Powerplants
The firm has extensive experience with power plant and industrial construction. Some attorneys have devoted the overwhelming majority of their time for the last five years to preparing, prosecuting and resolving claims involving power plants, particularly combined cycle plants that include gas turbines fitted to a heat recovery steam generator accompanied by steam turbines, and peaking plants. As a result of this experience, the firm has worked with and against many of the national leading experts and consultants. The firm maintains, however, a “hands on” philosophy in dealing with such outside professionals, and the firm routinely prepares its own charts, demonstrative evidence and other graphic and visual data used in making presentations at mediations and settlement conferences.
The firm’s experience on these projects has been that there are often significant differences between how contractors respond to demanding if not chaotic conditions on power plant projects, and these differing responses usually determine the value of the case. In particular, significant differences in project management, including quality reporting, claims management and change order administration often are determinative in how one’s adversary assesses the settlement value of any given claim. We believe it essential to delve deeply into the contractor’s payroll and production records in order to effectively prosecute or defend claims for changes, delays, disruption and inefficiency on projects of this sort.
A summary of our recent experience is included below:
WITHIN THE UNITED STATES
Maine
We represented the EPC contractor on several disputes/claims arising out of the construction of a 250 mw (approximate) cogeneration plant in Jay, Maine. These disputes included the following:
- Dispute with the mechanical and electrical subcontractor concerning late completion of the project, assessment of liquidated damages, disruption, impact and delay damages, and the negotiated takeover of the subcontractor's BOP work as a result of the subcontractor’s late completion. Amount in dispute was $20 million. The subcontractor and EPC contractor sued each other in Federal Court in Maine, and the dispute was settled favorably in mediation after certain key depositions were taken.
- Dispute between the EPC contractor and the supplier of heat recovery steam generators, concerning liquidated damages assessed by the EPC contractor against the HRSG supplier both for late delivery (delay liquidated damages) and for shortfalls in steam output (performance liquidated damages). Amount in dispute exceeded $2 million. After filing suit in Federal Court in Maine and taking certain key depositions, the case was settled without further court involvement, with the HRSG supplier making a sizable payment to our client.
- Dispute with the Owner concerning the assessment of liquidated damages for late completion of the plant (delay liquidated damages), performance shortfalls in the completed project (performance liquidated damages) and disputed changes. Amount in dispute exceeded $5 million. This dispute was settled favorably in negotiations, without any discovery or formal dispute resolution process.
Massachusetts
We represented the electrical contractor in connection with the construction of two different combined cycle (approximately 580 mw each) power plant projects located in Massachusetts. Griffin Cochrane & Marshall (“GCM”) assisted the electrical contractor in preparing its claim on the first project seeking, among other things, to foreclose the contractor’s mechanic’s lien on the first project. On the first project, the electrical contractor was a subcontractor to the balance of plant (“BOP”) subcontractor. The BOP subcontractor was in turn a subcontractor to the EPC contractor. The electrical subcontractor, the mechanical subcontractor, and the BOP subcontractor joined together as co-plaintiffs in the lawsuit and their collective claims were approximately $75,000,000.
We also subsequently prepared and filed a lien and lawsuit on the second project as well.
Among the co-plaintiffs on the first project, GCM took the lead in managing the massive number of documents in the case by incorporating well over one million images into a computer database on an offsite server that could be accessed over the internet and which counsel and the parties for all three plaintiffs could share.
After analyzing and organizing this extensive documentary evidence, we prepared and presented much of the documentary evidence we expected to present at any trial in a three-day mediation presentation with the other co-plaintiffs to the EPC contractor. Although our client’s second Massachusetts project and lawsuit were not even scheduled to be a part of the mediation, we persuaded the EPC contractor to negotiate a favorable resolution of not only the claims on the first project, but also the claims on the second project at the conclusion of the three-day mediation. The BOP contractor resolved its claims as well. All claims were prepared and resolved approximately ten months after we filed the lawsuit and before the parties conducted any depositions in the case.
Subsequent to the mediation, the mechanical contractor (who did not resolve its claims at the initial mediation) elected to replace its counsel and retain GCM to prosecute its claims on the project. After revising the mechanical contractor’s claim and resubmitting it, the mechanical contractor negotiated a settlement of its claims in a subsequent mediation session with the same mediator.
