration.
29.

it to the

Durki avers, upon inormation and belief, that contrar to UR' professional

duties and in lieu of completig its own testing and analysis , URS relied upon information and an
analysis provided by a vendor of a proprietar
30.
product

marketed as "Fabriform

Durkin avers , upon inormation and belief, that UR' initial design incorporated a

design for the interior side slopes of the water supply reservoir that was intended to provide for

KOP:269634v3 3514-

Case 1:04-cv-00163-GMS Document 306-4 Filed 10/25/2006 Page was interior slope stabilty at all times durng constrction, while the water supply reservoir 8 of 25

intially filled, and durg the servce life of the reseroir,

inclUding such times

when water level

in the reservoir was being drawn down for maintenance or to address emergencies.

Durki avers , upon inormation . and

belief,

that URS' . initial design included total

slope protection; however, in an effort to ostenibly " save costs-and at the behest of the

City-URS agreed to change their design
32.

Specificaly, the intial design prepared

by

UR included fi

placing an

impervous lier over the bottom and interior side slopes of the reservoir, over which was to be
placed a proprieta
product

known as ' 'Fabriorm , which would cover the impervous lier
from the ri ,

system along the entie

interior side slopes of the reservoir, i.e. ,

or the top of the

interior slope, to the

bas floor of the reservoir.
design ) that was included in the bid do cuments

33.

The changed design ("modi

eliatoothe ' 'Fabriorm '' for the lower porton of the interior side slopes, specifcaly from
elevation 169 down to the bottom of the reservoir, and instead called for the placement of
screened soil materials from the excavation of the basin (which soils were referred to as "cover

soil" in the Contract) over the imperous
floor. In the bid and Contrct docwnents,

lier system from elevation 169 down to the basin

UR identified the area between the basin floor and
area as "Zone

elevation 169 as "Zone
34.

and the cover soil for tht

N material"

UR'

change from the initial design to the modified design was ostensibly for the
of

purose of saving the City approximately one millon dollar in the cost
reservOIr,
35.

constrctig the

The modified design was incorporated into the bid and Contract documents for

KOP:269634v3 3514-04

Case 1:04-cv-00163-GMS Document 306-4 Filed or disclosing Page 9 of 25 the Project, without disclosure to any bidder of the intial design, 10/25/2006 the fact tht the
modified design had not been evaluatoo by the City or URS fer constrctabilty, safety, operation

or long term stabilty of the reservoir.
36.

Durki avers , upon inormation and belief, that although URS signficantly
of

chaged its intial design, UR failed to consider and professionally address the Consequences
the modified design prior to incorporating the chages into the Project documents.

37.

Durki avers , upon inormation and belief, that before

incorporatg

e modied

design into the Project docyments , (1) UR did not verfy that the modified design was even

onsctale utig ordiar
verfy that if complet

constrction

ea and metho

, (2) UR did not verify that the

modied design was safe for the contractors atemptig to build the Proj ect , and (3) URS did not
as designed by URS, the reserVoir would be safe and fuction
properly.

38. . Although the plan , drawigs and specifications for the Project were ostensibly

. prepared by URS, and UR

afxed its professional engie rig seal upon the Project plans and

drawigs, Durki avers, upon inormation and belief, that signficant portons of the purorted

engieerig" for the plans, drwigs and specifications for the Project were not prepared or
evaluated by UR, but inead were pla , drawigs and specifications prepared by others.
39.

Durki avers , upon information and belief, that the drwigs for the Project

incorporated a non-site specific "design" ostensibly prepared by vendors of the Fabrifonn
proprieta systems ,

which design was not fuly

evaluated ,

was not based on actual site

conditions , and was not verified by URS as appropriate for incorporation into the Project
requiements before the Project was let for biddig.

40.

