Court lifts stay on order for UI to pay Modern Piping $13.5 million

A district-court judge on Tuesday lifted the stay on the execution of the judgment that the UI pay the remainder of the $17 million it owes Modern Piping for work on the Stead Family Children’s Hospital.


Lily Smith

The Stead Family Children’s Hospital is seen on on Saturday, Sept. 23, 2017.

Marissa Payne, Editor-in-Chief

UPDATE: The UI announced it paid Modern Piping on Wednesday. Read more.

A 6th District Court judge on Tuesday gave the OK to allow attempts to collect the remainder of the $17 million payment the University of Iowa owes contractor Modern Piping for work on the Stead Family Children’s Hospital.

The Tuesday filings show a designee of the Johnson County clerk of court signed off on Modern Piping attorney Jeff Stone’s request for execution of an August 2018 judgment ordering the UI pay nearly $17 million to the Cedar Rapids-based construction company. The filings state the UI is to return the remaining balance to the sheriff within 120 days after the issuing of this order.

In September 2018, the court ordered a stay on the execution of the judgment as the UI awaited the finalization of its appeal to the Iowa Supreme Court. The Iowa Court of Appeals handed the case back down to the lower courts in April, affirming the district court’s earlier ruling that the UI owes the amount awarded by an arbitration panel in 2017. The appeal was finalized Monday.

RELATED: Court rules in favor of Modern Piping

The UI continues to withhold the brunt of the arbitration award it owes Modern Piping because of its contention that the firm has not provided final as-built construction records of the Children’s Hospital, which the company has repeatedly disputed. The university still owes $13.56 million on the original judgment, including interest.

As the dispute over the Children’s Hospital as-builts continues, the UI on April 29 placed $13.5 million with the law firm Meardon, Sueppel, and Downer PLC with instructions to pay Modern Piping as soon as the as-builts are approved by a third-party design professional. The UI on Monday paid $851,577.38 to Modern Piping’s account to cover attorney’s fees, expenses, and interest not pertaining to the final contractual payment.

“The University of Iowa has been very clear about its desire to make final payment to Modern Piping for work completed,” UI Assistant Vice President for External Relations Jeneane Beck said in a statement regarding Monday’s filings. “However, this cannot occur until Modern Piping has fulfilled its contractual responsibilities.”

UI President Bruce Harreld said in a May 2 interview with The Daily Iowan that the UI is exploring using a third-party firm to create final Children’s Hospital records from scratch. He said there is not a clear estimate of how much time it would take to produce the documents, nor is there a concrete idea of the cost, but he noted the cost range “starts from low millions to several millions.”

 “… If I knew exactly how much that cost and had a firm proposal, do I send that to Modern Piping and ask them to pay that, so I send an invoice? Do I ask them to use that firm to do it? Do we do it ourselves, pay for it ourselves, and then present the bill to Modern Piping or take legal action to get them to pay? At the end of the day, we’re going to have as-builts,” he said.

RELATED: UI considers using third party to create final Children’s Hospital construction records

Arbitration award documents state the panel’s “findings are not intended to preclude Iowa from exercising its contractual or common-law rights against Modern Piping to obtain any outstanding as-built documents or the medical gas certifications,” but the findings do “preclude Iowa from asserting back charges for these items or attempting to offset monies otherwise due” under the award.

Stone alleged in Monday court filings that the UI’s contention is a “willful violation” of the previous ruling and that “no jurisdiction exists to entertain such an argument” because there is no authority for the court to revisit and rule differently on an already affirmed decision.

“Regarding yesterday’s court filing, the university looks forward to disputing the claims made by Modern Piping,” Beck said.

Before the judge granted the stay on the execution of the judgment, the Johnson County Sheriff’s Office had begun the process to seize assets, according to the Iowa City Press-Citizen. The sheriff’s office did not name assets it would consider seizing, but Modern Piping identified Jackson Pollock’s Mural painting as a type of property it would target.

“As of today we have not received any new paperwork on this case,” Lt. Raquel Wray of the Johnson County Sheriff’s Office said Tuesday. “If we receive new paperwork from the plaintiff’s attorney we will execute on the judgment as directed.”

Beck said the UI has nothing further to share regarding inquiries about Tuesday’s ruling and whether the UI would counter potential attempts by the sheriff to seize UI assets now that the district-court judge has lifted the stay on the execution of judgment. In 2018, the UI argued it was immune to seizure of property because it serves a “vital public interest.”