The contractor in charge of building two Moore County elementary schools has filed a $3 million breach of contract lawsuit against the board of education.
J.M. Thompson Co. is seeking payment of about $1.5 million left unpaid in the construction contracts of both the McDeeds Creek and Aberdeen elementary schools, according to a complaint filed Jan. 25 in Wake County Superior Court.
Though the schools were able to open to students as originally projected, Moore County Schools has withheld funds on the basis of significant delays throughout both projects.
Suit Alleges Schools Prolonged Timeline
The Moore County Board of Education awarded a $25.3 million building contract to J.M. Thompson, which has its headquarters in Cary, for the construction of McDeeds Creek in December 2017.
Work began on Camp Easter Road in early 2018, and McDeeds Creek opened to students in August 2019.
J.M. Thompson was also the lowest bidder for the construction of Moore County Schools’ next major project: the new Aberdeen elementary school off of N.C. 5. The $27.1 million building contract for that school was awarded in August 2018.
Legal filings list Aug. 14, 2020 as the date that Moore County Schools formally closed out both contracts. The company says that they’ve been paid just under $24 million of the McDeeds Creek contract, and $25.6 million for Aberdeen.
J.M. Thompson is now suing for the balance of both contracts, as well as an additional $150,000 in change orders related to the McDeeds Creek project that went over and above the budgeted contingency. Thompson is demanding that the case be decided by a jury trial.
In the suit, the company also accuses the schools of prolonging the final stages of the McDeeds Creek project.
Whether or not a contract has been completely fulfilled is typically determined on a final walkthrough of the building, where any deficiencies are noted and presented to the contractor to address before they’re paid in full.
The suit says that Moore County Schools was about eight months late in presenting J.M. Thompson with that final “punch list.”
Board Blames Contractor for Delays
The school board has yet to formally respond to the contractor’s complaint. Board members discussed the suit behind closed doors during their regular meeting on Monday.
Earlier that day, the school board’s attorneys filed for and received an extension of the initial response period, giving the board until April 1 to answer.
"These lawsuits relate to deductions made from the contractor’s final payment as an ordinary part of the project close-out. Moore County Schools and the architect supervising the projects told the contractor repeatedly during construction that certain items were deficient and/or late, and the school system specifically advised the contractor in writing that these deductions from final payments would be made," John Birath, Moore County Schools’ executive officer for operations, said in a statement.
"Rather than engaging in a dialogue and trying to resolve their concerns about the deductions, which we believe are entirely valid and consistent with the contract provisions, they chose to file these lawsuits. We believe the lawsuits lack merit and intend to defend them vigorously.”
Though the school board’s discussions on confidential legal matters are carried out in closed session, past staff updates to the board detail delays in construction of both McDeeds Creek and Aberdeen.
Delays Noted in Monthly Updates
The school board has received monthly updates on the progress of its school construction projects since shortly after the opening of McDeeds Creek. The school opened on time, but Birath told the school board last fall that the building’s HVAC and other mechanical systems were still being reprogrammed after a lightning strike that summer. District staff have reported other defects in things like lighting, and projector screens installed that were the incorrect size.
All outstanding work in the school building itself had been completed by the end of 2019, and Birath reported to the school board that the district took over the building’s utilities as of Jan. 1, 2020. But at the board’s March meeting he said that other issues on the campus would soon be addressed as the weather improved.
“We are taking it very seriously and we will not allocate another dime of taxpayer dollars,” Superintendent Bob Grimesey told the board last March.
“Fortunately the kinds of things that Mr. Birath and I worry about are not the kind of things that are very disruptive to operations, but they are things that are part of our standard due diligence and our management of the situation, so we are working with the contractor and our legal counsel to make sure that it’s done right before they get paid.”
Construction on Aberdeen Elementary got underway in November 2018. The builder had a deadline of January 2020 to deliver the finished school, but by mid-2019 school staff told the school board that they were working with J.M. Thompson to regain ground after the project slipped a month behind schedule.
By the time the district received a temporary occupancy permit for the Aberdeen school last March, Birath informed the board that the district expected to collect liquidated damages based on how far behind schedule the project ultimately fell.
“They have a certain time to reach substantial completion, and that is for beneficial use of the facility and that was originally set at Jan. 24. Any calendar day after that, there is a fine for missing that date,” said Birath. “That continues to accrue until they hit substantial completion. Then they have 30 days to hit the final closeout when all documents, all punch list items are completed, everything is turned in to us for ownership of the facility. Every day they pass that, there is a separate fine for that as well, and they’re cumulative and they build upon one another.”
Aberdeen Elementary was furnished in July about a month before students moved in. In the meantime, Birath previously told the board that the schools had stepped in to rectify some deficiencies — like putting down sod in the play area where grass seed had failed to germinate — using funds from the construction budget.