Construction Lawsuits
Lane Construction Sues JV Partner Skanska Over Orlando I-4 Project
Work is continuing on the multi-billion-dollar I-4 Ultimate project, which reconstructs 21 miles of the interstate highway in Orlando.
(PHOTO COURTESY FLORIDA DEPT. OF TRANSPORTATION)
One of Florida’s most troubled construction projects is now in court, with one partner in a design-build joint venture pitted against another.
Lane Construction Corp. has filed a lawsuit seeking $132 million in damages for what it claims is Skanska USA Civil Southeast’s “gross negligence” in leading joint-venture construction of the much-delayed I-4 Ultimate project in Orlando. The project team now faces a “loss of significant magnitude,” according to the complaint, filed in U.S. district court in Orlando.
Lane, a member of the Skanska-Granite-Lane (SGL) joint-venture team, alleges that Skanska failed to protect its joint-venture partners—a duty under Florida law—by refusing to consider exiting the project when owner-caused cost increases and schedule delays would have enabled the contractors to do so. (Read the complaint here.)
The issue relates to a claim filed with the Florida Dept. of Transportation in June 2018 over drilled-shaft design issues that would ultimately add 245 days to the project.
The issue relates to a claim that SGL filed with the Florida Dept. of Transportation in June 2018 over drilled-shaft design issues. Those problems would ultimately add 245 days to the project—more than the 180-day total that would allow a contractor exit.
“SGL has suffered and will continue to suffer enormous financial losses” as a result of that decision, the complaint alleges, adding that Lane had “directed Skanska SE” to trigger the JV’s right to exit. The reason Skanska opted not to exit the contract—a decision made as managing partner of the JV—was to protect Skanska Concessionaire, which owns 50% of the I-4 Mobility Partners concessionaire team.
Skanska Concessionaire is contracted to operate and maintain the 21-mile stretch of interstate highway for 40 years after completion, Lane’s complaint asserts.
“Skanska SE’s judgment was impaired by a conflict of interest,” the complaint says. The SGL team originally estimated in 2014 that it could earn a $215-million profit by project’s end, Lane says. But by the second half of 2018, hope of a profit had disappeared.
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Noting during that time “Skanska SE struggled to provide accurate cost accounting and projections” to the project team, Lane’s complaint states that “While it was unclear how much of a loss SGL was projected to suffer, it was clear that SGL would earn no profit if it completed the project.”
According to Lane, Skanska SE is “financing those losses through working capital calls requiring Lane and Granite to pay tens of millions each month to continue the project.” The complaint estimates that Skanska will require the JV partners to contribute $250 million in capital by the end of 2021, including $75 million from Lane.
“Lane can no longer afford to finance the project so that Skanska SE’s sister affiliate and parent can realize their profits,” the contractor asserts. Lauralee Heckman, spokesperson for Lane, told ENR that while the company is asking for relief from continuing to fund the project in this manner, it will continue to work the project until completion.
FDOT had no further comment to ENR. According to spokesperson Maritza Ferreira, Skanska “refutes the allegations” and “remains fully committed to completing the I-4 Ultimate project as currently planned.”
