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Judge says Buffalo schools owe LPCiminelli $3.2 million, tosses lawsuit

The LPCiminelli construction firm won a big courtroom victory Thursday as a state judge dismissed two breach-of-contract claims from a lawsuit over the company's profits on the $1.3 billion Buffalo Schools renovation and construction project.

Supreme Court Judge Deborah A. Chimes directed the city school district to pay LPCiminelli nearly $3.2 million – plus interest – that the district owes to the company.

Two other claims that the district raised in its lawsuit against LPCiminelli were dismissed by another state judge last year, but the district is appealing that ruling.

The district sued LPCiminelli two years ago after Carl P. Paladino – then a member of the School Board – raised allegations of profiteering by the company. His allegations prompted an analysis conducted in 2015 by The Buffalo News, which found that approximately $400 million of spending on the project was unaccounted for in public records.

In a five-page ruling, Chimes said she found no evidence that LPCiminelli improperly hid information from the district or failed to properly rehabilitate 48 city schools.

"It is … uncontested that the District's architects certified that (LPCiminelli) properly completed the work," Chimes wrote. "Moreover, the District has accepted the work in question" and "is occupying the renovated buildings and utilizing the schools."

The decision was called "a major victory" by Benjamin M. Zuffranieri, an attorney for the Hodgson Russ law firm that represents LPCiminelli.

He said Thursday's decision should put to rest any allegations that LPCiminelli made excessive profits, breached its contract or illegally withheld any information it was required to provide to the school district.

"This was the largest and most successful construction project in the city of Buffalo and Erie County in the past 50 years," Zuffranieri told The News. "When it was over, there should have been a celebration, not a lawsuit. This is the second state judge who has dismissed the meritless claims in this lawsuit."

How much money did LPCiminelli actually make on the project?

"That is not public information," Zuffranieri responded, but he said the actual profit was "nowhere near" $400 million.

Elena Cala, a spokeswoman for the district, had no immediate comment on Chimes' decision when contacted by The News.

"The decision by Judge Chimes just came out today," Daniel J. Altieri, an attorney for the school district, said late Thursday afternoon. "We've reviewed it and disagree with it and are looking at all options."

School Board officials will ultimately decide whether the Chimes decision should be appealed, said Altieri, of the Harter Secrest & Emery law firm.

During the litigation, LPCiminelli argued that it assumed much of the financial risk for the project and was responsible for hiring subcontractors to do the work within a budgeted amount. Under the schools contract, money that was left over after the subcontractors were paid was given to LPCiminelli to cover overhead and profit, the company said.

Regardless of how much profit LPCiminelli made, the construction company fulfilled its obligations to renovate dozens of public schools, Zuffranieri said. State Supreme Court Justice Timothy J. Walker came to the same conclusion in a 21-page decision issued in January 2017.

Walker's decision dismissed several other aspects of the lawsuit, including another breach-of-contract claim and a claim that LPCiminelli failed to protect the financial interests of the school district during the decade-long contract. Those issues were appealed by the school district, and that appeal is pending in the Appellate Division of the state courts in Rochester.

The dispute over the Buffalo schools project is unrelated to federal bid rigging charges filed last year against three top LPCiminelli executives for the contract on the SolarCity plant at RiverBend. Those criminal charges, denied by the Ciminelli executives, are pending.

Attorneys for the school district filed the lawsuit in February 2016, alleging that LPCiminelli, while managing the massive school renovation project, withheld financial information as part of a scheme to conceal the "excessive profits" it was pocketing. The district asked for the release of all of financial records, documenting how much of the $1.3 billion was spent renovating the 48 schools. The lawsuit also sought an undetermined amount of financial damages, including repayment of the company’s profits, along with punitive damages and interest.

The district said that it would have fired the company – or demanded that more of the money be spent on school renovations – if it knew how much profit LPCiminelli was making.

The project originally was supposed to cost $1 billion, The Buffalo News reported in January 2015, but the cost increased by hundreds of millions through a series of changes to the original plans, although student enrollment declined and the district scaled back the number of schools to be renovated.

Another Ciminelli attorney, Daniel C. Oliverio, said LPCiminelli “provided the district with 48 beautiful, state of the art schools, and the company is proud of the work they did on this project.”

Buffalo school district sues LPCiminelli over school renovations

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