War of words escalates into lawsuits between Greater Sudbury, roads contractor

A bitter battle between Greater Sudbury and a southern Ontario roads contractor related to a troubled repair job on the Kingsway is now in the courts.

Road Surface Recycling (RSR) Ltd. and Greater Sudbury are suing each other over a failed pilot project to repair a section of the Kingsway.

Sudbury Auditor General Ron Foster said he received formal complaints from Frank Crupi of Toronto-based Road Surface Recycling in July, when the city halted the work on the Kingsway. (File)

The $1.8 million job was awarded to RSR, led by company president Frank Crupi, but was halted in July 2023 when the city said the quality of the asphalt was below the specifications called for in the contract.

That led Crupi to strongly criticize city managers involved in the project at a town hall attended by some city councillors. He accused project managers of nepotism and incompetence and made personal attacks on some of them.

That prompted an investigation by the city's auditor general, Ron Foster, who concluded that the job was halted when city and third-party testing showed the asphalt was below the standard called for in the contract with the city.

In October of this year, RSR filed a $1 million lawsuit against the city, seeking damages and money it says it is owed, as well as the right to finish the job.

None of the allegations in the lawsuits have been tested in court.

In response, Greater Sudbury is countersuing RSR for $4.5 million, saying, among other things, that RSR was only eligible to bid on the contract because the city "relaxed its pre-qualification requirement."

"This is completely contrary to the allegations that the procurement process lacked integrity and was designed to favour local contractors," the city said in its statement of defence and counterclaim.

Michael Schmidt is a technical co-ordinator with Ajax-based Road Surfacing Recycling. (Alana Everson/CTV News)

The city said the job was a pilot project because it was the first time it had tried this type of road repair. But, the city said, it was not an experimental project.

"RSR was required and at all times expected to satisfy its obligations under the contract, which it failed to do," the statement of defence said.

The work was supposed to start in 2021, but RSR told the city it was delayed by work it was doing for the province. Work was again delayed in 2022 and didn't begin until June 13, 2023, "nearly two years after receipt of the initial notice to commence work," the city said in its lawsuit.

When work did begin, the city said a number of issues arose. For example, open flames were observed on RSR's equipment, contrary to contract stipulations. The flames caused "existing crack seal material to ignite," the city said.

RSR's equipment couldn't reach temperatures of 120 C, also specified in the contract, instead only reaching temperatures between 60 and 90 C.

"A clean surface free of loose debris was not achieved after milling the existing asphalt," the city said in the lawsuit.

"This resulted in poor bonding between the HIR mix and the remaining asphalt layer."

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RSR promised it would improve the process and was allowed to continue working. But the city said the problems persisted, and the project was halted July 11, 2023.

Testing of the work already done found "several borderline and rejectable results," the city said. The project was formally terminated Oct. 9, 2024.

"RSR had delayed the start of the project by nearly two years, a serious breach under the contract," the city said.

"It is clear that Sudbury was lenient with RSR and provided a fair opportunity for RSR to commence and complete the project, far beyond what was required by Sudbury at law, or under the contract."

Allegations of bad faith

"RSR’s allegations of bad faith on the part of Sudbury for contacting the surety company is absurd, considering RSR’s non-performance of the contract," the city alleged in its suit.

The company only completed 24,000 square metres of the 224,000 square-metre project before it was shut down, according to the city.

"Due to RSR’s deficient equipment and/or process, the existing asphalt was so badly burnt that it can no longer undergo a rejuvenation process," the city's lawsuit said.

"The HIR asphalt placed by RSR now needs to be fully removed and replaced, a significantly more costly, timely and disruptive process."

The city also denied RSR's "inflammatory" claims that city employees had a conflict of interest or favoured local contractors "due to close personal or business relationships, or for any other reason."

"The facts support the opposite conclusion – Sudbury relaxed its pre-qualification requirement, which allowed RSR to bid on the project," and even put up with a two-year delay to starting the work, the city alleged.

Relationship has soured

The relationship between the city and RSR is beyond repair, the city said, so allowing the company to complete the work now is out of the question.

"RSR has made repeated unfounded, inflammatory and vexatious personal attacks and allegations of corruption and bribery against Sudbury staff, including at public meetings," the city said.

"RSR’s unprofessional conduct, coupled with its negligent performance and breach of contract, has caused irreparable damage to the parties’ relationship, making it impossible for them to continue with the contract."

In its statement of defence, RSR "denies each and every allegation" the city made in its statement of defence and counterclaim.

It said any delays to the work were caused by the city, for example imposing "non-contractual testing and additional requirements not specified in the contract."

A lack of timely approvals and site preparation "hindered the timely commencement and execution of the project," RSR said in its counterclaim.

RSR also said the project was "experimental in nature," and the city should have allowed it to adjust the job mix formula instead of "rigidly enforcing specifications."

Innovative pilot project

"The city's approach ignored the iterative process necessary for the successful completion of innovative pilot projects such as this," RSR said.

"Any delays and alleged deficiencies were caused by the city's unilateral imposition of non-contractual testing, untimely approvals and inadequate preparation of road sites."

RSR also said the third-party testing of its work was not done by an independent third-party, but by a company with "a longstanding and inextricable business relationship with the city."

And that testing was "flawed and biased, serving a pretext to unjustly delay the project and penalize RSR."

"RSR asserts that the city's project management was compromised by conflicts of interest, influencing project administration and decision-making," the statement of defence said.

"These conflicts breached the duty of fairness owed to RSR and compromised the integrity of the project."