Insurer that backed bond for Terrytown Gymnasium project suing Jefferson Parish

Elizabeth L. Gordon

GRETNA – An insurance company is suing a parish government for a claim made for deficient work for which the insurer had to pay. The Ohio Casualty Insurance Company filed suit against Jefferson Parish in the 24th Judicial District Court on Oct. 25. The company claims that it insured bonds for for the Terrytown Playground Gymnasium construction project that was to be completed by JaRoy Construction for a contract price of $4,635,307. The plaintiff alleges that the contract stipulated that all work be completed within 365 days and that a penalty of $500 per day would be assessed for every day the contractor went over the deadline. The Ohio Casualty Insurance Company asserts that during the project JaRoy submitted numerous change orders and was granted 55 more days to complete the construction and $307,775.32 more than the contracted payment. The plaintiff alleges that early into the project the Jefferson Parish Council announced the project had been plagued by problems and it terminated JaRoy's contract after paying out $3.8 million. The Ohio Casualty Insurance Company asserts that as the bond insurer it was requested to reimburse the parish government for the defective work, however, it claims the parish government is at fault for allowing the defective work to continue for a long period of time without stopping it sooner and that the warranty on the work was only valid after its completion. The Ohio Casualty Insurance Company claims that in accordance with a policy it paid another contractor a sum of $3,058,761 to complete the project, which was in excess of the $1.2 million remaining contract balance. The plaintiff claims that the Jefferson Parish Council should have paid it the remaining balance on the original contract. The defendant is accused of improperly approving and paying for defective work and then requiring the insurer to pay for corrections to the work and failing to address the defective work in a timely manner by terminating the agreement. An unspecified amount in damages are sought for partial payment on the remaining contract balance. The Ohio Casualty Insurance Company is represented by Elizabeth L. Gordon of New Orleans-based Shields, Mott & Lund. The case has been assigned to Division J Judge Stephn J. Windhorst. Case no. 720-522.

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