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In federal suit, contractor blames Jonesborough, architects for project delays

Nathan Baker • Jan 22, 2016 at 4:47 PM

Facing a $1.8-million lawsuit from an insurance company, a Johnson City contractor says the Town of Jonesborough and an area architect firm intentionally sabotaged two separate building projects and interfered with progress.

In a complaint filed in December in U.S. District Court for the Eastern District of Tennessee, Rainey Contracting claimed the town “willfully, maliciously and intentionally delayed and/or did not complete contracted work … causing unnecessary and detrimental delay to (Rainey), making it impossible to complete its construction obligations and fulfill the contract terms” when building the Jonesborough Senior Center.

The document was filed by the contractor as part of litigation with Westfield Insurance Company, which is seeking more than $1.8 million from Rainey to repay sub-contractors for the senior center and the renovation of a downtown Johnson City building for Northeast State Community College.

According to the contract between Jonesborough and the contractor, to keep down costs the town agreed to use its own workers, equipment and materials to grade the site, install drainage, water and sewer lines, put down a gravel base for the parking lot, pour concrete curbing and sidewalks, lay asphalt and landscape.

After grading, Rainey’s filing states the town delayed putting down stone and asphalt, making it difficult for sub-contractors to access the site and was unable to put in water connections, leaving the job site without water “for an unreasonable and unnecessarily prolonged period of time.”

Rainey also claims the town had cash flow problems during construction and was forced to borrow an additional $700,000 to continue day-to-day operations. While money was tied up, some of the contracted work related to the senior center was delayed, according to the suit.

In March, the town did issue a separate $700,000 bond to help pay for cost overruns related to the $3 million project, but Mayor Kelly Wolfe said town workers and administrators did not intentionally slow progress, as claimed by the filing.

“It’s an irrefutable fact that we did everything we could from day one to not only get the job done, but to get it done as quickly as possible,” Wolfe said Friday. “Unfortunately, when you take money and loans for projects from the federal government, you always have to take the lowest bid, and unfortunately, in this situation it didn’t turn out the way we hoped it would initially.”

In April, five months after the anticipated completion of the center, a town Board of Mayor and Aldermen dissatisfied with the delays instituted weekly meetings with Rainey and Ken Ross Architects to stay abreast of the progress.

In May, Scott Rainey, a principle of the company, walked out of one of those meetings after threatening to shut down construction, saying the town withheld $80,000 in pay over three months.

In June, the Jonesborough board fired Rainey, and Westfield brought in the Landmark Corp. to complete the work.

The original lawsuit against Rainey filed by Westfield in September claims the insurance company paid or expected to pay at least $820,597 to finish the job.

The downtown Northeast State site shares a similar story.

Westfield demands more than $1 million from Rainey for finishing the renovation of the former Washington County municipal building, allowing the community college to take up residence there.

According to Rainey’s third-party suit, Johnson City’s Shaw and Shanks Architects refused to adjust construction schedules for the project, even after a large, unexpected concrete foundational structure was discovered at the site.

Rainey further says the firm refused to discuss a leaking elevator pit for more than 65 days, ordered walls be repainted and caused extensive structural redesign work, putting the project behind deadline and over expected costs.

The architects eventually began contacting sub-contractors and vendors, complaining about Rainey’s work, which the company said caused some workers to refuse to begin their jobs.

In May, Rainey was thrown off the job site and locked out. Westfield brought in Landmark to finish that project, as well.

Rainey, citing breach of contract, negligence, “tortuous intentional interference,” slander and libel, demand $961,602 of Shaw and Shanks to recoup lost profits, expenses and damages.

In an answer to Rainey’s accusations, Shaw and Shanks denies them and says the contractor was fully compensated for the work done. When the project fell behind schedule, the firm says it had every right to terminate its contract with the company.

In the midst of the multi-party litigation, Rainey filed another suit Jan. 14, claiming Valiant Construction still owes $114,000 for work as a sub-contractor to expand the emergency room at the James H. Quillen VA Medical Center.

That filing claims Rainey was hired in October 2014 to install glass work, door improvements, metal work and drywall, but the contract was terminated in January 2015 without Valiant paying for the work already completed.

Valiant did not yet file an answer to the claims.

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