Case 2:16-cv-00234 Document 1 Filed in TXSD on 06/21/16 Page 1 of 9

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF TEXAS
CORPUS CHRISTI DIVISION
THE HANOVER INSURANCE COMPANY
Plaintiff,

v.
ROBSTOWN INDEPENDENT
SCHOOL DISTRICT
Defendant.

CIVIL ACTION NO. 2:16-cv-00234

ORIGINAL COMPLAINT
Plaintiff, The Hanover Insurance Company (the Surety), files this its Original
Complaint against Defendant, Robstown Independent School District (Robstown ISD), and
respectfully states:
I.
PARTIES
1.

The Surety is a New Hampshire corporation with its principal place of business in

Worcester, Massachusetts. The Surety is authorized to do business in the State of Texas.

2.

Robstown ISD is a Texas independent school district.

Pursuant to Section

17.024(c) of the Texas Civil Practice & Remedies Code, Robstown ISD may be served with
process through its Superintendent, Maria Vidaurri, at 801 North First Street, Robstown, Texas
78380.
II.
JURISDICTION
3.

Jurisdiction is predicated on 28 U.S.C. 1332. The parties are diverse and the

amount in controversy exceeds $75,000, exclusive of interest and costs.

ORIGINAL COMPLAINT

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III.
VENUE
4.

Venue is proper in this district under 28 U.S.C. 1391(b)(2) in that a substantial

part of the events or omissions giving rise to the Suretys claim occurred in this district.
IV.
FACTUAL BACKGROUND
A.

The Contract and Project

5.

Texas

Descon,

L.P.

(Descon)

was

predominantly

general

contractor/construction manager on public works projects in the State of Texas. The public
owners of these projects were generally municipalities and school districts.
6.

On May 13, 2014, Descon and Robstown ISD executed a contract entitled

Standard Form of Agreement Between Owner and Construction Manager as Constructor where
the basis of payment is the Cost of the Work Plus a Fee with a Guaranteed Maximum Price (the
GMP Contract).
7.

The GMP Contract was for the construction of the Robstown High School

Additions (the Project).

8.

The GMP Contract provided various requirements for a final guaranteed

maximum price by Descon, as a price was not known at the time of the execution of the GMP
Contract in May 2014.
9.

Under the GMP contract, Exhibit A was earmarked to be an amendment that

would be the final guaranteed maximum price from Descon.

10.

A final guaranteed maximum price was never provided by Descon, and there is no

Exhibit A to the GMP contract.

ORIGINAL COMPLAINT

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B.

The Demolition and Initial Plans for Demolition of the Project

11.

Gignac Architects (Gignac) was the architect retained by Robstown ISD to

prepare the construction plans for the Project.

12.

No detailed plans were prepared by Gignac as of May 2014, so plans were not

available to any bidders interested in the Project.

13.

Rather, at the time of execution of the GMP Contract, Gignac had only prepared

initial renderings and concept drawings, which were done in early February 2014.
14.

After execution of the GMP contract, Descon and Robstown ISD discussed fast

tracking just the demolition phase of the Project.

15.

As of July 1, 2014, the only detailed plans and specs prepared by Gignac were the

demolition plans.
16.

Based on the demolition plans prepared Gignac, Descon submitted a price

estimate of $1,503,597 on July 1, 2014, for just the demolition phase.

17.

Robstown ISD agreed to the price submitted by Descon for the demolition

phase.
C.

Issuance of the Performance Bond

18.

Under the Texas Government Code, contractors on public works projects are

required to secure payment and performance bonds from a corporate surety authorized to do
business in Texas. TEX. GOVT CODE 2253.021; see also TEX. INS. CODE 3503.002.
19.

On July 30, 2014, the Surety issued performance bond number 10602391-1 on

behalf of Descon in favor of Robstown ISD with a penal sum of $1,584,699 (the Bond), which

ORIGINAL COMPLAINT

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covered the demolition work to be performed by Descon.1 A true and correct copy of the Bond
is attached hereto as Exhibit 1 and is incorporated herein by reference in its entirety.
20.
D.

