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Home My WebLink About9F - Northwood Rd, Project 9202 TO: FROM: SUBJECT: DATE: MAYOR AND CITY COUNCILMEN!l\f (l... FRANK BOYLES, CITY MANAGER ~ APRIL 20, 1998 AGENDA ITEM 9F APRIL 20, 1998 Attached is correspondence received Friday, Apri117, 1998 from attorneys representing Valley Paving. The correspondence is intended to support Valley's claim for $8,059 for spreading top soil in conjunction with the Northwood Road project. A copy of the correspondence has been faxed to the City Attorney's office and I am hopeful she will have an opinion on this subject at the April 20 meeting. 16200 ~~l4.6FJR~EMe~~9.liI00MltiMente>dim372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245 AN EQUAL OPPORTUNITY EMPLOYER APR-17-98 11,40 FROM, 10,6022600 PAGE 1/6 MOORE, COSTEllO & HART, P.l.L.P. A Professional Umitecl Uability Partnership A -r:rORNEY$ ~s DIRECT Dl.AL NUMBER REPL'( TO MINNEAPOLIS OFFICE (612) 602-2645 o~l?EL~7, 19~ MR GREG ILKKA LIl i OF PRIOR LAKE 16200 EAGLE CREEK A VB SE PRIOR LAKE MN 55372-1714 Po;;;t"". brand fax transminal mem n l.- 1.- of ~ JU~ao_ Co. () Co. I Dept. phOne' lFad L/'I7d;}-t~ Fax it VIA 'ffiLECOPY(~7-42~ Re: Northwood Road, Prior Lake V.P. Job #806-6 Dear Mr. Ilkka: Our office represents Valley Paving, Inc.~ and we have been asked to review the City's closeout process on the above-refc,.I.,;..uced project. In particular, we have analyzed the following: I. The City's response to Valley's claim for $8,059.00 relating to ,,)}J.1I:..ading topsoil furnished by the City; and 2. The City's failure to process for payDlent the retention due on the project. The details of our review are outlined below. However, based on our review~ we have advised Valley that it could pursue a claim ag::l1nc:t the City for in exce~ of $68,000.00, calculated as follows: Retention Interest on Retention 1 Claim for Topsoil Spreading Interest on C1a.im2 $41,357.61 5,583.27 8,059.00 .-2.538.52 I The retention should have been paid on or before August I, 1991. Under Mjpne<;ota $t3tutes ~ 471.425, the statutory and "maximum legal rate" (O.C. 19.1) for interest is 15% per month. Even if payment is made as soon as May 1, 1998, the del8)' is 9 months. This amounts to 135% or $$,583.27 in interest due. 1400 NQRWEST CENTER. 55 E FIFTH ST' ST. PAUL, MN 55101-1792. TEL (612) 227-7633' FAX (612) 602-2670 701 FOURTH AvENUE SOUTH. ~UITE 1350' MINNEAPOUS. MN S5&'~1823' TEL (612) 613-0148' FAX (612) 602-2600 APR-17-S8 11.40 FROM. 10.6022600 PAGE 2/6 MR GREG ILKKA April 17, 1998 Page 2 Subtotal Potential Overhead and Profit on Claim) 4 Attorney's Fees $57,538A7 1,208.85 t O_OOMQ. Total potential Claim $68,747.32 Even though the City bas held Valley's retention and claim dollars, and interest is due th............u, I aDl prepared to reeommend to Valley that it still accept the retention and the face value of its claim to resolve this matter. Please advise Valley as soon as possible as to the City's decision. ANALYSIS 1. ~-.oil amm. The c;:ontract provides that Valley would spread topsoil located and salvaged from the site. There is no unit price for importing or ':>pL.:..cding topsoil supplied from off site. In short, the City's contract does not require Valley to spread imported black dirt. The City knew before this "AUa. work was perfoIIDed that it could not add importing black dirt (materials or labor) to Valley's contract without giving Valley an extra... At the same time, the City determined that it would be too expensive to pay Valley to import the topsoil. Therefore, the City imported the black dirt and agreed to pay Valley its costs to spread the material. Now, more than a year