School Board Must Start Paying Civil Suit Award

SNOW HILL – A visiting Circuit Court judge this week rejected an effort by the Worcester County Board of Education to avoid paying the $1.1 million awarded in a civil suit to a private contractor replaced mid-way through the construction of the new Ocean City Elementary School two years ago, ruling the defendant must now begin paying despite the ongoing appeal in the case.

Visiting Circuit Court Judge Robert Karwacki on Monday denied a motion to stay enforcement of judgment, ruling instead the Board of Education, and ostensibly Worcester County, must begin paying Beka Industries Inc. the $1.1 million awarded to the contractor at the close of a four-day civil trial in October. The school board has appealed the case with the state’s Court of Special Appeals and was attempting to avoid paying the private contractor until the appeal ran its course, but the ruling by Karwacki on Monday eliminated that possibility.

“They were basically saying we’re not going to let Beka start to collect until the appeal is heard, but the judge didn’t see it that way,” said Beka attorney David D. Gilliss. “Just because an appeal has been filed doesn’t mean the defendant is free and clear of its obligations.”

Gilliss said this week Beka was willing to meet the school board half way by allowing it to arrange for a surety, or supersedeas, bond, to ensure the settlement money will be in place when the appeal is exhausted. However, the school board had made no such financial arrangements and instead opted to attempt to avoid making any payment in the case.

“As a courtesy to the board, my client said we will wait until they’ve made arrangements to find the money and begin making payments,” said Gilliss. “But the board essentially said ‘we’re not paying you” and filed the motion to stay the enforcement of the judgment. Of course, the motion was denied and we are now free to proceed with the collection.”

The Worcester County Board of Education in 2004 hired Beka Industries to complete various components of the site work for the new elementary school including grading, sediment and erosion control, water and sewer line installation and, ultimately, demolition of the existing school. In August 2005, the school board allegedly became unsatisfied with the pace of the work being done by Beka and replaced the company with another contractor to finish certain components within the scope of the $1.8 million contract.

According to Gilliss, Beka completed much of the work within the scope of the contract, but stalled on one single component because of perceived flaws in the design. Gilliss said Beka was supposed to install water and sewer lines on the site, but his client identified errors on the drawings that ran the water lines into the sewer lines and the plans had to be redrawn.

Unsatisfied with Beka’s delay in completing its portion of the project, the school board replaced the company with another contractor in mid-stream. Last October, Beka filed a breach of contract lawsuit against the Board of Education seeking repayment for the entire amount it estimated it was due for its work on OCES. The amount of the original contract was $1.8 million and the school board had paid the contractor around $1.4 million.

Because of a complicated string of contested change orders within the scope of the project, Beka Industries was seeking around $1.3 million in the lawsuit. On Oct. 9, Karwack ruled in favor of Beka and against the school board, awarding the contractor $1.1 million after a protracted four-day trial in Circuit Court. Two weeks later, school board attorney James Almand officially filed an appeal in the case with the state’s Court of Special Appeals after getting a unanimous endorsement from the seven-member Board of Education.

With the judge’s ruling on the motion to stay enforcement of the judgment, the school board, and/or Worcester County, must now find a source for the $1.1 million owed to Beka with interest accruing at 10 percent starting the day of the verdict. Given the slow pace of the appeals process, the figure could grow before it’s all said and done.

Meanwhile the appeal is plodding along at a snail’s pace with no timetable in place for the case to be heard. The Board of Education is required to prepare a civil appeal information report in which it will outline the reasons for the appeal and what it alleges was problematic with the handling of the case at the Circuit Court level.

Shortly after a verdict was handed down in October, school board officials alluded to certain perceived flaws in the handling of the case at the Circuit Court level as the primary reason for the appeal. For example, Karwacki reportedly reached his decision less than a minute after Almand concluded his closing statement, despite the fact there were thousands of pages of material and 125 exhibits presented during the three-plus days of the trial.

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