2024 12 09 City of Warren's Response to Brencal Claim dated April 25 2024

City of Warren Response to Brencal’s Request for Equitable Adjustment

I. Summary of Brencal’s Request

• Brencal's claim has two components:

  • Flood Claim: Costs associated with time delays and cleanup following two storm events that resulted in failures of the bypass system and flooding of the pump station.

  • Sensor Claim: Costs associated with time delays and investigative costs arising from vibration sensor alarms indicating pumps exceeding acceptable vibration levels when they are not.

II. Relevant Background Facts - Flood Events

• The WWTP-18-006C project was initiated to address sewage overflow issues during extreme rain events.

• The project aimed to eliminate the condition where pressure caused manholes to “pop,” resulting in sewage overflow.

• This information was communicated to prospective bidders, including Brencal.

• The work required the 9-Mile Pump Station to be fully isolated from the sewage system during construction.

• Brencal was responsible for designing, installing, operating, and maintaining a temporary bypass system.

• An Influent Chamber was constructed by another contractor (Ric-Man) and made available for use by Brencal.

• Stop log frames were installed by Ric-Man in pipes connecting the Influent Chamber and pump station.

• The contract documents stated Brencal’s responsibility for “isolating/blinding other piping connections to the Influent Chamber not used as part of the bypass pumping system.”

• The bypass pumping system must maintain a maximum flow rate of at least 48 Million Gallons Per Day (MGD).

• The specifications disclosed that the pump station has a history of experiencing wet weather events in which peak flow rates exceed 48 MGD.

• The bypass system must “be designed to withstand these excessive influent flow rates and reliably maintain a maximum pumping rate of at least 48 MGD.”

Bidder Inquiry #45

• The City confirmed that “Influent flow that exceeds the capacity of the bypass pumping system will result in surcharging the influent chamber where the pumps are installed.

• The pump installation shall be capable of dealing with extreme surcharging.

Bypass System Design and Installation

• Brencal (through its subcontractor Xylem) designed the temporary bypass system.

• The project Engineer (Metco) reviewed the design for general conformance with the specifications.

• Brencal installed stop logs when the bypass system was activated.

• Inflatable pipe plugs were used between the influent chamber and the pump station to isolate it.

• A masonry bulkhead was constructed in a discharge pipe to prevent backflow.

• One sewer line was 42” in diameter, and the other was 54” in diameter.

March 26, 2021, Rain Event

• A heavy rain event occurred, and one of Brencal’s inflatable pipe plugs failed, resulting in flooding of the pump station.

• It is believed a damaged inflation cable on the inflatable plug caused the failure.

• Brencal had not installed any equipment in the pump station, so the flood damage was relatively minor.

• Brencal cleaned up the pump station and made no claim against the City.

City's Response to the March 26, 2021 Event

• The City reminded Brencal of its contractual obligations regarding the bypass system.

• The system was required to withstand such events.

• It does not appear Brencal took any steps to review or enhance the bypass system at that time.

June 26, 2021, Rain Event

• Another major rain event occurred.

• Brencal had installed pumps in the dry well section of the pump station.

• Brencal’s temporary bypass pumps continued to perform at a flow rate of 48 MGD or greater (three pumps operating at 16 MGD each).

• The influent chamber experienced a surcharge, Brencal’s inflatable plugs failed to hold, and sewage flowed into the wet and dry wells.

• Shortly thereafter, Brencal’s masonry bulkhead in the 42” sewer also failed, and sewage entered through the discharge pipe.

• The pump station was filled with 30 feet of sewage.

• The resulting damage required the pumps to be removed and repaired, and extensive cleanup and disinfection were required.

• This second flood caused delays to the project schedule.

Subsequent Actions

• Brencal installed enhanced stop plates and reinforced the bulkhead.

• During subsequent major rain events on July 17 and August 12, 2021, the isolation devices were again subject to a surcharge but held, resulting in the easternmost manholes “popping” as had happened before the Project began.

III. Relevant Background Facts - Vibration Sensor False Alarms

• The Project Specifications required Brencal to provide a vibration detector system for the pumps (Section 43 23 31.13 Vertical Centrifugal Pumps at 2.03 (E)(2) and 2.04 (U)(3)).

