Seven years after a Cedar Rapids-based contractor first started feuding with the University of Iowa over its work on the towering Stead Family Children’s Hospital, Iowa’s high court has weighed in and sided with the university on its appeal — reversing an order to pay Modern Piping another $12.8 million.
The Iowa Supreme Court affirmed and upheld a minor judgment awarding the contractor $21,784 for its costs and fees, but reversed and remanded the 2022 $12.8 million award — according to an opinion published Friday.
“We believe Modern Piping led the District Court astray when it convinced the court that its claim for wrongful injunction entitled it to recover restitution in the form of a broad-reaching unjust enrichment claim, and restitution should be measured as the disgorgement of the benefit provided to the University,” according to the opinion.
Essentially, Modern Piping argued the university should pay it the amount of money the hospital made while taking improper action against the contractor — and the Supreme Court said such an interpretation of the law requires specific circumstances and conditions that this case doesn’t meet.
“The District Court erred in allowing Modern Piping to pursue the restitutionary damages it sought as part of its wrongful injunction claim,” according to the Friday opinion, which opened with recognition of the 14-story Children’s Hospital as a “proud landmark in Iowa City known nationwide for the ‘Kinnick Wave’.”
“At the end of the first quarter of every home Iowa Hawkeye football game, the nearly 70,000 fans, players, coaches, referees, and opponents inside Kinnick Stadium turn to wave at the patients and families in the top floors of the Children’s Hospital,” according to the Iowa Supreme Court opinion that conceded, “Although its landmark status is now settled, construction of the Children’s Hospital did not go smoothly.”
Aggravated by delays, design changes, mismanagement, and defects discovered after the hospital opened in 2017, litigation and legal judgments contributed to the hospital’s ballooning price tag from an original $270.8 million to more than $400 million.
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“This case involves one of the construction disputes — at least at the periphery — between the University of Iowa and Modern Piping, Inc., the mechanical contractor for the project,” according to the opinion. “Modern Piping wanted to arbitrate some delay disputes; the university did not.”
To that end, the university obtained a court order barring the American Arbitration Association from getting involved in certain disagreements — and Modern Piping fought back, winning its battle to arbitrate. The university appealed but lost.
And, through arbitrating their disputes, Modern Piping won a $16 million award — damages the university paid.
“But this appeal is not about arbitration,” according to the opinion, clarifying that instead it’s about whether an entity like Modern Piping — wrongfully blocked from taking action — can be compensated for damages it incurred as a result.
“After the university lost its appeal about the validity of the injunction, Modern Piping attempted to recover not only the fees and costs it incurred in dissolving the injunction, but also the restitution it claimed was necessary to avoid unjustly enriching the university for its actions.”
In 2022, a jury sided with Modern Piping — awarding it another $12.8 million of UI profits made during the first eight months of Children’s Hospital operations. But now two years later, the Supreme Court has found that “is not a proper remedy for a claim for wrongful injunction and cannot stand.”
Modern Piping’s discord with the university dates back more than a decade and extends beyond the Children’s Hospital — having signed on in 2013 as mechanical contractor for both the health care project and the university’s new 1,800-seat Hancher Auditorium, being rebuilt after the 2008 floods. The projects together cost more than half-a-billion dollars, and Modern Piping’s contracts combined for nearly $40 million of the expense.
The contractor made its first request for arbitration in 2015 — over a Hancher dispute — and the university pushed back until being forced by court order. In 2016, a year later, Modern Piping asked to add similar Children’s Hospital disputes to the pending Hancher arbitration — sparking opposition, again, from the university.
“The Children’s Hospital disputes totaled over $8 million and similarly related to claimed delays and schedule compression, congestion, and out-of-sequence construction,” according to the opinion.
The university refused to arbitrate the disputes together and sought an injunction to prevent it from happening — arguing that being forced to “would require it to direct resources from the completion of the time sensitive Children’s Hospital Project to arbitrate a matter not properly before the AAA.”
A judge that same day granted the temporary injunction until seven months later the District Court dissolved it, finding the AAA immune from the UI action.
In September 2017 — about a year after the university occupied its new Children’s Hospital and months after beginning to treat patients there — an arbitration panel heard testimony from 15 witnesses over nine days. And the panel found in favor of Modern Piping, awarding it $21.5 million — including $16.3 million tied to the Children’s Hospital project for rampant design changes and “significant labor inefficiencies outside of Modern Piping’s control.”
That total award included $930,000 in prejudgment interest, more than $416,000 in attorneys fees, and nearly $500,000 in costs and expenses — all confirmed by a District Court and affirmed upon appeal.
The university satisfied the full payment as of June 2019.
Although payment had been made and appeal had been denied in that original arbitration, Modern Piping went on to file a counterclaim “for damages pertaining to delay in arbitration based on a wrongful injunction.”
The disagreement went before a jury in October 2022 — with Modern Piping focusing over the course of the three-day trial almost exclusively on the university’s partial occupancy of the Children’s Hospital during the temporary injunction and the impact that had on the contractor.
Experts opined, during the trial, that “the injunctive order empowered the university to partially occupy the unfinished Children’s Hospital, and the early occupancy prevented Modern Piping from arbitrating the partial occupancy dispute like it normally would have done, causing lost contract damages to Modern Piping and benefiting the university.”
Reporting the university made $12.8 million during its early occupation of the Children’s Hospital, jurors sided with Modern Piping — a decision the high court now agrees was flawed, following its review upon appeal.
