Insurance co seeks $10 million extra in Canalside project

BUFFALO, N.Y. (WIVB) – There’s another wrinkle in DiPizio Construction’s ongoing legal battle with New York State over the building of a Canalside project at the old Aud site.

The insurance company that has to get the work done has joined the lawsuit against the state, according to papers filed in State Supreme Court. Travelers Casualty and Surety Company of America claims that state taxpayers owe it at least $10 million in excess costs. That’s on top of the $20 million initial project estimate.

Travelers claims that the state’s firing of DiPizio’s on July 22, 2013 was “improper” because the contractor should have been given more time to deal with site and design issues. Travelers, quoting a consultant’s report, says there were “excusable delays due to, amongst other things, different site conditions below subgrade elevations and design changes, which entitled DiPizio Construction Company to a significant time extension.”

Travelers claims that the project fell behind schedule even after DiPizio was kicked off of the job. The new contractor, The Pike Company, was supposed to finish work by May 1 but the current finish date is Dec. 30, 2014 due to “delays by the Erie Canal Harbor Development Corporation and its design team.”

Travelers says the design team delays encountered by the new contractor “are similar to the delays” that DiPizio experienced before it was fired.

DiPizio’s lawsuits claim the Cheektowaga firm was wrongly kicked off the $20 million project to build bridges, canals and an ice rink on a portion of the former Memorial Aud site at Canalside.

DiPizio has also sued Sam Hoyt, regional president of the state Empire State Development Corporation, and Thomas Dee, president of the ECHDC, claiming that their public comments about the company’s failure to meet deadlines has nearly ruined the family owned business. The project was originally supposed to be finished by November 2012.

In a statement issued today, ECHDC said:

“ECHDC understands that the addition of Travelers in the case is necessary to fully adjudicate the various claims of all parties and as such, consented to the addition of Travelers as a party. Considering several of the major claims in the case made against ECHDC have already been dismissed by the recent decision of the Appellate Division Fourth Department, ECHDC fully expects that it will prevail in the ongoing litigation.”

The state appeals court recently overturned two decisions made by Acting State Supreme Court Justice Timothy J. Walker. The appeals court said the contract did not allow DiPizio’s selection of granite or the disposal of contaminated soil. DiPizio claims the issues do not affect their continuing lawsuit.

Rosanne DiPizio, project manager for the family-owned business Monday said she welcomed Travelers’ entry into the lawsuit.

“DiPizio Construction was always confident that once Travelers reviewed all of the facts it could only come to this determination. Now their determination is very clear. We were wrongly terminated.”

DiPizio noted that Travelers and its new contractor met the same problems “and now they are eight months behind schedule, not because they want to be but because of design problems and design errors.”

Travelers issued a bond to insure DiPizio’s completion of the Canalside project. Once DiPizio was dismissed for failing to meet the project’s schedule, Travelers was required to step in to direct the project’s completion. Travelers hired The Pike Company which continues to work on the project.

ECHDC officials have said there will be ice skating on the site by November with finish work completed in early 2015.

DiPizio continues interviewing officials as part of its pre-trial discovery. It recently subpoenaed Lawrence Schwartz, secretary to Gov. Cuomo who is expected to submit to questions on Sept. 17.

The state on Aug. 5 won a decision from Walker that DiPizio not publicly release any of the testimony – in print or in video – that it obtains during discovery.

The state claimed that DiPizio planned to release the testimony to the media to embarrass state officials in an election year. While Gov. Andrew Cuomo’s name was not mentioned, his November re-election was referenced in the courtroom.

The order was sought by attorneys for Erie Canal Harbor Development Corporation on behalf of its president, Thomas Dee, and Sam Hoyt, regional president of the state Empire State Development Corporation. Hoyt has submitted to DiPizio questions.

DiPizio Construction was fired in July 2013 after the state in a May 8 notice of intent to terminate cited lengthy delays, “deficient work” and failure to perform the work “in a good and workmanlike manner” in accordance with the contract.

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