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Skanska Sued Over FL Interstate Project

Tuesday, February 2, 2021

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In a complaint filed at the end of January, transportation and heavy civil construction company Lane Construction Corporation alleged that its joint venture design-build partner on Florida’s $2.3 billion Interstate-4 Ultimate project, Skanska USA Civil Southeast, put an affiliate company's interests before its obligations to the JV.

The suit was filed by Lane’s attorneys, Pillsbury Winthrop Shaw Pittman LLP and Baker & Hostetler LLP, in the United States District Court for the Middle District of Florida, Orlando Division.

Lawsuit Background

In 2014, the Florida Department of Transportation announced that it would take private funding for the rebuilding of I-4, which involved installing a toll expressway between upgraded free lanes. That same year, FDOT awarded the project to I-4 Mobility Partners OpCo LLC, a company set up and owned by Skanska Infrastructure Development Inc. and John Laing Investments Limited.

Breaking ground in 2015, the 21-mile-long I-4 Ultimate project has since been plagued by five worker deaths, a year’s worth of delays, $125 million in financial issues, and now, a lawsuit.

For I-4 Ultimate, Skanska, Lane and Granite Construction formed the Skanska-Granite-Lane (SGL) JV to perform design-build work on the highway improvement project. According to reports, however, Skanska's corporate affiliate has a about a 50% stake in the design, build, operation and maintenance of the highway for 40 years.

In the suit’s preliminary statement, Lane accuses Skanska—manager of SGL JV—of engaging SGL to serve I-4 Ultimate’s concessionaire, I-4 Mobility Partners, as a design-builder, willfully breaching its fiduciary duty to its joint venture partners, and gross negligence in connection with its participation in, and as the managing partner of, SGL. The suit also requests that Lane no longer be required to make capital contributions or other payments to SGL or Skanska.

wutwhanfoto / Getty Images

In a complaint filed at the end of January, transportation and heavy civil construction company Lane Construction Corporation alleged that its joint venture design-build partner on Florida’s $2.3 billion Interstate-4 Ultimate project, Skanska USA Civil Southeast, put an affiliate company's interests before its obligations to the JV.

To further explain the situation, the Orlando Sentinel reported that last year, the I-4 Ultimate project was expecting losses of $441 million when FDOT agreed to pay the additional $125 million in mid-March.

Since then, the state was hit with—but denied—another builder claim for $378 million. According to an FDOT press release, the funding announcement marked the settlement of a 2018 claim made by I-4 Mobility Partners, that sought a schedule extension and additional funding due to “unforeseen impacts.”

These impacts involved drilled-shaft design issues, which ultimately add 245 days to the project—more than the 180-day total that would allow a contractor exit

In April, the U.S. Occupational Safety and Health Administration issued fines totaling nearly $189,000 against SGL for two incidents. The first, a fifth worker death onsite when a concrete beam struck an aerial lift that was being used by two workers; this fine totaled $53,976. In the second incident, SGL was cited for exposing the workers to a struck-by hazard by not training them in their native language of Spanish, in addition to safety issues regarding the incorrect standing of cylindrical materials; this received a proposed fine of $ $134,937.

As a result of the combined project losses for the project builders, Skanska was reported to force its partners into cover the financial bleeding with monthly payments, some amounting to tens of millions of dollars.

In the lawsuit, Lane is demanding $132 million plus costs and attorneys' fees. In addition, the lawsuit apportions financial losses, requesting Skanska pay 40% and that Lane and Granite cover 30% each. According to Lane, Skanska could see that even though it was likely to incur substantial losses, I-4 Mobility Partners could still receive a profit of $200 million overtime if the project pressed forward.

"Skanska SE refused to trigger SGL’s right to exit the project because Skanska SE’s judgment was impaired by a conflict of interest," the suit states.

While Lane states that Granite Construction fully supported leaving the job as well, company Vice President of Marketing and Communications Erin Kuhlman countered the statement, saying that Granite “is not a party to the lawsuit and has no comment on this pending litigation.”

A Skanska spokesperson also weighed in on the lawsuit, saying, “While it is not Skanska’s policy to comment on pending litigation, the company will say at this time that it refutes the allegations contained in the subject complaint. With respect to the ongoing project, Skanska and SGL Constructors remain fully committed to successfully completing the I-4 Ultimate project as currently planned."

Florida’s transportation department declined to comment on whether the lawsuit portends further delays, construction problems or inflated costs for taxpayers.

Skanska Under Fire

In addition to the pending case with Lane Construction, Skanska has also been recently under fire as a result of damages experienced at the Pensacola Bay Bridge replacement project site in November.

In anticipation that Hurricane Sally would make landfall some 200 miles west of Pensacola, contractor and design-build team Skanska USA hadn’t planned to move its construction equipment but told Engineering News-Record that it had made all appropriate pre-storm preparations. However, when Hurricane Sally unexpectedly changed her course in the final hours of approaching land, it was too late to take additional action.

As a result, the Category 2 hurricane landed just 30 miles west of the Pensacola Bay Bridge (also known as the Three Mile Bridge) replacement project site, causing the dislodge of several barges and other construction equipment.

One of the worst impacts, Pensacola News Journal wrote, was a crane that passed under the Three Mile Bridge, smashing through the surface of the road from beneath, destroying the span. While the structure was closed immediately following the barge impact, it was reported that the bridge suffered a second impact the following day. Upon preliminary damage assessments, FDOT has determined that at least five of the 105 spans were irreparable and would have to be reconstructed.

The Garcon Point Bridge was also affected by a dislodged barge and was also closed.

Further inspection findings included:

  • To date, FDOT divers have inspected 202 underwater footings while top side inspection teams have assessed 105 spans, 202 piers and 525 beams;
  • The number of spans requiring full replacement remains at five and FDOT has identified an additional two that will require partial replacement; and
  • FDOT will have to replace a number of beams and is still determining the specific number needing replacement.

By the end of that month, FDOT issued a letter of intent to Skanska USA Civil Southeast, Inc. seeking damages and lost toll-related revenue because of the current toll suspension on the Garcon Point Bridge.

While owners of the Garcon Point Bridge have yet to pursue the recovery of lost tolls during this time, Jason Peters, FDOT Director of Transportation Operations, said in its letter of intent to Skanska that the department would pursue, should the request be made.

However, according to Sen. Doug Broxson, lost toll revenue caused by emergency closures are usually paid out by the Florida Legislature. In terms of tolls revenue, Broxson added that the loss was a monthly difference of between $700,000 and $4 million.

Money issues don’t end there for Skanska, however, as Sam Geisler, an attorney with the Pensacola law firm Aylstock, Witkin, Kreis and Overholt told reporters that the firm is currently representing 35 businesses that have been negatively affected by the bridge closure and are preparing to open a case against Skanska to immediate those losses as well.

"In a dream world, these businesses would get dollar for dollar what they've lost. They just want to be made whole," Geisler said. "Nobody is looking for a quick payday. This is really important because we've litigated against companies around the world, but this one is in our own backyard."

   

Tagged categories: Department of Transportation (DOT); Laws and litigation; Lawsuits; NA; North America; Ongoing projects; Program/Project Management; Project Management; Transportation

Comment from Mark Taylor, (2/8/2021, 8:40 AM)

Been a tough year for Skanska. 2021 may not be much better.


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