We successfully represented the owner, New Athens Generating Company, LLC, a merchant power company, on a $533 million power plant construction project in upstate New York in a series of complex arbitration proceedings, against the EPC contractor, Bechtel Power Corporation, one of the world's largest power plant construction contractors. Bechtel sought more than $94 million in additional compensation for alleged changes in the cutting-edge power generation technology incorporated into the plant, alleged force majeure severe winter weather encountered during construction, and other alleged changes, delays and force majeure events. New Athens, sought approximately $33 million in liquidated damages due to Bechtel completing the construction more than 200 days late. Due to the complexity of the case, the arbitrators divided the hearing into four phases, with each phase focusing on one of the areas of construction in dispute. The arbitration involved extensive testimony as to power plant combustion turbine engineering, construction scheduling, construction craft labor productivity and ergonomics, meteorology/climatology, chemistry, power industry economics, and construction cost accounting. Altogether, the arbitrators heard 53 days of testimony, from 53 witnesses, received more than 1,300 exhibits, with a transcript of nearly 15,000 pages. The arbitrators rendered several detailed written opinions throughout the arbitration. The final result of the arbitration was that New Athens successfully defeated nearly all of Bechtel's claims and the arbitrators awarded New Athens $26,950,000 in liquidated damages which constituted more than 80% of the liquidated damages sought by New Athens.
Case Studies - Construction & Trial
-
Major Arbitration Proceedings Regarding Power Plant Construction
-
Representation of General Contractor in Complex Construction Lawsuit
We represented the general contractor on the San Diego Naval Hospital project in connection with a complex lawsuit brought by two subcontractors against the structural steel supplier, our client and various sureties in Federal Court in San Diego. The claims included claims of mismanagement, compensable delays and changes. After two years of extensive discovery, we were able on motion for partial summary judgment to obtain the dismissal of a multi-million dollar claim against our client. Then, after a three-month jury trial, the structural steel supplier was found liable to the plaintiffs for $3 million and our client was vindicated. We argued the appeal in the 9th Circuit Court of Appeals and prevailed in that court as well.
-
Massive Default Termination Case Requiring Development and Usage of State of the Art Systems
We represented the general contractor to the U.S. Navy in a massive default termination case tried before the Armed Services Board of Contract Appeals. Our client, the general contractor on the Trident Training facility in King’s Bay Georgia, was terminated by default by the Navy after completing 85% of the project. In this bet-the-company-litigation the Navy was seeking $25 million in damages from the contractor and the contractor was seeking a like amount from the Navy. After employing state of the art systems to manage the millions of pages obtained in discovery and taking many depositions throughout the United States, we developed a case management and trial schedule to maximize both the likelihood of securing early victories and pressuring the Navy to settle. After several very successful trials before the Armed Services Board of Contract Appeals, the Navy commenced settlement discussions, which ultimately led to a complete settlement in which the Navy withdrew its default termination and paid our client $11 million.
-
Landmark Decision in Shareholder Derivative Suit
We represented several corporate officers and directors, and partnership managing partners, in a case that combined two shareholder derivative actions and a number of partnership rights actions. Minority shareholders and partners sought more than $200 million in damages for alleged mismanagement and abuse of corporate offices and partnership positions. Separate claims involving transactions over a 30-year period were advanced by the plaintiffs. The plaintiffs’ claims related to companies incorporated in two different states and a number of partnerships in a third jurisdiction, so that the law of several jurisdictions was applicable to the various claims.
Several motions, hearings and trial court rulings resulted in the plaintiffs abandoning their partnership claims and waiving their position that shareholder demand upon the two corporate boards of directors should be excused as futile.
The plaintiffs then made demand upon the two boards to file suit against several officers and directors. We counseled our clients to form disinterested director “demand committees” to undertake, on behalf of the corporations, independent evaluations of the shareholder demands. The demand committee’s report, which found no mismanagement or abuse, was accepted by the trial court; the attempted shareholders derivative action was summarily dismissed; and the result was affirmed on appeal in a precedent setting and now frequently cited decision in the State of Maryland.
