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Gold Hill officials to meet in hopes of resolving lawsuit

GOLD HILL — City officials hope negotiations will resolve a lawsuit brought by a local construction company.

Johnny Cat Inc. of Jacksonville has filed claims totaling $717,000 against the city, alleging contract fraud during the building of the city's new water-intake facility on the Rogue River. The case was filed in Jackson County Circuit Court on Sept. 22, and is set to go to trial Feb. 6.

Attorneys for Johnny Cat, Lee-Pace Engineering and the city, along with members of the Rogue Valley Council of Governments, will meet in Gold Hill today to try negotiating a pretrial settlement, said Public Works Director Royal Gasso.

"Hopefully, we'll have a resolution," said Gasso.

The city contracted with Johnny Cat in May 2005 to build a water-intake pump station and transmission line for $1.1 million, said Gasso. The project, plagued with setbacks, was completed in May 2007.

The major portion of the claim is based upon Johnny Cat assertions that its bid was low because engineering design work done by Lee-Pace Engineering was incomplete and/or erroneous, Gasso said. Johnny Cat is suing the city for unanticipated expenses it incurred during construction.

Gasso said the city should not be held liable for the contractor's claims. The city did not design the project and had no say in construction of the project — as long as it was done on budget. The city has no control over the means and methods used to construct the project in accordance with design specifications or permit requirements, Gasso said.

John Holmes, owner of Johnny Cat, could not be reached for comment Monday.

The lawsuit also seeks indemnity against recent fines levied against Johnny Cat by state regulatory agencies for violating environmental laws.

On March 24, the Department of Environmental Quality levied a $29,500 fine against Johnny Cat for forcing the temporary closure of the city's drinking water intake and causing pollution to state waters. The violations occurred while Johnny Cat was attempting to create a dry building platform in the river for construction.

Johnny Cat has appealed the environmental fine. Attorneys for the company stated in their written response to the notice of violation that Johnny Cat crews were acting under permit, did not violate turbidity regulations and were following directives from the Department of State Lands.

Ed Hodges, project manager for Lee-Pace Engineering, said in March that Johnny Cat struggled with the in-river portion of the project. There were also some significant issues with how the contractor built and maintained its coffer dams, he said.

The job was shut down for 21/2 months after December 2005 floods while construction crews repaired damage and engineers redesigned parts of the plan so the facility could withstand repeated floods.

A separate claim by Johnny Cat for damages from winter storms estimated at $29,486 has been paid by the state, said Gasso.

Reach reporter Sanne Specht at 776-4497 or e-mail sspecht@mailtribune.com.