Westmont Borough Council is suing its sewer project engineer to recover money lost in a dispute with the borough’s former sewer project contractor, Inland Waters Pollution Control Inc.
Arbitration in late May to sort out the dispute between the borough and IWPC resulted in a net $2 million ruling against the borough.
Arbitrators decided the contractor was entitled that award for damages related to a three-month work interruption caused by the borough’s failure to obtain an environmental permit necessary for work to continue.
Under Pennsylvania law, the borough may use common law right of indemnity, a fault shifting mechanism, to recover money from its engineer who was responsible for obtaining project permits.
In the borough’s lawsuit against Kenneth A. Mesko and Mesko & Associates Inc. filed Sept. 1, the borough contends Mesko, the borough’s project engineer, did not communicate with the Cambria County Conservation District about the need for permits or erosion and sedimentation controls.
Mesko, hired by the borough in 2016, was certified to ensure the project was prepared with the necessary environmental permits required by the Department of Environmental Protection (DEP), the borough’s complaint states.
Borough Council President Don Hall stressed that council is not suing Mesko as a person, but is seeking damages from Mesko’s insurance coverage.
“The council believes that Mesko is not only a person of integrity but also a good engineer,” Hall said. “We are retaining him for completion of the sewer project. ... This (lawsuit) is difficult. There is a lot of emotion on both sides of the equation. But essentially, we don’t have $2 million sitting in the bank. We are scrambling around to find out whether we can reduce negative outflow of monies by any means within our grasp.”
If the lawsuit is successful, Hall said he doesn’t know how much money the courts would award the borough, but it wouldn’t be the full $2 million.
Mesko’s legal defense, Francis McTiernan, of Wayman, Irvin & McAuley, LLC, said he is basing Mesko’s defense largely on an independent engineering firm’s opinion.
In January, the borough hired an engineering firm in Pittsburgh to perform an independent review. The final report from Civil & Environmental Consultants Inc. (CEC) was very favorable toward Mesko, he said.
The report from CEC’s Vice President Stephen Donaldson states: “It is my professional opinion that Mesko & Associates acted in a prudent manner during this period of the project. The facts that support this opinion. ... The original permit documents prepared by H.F. Lenz identified a project earth disturbance of 0.8 acres, which would not require an NPDES (National Pollutant Discharge Elimination System) permit.”
The sewer rehabilitation project was undertaken in 2014 to meet government regulations for eliminating sanitary sewer overflow. However, that project requires certain permits for excavation of areas larger than an acre. CEC experts agreed with Mesko that the area in question did not require such a permit.
But the DEP disagreed. McTiernan said early indications were that the DEP would allow excavation to continue while the permit was secured. But later, the DEP changed its mind and stopped the work.
The borough’s complaint against Mesko states he was responsible for obtaining a NPDES permit for the borough’s sewer rehabilitation project. That kind of permit is called for when earth is disturbed on a project, and Mesko failed to obtain it in a timely manner, according to the borough.
Despite the lawsuit, McTiernan said Mesko will keep working with Westmont Borough.
“Mr. Mesko has a very good relationship with the borough and continues to work with the borough,” he said.
Aside from suing Mesko in the Cambria County Court of Common Pleas, there were a couple other avenues the borough could have taken to attempt a recovery of at least part of the money it lost in arbitration with IWPC.
It could have appealed the arbitration award within 30 days to the Court of Common Pleas of Cambria County.
It could have also pursued money guaranteed from IWPC’s insurance company by prosecuting a previously filed breach of contract claim against the project performance bond in the U.S. District Court for the Western District of Pennsylvania.
“On advice of counsel, we are not appealing,” Hall said. “Appealing an arbitration decision is like shoveling sand against the tide. We’d wind up with the same result. And going after IWPC’s bonding company also wouldn’t work because the company was validated in the arbitration.”
At a meeting Tuesday, Councilman Gordon Smith informed council that payments from the borough’s sewer project fund have been made to IWPC, based on the recent arbitration decision.
The borough has paid IWPC $1.7 million to date. By Sept. 25, it will make another $330,000 payment that should completely satisfy the arbitration decision, Smith said.
The borough’s sewer rehabilitation project began in 2014 with a consent decree from the DEP. The borough agreed to a sanitary sewer overflow abatement plan. The project was separated into two phases, each running concurrently.
The first phase of the project is 55% complete, and the second phase is 65% complete, Smith said. The whole contract (now with Snyder Environmental Services and not IWPC) is scheduled to be finished by October 2021.