• The detectors have continued to send false alarms since installation.

• Brencal agrees the “vibration issue has yet to be rectified.”

• The system manufacturer, Metrix Instrument Company, has made a number of investigatory visits to the site beginning in December 2022.

• Several attempted solutions have been implemented, but nothing has been successful.

• The specifications required the vibration switches to be installed within the pump control panels.

Initial Investigations

• Determined that the wiring for the vibration switches was not correct and that there were some faulty switches.

• Troubleshooting led to the belief that there was also Electromagnetic Interference (EMI) inside the control panel.

• One attempted solution was to move the switches outside of the panels because the EMI was affecting the signal from the sensors.

• This improved the signal, but EMI was still occurring on the signals.

EMI Issues

• The signal from vibration sensors is sensitive and can be affected by EMI generated from nearby electrical power equipment.

• The cable between the sensor and the switch is a heavy-duty, shielded, armored cable, and the cable is run in a conduit separate from any other power/communication wiring, as designed.

• The pump control panels, designed by Eaton under Flowserve, contain electrical power equipment that is known for generating EMI, like transformers and VFDs.

• It is probable that the pump starter panels were not designed with appropriate shielding/protection to maintain an accurate signal from the vibration sensors to the vibration switches.

• Brencal’s supplier should have designed the pump control panels to provide EMI protection/separation for the vibration switches and their wiring.

• The vibration switches were located directly adjacent to the VFDs and transformers within the panel.

Cabling and Terminal Blocks

• The vibration sensor cabling was landed on a terminal block within the control panels, not directly wired to the switches, meaning portions of the wiring carrying the sensitive signal were not protected by the shielding/armoring.

• When the switches were relocated outside of the panels, Eaton simply added terminal blocks where the switches used to be and wired outside with normal American Wire Gauge (“AWG”) wiring, which does not solve the issue of EMI affecting the signal within the cabinet.

• Eaton was made aware in the specifications that the vibration monitoring switches would be installed within the control panels but apparently didn’t take care to design the panel to eliminate the effect of EMI on the vibration sensor signal.

• Brencal argues that the location of the starter panels may be the issue because the distance between the device and the switch is alleged to be too great.

• Brencal’s manufacturer recommended moving the switches down to the pump level, claiming that the distance between the pumping units and the switches was too long to maintain an accurate signal.

• This alternative location was the subject of a temporary installation, but that did not result in any confirmation of the cause of the false alarms.

• Metrix offers the same shielded, armored cabling that was used between the sensors and switches at lengths that are greater than the distance between the pumps and control panels, so the length of the cable should not be a reason for the signal being distorted as the location of the vibration switch.

• As a result of these ongoing issues, Brencal has not achieved Final Completion.

IV. Brencal’s 2021 “Claims” and Metco Responses

• Starting in August 2021, Brencal served a series of letters to the project Engineer presenting costs incurred by the flood on June 26, 2021, and requested a change order for these costs.

• The letters simply request a change order, without any additional information, explanation, or citation of contractual provisions.

• The City’s engineer Metco denied these requests, noting that the sewage floodwater resulted from the failure of the Bypass Pumping System that Brencal was responsible for.

• Metco cited Specification Section 33 01 30 50 and concluded the City had no contractual obligation to participate in any of the costs for which Brencal sought reimbursement.

• On November 3, 2021, Brencal served the City with an email giving notice that it was requesting a 4-month extension of time.

• Brencal gave no reasons for its request; the flooding events were not referenced in the request.

V. Brencal’s April 25, 2024, Request for Equitable Adjustment

• Nearly three years later, Brencal presented the City with its total costs for the entire Project of 12,312,985.47, claiming the full amount less payments received of 10,269,944.96.

• Brencal has now included any costs incurred due to the March 26, 2021, flood event in the requested amount. Costs for the March 26, 2021, event were not previously requested.

• Brencal is also claiming for the costs of all extended time on the Project, including general and administrative “Indirect Costs” (i.e., home office overhead) of 3,589,049.83 and a 20% mark-up for overhead and profit of 2,462,97.09.

