CPA files counterclaim vs GPPC over defective rehabilitation runway project

The Commonwealth Ports Authority has filed a counterclaim against GPPC Inc., a contractor that is suing CPA for allegedly causing the company to incur $39 million in damages over an airport runway rehabilitation project.

CPA, through counsel Robert T. Torres, filed a counterclaim complaint against GPPC for breach of contract, breach of the implied duty of good faith and fair dealing, negligent construction, violation of the Consumer Protection Act, and fraud.

CPA asked the Superior Court to hold GPPC liable to pay damages, prejudgment and post-judgment interests, attorney’s fees, and court costs. The agency demanded a jury trial.

According to Torres in the counter complaint, on Sept. 18, 2009, GPPC entered into a contract with CPA for the Francisco C. Ada/Saipan International Airport Runway 7/25 Rehabilitation project.

The project consisted of pavement rehabilitation for the Saipan International Airport Runway 7/25. This includes the milling of the existing runway, blast pads and shoulder pavement, asphalt concrete overlay, grooving and marking of surfaces, the restoration of Taxiway “A,” replacement of runway edge lights and guidance, and the installation of lighted wind cones.

On that same day, GPPC contracted with Fidelity and Deposit Company of Maryland for Fidelity to act as the surety for the required payment and performance bonds required by the contract.

Under the terms of the payment and performance bonds, Fidelity bounds itself to CPA in the sum of $12,488,800.

Under the terms of the bond, Torres said, Fidelity’s obligation would be discharged if GPPC substantially and satisfactorily performed and fulfilled the contract and any amendments.

The project included a 120-calendar day mobilization phase that preceded any construction work in the field.

Torres said construction was also delayed due to the ongoing safety management system mandated by the Federal Aviation Administration prior to the start of any construction work.

Due to this delay, GPPC filed an original claim of around $12 million. Hofschneider Engineering LLC negotiated the claim down to $5.9 million.

Physical work on the project began in April 2010 starting with electrical work in the airfield.

Due to the pavement age, observed level of distresses, poor quality, and contaminated pavement surface, it was determined that the 2008 original design would not be adequate to effectively rehabilitate the runway.

Funding for the project is provided under the FAA’s airports improvement program.

On Nov. 1, 2012, the construction manager from Hofschneider Engineering brought GPPC’s attention the concern that GPPC’s work procedure with handling excess aggregate was causing roughness to the finished pavement, particularly when the final layer is grooved, which could potentially lead to rejection of the pavement.

GPPC agreed it would remove the excess aggregate during paving and would prepare the final layer of the pavement to be evenly smooth.

Torres said GPPC provided faulty construction and failed quality control, resulting in defective pavement on the runway.

Torres said the pavement work provided by GPPC shows pavement distress and to this day continues to result in the presence of foreign object debris on the runway.

The lawyer said the testing performed on the distressed pavement has shown the pavement to be defective.

Torres said at the rate the pavement is now deteriorating and the pavement will not reach its intended minimum 20-year lifespan.

He said GPPC repeatedly attempted to shift blame onto CPA, arguing that Hofschneider Engineering is the agent and representative of CPA and therefore CPA is principally responsible for the defects relating to Hofschneider Engineering’s directing of the project.

On the contrary, Torres said, Hofschneider Engineering took no part in directing any of the asphalt mix design or construction.

Torres said Hofschneider Engineering’s role was simply one of the oversights to see that the aspect plans and specifications set under the contract documents were met by GPPC and to ensure that GPPC’s demands for progress payments were supported by the work actually performed.

Torres said under the contract documents, GPPC was required to repair defective work at no cost to CPA, but has refused to take responsibility and instead asserts that it should only perform patchwork repairs of certain areas of the pavement.

To date, Torres said, GPPC has not paid Mr. Takai of Takai & Associates for the work he performed for the project.

Torres said as a direct and proximate cause of GPPC’s breach of the contract documents, CPA has been damaged by the amount of costs to repair the runway in the amount of $20 million.

CPA, he noted, has been damaged by the continued deterioration of the runway as it goes uncorrected which exposes it to the possibility of the runway being declared unusable, which would adversely affect the entire CNMI given that the airport only has one permanent runway.

Torres said CPA is left with a runway that must be constantly monitored and inspected three times a day to address the presence of foreign object debris risk and is left with significantly shortened life for the runway.

CPA, he disclosed, has now learned that GPPC never secured additional coverage from Fidelity for the subsequent material changes to the work scope ordered by CPA.

GPPC, through counsel Mark B. Hanson, is suing CPA for declaratory judgment and breach of contract.

GPPC asked the Superior Court to issue a declaratory judgment that the additional work demanded by CPA was outside the scope of GPPC’s contractual obligations under the contract documents.

GPPC requested the court to award the company a judgment in the amount of no less than $38,998,240 for CPA’s material breach of contract.

The plaintiff also demanded payment for incidental and consequential damages for CPA’s material breach of contract plus prejudgment interest and court costs.