A 2020 court date is set for a jury to determine who will pay out damages in a lawsuit between Brainerd company Tom’s Backhoe Service and the city of Brainerd.

The issue arose after repairs were needed to portions of the utilities expansion project the city hired Tom’s Backhoe to perform at Brainerd Lakes Regional Airport in 2016.

The repairs have since been made, but the two parties disagree over who should foot the bill.

Tom’s Backhoe believes Brainerd owes it more than $800,000 for the repair project and other costs, while the city alleges Tom’s Backhoe is to blame for the leaks in the first place and requests $126,000 from the contractor for liquidated damages, as the project was not completed on time.

Under the project contract, Tom’s Backhoe worked to bring Brainerd Public Utilities water and sewer service from the city of Brainerd to the airport property boundary. Work began in April 2016.

In a civil complaint filed in Crow Wing County District Court in March 2018, Tom’s Backhoe said the project was shut down for the winter in the late fall of 2016 and at that time was considered to be “substantially complete,” with the new water and sewer systems operational as of December 2016. Prior to work restarting in spring 2017, the complaint said a number of leaks were found in areas of the water system that had been completed in 2016.

In a counterclaim filed in April 2018, the city of Brainerd agreed with those statements.

Tom’s Backhoe’s lawsuit also alleged between the time the project was shut down in the fall and started up again in the spring, the city or others with the city’s consent had taken control of a booster station and operated in such a way as to damage portions of the water system work done by Tom’s Backhoe.

“On information and belief, after all required testing had been undertaken and the water lines had passed all such required testing, the City or its representatives operated the booster station with persons not sufficiently trained, at pressures beyond those necessary or appropriate, and while ignoring alarms and other indications that they were improperly operating the booster station,” the complaint states.

Brainerd denied these claims in its counterclaim, alleging the damages were caused by Tom’s Backhoe’s own acts or omissions, or acts or omissions of others over whom the city had no control. Therefore, the city said it is not liable for damage costs.

“Installation of water lines and associated equipment were not completed per project plans and specifications, resulting in multiple leaks in the system that required repair,” Brainerd’s counterclaim states. “Repair of multiple leaks and subsequent necessary testing of the water lines delayed completion of project.

“Pursuant to section 4.03 of contract, (Tom’s Backhoe) agreed to pay liquidated damages in the event the work was not completed within the times specified by the contract.”

According to its lawsuit, Tom’s Backhoe made clear to the city, during weekly project meetings and in various in-person and written communications, that it disputed any obligations to undertake the investigative and repair work and it would require payment for the work.

The city denied these assertions in its counterclaim.

Tom’s Backhoe is suing Brainerd for at least $840,919.30, which includes:

• $546,859.22 worth of extra work to test for and repair the leaks.

• $248,632.66 in retainage the city still owes Tom’s Backhoe for the original project contract.

• $45,427.42 resulting from a dispute Tom’s Backhoe alleges sprang up between the city and Anderson Brothers Construction Co., one of the subcontractors on the project. In its complaint, Tom’s Backhoe said Anderson Brothers claimed it was owed more than it was paid for quantities of material used on the project. Brainerd’s counterclaim denies this allegation.

The complaint from Tom’s Backhoe also requests:

• Pre- and post-judgment interest from Brainerd, as allowed by law.

• A declaratory judgment that Tom’s Backhoe is not subject to liquidated damages.

• An award for costs, disbursements and attorney fees, as allowed by law.

• Such other and further relief as the court deems just and equitable.

In its counterclaim, Brainerd denied many of the allegations and countersued Tom’s Backhoe for $126,000 in liquidated damages and requested the following:

• Dismissal of the plaintiff’s complaint with prejudice and award of Brainerd its costs and disbursements.

• Declaratory judgment that Tom’s Backhoe is subject to liquidated damages and Minnesota Pollution Control Agency administrative penalties pursuant to the terms of the contract.

• An award of costs, disbursements and attorney’s fees, as allowed by law.

• Such other relief as the court deems just and equitable.

The city alleges the $126,000 in damages are due to the project not being completed on time. The project’s contract originally had two completion dates -- Oct. 21, 2016, for substantial completion and Dec. 14, 2016, for final completion. A change order extended the final completion date to June 2, 2017. The project was completed in October 2017.
Both parties accuse the other of breach of contract, which both parties deny on their part.

On April 25, 2019, both parties appeared before 9th District Judge Patricia Aanes via telephone conference for scheduling, during which she ordered the case to be tried by a jury.

The trial is set for 9 a.m. May 12, 2020, and is anticipated to last five days.

During a BPU Commission meeting Tuesday, July 23, BPU Superintendent Scott Magnuson updated the commission on the case. The first round of depositions began two weeks ago, he said, when Joel Fremstad, attorney for Tom’s Backhoe, deposed those on the city’s side. He expects another deposition with City Attorney Joe Langel next week. Magnuson said he expects depositions to be ongoing.

Neither Langel nor Fremstad could be reached for comment Tuesday afternoon.

Background with Tom’s Backhoe

This lawsuit is not the first issue Brainerd has encountered with Tom’s Backhoe Service.

In May 2015, the city chose not to pursue legal action to recover a $7,000 overpayment to Tom's Backhoe Service.

The accidental overpayment was part of a mediated settlement with the company following work on a 2012 Southeast 19th Street project. The city communicated with the contractor on the oversight and requested the overpayment be returned, although the contractor did not agree to do so.

Also in 2012, the city assessed $11,000 in damages against the company after it missed a deadline to complete a South Seventh Street project on time.