• Brencal’s total claim at this point is 8,094,687.43, with the majority being home office expenses and OH/P

VI. Legal Analysis of the Flood Claim

(A) Brencal’s 2021 letters did not meet the contractual requirements for a “claim.”

• Section 240 of the General Conditions governs the request.

• Section 240 requires written notice within 48 hours of receiving instructions considered to be extra-contractual.

• The notice shall state the amount of the extra cost involved and the reasons why the instructions require performance beyond that required by the contract resulting in the extra cost.

• The notice must be given before proceeding with the subject work.

• Failure to comply with the foregoing conditions shall be deemed a waiver by the Contractor of any claim whatsoever.

• The costs involved in the flood cleanup and repairs did not arise from an Engineer-instituted change of design.

• No additional instructions were provided to Brencal, nor were any needed.

• The contract generally requires that Brencal maintain and clean the project site and facilities.

• Section 242 also provides a procedure for “extra work” for delays.

• It shall become the sole responsibility of the Contractor to present such relevant facts and data as will clearly show to the City that the alleged delays, as claimed, are unavoidable and substantial and could not have been reasonably anticipated or guarded against.

• In 2021, Brencal made no effort to comply with the foregoing provision.

• Brencal’s “claim” is procedurally defective, and Brencal has already waived “any claim whatsoever” related to the flood events.

(B) Brencal failed in its express contractual duty to isolate the 9-Mile pump station

• Even if Brencal had not already waived its Flood Claim, to be entitled to compensation, Brencal must demonstrate the work is beyond the contemplated contractual scope of work.

• Here, the flood cleanup work does not constitute changed work or extra work.

• The bid documents disclose that extreme wet weather events, such as the ones that occurred on March 26, 2021, and June 26, 2021, should have been contemplated by the bidders and factored into their bids.

• The scenario in which the manholes “popped” during major rain storms was one of the conditions intended to be improved by the Project. This was known by the bidders.

Specification Section 33 01 30 50

• Requires that Brencal provide “temporary bypassing of all sewage influent flow to the City of Warren Nine Mile Pump Station,” and that the “bypass pumping system shall divert all sewage normally flowing unto the Nine Mile Pump Station…24 hours a day/seven days a week…

• The temporary bypass pumping facilities may include, but not be limited to, temporary dams, stop logs, blind flanges, pumps and drivers, discharge piping, valves, flow meter, electrical power feed and a controls and monitoring system.

• The CONTRACTOR is responsible for isolating/blinding other piping connections to the influent chamber not used as part of the bypass pumping system.

• Instructed the bidders that the minimum maximum flow flowrate capacity required at all times is 48 MGD, and specifies “The Nine Mile Pump Station has experienced influent peak flows during extreme wet weather that exceeds 48 MGD and CONTRACTOR’s temporary bypass system shall be designed to withstand these excessive influent flow rates and reliably maintain a maximum pumping rate of at least 48 MGD.

• The system is required to withstand the excessive influent flow rates, and the pumps must maintain 48 MGD.

• The bidders were thereby informed that an extreme wet weather event, as described, was possible and not to be unexpected.

• “Withstand” is not defined in the contract. The Oxford Dictionary definition of “withstand” is: “to be strong enough not to be hurt or damaged by extreme conditions, … ”

• “CONTRACTOR is responsible to provide all design, installation and operation of the temporary bypass pumping system.

• The CONTRACTOR is solely responsible for maintaining and monitoring the bypass pumping facilities.

• Brencal had a contractual duty to design, install, and operate a temporary bypass system that would isolate the 9-Mile Power Station and divert all sewage influent around it.

• The temporary bypass “system” included the temporary barriers and stop plugs, not just the pumps.

• Brencal’s duty included providing a bypass system that would withstand (not be hurt or damaged by) extreme influent flow rates, even if they exceeded 48 MGD.

• On or about June 26, 2021, the isolation of the 9-Mile pump station was breached when the isolation devices failed during an anticipated extreme wet weather event, resulting in influent flooding the chambers, damaging equipment, and contaminating the interior of the pump station.

• Brencal failed to perform its clearly prescribed contractual duties.

