Shapiro, Lifschitz & Schram

“They are very personal – you know who you are dealing with.”

Mike Hubert – President, Glen Construction Company

Case Studies - Power & Energy

  • Successful Representation of Owner of Natural Gas-fired Power Plants in Negotiations to Settle Complex Power Construction Disputes

    We represented a leading producer of electricity from natural gas and geothermal resources in two major disputes involving the construction of natural gas-fired power plants.

    One dispute involved the upgrade of a simple-cycle generation facility to a combined-cycle generation facility pursuant to an engineering, procurement, and construction (“EPC”) contract. During construction of the facility, the owner asserted claims against the EPC contractor for more than $10 million for project delays and certain defective work. The EPC contractor asserted claims against the owner for wrongfully withholding funds and filed a mechanic’s lien against the project for more than $22 million. The EPC contractor subsequently commenced litigation to foreclose on the mechanic’s liens. A principal subcontractor of the EPC contractor filed mechanics’ liens against the project for $12 million. The subcontractor also commenced litigation to foreclose on its mechanic’s liens.

    With our assistance, the owner engaged in a ten-month settlement negotiation process that resulted in the successful completion of the project, dismissal of all litigation, release of all mechanics’ liens, and favorable settlement of all claims.

    A second dispute involved construction of a combined-cycle electric generating facility. During construction, the owner asserted claims against the EPC contractor for more than $16 million as a result of non-conforming work and project delays. The EPC contractor asserted claims against the owner for more than $30 million for acceleration, productivity impacts, and overhead costs. With our assistance, the owner engaged in settlement discussions with the EPC contractor over a period of thirteen months. During this process the owner and EPC contractor engaged experts and made claims presentations to each other, which process ultimately resulted in a favorable global settlement.

  • Litigation and Arbitration Against Bechtel Corporation

    Successfully represented New Athens Generating Company, LLC, in a series of complex arbitrations against Bechtel Power Corporation, resulting in one of the largest liquidated damages awards in the history of the construction industry. Bechtel was the EPC contractor, responsible for the design, equipment procurement, and construction of a 1,080-megawatt power plant in Athens, New York. The facility is a combined-cycle plant using three Siemens 501G combustion-turbine generators.

    Bechtel delivered the construction project more than 200 days late, and sued New Athens for an additional $70 million for alleged changes in the plant’s Siemens 501G generators, severe winter weather, and other alleged delays, changes, and force majeure events.

    Our client New Athens denied liability for Bechtel’s claims and countersued for $33 million in liquidated damages on account of Bechtel’s completing the plant late.

    Because of the complexity of the case, the arbitrators divided the hearing into four phases, including extensive testimony on power-plant combustion-turbine engineering, construction scheduling, construction craft-labor productivity and ergonomics, meteorology/climatology, water chemistry, power industry economics, and construction cost accounting.

    The arbitration panel found Bechtel at fault for construction delays, including falling behind schedule from the start, delays from technology problems for which Bechtel had assumed responsibility in its EPC contract, Bechtel’s failure to satisfy water chemistry requirements, and Bechtel’s delayed installation of equipment, including some redesigned and re-procured late in the project due to Bechtel’s design errors.

    The contract had express, negotiated provisions for liquidated damages. In the arbitrators’ final judgment, Bechtel’s claims were defeated and New Athens was awarded liquidated damages of nearly $27 million.

    Lead attorney Judah Lifschitz observed: "It’s important to note that New Athens did not back down in the face of such large claims from one of the world’s largest contractors. In fact, New Athens’s decision to vigorously defend itself and its refusal to be intimidated by Bechtel’s large claims proved extremely wise."

    In American Municipal Power (AMP) v. Bechtel Power Corp., Shapiro, Lifschitz and Schram represents AMP in litigation involving a multibillion-dollar EPC contract between AMP and Bechtel Power Corporation in connection with the AMPGS coal plant, which was to be constructed in Meigs County, Ohio.

    After providing and confirming an indicative estimate of $2.1 billion for the project and advising AMP to enter into multimillion-dollar contracts for the major plant equipment, Bechtel, several months later, raised its estimate to over $3 billion. AMP sued Bechtel for $97 million for wanton and reckless breach of the EPC contract. In a motion to dismiss, Bechtel argued that the contract’s limitation-of-liability clause insulated it from any liability in excess of $500,000.

    The U.S. District Court in Columbus, Ohio, denied Bechtel's motion to dismiss and agreed with AMP that “the limitation of liability clause cannot be enforced if AMP proves that [the contractor] acted willfully or wantonly recklessly, or with gross negligence.” The matter is now awaiting ruling on summary judgment. This case is likely to have important implications on EPC contracts and the viability of limitation-of-liability clauses in construction disputes involving EPC contracts and liability issues.