Durki avers , upon inormation aid belief, that prior to completig the " fial

KOP:269634v3 3514-

Case 1:04-cv-00163-GMS UR had failed to Filed 10/25/2006 Page required design" and prior to soliciting bids , Document 306-4 perform all essential engieerig10 of 25 of design professionals , includig the slope stailty
critical studies

anysis of the modified design and all other

d testig, all of which were necessar for UR to detenne the constrctabilty

of the modified design and the. safety of the Project durg constrction, and for proper
maitenance of the reservoir on a long
41.

ter basis.
bids,

Durki aver, upon inormatiQn and beJief, that prior to solicitig
documents or anywhere

UR did

know, but did not disclose in the biddig

acessible to bidders, that the

modified design had inerent flaws, includig the following:
tht the
Zone

materials were especially vuerable to severe erosion

durg constrction;
tht the modified design

provided that the Zone N. materials were to form
to elevation 169 ,

a shelf area, known as a "bench" , from the floor of the reseroir

upon

which the "Fabriorm " slope cover was anchored, but that the bench and Zone IV
material would. fail

under conditions that were likely to occur durg constrction, the
durng the service life of the reseroir; and

fillig of the reservoir or

th when the reservoir was drwn down to a water elevation below 169

(Le. the highest point of Zone IV and wave and/or wid conditions existed or if the
water was drwn down below the elevation of 169 at a rate greater than five millon

gallons per day, the Zone IV materials would fail and the bench and the Fabriform anchor
would be compromised.
42.

Because UR had failed to perfonn all necssar calculations and pre-bid

evaluations, the severity of defects may not have been fuly known, but UR proceeded with the

KOP:269634v3 3514-04

Case 1:04-cv-00163-GMS Document 306-4 Filed 10/25/2006 Page 11 of 25 procurement on behaf of the City without regard to the known defects and without disclosue to
any bidder.

Bid SolicitationJre-Contract Activities
43.
it refered to as

In or about Januar, 2002 , the City advertsed for bidding the public works project
the ' 'Water Supply Reservoir, City of Newark , Delaware, Contract 02- 02"

utiliing UR' modified design.
44.

Prior to the solicitation of bids, UR and the City both knew, or in the exercise of
to

professional dilgence UR should have known that the materials that would be utilied

constrct the reservoir were highy erodible anq unble under conditions that URS and the City
ew or should have known would. be encountered durg
was plac
45.
constrction and afr the

reservoir

in serce.
Specifically, but without limtatio Pt:or to the solicitation of bids , URS and the

City bothlmew that when the level of water with the reservoir would periodically be an

elevatonJower than 169, that the "Zone IV" materials would be subject to severe erosion and
tht the "bench"

upon which the Fabriorm

was "anchored"

would fail, creatg a risk of

catatrophic failures of the slopes and possible. compromise of the integrty of the entie

reseroir.
46.

Durki avers , upon inormation and belief, that before solicitig

any bids,

and the City knew of the conditions that would affect the Project, but despite their obligations to

disclose all material information, failed to advise all bidders , includig Durki of these material
conditions.
47.

Durki avers, upon inormation and belief, that prior to solicitig

bids for the

KOP:269634v33514-4

Case 1:04-cv-00163-GMS Document 306-4 or pre-contract investigation by any Project, the City and UR knew that no re onable pre-bidFiled 10/25/2006 Page 12 of 25

. bidder would discover the inonnatiOn known but concealed by URS and the City, includig,

without limitaton, the fact that UR had failed to adequaely prepare design and constrction
documents and had not completed all necessar engieerig evaluations.
48.

The City and UR

wamted, either expressly or implicitly, that the bidding

documents were complete and acurate, that the City and/or UR had disclosed all known

relevant inormation, and that the biddig

documents fuy and

accurately described the scope of

work such that a competent contractor could formulate a bid price and complete the work in

conformance therewith.
49.

Specificaly, the bid documents were represented by the City and URS to descrbe

a fuctionally complete Project" (Section 3. 2)-and tht the scope of the work to be performed by
the contractor was " any work, materals or equipment that may
reasonably

be inered from the

ontrct. Documents... " (Section 3.
50.

The City opened al bids and thereafer reviewed with Durki , the apparent low

bidder, the basis upon which Durki had prepared its proposal.
51.

Notwthtadig the review of Durki' s bid and post bid-openig dicussions, at

no

tie prior to awarding the Contrt to Durki did either the City or UR disclose to Durki
respectig relevant site conditions , the constrctabilty of

any factul or engieerig inonnaton

the Project , or that UR had not properly completed the necessar engieerig for the Project

even though the foregoing facts were critical to Durki' s biddig and method of prosecuting the

Project , and that the foregoing facts were not known by or available to Durki.

