Leaks in a public housing complex could force Navillus Contracting to return to its 2017 bankruptcy case.
The beleaguered concrete contractor is asking a federal court to reopen its Chapter 11 case for the sole purpose of barring a lawsuit by the New York City Housing Authority.
The agency sued Navillus in August 2020, alleging that the firm’s shoddy workmanship and use of porous mortar led to leaks at 14 buildings in the Bronx’s Parkside Houses. NYCHA had hired Navillus in 2015 to restore exterior brickwork and repair roofs. It alleges that the work caused at least $11.9 million in damages.
Navillus exited bankruptcy in 2018 after settling another lawsuit brought by various construction unions. The company argues that NYCHA can’t bring its lawsuit because the claims stem from work completed in September 2017, two months before Navillus filed its bankruptcy petition. According to Navillus’ motion, NYCHA should have made its negligence and breach of contract claims while the bankruptcy was still active.
What’s more, the agency knew about the alleged construction defects when it filed other claims against Navillus in the bankruptcy proceeding, according to the motion, which cites a 2017 report on building leaks. Navillus seeks to enforce the plan and discharge claims that arose prior to its emergence from bankruptcy.
A spokesperson for NYCHA said the agency is reviewing Navillus’ arguments. It has until May 27 to respond to the contractor’s motion. A hearing is slated for June 10.
An attorney for Cowi Consulting, an engineer that allegedly signed off on Navillus’ use of subpar mortar, did not immediately return messages seeking comment. It’s also being sued by NYCHA.
It has been a rough couple of years for Navillus, one of the city’s largest concrete contractors. After the company resolved a massive union lawsuit and emerged from bankruptcy, its CEO was indicted on charges that he and others cheated various construction unions out of more than $1 million. CEO Donal O’Sullivan disputed the allegations but agreed in August to temporarily step down while the case played out. His trial is expected to start in October.
NYCHA filed its lawsuit one day after O’Sullivan announced his departure.