Section 219 of the General Conditions

• Imposes a general duty to protect the work: “The Contractor shall take all responsibility for the work and shall continuously maintain adequate protection of the work and all materials and equipment to be incorporated therein from damage. ***”

• Brencal failed in this regard.

• Brencal may argue the June 26 event was an “act of God,” the extent of which could not have been anticipated.

• The bid documents notified Brencal that extreme wet weather events were possible and would exceed 48 MGD.

• Brencal agreed to design a system that would withstand an extreme event.

• It was reasonably possible to design an appropriate system, as proved by subsequent wet weather events during which the system did withstand the flow pressure.

• Brencal may argue that its pumps kept working at or above 48 MGD throughout the storm event and, therefore, did “withstand” the extreme influent flow.

• Maintaining the continuous pump rate at 48 MGD during an excessive influent flow event was only one of Brencal’s duties.

• The contract language makes clear there were multiple duties and that the entire “system” had to withstand the event and maintain isolation. The entire system did not.

• Brencal may argue that since the Engineer reviewed and approved the system design, it bears some responsibility.

• The contract language makes clear Brencal is responsible for the design.

• Requires that Brencal provide design calculations performed by a Michigan-licensed engineer.

• A reviewer is entitled to rely on an engineer’s seal, assuming such calculations were provided.

The General Conditions at 225

• “The Engineer shall not be responsible for the Contractor’s failure to perform the work in accordance with contract documents. ”

• The Engineer’s review does not alter Brencal’s contractual responsibilities.

• Brencal failed to provide the Engineer with any shop drawing for the bulkhead that failed, so the Engineer never performed such a review.

(C) Brencal has an affirmative duty to clean the flood damage without compensation

• The cause of the flooding was the failure of Brencal’s bypass system to withstand the extreme weather event and maintain isolation of the pump station.

• Section 33 01 30 50 at 1.07(D) provides, “The CONTRACTOR shall be solely responsible for any overflows or backups during the construction caused by its activities.

• 1. 07(E) provides, “The CONTRACTOR shall be solely responsible for cleaning the Work areas and equipment left in the sewers following wet weather flooding or high-water events.

• 1. 07(F) provides, “The CONTRACTOR shall be solely responsible for any flooding and/or property damage caused by his temporary bypass pumping system.

• The Contractor has duties to clean the facilities and turn over equipment that meets the specifications.

• Because there is a causal connection between the failure of Brencal’s bypass system and the damage from the flooding, Brencal is solely responsible for the cleanup.

• Failure to clean up and repair the pumps after the flooding would be a breach of the contract by Brencal.

(D) Brencal contractually assumed the risk of flood damage

• Even if a causal connection between Brencal’s failure to perform its contractual duties and the flooding did not exist, Brencal assumed the risk for the damage that occurred in this instance.

• Causation is not a requirement to establish that Brencal is responsible for cleaning up and repairing the flood damage.

• The General Conditions are replete with explicit provisions that transfer any and all risks of an extreme weather event to Brencal.

The General Conditions at 201(B)(2)

• “Assumption of Risk. The Contractor undertakes and assumes all risk of dangerous conditions, on all places where it will be performing the work, in order to determine whether such places are safe for the performance of the work. Except for acts of gross negligence or intentional misconduct by the City or its employees or agents, the Contractor also agrees to waive and release any claim or liability against the City for personal injury or property damage sustained by it or its agents or employees for personal injury or property damages while performing under the Contract.

201(B)(4)

• “Property and Materials. The Contractor agrees that it is the Contractor’s responsibility, and not the responsibility of the City, to safeguard the property and materials that the Contractor or any of the Contractor’s agents, subcontractors or employees, use or have in their possession while performing under this Contract. Further, the Contractor agrees to hold the City harmless for any loss of property and materials used pursuant to the Contractor’s performance under this Contract which is in their possession, except if caused by the City’s gross negligence or intentional misconduct.

219

• “The Contractor shall assume full responsibility for loss or damage to the work during the entire construction period resulting from caving earth and from storms, floods, frosts, and other adverse weather conditions, and from all other causes whatsoever not directly due to the intentional act or gross negligence of the City, including fire, vandalism and malicious mischief, and shall turn the finished work over to the City in good condition and repair, at the time of the final estimate. For the purpose of this section the decision of the Engineer, with respect to existing conditions and the need for corrective action by the Contractor, shall be final.