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The Iowa Supreme Court affirmed and upheld a minor judgment awarding the contractor $21,784 for its costs and fees, but reversed and remanded the 2022 $12.8 million award — according to an opinion published Friday.
“We believe Modern Piping led the District Court astray when it convinced the court that its claim for wrongful injunction entitled it to recover restitution in the form of a broad-reaching unjust enrichment claim, and restitution should be measured as the disgorgement of the benefit provided to the University,” according to the opinion.
Essentially, Modern Piping argued the university should pay it the amount of money the hospital made while taking improper action against the contractor — and the Supreme Court said such an interpretation of the law requires specific circumstances and conditions that this case doesn’t meet.
“The District Court erred in allowing Modern Piping to pursue the restitutionary damages it sought as part of its wrongful injunction claim,” according to the Friday opinion, which opened with recognition of the 14-story Children’s Hospital as a “proud landmark in Iowa City known nationwide for the ‘Kinnick Wave’.”
“At the end of the first quarter of every home Iowa Hawkeye football game, the nearly 70,000 fans, players, coaches, referees, and opponents inside Kinnick Stadium turn to wave at the patients and families in the top floors of the Children’s Hospital,” according to the Iowa Supreme Court opinion that conceded, “Although its landmark status is now settled, construction of the Children’s Hospital did not go smoothly.”
‘Enriching the university’
Aggravated by delays, design changes, mismanagement, and defects discovered after the hospital opened in 2017, litigation and legal judgments contributed to the hospital’s ballooning price tag from an original $270.8 million to more than $400 million.
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“This case involves one of the construction disputes — at least at the periphery — between the University of Iowa and Modern Piping, Inc., the mechanical contractor for the project,” according to the opinion. “Modern Piping wanted to arbitrate some delay disputes; the university did not.”
To that end, the university obtained a court order barring the American Arbitration Association from getting involved in certain disagreements — and Modern Piping fought back, winning its battle to arbitrate. The university appealed but lost.
And, through arbitrating their disputes, Modern Piping won a $16 million award — damages the university paid.
“But this appeal is not about arbitration,” according to the opinion, clarifying that instead it’s about whether an entity like Modern Piping — wrongfully blocked from taking action — can be compensated for damages it incurred as a result.
“After the university lost its appeal about the validity of the injunction, Modern Piping attempted to recover not only the fees and costs it incurred in dissolving the injunction, but also the restitution it claimed was necessary to avoid unjustly enriching the university for its actions.”
In 2022, a jury sided with Modern Piping — awarding it another $12.8 million of UI profits made during the first eight months of Children’s Hospital operations. But now two years later, the Supreme Court has found that “is not a proper remedy for a claim for wrongful injunction and cannot stand.”
Full payment
Modern Piping’s discord with the university dates back more than a decade and extends beyond the Children’s Hospital — having signed on in 2013 as mechanical contractor for both the health care project and the university’s new 1,800-seat Hancher Auditorium, being rebuilt after the 2008 floods. The projects together cost more than half-a-billion dollars, and Modern Piping’s contracts combined for nearly $40 million of the expense.
The contractor made its first request for arbitration in 2015 — over a Hancher dispute — and the university pushed back until being forced by court order. In 2016, a year later, Modern Piping asked to add similar Children’s Hospital disputes to the pending Hancher arbitration — sparking opposition, again, from the university.
“The Children’s Hospital disputes totaled over $8 million and similarly related to claimed delays and schedule compression, congestion, and out-of-sequence construction,” according to the opinion.
The university refused to arbitrate the disputes together and sought an injunction to prevent it from happening — arguing that being forced to “would require it to direct resources from the completion of the time sensitive Children’s Hospital Project to arbitrate a matter not properly before the AAA.”
A judge that same day granted the temporary injunction until seven months later the District Court dissolved it, finding the AAA immune from the UI action.
In September 2017 — about a year after the university occupied its new Children’s Hospital and months after beginning to treat patients there — an arbitration panel heard testimony from 15 witnesses over nine days. And the panel found in favor of Modern Piping, awarding it $21.5 million — including $16.3 million tied to the Children’s Hospital project for rampant design changes and “significant labor inefficiencies outside of Modern Piping’s control.”
That total award included $930,000 in prejudgment interest, more than $416,000 in attorneys fees, and nearly $500,000 in costs and expenses — all confirmed by a District Court and affirmed upon appeal.
The university satisfied the full payment as of June 2019.
Counterclaim
Although payment had been made and appeal had been denied in that original arbitration, Modern Piping went on to file a counterclaim “for damages pertaining to delay in arbitration based on a wrongful injunction.”
The disagreement went before a jury in October 2022 — with Modern Piping focusing over the course of the three-day trial almost exclusively on the university’s partial occupancy of the Children’s Hospital during the temporary injunction and the impact that had on the contractor.
Experts opined, during the trial, that “the injunctive order empowered the university to partially occupy the unfinished Children’s Hospital, and the early occupancy prevented Modern Piping from arbitrating the partial occupancy dispute like it normally would have done, causing lost contract damages to Modern Piping and benefiting the university.”
Reporting the university made $12.8 million during its early occupation of the Children’s Hospital, jurors sided with Modern Piping — a decision the high court now agrees was flawed, following its review upon appeal.
Supreme Court sides with UI in Children’s Hospital spat, reversing $12.8M judgment
Seven years after a Cedar Rapids-based contractor first started feuding with the University of Iowa over its work on the towering Stead Family Children’s Hospital, Iowa’s high court has weighed in and sided with the university on part of its appeal — reversing an order to pay Modern Piping...
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