St. Louis Federal Reserve Bank Sues McCarthy for ‘Defective’ Windows

The Federal Reserve Bank of St. Louis is alleging breach of contract in a federal lawsuit filed last week against McCarthy Building Cos. and subcontractors Winco Window Co., Hilboldt Curtainwall Inc. and Architectural Glass Products LLC.

In papers filed last week in U.S. District Court for the Eastern District of Missouri, the Federal Reserve Bank of St. Louis claims that the companies are responsible for installing at least 498 defective windows spread throughout the first six floors of the bank’s headquarters in downtown St. Louis in 2008. The Fed is seeking more than $1.5 million to replace the windows, move employees and readjust security measures, according to the filing.

The Fed and McCarthy, which had been hired to provide construction management for renovations and an addition at the St. Louis Fed’s headquarters, tried to settle the dispute privately, but nearly two years of negotiations failed to produce a deal to which both sides could agree.

Representing the bank, St. Louis-based attorney Dorothy White-Coleman wrote in court documents that her client “afforded Defendant a reasonable opportunity to inspect the windows and correct the defects, which Defendant has failed to do.”

The windows in question were Winco model Nos. 3350 and 1550 that were supposed to be fixed, aluminum-framed laminated and insulating glass designed to prevent buckling, the opening of joints, the overstressing of components and the failure of joint sealants among other things. The glass was also expected to be resistant to blasts and other detrimental effects, which was desired by the Bank for security reasons, according court records.

The windows were installed in four phases from January 2008 to September 2008. However, a Hilboldt inspection of the windows in June 2011 revealed that the windows had allegedly begun delaminating along the edges and “appeared to be defective,” according to court documents.

An “expert window consultant” hired by the bank alleged the windows did not meet industry standards and were defective, the complaint states. That expert also said total replacement was the only “reasonable” remedy, according to the lawsuit filing. Citing a survey of the building windows, bank officials say the delamination problem had become “pervasive and progressive.”

The federal bank charges that McCarthy breached its contract in “numerous” respects, “including, but not limited to, permitting its subcontractors to install windows that failed to meet specifications; selecting substandard and/or inexperienced subcontractors to perform the obligations under the Contract; failing to adequately take supervision and/or construction management of the Project as Defendant contracted to do; selecting poor and substandard materials for use in the construction of the Project; and failing to acknowledge and/or correct clearly identified defects and deviations in the specifications for the windows.”

The Federal Reserve went on to say that McCarthy had an obligation to ensure that all work was completed “in a good and workmanlike manner” and that the other three defendants were equally as responsible for performing the work in similar fashion, according to court documents.

Scott Wittkop, central division president of McCarthy Building, issued a statement reiterating the importance of quality and customer satisfaction to his company.

“While we do not believe we are in breach of our contract,” he says in a released statement, “we are continuing to work with the Federal Reserve Bank, installation subcontractor and supplier to resolve this warranty issue. Consistent with ongoing and proactive discussions, we have delivered a formal proposal for resolution to the Federal Reserve Bank and are looking forward to reaching an agreement among all parties.”

Denny Hilboldt, the owner and founder of Hilboldt Curtainwall, echoed those comments when reached on Monday, saying that all parties involved are still trying to work the matter out in a timely fashion.

Nobody from Winco Window Co. could be reached for comment.