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LEGAL MATTERS
3 Months Ended
Apr. 30, 2018
LEGAL MATTERS  
LEGAL MATTERS

 

NOTE 9 — LEGAL MATTERS

 

In the normal course of business, the Company may have pending claims and legal proceedings. It is the opinion of management, based on information available at this time, that there are no current claims and proceedings that could have a material effect on the Company’s condensed consolidated financial statements other than as described below.

 

On February 1, 2016, TRC was sued in Person County, North Carolina, by a subcontractor, PPS Engineers, Inc. (“PPS”), in an attempt to force TRC to pay invoices for services rendered in the total amount of $2.3 million. PPS has placed liens on the property of the customers in several states where work was performed by PPS and it has also filed a claim in Tennessee against the bond issued on behalf of TRC relating to one significant project located there in the amount of $2.5 million. On March 4, 2016, TRC filed responses to the claims of PPS. The positions of TRC are that PPS failed to deliver a number of items required by the applicable contract between the parties and that the invoices rendered by PPS covering the disputed services will not be paid until such deliverables are supplied. Further, TRC maintains that certain sums are owed to it by PPS for services, furniture, fixtures, equipment, and software that were supplied by TRC on behalf of PPS. The damages sought by TRC pursuant to its counterclaims approximate $4.9 million The amounts invoiced by PPS have been accrued by TRC and the corresponding liability amount was included in accounts payable in the condensed consolidated balance sheets as of April 30 and January 31, 2018. TRC has not recorded an account receivable for the amounts it believes are owed to it by PPS. A mediation effort was attempted in 2016 but it was unproductive and an impasse was declared. In December 2017, an amended complaint was filed by the plaintiff and TRC filed an amended counterclaim. In anticipation of a trial, the discovery process has begun. The Company intends to continue to defend against these claims and to pursue its counterclaim with vigorous efforts. Due to the uncertainty of the ultimate outcomes of these legal proceedings, the Company cannot provide assurances that it will be successful in these efforts. However, management does not believe that resolution of the matters discussed above will result in additional loss with material negative effect on the Company’s consolidated operating results in a future reporting period.

 

GPS is in a dispute with a former subcontractor on one of its power plant construction projects. The subcontractor, terminated primarily for cause by GPS, claimed damages of approximately $11.0 million. GPS submitted a counterclaim for an amount related to the value of the subcontract completed by GPS. Subsequent to April 30, 2018, the results of binding arbitration related to this matter were issued, as disclosed in Note 16 herein.