Saturday, September 24, 2016
Joplin R-8 legal expenses on P1 lawsuit top $1 million; Huff apparently hid P1 from state auditors
Legal costs continue to mount as the district battles the P1 Group, the Lenexa, Kansas, electrical contractor that claims it is owed more than six million dollars for added costs that were necessitated by Huff's rush to avoid embarrassment when it became apparent that the school would not open on time.
On Tuesday night, the R-8 Board of Education will approve another $161,033.91 in fees to Polsinelli, P. C., the Kansas City law firm that is handling the P1 lawsuit, which was filed by the district when it became apparent that P1 might go to court to collect the payments it says it was due. Since the filing of that action, P1 has filed a countersuit.
Taxpayers have forked over at least $979,127,40 to Polsinelli, including $490,992.09 in the past three months alone.
While it is appearing likely that the two sides are working toward an agreement, barring an upset, the legal bills will cross the $1 million threshold next month, which certainly leaves the impression that we are either headed toward a multi-million settlement with P1, or we will end up spending nearly as much in legal fees as the electrical contractors are saying they are owed.
Counting the $50,000 that was paid to Huff as part of his severance package, the total has already passed $1 million. It was made clear after the arrival of Norm Ridder as interim superintendent that the fee was so Huff could help the district deal with the lawsuits and not for his expertise on any other matters and it appears the primary legal action that was considered was the P1 suit and countersuit.
Of course, the costs that came as a result of Huff's orders to do whatever was necessary to get the building open on time are only a part of the costs that were borne by R-8 taxpayers in the effort to make Joplin High School a showcase building.
The most infamous example of that came from what CFO Paul Barr referred to as "might-as-well" spending, $8 million that was spent on items that were not on the project plans that were approved by FEMA, but were added because district officials thought they "might as well" go ahead and do them.
The items to which Barr was referring included extra tennis courts, artificial turf and lighting for all fields and practice fields at the high school complex, and a new track so the athletes would not have to travel to Junge Field.
Though it has been largely forgotten because of the district's PR push to make it appear that all financial problems came as a result of the tornado, the way the high school construction project was handled was harshly criticized in the state audit of the school district, which was released in March 2015.
(T)he construction manager incurred acceleration costs to ensure the high school and technical center would open on time for the 2013-2014 (sic) despite delays from site remediation of an old abandoned mine at the building site. The district did not obtain adequate supporting documentation to ensure payments to the construction manager were reasonable and comply with the contract provisions for the general conditions fees and acceleration costs.
While other construction invoices are reviewed by the construction manager prior to district review, only the district is responsible for reviewing the construction manager's invoices so it is important the district receive detailed information to do this effectively. General conditions fees and acceleration costs totaled $1,474,489 and $2,788,146 as of November 2014, respectively, for the school construction projects.
In retrospect, it appears Huff and district officials may have kept the P1 situation from the state auditing team. The back-and-forth between Huff and P1 began even before the audit team arrived in Joplin, according to court documents.
In a letter sent February 27, 2014, P1 told former Buildings Project Manager Mike Johnson that the rush to get the building open on time was going to run into considerable added costs.
The documentation from the lawsuit includes e-mails from C. J. Huff dated in July 2014 showing that he was fully aware of the money the P1 Group claimed it was owed and indicating that he was talking things over with the board and that it had concerns. The July e-mails were sent the same month the auditors moved their operation into full swing, yet the dealings with the electrical contractors were not mentioned anywhere in the state audit report and the billing from the company is not included in the figures for the cost overrun that the auditors included in that report.
From the April 23, 2015 Turner Report:
Following two meetings with Joplin Schools in June, the company received a message from C. J. Huff, according to the countersuit:
On July 3, 2014, Joplin Schools’ Superintendent, Dr. CJ Huff sent an email to P1 Group advising that he had met with the Joplin School Board’s Facilities Committee and that he had talked with the individual members of the Facilities Committee. (Note: The committee consisted of Mike Landis and Jim Kimbrough.)
Dr. Huff reported that they were “comfortable” taking P1 Group’s request for compensation related to the directed acceleration to the School Board at the July 2014 meeting. On behalf of Joplin Schools, Dr. Huff requested P1 Group to provide a “not to exceed” number for the acceleration impacts through Project completion.
On July 11, 2014, in response to Dr. Huff’s email, P1 Group sent a letter to Joplin Schools, with a copy to UCC (Universal Construction) and Corner Greer, requesting a change order in the amount of $2,912,000 to cover the anticipated costs related to the delays and acceleration on the Project.
On July 22, 2014, Dr. Huff, on behalf of Joplin Schools, sent an email to P1 Group advising that he was presenting P1 Group’s request for compensation to the Board that evening and anticipated questions from the Board. Dr. Huff also advised that he appreciated P1 Group’s commitment to helping Joplin Schools achieve its goals.
On July 26, 2014, Dr. Huff, on behalf of Joplin Schools, sent an email to P1 Group advising that, as expected, the Board had a number of questions regarding P1 Group’s claim. Dr. Huff explained: “Due to the size of the billing, I think they just want to be comfortable that they can justify the expense when asked by patrons and the media.”
After classes began in August, P1 notified the district that more of its delays were going to increase the costs on the auditorium, which was still not finished.
By letter dated September 10, 2014, P1 Group notified Joplin Schools of delays and interferences related to completion of Area A – the Auditorium for the new High School. P1 Group notified Joplin Schools that P1 Group would seek compensation for these issues.
By email dated September 16, 2014, P1 Group was notified by Joplin Schools that due to the amount of P1 Group’s claims, Joplin Schools had retained a law firm to review P1 Group’s claims.
60. By letter dated October 29, 2014, Dr. Huff, on behalf of Joplin Schools, notified P1 Group that Joplin Schools was denying P1 Group’s request for additional compensation.
In the original lawsuit filed by the school district against P1, the district claims that P1 was guilty of shoddy worksmanship, but there is no mention of anything of that sort in its dealings with the company itself.
Not so coincidentally, it appears, the district filed its lawsuit against the P1 Group on April 22, 2015, waiting until after the state audit was on the books.