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Court rejects Kenilworth lawsuit

Sean Ryan
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The Wisconsin Supreme Court on Wednesday reaffirmed that state bidding laws force contractors to bear the heaviest burden when challenging government contract awards.

The court on Wednesday rejected Chicago-based Prism Development Co.’s lawsuit claiming the state broke the law when selecting Weas Development Co. to renovate the Kenilworth building in Milwaukee for the University of Wisconsin-Milwaukee. The court did not examine whether the state contract was awarded legally.

The Supreme Court dismissed the case because Milwaukee-based Weas completed the Kenilworth project in 2006, and, according to the court decision, even if Prism’s claims of unfairness are true, the case is pointless because the developer cannot seek monetary damages after the project is completed.

“We’re disappointed, obviously, in the decision because we believe the public contracting statutes and regulations should allow for aggrieved bidders who are really wronged to get some compensation,” said Prism attorney Joseph Cincotta, a solo practitioner in the Milwaukee-based Law Offices of Joseph R. Cincotta LLC.

Prism filed its 2005 lawsuit against the Wisconsin Department of Administration after the company lost a competition to renovate the Kenilworth building into dorms and classrooms for the UW-Milwaukee. The University of Wisconsin System in 2002 issued a request for proposals for the project, and a team of judges selected Prism’s proposal.

But the State Building Commission never approved a contract because another developer contested the award. The RFP was cancelled, and the state issued a second request in 2005.

Prism again submitted a proposal, but the state selected Weas Development’s project and signed a contract with the company.

Prism’s lawsuit against the award was dismissed because the company never sought a court injunction stopping the Kenilworth project until a court could rule on the lawsuit.

Cost and the general reluctance of courts to delay public projects makes it difficult for contractors to succeed in filing injunctions, said Steven Martin, a construction attorney with CMT Legal Group Ltd., Waukesha. Furthermore, he said, there is no guarantee a company succeeding in getting an injunction will get the job.

“From a practical standpoint, it puts the builder in a position of tremendous disadvantage because if you have to try to get an injunction it’s a pretty expensive process,” he said.

Prism was trying to recover the money it spent drafting its development proposal and whatever profit the company would have made redeveloping the Kenilworth building, Cincotta said. But the Supreme Court ruled there is nothing left for Prism to recover because it can’t get the project and because state law does not let the company win monetary damages from the state.

Cincotta said he argued statutes let contractors recover damages after projects are complete. If the decision had gone the other way, the case could have reversed the rule requiring builders to swiftly seek court injunctions against projects if those builders believe the projects were awarded illegally, he said.

“You have to go into the contracting process, I think, with the attitude that you might have to file court action right away if things go wrong,” Cincotta said, adding it is that kind of mindset that creates an adversarial relationship between contractors and public owners.

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