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Contractors still unpaid in Zimmer development

Even after students moved in last August, bare earth still abounded at Zimmer’s development The Husk at Western Carolina University. Holly Kays photo Even after students moved in last August, bare earth still abounded at Zimmer’s development The Husk at Western Carolina University. Holly Kays photo

The first students moved into The Husk at Western Carolina University last August, but nearly a year later the companies responsible for developing, designing and building the environmentally disastrous  Millennial Campus student housing development are embroiled in a complex lawsuit that has left at least one local subcontractor facing a six-figure deficit until the situation resolves. 

In August 2020, Sylva-based Parker Paving Company paved the 500-bed development’s sizable parking lot. Owner Kaleb Stockton said he expected to get paid within a month or two of doing the job, but 10 months later his company is still short more than $400,000, equivalent to about 10 percent of its annual revenue.  

Parker was hired by Rutherford County-based Site Development Corporation, which was hired by Charlotte-based West River Construction, which was hired by Wilmington-based Zimmer Development Company. For now, Parker Paving’s status as a second-tier subcontractor means that Stockton can’t do much but wait. 

“What I’m told is Zimmer hasn’t paid West River,” said Stockton. “Therefore West River can’t pay Site Development Corporation and Site Development can’t pay us.”

 

Site Development sues for payment 

Neither Stockton nor Parker Paving are parties in the lawsuit whose 374-page case file began Dec. 10, 2020, but the outcome of the ongoing litigation will directly affect the company’s ability to collect on the debt owed it.  

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“We’re going to have to take action against Site Development Corporation, and my stance is until Site Development has been paid from the general contractor (West River), what’s the point in placing that?” said Stockton. “You’re just asking for money they don’t have anyway.”

Site Development is trying to gain possession of that money. It is the plaintiff in the original lawsuit, filed against co-defendants Zimmer — named as ZP No. 335 LLC in the lawsuit — West River, Whittier-based Hooper’s Grading Company and Civil Design Concepts P.A.  The Dec. 10 suit followed a Nov. 6, 2020, lien that Site Development filed on the Western Carolina University-owned property. 

Site Development claims that West River — and ultimately Zimmer — owes it $1.15 million, plus interest, attorney’s fees and court costs. The company is also seeking a jury trial to award damages in excess of $25,000 from Zimmer and Hooper’s, one of Site Development’s subcontractors. 

But Site Development is not the only one pointing fingers. 

West River is claiming that Zimmer, Site Development and CDC breached their contracts, Zimmer is claiming that West River and Site Development breached their contracts with Zimmer and Hooper’s alleges that Site Development breached its contract with Hooper’s and owes $320,609. All parties are asking for a jury trial and claiming damages in excess of $25,000 against each other. 

According to Site Development, which initiated the suit, it hasn’t been paid because West River and Zimmer are improperly penalizing the company for the failings of CDC and Hooper’s. 

“Civil design issues, such as that described above, became par for the course on the project, with the civil design being revised no less than 23 times, such changes happening multiple times a month for nearly a year,” reads Site Development’s suit. “Revisions to the civil design continued up to and until at least June 2, 2020.”

The changes were necessary due to CDC’s “numerous design and engineering errors” and significantly delayed Site Development’s progress, the suit claims. Meanwhile, said Site Development, its subcontractor Hooper’s improperly installed many components of the project, causing every waterline joint and multiple sewer joints to fail as well as water fitting failure, crooked sewer lines and improperly installed sewer lines in the manholes. Zimmer and West River want to backcharge Site Development for Hooper’s failings, Site Development said. 

Site Development believes that it’s being shortchanged so that Zimmer can cover the more than $200,000 in civil penalties it faces due to multiple environmental violations on the site. 

Since 2019, the Division of Energy, Mining and Land Resources issued 10 notices of violation and the Division of Water Resources issued six, according to the aggregated results of multiple public records requests by The Smoky Mountain News. 

“Upon information and belief, rather than seek recoupment of these civil penalties from CDC, ZP (Zimmer) instead seeks to improperly pass these civil penalties on to Plaintiff,” Site Development alleges. 

 

CDC and Hooper’s defend their work 

Other parties to the lawsuit tell a very different story. 

According to Hooper’s, which filed a counterclaim against Site Development along with its answer to the original complaint March 1, it performed its work “in a good and workmanlike manner” but encountered issues when Site Development brought in its own people to work on the project. The filing specifically states that Hooper’s installed water and sewer features in conformity with CDC’s plans. 

“Defendant alleges that Plaintiff provided Hooper’s with its own labor to assist in the work on the project and failed to properly supervise its own labor and inspect the work performed by its employees,” the filing reads. “The unclean hands of Plaintiff act as a complete bar to any of its claims that it makes in equity.”

Site Development “persistently” understaffed the project and failed to address concerns that authorities brought to its attention, Hooper’s said. The company hasn’t paid Hooper’s for work or equipment since May 25, 2020, placing it in breach of contract and in debt to Hooper’s by $320,609. 

However, in their responses CDC and Zimmer agreed with Site Development’s charge that Hooper’s work was subpar — but said Site Development performed poorly too. 

