A long-running legal dispute that has already cost the state millions of dollars and threatens to cost millions more is heading back to a rural Georgia courtroom in September.
The state has racked up more than $6 million in legal fees over eight years defending itself against a raft of lawsuits brought by the now-bankrupt Douglas Asphalt — at one time the largest road-paving company in South Georgia.
The company’s owner, Joel Spivey, says the Georgia Department of Transportation used faulty tests to discredit his work, cancel his paving contracts and put him and more than 500 of his employees out of business. The state says Douglas Asphalt’s work was shoddy and that it was justified in firing the company.
GDOT officials declined to comment on the pending litigation, as did Lauren Kane, a spokeswoman for the state Attorney General’s Office.
The case is set for trial Sept. 9 in Turner County Superior Court, where Spivey is seeking a judgment in excess of $10 million, said his attorney, Brent Savage.
The saga began in 2004, when potholes started appearing in the asphalt along a 12-mile section of I-95 in Glynn and McIntosh counties in coastal Georgia. Douglas Asphalt had been paid $4.2 million to pave it seven years earlier, and GDOT inspectors had signed off on the work.
The paving was supposed to last 15 years but it started cracking prematurely, former GDOT Commissioner Harold Linnenkohl said.
Engineers for GDOT attributed the problem to an insufficient amount of hydrated lime in the asphalt mix. Hydrated lime is an ingredient added to asphalt to reduce its susceptibility to moisture damage.
GDOT asked Douglas Asphalt to rip up and replace tons of the asphalt it had laid. But the company refused, blaming the problem on the soft ground below the road.
“The foundation of the road was not good,” Spivey said. “That area is over marshland, and there have been problems there since the day the road was opened to traffic.”
GDOT hired two materials testing companies to remove hockey-puck-size asphalt samples from the site and test them to determine the lime content. The companies sent their data to GDOT, which concluded the asphalt did not meet specifications.
In January 2004, GDOT found Douglas Asphalt in default on its contract for work on I-95. The state subsequently canceled a $55 million contract to pave portions of I-75 in Turner and Crisp counties, and it took 100 other projects away from the company. GDOT also removed the company from the state’s approved bidders list for all future road projects.
Linnenkohl said he still believes he made the right call.
“If you leave something out of your mix, that’s fraud, that’s stealing,” Linnenkohl said. “They left something out. And in my opinion, they left it out on purpose.”
Spivey is convinced that someone at GDOT had a vendetta against his company, perhaps because a competitor wanted to squeeze them out.
“(GDOT) targeted my company, and they intended to put us out of business,” Spivey said.
Douglas Asphalt was founded in 1971 by Spivey’s father and another business partner. Spivey became the first employee when he was 20 years old. His son, Kyle Spivey, joined the firm at age 21 and worked his way up from a project manager to supervisor of operations. Together, the family built the company into a $140 million-a-year business, Spivey said.
But as a result of the dispute with GDOT, Douglas Asphalt could no longer get state paving contracts. The company closed and about 550 employees lost their jobs. It was a big hit to the economy in the tiny southeast Georgia city of Douglas (population 11,589), where the company was headquartered, said JoAnne Lewis, president of the Douglas-Coffee County Economic Development Authority.
Everybody knew somebody who had been laid off from Douglas Asphalt.
“The loss of those jobs were just devastating to this community,” Lewis said.
Over the past nine years, Douglas Asphalt has filed numerous lawsuits against GDOT or state transportation officials in Cherokee, Coffee, Fulton, Glynn, Gwinnett and Turner counties and in federal court. The company has yet to prevail in a single claim against the state.
But the company was handed a huge victory in 2009, when a jury returned a $150 million verdict in the U.S. District Court, Southern District of Georgia, against a testing company hired by GDOT. Applied Technical Services was paid by GDOT to determine the amount of lime in the asphalt samples. Douglas Asphalt successfully argued that the test it used was not scientifically valid — and that GDOT officials knew it.
It wasn’t the first time GDOT’s testing procedures had been castigated. Superior Court judges in Fulton and Turner counties also ruled the state’s tests inadmissible at trial.
But the federal jury’s verdict against ATS was overturned by the 11th U.S. Circuit Court of Appeals. The court ruled that ATS was not responsible for the harm to Douglas Asphalt because it performed the tests in the manner specified and required by GDOT.
Now Douglas Asphalt has pinned all its hopes on the case against GDOT set for trial in Turner County. But with the testing evidence ruled inadmissible, the crux of the case becomes audits conducted by the state. The audits show Douglas Asphalt did not have records of receipts showing enough lime was purchased for the project.
Savage conceded that the company’s records were imperfect, but he said the receipts weren’t there because Douglas Asphalt traded with other vendors for lime. The cost of hydrated lime at the time was about 70 cents per ton, which for the I-75 paving project added up to about $350,000 — a small sum considering it was a $55 million contract.
“The stuff is cheap,” Savage said. “You wouldn’t cut corners on this.”
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