UI, Modern Piping in court over Hancher and Stead Family Children’s Hospital projects

The UI and Modern Piping have taken the terms of the Hancher Auditorium and the Stead Family Children’s Hospital to court.


Katina Zentz

The UI Stead Family Children’s Hospital is seen in September 2018.

Kelsey Harrell, News Reporter

As the appeal of a Johnson County judge’s ruling on Modern Piping’s lawsuit against the University of Iowa over the terms of construction projects heads to the state’s highest court, the UI and Modern Piping remain locked in a stalemate over the amount of money that should be owed.

Modern Piping, a Cedar Rapids construction company, sued the UI for work done on Hancher and the Stead Family Children’s Hospital.

The settlement on the projects began during a change order — work either added or deleted from a contract — for the Hancher project. The UI and Modern Piping were unable to negotiate on this.

Because Modern Piping has numerous arbitral issues with UI in both the Hancher and Stead projects, Modern Piping CEO Ken Brown said, the two were combined into one case.

RELATED: Board of Regents discusses UIHC audit, comments on Modern Piping allegations

At the state Board of Regents meeting Sept. 12, UI President Bruce Harreld noted the case.

The UI has paid Modern Piping more than $57 million as the general contractor for both the Hancher and Stead  projects, Harreld said. However, he said, the UI and Modern Piping are negotiating the payment of approximately $17 million more for labor inefficiencies and change-order requests. The UI does not accept Modern Piping’s claims to be valid, Harreld said in his statement.

The $17 million will also cover Modern Piping’s arbitration cost and attorney fees, which the university never agreed to pay, Harreld said.

According to the statement Modern Piping provided in response to Harreld’s comments, so many changes were made to the plans on the Stead project that the company was no longer working on the same project it originally bid on. This is referred to as a cardinal change, and it cost it millions of dollars, the statement said.

Stead was a $300 million project funded by bonds, patient revenue, and private donors.

Brown said the company submitted the Stead design to the design professional for review, and the design professional determined the work shall be arbitrated. A conclusion between the UI and Modern Piping could not be agreed upon, he said.

Brown said having $17 million withheld from Modern Piping has prevented company officials from expanding the business, hiring employees, and applying for new equipment.

Modern Piping and UI officials met this spring to discuss a resolution to the dispute and an agreed upon dollar amount for payment, Harreld said, but an agreement on other details were not agreed to at that time.

Harreld said Modern Piping refused language that would make it stand behind its work for the original contracts on both projects. The company’s refusal was unacceptable to the regents’ office and the university, he said.

“While the university has attempted to negotiate in good faith multiple times, it has found an unwilling partner,” Harreld said. “The university refuses to accept a deal that does not protect the patients, students, taxpayers, and families of Iowa.”

In the Modern Piping statement, the company said it stands behind its work on both the Hancher and Stead projects. The statement said the UI rejected all settlement language requests from Modern Piping.

The University of Northern Iowa and Iowa State University are easier to work with on construction projects compared with the UI, Brown said.

Harreld said Modern Piping has been paid for its work on Stead but has yet to provide the plans and specifications as to where all the pipes, vents, and valves are in the building. Harreld said Modern Piping did not manage repairs on a damaged pipe in Hancher, causing $203,600 in damage.

Modern Piping responded that the company has provided all requested documents in more detail than asked for. Modern Piping said this is a negotiated settlement that the university has not honored.

In regard to the damaged pipe, Brown said it is factually correct that Modern Piping did not manage the damages but said the company offered to. Brown said the UI indicated it would prefer UI design and construction services handle the repairs.

Interest began accruing on the $16.9 million balance owed on the original judgment Feb. 28 and will accrue until payment, according to court documents, at a rate of $2,321.83 a day.

Modern Piping is disappointed that the UI has continued to fight this case when every judge it has been in front of has sided with the company, Brown said.

“I believe it would benefit the students, faculty, staff, and the Iowa taxpayers if the Board of Regents took a more active role in oversight of UI’s operations,” Brown said.   

The UI appealed the decision to the Iowa Supreme Court. A district court judge granted a motion for stay, which prevents attempts to collect the award until the appeal is finalized.