Lawsuits significantly increase cost of Jackson school project

An adverse court ruling this week in a long-running lawsuit involving Jackson School District could cost the district about $5 million.

Cape Girardeau County Circuit Judge Benjamin Lewis issued the ruling Tuesday in favor of Total Electric, an electrical services company in Farmington, Missouri, led by Danny Miller. At issue was the district’s refusal to pay an earlier judgment for $800,000 in a timely manner and the interest owed on the judgment stemming from an expansion project more than a decade ago.

Miller contended the Missouri Prompt Pay Act calculates interest at 1.5% compounded monthly, while the district argued the calculation should involve only simple interest. Over the span of the suit — which has bounced among circuit, appellate and the state Supreme Court — the compounded interest would be about $5 million, while a simple interest calculation would total about $500,000.

Lewis ruled in favor of the compounded interest calculation, citing a state precedent, “... the [defendant] shall also pay, in addition to the amount due, interest at the rate of 18% per annum, compounded monthly.” Later in the ruling, Lewis wrote, “There is no question that defendant has not paid the prompt pay penalty compounded monthly. Therefore, the judgment is not paid in full, and the motion for satisfaction of judgment is overruled.”

The action came in response to the district’s request to end the suit.

In a letter to Miller, dated Feb. 4, the district sent a check in the amount of $536,901.21, claiming the amount would effectively end the matter, “This check includes amounts for interest and the Prompt Payment Penalty. ... Please file a satisfaction of judgment pursuant to Rule 74.00 by Friday, Feb. 11.”

Miller responded a few days later, saying he did not agree with the interest calculation and the two parties would likely end up back in court, asking Lewis to decide the matter.

Miller declined to comment on the matter Wednesday.

District superintendent Scott Smith said the potential additional costs to the district could affect the district’s operation.

“We are deeply saddened by the ruling from the recent hearing because this ruling could potentially negatively affect students and teachers by taking focus and resources out of the classroom. The district feels like we have already paid everything that was due to Mr. Miller in an effort to handle a past issue concerning construction plans from over twelve years ago,” he said in an emailed statement. “As for the district, we are going to do everything we can to move forward in the best interests of the students we serve. We are in the business of educating kids, and that is what we intend to do. The more that we, as a community, continue to focus on the issues associated with the past construction of the Events Center in 2006-2008, the less time, energy and funds we have available to focus on serving our kids today. The district will have to explore every option in order to best serve our students.”

Smith did not comment on whether the district would appeal the ruling.

Costly project

Lawsuit costs from the project could ultimately cost the district not much less than the project’s original $20 million price tag.

A $19.8 million bond issue, approved in August 2006, funded the construction project, which included auditorium, kitchen and gymnasium facilities, but judicial findings and legal costs have significantly added to the total cost.

The school district paid about $1.2 million in one lawsuit involving the project’s prime contractor, Penzel Construction, and a roofing subcontractor, but it is Total Electric’s suit that has significantly added to the price tag.

According to a letter from Miller’s legal counsel, Michael Wilson, to the district’s counsel in December, Jay Dobbs, the Total Electric suit includes costs totaling nearly $10 million:

• Original judgment — $800,000
• Prejudgment interest — $685,479.45
• Attorneys’ fees per judgment — $630,884
• Prompt Payment penalty through Nov. 14, 2019 — $4,377,512
• Court costs — $9,961.62
• Postjudgment interest — $1,239,761.42
• Prompt Payment penalty from Nov. 15, 2019, through Dec. 28, 2021 — $2,013,448
• Attorneys’ fees on appeal — $95,564.50.

Subtracting a January payment of about $4 million and the February payment, the district would still owe about $5.3 million, according to Miller’s calculation, for a total cost of about $9.8 million.

According to Smith, from 2005 through 2022, lawsuits related to the project have cost the district $2,152,113.26 in legal services fees.