Following an Executive Session during the February 27 City Council Meeting, the Council authorized City Manager Wes Pierson to settle the two-year-old wind turbine lawsuit with Landmark Structures, L.P., Freese and Nichols, Inc., and Urban Green Energy pursuant to the terms discussed in Executive Session (those terms are summarized in the bullet points below). As part of that settlement, which was signed on April 11, 2018, all parties agree to the following:
- Landmark and Freese and Nichols will pay the Town a total of $800,000.00 in cash ($550,000 from Landmark Structures and $250,000 from Freese and Nichols, Inc.); and
- Landmark will remove the wind turbines and make any necessary repairs to the roof of the water tower at no cost to the Town.
The total cost for the wind turbine project in 2012 was $1,263,973. $472,400 was funded through a federal energy conservation grant through the State Energy Conservation Office (SECO), which Addison is not required to return. The remaining $791,573 was funded through the certificates of obligation (COs) that were approved by Council in 2008 to cover a broad range of Town projects. The issuance of this debt was not specifically for this project, but the funds were eligible to be spent on projects related to Addison’s Utility Fund. The final payment on this 2008 debt issuance was made in February 2018.
In February 2012 Landmark Structures installed a wind energy system on the Surveyor Water Tower at 4000 Arapaho Road. The goal of the system was not only to generate enough wind energy to power the water tower learning center and some street lights along Arapaho Road, but also to position Addison as a model for cities around the country in the use of affordable alternative energy sources. Landmark contracted with Urban Green Energy (UGE) to manufacture and install the wind energy system; Freese and Nichols served as the Town’s project manager.
After the turbines were installed in 2012, the system functioned for only three months before an entire wind turbine fell from the top of the water tower to the ground. The system was retrofitted, but a few months later, in a second incident, a blade broke free, pierced the roof of a nearby building, and landed in the conference room of a local business. At the Town’s request Landmark and its partners on the project rebuilt the turbines, but once again a blade separated from a turbine, causing damage to other parts of the turbine system. No one was hurt in any of the incidents, but the Town decided to secure the turbines in a non-operating state in 2014 due to the potential safety concerns. In the Summer/Fall of 2015, after three failures and extensive discussions with Landmark that failed to resolve the issues, the Town of Addison instituted suit against Landmark Structures and UGE alleging causes of action for breach of contract, breach of warranty, negligence and fraudulent inducement. Freese and Nichols was added to the suit in 2016.
After two failed mediation attempts and numerous legal actions, a trial date was set for March 5, 2018 in the 44th District Court of Dallas County. Leading up to the trial, the defendants filed several motions, including motions to dismiss the case (Summary Judgment), exclude Addison’s expert witnesses, and spoliation. On February 25, 2018 Judge Bonnie Lee Goldstein denied Landmark’s motion for Summary Judgment and allowed all of Addison’s claims to proceed to trial. Judge Goldstein also denied Landmark’s motion to exclude Addison’s experts.
On February 27, Landmark Structures and Freese and Nichols approached the Town with what the Council believed to be a good-faith settlement offer. The combined financial offer not only exceeded the local investment in the project, but it also included the removal of the wind turbines and any necessary repairs to the roof of the water tower at no cost to the Town.
When Addison filed this lawsuit, the understanding and intention was to recover legal fees. In early 2018, Addison’s attorneys informed Council that the Defendants were arguing that several recent state court opinions successfully challenged the long-held practice in the state of Texas that attorney’s fees in a breach of contract suit against a partnership or limited liability partnership are recoverable. Chapter 38 of the Texas Civil Practice and Remedies Code (“Chapter 38”), states that “a person may recover reasonable attorney’s fees from an individual or corporation, in addition to the amount of a valid claim and costs” for a breach of contract. However, about the same time Addison’s case was being filed, the definition of “corporation” was being challenged to exclude limited liability companies and partnerships. In September 2015, a Houston Court of Appeal’s decision became final, holding that the literal language of Chapter 38 did not allow recovery of attorney’s fees against a partnership or limited partnership. The Dallas Court of Appeals followed suit in December 2016. The Dallas Court of Appeals opinion is binding for cases in Dallas County.
In an effort to be good stewards of taxpayer dollars and to avoid incurring additional lawsuit expenses, including attorneys fees, expert witness fees and materials testing fees, that already topped $496,000, Council directed City Manager Pierson to settle the lawsuit in accordance with the terms discussed in Executive Session. The recent delays associated with finalizing the settlement agreement were associated with a disagreement between the Town and Landmark on the scope of the removal of the wind turbines from the water tower. We are currently waiting on a signature from Freese and Nichols and will share the settlement agreement when its fully executed.
At its April 24 meeting, the Addison City Council is scheduled to ratify the agreement signed by City Manager Pierson on April 11, 2018. Town staff is currently researching the possible ways to use the money the Town is receiving in the settlement.