Miami Beach city manager calls Clark's convention center allegations 'unfounded'

UPDATE: Feb. 3: In a letter to Miami Beach Mayor Dan Gelber and the city's commission members, city manager Jimmy Morales responded to what he called "unfounded allegations" made by Clark Construction Group in its lawsuit, which seeks approximately $90 million for extra work and retainage.

Morales said that Clark has still not reached substantial completion nor has the project received a temporary certificate of occupancy, which is why the city placed the contractor in default seven months ago. Morales said the city is withholding retainage in order to protect its financial interests and provided copies of letters from the city and from the architect outlining the general contractor's alleged deficiencies.

In response, Clark's attorney Etan Mark with Mark Migdal & Hayden, said that the issues raised by Morales are addressed in the lawsuit and that Clark has met with Morales and other city leaders "dozens" of times to try and reach a resolution.

"It was apparent in these meetings that without agreement on a reasonable path to resolution, Clark would be forced to pursue legal action in order to protect Clark and its subcontractors," Mark said.

Dive Brief:

Clark Construction Group is suing the city of Miami Beach for $90 million, which represents money the contractor says it is still owed under its contract for the $600 million, 1.5 million-square-foot renovation and expansion of the Miami Beach Convention Center. Also named as a defendant in the suit is consulting firm Hill International, which acted as the owner's representative during construction.
In the lawsuit, Clark says that both the city and Hill acted in "bad faith, unprofessionally and in derogation of their respective duties and obligations" during the course of the project. Clark alleges that changes and other extra costs add up to more than $70 million and the balance due on the contract, which includes retainage, is $20 million.
Clark said that despite the city and Hill mismanaging the design process, which made the original guaranteed maximum price unrealistic, and not living up to agreements about extensions of time and changes, the general contractor and its subcontractors made sure that work was completed in time for the convention center to hold its scheduled events. Even so, Clark said the city back-charged it for liquidated damages in the amount of $15,000 per day, even for days that the city refused to give Clark access to the property. The facility is the site of the Super Bowl Experience fan event this weekend for Super Bowl LIV.

Dive Insight:

Clark's allegations include claiming the city refused to pay for changes, didn't reimburse Clark or its subcontractors for delays related to 2017's Hurricane Irma, refused to grant appropriate extensions of contract time and unreasonably held retainage.

Specific allegations that Clark has made include:

The city hired one of Clark's subcontractors to perform extra work at the convention center and then made the decision to use part of Clark's earned fee to pay the subcontractor.
The city continually changed what it required for Clark to obtain a Temporary Certificate of Occupancy.
The city received enough money from the county and city to reimburse contractors for hurricane costs but kept some of that money instead.

"Clark and its subcontractors proceeded with all work in good faith to ensure absolutely no disruption to the city’s more than 92 planned, revenue-generating convention center shows, including four Art Basel Miami Beach events," said attorney Etan Mark, with the law firm of Mark Migdal & Hayden, in an emailed statement sent to Construction Dive on behalf of Clark.

"After attempting to reach resolution for more than one year, Clark is very disappointed to arrive at this juncture but must take this necessary step to protect itself and its subcontractors, many of which are local. The completion of the convention center is a point of pride for Clark and the residents of the city, and we look forward to a swift resolution so that Clark and its subcontractors can finally be paid for their hard work," the statement said.

Construction Dive reached out to Hill for comments about the lawsuit but has not yet received a response. However, in a media statement, Jimmy Morales, city manager, said, “I find it shocking, given that Clark Construction has delayed this project for nearly 1.5 years and has yet to finish, that they have the gall to file a lawsuit against us. Frankly, the city is the one entitled to damages, not Clark. We are not going to litigate this through the newspapers, and look forward to our day in court.”