New trial ordered in case against Nebraska school district

By Grant Schulte, Associated Press | Posted - Aug. 21, 2015 at 10:01 a.m.

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LINCOLN, Neb. (AP) — The Nebraska Supreme Court ordered a new trial Friday for a legal dispute between an architectural firm and a school district that was ordered to pay an extra $2 million for construction work.

Facilities Cost Management Group had sued the Otoe County School District for breach of contract for failing to pay the full amount due for the construction and renovation of three schools.

Otoe County school officials hired the firm in 2007 for work at two elementary schools and a high school, but stopped paying project invoices in 2009 when they learned the project was roughly $2 million over budget.

According to the firm's lawsuit, the district had approved change orders at several points "which significantly added to the square footage and costs of the projects as well as the fees due" to the firm.

School officials argued the contract didn't specify the scope of work that resulted in higher fees and costs. The district said it already had paid more than $3.6 million in fees and costs to the firm, and argued the firm had refused to show how the additional fees and expenses were calculated.

The district counter-sued Facilities Cost Management Group, alleging the firm didn't properly estimate the total cost of work and didn't keep district officials informed about all of the expenses. According to the district's lawsuit, the firm structured its package and change orders in a way that allowed it to claim more fees and expenses.

A jury sided with the firm in February 2014 and awarded nearly $2 million in damages. The state Supreme Court overturned the verdict, ruling the trial judge had erred in instructing jurors that key portions of the contract were "not ambiguous." District attorneys argued portions of the contract weren't clearly defined, including the "scope of work" that could lead to higher fees.

"It is not clear what is encompassed by 'scope of work,'" Justice Lindsey Miller-Lerman wrote in the high court's ruling. "There is some suggestion that square footage may be one way the scope of work may be determined, but there are arguably other ways to determine the scope of work under the contract."

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Grant Schulte


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