In a Feb. 19 answer to Site Development’s original complaint, CDC alleged that Hooper’s Grading should never have been selected to work on the project, as the company does not hold a license from the N.C. Licensing Board for General Contractors. According to a Feb. 16 letter from Director of Licensing Sherry M. Smith that is attached to the filing, there is no record of Eliott Hooper or Hooper’s Grading ever being licensed with the board, and such licenses are required for any contractor managing a job worth $30,000 or more. 

CDC denied that it was to blame for project delays and cost overruns. 

“With the exception of a minor plan revision dated June 2, 2020, to add additional curb inlets in the parking lot, none of the plan revisions were caused by design issues on the part of Civil Design Concepts, and Civil Design Concepts was not negligent and did not breach its contract in any respect,” CDC wrote. 

The first plan revisions came after a potential Cherokee archeological site was found in the footprint of the sediment basin. When it proved impossible to clear the area archeologically, the plans had to be revised, because the originally designed single sediment basin wouldn’t fit in the smaller area. CDC revised its plans on May 15, 2019, to provide multiple sediment basins and other stormwater control measures, with related revisions on June 12 and an extra sediment basin added June 20 of that year. Requests from Zimmer spurred three more plan revisions in September and October 2019, also related to archeological findings. 

However, CDC said, eight plan revisions completed between Nov. 8, 2019, and Oct. 7, 2020, were necessary “due to Site Development Corp. failing to follow approved plans, information and/or instructions.”

Site Development’s failings ultimately resulted in an Oct. 31, 2019, landslide  that flooded a downhill student housing development with mud and caused one of the 12 small houses to be condemned, CDC said. One of its representatives visited the site on Oct. 23 and was concerned about the sediment basin’s allegedly improper installation. Later that day, the representative emailed Site Development, West River and Zimmer about those concerns and held a conference call with those parties the next day. 

“During the call, West River directed Site Development Corp. to install Sediment Basin C per plans,” CDC’s response says. “Site Development Corp. did not take action and on October 31, 2019, improperly installed Sediment Basin C caused a small landslide which pushed a neighboring house off of its foundation and resulted in a significant amount of sediment leaving the site.”

Follow-up investigation showed that Site Development had failed to install Sediment Basin B and the required bypass ditches, which resulted in Basin C serving a much larger drainage area than planned, CDC said. 

Five additional revisions came in 2020, three requested by West River or Site Development, said CDC. Another was due to pool design revisions and the final one added more drainage features to the parking lot. 

 

Zimmer and West River weigh in 

In its Feb. 25 answer to Site Development’s allegations, Zimmer echoed many of CDC’s criticisms of Site Development. It also entered a counterclaim against Site Development and crossclaims against West River and CDC — though its cross claim against CDC did not contain any allegations and merely asked to be included in the awarding of damages should the court find that CDC was negligent. Its claim against West River says that West River and its subcontractors — which include Site Development — failed to perform “in a good and workmanlike manner,” resulting in Zimmer paying more than $200,000 in state penalties, as well as attorney’s fees and extra construction expenses. 

Like CDC, Zimmer alleged that Site Development improperly installed the sediment basin after the initial archeology-related plan revisions and that the NOVs were not due to deficient plans by CDC, but rather came because Site Development failed to properly sequence the work. In some cases, Zimmer alleged, it had to hire additional contractors to fix work that Site Development and Hooper’s did incorrectly. By withholding payment, Zimmer and West River are “attempting to recover” some of the additional cost they incurred to correct Site Development’s work and complete the project on time. 

While much of Hooper’s work was indeed defective, Zimmer claimed, Site Development was responsible for its subcontractor’s performance. Additionally, Site Development itself performed utility work that Zimmer deemed defective and incomplete, hiring other contractors to finish it. 

In its March 26 response to Site Development’s suit, West River moved to dismiss the lawsuit and put forth crossclaims and counterclaims of its own, targeting Zimmer, CDC and Site Development for breach of contract. 

Like Site Development, West River said that CDC’s negligence was the cause of its many plan revisions and that these revisions delayed the project. However, West River also averred that Site Development itself had performed substandard work that directly contributed to the environmental violations and caused the landslide on Halloween 2019. 

“Throughout the project, plaintiff’s work including, without limitation, the erosion control devices and grading work it performed on the project, were not performed in accordance with the terms of the subcontract and applicable laws, codes and regulations,” West River claimed. 

Meanwhile, said West River, CDC failed its duty to “provide complete and unambiguous civil design drawings that comply with applicable laws, ordinances, rules and regulations” and Zimmer is unjustly refusing to pay West River for the work it did. 

In an April 29 filing moving to dismiss West River’s claim against it, Zimmer said that West River had not been paid for some items “because the work was not completed, was done improperly or incorrectly by West River or its subcontractors, and in some cases had to be redone by West River or its subcontractors, and in some cases, by other contractors.” Site Development and CDC also moved to dismiss West River’s claims, with CDC stating that it never had a contract with West River, that West River “materially deviated” from CDC’s plans and that West River should have known about Site Development’s alleged shortcomings and is “vicariously liable” for those shortcomings. 

While WCU owns the land where the apartment complex stands, Zimmer is the developer and property manager, holding a 40-year lease on the property. However, WCU is not a party to the lawsuit. 

“WCU is aware of this pending litigation, but are not able to make any comments at this time,” said WCU Communications Director Benny Smith. 

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