County School Board Appeals $1.1M Lawsuit Ruling

SNOW HILL – Less than two weeks after a visiting Worcester County Circuit Court judge ruled against the Worcester County Board of Education in a $1.3 million-plus lawsuit filed last year by a private contractor replaced mid-way through the construction of the new Ocean City Elementary School over two years ago, the defeated defendants have filed an appeal with the state’s Court of Special Appeals.

On Tuesday, the Worcester County School Board filed a notice of appeal with the state’s Court of Special Appeals, seeking to overturn Judge Robert Karwacki’s decision to award $1.1 million to Beka Industries after a four-day trial earlier this month.

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, sewer and water line installation and, ultimately, the 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 attorney David D. Gillis, who is representing Beka Industries in the case, the contractor completed much of the work within the scope of the contract, but stalled on one single component because of perceived flaws in the design. Gillis 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 that component of the project, the school board replaced the company with another contractor in mid-stream. Last October, Beka Industries filed a breach of contract lawsuit against the Worcester County 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 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, Karwacki awarded Beka Industries $1.1 million after a protracted four-day trial in Circuit Court.

Shortly after the judge rendered his decision in the case, school board officials immediately suggested an appeal would be filed, citing certain irregularities in how the case was handled. This week, school board attorney James Almand officially filed a notice of appeal to the Court of Special Appeals after getting an unanimous endorsement from the seven-member Board of Education during its monthly meeting.

“The board feels strongly this case should be appealed,” said Almand yesterday. “In fact, the decision was unanimous. The board believes it has good reason not to pay Beka what it alleges it is owed.”

Almand 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.

“We believe there were substantial errors made during the trial and we’re looking forward to getting the evidence in front of the appeals court,” he said.

For his part, Gillis said this week he is not surprised the Board of Education filed the appeal given the complexities of the case. He said he is ready to present the same evidence to the appeals court and expects a similar outcome.

“I don’t typically spend a lot of time thinking about what the other side might do,” he said. “Based on the significant amount of money awarded in this case, we anticipated an appeal and we are preparing for that now.”

Gillis said he anticipated an appeal based on the substantial settlement meted out by Karwacki at trial. For the moment, the school board, and ostensibly Worcester County, owes Beka Industries $1.1 million.

“It’s a significant amount of money for the Worcester County Board of Education relative to their budget,” he said. “Frankly, that’s a big concern for my client. We have real concerns about the Board of Education’s ability to pay the judgment in this case.”

Gillis said the school board would have to bond the $1.1 million owed to his client with interest accruing at 10 percent starting the day of the judge’s verdict. Given the slow pace of the appeals process, the figure could grow before it’s all said and done.

“I’m confident Beka will prevail on appeal in this case,” he said. “One of the positives in the appeal is that the defendant will have to take out a supersedeas bond for the entire amount awarded by the judge, which will guarantee the money will be there when the appeal is exhausted.”

On the downside, Gillis said Beka will now have to wait for the appeal to run its course before it is awarded the settlement.

“This is a very important case for my client,” he said. “This is a substantial amount of money for a small business, or any business for that matter given the current economic situation.”