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Tampa Bay Water votes to settle reservoir suit, pay engineers $21 million in legal fees

After losing both at trial and on appeal, Tampa Bay Water's board voted 8-0 Monday to end its pursuit of damages from the engineering company that designed its flawed 15.5 billion gallon reservoir.

Instead, the utility will pay HDR Engineering's legal fees and costs, totaling about $21 million.

"These fees will be paid through funds on hand and they will not directly affect water rates," Tampa Bay Water spokeswoman Michelle Biddle said in a statement emailed to the Times.

The utility's board really had no choice after the appeals court decision last month, explained board members Susan Latvala, Charlie Miranda and Sandra Murman.

"There were no other avenues to take," said Miranda, a Tampa City Council member.

Latvala, a Pinellas County commissioner who chairs the Tampa Bay Water board, said voting to end the suit was "one of the hardest things I've ever had to face." But given what happened in court, she said, "there's nothing left to do but pay up and move on."

While Murman agreed, she expressed anger and frustration that HDR would insist on so much money from a government entity. She said that was one of the main reasons for dropping the case: "We can't afford to pay them any more money."

HDR chairman George A. Little said he was "pleased by the Tampa Bay Water board's decision." However, he said, the five-year court battle "was frustrating for us because we made every attempt to resolve the issue so everyone involved could avoid time consuming and expensive litigation."

HDR, a Nebraska company, designed the C.W. Bill Young Reservoir and oversaw its construction in Hillsborough County. The project was approved in 1998 with no discussion by the utility's board. The company the board hired to design it — again, with no discussion or debate — had never worked on a project like it.

The only off-stream reservoir that HDR had worked on before was built for Clinton, Texas — a project the city manager says was "orders of magnitude smaller" than what Tampa Bay Water got.

The job of overseeing the company's work was assigned to a utility employee who wasn't a licensed engineer. Meanwhile, state permitting officials from the Department of Environmental Protection had never dealt with a reservoir this big, so they relied on the advice of a consultant who worked for the phosphate industry on smaller dams.

The reservoir — the largest in Florida — opened in June 2005 to store water skimmed from the Alafia River, Hillsborough River and Tampa Bypass Canal. Within months, cracks developed in the earthen embankment surrounding the reservoir. The utility is now spending about $122 million to fix it.

In 2008, Tampa Bay Water sued HDR and two contractors who had worked on the reservoir, saying they should pay for repairs. The contractors settled the claims for $6.75 million, leaving only HDR as the defendant.

Tampa Bay Water initially demanded $225 million from HDR. In 2011 HDR offered $30 million to settle, but Tampa Bay Water officials rejected that.

In April 2012 the case went to trial in federal court. By then Tampa Bay Water had reduced its damage claim to $73 million.

After listening to testimony for a month, the jury took just four hours to find for HDR. The quick verdict marked another public relations setback for Tampa Bay Water, which has seen two of its boldest projects — the reservoir and the Apollo Beach desalination plant — evolve into the source of repeated headaches.

U.S. District Judge James Whittemore ruled that HDR deserved $9.2 million in attorneys' fees and $10.8 million in expenses for defending itself against the lawsuit. Whittemore called the fees "extraordinary" but explained in his 38-page ruling, "This was no ordinary engineering malpractice case."

In fact, he noted in his ruling, some testimony suggested it might be "the largest engineering professional liability case, in terms of damages sought, ever tried to a jury."

The utility appealed. But last month three judges with the 11th U.S. Circuit Court of Appeals in Atlanta issued a ruling rejecting the utility's arguments that the trial judge had committed a series of errors.

Tampa Bay Water votes to settle reservoir suit, pay engineers $21 million in legal fees 10/21/13 [Last modified: Tuesday, October 22, 2013 2:11pm]
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