Construction company sues water authority

John Thompson • Mar 7, 2012 at 9:12 PM

ELIZABETHTON — Thomas Construction Co. of Johnson City filed a lawsuit in Carter County Chancery Court on Monday against the Watauga River Regional Water Authority.

The lawsuit has two parts. The first part contends there has been a breach of contract because the water authority has not paid all it owes Thomas. The second part is a suit for loss of opportunity because Thomas remained under a $2 million construction bond to complete the water authority contract. Because it is under the bond, Thomas said it has lost business opportunities and the chance to bid on other construction projects.

Thomas alleges the water authority still owes $418,872.82 on the contract to lay the southern connector pipeline running from the new water treatment plant at Wilbur Lake to the South Elizabethton Utility District. Thomas was to be paid $1,889,851.82 under the contract, but has only been paid $1,470,978.70.

Thomas also alleges the water authority failed to pay legal fees and interest due the construction company in the amount of $112,561.72.

In the loss of opportunities complaint, Thomas said it could not continue working on the project when it was not being paid by WRRWA. Although it was not being paid, Thomas said the water authority continued to hold the $2 million construction bond until Jan. 10. As a result, Thomas did not have the bonding power to bid on other projects. The loss of business opportunities was determined by Thomas to be $1.8 million.

Thomas’ attorney in the lawsuit is Johnson City attorney Rick J. Bearfield.

Thomas McKee of the Johnson City firm of Herndon, Coleman, Brading and McKee is the legal counsel for the water authority.

“I am not sure why he chose this time to bring the lawsuit, but there is no doubt the water authority owes him money,” McKee said.

McKee said the water authority was relying on state and federal grants to finance the construction of the new water plant. A problem was encountered when a federal grant that had already been rewarded and being used to pay the contractors was taken back by the government.

That created a deficit in the funds needed to build the project that the water authority is attempting to make up through state revenue bonds in which the money will be borrowed and paid back through the sale of water to its customers once the water plant is on line.

McKee said there are several steps the water authority has to take in order for the bonds to be issued by the state. Those have taken several months and are not yet complete.

Although it is not part of the lawsuit, the Carter County Highway Department is also interested in seeing the payments made to Thomas. One of the final stages of the construction contract is to repave Siam Road after several miles were cut in order to place the new water line.

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