Cost of arbitrator ruling on Kinsman sewer project: $2.4 million

By Ed Runyan

runyan@vindy.com

WARREN

In the spring of 2015, the Trumbull County commissioners and county Engineer Randy Smith faced a difficult problem: what to do about massive change orders and what they considered substandard work by a contractor.

For months, the commissioners had watched change orders pile up on the $10.6 million Kinsman sewer project, which was being managed by engineering firm MS Consultants and the county sanitary engineer’s office.

Among the reasons given for the change orders were petroleum-contaminated soils that had to be removed and old storm sewers that had to be replaced. Marucci and Gaffney of Youngstown, the construction company installing the sewer, had been approved for more than $1 million in change orders by March 2015.

About that same time, the commissioners decided to bring Smith on board to take the lead position with the sanitary engineer’s office, in addition to his elected job as head of the highway engineer’s office.

A week later, Rex Fee, executive director of the sanitary engineer’s office, resigned, saying later he did so because he believed he was pressured to step aside.

In the coming months, Smith gave several reports to the commissioners with the assistance of the county’s newly hired attorney, Joseph Cavasinni of Cleveland, regarding substandard work they said Marucci and Gaffney was performing on the Kinsman project and on a similar project in Vienna Township.

That October, the commissioners signed off on suing Marucci and Gaffney and terminating the contracts it had with the company on both sewer projects.

Commissioner Dan Polivka, whose family runs a construction company, said at the time: “No one wins when you go to court,” but “it sounds like they [Smith] exhausted all options.”

The county hired other companies to fix and complete the two projects. The Vienna litigation remains in common pleas court, and the Kinsman project went to a panel of arbitrators.

It was with great anguish that county officials learned in August that the arbitrators had ruled in favor of Marucci and Gaffney, saying, “the greater weight of evidence” showed the problems with the project were caused by poor engineering and project management, not poor construction by Marucci and Gaffney.

The arbitrators not only refused to order Marucci and Gaffney to pay the county more than $1 million, but they awarded $1.2 million to the company.

So what was the whole cost to the county of the failed lawsuit?

The Vindicator requested public records to arrive at an answer. The records consisted of three sets of cost summaries – one written by the sanitary engineer’s office, one by Marucci and Gaffney and one by the arbitrators.

The short answer is $2.4 million, according to the documents and interpretation by Smith. That consists of $1.7 million the county spent to fix the sewers and $700,000 the county believed Marucci and Gaffney owed the county.

The county summary said it wanted $2.7 million from the company, but only $1.7 million were “out of pocket” payouts the county made, Smith said.. Those included about $571,000 paid to MS Consultants to provide extra engineering and project administration for the repairs.

An additional $300,000 in legal costs was paid to Cavasinni and his law firm, Reminger Attorneys at Law. The county and Marucci and Gaffney paid about $80,000 each to the arbitrators.

An additional out-of-pocket cost to the county was $95,000 to the Lake County Building Inspection Department, which produced videos of the inside of the sewer lines that indicated there were numerous “sags” in the line that needed to be repaired.

Construction company JS Northeast was paid about $65,000 for its repair work, and Lee’s Excavating Inc. was paid about $190,000.

The sanitary engineer’s office also had hoped to recoup about $1 million for costs associated with time spent by county employees and lost revenue as a result of the delay in getting the sewer line working, Smith said. Those were not out-of-pocket costs to the county. The arbitrators refused to award them to the county.

As for the $1.2 million the arbitrators awarded to Marucci and Gaffney, about $500,000 was “retainage,” which is money owed to the company but withheld while the matter was being litigated. There was little question that Marucci and Gaffney would ultimately get that money, Smith said.

Smith said he doesn’t know yet how much of the $2.4 million spent to resolve the dispute will be covered by the U.S. Department of Agriculture grant the county secured for the project. The grant was expected to cover 75 percent of the project cost, with state grants and sewer customers paying the rest.

The sewer serves 343 homes and businesses in the Kinsman Center, Farmdale and Kinsman Township areas.

Marucci and Gaffney’s contract originally called for it to be paid $5,888,000, but change orders raised that amount to about $7 million. An additional $1.5 million was for upgrades to the Kinsman sewage-treatment plant.

If some part of the $2.4 million isn’t covered by the grant, the extra will be paid by the customers in the Kinsman sewer district, meaning charged through higher sewer bills, Smith said.