By RUSS OLIVO

WOONSOCKET — A proposed $2.45 million legal settlement between the city and Promac Inc. is on hold indefinitely because of a side dispute involving the construction company and its former lawyer, Charles Kirwan of Pawtucket.

Kirwan is displeased with the sum set aside for him in the settlement and has placed a lien against the proceeds, according to an internal memo obtained by The Call.
Citing the lien, the city’s lawyers advised the City Council against approving the settlement moments before the panel was slated to do so Monday night. The city’s lawyers said the lien could expose the city to further liability if the matter remains unresolved.
Efforts to reach Kirwan for comment were not successful Tuesday, but Jules D’Allesandro, Promac’s current lawyer, is considering seeking disciplinary action against Kirwan as a result of the lien. Reached by telephone, D’Allesandro said a lawyer can be sanctioned for behaving unethically if his actions run
counter to the interests of a former client, which is what Kirwan’s lien is doing by holding up the settlement.
“I’m at a loss to discern his position on this, but he doesn’t have any right to hold up a settlement,” said D’Allesandro. “It’s certainly something we’re going to have to address.”
The core dispute dates back to 2001, when the School Committee terminated its contract with Promac to build the Gov. Aram J. Pothier School. While another company, U.S. Fidelity & Guaranty Trust (USF&G) was called in to finish the job, Promac sought damages against the city in arbitration. USF&G, which tapped Promac’s performance bond to finish the $7 million project, also evolved into a party in the ensuing legal proceedings.
After numerous evidentiary hearings that spanned more than two years, an arbitration panel in 2005  found that the School Committee was in “major material breach” of its contract with Promac. The panel ordered the city to pay the company more than $3.4 million in damages, plus interest in excess of $1,100 per day until the matter was resolved.
The settlement at hand would vaporize several lawsuits spawned by the city’s efforts to vacate the arbitration award in Superior Court. A trial date on the matter has been set aside while the parties attempt to come to terms out of court.
City Council President Leo T. Fontaine said the city is not eager to pay out nearly $2.5 million to resolve the dispute. But Fontaine said that given the alternatives, it is by far the least costly avenue to put the matter to rest and it is in the city’s interest to get on with the settlement as quickly as possible.
“Certainly the settlement is something we need to consider, especially since we’re being fined over $1,000 a day as long as the matter remains unresolved,” said Fontaine. “However, we can only act under the direction from our lawyers in the case.”
Strapped for cash, the city would borrow the money to pay for the settlement by floating a “judgment bond,” subject to voter approval, according to the proposed settlement papers. The city would be required to take steps to begin the process of floating a bond within 30 days of signing the settlement agreement.
The proposed settlement papers say the proceeds are to be divvied up into two checks, one for $2.298 million payable to Promac, D’Allesandro, USF&G and its lawyer, Charcretia DiBartolo. A second check for $152,000 would be cut to Promac, D’Allesandro and Kirwan.
The resolution would release the School Department, the city and Mayor Susan D. Menard of all pending legal claims. The parties in the suit agreed that $250,000 of the total settlement is set aside to specifically release the city and Menard, individually and in her capacity as mayor, from all claims.
The city estimates  it could take at least 90 days to arrange a bond sale in the current economic climate, in which even credit-worthy borrowers are having difficulty persuading banks to lend them money. Given the financial conditions, however, the settlement acknowledges that it might take the city even longer to arrange a bond referendum.
However long it takes, the city would have no more than 10 more days to pay the claimants once the bonds are issued and sold.
Unfortunately, Fontaine says, the bond referendum won’t cover all of the costs associated with the litigation. The School Department has racked up over $1 million in legal fees from the litigation,  most of it destined for the firm of Wistow & Barylick of Providence. Fontaine estimates the city will owe the firm Rodio & Ursillo of Providence at least $100,000 more for handling certain aspects of the case.