Contract Award: Durkin s Performance and CitylU' Responses
KOP:269634v33514-

Case52. 1:04-cv-00163-GMS ,Document 306-4 entered 10/25/2006 contrct for of 25 On April 24, 2002 Durkin and the City Filed into a wrtten Page 13 the
constrction of the Project
(" Contract" ). Notice to

proceed with the constrction work was
hereto as

issued by the City on May 24. 2002. Relevant portons of the Contract are atthed
Exhibit "

53.

Federal Inurce Company (' 'Federal'' ) was , at all times relevant hereto , the

payment and perormance bond suety for Durki in connection with the Project.
54.

The City appointed URS as the consction inpector for the Project,

notwthtading the fact that UR was the designer of the Project, and that one of the essential
fuctions of the constrction inector is to report and evaluate any alleged defects in the Project
design for which UR
would ultiately be responsible

55.

UR'

positions as both designer of the Project and constrction inector

was an

inerent confict of interest, which should have disqualified UR as the field inspector on behalf
of the City.

56.

Afr mobilig to the site and commencing constrction of the Project,

Durki

was subjected to materially different requiements than those specified in the Contract, and was

fuer dkected to perform additional and extra work.
57.

Specifically, afer

begig work on the Project, Durki was diected by the City

and URS to employ technques and perform additional and extra work to address omissions and

deficiencies in the Contract documents , includig, as examples only:
the Project design failed to properly anticipate the chaacteristics of the soils; as a

result, Durkin was diecte to haul in water to add to the on-site materials in order
to achieve the specified moistue content set fort
in the

Contrt documents;

KOP:269634v3 3514-0

. '.
Case 1:04-cv-00163-GMS charged with306-4 the Contract specifications 14 of 25 URSfield personnel Document followingFiled 10/25/2006 Pagefailed to
follow the requiremerits for aceptace testing; as a result, Durki was forced to
retai the servces of a

soil engieer to ensure that the required testing for

compliance with the Contract specifications was performed in a timely and proper

maner so as to permt the work to proceed on schedule;

UR'

design failed to properly estiate

the quantity

of excavated materals; as a

result, Durki was directed to haul the excess material to the exteror embanent
of the reservoir which fronts Old Paper Mill Road , and was fuer required to
handle and compact the excess materals as if it were uLandscape Fil.
Durki was also diected to perform additional work in

screenig the fill material

to remove rocks and stones, notwthtandig the fact that the Contract permtted
an alternative method of treatg the fill , namely rakg.

58.

As of October, 2003 , DurkI had accrued

and presented

clais for the extra work

in an.amount in excess of $650 000 due to the design defects and improper Contract
admini strtion
59.
by

UR.

Durki complied with all ofUR' diectives, the Contract'requiements and all
clais for exta compenation to the City.

other conditions. precedent to presentig

Siope Stabilty. Safety and Project Constructabilty Issues

60.

AB of the early fall of 2003, Durki

had substatialy underten the specified

prepartory work described in the Contrct in anticipation of the star of the constrction of the

Zone N" materials, includig the screenig of the Zone N material , the placement of the
geotextile and impervious lier
on the substatial areas of

the slopes and the floor of the

KOP:269634v3 3514-

..
Case reservoir. 1:04-cv-00163-GMS
61.

Document 306-4

Filed 10/25/2006

Page 15 of 25

In the locations desigfated by the Contract; DUiki had placed geotextile materials

and liner and p epared to place the Zone IV materials on the slopes

begig at the "shallow

end of the reservoir, i.e., where the difference in the elevation from the floor of the reservoir to
the elevaton of the Zone IV bench was the smallest.

62.

As designed by UR, the Zone IV niaterials were to be placed ftom the toe of the
IV materals was constrcted and

. slope to elevation 169, whereat a ' 'bench'' frm the Zone

. where the Fabrionn materials were be anchored From that point, the Fabrionn materials.
would be placed on the slope up to the top of the reseroir," at which point a "wetland" mitigation
strctue was to

be conscted

63.

. AI designed by UR, large rocks , known as "rip-rap , were to be placed on the

Fabrionn at and near the top of the slope adjacnt to the wetland mitigation strctue.
64.

Durki had retaned the servces of a geotechncal consultant , deoSyntec

Consultats , Inc. (" GeSyntec ), for puroses of maitaig quality control durg the
placement of the Zone IV materials, ination of the Fabrionn, placement ofthe rip-ra and
constrction of the "wetland" mitigation strctue at the top of the slope of the reservoir
65.

