A bonding company claims Phoenix didn’t have a proper basis to terminate a California firm that was building a $105 million sewer plant.
That assessment could be a multimillion-dollar blow to Phoenix and four other cities that fired Earth Tech on Aug. 12.
The cities blamed Earth Tech for faulty work, safety lapses and environmental problems.
Since Federal Insurance Co. doesn’t support the cities’ decision, it’s unlikely that the bonding company will help pay an estimated $12.7 million to hire a new company to finish the job.
Firing Earth Tech ultimately could cost as much as $110 million in legal and construction costs.
An attorney for the cities said they are prepared to shoulder construction expenses and may sue Earth Tech and Federal to recoup some of those costs.
Phoenix, Tempe, Mesa, Scottsdale and Glendale will share the $105 million sewer facility, and Phoenix runs day-to-day operations of the project.
The cities need more sewer capacity by 2007 or 2008 to make room for more houses, shops and offices.
Meanwhile, an Earth Tech lawsuit seeking $10 million in back pay from the cities goes before a Maricopa County Superior Court judge Sept. 7.
Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Topics InsurTech Tech Contractors
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