Loading...
Agenda 08/26/2025 Item #16K11 (Mediated Settlement Agreement w/Capital Contractors, LLC related to a payment dispute concerning multiple Hurricane Ian construction repair projects under P.o. #4500220970/Contract #20-7525)8/26/2025 Item # 16.K.11 ID# 2025-2700 Executive Summary Recommendation to approve a Mediated Settlement Agreement with Capital Contractors, LLC, related to a payment dispute concerning multiple Hurricane Ian construction repair projects issued under P.O. No. 4500220970, Agreement No. 19-7525, the Annual Agreement for General Contractor Services, in the negotiated amount of $120,000. OBJECTIVE: To approve a Mediated Settlement Agreement with Capital Contractors, LLC related to a payment dispute concerning multiple Hurricane Ian construction repair projects issued under P.O. No. 4500220970 for Agreement No. 20-7525, in the negotiated amount of $120,000. CONSIDERATIONS: Background The attached recommended settlement agreement arises out of a payment dispute concerning work performed by Capital Contractors, LLC (“Capital”) following the aftermath of Hurricane Ian. Hurricane Ian made its impact on southwest Florida on September 28, 2022, and created the need for significant construction work and repairs throughout the County. In attempting to get ahead of this event, the County issued blanket Purchase Order No. 4500220970 (“PO”) for purposes of memorializing a general scope of work to be performed, with Procurement Division staff directing that the Emergency PO be opened under Agreement No. 19-7525. That single PO was the only one issued for all the Hurricane Ian work assigned to Capital. Agreement No. 19-7525 is an Annual Agreement for General Contractor Services, which generally sets forth the scope of services, payment and performance bond requirements, release and affidavit forms, applications for payment, etc. Work on projects under Agreement No. 19-7525 was initially capped at $200,000 (as provided in Request for Qualification No. 19-7525, which is incorporated into the agreement) but was later increased to $750,000 with Board approval of any amount over $400,000 by the First Amendment to the Agreement (Agenda Item 16.C.19), which occurred prior to Hurricane Ian. By contrast, Capital and the County also have a contract for Small General Contracting Services, Agreement No. 20-7771, which requires “urgent work” to be performed on a time and material, not-to-exceed basis. On September 26, 2022, in an attempt to get ahead of potential Hurricane Ian repair work, staff obtained hourly rate quotes from the several contractors under Agreement No. 20-7771, which contract is utilized on a rotational basis. Confusion arose regarding payment to Capital because although the PO was opened under Agreement No. 19- 7525, once the emergency construction services were initiated by staff, Capital’s estimates and hourly rate for those services was at an hourly rate that was significantly higher than the rates for various project management positions for projects issued under Agreement No. 20-7771. Neither Agreement No. 19-7525 nor 20-7771 allow for emergency or overtime premiums for labor rates. Other improprieties also occurred in the authorization and commencement of work. For example, some of the work actually performed exceeded the amount that could proceed without prior Board approval (such as the Clam Pass boardwalk repairs $685,035.28 and the Caxambas Bait Shop repairs $534,203.47 and some projects were performed without the proper bonds in place (albeit successfully and to County staff’s satisfaction). Notably, County staff initially struggled to secure contractors under contract with the County (many who, along with their workers, experienced great personal and commercial losses in Lee County) to inspect and provide proposals to perform the necessary health, life, and safety corrections necessary to prevent harm at County facilities. Capital’s invoices also revealed some billing discrepancies concerning improper markup for overhead and materials including in one instance what appeared to be work that had previously been reimbursed on a prior invoice submitted by Capital. When staff later discovered that Capital was seeking reimbursement based Page 4502 of 4682 8/26/2025 Item # 16.K.11 ID# 2025-2700 upon an hourly rate embedded in its estimates under the PO under Agreement No. 19-7525, County staff facilitated short paying Capital for its work based upon the rates included in Agreement No. 20-7771. That short pay ultimately resulted in Capital asserting at mediation that it was entitled to $286,284.66, plus statutory prejudgment interest on that amount (at an annual rate adjusted quarterly as low as 8.54% and as high as 9.50%) for almost the last three years. Finally, the work performed under the PO issued to Capital and authorized by County staff was under the Board’s State of Emergency Resolution No. 2022-145 (the “Resolution”), which was extended and ultimately ran through November 13, 2022. The Resolution generally waives the procedures and formalities otherwise required of political subdivisions by law pertaining to: (1) the Performance of public work and taking whatever prudent action is necessary to ensure the health, safety and welfare of the community, (2) entering into contracts, (3) incurring obligations, (4) the employment of permanent and temporary workers, (5) the utilization of volunteer workers, (6) the rental of equipment, (7) the acquisition and distribution, with or without compensation, of supplies, materials and facilities, and (8) the appropriation and expenditure of public funds. A number of attempts were made to informally resolve this payment dispute with Capital prior to participating in formal mediation with authorized representatives on July 14, 2025. Mediation was held before a mutually agreed upon Certified Civil Circuit Court mediator approved by the Florida Supreme Court. The mediator engaged by the parties has consistently been recognized by his peers as one of the Best Lawyers in America® for Construction Law and Construction Litigation and his firm has been retained by the County for more than twenty-five years. The Mediated Settlement Agreement