Demolition work on the project continued through the summer of 2014.

The GMP Proposal by Descon and Bond Riders

21.

On October 10, 2014, Gignac provided the next set of plans to Descon following

the demolition plans being provided in July 2014.

22.

Based on October 2014 plans, Descon submitted a GMP proposal on October 14,

2014, which quoted a total price of $10.6 million for the Project (inclusive of the demolition
work). A true and correct copy of the GMP proposal is attached hereto as Exhibit 2 and is
incorporated herein by reference in its entirety.
23.

At the same time, Descon provided a separate proposal for a new agriculture barn.

24.

The proposal provided by Descon for the agriculture barn that was subsequently

accepted by Robstown ISD was for a total price of $740,895 (which was over and above the cost
of the High School additions). A true and correct copy of the proposal for the agricultural barn is
attached hereto as Exhibit 3 and is incorporated herein by reference in its entirety.
25.

On October 22, 2014, the Surety executed an Increase Rider raising the penal

limit of the Bond to $10.6 million, which matched the GMP proposal submitted by Descon on
October 13, 2014. A true and correct copy of the Increase Rider is attached hereto as Exhibit
4 and is incorporated herein by reference in its entirety.
26.

On the same day, the Surety executed a separate Increase Rider Number 2 raising

the penal limit of the Bond by $740,895 to cover the new agriculture barn. A true and correct

1 The bond number was filled in by Descons bonding agent, who did not have access to the correct bond numbers
of the Surety. Thus, bond number 10602391-1 was later changed in the Suretys system to reflect No. 1031504.
This is also true of the subsequent bond riders with inaccurate bond numbers (detailed infra).

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copy of the Increase Rider Number 2 is attached hereto as Exhibit 5 and is incorporated herein
by reference in its entirety.
27.

As of October 22, 2014, the only plans prepared by Gignac were the demolition

plans in July 2014 and the plans of October 10, 2014, used by Descon for its GMP proposal.
E.

The Payment Procedures under the GMP Contract

28.

In addition to providing a guaranteed maximum price, Descon was entitled to

charge a construction managers fee of 3.8%.

29.

The construction managers fee of 3.8% would be added to all invoices from

subcontractors and suppliers of Descon that provided labor and/or materials to complete the
Project.
30.

Under the terms of the GMP contract, Robstown ISD and/or its architect were

responsible for verifying all of the costs claimed by Descon for construction of the Project,
which meant verifying subcontractor and supplier invoices to corroborate actual work performed
before paying Descon for the invoices plus its construction managers fee.
F.

Overpayments by the District

31.

Between June 2014 and March 2015, the District processed seven payment

applications submitted by Descon.

32.

All payment applications submitted by Descon were reviewed, processed, and/or

approved by Gignac as the architect on the Project.

33.

Overall, the District paid Descon more than $3.2 million.

34.

The District and/or Gignac failed to comply with the terms of the GMP Contract

in verifying costs claimed by Descon prior to processing payments.

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35.

Based on the investigation conducted by the Surety, the District paid Descon a

minimum of $1,573,667 for work that was not performed.

36.

Despite request by the Surety, the District has refused to repay money to the

contract balance to cover the overpayments to Descon.

G.

Texas Descons Default

37.

During the spring and the summer of 2015, Descon began to experience financial

problems.
38.

On June 2, 2015, Descon executed a voluntary letter of default, which declared a

default of the GMP Contract. A true and correct copy of the voluntary letter of default is
attached hereto as Exhibit 6 and is incorporated herein by reference in its entirety.
39.

On September 3, 2015, the voluntary letter of default executed by Descon was

provided to Robstown ISD.

40.

Despite receipt of the voluntary letter of default, Robstown ISD has still not

terminated its contract with Descon as of the date of this filing.

41.

Termination of a bonded contract is a condition precedent to action by a surety

under its performance bond.

H.

New Plans Contemplate a Different Scope of Work for the Project

42.