225

• “Any work which, during its progress and before its final acceptance, may become damaged from any cause, shall be removed and replaced by satisfactory work at the Contractor’s expense.

227

• “The Contractor shall bear all risk of losses resulting to him on account of the amount or character of the work or because the nature of the ground in which the work is done is different from what was estimated or expected, or on account of the weather, floods, elements, or other causes; ***”

• Michigan Courts enforce clear and unambiguous contract language.

• Brencal received consideration in exchange for expressly assuming the risk of extreme weather, a risk of which Brencal was made fully aware before entering the contract.

• Regardless of the cause of the flooding, these contractual risk-shifting provisions should be enforced.

(E) Brencal is not entitled to damages for the delay caused by the flooding

• The contract form provided in the bid documents expresses that Brencal is not entitled to damages for delays due to storms, floods, or acts of Providence.

ARTICLE II - THE TIME

• “… It is agreed that if the Contractor shall be unavoidably delayed in beginning or fulfilling this Contract by reason of excessive storms or floods, or by Acts of Providence, or by general strikes, or by court injunction, or by stopping of the work by the Owner because of any emergency or public necessity, or by reason of alterations ordered by the Owner, the Contractor shall have no valid claim for damages on account of any cause or delay; but Contractor shall in such case be entitled to such an extension of the above time limit herein, as the Engineer shall adjudge to be just and reasonable; provided, however that formal claim for such extension shall be made in writing by the Contractor within a week after the date upon which such alleged cause or delay shall have occurred.

• The General Conditions at Section 245 also limit the Contractor’s delay-related damages to those circumstances in which a court order or public authority delays the work.

• In such cases, the Contractor is entitled to an extension of time and only the actual costs to remove tools or materials and protect the work already underway. These circumstances are not present here.

(F) Brencal’s request for an extension of time is procedurally defective

• Brencal’s November 3, 2021, request for an extension of time does not identify a cause or delay event.

• Assuming the “delay event” was the June 26, 2021 flood, Brencal also failed to provide an incident report as requested by Metco, which should have provided Brencal’s analysis of the cause(s) of the isolation breach.

• Having failed to provide the essential information required by the contract, the November 3, 2021, request does not meet the procedural requirements for a claim.

• Assuming the delay event was the June 26, 2021 event, the request also fails to comply with the contract at Article II, which requires the notice to be provided “within a week” after the cause or event.

• If the claim is associated with the June 26, 2021 event, the claim is untimely.

• The same is true for Brencal’s April 25, 2024, Request for an Equitable Adjustment.

• Section 242 of the General Conditions applies to requests for extensions of time. That section provides for a notice of the claim within 72 hours.

• Brencal failed to comply with the notice provisions in a timely manner, nor did the Contractor support any basis for entitlement.

• Brencal requests for additional time related to the weather events are procedurally defective.

(G) The Delay Issues Overlap But Are Not Concurrent

• The delay in reaching the point where the temporary bypass system could be removed was not caused by the vibration detection system false alarm issue.

• The Engineer required that Brencal comply with the specifications in 33 01 30.50 before the bypass system could be removed.

• The vibration system defects were known at that time but did not delay the Engineer from releasing the bypass system.

• The delay in awarding substantial completion was due to the lack of complete training and information so the City could operate the system with its own personnel, not the vibration issue.

• The vibration issue is the most significant issue holding up the award of Final Completion.

VII. Legal Analysis of the Vibration Sensor Claim

Relevant specifications include:

• 43 23 31.13 at 1.0 Summary C. – “The CONTRACTOR/Pump manufacturer shall coordinate with the instrumentation and controls system supplier to ensure compatibility of control/monitoring circuits and proper interface of the pumps, motors and VFD/starters with the facility instrumentation system.

• 43 23 31.13 at 1.03 Quality Assurance (G)(5). “If there are difficulties in operation of the equipment due to the manufacturer’s fabrication or CONTRACTOR’s installation, additional services of Manufacturer’s Representatives shall be provided at no change in Contract Prices or Time.

