Retailer Forever 21 waiting on sinkhole damages while RTG, consultants, city debate liability
Taylor Blewett, Ottawa Citizen
Updated: November 22, 2019
Nearly three and a half years after a crater opened up on Rideau Street, legal jousting continues between companies who want compensation for the financial hit it had on their operations and also between defendants who are tossing liability for the sinkhole around like a hot potato.
In June 2018, fashion retailer Forever 21 served the City of Ottawa, Rideau Transit Group and SNC-Lavalin Constructors with a lawsuit seeking $250,000 in damages for “negligence and lost profits.” The lawsuit remains active.
Rideau Transit Group (RTG) is the consortium contracted by the city to develop the first phase of light rail transit in Ottawa. RTG tasked SNC-Lavalin Constructors, operating as OLRT Constructors, with building the Confederation Line.
This newspaper has reported extensively on the lead-up, appearance and aftermath of the sinkhole on Rideau Street.
LRT construction crews had finished digging out the future Rideau Station cavern and were working on the final 50 metres of tunnel between Colonel By Drive and the Rideau Canal.
Around 10:30 a.m. on June 8, 2016, the massive sinkhole opened up just east of the intersection of Rideau Street and Sussex Drive. It consumed a van parked on the street and ruptured gas and water lines.
Surrounding buildings were evacuated, including the Rideau Centre. A boil-water advisory and business closures lasted for days, while Rideau Street didn’t fully reopen for buses and pedestrians for more than six months.
According to a root cause report commissioned by the city, LRT tunnelling work in the area’s soft ground was a likely contributor to the sinkhole.
In its lawsuit, Forever 21 alleged “the defendants acted negligently by failing to meet their standards of care, which caused the sinkhole to develop, which in turn caused F21 to foreseeably incur significant business losses.”
It outlined a list of specific allegations against the defendants, including failure to “exercise due care, skill and diligence when carrying out the design, inspection, construction and maintenance of the tunnel.”
Forever 21 operates a store inside the mall with an entrance from Rideau Street. It alleges the sinkhole and subsequent repairs led to “reduced customer traffic and sales” at the store and estimates its damages and/or losses at approximately $250,000.
The defendants submitted a notice of intent to defend in December 2018, but the litigation has remained at a standstill.
RTG and SNC-Lavalin did not respond to request for comment. The city declined to comment, as it traditionally does on litigation that is before the courts.
Meanwhile, the Forever 21 chain filed for bankruptcy in September and announced plans to close its 44 Canadian stores.
Keith MacLaren is the company’s lawyer for the sinkhole lawsuit. Reached by this newspaper, he said he didn’t anticipate the bankruptcy would derail this legal action.
MacLaren said the lawsuit was essentially on hold until arbitration involving the city, RTG and project consultants determined which party was liable for the sinkhole. He said his side agreed the defendants wouldn’t have to file a defence until the arbitration concluded.
As of Tuesday, they were still waiting, without a clear sense of when the question of sinkhole liability would be resolved.
“As a firm, we’re very professionally courteous and we don’t push,” unless there’s good reason to do so, MacLaren said. “We’ve probably afforded too much professional courtesy.
“Everybody’s pointing the finger at each other in terms of who’s liable.”
In the past, the city has expressed a belief that the sinkhole was RTG’s fault and that extra costs related to the LRT delay fell to the private consortium, not taxpayers.
RTG has previously asserted that the sinkhole was a “relief event,” a contractual term that could apply to several different situations and absolve the consortium of responsibility, provided the situation was outside RTG’s control.
Negotiations over who is responsible for LRT cost overruns have previously been confirmed by the city.
Asked for an update on these talks and its current position liability for the sinkhole, the city was not immediately able to respond Friday.
However, another litigation involving the Rideau Street crater lays bare some of the back-and-forth over who should cover the bills it created.
At the same time Forever 21 filed its lawsuit for sinkhole damages, so did the companies that own the Rideau Centre. They’re claiming $3 million in damages from a long list of defendants, including RTG, the City of Ottawa and various subcontractors and consultants.
The lawsuit alleges that ruptured water mains in the sinkhole flooded the Rideau Centre basement, damaging escalators, electrical and interior fixtures and causing “other associated losses and damages.”
It claims the defendants caused or contributed to these damages through “negligence and/or nuisance and/or breach of duty.”
Two statements of defence and cross claims were filed in October: one from a group of engineering consultants named in the lawsuit, and the other from the City of Ottawa, RTG and its affiliates.
In the consultants’ statement, they said they were retained to provide limited engineering consulting on design of the Confederation Line. They denied the allegations against them and went on to say that, if the plaintiffs actually suffered the damages they claimed — which the consultants also deny — then that was on the plaintiff and/or their co-defendants: the city, RTG, and others.
The consultants went on to initiate a cross claim against their co-defendants, demanding they cover any amounts for which the consultants may be found responsible.
In their own statement of defence and crossclaim, RTG and the city fired back with the same message: denying the allegations against them and asserting that any damages were the fault of the plaintiff or the contractors and consultants named as co-defendants, and that any money paid out reflect this.
“The defendants state that the work which they performed on the OLRT Project was performed in a reasonable, careful, good and workmanlike manner, without negligence or breach of contract, and in accordance with the terms and provisions of the relevant contract(s) and generally accepted industry standards and practices,” the RTG statement read.
With files from Jon Willing and Matthew Pearson
https://ottawacitizen.com/news/local-new...le-rtg-consultants-city-debate-liability
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