IOWA CITY — In its ongoing attempts to collect a very real judgment against the University of Iowa, Modern Piping suggested Wednesday an abstract expression: seizing the UI’s most treasured painting.
An arbitration panel and a district court judge have ruled that the Cedar Rapids company is owed up to $21.5 million for work it did on the UI Stead Family Children’s Hospital and Hancher Auditorium. The UI has appealed, arguing its opposition to pay because of its “vital” public service and the potential for “financial hardship.”
On Wednesday, the contractor fired back.
“Does the Board (of Regents), by not paying a valid judgment against it and claiming immunity from execution, truly desire to risk execution on its property not ‘necessary and proper for carrying out its general purpose,’ such as Jackson Pollock’s Mural?” an attorney wrote in a document filed in Johnson County District Court.
“Mural” — which the UI received as a gift in 1951 — has garnered international acclaim and audiences. It has been appraised at $140 million, well over the balance of more than $17 million a court last week found the university owes Modern Piping for its work on the Children’s Hospital.
“For three years, the university has reaped the benefit of money to which Modern Piping was contractually entitled,” the company’s attorney, Jeff Stone, wrote. “ The University of Iowa is certainly in a better position to finance the construction of its hospital than is Modern Piping.”
Several Republican lawmakers who say they’re concerned with the UI’s treatment of contractors and its execution of building projects this week told The Gazette they plan a “full investigation” once the Iowa Legislature convenes Jan. 14.
“It’s a national embarrassment,” said Rep. Jake Highfill, R-Johnston. “It is becoming a spectacle about, ‘How are the regents going to pay? Who is the University of Iowa going to pay?’ … This is embarrassing. You can’t pay your bills?”
Although those concerns arise from Modern Piping’s dispute, it’s far from an exclusive complaint, said Rep. Bobby Kaufmann, R-Wilton.
“I can’t tell you how many state employees and contractors have reached out and said, ‘It’s not just this case,’” Kaufmann said. “This case is in the public and everyone is seeing it. But there is a lot more of this. The claim is worth checking into.”
Kaufmann, as chair of the government oversight committee, said he plans to spearhead a look at the university’s dealings with contractors and construction projects — beginning with the 14-story Children’s Hospital, the biggest capital endeavor in Board of Regents history.
Modern Piping and a second contractor, Merit Construction of Cedar Rapids, have sued over payments they say they are still owed on the project — which an investigation by The Gazette found was plagued by thousands of design changes as construction was underway, rampant miscommunication, budget overruns and blown deadlines.
Project woes spiked the Children’s Hospital budget from $270.8 million to more than $360 million and postponed the opening for months.
Modern Piping sued the UI in March 2015 and has won rulings along the way affirming the award. Last week, a Johnson County district judge again ruled in the company’s favor, ordering the UI pay it the balance owed of over $17 million. That accounts for some UI payment toward the award, but partly negated by hundreds of thousands of dollars in interest.
The UI promptly appealed the decision, delaying further payment even as interest accrues at $2,321.81 a day.
In its efforts to compel payment, Modern Piping last week filed a “general execution” with the court, which directs the Johnson County Sheriff’s Office to “seize the defendant’s specific property or assets,” according to the Iowa Judicial Branch.
Capt. Bill Deatsch confirmed the Sheriff’s Office received that order and must act on it. Although that action can take different forms, Deatsch said his office has started the process of garnishment of bank accounts, wages, real estate or other valuables.
“I am not telling you we did a bank garnishment,” he said. “But it’s one of the things we could be in the process of doing.”
Modern Piping has accused the UI of dragging its feet on payment in hopes of outlasting contractors and avoiding payment altogether.
Stone noted the university in appeal after appeal has made the same argument: It didn’t agree to arbitrate the hospital dispute.
“That fight is over, and the board lost,” he wrote. “At every stage of litigation, every tribunal has thoroughly considered and resoundingly rejected the board’s argument that it did not agree to arbitrate this dispute.”
Rep. Ashley Hinson, R-Marion, said therein lies her biggest concern, justifying her support of an investigation.
“We need to look at how they do business and is there a change that needs to be made?” she said. “It’s gotten to the point where we need to start doing some digging and asking some questions.”
Amid university gripes of legislative funding cuts, Hinson said UI decisions to defy court orders and allow interest to accumulate sends the wrong signal.
“If most parents understood, and most students understood what was happening here with this approach, in this case specifically, I think they would be very upset,” she said.
In addition to its fight with Modern Piping, the UI is headed to arbitration this fall with Merit Construction. It has sued over bid packages on the Children’s Hospital it says total $64.1 million.
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