Payment application number five submitted by Descon in November 2014 shows

a total contract sum of $11,340,895, which contemplates the total cost for the high school
renovations, as well as the new agriculture barn. A true and correct copy of payment application
number five is attached hereto as Exhibit 7 and is incorporated herein by reference in its
entirety.

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43.

Payment application number five contained Descons schedule of values for

completion of the Project, which were estimates/values based on the October 2014 plans
provided by Gignac.
44.

On May 29, 2015, Gignac submits a new set of plans for construction of the

Project.
45.

On June 12 and 22, 2015, Gignac again revised the drawings with a total of 84

pages of addenda.
46.

Subsequent to the voluntary letter of default being tendered to Robstown ISD in

September 2015, Gignac again revised the plans with 40 new pages of addenda.
47.

Revisions by Gignac continued in February 2016, with 78 revised plans.

48.

The plans bid by Descon in October 2014 consisted of 23 pages.

49.

The District is now seeking a project that has more than 180 pages of plans, the

majority of which significantly alter the original design of the Project bid by Descon in October
2014.
50.

Based on the Suretys investigation, the differences in the plans originally bid by

Descon and the ones subsequently revised by Gignac add $3 million worth of work.
51.

Despite request by the Surety, the District has refused to add money to the

contract balance to cover the cost of the changes to the work reflected in the revised plans.
I.

Claims against the Bond by the District

52.

On May 31, 2016, Robstown ISD asserted a claim against the Bond. A true and

correct copy of the claim by the District is attached hereto as Exhibit 8 and is incorporated
herein by reference in its entirety.

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53.

In its claim, the District demanded that the Surety complete a scope of work based

on all of their revised plans that were not originally bid by Descon.
54.

The claim against the Bond was acknowledged by the Surety on June 3, 2016. A

true and correct copy of this correspondence is attached hereto as Exhibit 9 and is incorporated
herein by reference in its entirety.
55.

In its acknowledgment, the Surety addresses the overpayments by Robstown ISD,

as well as the betterments requested by Robstown ISD tied to the revised plans.
56.

On June 16, 2016, the Surety denied Robstown ISDs claim against the Bond

based on the actions of Robstown ISD. A true and correct copy of this correspondence is
attached hereto as Exhibit 10 and is incorporated herein by reference in its entirety.
V.
CONDITIONS PRECEDENT
57.

All conditions precedent to recovery by the Surety against Robstown ISD have

occurred or have been performed.

VI.
CAUSE OF ACTION DECLARATORY JUDGMENT
58.

The Surety incorporates herein by reference, as if fully set forth, the allegations

59.

Pursuant to 28 U.S.C. 2201-2202, the Surety requests that the Court enter a

above.

declaratory judgment against Robstown ISD finding the following:

a. The Surety does not have any liability under the Bond based on the material
alterations to the bonded scope of work by Robstown ISD, including the
depletion of the contract balances that serve as the collateral on the Bond.

ORIGINAL COMPLAINT

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VII.
REQUEST FOR RELIEF
For the foregoing reasons, The Hanover Insurance Company respectfully requests that
Robstown Independent School District be cited to appear and answer herein and, upon final trial
thereof, that the Surety receive:
1.

A declaratory finding that the Surety does not have any liability under the
Bond;

2.

Costs of court; and

3.

Such other and further relief to which the Surety is justly entitled.
Respectfully submitted,
LANGLEY LLP
By: /s/ Brandon K. Bains
Keith A. Langley
State Bar No. 11919500
Southern District of Texas Bar No. 19121
Brandon K. Bains Attorney in Charge
State Bar No. 24050126
Southern District of Texas Bar No. 711977
1301 Solana Blvd.
Building 1, Suite 1545
Westlake, Texas 76262
214-722-7160
214-722-7161 (Fax)
klangley@l-llp.com
bbains@l-llp.com
ATTORNEYS FOR THE HANOVER
INSURANCE COMPANY

ORIGINAL COMPLAINT

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