Susquehanna Art Museum fight is "just a mess"

Written by Ben Allen, General Assignment Reporter | Oct 7, 2015 2:23 PM

(Harrisburg) -- Harrisburg's Susquehanna Art Museum is at the center of a dispute, and one lawyer watching the case says it's a messy one.

Fulton Bank and Jem Construction Group are squaring off over what's left of a $5 million state grant. The Dauphin County Industrial Development Authority had been acting as a pass-through for the grant, but recently asked a court to step in as the dispute intensified.

Susquehanna Art Museum missed a payment to Fulton on a $3 million loan in March, but it also owes Jem nearly $1.2 million.

Commonwealth Court will have to analyze at least two complicated contracts, and even then, might not have a clear-cut answer.

Lawyer Jeffrey Ludwikowski with Pittsburgh law firm Picadio,Sneath, Miller, and Norton says the court will face a tough case.

He says even once a decision is made, the matter might drag on.

"I perceive this as being a fairly long and drawn out process if these parties can't come to an agreement on how they're going to split these funds up and force the court to actually make a determination as to who gets it. Because if somebody loses, they're not going to walk away from this amount of money," says Ludwikowski.

Ludwikowski says the court will likely look at conditions attached to the state grant, bank loan, and construction contract. He says justices may pay particular attention to whether it was legal to use the state grant as collateral for the $3 million loan. If it wasn't, the court could disregard questions about who is first to get paid and disregard the bank loan. But that is just one scenario.

Justices could also find that the loan met all requirements, and is first in line.

He adds: "If I were advising the parties to this, there's another $600,000 sitting there that nobody has a claim to yet because it hasn't been released. I'd try and work it out between the bank and the general contractor in a way that we could maximize each of our recoveries and cut our losses."

Whenever a decision comes, he expects the losing side will sue the museum or the winners to try to recover money.

He says the court might set a precedent with its decision.

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