Board concludes litigation on high school construction projects
The Lake Oswego School Board has approved an agreement to settle its legal malpractice lawsuit against the law firm of Davis Wright Tremaine in exchange for $1.5 million. This agreement brings to a conclusion the final phase of the Lake Oswego School Districts efforts to recover damages due to performance issues with architects, construction managers, construction contractors and legal counsel during construction projects at Lake Oswego High School and Lakeridge High School.
In November 2000, voters approved an $85 million bond measure for facilities and infrastructure improvement projects at all schools, including the rebuilding of Lake Oswego High School and major remodeling of and additions at Lakeridge High School.
The high school projects were extensive and complex. To oversee and complete the projects, the district engaged the expertise of architects, construction management, a primary construction contractor for each high school and legal counsel. An architectural firm (LSW) was selected in December 2000. DWT was selected as the districts legal counsel for the construction projects. Construction at both high schools commenced in 2002; Lakeridge High School was completed in 2004 and Lake Oswego High School in 2005.
Performance issues and lawsuits
Architects: Approximately midway through each high school construction project, the district became aware of deficiencies in the plans prepared by LSW, the primary architect for the projects, as well as deficiencies in LSWs on-site administration of the projects. The district, through DWT, its legal counsel for these capital projects, filed a lawsuit against LSW to recover damages caused by LSWs professional negligence. This lawsuit was dismissed as it was ultimately determined that the lawsuit was not filed by DWT in a timely manner. The district terminated its relationship with DWT at that time and, with new legal representation, was able to settle for $400,000 from LSW.
Construction: Following the completion of Lake Oswego High School, issues arose relating primarily to water intrusion, which created mold within certain walls, and structural issues with the new West Gym roof. Repairs were a complicated and costly undertaking. To recover the cost of the repairs, the district filed a construction defect lawsuit against the general contractor Robinson Construction who in turn filed claims against a number of its subcontractors. Final direct costs of repairs were $10 million, but legal fees and other costs related to the lawsuit increased the districts total costs to $13 million. This suit was settled for $6.7 million.
Legal counsel: After dismissal of its lawsuit against LSW, the district filed a legal malpractice claim against DWT, primarily for its negligence in missing the filing deadline. As noted earlier, the district has now settled this lawsuit, bringing to a conclusion all legal actions stemming from projects funded by the 2000 bond measure.
The district has vigorously pursued every responsible means of realizing full restitution for damages incurred, and after years of complex legal process and multiple lawsuits, has been able to recover $8.6 million. This leaves the district approximately $5 million short of full restitution for its damages.
While the district has not been successful in its efforts to obtain full compensation from LSW, Robinson Construction and DWT for their deficiencies, it is the school boards and its new legal counsels belief that the DWT settlement and the settlements secured over the past few years represent the best damage recovery possible. The legal fees required to pursue claims and Oregons limitations associated with recovery of damages limit our ability to realize full compensation for damages. While less than what was sought, the ultimate outcome of the districts efforts is generally in line with expected ranges of damages recovery.
The school board is working with district administration to develop a plan for financing unrecovered damages that will have the least impact on the operation of the district. While state financial resources for ongoing district educational programs and operations are inadequate and have been for some time, the district has excellent overall financial stability and borrowing capacity.
As the conditions and decisions that led to this outcome are examined, it is understood that the districts handling of these projects may be questioned in light of the problems, claims and lawsuits that arose. However, it should be noted that the school boards at that time conducted well-documented due diligence and oversight when architects, general contractors, construction management and legal counsel were selected to advise, design, construct and supervise the bond projects. The district has actively pursued accountability from those who were contractually charged with the responsibility to deliver the services and projects requested and paid for by the district and, ultimately, its taxpayers.
Those projects two vastly improved high schools and infrastructure improvements throughout the district have reaped great benefits for our community and will continue to do so for the foreseeable future. The district owns the criticism that the scope and timeline of projects were perhaps too ambitious and left the district overextended given the complexity of the projects that were simultaneously undertaken. Ultimately, however, the district and the community were failed by those called upon and relied upon to provide their expertise to the successful execution of those projects.
Patti Zebrowski, school board chairwoman, Bob Barman, school board member, Liz Hartman, school board member, Sarah Howell, school board member. John Wendland, school board member
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