Upper East Fork Interceptor System
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Beck Branch Parallel Interceptor Improvements, Beck Branch Parallel Interceptor Phase II, and Plano Spring Creek Force Main Parallel; Final Settlement Agreement; Project No. 501-0439-16
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SUBJECT
recommendation
Authorize final global settlement agreement of lawsuit styled Ark Contracting Services, LLC v. North Texas Municipal Water District, Lockwood, Andrews & Newnam, Inc., Freese & Nichols, Inc., and Garver, LLC.; Cause No. 471-02694-2023; In the 471st Judicial District Court, Collin County, Texas.
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PURPOSE
Authorize execution of final global settlement agreement resolving lawsuit.
RECOMMENDATION
The Executive Director, NTMWD staff, and Saunders | Walsh recommend the Board of Directors authorize execution of a global settlement agreement securing resolution of all claims in the lawsuit.
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Scope: |
Global settlement related to ongoing litigation |
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Project: |
No. 501-0439-16, Beck Branch Parallel Interceptor Improvements; Beck Branch Parallel Interceptor Phase II and Plano Spring Creek Force Main Parallel |
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Amount: |
Confidential (to be discussed in Executive Session) |
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Committee: |
This will be a Champion Update at the March 25, 2026 Wastewater Committee meeting |
DRIVER(S) FOR THIS PROJECT
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☐ Regulatory Compliance |
☐ Asset Condition |
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☐ Capacity |
☐ Redundancy/Resiliency |
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☐ Relocation or External Requests |
☐ Operational Efficiency |
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☐ Safety |
☐ Administrative |
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☐ Policy |
☒ Other Legal Services |
BACKGROUND
• On May 26, 2023, Ark Contracting Services, LLC (ARK) filed suit against NTMWD, Lockwood, Andrews & Newnam (LAN - Engineer of Record), Garver (Leased Employee - Project Management), and Freese & Nichols (FNI - Inspection Services).
• ARK’s current live pleading seeks recovery of $15,000,000 from NTMWD, plus attorneys’ fees and interest. ARK also sued LAN, Garver, and FNI in contract and tort, seeking similar actual damages, plus punitive damages of $25,000,000.
• Trial is preferentially set on March 30, 2026.
• Lawsuit arises out of a construction contract for the Beck Branch Parallel Interceptor Improvements, Beck Branch Parallel Interceptor Phase II and Plano Spring Creek Force Main Parallel (Project)(reference Administrative Memorandum No. 5557).
• On May 28, 2020, NTMWD entered into the construction contract for Project. ARK’s bid was $20,869,584.
• Open cut trenching began in early 2021. ARK’s primary claim is that NTMWD and the other defendants interfered with ARK’s means and methods of construction. ARK claims that the other defendants tortiously interfered with the contract, as well as committed acts of negligence, fraud, and conspiracy. NTMWD and the other defendants have at all times vigorously disputed these allegations.
• On July 21, 2023, ARK sent a notice of contract termination and abandoned the Project. NTMWD contends that this was a material breach of the contract.
• Upon ARK’s termination and abandonment, NTMWD made prompt demand upon ARK’s performance bond surety to satisfy its obligations under the bond and to complete ARK’s scope of work (or pay the District to do it). It refused.
• NTMWD performed emergency work to remedy life/health/safety risks to the public caused by open trenches. NTMWD then re-packaged and re-bid the remaining scope of work and awarded the bid for completion work to Wilson Contractor Services, Inc. Original contract with Wilson: $16,757,742. Wilson’s work is nearing completion.
• NTMWD filed counterclaims against ARK and the surety, seeking recovery of the amount spent by NTMWD in excess of ARK’s contract amount to correct and complete ARK’s abandoned scope of work. NTMWD’s principal claim is for $13,580,788.81.
• Litigation has been ongoing since 2023.
• Mediation took place on Saturday, February 28, 2026. It did not settle during the formal mediation, but negotiations have continued since that time.
• On March 16, all other parties agreed to a global settlement agreement that would result in resolution of all claims in the case. All other parties to the litigation agreed to and signed this global settlement agreement.
FUNDING
Confidential (to be discussed in Executive Session). Funds will be credited back to the Upper East Fork Interceptor System Capital Program.