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Wednesday, August 9, 2000

City & County of Honolulu

City to pay
$1 million in
park job dispute

The money, going to a contractor
and a bonding company, involves
work at a Salt Lake district park

By Gordon Pang

The city agreed today to pay a contractor and its bonding company $1 million in a settlement in connection with improvements at Salt Lake District Park.

At its meeting in Kapolei, the City Council voted to approve the payment to Haitsuka Brothers Ltd. and United Pacific Insurance Co., its bonding company.

A trial had been scheduled to begin in October in U.S. District Court. Haitsuka had been seeking more than $3 million.

Judge Susan Oki Mollway already granted partial summary judgment to Haitsuka and ordered the city to pay $700,000 for failing to pay for eight change orders associated with the dispute.

The litigation stems from a city contract awarded to Haitsuka in 1992 for improvements at Salt Lake District Park. In turn, Haitsuka subcontracted Bateman Construction to perform excavation work.

Unexpectedly, Bateman encountered extremely hard rock, which resulted in dramatic overruns. Bateman sued Haitsuka in an arbitration and won $1.3 million.

The arbitrator described the subcontract as "unconscionable."

Haitsuka's attorney, Dennis King, said the Bateman arbitration award came as a surprise to Haitsuka, since the city's initial bid information acknowledged that no subsurface boring data had been gathered and that the contractor would take over all risks.

Haitsuka reasoned that Bateman assumed those risks as subcontractor.

The city's settlement with Haitsuka and United Pacific comes as a result of a lawsuit brought by the bonding company against the city. Haitsuka eventually became a party in the suit.

King said that all of the money is going to United Pacific and that Haitsuka has not recovered all of the costs associated with the dispute.

City & County of Honolulu

E-mail to City Desk

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