Fire district settles lawsuit

BY christian hill | THE OLYMPIAN • Published September 15, 2007

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LACEY - A lengthy and complex lawsuit stemming from the construction of three fire stations has been resolved, and neither Lacey Fire District No. 3 nor the general contractor has to pay a penny in settlement costs.

In October 2005, Scott Wall Construction of Olympia sued Lacey Fire District No. 3 for $7.3 million for breach of contract. It alleged the district was responsible for deficient plans and unfair management by the architect and construction manager that added time and millions of dollars in costs to the project.

Scott Wall Construction had no legal right to sue the architect or construction manager individually because its contract was with the district. In a bid to shield itself from heavy losses, the district signed a "pass-through" agreement that enabled Scott Wall Construction to sue the architect and construction manager directly in the district's name.

The parties were required to try to resolve the lawsuit through mediation before trial and reached the settlement during a meeting July 17 in Seattle.

Thurston County Superior Judge Richard Hicks formally dismissed the lawsuit Aug. 23. The three-week trial was set to begin Oct. 1.

Under the settlement, the architect and construction manager will pay $1 million through their insurers, although both maintain they did nothing wrong. The fire district and Scott Wall Construction paid nothing.

"We didn't feel like we had any responsibility here, but that's the nature of litigation," said C. Scott Penner, the lawyer representing Olympic Associates.

The money will be split between the fire district and Scott Wall Construction, with the contractor receiving the bulk of the money to pay for a portion of its initial claim and help pay its legal costs, said W. Gregory Guedel, the attorney representing the fire district. The portion of the money going to the fire district will pay a "significant amount" of its legal fees, he said.

"It was a good result for the district and the taxpayers," Guedel said.

TCF Architecture of Tacoma and Olympic Associates Co. of Seattle agreed to settle the lawsuit to avoid a costly trial and the possibility of a costly verdict, their lawyers said.