A Maryland jury returned a $2.1 million verdict against the construction manager for the failed construction of the City of Salisbury's sewage treatment plant upgrades. The jury required the construction manager to return $2.1 million of the approximately $2.7 million that the City paid to it for its work.
According to the article describing the verdict, the project involved $80 million in proposed upgrades to the sewage treatment plant that ultimately proved ineffective at reducing pollution. The State of Maryland spent $54 million redoing the project and, as is not surprising in such circumstances, the project has since spawned several lawsuits. Including the $2.1 million verdict, the City has apparently collected $13 million from the companies involved in the project.
This significant case highlights that both contractors and owners must be mindful of the terms of the contracts governing work. As this case illustrates, construction projects often have problems - some small and some large. Contracts should account for and provide remedies for such problems.
The parties to construction contracts should consider limitation of liability/damages provisions (contractors likely want them and owners likely do not), dispute resolution provisions (private arbitration with a construction industry expert vs. a jury trial vs. a trial with a judge), and other provisions concerning any risks or problems that exist or could arise on a project. Contractors and owners should meet with their professionals to review and understand the terms of the work before agreeing to move forward. The terms of a contract ultimately will govern what happens if, as sometimes happens, the project fails.