The suit was filed yesterday in New Jersey Superior Court in Monmouth County and served upon Gilbane today at its Lawrence, N.J., regional office. The SDA is seeking compensatory and other damages from Gilbane, which was terminated from the Midtown Community Elementary School and 22 other SDA projects in February 2008. The SDA terminated Gilbane from all Authority-managed projects upon determining that there was a fundamental disagreement with the company concerning the responsibilities and duties required of a Project Management Firm (PMF).

Due substantially to Gilbane’s failures in managing the project, the school's exterior walls became infested with mold in late 2006. The school's exterior walls had to be demolished and replaced, delaying the school’s opening by one year. The school will open in September 2008.

Project Management Firms, such as Gilbane, are responsible for the management of projects from predevelopment activities through design and construction. They serve as the SDA's eyes and ears at project sites on a daily basis. Through a competitive process, Gilbane was hired to manage projects, including Midtown Community Elementary School, beginning in December 2002.

According to the lawsuit, Gilbane knew or should have known about the existence of mold at least as early as September 12, 2006, when the SSP Architectural Group, the project architect, noted mold in a field observation report. Furthermore, a November 7, 2006 photo taken by Gilbane’s own employees revealed visible evidence of mold. However, Gilbane never notified the SDA and allowed construction to continue. The SDA did not learn of the mold until Turner Construction Company, the general contractor, notified the SDA on January 17, 2007. By then, the brick façade had been fully constructed and there was no safe alternative to addressing the mold except to tear down the façade and sheathing.

"Gilbane did not just make mistakes on this project," said Scott Weiner, CEO of the SDA. "As the suit states, its repeated breaches of contract and failure to notify us of ongoing problems represented an ‘arrogant and cavalier approach’ toward its responsibilities. New Jersey taxpayers should not have to bear the cost of Gilbane's failures on this project. I have every confidence that this lawsuit will be successful. The SDA will aggressively take action whenever it is necessary to protect the public interest."

The Neptune project experienced more than $13 million in unforeseen costs due to mold and the remedial and corrective actions needed. The SDA has recovered a total of $6.5 million from Turner and SSP for their mistakes on the project. Turner, SSP and Gilbane participated in a mediation facilitated by the SDA to allocate financial responsibility among the three parties. Only Gilbane did not reach settlement with the SDA.

"It is the policy of the SDA to mediate when appropriate and litigate whenever necessary. In this matter we have been left with no alternative except to aggressively litigate the matter," Weiner said.

The suit alleges that Gilbane breached its contract in multiple ways, such as allowing the sheathing to be exposed to the elements for as long as five months beyond the manufacturer's recommended 30-day exposure period. Moreover, Gilbane’s failure to identify errors in the design contributed to uncontrolled water intrusion, which resulted in the mold growth. Then, Gilbane allowed four months to pass without notifying the SDA about the existence of the mold.

Other failures by Gilbane included:

• Failure to ensure that the building could successfully be constructed as originally designed;
• Allowing a different sheathing product than originally approved to be installed, then failing to notify the SDA;
• Allowing the sheathing to be installed incorrectly;
• Allowing water to penetrate the building due to incomplete exterior openings and an inadequate water management system; and,
• Failure to identify omissions in design documents such as missing flashing details and the lack of a weather-restrictive barrier.

Through the SDA’s Office of Chief Counsel, a systematic program is now in place for reviewing cases for potential cost recovery. The SDA has several other cost recovery actions under way, including five cases totaling $9 million to recover funds spent on environmental remediation of project sites from responsible parties. Legal complaints are being prepared in five more cases totaling $11 million, with 59 additional cases under review.

A suit also has been filed for $3.6 million for design errors leading to the buckling of steel beams at the Mount Vernon Elementary School in Irvington. Out-of-court recovery actions are underway in eight other cases of errors and omissions by architects and engineers, with 15 to 20 additional instances under review.

Before its termination by the SDA, Gilbane had managed a total of 23 projects in Neptune, Barnegat, Long Branch, Asbury Park, Vineland and East Orange.

Complaint, SDA v. GILBANE BUILDING COMPANY