A subcontractor hired to install a natural gas pipeline in the Kennebec Valley is suing the contractor as well as an insurance company, marking the second U.S. District Court lawsuit in recent months to plague the $350 million project spearheaded by Summit Natural Gas of Maine.
Ursa Major Underground Inc., of Lake Ariel, Pa., is suing Schmid Pipeline Construction Co., of Mayville, Wis., as well as Liberty Mutual Insurance Co., a Massachusetts-based firm licensed in Maine that wrote the surety bond for the contract.
In its complaint, Ursa says Schmid has failed to make good on its contract and Liberty Mutual refused to pay in a letter saying that Summit Natural Gas Inc. has not paid Schmid for the work yet.
The lawsuits are not expected to have a visible effect on the pipeline construction in central Maine.
“The work that had involved Schmid or any of its subcontractors is complete,” Julie Rowey, director of marketing and communications for Summit, said Tuesday.
Summit officials announced last week that the firm had completed a pipeline to the UPM Madison Paper mill, the final link in its 68-mile steel backbone transmission pipeline from Pittston to Madison.
Ursa Major Underground, represented by David P. Ray, is charging breach of payment bond against the insurer and Schmid. The subcontractor also accuses Schmid of breach of contract and breach of the prompt payment statute.
Neither defendant has been served with notice of the lawsuit, Ray said Tuesday. Ray also said he anticipated attorney John Hobson would be representing Schmid because he is doing so in another case.
Ursa Major Underground signed on as a contractor Sept. 3, 2013, with Schmid to conduct “horizontal directional drilling” on the Kennebec Valley Pipeline Project. Ursa was fired by Schmid on Nov. 20, 2013, but was owed more than $1.7 million, the complaint says. Neither Ray nor a Pennsylvania attorney working with him were able to say precisely where Ursa Major Underground worked on the pipeline project.
Construction of transmission pipelines for Summit and competitor Maine Natural Gas tied up roads in central Maine much of the year as they raced to reach commercial and industrial customers. The construction is expected to continue this year as they go after more business and residential customers in central Maine.
“Schmid terminated the subcontract with (Ursa) solely by reason of claims and disputes that had arisen between Schmid and Summit,” the complaint says, and then goes on to make reference to another civil lawsuit in federal court in which Schmid is suing Summit Natural Gas, seeking $72 million from Summit.
That separate lawsuit says Schmid was hired by Summit “to construct and install approximately 68 miles of 10-inch, 8-inch and 6-inch steel pipe in Somerset and Kennebec counties and Schmid was to provide a capital outlay of no more than $10 million at any point.”
Summit’s response to that claim denies the allegations and says it relies on the terms of the contract.
Rowey said the lawsuit refers to the first phase of Summit’s project, which is now complete. Summit is embarking on the second phase, an additional 85 miles of distribution pipeline. Summit also has started a new project in southern Maine, installing a 66-mile pipeline through Cumberland, Falmouth and Yarmouth.
Summit Natural Gas of Maine, Inc., of Littleton, Colo., through its attorneys Robert Ruesch and John Giffune, also filed a counterclaim against Schmid charging breach of contract, saying: “Schmid walked off the project and demobilized on November 20, 2013,” and “Schmid had been paid approximately $68 million by Summit per the terms of the contract.”
Schmid’s abrupt departure from the project last fall stalled underground drilling in Norridgewock, causing project delays. Madison Paper, after connecting to Summit’s pipeline last week, switched to natural gas six months later than originally hoped.
Summit says the contracted work was time-sensitive and that Schmid is liable for damages for allegedly failing to complete the work on time and overbilling. It also says any money claimed by Schmid should be offset by almost $30 million Summit has paid directly to Schmid subcontractors and suppliers.
Betty Adams — 621-5631 [email protected]