On June 7 Judge Bridgett Mary McGrath dismissed Proviso East High School from a civil suit filed by Restore Construction and Restore Restoration. (Chronicle Media file photo)

A circuit court judge has dismissed the District 209 Proviso High School Board and its insurance company from liability for $1.8 million in over-budget bills submitted by a politically connected fire restoration and construction company.

Attorneys for the school district said that the purported contract with Restore Construction of Franklin Park imposed no legal liabilities on D209 because then-Superintendent Nettie Collins-Hart had no legal authority to enter into contracts over $25,000, and then board president Dan Adams had no personal authority to sign any documents without a formal roll call vote of approval by the school board as a whole.

On June 7 Judge Bridgett Mary McGrath dismissed the high school from a civil suit filed by Restore Construction and Restore Restoration. At issue were a contract and amended contract that gave wide latitude to Restore, which presented a $4.2 million repair estimate that ballooned to $5.5 million. Restore’s final bill was $7.3 million.

The court also dismissed two people responsible for signing the contracts with Restore without any authority, former board president Dan Adams and former D209 Superintendent Nettie Collins-Hart. Also dismissed were the school district’s insurer, Traveler’s Indemnity Company and three other companies named in the lawsuit.
D209 board president Teresa Kelly said, “I can’t give you comment at this time, since the case isn’t finished.”

Adams and Collins-Hart hired Restore Restoration to board up fire damaged windows and conduct cleanup after faulty electrical wiring caused a three-alarm fire that damaged 10 rooms of Proviso East High School at 807 N. First Ave. in Maywood on May 10, 2014.

Restore Construction and Restore Restoration are run by Patrick Santoro and his son, Michael, who have numerous political connections, including to former D209 Board President Emanuel “Chris” Welch, who is now an Illinois State Representative, Melrose Park Mayor Ron Serpico and Cicero Town President Larry Dominick.

Twelve days after the fire, Collins-Hart signed a contract with Restore Construction to repair the fire damage. Three month later Adams signed another contract

Documents show the contract for fire remediation, labeled with the hand-written word “Emergency” at the top, was signed within days of the fire. District 209 Superintendent Nettie Collins-Hart and Chief Financial Officer Todd Drafall retained Restore without any approval by the school board.

Adams, who was board president in May 2014 at the time of the fire, subsequently signed an amendment to the contract on Aug. 12, giving Restore wide latitude in dealing with the insurance company. That action, despite being taken nine weeks after the fire, was also undertaken without either the knowledge or approval of the school board.

Adams agreed to the school district paying Restore not only any amounts the insurance company might refuse to pay, but also to pay Restore’s legal bills in case of a lawsuit. The amended contract also granted Restore power of attorney, allowing the contractor to act in the stead of district administrators “with respect to signing, approving, authorizing and endorsing” various documents “necessary to satisfy Contractor’s claim for payment …”

Adams also did not require that a surety bond be acquired for the reconstruction work, leaving the district potentially liable for any additional charges.

Almost a year later, the fire repair work for which Restore had been paid more than $5.5 million was still not finished. The school district’s insurer, Traveler’s Indemnity Company, peppered Restore with detailed questions regarding the reasoning for the additional bills, and stopped making payments when they found Restore’s answers to be unsatisfactory.

Restore stopped work in April, 2015, and filed suit that October against District 209 and Traveler’s for breach of contract. The suit also named Adams, Collins-Hart, Business Manager Drafall, and then-Proviso East Principal Tony Valente individually for simple fraud and breach of contract.

Matthew S. Ponzi, the attorney for Traveler’s Indemnity Company, alleged in July, 2014 that Restore gave a repair cost estimate of $4.2 million. Traveler’s accused Restore of engaging in “bait-and-switch” billing and using a significantly higher pay standard for workers than it had agreed to in negotiations. The Insurance company alleges Restore agreed to “prevailing industry wages” but then billed using “Prevailing Wage” pay rates routinely adopted by most governmental entities

“The necessary lawful prerequisite of approval of this type of contract required a roll call vote of (a quorum) of the board in order for either of the purported contracts to be valid,” Grodsky argued in his motion to dismiss. “There is not even an allegation that the board of education was aware of the contractual document.”

“It is undisputed that this vote never occurred and that the contracts at issue were never lawfully approved by the board. Instead, there were acts taken by individuals that were beyond their authority.”

Restore argued that the work was done on an “emergency” basis, but Grodsky pointed out that the original repairs contract was signed by Collins Hart some nine days after the fire, during which period there was a scheduled school board meeting during which the subject was never brought up.

He also argued that emergency or not, “the mere existence of an emergency does not usurp the Board’s obligations to approved construction contracts.”

Judge McGrath dismissed a total of 10 counts against D209 “with prejudice,” meaning they cannot be re-filed. She dismissed two other counts “without prejudice,” allowing Restore to file an amended complaint on those two counts.

In continuing the other remaining counts of the case to a July 11 court hearing, Judge McGrath noted the caveat that her ruling on the various dismissals were “subject to the court’s review of the official transcript” of the June 7 hearing.

— Proviso high schools off hook for $1.8 million in fire repair overruns —