Agenda 09/14/2021 Item #16K21 (Settlement agreement and Mutal Release)09/14/2021
EXECUTIVE SUMMARY
Recommendation to approve a mediated Settlement Agreement and Mutual Release and
Addendum to Settlement Agreement and Mutual Release in the lawsuit captioned Collier County v.
West Construction, Inc. and Philadelphia Indemnity Insurance Company, Case Number 11-2021-CA-
00783, concerning the County’s claim for damages involving the delay in completing the
construction of the general aviation terminal facility at the Marco Island Executive Airport, and to
authorize the Chair to sign the attached mediated settlement agreement.
_____________________________________________________________________________________
OBJECTIVE: To approve the attached mediated settlement agreement in the lawsuit captioned Collier
County v. West Construction, Inc. and Philadelphia Indemnity Insurance Company, Case Number 11-
2021-CA-00783, concerning the County’s claim for damages involving the delay in completing the
construction of the general aviation terminal facility at the Marco Island Executive Airport (the “MKY
project”).
CONSIDERATIONS:
Summary of Settlement
The details of the proposed Settlement, which are set forth below, are rather extensive. In short, the
County received the benefit of a brand new FDOT award winning terminal, at a total contract price
including change orders of $9.5 million, for $8.8 million, of which approximately $7.0 million was, or
will be, paid through grant funding. After the reimbursement of the grant funds, the County’s estimated
20 percent local contribution is $1.8 million.
Settlement Details
Despite County staff’s best efforts, the contractor on the MKY project, West Construction, Inc.
(“West”), fell well behind the 320 calendar days that Board approved Agreement No. 18 -7240 (the
“Agreement”) required West to achieve Substantial Completion. In fact, West did not achieve
Substantial Completion until January 22, 2021- over a year and half after the date required under the
Agreement. On February 22, 2019, the County retained the law firm of Carlton Fields to assist as co -
counsel to provide specialized construction law-related assistance on the MKY project. Since that time,
staff worked with Carlton Fields to utilize outside experts with specialized skills in project scheduling
and materials installation knowledge to manage and document the performance issues and delays caused
by West.
The MKY project involved a competitive Invitation to Bid procurement process in which the
responsive, responsible low bidder is recommended to construct the work. West’s bid of $9,396,263.10
was approximately $300,000.00 less than the second lowest bidder. Through a series of five additive
and deduct Change Orders, the net final contract amount is $9,507,021.56.
The Florida Department of Transportation (“FDOT”) provided 80% funding for the MKY project, a
total of $8,511,520 for design and construction (through a Joint Participation Agreement entered into
with the State).
The County’s approach to managing the completion of the project had a three-fold objective: (1) to
deliver a complete and quality final project consistent with the grant funding largely provided by the
FDOT and FAA; (2) manage the project in a manner that removed any opportunity for West to assert
claims that the County had any responsibility for delaying completion of the project, and (3) protecting
the County’s interest by addressing any additional costs incurred resulting from the delay at the
successful completion of the project. This Executive Summary will address the success achieved as to
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all three of those objectives culminating in this recommendation to approve the attached mediated
settlement agreement with West and its surety.
On March 17, 2021, the County filed a two count civil complaint arising out of West’s delays on the
MKY project consisting of a breach of contract claim against West, and a breach of bond claim against
West’s surety, Philadelphia Indemnity Insurance Company. Between withheld retainage and setting off
as a credit a sum that West submitted under its most recent payment application, Change Orders, and
unbilled work actually performed, the County currently holds slightly more than $1.6 million in unpaid
monies against its Agreement with West as follows:
Retainage held as of Sept. 14, 2021 $ 873,081.64
Pay Application 23 Held as of Sept. 14, 2021 $ 345,278.84
Change Order #4 $ 10,579.49
Change Order #5 $ 43,608.69
Unbilled Contract Amount $ 376,738.24
Total Funds Held $1,649,286.90
At the time of filing suit, West had accrued liquidated damages in approximately $2.4 million, which
damages were established by the parties based upon an agreed sum to be assessed against the contractor
for every day that the project is not completed by the Substantial Completion date. If the legal action
filed by the County were to continue, staff anticipates that West would challenge the claim for
liquidated damages in any Answer it would file, as well as presenting other defenses.
As part of the County’s due diligence, it explored the potential liability of all the other parties it ente red
into contracts with to perform services on the MKY project, including its engineers of record, Schenkel
Shultz, Inc. and Atkins North America, Inc. (collectively, “EOR”). A review of the plans and
specifications for the project by the County’s independent architectural consulting expert, Jonathan R.
Toppe, AIA, NCARB, of Toppe Consultants, Inc., concluded that the plans satisfied the standard of
care, and that any ultimate degree of liability did not reside with the EOR. Mr. Toppe has almost a half
century of professional experience and was instrumental in developing the legal standard of care
required for architects in Florida.
In preparing for the anticipated litigation as the project progressed, the County incurred “soft costs” (soft
costs refer to an item that is not considered a direct construction expense, such as a miscellaneous cost,
including legal or expert consultant fees), including the need to further engage the consulting engineers
through Change Orders during the extended duration of the project. To date, almost all of those costs
have been reimbursable under the grant at an 80% recovery rate and final costs will likewise be submitted
for reimbursement.
On May 10, 2021, the Court entered an Order abating the Case, to allow the parti es an opportunity to
engage in early mediation on July 23, 2021. All parties appeared at the mediation with representatives
authorized to bind the corporate entities, and the Collier County Airport Authority management
employees appearing with authorization to bring any settlement recommendation to the Board of County
Commissioners for approval.