    Represented a subcontractor in the construction of a combined-cycle plant in Albany, N.Y., in a suit with Bechtel Power Corp. in U.S. District Court in Denver, Colo. We resolved the multimillion-dollar dispute with a settlement found favorable by our client.

    Represent a large Turkish contractor in a dispute with Bechtel International, Inc. over the construction of a U.S. military intelligence facility in Tbilisi, Georgia.

  • Eastern USA: Litigation, Arbitration, and Mediation

    Represented the merchant owner of a combined-cycle plant near Albany, N.Y., faced with $40 million in construction claims. We developed a strategy and assisted the owner in negotiating a settlement and closeout of the project.

    Represented National Energy & Gas Transmission, Inc. (NEGT) in a multimillion-dollar dispute with Babcock and Wilcox, which arose at the outset of a project to install scrubbers at the Brayton Point Power Station, a four-unit, 1,530-megawatt coal, natural gas, and fuel oil-fired facility in Somerset, Mass. We represented NEGT in a mediation concluding in a settlement found highly favorable by our client.

  • Western USA: Litigation, Arbitration, and Mediation

    Represented National Energy & Gas Transmission, Inc. (NEGT) against a $20-million claim by a contractor responsible for the water treatment portion of the four-unit, 1,022-megawatt, combined-cycle power plant, La Paloma Generating Facility in California. We defended against the contractor’s claims and represented our client in a mediation, resulting in a settlement found very favorable by NEGT.

    Provided representation and strategic advice to a California utility in disputes with the EPC contractor during construction of a combined-cycle generating station in Northern California.

    Defended a California utility, in a retrofit of an existing power plant, against millions of dollars of claims by the original equipment manufacturer (OEM)/EPC contractor. We analyzed the claims, represented the client in arbitration, and ultimately successfully resolved the matter in mediation.

  • Southern USA: Litigation and Mediation

    Represented the owner of an activated-carbon plant in Louisiana, in a major dispute over the plant’s design and construction. The owner and the EPC contractor had claims against each other for more than $50 million. As problems arose during the project, we represented the owner and provided legal and strategic advice. After reviewing and analyzing the claims on both sides, we represented the owner in a multisession mediation that resulted in a settlement found very favorable by our client.

For more information regarding Shapiro, Lifschitz & Schram’s Power & Energy Practice, contact Department Chair Steven H. Schram at schram@slslaw.com.

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Did You Know . . .

Members of the SLS trial group have tried in excess of 50 jury trials and 75 bench trials?

The SLS construction group has worked on sports stadiums across the country including Orioles Park in Baltimore and Paul Brown Stadium in Cincinnati?

The SLS construction group has worked on power plant projects across the country?

In 2007 SLS was selected for an Honorable Mention as one of the Best Places To Work in Washington DC?

Ron Shapiro, Steve Schram and Judd Lifschitz have all been selected as SuperLawyers by Law and Politics?

The SLS office building is an historic townhouse constructed in the late 1800s?

SLS has been selected by Martindale-Hubbell as a Preeminent Law Firm?

SLS trial lawyers have argued appeals in the U.S. Circuit Courts of Appeal for the 4th, 5th, 9th, D.C. and Federal Circuit?

SLS trial lawyers have been lead trial counsel in cases in Arizona, California, District of Columbia, Florida, Louisiana, Maryland, New Jersey, New York, North Carolina, Oregon, Texas, and Virginia, - to name just a few?

Virtually all the cases that SLS trial lawyers mediated have been favorably settled at mediation?

The transactional group at SLS was lead counsel on one of the largest, most complex mixed-use projects in downtown Washington, DC involving 4 lenders and 6 property owners?

In appreciation for the outstanding efforts of each of its employees during 2007, SLS gave everyone (attorneys, paralegals, and staff) a 4 day/3 night expense paid trip to Key West, Florida?

The transactional group at SLS has represented tenants in more than 200 retail leases in the Mid-Atlantic region?

Every attorney in the transactional group at SLS has at least 15 years experience?

The transactional group at SLS has represented developers in the purchase, construction, financing and/or sale of more than 75 multi-family apartment projects?

The transactional group at SLS has represented real estate investors and developers with respect to property in Pennsylvania, West Virginia, Delaware, Maryland, the District of Columbia, Virginia, North Carolina, South Carolina, Georgia, Florida, Texas, Tennessee, Michigan and the U.S. Virginia Islands?

Attorneys in the transactional group at SLS have represented eight national banks in commercial real estate loans?

Attorneys in the transactional group at SLS have represented the FDIC, the Resolution Trust Corporation and several banking institutions in loan workout transactions throughout the Mid-Atlantic region?

The transactional group at SLS has represented homebuilders and commercial real estate developers in work-outs of individual loans and also for work-outs of large portfolios involving dozens of properties in several states?

The trial lawyers of SLS have numerous reported decisions to their credit?