Demo firm drops $1M lawsuit alleging contract breach

Christine Ferretti
The Detroit News

Detroit — A contractor in the city’s federally funded demolition program has dropped a lawsuit against Detroit’s land bank over more than $1 million in work it claimed the authority refused to pay.

Troy-based Esso Wrecking Co. voluntarily dismissed the Wayne County Circuit Court suit on Friday, according to court records. The firm filed the complaint late last month, alleging breach of contract.

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

Esso’s attorney, Christian Hauser, noted on the day the suit was filed the company and land bank were close to a resolution and he was “optimistic” the matter would be resolved.

On Tuesday, he confirmed Esso was paid its contract balance and voluntarily dismissed the suit.

“They were very cooperative, they were very professional and we were able to get an agreement in place that resolved the litigation,” Hauser said.

Craig Fahle, a land bank spokesman, declined to discuss specifics of the negotiations with Esso, saying only “we were confident we would reach an agreement on this and we did.”

Esso’s complaint was filed 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.

Farrow, 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, left the company “saddled with enormous debt service,” according to the filing.

The court in March noted the parties agreed the properties in question would not be rebid while the case is pending. A status conference is slated for Friday.

The city’s demolition program has taken down more than 11,400 blighted homes, primarily with federal “Hardest Hit” dollars since spring 2014. But the effort came under scrutiny in the fall of 2015 when questions were raised about 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.