Judge affirms $12.8M jury award against UI in long-running Children’s Hospital spat

IOWA CITY — Once again, the University of Iowa has lost a legal battle with a Cedar Rapids contractor that worked on its Stead Family Children’s Hospital — adding millions to the UI’s swelling legal tab and further ballooning the total hospital project cost to more than $420 million.

A Johnson County District Court judge Wednesday denied the UI’s request that a judge either override an October verdict, order a new trial, erase the $12.8 million jury award or lower it.

“The court finds there was substantial evidence to support the verdict,” District Court Judge Chad Kepros wrote in his Wednesday ruling. “There is no indication that the jury did not properly weigh the evidence presented to it.”

UI officials didn’t immediately provide comment on the ruling or their next steps.

This week’s court order relates to an Oct. 27, 2022, jury verdict against the UI, ordering it pay Cedar Rapids-based Modern Piping another $12.8 million for “wrongfully” blocking in 2016 the contractor’s ability to arbitrate a dispute over payment for its work.

A judge first ruled in Modern Piping’s favor in January 2017 and again in April 2017. The UI spent years appealing in various capacities — culminating with a jury trial Oct. 25.

Separately, a judge in 2019 ordered the UI to pay Modern Piping $21.5 million more for its work on the 14-story, 507,000-square-foot hospital — an award Iowa’s Court of Appeals upheld after the UI fought it.

Although the UI paid Modern Piping that judgment in full, it hasn’t paid anything on the more recent damages jurors awarded the contractor after finding the university’s efforts to block arbitration back in 2016 “unjustly enriched” the UI while harming the contractor.

So in addition to the recent $12.8 million verdict, Modern Piping asked the judge to order the UI pay “prejudgment interest” amounting to $3.1 million to date — or nearly $3,000 a day. Judge Kepros this week approved that accruing interest — bringing the new total the UI owes Modern Piping, including the jury award, to $15.9 million.

Jurors in October came up with their verdict two days after the start of the Oct. 25 trial and just hours after closing arguments. The university in promptly appealed, arguing:

The judge this week rejected those arguments, calling out the UI — for starters — for its objection after the trial to exhibits and evidence that it hadn’t objected to at the trial.

“There has been no showing made by (the UI) that the award of damages was influenced by passion or prejudice,” Kepros wrote. “During the trial, the court received no complaints about the conduct of the jury, or was in any way alerted (or observed) that the jury was being improperly influenced in any way.”

He noted the university was arguing issues already resolved, saying the court “is not persuaded that any errors were made in the trial proceedings.”

He also found “nothing that justifies” reducing the damages, and faulted the UI for presenting “false and misleading information to the court” in first seeking to prevent the contractor from its plan to arbitrate the dispute in 2016.

The order could drive up the Children’s Hospital price tag from its original budget of $270.8 million to more than $420 million. That includes $10 to $15 million the UI has budgeted to spend addressing faulty windows installed in the hospital — for which UI is suing two separate contractors.

Vanessa Miller covers higher education for The Gazette.

Comments: (319) 339-3158; vanessa.miller@thegazette.com