CHARLESTON – A Putnam County construction company owned by Powerball winner Jack Whittaker claims a civil engineering consulting firm did properly carry out the terms of its contract in building a water treatment plant in Mingo County.
In the lawsuit filed Jan. 11 in Kanawha Circuit Court, Diversified Enterprise Inc. alleges that Clarksburg-based Thrasher Engineering Inc. "failed to fully and fairly carry out its duties" set forth in contract documents and, as a result, caused Diversified to suffer damages.
It all begins with Thrasher, which has an office in Charleston, entering an agreement with the Mingo County Public Service District in 1999 to provide services for a water treatment plant at Naugatuck. Thrasher prepared contract documents, plans and detailed specifications on the project in March 2000, according to the lawsuit.
Ohio-based Holley Brothers Construction Company Inc. submitted the low bid of $5,900,000 and was awarded the contract on July 10, 2000. But that company failed to finish the job and failed to pay vendors, suppliers and sub-contractors, so Holley's contract was terminated.
The Mingo County PSD then asked that Holley's surety company, Mid-State Surety Company, complete the project. So Mid-State requested bids, and Diversified submitted the lowest bid to complete the project. On Aug. 5, 2002, Diversified and Mid-State entered an agreement for $1,751,758.
Diversified was required to finish the project within 180 days, according to the suit.
"Project records demonstrate that although Diversified completed the project sufficient for MCPSD to take possession and commence processing water in February 2003, Thrasher claimed at that time that there remained substantial work under the completion agreement which had not been completed by Diversified," the suit says.
From February 2003 to December 2004, there were at least nine punch lists – which is defined as a list of discrepancies that need to be corrected by the contractor – issued by Thrasher and/or the Mingo County PSD.
Also, on Aug. 13, 2004, the PSD filed a lawsuit in Mingo Circuit Court against Mid-State and Diversified, claiming the project was not completed as of that time and that the water treatment plant "operates neither effectively nor efficiently to produce water for its customers."
That lawsuit sought actual damages of about $1 million and more than $450,000 in liquidated damages. The PSD and Mid-State settled that on Jan. 28, 2005, for $600,000, according to this lawsuit.
In the Kanawha lawsuit, Diversified says Thrasher, as engineer and design professional on the Naugatuck project, "was responsible for administration of the completion agreement between Diversified and Mid-State."
Thrasher, the suit says, provided construction administration services and resident project and inspection services on the project, including review and inspection of Diversified's work, preparation of punch lists and issuance of certificates of completion.
The suit says Diversified was required to "look to" Thrasher for direction and supervision on the project and that Thrasher owed a duty to perform its responsibilities in good faith.
"Throughout the course of said project, Diversified relied upon Thrasher to provide direction and instructions … but Thrasher gave faulty and incorrect directions and instructions to Diversified, and Diversified has been damaged by its reliance on Thrasher," Whittaker's company says in the suit, filed by attorneys Carl L. Fletcher Jr. and Gene W. Bailey II of Charleston's Daniels Law Firm.
Diversified alleges Thrasher breached it duties, in part, by:
X "improperly administering the project;"
X "continually issuing Diversified conflicting and incorrect instructions as to how work was to be performed on the project;"
X failing "to provide timely responses to Diversified's and Mid-State's numerous requests for instructions;"
X failing "to approve, in a timely manner, the numerous requests for changes submitted both Diversified and Mid-State;"
X failing "to conduct periodic inspections of said project as required by the contract;"
X failing "to provide timely information and assistance to Diversified and failed to timely and reasonably interpret contract documents as requested by Diversified;"
X preparing "defective plans and specifications for the project, and because of Thrasher's faulty design of the project, design changes were necessary which caused severe disruption, delay and added expense to Diversified's work on the project;"
X failing "to adequately and reasonably supervise and direct Diversified's work on the project;"
This negligence, the suit claims, caused Diversified's injuries and damages and the delay in the completion of its work.
As a result, the suit says Diversified suffered grievous losses and damages, including loss of full compensation due and delayed payments that resulted in Diversified inability to pay subcontractors and suppliers timely as well as additional costs.
"Due to the breach of Thrasher's duty to Diversified, Diversified was not paid for work performed and completed, even long after Diversified's work was completed and accepted," the suit alleges.
Diversified seeks a judgment in an amount to be determined by a jury as well as pre- and post-judgment interest. It also requests punitive damages to punish Thrasher for its conduct as well as to deter similar conduct in the future. It also seeks attorney fees, court costs, other expenses and other relief.
The case has been assigned to Circuit Judge Charlie King.
This isn't the first time Whittaker and Holley Brothers have been involved in a legal action.
In a 2001 lawsuit filed in Gallia County, Ohio, Holley Brothers accused Whittaker of "providing false invoices, false job cost reports and interfering with internal operations" of the company, at a cost of $318,734.
Whittaker countersued, saying Holley Brothers withheld money, stole his tools, vehicles and equipment and owed him $2.7 million. He also said his contract with Holley Brothers entitled him to 30 percent of net profits or 10 percent of the gross contracts in West Virginia, whichever is less.
They settled the lawsuit in December 2002 for an undisclosed amount, only days before Whittaker won a record $315 million Powerball prize.
Kanawha Circuit Court case number: 06-C-44