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Contractor sues Detroit’s land bank for $1M

Christine Ferretti
The Detroit News

Detroit — A contractor in the city’s federally funded demolition program is suing the Detroit Land Bank Authority on claims it’s owed more than $1 million for work the authority is refusing to pay.

Troy-based Esso Wrecking Co. filed a lawsuit Monday in Wayne County Circuit Court alleging breach of contract.

At issue is $1.1 million tied to “certain abatement and demolition” work under four separate agreements between July 2015 and June 2016, according to the complaint.

“Despite completing all of its work, and despite Esso’s repeated requests for payment, the DLBA has failed and refused to pay Esso for its work performed pursuant to the agreements,” the lawsuit reads. “The DLBA’s failure and refusal to pay the sums owed to Esso for work completed is a breach of the agreements.”

Esso’s attorney, Christian Hauser, indicated Monday evening the company and the land bank weren’t too far off from resolution over the issue, however.

“I’m optimistic that we’ll be able to resolve this sooner than later,” Hauser said.

Craig Fahle, a spokesman for the land bank, said it does not comment on pending litigation.

Esso’s suit comes after another contractor in the program, Farrow Group Inc., sued the land bank in February for an alleged breach over seven demolition packages involving 155 houses it was awarded last June.

The company, in its Wayne County Circuit lawsuit, contends it was instructed to secure equipment to start the demolition work.

It complied, spending more than $700,000 on equipment for the work but final contracts and notices to proceed with the project never materialized, the complaint notes.

The predicament, the complaint said, left the company “saddled with enormous debt service.”

The court in March noted the parties agreed the properties in question would not be rebid while the case is pending.

The city’s demolition program has taken down about 11,000 blighted homes, primarily with federal “Hardest Hit” dollars since spring 2014. But the effort came under scrutiny in the fall 2015 when questions were raised about its costs and bidding practices.

The program is currently the focus of a criminal investigation being conducted by a federal watchdog agency and is the subject of other state and local reviews.

The land bank, which oversees the program with the city’s building authority, has defended it and pledged cooperation in all investigations.