Unalaska is suing a former contractor blamed for costly delays during construction of the city's wastewater treatment plant in 2013 and 2014.
The City Council approved the lawsuit unanimously Tuesday, authorizing City Attorney Brooks Chandler to bring civil litigation against Advanced Blasting Services, LLC.
The Wasilla company was hired to remove rock on a $1.45 million contract.
But city officials say it "over-blasted" the site, forcing a redesign that created a "domino effect of extra work" and generated still-unresolved claims from other contractors.
Representatives for Advanced Blasting declined to comment on the allegations in 2014.
City officials say the company has ignored default notices requesting payment and estimate Unalaska could recover more than $2 million in the lawsuit.
The litigation will also name the Ohio Casualty Insurance Company, which issued a performance bond guaranteeing Advanced Blasting’s work. Officials say the firm has also defaulted on payments.