New Hampshire
We handled a 752 mw gas-fired combined cycle plant located in New Hampshire. GCM prepared and submitted a demand for arbitration against the EPC contractor on behalf of the mechanical contractor. The claim sought recovery for extra work, acceleration, inefficiency, contract balance, and to foreclose a mechanic’s lien.
After filing the demand for arbitration, the EPC contractor sought to stay the arbitration and force the mechanical contractor to join litigation that the EPC’s joint venture partner had filed in federal court. After persuading the federal court that the mechanical contractor’s claims were arbitrable and that it was not a proper party to the federal action, the client was able to successfully negotiate a settlement with the EPC contractor.
New York
We represented the electrical contractor, which was a member of a design-build joint venture constructing a 250 mw (approximate) cogeneration plant in metropolitan New York. The dispute was based on allegations of delayed completion, assessment of liquidated damages, massive labor hour overruns, increased jobsite overhead costs (increased and extended site supervision, construction equipment, material storage, etc.) and other construction damages. The amount in dispute exceeded $40 million for the electrical contractor, and exceeded $100 million for the entire joint venture, before Owner counterclaims and backcharges. The electrical contractor’s portion of the dispute was resolved favorably in mediation, after preparation of the contractor’s claim, but without the need for formal discovery.
We are presently representing the electrical contractor in a suit against the general contractor on a 250 mw cogeneration project in New York City. The electrical contractor has claimed $18 million based on disruption, design changes and other impact work, and the general contractor has counterclaimed for $10 million.
We are also representing the same electrical contractor in negotiations concerning claims on yet a second cogeneration project in New York City.
Ohio
We represented an electrical contractor in connection with the construction of a cogeneration facility located within a steel mill. The electrical contractor asserted a substantial claim for additional compensation against the general contractor and its surety. The parties settled the matter at mediation before incurring substantial amounts to litigate the dispute. One factor that rendered the negotiated results somewhat unusual was the fact that the electrical contractor had in fact earned its bid profit margin before being paid anything in connection with its claims. By demonstrating that the contractor had exceeded its bid margins on virtually all of its projects over the prior three years, we persuaded the contractor and its surety that the fact of having earned its bid margin would not ultimately serve as a meritorious defense in the case.
Kentucky
We represented the contractor constructing a power plant outside Lexington, Kentucky in disputes arising out of allegedly defective turbine parts delivered to the Project by the turbine supplier. Amount in dispute was approximately $1.5 million. Issues involved allegations of extra work and delay as a result of repairs necessary. Suit was filed in the state court in Kentucky, and a favorable settlement involving a substantial payment to our client was negotiated after we prepared a detailed claim and presented it to the opposing party. No depositions were needed or taken in order to effect the settlement.
Georgia
We served as counsel for an EPC contractor on a power plant project in Georgia, in a dispute involving one of its principal subcontractors. Amount in dispute was slightly less than $1 million, and was settled favorably after key depositions led to a mediation.
Florida
We represented a large utility in Florida concerning the construction of two large power plants. Several disputes arose concerning each power plant. On the first power plant, the parties had a dispute concerning whether liquidated damages were due, which depended on whether the post-weld heat treatment for certain work in the HRSGs was properly performed, and whether the HRSGs passed hydrostatic testing in accord with the contract documents. There were millions of dollars in dispute. After analyzing the contract documents, the project’s CPM schedule, and project documents we outlined a suggested path forward for the negotiations between the client and the contractor. As a result, the parties settled the dispute with our client retaining almost all the liquidated damages it claimed. No suit was ever filed.
On the second project, we represented the owner against the contractor’s claims seeking an adjustment in labor wage rates, indirect labor costs, additional costs associated with HRSG erection, recovery of costs within the contract’s “dead band,” and the proper amount of a sizeable deductive change order when the owner reduced the scope of the contract. As with the liquidated damages dispute, we reviewed the project contract, relevant project documentation, interviewed witnesses, and suggested a detailed course of action for principled negotiations. The owner then properly settled its disputes with the contractor, without litigation or arbitration, on terms favorable to the client.
Mississippi
In the fall of 2002, we advised an industrial electrical contractor headquartered in northwestern Indiana on a $4.5 million claim arising out of the construction of a power plant in Jackson, Mississippi. GCM presented the claim to the project general contractor and filed a lien against the owner’s property. After negotiations between the electrical contractor and the general contractor, the parties achieved settlement in which our client received several million dollars, and our client was awarded an additional project. The parties reached the settlement without the need of litigation or arbitration of any kind, and the valuable relationship between the parties was preserved for future work.