Nowhere in the Contract specifications was Durki diected to employ any special

or extraordiar constrction

technques for placement of the Zone IV materals, the Fabriorm
rip-rap.

material, the wetland strctue or the
66.
Durki began

the placement of the Zone IV materials at the end of the reservoir

where the least amount of Zone IV materials would be placed, and C?mpleted a seetion ofthe

Zone IV work prior to any rain.

KOP:269634v3 3514-4

Case 1:04-cv-00163-GMS
67.
All materials

plac by Durki met the ContraCt specifications for gradtion and

Document 306-4

Filed 10/25/2006

Page 16 of 25

density, and Durki
68.
69.

fuer protected the Zone

materials from rain by sealing the cover soil.
event.

In September, 2003, there was a sustained rai

Notwithtanding (1). Durki' s installation of the Zone IV materials in cOmplete

accordance with the Contract design; (2) Durki' s implementation of erosion mitigation utilizing

ordiar mean and methods; (3) Durki' s constrction of the slopes to the grades and lies
prescribed in the Contract plan; and (4) Durki' s properplaceme:nt and compaction of the Zone
IV material, the

Zone

materials that had 1,een placed by Durki were severely damaged by

the

ra.
70.

Specifically, due to defects in URS' desi

, water on the impero

slope liner at

elevations ' greater than 169 was chaneled down to and

undermed the Zone IV bench, causing

severe daage to the work which mc1uded displacement and sloughing ofentUe sections
Zone IV materials down the slope to the floor of the reservoir.
71.

The ordiar mean and methods of eros'ion mitigation employed

by Durki could

not overcome the defects in UR' design.
72.

Not only did the Zone

materials fai, but because the eighteen (18" ) inches of
lier

Zone IV materials placed on the floor of the reservoir were placed on top of the impervous

the moistue was trapped in the materials.

73. . The trapped moiste in the materials located on the floor of the reservoir resulted
in the bearg capacity of those materals being signficantly
constrction equipment from

dished thereby precluding

gaig access to the afected areas without severe ruttig and

likely damagig the underlyig liner.

KOP:269634v3 3514-4

Case 1:04-cv-00163-GMS severe daage to and failure of the Zone IV materials 17 of 25 Document 306-4 Filed 10/25/2006 Page As a- result of the 74.

, Durki

requested that GeoSyntec evaluate the b6i1ditions and advise DUrki

of the liely

cause(s) of the

problems and any potential consequences.
75.

GeoSyntec advised Durki tht there was a potential serious defect in UR' s

design that affected the constrctabilty of the Proj ect, and also that there were other potentially

more serious defects , that called into question the integrty of the entie design and raised
life/safety issues.
76.

The Contrt Specificatons (Section 3. 2) requied Durki to advise the City and

UR of any discovered design problems and defects.
77.

Durki imediately advised the City and URS of the potential defects in the

Project.design, and requesed that the City and UR immedately addrss the issues.
78. .

Contemporaneous with the notice to the City and UR,

Durki requested UR to

provide its design analysis of,

inter alia slope stabilty, so that Durki' s geotechncal consultant

could fuher
79.

review

the modified design
City,

At a meetig among the

Durki UR . on September 26

2003 , Durki'

constats advised the meetig attendees of the discovered design defects; specifically, Dur'
consultats advised

inter alia that in the event of a rapid or other drw-down of the reservoir

the design for the Zone IV materials had a factor of safety of less that one.
80.
81.

A factor of safety of less than one indicates that failure. would occur.
In a m.emorandwn frm

UR to the City dated October 14 , 2003, that was not
inter alia:

addressed or sent by UR to Durki, URS wrote,

'we concur that if a very conservative approach is tae to the evaluate cover soil stabilty using the infinite slope method of analysis and assuming no soil cohesion, intataeous
KOP:269634v3 3514"(4

Case 1:04-cv-00163-GMS Document 306-4 a factor of10/25/2006 Page 18one 25 Filed safety of approximately of is drawdown, and no drainage of the cover soils, calculated. "

82.

The conditions described in UR' memorandum would occur.ifthe reservoir

were drawn down in an emergency.
83.
AB

a "high hazard" earen da URS !mew that the factors of safety for its design

were well below the mium
84.

stdads of safety aceptable for such strctues.

In the October 14, 2003; memoradum UR ac!mowledged that it had changed its

origial design to the

modified design in order to save approxiately

$1. 0

millon.

