Honeywell – Lyons sues Honeywell, partners over wastewater plant construction
The town of Lyons is suing Honeywell International Inc. (NYSE: HON) and a group of subcontractors over what it alleges was a yearslong failure to properly install upgrades to its wastewater plant.
In the suit filed Friday in Boulder County District Court, Lyons selected Honeywell and its partner firms in 2010 to upgrade the town wastewater plant, with the express goal of reducing the amount of energy needed to run the plant. The contract’s maximum value at that time was just more than $5.86 million.
Honeywell spent the next few years designing the upgrades until September 2013, when floods struck Boulder County during a major rainstorm. The floods left eight people dead and Lyons itself without utilities for more than a month.
Construction for the upgrades began in April 2014, and the contractors were given an additional $443,041 in maximum contract value to replace some of the existing equipment damaged by the flood.
In July 2015, the suit claims, the Colorado Energy Office alerted Lyons that Honeywell’s contract as a pre-approved energy services company with the state had expired.
Subsequent changes to the contract over the course of construction through 2017 brought the total maximum value of the contract to just less than $7.07 million, the lawsuit alleges.
A few months after delivery, Lyons alleges that a measurement report from Honeywell and Tetra in October 2017 showed that the plant was costing the city more energy usage that it did before the upgrades due to a higher level of oxygen demand from microorganisms breaking down organic matter in water.
A higher rate of oxygen demand generally indicates worse water quality.
A month later, the Colorado Energy Office allegedly told Lyons officials that Honeywell’s performance on the project didn’t justify the increase in its contract value, and that some of the provisions that the company inserted into the contract didn’t comply with the office’s rules.
In December 2017, Honeywell went back to the Lyons trustees to ask for another contract value increase for just more than $536,000 to cover higher labor costs due to the floods. Lyons instead gave the company $100,000 as a good-faith measure while it disputed the plant’s outcome, according to the suit.
Two months later, Honeywell allegedly issued a request for proposals to other companies as a way to resolve complaints from the city. The suit claims that this request admitted that the plant produced more sludge from biosolids processing than expected, and only recovered 73% of the biosolids in the sludge versus the expected 98%, reducing the plant’s efficiency overall.
That led to the city issuing a sewer rate hike in November 2018 to cover the additional costs of processing.
When the city issued a breach-of-contract notice to Honeywell in October 2018, the company allegedly responded by saying that breweries and distilleries were the cause of the additional waste, even though those companies were operating before the plant upgrades began.
The city then retained a water-engineering firm to examine the plant, which claims that Honeywell and its contractors designed the plant to handle only half of the biological oxygen demand than what the town’s prior discharge reports showed and ultimately led to a plant that couldn’t efficiently manage the demand put on it.
Lyons is seeking a jury trial and damages for breach of contract and fraud and is seeking damages for the plant’s construction, operating and financing costs, along with other damages to be determined at trial.
Honeywell did not respond to a request for comment Monday afternoon.
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