State loses Front Street
lawsuit, could be on hook for millions
By Ed Jacovino Journal Inquirer , July 20, 2012
HARTFORD — The state has lost a lawsuit against the contractor hired to
build the now-vacant Front Street
project, meaning it could have to pay millions in damages and legal fees.
The Front Street
development was part of ex-Gov. John G. Rowland’s Adriaen’s
Landing project along the Connecticut River that
included the Connecticut Convention Center, the Connecticut Science
Center, and Front Street.
Capital Properties Associates, the lead developer on Front Street, sued the state after being
fired by former Gov. M. Jodi Rell. Delays and scope
changes by both Capital Properties and the state had plagued the development.
The company was supposed to build a mix of housing, retail, and entertainment
on the west side of Constitution Boulevard — across the street from the hotel,
science center, and convention center — called Meeting House Square or Front
Street, at different phases of the project. But construction never really
started.
The firing came after Rell
presented Richard Cohen, Capital Properties’ owner,
with a new contract that lowered the state’s responsibilities and made Cohen
have to pay more. Rell told him to sign it or lose
the job.
Cohen refused. Rell fired him. That was in July 2004,
one month into Rell’s term in office after Rowland, a
fellow Republican, resigned amid a corruption scandal.
Cohen sued that November, saying Rell had broken the
contract by bargaining the new agreement in bad faith. Rell
countered with the state’s own lawsuit, saying Cohen already had abandoned the
job.
In a decision issued Wednesday, Hartford Superior Court Judge Marshall Berger
handed the state an overwhelming defeat, saying Rell
was in the wrong.
“The state breached the development agreement by unilaterally demanding that
Capital sign the proposed second amendment on July 26, 2004, threatening to
terminate Capital if it did not sign the amendment,
and terminating Capital because it did not sign,” Berger wrote in his decision.
“These acts demonstrate that the state acted prematurely and in bad faith.”
The decision in Capital’s favor means the developer and state now will argue in
court over how much the state should pay Capital and Cohen.
Sources have said Capital is out about $2.5 million. A footnote in the decision
says that according to lawyers for the state, Capital Properties spent $5
million and was reimbursed about $3.8 million for the project.
The state likely is on the hook for Capital’s legal fees, and also must pay for
its own lawyers. The state hired private lawyer George D. Royster
from the Hartford
firm Halloran & Sage.
The lawsuit lasted more than seven years. Sources said there were efforts to
reach a settlement, but they were unsuccessful.
Attorney General George C. Jepsen’s office said today
the state has paid Halloran & Sage $3.1 million
for this case since 2004. It owes $14,000 more.
Berger also commented on how complex the project was. Usually, the state
decides on the scope of the project, and hires the contractor to build it. That
wasn’t the case with this project.
“This was different. The parties here were creating the specifics of the
agreement and designing the project,” the judge wrote. “Unfortunately, there
were too many moving parts and both sides underestimated the complexity and the
time required for this project.”
Joel Kozol, the lead lawyer for Capital Properties,
celebrated the decision Thursday. “We’re pleased that Judge Berger provided our
client Capital and Richard Cohen with a total victory,” he said.
Richard Weinstein, a West Hartford lawyer, represented Cohen. “This is a
complete vindication,” Weinstein said.
Andrew J. McDonald, general counsel for Gov. Dannel
P. Malloy, a Democrat, blamed the loss on Rowland.
“John Rowland’s legacy to the state of Connecticut was not only corruption but
apparently incompetence as well,” he said.
Even though the judge’s decision found Rell at fault,
Rowland had put the project on the path to its breakdown, McDonald said.