Texas
We represented a mechanical contractor in connection with significant losses and cost overruns the contractor was incurring during the construction of four heat recovery steam generators (“HRSGs”), a part of a larger combined cycle power plant. When the project was partially complete, we successfully negotiated the prospective conversion of the contractor's lump sum agreement to a cost reimbursable contract format. Multi-million dollar claims for costs incurred prior to the conversion of the contract to a cost-plus format were then mediated to a mutually satisfactory conclusion. We achieved an important goal for the client in resolving the matter with no litigation or arbitration having ever been filed by either party. We resolved the entire dispute within approximately nine months after being initially retained in connection with the matter.
Michigan
We represented an Indiana mechanical contractor in a claim against a general contractor arising out of the construction of an 1,100 megawatt power plant involving three combined cycle units (combustion turbine, generator, steam turbine and generator). Our client commenced work before a contract was signed, and incurred several million dollars in costs with practically no payment being made by the general contractor. While our client was working, and while the contract was still under negotiation, the general contractor made numerous changes to the plans and specifications for the work. Our client, the mechanical contractor, also experienced increased costs as a result of delays caused by the general contractor and a subsequent order to accelerate. When the parties could not agree on the final contract terms and amount, given the additional costs incurred as a result of additional work, delays, and acceleration, we advised the client during negotiations they conducted with the general contractor concerning the pending claims. The parties promptly reached a settlement without any litigation or arbitration, and the general contractor paid our client all costs it had incurred on the project to date. The general contractor excused our client from further work on the project. Our client thus avoided the possibility of significant additional losses and expensive litigation on this project, including the substantial risk of continuing forward on a project which was clearly troubled and on which further delays, disruption, and acceleration were a virtual certainty.
Washington
We served as lead counsel to prepare an EPC contract for the construction of a power plant in the State of Washington. We were selected to perform this work based on our experience in power plant projects and claims, and our ability to draft a contract that would minimize such claims.
California
We represented a mechanical contractor that asserted claims against an EPC contractor in connection with a prototype project that had been constructed in other states. As a result of our prior experience in earlier cases with this same contractor, it was unable to credibly deny the existence of systematic problems (such as material handling and procurement) within its international organization. After concluding a 2-day mediation but prior to filing any lawsuit or arbitration, the client negotiated a favorable settlement of all its claims.
OUTSIDE THE UNITED STATES
Alberta, Canada
We represented the EPC contractor on several disputes/claims arising out of the design and construction of a $200 million ( U.S.), 425 mw (approximate) cogeneration plant north of Calgary, Alberta, Canada. These disputes/claims included the following:
- Massive labor overruns, delayed completion of project by approximately eight months, assessment of delay liquidated damages, assessment of performance liquidated damages, and assessment of backcharges for allegedly defective design and performance. Amount in dispute exceeded $20 million ( U.S.). Dispute settled favorably after suit filed in Canada, but before discovery.
- Claims against the turbine manufacturer for defective design (including catastrophic break down of the turbines during testing) and delays. Amount in dispute exceeded $12 million ( U.S.). Claim settled with a substantial payment to our client after we prepared a claim against the turbine manufacturer and negotiations held. No suit or arbitration necessary to settle.
- Claims by and against the insulation contractor based on delayed and disrupted work, including substantial manhour overruns. Amount in dispute exceeded $1 million ( U.S.). Dispute settled after several rounds of negotiation in which data and construction information was exchanged and analyzed.
Sea of Marmara , Turkey
We represented the engineer and balance of plant (“BOP”) equipment provider in disputes arising out of the construction of a nominal 500 mw (approximate) cogeneration plant on the Sea of Marmara in Turkey. The dispute centered on allegations of delayed engineering, delayed construction, assessment of liquidated damages, contractor delay and impact costs (labor overruns, extended jobsite and home office overhead, delay damages), defective engineering and other matters. The amount in controversy exceeded $25 million ( U.S.), and the dispute was resolved favorably in the early stages of discovery, before any depositions were taken, with a sizeable payment to our client.
We also represented the engineer in a dispute with a supplier, who provided a turboexpander to the Turkey project. The turboexpander was allegedly defective, and resulted in a catastrophic failure and substantial damage on the project. We were also able to settle this dispute favorably without the need for depositions.
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