WWHGD Defeats $50 Million Cost Overrun Construction Lawsuit

Weinberg Wheeler Hudgins Gunn & Dial partners Dave Dial and Nick Panayotopoulos defended client Dawson Building Contractors (“Dawson”) in a suit by the Public Building Authority for the City of Huntsville (“City”) for the allegedly botched construction of the Huntsville-Madison County Jail in Huntsville, Alabama. As a result of the purportedly poor construction, the City spent $79 million to complete the jail that was initially to be completed under Dawson’s $24 million contract.

The City stopped construction on the jail in 2005 when significant problems were found. Dawson contended that the problems were the fault of the City’s poor design. In June of 2006, the City issued a notice of termination for convenience to Dawson reserving the City’s “right” to convert the termination to one for “cause”/default while the City investigated. Soon after litigation was initiated, Dawson filed motions against the City arguing that once terminated for convenience, a dead contract could not be resuscitated. For purposes of Dawson’s motions, it was presumed that the City was correct and Dawson’s construction was defective causing tens of millions of damage. On appeal, the Alabama Supreme Court ruled that in spite of the City’s reservation to pursue damages, Dawson had no obligation to pay damages, even if its construction was defective as the City claimed. Eight of nine Alabama Supreme Court justices agreed with Dawson.

The Alabama Supreme Court eliminated all claims against Dawson and its $24 million surety bond, but left in place claims against other Defendants. In addition, Dawson’s multi-million dollar claims against the City were left intact.

The title of an editorial from The Huntsville Times succinctly summed WWHGD’s legal results: “Jail ruling wreck’s City hopes.” Other articles in the press echo the editor’s views: “Alabama Supreme Court deals $24 million blow to City of Huntsville’s hopes of collecting cash from jail lawsuit” and “Huntsville leaders regrouping after Alabama Supreme Court sides with jail builder.”