and a half after the City received Valley's bill, it wants to go back on its 3&....:..L.LLent. This analysis is buttressed by the following: . There is no Cuu.L.a.ct provision requiring Valley to spread black dirt imp",..u by the City. . V alley performed all of its contract work, i. e., salvaged and spread site materials, without any objection by the City to the manner in which Valley performed this work. 2 The claim waS bitted on August 16, 199(i. and should have boen paid by October 1, 1996. Ifpaid by May 1, 1998. this ._l'...sents a delay of21 months. or 31.5%. This amounts to $2,538.59 in in~w....... due at 1.5% per month. 3 The claim of$8,059.00 does Dot include home office overhead and profit. valley reServes the right to add overhead and profit if it must file for arbitration to collect this sum. 4 If Valley xnust arbitrate to collect its claim, its retention and the intc:rest due on those sums, Minnesota..SJattltes ~ 471.425, subd. 4(c). gives Valley the right tQ collect ~ts attorney's fees. We have cs1:imate<l it would c;ost a minimum oUIO,OOO.CO to prove the City's delay in making payment. APR-17-98 11:40 FROM: 10:6022600 PAGE 3/6 MR GREG ILKKA April .17) 1998 Page 3 . Valley could have refused to ,:).pL.;.dti the City's materials until the City issued Valley a lump-sum or unit-price change .order. Rather, Valley proceeded after the City agreed to pay Valley on a time-and-materials basis. . It is insupportable to suggest that Valley initially saved the costs in its "claim" because it would have had to spread site materials anyway. First, V alley's contract only covered the spreading of site materials, not . whatever additional quantity the City might import onto the site. Second, Valley had already incurred the expense of spreading the site materials when the City and a number ofresiden.ts ':'.n..l'.Lessed concern about turf establishment on site materials- Valley actually had to remove site topsoil it had already spread and replace it with the imported black dirt. That is clearly extra wo~ and the extra work was performed to satisfy your taxpayers- . All of this was undertaken with the consent of the City's employees. (See attached 1c..~~.:..L from John Wingard dated March 20, 1998.) 2. :ReteJ1t1ol1- The City cannot withhold final payment because Valley has a claim. G.C. 20.1 specifically provides that final payment constitutes a release of all claims other than "claims in stated amounts as may be specifically excepted by the Contractor:' Valley's bill to the City dated August 16, 1996 (copy enclosed) and Valley's letter to the City dated January 26, 1998, satisfies this requirement. Therefore, even if you dispute the extra claim, the City is obligated to pay 1h:e retention due, plus interest. Again, please advise Valley or me as soon as possible as to the City's position. I have told Valley there is no reason to discount its claim and that the claim is probably understated. . Very truly yours, MOORE, COSTELLO & HART, P.L.L.P. By :rmJ Enclosures cc: Valley Paving, Inc. MPLS:15669_I.DOC APR-17-98 11,41 FROM, APR. -10' 98(THUI 14:04 YALLr.l rI\Yll\\.1 10,6022600 PAGE 4/6 t -01 ~ ndIBI: .,,~."'. J.~.'\' w.c. e.I\A ~'S ard1llBZ . lard ~ , ............,m,.;w ~ :1r-.'1 1;01''''''''.1- \ 310makt~ ~~ ~776 (5D1) %51.2924 ,. ..:;t. _ 338-2BtX> 1(6001 ~ ~ (507) 231.5516 'VNI'I'/.r~ccm March 20, 1998 VaUey Paving Alto: RiCh CCIII ~l' 8800 13th-Avenue East Shakopee. MN 55379 Re: Narlt1wtlod Road '..C?,'"4Y of Prior Lake Dear Rjd'l: ~ . : ....~ .. t . The N~ flgad ~ in Prior LaI<a WBnl.,eIL The City ancIb ~ \NOrked togetherdurins tte cons.1ruCtion phase to resolVe field is$uas that ahAlaYs occur on major proje=S. The Corolraclorpresenred !he Of<ion ID ...11he "mting ~ _than """""" . 