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.