Prominent demo firm sues land bank for $450K
Detroit — One of Detroit’s most prominent demolition contractors is suing the city’s land bank for breach of contract, claiming it’s owed nearly a half million dollars.
Rickman Enterprises Group filed a lawsuit Thursday in Wayne County Circuit Court arguing it has repeatedly asked the land bank to pay for abatement and demolition services the Detroit-based firm provided last summer, but the authority has refused to pay.
The complaint alleges a breach of contract, unjust enrichment, misrepresentation and that the firm suffered “substantial injustice and prejudice” because the land bank failed to comply with its representations that Rickman would be paid for demolition services rendered under an agreement reached in July.
The firm is asking the court to grant a judgment against the land bank for more than $450,000 it contends it’s owed, plus interest, costs and attorney fees, and whatever else the court deems “equitable and just.”
The legal filing stems from a demolition package Rickman secured on June 30, which included about 122 residential structures. The total value of the work was nearly $1.8 million, according to the filing. The company is seeking to recoup costs associated with abatement and demolition associated with about 70 of the properties.
Christian Hauser, an attorney for Rickman, did not immediately provide comment on Thursday.
Craig Fahle, a spokesman for the land bank, said Thursday the authority does not comment on pending litigation.
Thursday’s lawsuit is the third in recent months filed against the land bank by a demolition contractor alleging a contract breach.
The demolition program is at the center of a federal criminal investigation, one of several ongoing federal, state and local reviews, after concerns were raised over rising costs and bidding practices. Mayor Mike Duggan and the land bank, which oversees demolitions with the city’s building authority, have defended the program and pledged cooperation in all investigations.
Rickman, in its Thursday lawsuit, said the properties were assigned to the firm in a computer database maintained by the land bank and used by program contractors to manage and handle payment of demolition work.
On June 30, Rickman prepared and submitted its required 10-day notice of intent with the state Department of Environmental Quality to renovate and demolish certain structures within the awarded demolition group.
Rickman contends that, at the direction of the land bank and building authority, it then began to “immediately mobilize crews and equipment to various structures that were to be abated and demolished.”
The firm also began to secure necessary demolition permits with the city’s building department. Rickman began its work on or about July 13.
On July 19, the lawsuit says the firm received written notice from the land bank that it was formally awarded the work. The notice, provided as an exhibit in the court filing, was authored by Martha Delgado, a former compliance manager for the demolition program who stepped down in January.
The notice instructed Rickman to obtain its 100 percent performance bond for the projects. It did within the proper five-day time frame, the lawsuit says.
The firm continued on with what it contends had become a standard practice: proceeding with the work while it waited on the land bank to countersign the agreements, the lawsuit says.
“It was not at all uncommon for the DLBA to take weeks to return the fully executed contract to Rickman (or other contractors for that matter) even though the DLBA was well aware that Rickman, and other contractors were performing abatement and demolition work throughout the city of Detroit,” the lawsuit contends.
But then on July 26, the land bank sent an email to Rickman directing them to “immediately stop” all work.
This action, the lawsuit alleges, was in response to the Michigan State Housing Development Authority’s stoppage of the Hardest Hit Fund program in Detroit while it reviewed the land bank’s administration of the program.
By that time, the lawsuit says, Rickman had already proceeded to “fully abate and partially demolish dozens of abandoned structures.”
The land bank addressed properties involved in the Rickman agreement that had been flagged by Detroit’s auditor general in a special March report concerning the city’s demolition activities.
The analysis — covering Jan. 1, 2014, through Dec. 31, 2016 — was based on ongoing audit work of Detroit demolitions requested by Detroit’s City Council in fall 2015.
The land bank challenged the findings and Detroit Auditor General Mark Lockridge’s auditing practices. Lockridge has defended the findings and process used to reach them.
Land Bank Board Chairwoman Erica Ward Gerson has said Rickman was identified for the project bid last summer. But the firm violated program practices by immediately beginning the work before the final contract was awarded.
The violation, she said, resulted in the “stop work” order and ultimately, a separate competitive bid to have the final portion of the work completed for 19 properties tied to that July 2016 agreement.
In response, Lockridge noted the emails — also referenced in the Thursday lawsuit — informing the firm it has been awarded the properties, pending bond and insurance.
Since spring 2014, Rickman has been awarded about $17 million in demolition work for 1,094 properties, according to records reviewed by The News. A status conference in the case is set for Aug. 31.