1ha existing bituminous. This allowed the residents to have a drivable surtac:e during construGtion. The eonlrac;lOr added 2 to 3 feet to tho new retaining \Naft north of Butternut Circle. The Contradcr had to corne back to Il'\B job sjte to add to the retaining waft. He also worked with CJ lot of property owners 810119 Northwcod Read to .....~. '"~ their front \ogo~. A lot of a30peration oa::u~ to make it a sua:essful projeGl The pniJed did not have enough topsail to satisfy ttle resjd..... (p alOng Nof'lhwCOd Road 'The CitY had extra blatik dirt avaUable at no cost that was hauled by the CitY to thS site to provide 6 jnches of good topsoil, lhe City CQuJd have negotiated with the Contrador to provide the black dirt. but this option lIIOuld haVE! beBn a lot ,. ",':: expensive. lhe Contractor's involvement was to spread the black dirt across the boulevards. . I feel that the city and the Contrador should be able to negotiate an agreeable price to' ~th P,IIrties to compensate .the ContraaDr for spreading. out the black ~.. lJ)e . City's' insped.ar should have recOrds gf the time spent by V4illey paving that could ):Ie used to determine a fair amount fDf'this extra work. The sod and topsoil are small, ...,;(.":105 of the total east of the projer:ot, but are very imPOrtant Items far tlte residents along the street. HOpefUlly this issue can be resolVed 6000. sincerely, RIEKE CARROLL MULLER ASSOCIATES. INC. ~rw~ ! . John Wingard, P.E .NJldu APR-17-98 11:41 FROM: APR.-16' 98lTHU) 14:03 VALLEY PAVING ~~-- ---- -- V~ re~~l}!g f 10:6022600 \[.tJ.,,'I.J U""'" PAGE 5/6 , soJrH OFFICE 8800 13TH AVENUE EAST SHAKCFEE. MN !S537S (6121 445-8616 I . , I FAXTRANSMII .AL MEMO' )u.j Jt, 17ft, fI -J.:\" u; ~ .,~ c; t. y of f';6( ~'rt. . ~'17 - fd,1J5 17-v DA TE:_ TO: f ~e ~: .\. \ MESSAGE: or~ ~ .,!;jPf fe;. co"- :'~~' ,; ( 6;Je ~e.. ft(j:tU"J;1I'c) !~;s V (/ -Jk~ iJe Lel )} dotJ :,. .,. fIlOH: .$ rl""' .. l"t . 4G{~\ J.o/~). .~ wl~ !~~ FAX NUMBER. (bJ1) 4-15-0355 scum OffiCE - SHAKOP'EE 0L0~;6 J ..J /0.5, t ..~t"t 1/ CJ . .f; l,A.J\"~ X f'}ti , s-J~Qr I" ol.llS e . - -1i-'~J ._..~ / . II / NUMBER CjlF PAGES TO roll.OW .TAANSr-lll 1Al. MEMO: fJ..EASE CONTACT (.61~ "45.. 8"51f'lCM~DIAIELY.1F NO"~t.. RECEIVEI) , I tLffi,.. c~Je Actia'll Equal 0," r-.... ~nit.y (.,,,,::..-p- " . . ".:" .=--,:-:,-,--- .. ..~ -:.-'~:_~.}.:~.~~~~--: ..<""-'~ ,-' ... .... - . ...i ... - . - .' APR-l?-98 11,41 FROM, APR. -10' 98 (THU) 14:03 VALLJ:;Y t'AVINIi , . Vall~y Paving No~od Rd Extra Worlt Placing Topsoil Da~ F~Y M0nc3~y TuesG,aY. Wed~Y ~y .. M~ TUes~ wedn~day Thu~ay FrtcUjy MondaY lues: BY wednepday 1l1wsPay Frid~ Satu~ay =-- . Date 7-1 g...96 7-22-96 7-23-:96. 7-24-96 7-~96 7-2&-96 7-29-96 7-3Q.96 7-31-96 8-1-96 8-2-96 8-5-96 &&96 8-7-96 8-8-96 &-9--96 8-1~96 _ 'ND Wotlt sp~'.CityTopsoil spr~ CitY Topsoil spread City TopsDl1 spre$i CItY Topsoil . No Work 1/2 t1llle DriVeway & Topsoil 1fl time DriVeWay & Topsoil No Wtn 1f21lme Driveway & Topsoil 112 time Driveway & TopsoY SpreaC1 CityTopsDll 11Z time D~ & 1opso" 1/2 time Driveway & Topsoil Rftaining Wall & Clean Up Spread City Topsoil ---. ---- ..~--- . . . 10,6022600 1&1J''t't..J u"".. Equip Equipment Hr:. Rental Loader 9 TD8 108 iD8 T08 : BobC8t Bobcat BobCat BDbcat 108 Bobcat I Bobcat 108 .---- - - 7 1Q_5 11_5. 11.5 2 9 4 5.5 12..5 t).5 6 11 Equip Rate $lhr $133.00 $80.00 $80.00 $80.00 580-00 $67.00 $67.00 $61.00 $57_00 $80.00 $67 _00 $61.00 $80.00 PAGE 6:t'6 Total Cost $1.197-00 $O.t)Q $56(tOO $840.00 592.0.00 ~920.00 $0.00 51:34_00 $201.00 $0.00 $268-00 $368.50 $1.000.00 $368..50 $402..00 $0.00 $880.00 Total $8.059-00 t..