Contractors that win jobs with towns need to pay close attention to who approved the work, according to a court ruling.
Cardinal Construction Co. Inc., Fond du Lac, lost a $660,000 contract to build a fire station in the town of Clayton, in Winnebago County,Â because the town electorate did not approve the project, according to a March 11 state appeals court ruling.
Clayton Town Board members backed the project and signed the contract. But town residents, who, under state law, have authority over building projects, rejected the fire station on three separate occasions, according to court records.
The Town Board members were then replaced, and the new board ripped up Cardinal Construction’s contract saying the initial board never had the right to issue it.
The appellate court ruled Cardinalâ€™s contract with the town never existed. The decision affirmed a Winnebago County Circuit Court ruling.
Attorney William Cole, who represented Cardinal in the case, said he is meeting with the company to considerÂ petitioning toÂ the Wisconsin Supreme Court for review.
The appellate court’s decision, written by Judge Lisa Neubauer,Â means contractors bidding on jobs with towns must make sure the town electorate approved the project, saidÂ Cole, of the Madison law firm Reuter Whitish and Cole SC.
He argued the Town Board had the authority to issue the contract because state law requires towns to provide fire protection. He also argued towns are not required to seek approval of the electorate for all projects.
But the appellate court ruled state law requires a town’s residents to approve all land purchases and new buildings.
Rich Carlson, attorney for the town of Clayton, said the court’s ruling makes clear that towns need residents to approve construction of fire stations. In Clayton’s case, that means the Town Board never had the authority to issue Cardinal a contract.
Carol Nawrocki, legal counsel for the Wisconsin Towns Association, said the ruling was being watched by towns across the state. The court’s decision makes clear fire stations are not an exception to state law requiring electorate approval.
Cardinal was not paid for the job and had done little work on the site of the proposed fire station, Cole said.
But the town’s decision hurt the company in other ways, he said.
“They lost professional standing with their subcontractors,” Cole said.
The appellate court ruling also puts contracts at risk depending on who is elected to the Town Board, Cole said. If one board issues a contract and is voted out of office, the new board may be able toÂ back out of theÂ contract, he said.
Cole said contractors working for towns will need proof that residents approved projects. Those contractors also may need to demand towns pay for projectsÂ upfront or as construction proceeds to avoid getting stuck with a half-completed building because a new Town Board is voted into office.
“(Contractors) around the state,â€ Cole said,Â â€œare going to lose sleep over this.”