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County settles suit with one broadband contractor

Lake County is facing a pending lawsuit regarding of the construction of its broadband network, Lake Connections. (News-Chronicle file photo)

The Lake County Board of Commissioners approved a settlement with Compass Consultants Inc. to end one of the lawsuits related to the construction of the county's broadband network, Lake Connections.

Though the County Board approved the settlement by a vote of 3-2, the exact terms of the settlement are not yet available to the News-Chronicle as representatives of Compass and Lake County have not yet signed the agreement.

Over the past month, the board has spent several hours in mediation with Compass and Rohl Networks, LP, a Jupiter, Fla., based company that was the main contractor during the construction of the broadband network from 2012 to 2015. The settlement reached with Compass, however, was not acceptable to all the board members, with Commissioners Jeremy Hurd and Rick Hogenson both voting against the resolution.

"I know we've debated this for probably five or six hours already, so I don't have a lot more to say other than my concerns remain," Hurd said during a board meeting on May 9. "I appreciate the hard work that was done, but at this time I am just not able to get behind the agreement to proceed with the settlement."

Compass was retained by the county to provide engineering services in the construction of the network and filed a counterclaim after being named a defendant in Rohl's breach of contract lawsuit against the county.

According to court documents, Rohl filed a lawsuit against Lake County and Compass in May 2016, claiming that Lake County was in breach of contract and owes Rohl $2.55 million on a mechanic's lien, and that Rhol is not liable for liquidated damages for the delay in the construction of the project. Compass also holds a lien on the project in the amount of $662,973.96, which was filed in January 2016, and filed a countersuit against Lake County. A message left with attorneys representing Compass were not returned by the News-Chronicle's deadline.

"We're happy that Compass came up with an agreement that works for them and the county, and Rohl is hoping they can do the same thing," said Jeff Lopez, vice president of operations at Rohl. "We're just hoping we can get this behind us."

Lake County administrator Matt Huddleston and County Attorney Russ Conrow said they are continuing to negotiate with Rohl to settle the lawsuit and if not, a trial is set to begin in October.

According to the complaint filed by Rohl:

Lake County failed to pay Rohl its retainage and what it owed for the work it performed; failed to obtain contracts, permits and agreements in a timely manner necessary to allow Rohl to perform its work; made excessive and untimely changes to the project scope and other activities that impacted Rohl's work and its cost to perform such work; unreasonably interfered with Rohl's scheduled sequence of construction by requiring Rohl to perform work different from the scope of work described in the contracts; energized the fiber optic network prior to its completion and then required Rohl to provide maintenance services and repairs to this active network; and failed to make areas of the project available to Rohl in a timely and adequate manner necessary for proper sequencing and performance.

Rohl claims that it notified Lake County both orally and in writing for the foregoing breaches, as well as the resulting financial impact on Rohl and that Lake County refused to grant equitable adjustment to the project schedule and grant extensions of time necessary because of Lake County's breaches.

Despite repeated requests by Rohl, the company claims that Lake County has unreasonably refused to pay it for what it is owed under contract. For breach of contract Rohl is asking for compensatory damages in an amount in excess of $50,000, plus attorneys' fees, costs and disbursements.

Rohl is also seeking payment on a mechanic's lien filed in April 2016. A mechanic's lien is a charge or claim upon the property of another individual as security for a debt that is created in order to obtain priority of payment of the price or value of work that is performed and materials that are provided in the erection or repair of a building or other structure. In this case, "the construction, alteration or repair of a telephonic, broadband, fiber optic cable line."

The lawsuit states that Rohl provided labor, skill services, machinery and materials for the project from May 31, 2012, to Jan. 15, 2016, and is therefore owed $2.55 million for the "fair, reasonable and agreed upon value of the labor and materials supplied by Rohl to the project." Rohl also claims that to prosecute its mechanic's lien rights, the company has retained legal services and has incurred, and will continue to incur, expenses for attorneys' fees, costs and disbursements. On top of the $2.55 million, Rohl is requesting compensation for those expenses.

Lake County filed a motion to have this part of the lawsuit and the counterclaim by Compass dismissed. The motion was denied in November 2016 by Judge Michael Cuzzo, but he did grant Lake County's application to release the property affected by the alleged liens filed by Rohl and Compass on the condition that it be released upon Lake County's deposit of two separate bonds with the Lake County Court Administrator in the amount of $3,088,370 for the alleged lien claimed by Rohl and $802,821.27 for the alleged lien claimed by Compass.

Finally, Rohl is requesting declaratory judgment that it is not liable for liquidated damages on the project because the company claims the delay on the project was the result of Lake County's breaches of contract. Liquidated damages are an amount of money that contracting parties agree on as the amount of damages one of them can recover if the party breaches the contract.

The county and Rohl continue to negotiate a settlement which will close out the contracts. A five-day jury trial for this lawsuit is currently set to begin Oct. 30.

Reporter Jamey Malcomb contributed to this report. 

Adelle Whitefoot

Adelle Whitefoot is a Michigan native who moved to Minnesota in Sept. 2014 when she started as a reporter for the News-Chronicle. She graduated from Northern Michigan University in Marquette, Mich., in 2012 with a bachelor's in English writing and has been a professional photographer since 2011. Whitefoot is the beat writer for the Two Harbors City Council.

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