2006-06-01 / News

Councilors to decide on Siegmund appeal

By Dotti Farrington

At a special meeting this week, the Town Council was expected to decide whether or not to appeal the arbitration decision on the three-year-old Siegmund case involving work to upgrade the municipal sewer system. The deadline for appeal is Tuesday, June 6.

Town Solicitor J. William W. Harsch responded to charges and claims by Laszlo Siegmund and his firm, Siegmund and Associates Inc. of Providence, that Siegmund won the case.

In the first battle, before an arbitration panel, the town got nothing and Siegmund was awarded $47,105. The council may decide to legally dispute that amount.

Harsch said in an interview last week that the next battle, if started, would be unique in that it would represent a "malpractice suit" against an engineer. He said that such cases were rare or nonexistent because the engineering industry has established the usual practice of arbitrations to settle differences with clients.

The councilors previously sent Harsch to arbitration with a message that Siegmund was hired, "after aggressive efforts on his part, to do the work as the hometown boy with enough years here to qualify as a native son." He had done some satisfactory work for the town on waterfront construction at East Ferry. Harsch claimed Siegmund took advantage by submitting positive work progress reports that the town later claimed were inaccurate and misleading.

Siegmund disputed such characterization of himself and his firm's work.

The document trail

According to the documents, Siegmund and former Town Administrator Maryanne Crawford left a trail of disputes throughout most of 2003. If anything, Crawford gave Siegmund too much patience, Harsch said. But Siegmund said Crawford never wanted him to get the contract in the first place. In arbitration testimony, she denied any such bias.

Town officials withheld approval of payment on some Siegmund bills that led to his repeated demands for payment. As 2003 was ending, he and the town talked about terminating the contract. Harsch said last week the town "was willing to cut him loose," but he was insisting on $80,000 in payments, plus releases from holding him harmless for possible work deficiencies. Siegmund said he and the town were within a $10,000 settlement when the town sent him a Jan. 14, 2004 termination letter, and then he filed for arbitration.

Harsch said the negotiations never reached a $10,000 settlement.

Even Crawford, who defined some problems, and other town officials, did not see the extent of alleged deficiencies until the arbitration started. According to arbitration testimony, Douglas Ouellette, who manages the wastewater treatment plant, triggered a review of Siegmund's work when in late 2003 he found defects in a manhole that was supposed to have been upgraded under Siegmund's supervision. In March, 2004, the town hired

Thomas Nicholson of C & E Engineering Partners of Woonsocket as an independent consultant. Nicholson wrote that Siegmund finished only about half of the design for wastewater treatment plant upgrades that should have been completed by the end of 2003. He reviewed other work by Siegmund's company and said it was less than acceptable.

Siegmund billed the town for 84 percent of design plans for upgrading the treatment plant. He disputed Nicholson's testimony about both the quantity and quality of his work. He withheld his design work until 2006 as part of the arbitration process in February. The town said it did not receive his design plans in time to be of any value.

Report on work done, or not

Harsch said the town "did not know how negligent Siegmund had been" until it received Nicholson's report in April 2004. Until then, he and others thought the dispute represented personal differences between Siegmund and Crawford and not professional matters, Harsch said.

The review said Siegmund's work on infiltration/inflow studies was not done as specified and needed, that three of eight meters needed to do the studies malfunctioned, and that the defective tests were not repeated. Nicholson also said that Siegmund's calculations about flows were incomplete, that proof that Siegmund inspected the manholes as claimed was lacking, and that pre-design evaluation and design on pumping stations and the treatment plant were insufficient. Siegmund disputed all of the town's claims during arbitration. He claimed the arbitration award "demonstrates that no engineering and no management mistakes were made."

Harsch said Siegmund's pursuit of arbitration "forced (the town) to respond and defend itself (and) to include any counterclaim it might have; otherwise it would be barred from doing so in the future."

Harsch said the town's willingness to admit there was a mutual termination of the contract, as found by the arbitrators, "was technically fatal to the town's claim" within the arbitration. The town could still recover its claims in a court suit if it successfully appealed the arbitration panel's decision, he said.

Harsch said if the arbitrators had ruled early in their proceedings, as asked, the case involved "a basic jurisdictional matter" that would have saved both Siegmund and the town considerable costs in "putting on the entire case."

Siegmund called the town's countersuit "retaliation" for his final bills. He claimed the April 6, 2006 decision represented his win and "completely exonerates my firm." He believes the decision is not subject to appeal. The town claimed the arbitration panel's was a "draw," or as Harsch has claimed, "a hollow victory at best."

Contract costs

The contract called for Siegmund to be paid $634,765. He was paid $392,878.

The town countersued originally for more than $1.5 million, but then amended its claims by deducting $430,000 in interest on the bond it had for the $7.24 bond for sewer system improvements. The town was able to establish that the no-interest bond could be carried over for the work still to be done under new contracts.

The unfinished work was turned over in early 2004 to Vollmer Associates of Boston, the firm that was the second lowest bidder for the contract Siegmund was awarded in 2001. Vollmer now holds five contracts with the town for a total of $630,250 to finish or correct the work Siegmund had been hired to do. Vollmer also was paid $30,549 as an expert witness in the arbitration against Siegmund.

Siegmund was hired to oversee the $7.24 million in sewer system improvement work that was to have been completed by the end of 2003.

Arbitration costs

Siegmund's insurance company was awarded $30,000 toward its legal costs of the arbitration. The town is trying to negotiate that amount with the insurance company. Siegmund was not awarded any costs for his lawyer Mark Liberati, a Jamestown resident and former town councilman whose office is in Providence.

So far, the town spent more than $200,000 in legal fees to date, expert witness costs, and arbitration fees to fight Siegmund's claims.

Arbitration decision

Arbitrators awarded Siegmund $47,105 and nothing to the town. The award provided Siegmund with nothing for unpaid invoices or claims of lost profit, and $5,062 toward his $47,105 claim. They also gave his insurance company $30,000 toward attorney fees.

The arbitrators awarded nothing to the town and said all claims not paid was a denial of those claims.

Siegmund's positions

Siegmund said termination of his firm's contract "was used as a convenient way to hire Vollmer." The Vollmer contracts were awarded without following mandated procedures, he said. The councilors debated procedures on awarding the contracts in 2004 and concluded that the they followed both town and state laws.

Siegmund and Vollmer also vied for the town highway barn project at Taylor Point. The design work went to Vollmer but voters later rejected the garage project. Siegmund had done volunteer work on highway barn studies and had challenged Vollmer's cost estimates only a few weeks before the town announced that it had terminated Siegmund's contract for the sewer-system upgrade. At that time, town officials said the two jobs, and the issues involved in each, were completely separate from each other.

Return to top