Contractor claims city owes it $252,000 [The Free Press, Mankato, Minn.]

Nov. 28--MANKATO -- The Mankato City Council met in a closed session Monday to discuss a contractor's lawsuit against the city that is being considered by an appeals court.

Contractors Edge, Inc., is accusing the city of not paying a $160,000 change order on a 2009 road project. The contractor lost the case in district court, then appealed. The appeals court heard the case on Oct. 27, and has 90 days from that date to render a verdict.

In the summer of 2009, Contractors Edge entered into a contract with the city to extend Power Drive in the Eastwood Energy Industrial Park.

The contractor's Minneapolis attorney, Aaron Dean, said the city changed the scope of the work after the contract was signed by requiring the contractor to haul dirt farther.

This, by itself, wouldn't be cause for a lawsuit. The company sought what's called a "change order" to compensate it for the added expense.

After several weeks of negotiations over the size of the change order, a city employee managing the project signed a change order dated Nov. 24, 2009, worth $160,722.

Dean said the contractor did the extra work and was notified about a week before completing it that it would not get any extra money. The contractor would still get extra time, 40 days in this case, to finish the project.

It is the city's legal opinion the change order was never legally valid because it was not approved by the City Council, City Attorney Eileen Wells said. It never went to the council because the contractor did not provide evidence that he had incurred the extra costs, she said.

"The city engineer was not able to substantiate the change order request," she said.

When asked why the city employee signed the change order, Wells said he was "bullied" into it by the contractor. In any case, she said, the change order meant nothing until signed by the City Council.

Dean said city drafted the initial change order to trick the contractor into doing the work without ever intending to pay him.

"He (the city employee) thought it was better to draft the change order then have his boss ultimately deny the change order on the signatory level," Dean said.

"It is an outrageous case of government abuse against a private citizen," he said.

In June of 2010, the city offered the contractor $67,325.30, but he turned it down.

The attorney is seeking $252,000 -- more than the $160,722 change order -- because he said the higher amount was the cost of how much extra work is actually done.

The plaintiff is also seeking interest at a rate of 18 percent and more than $100,000 in attorneys' fees, Dean said.

The city of Mankato is being represented in the appeal by the League of Minnesota Cities Insurance Trust.

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