85.
erosion (of the Zone

UR fuer acknowledged in its October 14, 2003, memorandum that "the
materials) that has been observed to date has occured with the lie
in plac).

above, EL 169 exposed (no riprap or Fabriorm

Ths relatively smooth surace results

in very high erosive velocities.
86.

As par of the October

14

2003 , memorandum, UR aclmowledged that the

concerns that were raised by Durki

were

valid and stated that ' 'We (US) do propose a slight

change in the Fabriorm detal to mitigate the maitenance impacts , and proposed to the City

varous alteratives designed to address some of the defects in the modified design.
87.

Begig in late October, 2003 , URS advised Durki that the modified design
requested Durkin to provide pricing for alterntes
to the as- designed

requied changes, and

system.
88.

UR fuer stated even though they agreed that the modified design had to be
if the prices quoted by Durki for

abandoned and con-ective measures implemented neverteless ,

the alternatives were not acceptable , that UR would direct

Dur to proceed with the modified

KOP:2e9634v3 3514.0

Case 1:04-cv-00163-GMS Document 306-4 Filed 10/25/2006 Page 19 of 25 design set forth in the Contract, even though URS knew tht the modified design could not be

constrcted.
89.

Durki avers, upon inonnation
responsibilty for

and

belief, that

UR attempted to conceal its own
to convince

design errors and fiancial

the errors by attemptig

the City that the

alternatives were to "mitigate potential maitenance issues " so as to obta fuds ftom the City to
pay Durki the costs to remedy the defects in URS' modified design.
90.

Only after October, 2003, did the City and UR

adt to Durki for the fist tie

that the City had contingent plan to drai the reseroir for maintenance, emergencies or due to
severe drought conditions, and that the conditions durg the draig ofthe reservoir for
maitenance or durg emergency draw-down would liely

undenne the Fabriorm and

intalation of rip-rap.

FUTHER INSTIGATION OF DESIGN DEFICIENCIS
91.
As requested Durki provided prices to UR for the varous alteratives
to the

modified design.
92.

Afer submittg proposals

for alterative

design for reviewig and

consideration, Durki was advised that the City and UR would not implement any of the
issues and life/safety concerns alternatives to the design notwthsdig the seriousess of the

because Durki' s prices were alegedly too high.
93.

Durki alternatively offered to work on a "time and material" basis , with control
rejected.

of the operations being vested in URS and the City, but ths proposal was also

94.

At al

ties durg these discussions and exchanges of pricing for the alternative
, had

schemes proposed by UR, Durki contiued with the available work on the Project

KOP:269634v3 3514-

Case 1:04-cv-00163-GMS Document 306-4 Filed 10/25/2006 materials delivered to the Project site, and awaited diection from the City and
was to proceed.
95.

Page 20 it UR on howof 25

Durg this same period of time , Durki contiued to request that the City and

UR provide their design calculations and other essential design inormation so that Durki'
consltants could complete a

fuer evaluation of the design issues that afected both life/safety
tie that the
to

concern as well as constrctabilty.
. 96.

In the late fall and/or early witer, 2003 , Durki leared for the fit

reaon that the requested design inormation was not provided was that UR

ha faied

. complete these essential calculations and analyses prior to bidclg,

and

was only then

begig

to evaluate the life/safety, slope stabilty
97.
Shortly thereafer

and other issues

afectig constrctabilty.

an improper and ilegal attempt to force Durki to proceed
tht

with a known deficient plan the City, with the advice ofUR, wrote to Federal and claied

Durki' was in some fashion faig to perform the Contract work.
98.

The letter to Durki' s surety was wrtten in bad faith in that inter alia Durki

had never abandoned the site and was stil prosecutig available work and having materials
delivered to the site, and that puruant to Section 3.3. 2 of the Contract specifications, Durki was

contractully obligated to raie
99.

the design deficiency issues with the City

and URS.
inter alia,

The letter to Durki' s surety was wrtten in bad faith in that,

knew at the time of the City' s notice to Federal that there were indeed design deficiencies , and

that if Durkin had proceeded, additional costs and expenses would be incUled for no good

purose.
100.

