ITEM 3. LEGAL PROCEEDINGS
In April 2003, we commenced a remediation project in New York City for a local utility to remove sediment from an oil storage tank. During the course of the project, the sediment in the tank was found to be substantially different than the sediment that the customer represented to be in the tank prior to the inception of the project. We continued to work on the project so as not to default on the terms which we understood to exist with the customer. The additional costs incurred to remove this matter were approximately $1,600,000. We have recognized revenue of approximately $1,700,000 with respect to the original scope of this project. All amounts due under the original contract have been paid. We have not recognized the revenue associated with our claim for the additional work for which we billed the customer. The project has been completed and the customer has refused to acknowledge its liability for these additional charges. On October 22, 2004, we commenced an action against the utility in the New York State Supreme Court, County of New York, claiming that we are entitled to approximately $2,000,000 of contractual billings and related damages in connection with this matter. On December 6, 2004, the utility filed an answer, denying our claims. The case is currently in pre-trial discovery.
On August 5, 2004, we commenced an action against the New York City Economic Development Corporation in the New York State Supreme Court, County of New York, seeking to collect approximately $1,255,000 of contractual billings relating to a large roof tar removal project. On October 15, 2004, the Economic Development Corporation filed an answer, denying our claims. On November 4, 2004, the Economic Development Corporation filed an amended answer denying our claims and asserting counterclaims in unspecified amounts, seeking liquidated damages, reimbursement for consultant’s fees, and breach of contract. The case is currently in pre-trial discovery. In July 2007, we filed a motion for partial summary judgment for approximately $750,000 for work related to undisputed change-orders.
We are a plaintiff in approximately 17 lawsuits, including those described above, claiming an aggregate of approximately $7,500,000 pursuant to which we are seeking to collect amounts we believe are owed to us by customers, primarily with respect to changed work orders or other modifications to our scope of work. The defendants in these actions have asserted counterclaims for an aggregate of approximately $1,000,000.
We are party to litigation matters and claims that are in the ordinary course of our operations, and while the results of such litigation and claims cannot be predicted with certainty, we believe that the final outcome of such matters will not have a material adverse effect on our financial condition.
AI
