Court rules in favor of Modern Piping

The Iowa Court of Appeals confirmed on Wednesday the Johnson County District Court was correct in ruling in favor of Modern Piping in the arbitration of the contract dispute with the University of Iowa.


Katina Zentz

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

Kelsey Harrell, News Reporter

After months of dispute over the settlement of legal bills between the University of Iowa and Modern Piping for the Hancher and UI Stead Family Children’s Hospital projects, the Iowa Court of Appeals has ruled in favor of Modern Piping.

On Wednesday, the court ruled that the UI pay Cedar Rapids-based construction company Modern Piping $21.5 million for the work done on the projects.

As The Daily Iowan has previously reported, 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.

Modern Piping has previously said in a statement that a cardinal change was made to the hospital project, meaning that the company was no longer working on the same project it had originally bid on.

Modern Piping moved to arbitrate the Hancher project contract in 2015 after an issue on the project arose. Later, it moved to arbitrate the Stead Hospital project contract after a performance dispute occurred. Because both projects fell under the same contract provisions, they became one case.

RELATED: Iowa appeals court rules against UI argument in Modern Piping dispute

The dispute was brought to the American Arbitration Association, and in March 2018, Modern Piping was awarded $21.49 million plus interest for the projects. In August 2018, the 6th District Court granted the motion to confirm Modern Piping’s arbitration award.

The UI has paid Modern Piping more than $57 million as the general contractor for both the Hancher and children’s hospital projects, UI President Bruce Harreld said at the Sept. 12 state Board of Regents meeting.

“There’s the notion that we paid a substantial amount of money to all of our contractors, including the ones who we’re in dispute with, and we’ve paid over $50 million to them, so this notion that we’re not paying our bills just really isn’t true,” Harreld said in an interview with the DI in October.

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

The ruling filed Wednesday by the appeals court stated in court documents the UI contends it never agreed to arbitrate the contracts for the projects and argues that the district court was incorrect in confirming the arbitration award. According to the ruling, both contracts state disputes may be subject to arbitration by mutual agreement of the parties.

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

The UI did not respond to requests for comment regarding Wednesday’s ruling by the time of publication.

According to the ruling, the use of “shall” in the arbitration clause caused the district court to determine that, when disputes are referred to the design professional, it is mandatory to follow the language in the contract.

Because of this, the appeals court determined the UI’s signing of the contract consents the mandatory arbitration of both the projects.

“We find no error in the district court’s determination that the contract clauses regarding arbitration are mandatory with regard to disputes referred to the design professional,” the ruling stated.