• Brencal does not deny it is responsible for meeting the specifications and providing a properly functioning system for the vibration detectors.

• Brencal’s current theory regarding the reason for the malfunctioning is the location of the panels, but that theory has not been proved.

• The false alarms have not been eliminated, as all five units still continue to register false alarms.

• It has been many months since the temporary pump level location experiment was attempted, and Brencal’s theory remains just a theory.

• No design defect(s) on the part of the City’s engineer have been identified.

• Until there is some reasonably definitive conclusion regarding the malfunctioning detector system, the problem of nuisance alarms persists, is still holding up Final Completion, and is still Brencal’s contractual responsibility.

• Both the City and Metco have been involved in the troubleshooting and have cooperated with Brencal, Metrix, Eaton, and Brencal’s subcontractors to assist with the investigation and analysis.

• The City has done nothing to disrupt, delay, or hinder the investigative and remedial efforts by Brencal.

• Any and all liability for costs arising from the vibration sensor system failure lies with Brencal, and all responsibility for the extended time of performance remains with Brencal.

VIII. Legal Analysis of “Abandonment” Claim

• Brencal argues that the parties have “abandoned” the contract.

• Under Michigan law, parties have been found to have abandoned their contract where they act inconsistently with the terms of the contract.

• Brencal cites Interior/Exterior Specialists Co. v Devon Industrial Group, LLC, where the parties were found to have abandoned their contract where the general contractor was forced to act inconsistently with the contract terms through interference by the owner with means and methods, schedule, sequence and scope, which resulted in work being performed under conditions contrary to those contracted for.

• Here, the conditions under which the work was performed were exactly as described in the contract.

• Even if that were not the case, the rule is clear that an “abandonment” must be mutual, and the intention clearly exhibited:

  • “A party displays intent to abandon if it “positively and absolutely refuses to perform the conditions of the contract, such as a failure to make payments due, accompanied by other circumstances, or where by [its] conduct [it] clearly shows an intention to abandon the contract. ” Collins v. Collins, 348 Mich. 320, 83 N.W.2d 213, 216-17 (1957) (internal quotations omitted).

  • Abandonment must be mutual, however; if one party continues to perform under the contract after the other party exhibits its intent to abandon, there has been no abandonment. See 17A Am Jur 2d Contracts § 543; see also SS Silberblatt, Inc. v. Seaboard Sur. Co., 417 F.2d 1043, 1054-55 (C.A.8, 1969) (holding that abandonment requires mutual consent of the parties); Dault, [supra ] at 915-16 (finding that the parties abandoned the contract because one party ordered work not contemplated in the contract and the other party “acquiesced” by performing the non-contractual work rather than performing under the contract). [In RM Taylor, Inc. v. General Motors Corp., 187 F.3d 809 (C.A.8, 1999).]

• It cannot be reasonably argued that either party involved here showed any intention to abandon the contract (at least until now).

• The City did not order any out-of-scope work except that which is covered by a mutual contract modification.

• There is no allegation of interference by the City, or that the City disrupted Brencal’s work or sequence or schedule, nor could there be.

• The City has consistently stood on the terms of the written contract as the basis of its position. No mutuality can be shown.

• Abandonment is not a viable claim.

IX. Legal Analysis of Damages Claimed by Brencal

• Much of Brencal’s presentation focuses on its claim for total cost damages.

• The basis of Brencal’s total cost quantum meruit damages claim is its “abandonment” theory, which is without merit.

• The contract has not been abandoned, and it continues to govern the relationship of these parties.

• Any damages that Brencal may be entitled to must, therefore, be grounded in the contract. Brencal has not cited any contractual basis for recovering any of its damages.

• Brencal has been paid in accordance with the contract, including the July 19, 2022 contract add of 689,465.90.

• The only amount not paid to Brencal is 259,737.00 in retention, which the City is entitled to hold until Final Completion.

• Regarding Brencal’s claim for additional months of keeping the bypass system on site, the City does not see a contractual basis for this claim.

