Education

Judge clears way for execution of award in University of Iowa Children's Hospital spat

UI 'looks forward to disputing the claims made by Modern Piping'

Signs are posted on the windows along with an outline of a hand waving on the University of Iowa Stead Family Children’s Hospital as seen from Kinnick Stadium in Iowa City on Saturday, Sep. 1, 2018. (Stephen Mally/The Gazette)
Signs are posted on the windows along with an outline of a hand waving on the University of Iowa Stead Family Children’s Hospital as seen from Kinnick Stadium in Iowa City on Saturday, Sep. 1, 2018. (Stephen Mally/The Gazette)

IOWA CITY — A Johnson County judge Tuesday confirmed a hold on a request to seize University of Iowa assets had expired, clearing the way for the Johnson County Sheriff’s Office to take the millions UI owes a contractor.

That ruling came in response to a Monday request from Cedar Rapids-based contractor Modern Piping that the district court force the UI to keep its promise to pay the balance it owes on a $21.5 million award, should it lose its appeal in the yearslong dispute.

Following District Court Judge Lars Anderson’s order Tuesday that the clerk of court could allow execution of the award, the clerk did just that — producing a “general execution” document Modern Piping can take to the Johnson County Sheriff’s Office requesting it seize the money UI owes.

That amounts to $13.6 million — as the university has paid portions of the original award, even while interest has continued to accrue at $1,751.41 a day.

UI officials declined to comment on the judge’s order. But — despite promising to “satisfy the judgment” should it lose on appeal — UI officials in recent days have dug in on their refusal to not pay, at least not yet.

The rub lies in detailed documents showing Modern Piping’s work on the 14-story, $392 million Stead Children’s Hospital, the largest project in Board of Regents history. Modern Piping says it has fulfilled all contractual obligations pertaining to “as-built” documents. UI contends it has not.

Modern Piping has won repeated court orders and awards in the dispute, including when the district court in August affirmed the $21.5 million arbitration panel decision in the contractor’s favor.

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After that affirmation, Modern Piping asked the sheriff’s office to garnish UI bank accounts — going so far as to suggest it tap the famed UI-owned Jackson Pollock “Mural,” appraised at $140 million, to cover the debt. A judge told the sheriff’s office to stand down pending the Court of Appeals decision — vowing the UI will be good to “satisfy the judgment if it is unsuccessful on appeal.”

The UI appeal proved unsuccessful April 3, when the Court of Appeals upheld the lower court’s affirmation of the 2018 arbitration award.

IOWA CITY - With another year of construction left on a gleaming new children's hospital, University of Iowa Health Care executives ordered a contractor to make a change: These manual doors for the lobby library, theater, pharmacy and other areas just won't do.

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The next day, the UI announced plans to pay Modern Piping, but UI President Bruce Harreld walked that back in an April 18 public diatribe before the Board of Regents.

During the regents meeting, Harreld re-upped the accusation he first aired last fall that Modern Piping is withholding documents showing how the hospital was built.

Harreld described concerns and risks associated with the missing hospital drawings, and he agreed with a regent accusation Modern Piping was engaging in “extortion.”

Harreld since has apologized for his role in the “unprofessional and unfortunate” public “war of words.” And UI spokeswoman Jeneane Beck said UI “has been very clear about its desire to make final payment to Modern Piping for work completed.”

She reported UI on April 29 placed the $13-plus million it still owes Modern Piping with Iowa City-based law firm Meardon Sueppel & Downer, providing instructions “to immediately release the funds to Modern Piping once final construction documents have been submitted to, and approved by, a third-party design professional.”

All Modern Piping needs to do, according to Beck, is fulfill its “contractual responsibilities.”

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Those responsibilities, according to UI, require Modern Piping to produce marked-up, hard-copy, as-built drawings showing changes to original designs, as well as electronic files.

Modern Piping contends it has fulfilled all contractual obligations and points out project officials signed off on and approved final “as-built” documents in question last summer.

UI officials have told The Gazette that was inadvertent and the result of an error by an intern with Heery International, the design professional on the project.

Regardless, according to court documents Modern Piping filed Monday, the District Court has “no authority to revisit and decide differently issues already concluded.” Modern Piping attorney Jeff Stone argued only an arbitration panel can do that, per an original agreement, bringing the dispute full circle — as the UI contention in the case long has hinged on the arbitration panel’s original involvement.

Although the university declined to comment on the judge’s Tuesday order clearing the way for an award execution, Beck in an earlier statement said the university “looks forward to disputing the claims made by Modern Piping.”

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

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