-
Multimillion Dollar Jury Verdict in Fraud Case
Our client was one of two principal owners of a closely-held corporation in the building aggregates industry. Following the sale of the corporation on highly profitable terms, several lawsuits were filed alleging claims by our client against the other former owner for breach of fiduciary duty and alleging claims by the other former owner against our client for fraud and self-dealing. We tried the case before a jury for 90 days. The jury returned a verdict for our client for more than $2 million actual damages plus punitive damages and denied all of the claims against our client.
-
Successful Defense of State of New Jersey in Superfund Construction Dispute
We defended the State of New Jersey in a lawsuit brought against the State by a major international contractor on a large Superfund remediation project. The engineering firm which designed the project was also made a defendant and cross-defendant. The contractor sought more than $60 million from the State and the State counterclaimed for millions of dollars of liquidated damages due to late completion of the project. Thorough discovery led to effective motions for partial summary judgments which were rendered on the eve of trial forcing the contractor to settle “on the courthouse steps” The contractor’s numerous claims involved both civil construction work, as well as vertical construction and complex water purification equipment mechanical work.
By utilizing the testimony of an expert in estimating costs for this type of environmental remediation project, we showed that the contractor had underbid the job by millions of dollars. With that expert testimony, we also showed that the contractor’s claims for alleged extra costs were, in fact, costs that should have been anticipated and included in the lump sum bid.
-
Using Prudence and the Legal Doctrine of Forum Non Conveniens to Dismiss a European Company’s Case from the American Court
Our client, a European company, was sued in an eastern United States court for millions of dollars in claims arising from complex financial and corporate transactions. This presented the prospect of these complicated claims against our client, a foreign company, being tried before an American jury. Unquestionably, the American court had jurisdiction to hear the case. However, utilizing a careful analysis and presentation to the court of both the factual and legal issues to be resolved, we were able to show that crucial witnesses, whose appearance in the American court we could not require, were located in Europe and that crucial legal issues were governed by foreign statutory law which would be difficult for an American court to interpret and apply. Based upon those factors, we successfully argued that, notwithstanding the court’s jurisdiction, prudence and the legal doctrine of forum non conveniens dictated that the American court should dismiss the case without prejudice so that it could be refiled in Europe. Later, the case was tried in Europe without a jury and the client prevailed.
-
Claim Dismissed
Our client, an investment advisory firm, was sued for allegedly giving inadequate advice to a group of wealthy investors during the course of negotiations with a large investment bank for large over-the-counter market securities derivative transactions. The investors had been sued by the investment bank for $6 million allegedly owed as a result of dilution of the securities, which were the subject of the transactions. The investors filed a third-party complaint against the client alleging that there had been a failure to warn of any potential for such a claim. We filed a motion for summary judgment against the investment bank seeking the dismissal of the investment bank’s claim against the investors. The court granted our motion, the investment bank’s claim against the investors was dismissed, and the investors’ third-party complaint against the client was rendered moot.
-
Proved the Earth Movement Exclusion Not Applicable
Our client was a real estate developer and owner. A large new development was constructed immediately adjacent to a downtown office building owned by our client. The construction included a large excavation for a multi-story underground parking garage. As a result of the excavation, our client’s building was destabilized, damaged structurally, and had to be evacuated. We filed suit against the excavation and construction firm and the insurer. All parties agreed to mediate the dispute before a mutually agreed-upon professional mediator. Although there was little local legal precedent on point, after thorough legal research in the law of several jurisdictions which had decided similar matters, we presented arguments that the excavation and construction firm was liable under a legal theory of strict liability and that the earth movement exclusion was applicable only to natural earth movement, e.g., earthquake, and not to manmade earth movement. With the assistance of the mediator, the case was settled upon very favorable terms for our client, including the repair and restoration of the building, compensation for lost rental revenues, and compensation for other expenses.
For more information regarding Shapiro, Lifschitz & Schram’s Construction & Trial Practice, contact Department Chair Judah ("Judd") Lifschitz at lifschitz@slslaw.com
