City loses suit over firing of contractor; Nashville company wins $1.23 million
By Ron Nissimov
A judge has ordered the city of Houston to pay $324,000 in interest and court costs in addition to a $906,000 jury verdict against the city in December for wrongfully terminating a Tennessee company from an asbestos removal project.

With the final judgment signed by State District Judge Pat Mizell last week, the city must now pay $1.23million to American Resources Inc. of Nashville.

"This shows that even a little guy can fight city hall," said John Tavormina, ARI's Houston attorney, on Tuesday.

Tavormina said the wrongful firing in June 1996 forced the company to declare bankruptcy. The company submitted the low bid on removing asbestos from the new Houston Police Department headquarters at 1200 Travis.

A recent city audit revealed that $1.5 million was improperly diverted from construction projects at four city buildings, including asbestos removal at the new police station.

Tavormina said the circumstances in the ARI lawsuit are unrelated to allegations of misappropriation of funds by four former or present city Public Work Department employees. But he did say both situations showed a pattern of mismanagement.

Tavormina said one of the primary allegations in the lawsuit was that the city allowed a conflict of interest to occur by hiring Atlanta-based Law Engineering and Environmental Services to make sure ARI's work complied with health codes.

He said Law Engineering was majority owner of another company, IAM, that had unsuccessfully bid for the asbestos removal job at the new police headquarters. Because of this, Tavormina claimed, law Engineering put up unreasonable obstacles in approving the work performed by ARI.

ARI also sued Law Engineering and reached a confidential settlement with that company before trial. Tavormina said Law Engineering sold its IAM division because of the potential conflict of interest problem. Law Engineering officials did not return a Chronicle call.

ARI began work in January 1996 and was fired six months later, Tavormina said. City officials claimed ARI had improperly left the job site for two days, but jurors were shown a memo in which Law Engineering approved ARI taking the time off, Tavormina said. The city had countersued ARI for $2.7 million because it had to hire another company to finish the work at an accelerated pace. The jury did not find in the city's favor.

The assistant city attorney who handled the case, Arnold Govella, was busy with another trial Tuesday and could not comment.

According to Tavormina, city officials said they did not realize Law Engineering was the majority owner of IAM. They said there was no conflict of interest problem because IAM was not hired to finish the job.

But Tavormina said even if IAM had not been hired for the job after ARI, Law Engineering had a vested interest in trying to get ARI fired because it didn't want the Nashville firm to compete in the Houston market.

Tavormina said Law Engineering and IAM had worked together on at least five private-sector jobs before the lawsuit. He said an official who helped write the state's health code testified during the trial that he believed state regulations were violated on these projects because Law Engineering was put in charge of approving the work done by a company it owned.