Dismissal arguments heard in Anchorage port lawsuit

The Municipality of Anchorage lawsuit against players in the stalled and over-budget port expansion project is in the midst of its first major test as arguments were made Jan. 9 regarding a motion for dismissal filed by former project manager Integrated Concepts and Research Corp.

The dismissal motion was filed by ICRC’s legal team in April 2013, roughly a month after the municipality filed its complaint alleging breach of contract and negligence in work by ICRC, port designer PND Engineers Inc. and consultant VECO Alaska.

CH2M Hill, which now owns VECO, joined the dismissal motion but did not testify at the hearing.

ICRC attorney Kurt Hamrock said that all of the work ICRC and its subcontractors did at the port was approved and paid for by the U.S. Maritime Administration, or MARAD, which oversaw the project on the municipality’s behalf from 2003 to 2012.

An Inspector General report issued last August criticized MARAD for its management of port projects in Guam and Hawaii, as well as the Port of Anchorage. MARAD is a branch of the U.S. Department of Transportation.

“The federal footprint is all over this lawsuit,” Hamrock said to U.S. District Court Judge Sharon Gleason.

Bennett Greenberg, from the firm Seyfarth Shaw LLP of Washington, D.C., represented the municipality in the hearing. ICRC recommended PND Engineers’ Open Cell Sheet Pile dock design early in the project, he said. In a report commissioned by the municipality, CH2M Hill has since deemed the sheet pile design unsuitable on seismic and working life criteria for the challenging construction site. A third-party engineering consultant hired by the municipality after it filed the lawsuit later supported that finding.

PND contends faulty installation of its design caused damage to the project, which has been at a standstill since 2010, not the design itself. Open Cell Sheet Pile has been used at dozens of ports across Alaska with no issue, PND officials have said.

The municipality’s case focuses on which entity chose the sheet pile design, according to Hamrock. He insisted MARAD approved the use of the Open Cell Sheet Pile design and noted that the municipality’s complaint does not indicate that the federal agency ever “expressed displeasure” with the work performed at the port.

“Failures that are alleged all relate to contract work — you didn’t do the work in the way the (municipality) would’ve approved even though the federal government approved,” Hamrock said.

When Gleason asked Hamrock why MARAD has not taken a stance in the case, Hamrock said he couldn’t say why the agency has remained neutral in the lawsuit.

The federal government has sovereign immunity in instances such as the municipality’s suit to prevent it from being held liable in a “backdoor” manner when it can’t be held liable directly, Hamrock said.

In his argument for the municipality, Greenberg said, “Certainly, the government didn’t contract with ICRC to perform their work in a negligent manner.”

Greenberg added that ICRC and PND did not perform their work to a “requisite standard of care,” and based on CH2M Hill’s suitability report, ICRC failed to manage its subcontractors; failed to have quality control and inspection protocol in place; and failed to evaluate the suitability of the Open Cell Sheet Pile.

On Jan. 2, CH2M Hill became further intertwined in the project when Anchorage Mayor Dan Sullivan announced the engineering firm had been chosen to manage future port construction on a contract with options for up to nine years worth $54 million.

The Anchorage Assembly moved a Jan. 14 memorandum to approve the management contract to its Bid and Review Board. After two expected work sessions the contract will be brought back before the full Assembly Feb. 11. Assemblyman Dick Traini asked other Assembly members not to contact CH2M Hill regarding the pending contract because of the municipality’s lawsuit against the engineering company.

ICRC’s Hamrock said his client contracted with MARAD for all of its work and that the municipality was not even listed as a third party beneficiary in the 2003 contract with MARAD. Further, the 2008 contract between ICRC and MARAD limits the municipality’s involvement in the project to “passing along title” to the work in question, Hamrock said.

Because the Municipality of Anchorage owns the port and co-funded the work, Greenberg said the city was always the ultimate benefactor.

“In our mind there is no question since the first day of 2003 that ICRC understood the municipality was the beneficiary of the project,” Greenberg said.

Gleason did not give a timetable for her ruling on the dismissal hearing.

Elwood Brehmer can be reached at [email protected].

01/15/2014 - 12:12pm