The attached Settlement Agreement presented for the Board’s approval provides for:
• West and the Surety agreeing to walk away from seeking reimbursement from the County of the
in excess of $1.6 million in monies reflected in the above chart.
• West’s payment of an additional sum in the amount of $45,811.82 (payable in four equal
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installments starting within 30 days from September 14, 2021), to cover increased final costs.
• West’s full release of any past or future claims against the County and its assignment of all
manufacturers, subcontractor, or other warranties related to the Project to the County.
• West’s Payment Bond issued by the Surety shall remain in full force and affect.
• An agreed upon Addendum to Settlement Agreement and Mutual Release (addressed in the
Settlement Agreement and Mutual Release, and attached as a part thereto), that does not alter the
terms of the Settlement Agreement but includes desired specificity sought by West as such
matters may relate to other non-County claims that may exist with its subcontractors.
The net result of the proposed settlement is that a low bid contract in the amount of $9,507,021.56 will
actually cost approximately $8,803,592.94. This represents an estimated $703,428.62 in project savings
after taking into consideration all costs and approved Change Orders.
Had the parties been unable to reach a mediated settlement, it is estimated that a trial could t ake upwards
of two weeks and result in further incurred costs in the range of $565,000 to $630,000. The
recommendation to approve the mediated settlement agreement is based upon the favorable resolution
arrived at by the parties and the potential costs and always present risks associated with going to trial. It
is also noteworthy that despite the delay in the completion of the project, revenues at the MKY airport
increased markedly year after year, with no resulting diminishment in earnings. Accepting th is settlement
will conclude this case and result in the filing of a Joint Notice of Voluntary Dismissal with prejudice by
the parties once all settlement proceeds are received.
Finally, FDOT awarded the Marco Island Executive Airport terminal building project the recipient of its
2021 General Aviation Airport Project of the Year, which was announced at the Florida Airports
Council’s Annual Conference this past July. The Collier County Airport Authority Executive Manager
recommends Approval of the attached Settlement Agreement and Mutual Release and the Addendum to
Settlement Agreement and Mutual Release.
FISCAL IMPACT: Approval of the Settlement Agreement and Mutual Release and the Addendum to
Settlement Agreement and Mutual Release will result in project savings of approximately $703,428.62 as
follows:
Total Funds Held $ 1,649,286.90
Settlement Payment $ 45,811.82
Less: Estimated Additional Costs Incurred ($ 991,670.10)
Net Estimated Project Savings $ 703,428.62
GROWTH MANAGEMENT IMPACT: There is no Growth Management Impact associated with this
Executive Summary.
LEGAL CONSIDERATIONS: This Settlement Agreement has been reviewed and approved by the
Collier County Airport Authority staff and the County Attorney’s Office. There would be significant
additional costs associated with trying this case including retaining expert witnesses, and a positive result
can never be guaranteed with any degree of certainty. We believe that this settlement is reasonable based
on the totality of the circumstances. This item is approved as to form and legality and requires majority
vote for Board approval. -SRT
RECOMMENDATION: Recommendation to approve a mediated Settlement Agreement and Mutual
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Release and the Addendum to Settlement Agreement and Mutual Release prior to trial in the lawsuit
entitled Collier County v. West Construction, Inc. and Philadelphia Indemnity Insurance Company , Case
Number 11-2021-CA-00783, filed in the Twentieth Judicial Circuit in and for Collier County, Florida,
and for the Board to authorize the Chair to sign the attached Settlement Agreement and Addendum
ATTACHMENT(S)
1. Settlement Agreement and Mutual Release (PDF)
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COLLIER COUNTY
Board of County Commissioners
Item Number: 16.K.21
Doc ID: 19965
Item Summary: Recommendation to approve a mediated Settlement Agreement and Mutual
Release and Addendum to Settlement Agreement and Mutual Release in the lawsuit captioned Collier
County v. West Construction, Inc. and Philadelphia Indemnity Insurance Company, Case Number 11-
2021-CA-00783, concerning the County’s claim for damages involving the delay in completing the
construction of the general aviation terminal facility at the Marco Island Executive Airport, and to
authorize the Chair to sign the attached mediated settlement agreement.
Meeting Date: 09/14/2021
Prepared by:
Title: Legal Assistant – County Attorney's Office
Name: Jessica Hayes
09/03/2021 9:39 AM
Submitted by:
Title: County Attorney – County Attorney's Office
Name: Jeffrey A. Klatzkow
09/03/2021 9:39 AM
Approved By:
Review:
Growth Management Operations Support Heather Meyer Additional Reviewer Completed 09/03/2021 10:07 AM
Growth Management Operations Support Christopher Johnson Additional Reviewer Completed 09/03/2021 10:44 AM
Airport Authority Andrew Bennett Additional Reviewer Completed 09/03/2021 2:19 PM
Growth Management Department Gene Shue Additional Reviewer Completed 09/03/2021 2:47 PM
County Attorney's Office Scott Teach Level 2 Attorney Review Completed 09/07/2021 10:27 AM
Office of Management and Budget Debra Windsor Level 3 OMB Gatekeeper Review Completed 09/07/2021 10:29 AM
Office of Management and Budget Susan Usher Additional Reviewer Completed 09/07/2021 11:55 AM
County Attorney's Office Jeffrey A. Klatzkow Level 3 County Attorney's Office Review Completed 09/07/2021 4:19 PM
County Manager's Office Sean Callahan Level 4 County Manager Review Completed 09/08/2021 3:52 PM
Board of County Commissioners Geoffrey Willig Meeting Pending 09/14/2021 9:00 AM
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