Issue: Termination of construction contract three years after completion. S.J. Louis v. City of Austin. Texas (2018). by Hugh Anderson

Summary: This is a pending case that has not yet reached the appellate stage, but bears monitoring. The case arises from a $161 million flood control tunnel project. The contractor allegedly used shoddy concrete and failed to install a tunnel liner or rebar in some places. Repairs were made and the city may or may not have accepted the work as complete in 2015. However, in February 2018 the city sent the contractor a demand for the return of $22 million in contract payments, and in March the city terminated the contract. A local court denied the contractor’s request for an injunction against the termination, despite the contractor’s assertion that a termination would ruin the company’s future business prospects because the termination would need to be disclosed to prospective customers.

The termination was reportedly made partly to enhance prospects for collecting under a performance bond.

According to the city, the dispute in 2015 was a stalemate. Published news reports indicate that in 2015 a representative of the contractor closed a letter with the statement that “I guess we shall see who has better lawyers.”

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