Published: October 11, 2008 10:56 pm      

Copies of signed contracts missing

Between Fairmont, water filtration plant engineers and manufacturer

FAIRMONT — The City of Fairmont and the engineering firm that designed its $10 million water filtration plant are currently going through a mediation process that is required by the contract for professional services between the city and the firm.

But the city does not have a copy of those signed contracts with either Chapman Technical Group, the plant’s engineers, or GE Zenon, the plant’s manufacturer. What the city has are only draft copies of the documents, which they believe represent what was eventually signed by the city manager at the time.

The lack of a signed contract came into light when the city experienced a crisis at the plant in the winter of 2007. The crisis left the city’s water fund damaged, and will require an $8.7 million long-term correction action project to ensure that a similar emergency will not happen again in the future.

But while preparing for the mediation process with Chapman Technical and GE Zenon, a copy of the final signed agreement could not be located. What the city does have on file is a final draft of the engineering services agreement with Chapman Technical for the design of the $40 million water system upgrade, which also includes the $10 million water filtration plant.

The final draft was sent to the City of Fairmont on June 5, 1997. The draft includes signature lines for Robert Belcher, vice president of environmental engineering for Chapman Technical, and Bruce McDaniel, the interim city manager in the spring of 1997.

In August of that year, McDaniel was hired as the city manager on a permanent basis, and Doug Amos was promoted to utilities manager, the position McDaniel left for the city manager’s job.

Both Amos and McDaniel said the city’s original contract with Chapman was signed prior to 1997, which Amos said was specifically in 1995. That contract would have been for an agreement to develop a comprehensive report in an anticipation of a $40 million system wide improvement project. But that is not the contract the city is currently missing.

Both Amos and McDaniel have since left their positions with the City of Fairmont and are now working in the private sector. Amos currently works for West Virginia American Water in Charleston and McDaniel is working for Greenhorne and O’Mara.

“The final draft that we have, we’re pretty confident that it represents what the agreement actually was,” current City Manager Jim Snider said. “I think the only problem is that now that we have an issue with the provider and the engineers, you basically gather all of your legal documents and everything associated with trying to determine what your damages are, it’s one place you go to — to get a copy of your signed agreement — and obviously it’s disconcerting that we do not have that.”

But Snider and city attorney Kevin Sansalone both indicate they do not believe it will hurt the city in its litigation process with Chapman Technical and GE Zenon. The Virginia-based law firm that is representing the city in its mediation process has requested a copy of the signed contracts from both companies.

“Obviously, the document exists,” Sansalone said. “I think those documents (the city has on file) represent the ultimate documents that were signed.”

Snider said that it is “highly unusual” that the city does not have a signed copy of the contract with Chapman Technical. The final contract is not on file with the city manager’s office or with the city attorney, the city clerk or the utilities manager.

At some point, prior to the summer of 1997, an act of Fairmont City Council gave the broad authority to the city manager to negotiate the contract with Chapman Technical for the design of the water system improvement project. Council’s act, probably by resolution, gave the city manager broad powers to negotiate the contracts as the representative for the City of Fairmont.

Nick Fantasia, the mayor at the time the contract was signed, said he had nothing to do with the actual signing of the contract, but confirmed that a council resolution would have been passed to allow the deal to be struck.

He said he does not know where the contract is today, but he would “assume” that the city manager has it. He said the utility manager and Sansalone, who was contracted by the City of Fairmont for legal services through his law firm at the time the contract was signed, should also have copies of the signed document.

McDaniel said that he knows there was both an engineering services agreement with Chapman and a procurement agreement with Zenon signed when the decision for the plant was executed in 1997.

He said he does not recall if there was a formal signing ceremony, but is positive that the documents exist. However, he does not know where they are today.

“I wouldn’t have any idea where they are. But they certainly exist; they’re somewhere,” he said. “I don’t know where the previous utility manager had them or where they are after I left, but they certainly existed.”

He said the previous utility manager could have also signed the documents, and he said that his best guess for the place to start in locating them would be with Sansalone.

He also said that he recalls viewing the procurement documents over the years, most recently when the city was doing research to determine what needed to be done for corrective action for the plant after the water emergencies during the winter of 2007.

Amos said he also does not know where the signed contract is today, but he knows he saw it after it was signed.

“That was a major contract executed by the city as the owner,” he said. “I know that the city staff put a lot of effort into that entire project and the selection equipment manufacturer and supplier to be used. It was a very, very important process.”

Amos said it “certainly wouldn’t have been inappropriate” for he or McDaniel to sign the contracts, but does not recall who actually penned the documents.

It wasn’t until a few years ago that Sansalone was hired by the city as a full-time attorney and now occupies an office in the city’s main offices. Sansalone reviewed drafts of the 1997 contract between Chapman Technical and the city for the water system improvements.

Following his review, Sansalone gave his legal opinion about the documents to McDaniel and Chapman Technical officials in the form of a memorandum, and a cover letter on the draft copy the city has on file indicates that Sansalone had conversations with Robert Belcher, vice president of environmental engineering for Chapman Technical, about increasing the amount of professional liability insurance.

What may be at issue is Exhibit H of the document, which lists all of the limitations of liability for Chapman Technical, including professional liability, or failure to follow the standard of care that’s assignable to engineers.

In the contract itself, Chapman Technical is insured for $1 million worth of professional liability, or errors and omissions in the design of the plant and water system, which Sansalone says is not unusual for that amount of coverage in 1997 for E&O liability. But Exhibit H in the contract is a clause that essentially protects Chapman Technical from any claim exceeding the amount it is insured for, including damages that occur because of negligence, professional errors and omissions, strict liability or breach of contract or warranty. At the time he reviewed a draft document in 1997, Sansalone argued that Exhibit H should be excluded from the contract all together, but he indicated that the clause is within document that was eventually signed by McDaniel.

“If it weren’t for Exhibit H, really they’d be liable to the extent of their assets,” Sansalone said, and not just the $1 million insurance policy.

Whether the city will be held to that $1 million clause for errors and omissions in design, which the city and its consultant STRAND Associates claims is the reason for the failure of the plant in 2007, will be considered in the legal process Fairmont is going through right now.

“That’s going to be tested, at some point, whether it is through the mediation process or ultimately in litigation, that’s going to be argued,” Snider said. “Our argument is going to be that no, we are not limited to that.”

The contract with GE Zenon has a similar clause for $4 million, but that represents the value of the product Zenon provided.

E-mail Misty Poe at mpoe@timeswv.com.

E-mail Mallory Panuska at mpanuska@timeswv.com.