Entering mediation, Capital asserted unpaid invoices totaling $286,284.66, along with prejudgment interest, which presented a total claim sought of $348,000. The attached Settlement Agreement presented for the Board’s approval provides for: • The parties agree to settle the entire amount of Capital’s claim for the sum of $120,000.00, payable subject to and within thirty-days (30) of the Board’s approval. • Each party shall bear its own attorneys’ fees and costs. • The parties agree to release one another and their agents from any and all claims, demands, and actions giving rise to the payment dispute upon approval of the Mediated Settlement Agreement. Had the parties been unable to reach a recommended mediated settlement, it is estimated that a trial could have resulted in incurring additional costs in excess of six figures, with no certainty that the County would prevail. The possibility of litigation also presents a difficult factual matter for a jury to decide given that potential jurors could personally relate to the severe damage resulting from Hurricane Ian and the difficulty in working with a contractor to successfully make repairs, as Capital did for the County. In this instance, the proposed settlement of $120,000.00 represents a reduction of the demanded amount of $286,288.66 by $166,284.66, as well as a complete waiver of prejudgment interest in the asserted approximate amount of $61,715.34 (and potential Florida Prompt Pay Act damages that can include an award of attorneys’ fees). Finally, the construction of the various projects have long been concluded and determined acceptable to the County’s satisfaction. Capital and the County are currently under contract on several projects involving both construction and engineering services. Capital has provided consistently reliable services and has proven to be a valued Page 4503 of 4682 8/26/2025 Item # 16.K.11 ID# 2025-2700 contractor, especially as the County progresses through the current hurricane season. In the past, the parties have been able to resolve payment-related disputes that may have arisen during the course of a project. In this instance, the parties exhausted all informal efforts before engaging in formal mediation in an effort to avoid litigation and reach a compromise as to all asserted claims. The parties had originally agreed to bring this item to the Board’s regularly scheduled August 12th meeting but due to the cancellation of that meeting it was agreed that the item would be presented for approval on the August 26, 2025, meeting. An email is attached to the Mediated Settlement Agreement memorializing the parties’ consent to informally extending the dates and timing referenced for payment (subject to the Board’s approval) based upon the later date upon which this item is presented for approval. FISCAL IMPACT: The Mediated Settlement Agreement of $120,000 does not present any additional financial impact not otherwise authorized in the Board approved Agreement and available under the open Purchase Order. GROWTH MANAGEMENT IMPACT: There is no impact to the Growth Management Plan related to this action. LEGAL CONSIDERATIONS: This Settlement Agreement has been reviewed and approved by the Collier County Manager’s Office Facilities Management Division Director, Outside Legal Counsel with Woods Weidenmiller Michetti Rudnick, and the County Attorney’s Office. The proposed settlement represents a compromise by both parties as to the amount in dispute and reduces the risk of incurring significant additional costs were the matter to proceed to trial, where a positive result can never be guaranteed with any degree of certainty. The recommendation to approve the Mediated Settlement Agreement in the amount of $120,000 represents a reduction of Capital’s asserted claim by almost two-thirds (2/3), and is reasonable based on the totality of the circumstances. This item is approved as to form and as to legality and requires majority vote for Board approval. —SRT RECOMMENDATIONS: That the Board approve the attached Mediated Settlement Agreement with Capital Contractors, LLC, related to a payment dispute concerning multiple Hurricane Ian construction repair projects issued under P.O. 4500220970, Agreement No. 19-7525, the Annual Agreement for General Contractor Services, in the negotiated amount of $120,000, and authorize the Chairman to sign the settlement agreement. PREPARED BY: Deputy County Attorney, Scott R. Teach ATTACHMENTS: 1. Mediated Settlement Agreement 08.13.25 2. Emergency PO Hurricane IAN 3. PO 4500220970 4. Agreement No 19.7525 5. Agreement No 20.7771 Page 4504 of 4682 Page 4505 of 4682 Page 4506 of 4682 Page 4507 of 4682 Page 4508 of 4682 Page 4509 of 4682 Page 4510 of 4682 Page 4511 of 4682 Page 4512 of 4682 Page 4513 of 4682 Page 4514 of 4682 Page 4515 of 4682 Page 4516 of 4682 Page 4517 of 4682 Page 4518 of 4682 Page 4519 of 4682 Page 4520 of 4682 Page 4521 of 4682 Page 4522 of 4682 Page 4523 of 4682 Page 4524 of 4682 Page 4525 of 4682 Page 4526 of 4682 Page 4527 of 4682 Page 4528 of 4682 Page 4529 of 4682 Page 4530 of 4682 Page 4531 of 4682 Page 4532 of 4682 Page 4533 of 4682 Page 4534 of 4682 Page 4535 of 4682 Page 4536 of 4682 Page 4537 of 4682 Page 4538 of 4682 Page 4539 of 4682 Page 4540 of 4682 Page 4541 of 4682 Page 4542 of 4682 Page 4543 of 4682 Page 4544 of 4682 Page 4545 of 4682 Page 4546 of 4682 Page 4547 of 4682 Page 4548 of 4682 Page 4549 of 4682 Page 4550 of 4682 Page 4551 of 4682 Page 4552 of 4682 Page 4553 of 4682 Page 4554 of 4682 Page 4555 of 4682 Page 4556 of 4682 Page 4557 of 4682 Page 4558 of 4682 Page 4559 of 4682 Page 4560 of 4682 Page 4561 of 4682 Page 4562 of 4682 Page 4563 of 4682 Page 4564 of 4682 Page 4565 of 4682 Page 4566 of 4682 Page 4567 of 4682 Page 4568 of 4682 Page 4569 of 4682 Page 4570 of 4682 Page 4571 of 4682 Page 4572 of 4682 Page 4573 of 4682 Page 4574 of 4682 Page 4575 of 4682 Page 4576 of 4682 Page 4577 of 4682 Page 4578 of 4682 Page 4579 of 4682 Page 4580 of 4682 Page 4581 of 4682 Page 4582 of 4682 Page 4583 of 4682 Page 4584 of 4682 Page 4585 of 4682 Page 4586 of 4682 Page 4587 of 4682 Page 4588 of 4682 Page 4589 of 4682 Page 4590 of 4682 Page 4591 of 4682 Page 4592 of 4682