Company goes to court over construction debt
A Chatfield construction company's claim of $560,893 in unpaid excavation work is being considered by an Olmsted District Court judge.
The company, Griffin Construction Co., performed the work in 2007 and 2008 on a 9-hole golf course and 250-lot housing development named Hadley Creek Village.
Griffin had been hired by the developer, Hadley Valley Partners of Rochester LLC, to perform the work, but received only partial payment. Griffin filed a mechanic's lien against the property, now owned by the city of Rochester.
Attorneys for Griffin, the city, Yaggy-Colby Associates and others argued motions to dismiss the case on Wednesday in Olmsted District Court. Judge Robert Birnbaum heard arguments for two hours and took the case under advisement. He will decide the motions within 90 days.
Absent from the table was the developer. Although it is named in the suit, Hadley Valley Partners is financially unable to pay the claim, said owner Dick Argue. He attended the hearing but without representation and did not participate. Earlier attempts to negotiate repayment were not successful, Argue said, and a mediation session between the city and Griffin ended deadlocked.
A city counter-claim against Griffin alleges that the excavation included an unauthorized pond excavation not included on the city-approved grading plan.
Bob Huber, attorney for Griffin, said the pond was ordered by Argue, who pledged city approval for the work. City officials were aware of the excavation as it was taking place but did not object until the time of the lawsuit, Huber said.
The pond excavation was needed, Argue said after the hearing, because of a shortage of fill material for home sites to be found on the rest of the 207-acre property.
Yaggy-Colby provided "data points," but never a full set of grading plans, that allowed Griffin to determine how to perform the pond excavation, Huber said.
"The city never told Griffin to stop," Huber said. "They never told Griffin to wait. … They never filed criminal charges. They allowed Griffin to go forward."
When the city took possession of the golf course in March 2009, "they accepted the work as it was done," Huber said.
Marilyn Rosberg, attorney for Yaggy-Colby, said the company gave excavation data to Griffin as instructed by Argue but also told Griffin that proceeding with the work without city approval was "risky."
"Yaggy-Colby was not acting on behalf of the city," Rosberg said. "Yaggy-Colby was not hired to oversee and watchdog and inspect the work on the golf course."
She asked that the claim against Yaggy-Colby be dropped because of Griffin's failure to provide an affidavit from an expert, as required by state law.
George Hoff, attorney for the city, said Griffin "made a bad judgment, … and they're seeking a deep pocket to get paid."
A contract between the city and Griffin specified that the work was to be done at no cost to the city, Hoff said.
"That's the end of the case against us as far as I'm concerned," Hoff said.
Huber said the city failed to meet standards of prudence when it allowed Argue to post only $1.3 million of a required $1.9 million performance bond.
"They allowed the project to go forward without enough (financial) security," he said. "We wouldn't be here if that letter of credit had been provided."
The development, conceived at the height of the local and national housing boom, ground to a halt when the housing market collapsed. Though the golf course is finished, only a handful of homes have been built, and fewer have been sold.
"It is not going as we hoped or as our market studies showed it would," Argue said. "Bad timing … just bad timing."
Some 120 interested buyers are on a list, Argue said, but at least several of them are stuck with their own homes they have been unable to sell.