The letter to Durki' s surety was in bad faith in that

inter alia,

the City and URS

KOP:269634v3 3514-

Case 1:04-cv-00163-GMS Document 306-4 Filed 10/25/2006 Page not ofthe. Contiact specifications provided that "the Contractor shall21 of 25 knew that section 3.

proceed with the Work affected thereby" (i.e. a design defect or eror) " until an abatement or
supplement to the Contrt DocUments. has been
issued (in wrtig)....

101.

In December, 2003 , the City and UR met with Federal and Durki in a

supposedy " off the record" meetig.
102.

At the behest of the City to seek the advise of consultats

other than

those

retaned by Durki Federal engaged the servce of a nationaly-recogned geotechncal

engieerg consultat, Greg Richardson, Ph.D., P. E., to review the design and advise whether
there were defects in the modified design.
103.

Unkown to Federal and Durki .prior to Federal retanig Dr. Richardson, URS

had contacted Dr. Richardson for puroses of solicitig advice respectig the adequay of UR ,
modified design.
104.

In conversations between URS and. Dr. Richardson,

UR aditted to the design

.deficiencies and that URS had modified its intial design at the behest of the City in order to save

approximtely $1. 0 millon.
105.

In completig his analysis and evaluation of the modified design Dr. Richardson
by

also contacted the testg laboratory then being .utilied
stabilty analysis

UR to belatedly complete the slope

and other computations. The results of these discussions were reported in the

wrttn report prepared by Dr. Richadson, which fuer
modified design.
106.

confed the deficiencies in the

Richardson completed his analysis and generated an intial

wrtten report

dated

Januar 13, 2004.
KOP:269634v33514.

Case 1:04-cv-00163-GMS, 2004 report , Richardson confed. the defects in .the design,25 Document 306-4 Filed 10/25/2006 Page 22 of the 107. In the Janua 13

existence of signficant life/safety issues, that the as-designed system was not " constrctable" and
advised that proceedng with the modified design would imperil workers and that potential
catatrophic failures could occur if the constrction
108.
work proce

ed.

A copy of Dr. Richardson s Januar 13, 2004 report was provided to the City and
dated

UR by Federal under a cover lett
109.
At no tie did

Janua 20 2004.

the City or UR seek an independent evaluation of either UR'

modified design or Dr. Richardson s report.
110.

On Janua 30, 2004 ,

UR prepared a wrtten response to the Januar 13, 2004

report of Dr. Richardson.
111.

The JallUar 30 2004 report from UR

resondig to. Dr. Richardson Janua

13, 2004 report was not forwarded to Durki

or Federal for comment or response prior to

termation of the Contrct by the City.

CIY AN URS' REFUSAL TO PAY FOR WORK AN MATERIS
112.

Notwthstadig its contraCtul obligation to pay Durki for the work performed

and the materials provided on the Project,

begig in November, 2003 , in material breach of

the Contract, the City began to improperly withold .payments from Durki.
113.

Notwithtadig its own material breach of the Contract by refuing to pay for

work performed, the City, though UR, diected Durki to continue with the Project work

puruant to the modified design.
114.

At the diection of the City, Durki contiued to work on the Project, fishig
2004 ,

much work as was available until in or about Januar,

when, because of weather concerns

KOP:269634v3 3514-0

Document 306-4 and Case 1:04-cv-00163-GMS restrctions in the Contract specifications , work was
115.

Filed halted. 10/25/2006

Page 23 of 25

As recently as mid-Januar
2004.

2004 "

the City approved Durki' s payment estiate

for work completed through Januar
116.

Durki fuer contiued to have materials delivered to the Project for use when

the weather conditions penntted fuer work.

NOTICE OF: DEFAULT
117.
. contractor
Section 15. 2 .of

the Contract provides

lited rights for the Ower to termate

.a

for an alleged d.efault, and fuer im oses express conditions precedent upon the

Owner to protect the contractor s procedural and substtive due process rights.

118.

Section 15.

1 though section 15. 2.4 of the Contrct allow for a terntion for

default only if the contractor ' 'persistently fails to perform the Work in

acrdace with the

Contract Documents... " or if the contractor "disregards Laws or RegUations of any public body

havigjursdiction" or if the contractor "disregards t4e authority of the Engieer" or if the

contrtor "otherwse violates in any substatial way any provision of the Contrac Documents.
119.
Section 15. 2.4

of the Contrt provides, in pertinent par that

OWNR

may,

after

yie CONT

CTOR (and the surety. if any). seven

days written notice and to the extent permitted by Laws and Ref:ulations. terminate the servces ofCONTCTOR. " (Emphasis added)
120.
The language contaed. in Section 15. 2.4

of the Contract was an express

contractu requirement and

procedural condition precedent to the right of the City to termate

the Contract for cause and avail itself of the rights and remedes set forth in Section 15. 2.4.
121.

