Haines Borough Assembly authorizes termination of Turnagain contract, schedules mediation

The Haines Borough Assembly on Oct. 14 voted to authorize the borough manager to terminate the Turnagain Marine construction contract for convenience, a move the borough’s attorney said would allow the project to move forward while litigation proceeds.

Manager Fullerton told the assembly that a new sinkhole at the Lutak Dock site and continuing, dynamic changes to the facility make time a critical factor and that the borough cannot be under contract with two firms for the same work. “You can’t be under contract with two contractors for the same scope of work,” Fullerton said when urging the assembly to clear the contractual path to rebid or hire a different contractor.

Assembly member Stickler moved to adopt Resolution 25-10-1205, and the motion passed on a roll-call vote 5-1; Assembly member Smith cast the lone dissent. The resolution authorizes the borough manager to terminate Turnagain Marine’s contract for convenience.

Assembly attorney Taylor summarized Turnagain’s complaint against the borough, saying Turnagain had pleaded multiple causes of action including requests for declaratory relief, breach of contract, breach of the implied covenant of good faith and fair dealing, and a claim in equity (quantum meruit). Taylor said the court ordered the parties to pursue mediation and urged the assembly to identify a mediation team and get on a mediator’s calendar, likely “fourth quarter of this year or early next year.”

Taylor explained the legal difference between termination for default and termination for convenience: a default termination alleges material breach and is more adversarial; a convenience termination does not require proof of breach and is generally more straightforward, though the contractor may submit claims for costs incurred. Taylor said the borough had paid Turnagain a lump sum of $310,000 for phase one (design and permitting) and that Turnagain had previously submitted an invoice referencing steel costs that were, at one point, described as roughly $9 million; Taylor said some of that steel may have been sold or reused and that the exact exposure will be refined through mediation or litigation.

Fullerton also recommended terminating the R & M Consultants Inc. owner-advisor contract (Resolution 25-10-1206) to keep the project structure clear if the borough elects to act as owner-builder or rebid; the assembly adopted that resolution by roll-call vote 4-2.

Taylor said mediation remains the immediate next step under the court order and suggested the assembly consider preauthorizing a mediation team with limited settlement authority if the assembly wants a quicker path to resolution. If mediation fails, Taylor said, the parties would return to active litigation and a trial date could be set roughly 12 to 18 months out.

The assembly’s action authorizes the borough manager to proceed with contract termination for convenience and directs staff and counsel to continue with mediation scheduling and related litigation steps.