Flathead County will pay $8,500 in a negotiated settlement with LM Excavating to end a legal battle over the demolition of the county-owned Kalispell Feed & Grain facility south of Kalispell, the commissioners unanimously decided Thursday.

On Tuesday a temporary restraining order issued in Flathead District Court forced Spoklie Gravel and Oilfield Service to stop tearing down the defunct grain elevators and accompanying structures.

Spoklie Gravel was awarded a $48,400 contract for the demolition work, but LM Excavating of Columbia Falls — the low bidder for the project at $40,000 — then sued the county, alleging the county commissioners should have deemed Spoklie’s proposal insufficient because of a missing cover page.

LM Excavating has agreed to the $8,500 cash settlement.

Once the company’s legal fees are covered, LM will share the remaining money equally with five other contractors who bid on the demolition project, according to Julie Matson, who owns LM Excavating with her husband, Larry.

“It’s the right thing to do,” Matson said. “We were all affected.”

LM Excavating came up two points short in a review that ranked proposals from seven competing firms. LM didn’t receive any points for attending a pre-bid meeting, even though Matson said her husband arrived late to that meeting because weather conditions and a related vehicle accident slowed traffic.

“One of the reasons we questioned their point system was because they hadn’t given us the full amount of points for being the low bidder,” Matson said. “They didn’t give us the maximum.”

As for Spoklie’s missing cover page in the proposal, she said, “As contractors we’re required to follow the law and we expect the same from the county.”

Spoklie submitted a cover page after the fact, but LM Excavating maintained Spoklie’s proposal was “incomplete, illegal and non-responsive” and asked the court to void the contract with Spoklie.

Robert Spoklie, owner of Spoklie Gravel, told the commissioners Thursday that if the project were to shut down for 15 days, he would expect compensation of at least $31,470 plus the amount of his bond and all permits that his company purchased for more than $4,000.

Spoklie initially had offered to tear down one of the smaller buildings at the Kalispell Feed & Grain site at no charge because he could recycle the material, Commissioner Pam Holmquist said following the commissioners’ meeting Thursday.

Spoklie had informal discussions with county Maintenance Supervisor Jed Fisher and ultimately it was decided to broaden the scope of work, and that the demolition would go through a formal bidding process, Holmquist added.

The county now will ask for a resume-work order from the court so the demolition can resume prior to the lawsuit being officially dismissed.

The tension was high between Commissioners Phil Mitchell and Gary Krueger Thursday morning as they considered the lawsuit settlement.

Prior to the commissioners’ vote on Feb. 16 to award the bid to Spoklie, Krueger had pointed out Spoklie’s proposal was incomplete and should be discarded. He voted against it.

Holmquist and Mitchell stood by the advice of Deputy County Attorney Tara Fugina and the Montana Association of Counties in awarding the contract to Spoklie.

Fugina maintained the cover sheet was not necessary to evaluate the proposals and was therefore not material. She further contended the commissioners “deeming a proposal non-responsive is discretionary.”

Holmquist said she was sticking with the advice from Fugina and the state association.

Mitchell apologized “for how Mr. Spoklie has been treated,” and said he believes the “office of the commission and county administrator did not show respect for their office and their duties.”

Mitchell faulted Krueger for not supporting the legal advice from Fugina and direction from the Montana Association of Counties to defer to Fugina.

Krueger defended his contention that when Spoklie’s proposal was discovered to be incomplete, “the process should have reset.”

Instead, he said, the cover letter to Spoklie’s proposal was added after the fact and Tom Heinecke of Morrison-Maierle, the county’s project engineer on the proposal review committee, was instructed to “push forward with negotiations of a contract” that was non-responsive under state law.

“I will not allow Mr. Heinecke or any employee of Flathead County to be the fall guys for the decisions of the county commission,” Krueger said. “The laws and policies for procurement are in place to be following by all doing this county’s business and the commissioners are no exception.”

Mitchell said he wants to see if Morrison-Maierle would be willing to pay part of the settlement cost.

When the commissioners initially voted to negotiate a contract with Spoklie, Krueger disclosed for the record that Spoklie had helped him extensively with his campaign for commissioner.

On Thursday, both Mitchell and Holmquist told the Daily Inter Lake they, too, received campaign money from Spoklie when they ran for their commission seats.

Mitchell said he does not believe it was a conflict of interest to vote in favor of Spoklie’s contract proposal because the review committee considered Spoklie’s qualifications and came up with that company as the top pick. Mitchell also said he does not receive any personal gain by supporting Spoklie’s contract.

Holmquist said she had campaign contributions from many contractors and engineers throughout the county and also does not believe voting for Spoklie’s contract was a conflict of interest.

Features editor Lynnette Hintze may be reached at 758-4421 or by email at lhintze@dailyinterlake.com.