City sued over Phoenix Bank project
Published 11:19 pm Friday, December 16, 2011
A Suffolk-based corporation is suing the city for breach of contract and negligence after it says the city wrongfully terminated its contract to do renovations on the old Phoenix Bank building.
Pepperdine Corporation has requested an award of $175,000, saying it incurred the expenses in trying to correct errors and inconsistencies in the city’s contract documents at the city’s request.
The city issued the request for bids in February for companies to renovate the 3,900-square-foot building at 341 E. Washington St. to become a gallery and administrative offices for the Suffolk African American History Museum.
Pepperdine was the lowest of six bidders with an offer of $884,123, so the city entered into a contract with them on March 23, according to the lawsuit filed in Suffolk Circuit Court last month.
But then Pepperdine discovered “numerous errors, omissions and inconsistencies in various documents” related to the project, according to the lawsuit. As an example, the lawsuit states, one document listed the owner of the property as Hampton University, rather than the city of Suffolk.
The company sought direction from the city and was asked to provide a list of the errors, according to the lawsuit. It complied on May 11.
There ensued a summer full of back-and-forth via email between the two entities, including the city re-issuing the documents but failing to make the needed changes.
Finally, Pepperdine delivered a signed contract form to the city on Sept. 7, along with a list of the changes that still needed to be made.
But then, on Sept. 21, the city notified Pepperdine it was terminating the contract.
“The city of Suffolk wrongfully terminated the contract with Pepperdine Corporation for the project,” the lawsuit says.
The suit asks for $120,000 plus interest for breach of contract, plus $55,000 for negligence.
“The city of Suffolk owed Pepperdine Corporation a duty to prepare valid contract documents and to administer the contract award process in a reasonable and legal manner,” the suit reads. “Pepperdine Corporation incurred considerable expense at the request of the city of Suffolk to correct the erroneous and inconsistent contract documents issued by the city of Suffolk so that corrected contract documents could be prepared for the project.”
So far, no action has been taken on the lawsuit except for the city to file a motion requesting that documents referenced in the suit be included in the case file. The next hearing has not been set, according to an online case information system.
City spokeswoman Debbie George said the city does not comment on pending legal matters.