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State - Budget
State loses Front Street lawsuit, could be on hook for millions

State loses Front Street lawsuit, could be on hook for millions

By Ed Jacovino  Journal Inquirer , July 20, 2012

HARTFORDThe state has lost a lawsuit against the contractor hired to build the now-vacant Front Street project, meaning it could have to pay millions in damages and legal fees.

The Front Street development was part of ex-Gov. John G. Rowland’s Adriaen’s Landing project along the Connecticut River that included the Connecticut Convention Center, the Connecticut Science Center, and Front Street.

Capital Properties Associates, the lead developer on Front Street, sued the state after being fired by former Gov. M. Jodi Rell. Delays and scope changes by both Capital Properties and the state had plagued the development.

The company was supposed to build a mix of housing, retail, and entertainment on the west side of Constitution Boulevard — across the street from the hotel, science center, and convention center — called Meeting House Square or Front Street, at different phases of the project. But construction never really started.

 

The firing came after Rell presented Richard Cohen, Capital Properties’ owner, with a new contract that lowered the state’s responsibilities and made Cohen have to pay more. Rell told him to sign it or lose the job.

Cohen refused. Rell fired him. That was in July 2004, one month into Rell’s term in office after Rowland, a fellow Republican, resigned amid a corruption scandal.

Cohen sued that November, saying Rell had broken the contract by bargaining the new agreement in bad faith. Rell countered with the state’s own lawsuit, saying Cohen already had abandoned the job.

In a decision issued Wednesday, Hartford Superior Court Judge Marshall Berger handed the state an overwhelming defeat, saying Rell was in the wrong.

“The state breached the development agreement by unilaterally demanding that Capital sign the proposed second amendment on July 26, 2004, threatening to terminate Capital if it did not sign the amendment, and terminating Capital because it did not sign,” Berger wrote in his decision. “These acts demonstrate that the state acted prematurely and in bad faith.”

The decision in Capital’s favor means the developer and state now will argue in court over how much the state should pay Capital and Cohen.

Sources have said Capital is out about $2.5 million. A footnote in the decision says that according to lawyers for the state, Capital Properties spent $5 million and was reimbursed about $3.8 million for the project.

The state likely is on the hook for Capital’s legal fees, and also must pay for its own lawyers. The state hired private lawyer George D. Royster from the Hartford firm Halloran & Sage.

The lawsuit lasted more than seven years. Sources said there were efforts to reach a settlement, but they were unsuccessful.

Attorney General George C. Jepsen’s office said today the state has paid Halloran & Sage $3.1 million for this case since 2004. It owes $14,000 more.

Berger also commented on how complex the project was. Usually, the state decides on the scope of the project, and hires the contractor to build it. That wasn’t the case with this project.

“This was different. The parties here were creating the specifics of the agreement and designing the project,” the judge wrote. “Unfortunately, there were too many moving parts and both sides underestimated the complexity and the time required for this project.”

Joel Kozol, the lead lawyer for Capital Properties, celebrated the decision Thursday. “We’re pleased that Judge Berger provided our client Capital and Richard Cohen with a total victory,” he said.

Richard Weinstein, a West Hartford lawyer, represented Cohen. “This is a complete vindication,” Weinstein said.

Andrew J. McDonald, general counsel for Gov. Dannel P. Malloy, a Democrat, blamed the loss on Rowland.

“John Rowland’s legacy to the state of Connecticut was not only corruption but apparently incompetence as well,” he said.

Even though the judge’s decision found Rell at fault, Rowland had put the project on the path to its breakdown, McDonald said.