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ASPA files $10 Mil lawsuit over scrap metal cleanup

fili@samoanews.com

The American Samoa Power Authority is suing Good Year Corporation (GYC) for breach of contract in the removal of scrap metal and other debris from the Tafuna Scrap Metal Yard (TSMY).

The lawsuit against GYC, a subsidiary of Hong Kong-based Beltrade Group, was filed Apr. 12 this year. ASPA is represented by the law firm of Ashley & Associates.

Last Friday, the court granted ASPA’s motion to allow service of the lawsuit by publication, since GYC is no longer in operation in the territory. This means ASPA will be publishing the notice in the local papers so that the company can be notified.

ASPA is accusing GYC of instructing employees to “bury extensive amounts of scrap metal, gas cylinders and scrap wire” below the surface of TSMY before the property was  returned to ASPA.

COMPLAINT

According to the complaint, ASPA and GYC, which is no longer operating in the territory, entered into an agreement around October 2007 where the defendant agreed to pay ASPA $300,000 for the right to remove all recyclable materials, as well as other materials from the TSMY.

Additionally, a provision of the agreement states that GYC was to provide a $500,000 performance bond to ASPA as a surety against potential breach of its contractual agreement.

The agreement further states that in the event that the Contractor fails to successfully satisfy its contractual obligations under this agreement with the terms stated, the contractor would forfeit to ASPA the entire Performance Bond and waive its right to challenge said forfeiture in any court.

Moreover, the agreement stipulates that if it’s discovered that any materials or soil are found to be contaminated at TSMY by the federal and territorial environmental protection agencies, GYC would be “solely financially responsible” for the disposable of the contaminated materials and soil according to standards required by the local EPA.

According to the complaint, amendments were later made to the agreement.

One amendment called for GYC to complete its performance work by Apr. 15, 2010 and the other amendment released the $500,000 performance bond and replaced it with a $100,000 performance bond.

The complaint goes on to say that around Apr. 9, 2010, gas cylinders under the control of GYC in the TSMY discharged hazardous gases into the environment, just six days before the defendant was supposed to complete all of their obligations pursuant to the 2007 agreement and subsequent amendments.

“Trevor Stevenson, the TSMY Site Manager of GYC, directed other GYC employees to discharge the harmful gases into the environment during the Apr. 9, 2010 incident at TSMY,” ASPA alleges in the complaint, adding that this incident is the subject of an ongoing criminal investigation. (ASPA didn’t say if the criminal investigation is being conducted by local or federal authorities, or both.)

ASPA further alleges that the gas release incident was “an intentional act... by GYC in an effort to vacate the TSMY and avoid breaching the Apr. 15, 2010 complete performance deadline.”

According to ASPA, GYC did not complete the terms of the October 2007 agreement and amendments by the Apr. 15, 2010 deadline. It also notes that around Apr. 23, 2010, the USEPA received a request from ASEPA to take environmental samples at TSMY.

ASPA claims that it became aware around Apr. 28, 2010 that GYC had been moving recyclable materials from TMSY and storing them at the T&T Scrap Metal Yard in Futiga. Then on July 8, 2010, ASPA said it notified GYC of its intent to foreclose on the $100,000 performance bond.

The complaint reveals that on July 12 of the same year, the USEPA served ASPA with a Unilateral Executive Order (9-2010-0011) estimating cleanup costs at the TSMY to be $290,140. USEPA stated that the order was issued because of the conduct by GYC at the TSMY, particularly the release of hazardous gases.

On Oct. 20, 2010, the USEPA sent ASPA a letter formally rejecting GYC’s latest Work Plan as “unsafe, inadequate, and lacking in required detail”.

In the same letter USEPA gave notice to ASPA that they would be on the TSMY site to commence removal activities on Dec. 6, 2010.

According to the complaint, USEPA completed its clean up of the TSMY site on Mar. 3, 2011 and the current bill to ASPA for the clean up is $148,000. Four days later, ASPA began grading the land and preparing TSMY to be turned over to the Federal Aviation Administration and it was at that time that ASPA discovered on the surface level that wires and scrap metal had been buried subsurface at TSMY.

“After an extensive investigation”, two former GYC employees (identified by name in the complaint) “admitted to ASPA in sworn affidavits that they were instructed by GYC, while still in their employ, to bury extensive amounts of scrap metal, gas cylinders and scrap wire below the surface of TSMY prior to turning over the land to ASPA”.

According to the complaint, USEPA cannot sign off on the condition of the TSMY while there are large amounts of scrap buried underground and ASPA cannot legally turn over TSMY to the FAA without the USEPA signature acceptance.

As of September last year, ASPA says, it continues to excavate TSMY and remove scrap metal, gas cylinders, scrap wires and debris buried by GYC, the complaint alleges and noted that when GYC “abandoned” TSMY “they left a pre-existing wall in damaged condition and ASPA incurred repair expenses to restore the wall to its proper state.”

COST OF BREACH OF CONTRACT

As of Mar. 31, 2012 ASPA claims it has incurred total repair and removal costs of $5.17 million for the removal of the scrap metal, gas cylinders, scrap wires and debris buried by GYC at the TSMY.

Additionally, ASPA has incurred $4.38 million in tipping fees; $34,580 in administrative costs; $374,754 in equipment rental costs; $33,360 in security costs; $31,688 in labor costs; $8,340 in wall repair costs; and $7,699 in utility costs.

ASPA is requesting the court to grant ASPA the right to foreclose on the $100,000 performance bond because of GYC’s “incurable contractual breaches”; and order judgement of $290,140 in favor of ASPA in accordance with the USEPA Unilateral Executive Order, plus future costs pursuant to federal laws.

Additionally, ASPA asks that the court issue an order requiring GYC to pay ASPA the costs of complying with the Unilateral Executive Order and award ASPA the costs incurred for the removal of recyclable materials and debris originating from the TSMY as well as other relief the court may deem proper.



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