The contract states at Section 33 01 30.50 - 3.03(C) that:

• “Once the temporary bypass pumping system is no longer needed for the construction of improvements in the Nine Mile Pump Station and the new pumping system in the Pump Station has been performance tested and approved by the ENGINEER for operation, the temporary bypass pumping system shall be removed and all impacted areas restored to their existing condition. removal of the bypass system requires both that the system not be required for further construction and that the system is site tested to the satisfaction of the engineer.

• Both requirements must be met before the bypass system is to be removed.

• Brencal did not meet both requirements until July 25, 2022, at which time the Engineer promptly released Brencal to remove the temporary bypass system. Any costs after the 12-month period are the responsibility of Brencal.

33 01 30.50 - 1.0[4] 3(B) provides:

• “The duration for the continuous temporary bypass pumping operation shall be a maximum of 12 months from the start of the bypass pumping period. If temporary bypass pumping is required beyond 12 months the CONTRACTOR shall be responsible for all additional costs associated with extending the temporary bypass pumping period and without any increase in Contract Price or Time.

• The requirements are not vague, and the City did nothing to hinder the contractor.

• The City has performed in full conformance with the contract.

• Brencal accepted responsibility for the risk of extreme weather events.

• Brencal was released to remove the bypass system as soon as it met the contractual requirements.

• Brencal remains responsible for completion of the vibration detection system.

• The City has never indicated any intention to abandon the contract.

• Brencal can show no breach by the City, no harm caused to it by the City, and has otherwise failed to demonstrate any entitlement to any damages at all. Rather, the City is entitled to at least 2,472,000.00 from Brencal.

X. Legal Analysis of Liquidated Damages Claim Against Brencal

• The City reserves the right to assess liquidated damages against Brencal.

• There is no dispute regarding the contractual dates for Substantial Completion and Final Completion.

• The Notice to Proceed was issued on January 7, 2020.

• Applying the time durations in Addendum No. 1, the original Substantial Completion date was September 15, 2021, and the original Final Completion date was December 14, 2021.

• Brencal acknowledged the contractual Substantial Completion date of September 15, 2021, in its request for an extension of time, dated November 3, 2021.

• On July 19, 2022, the parties agreed to a contract modification that added 353 days to the time for Final Completion, re-setting that date as December 2, 2022.

• Brencal has not yet achieved Final Completion.

• The contract modification does not mention Substantial Completion. The City did not wish to change the Substantial Completion date because it had already passed, and it preserved its right to assess liquidated damages from September 15, 2021.

• Assuming the additional 353 days were added to the date for Substantial Completion as well, that would place the modified date at September 3, 2022, which is a Holiday Weekend Saturday. Skipping to the next business day, the adjusted date of Substantial Completion would be Tuesday, September 6, 2022.

• For purposes of this mediation only, the City will use the theoretically modified Substantial Completion date of September 6, 2022.

Under the express terms of the contract in Supplemental Specifications

• The achievement of Substantial Completion is a specially-defined term. It is not the common law definition.

• The owner’s use of the system alone does not constitute “Substantial Completion” under this contract.

• For “Substantial Completion” to occur, the contractor must have the project completed, site approval tested, and the owner’s personnel trained to the point where the owner can reliably operate the system. The terms are clear and not ambiguous.

• Applying the contract requirements as written, Brencal did not achieve Substantial Completion until December 20, 2023

The Supplemental Specifications at I CONTRACT TIME OF COMPLETION (E) provides that:

• “Liquidated damages will be assessed against the Substantial Completion date and Final Completion date at the rate of 3,000.00 per each calendar day that work remains incomplete.

• As of the date of this Response (December 9, 2024), the City is therefore entitled to TWO MILLION FOUR HUNDRED SEVENTY-TWO THOUSAND DOLLARS AND ZERO CENTS (2,472,000.00) in liquidated damages for 824 days. The City has never waived its rights to collect these amounts from Brencal.

• Liquidated damages clauses are enforceable when local governments contract for public works projects. Moore v St Clair County, 120 Mich App 335, 341; 328 NW2d 47 (1982).

• The liquidated damages clause in the contract is reasonable, not a penalty, and none of the circumstances that would excuse the assessment of liquidated damages are present.

XI. CONCLUSION

• Overa

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