The City failed to provide Durki or Federal with the requied

seven days wrtten

notice of its intent to termate the Contract for cause.

KOP:269634v33514-o4

...

Case 1:04-cv-00163-GMS spondence from the City prior10/25/2006 the Contract was Filed to termatig Page 24 of 25 122. The last dated cOlTe Document 306-4

a letter from the City Manager to Durki' s surety dated Noveriber 21 2003 , in which the City
Manager stated
inter alia,

that " (O)n behalf of the City of Newark, Delaware , I am wrtig
considerin& declarg (Durki) in
default.. Ths

inorm you .that we are now

precautionary

letter has become necessar following (Durki' s). failure to present a response to a mean and
methods for contiuation

of the Project in accordace with our contract." The letter concluded

by statig tht "

we are requestig that a conference be held includig the surety representatives
andcolTect copy of

(Durki), UR and representatives of the City. " (Emphais added) A tre
letter is attached hereto as Exhbit "
123.

the

The requested meetig occured on December 9, 2003 , after which Federal

retmned the servces of Dr. Richardson as outlied above.

124.

At its regularly scheduled meeting in Janua, 2004 , the City Counsel did not raise
to formally declare Durki to be in default of its obligations
of the COlJtract as the

any. issues respectig any decision

. under the Contract,

or otherWse cite to the provisions of Section 15. 2.4

basis for tennation of the Contrt.
125.

Subsequent to the City Council meetig in Januar 2004, and up though the date

of termtion

of the Contract, neither Dur

nor Federl received any wrtten notice of default

or any wrtten notice of an intent to terminate the Contract pursuant to the provisions of Section
15. 2.4 of the Contract.

126.

It appears the decision by the City and City Council to terminate the Contract was
conducted

reached at the City Council meetig

on Februar 2 2004. The offcial minutes of the

City Council meetig held on Februar 2 , 2004, provide:

KOP:269634v33514-04

Case 1:04-cv-00163-GMS Document 306-4 Filed 10/25/2006 Page 25 of 25 MOTION BY MR. GODWI, SECONDED BY MR. CLIFTON: THT DONALD CONTCTING, INC. BE TERMATED IMDIATEL Y FROM FUTHER INOLVEMENt 1N THE CONSTRUCtION OF TH NEWAR WATER

DUR
WIll

RESERVOIR

BASED ON ITS REFUSAL TO PERFORM UNDER ITS CONTRACT
THE CITY OF NEW
AR;

PROMPTLY AN PROPERLY NOTIFY DONALD M. DUR CONTRACTING OF TH TERMATION AN DEMA INC. AN THE SURTY OF THT SAI SURTY FUFILL ITS LAWF OBLIGATIONS UNER ITS BOND WI DUR. (Emphasis fushed)

AN THAT LEGAL COUNSEL FOR TH CIT

DUR,

127.

The followig day, Febru 3 , 2004 , the City Manager sent a letter to Durki
and overght mail ,

and

Feder via facsimle

in which the City "declared a Contractor default and

heteby fonnalytenntes (Durki)' s right to complete the contract... " and fuer stated that the
November 21 , 2004 letter from the City

Manger to Federal constituted its seven day advance
15

wrtten notice of intention to termate the Contract pursuant to Arcle
12'

of the Contract.

On Febru 5, 2004 , a day after the Contract had been termated by the City, the

City' s attorney sent a letter to counsel for Durki and Federal which included a copy of the

response to Dr. Richardson s Janua 13 , 2004 report.

. 129. As of the date the City and City Council termnated the Contrct, the City had not
complied with the substative or procedural due

process rights embedded with the Contract for

termation of the Contract for cause.

130. At no tie
under its Contract...

had

Durki breached the Contract with the City, or refued "to peronn

131. Furer, the

alleged refual "to

peronn under its Contract.. " was specifically

contradicted by the certifications by the City and UR in mid-Januar approving Durki'
request for payment.

132.

The City, City Council and UR failed to aford Durki any substative

or

KOP:269634v3 3514-04