Justia Construction Law Opinion Summaries

A group of three major construction firms formed a joint venture to undertake Florida’s largest infrastructure project: the reconstruction and expansion of a major interstate. The venture’s contractual and financial structure was complicated, involving a public-private partnership in which a concessionaire entity financed the project, hired the joint venture to perform the actual construction, and would gain long-term maintenance rights. One member of the joint venture, aware of mounting losses, proposed a strategy for the venture to attempt to exit the project or use the threat of termination as leverage in negotiations. This strategy relied on a contested interpretation of the contract and was opposed by the other members, who considered it dangerously speculative and likely to cause greater harm.As losses increased, the dissenting member stopped contributing required capital to the joint venture, accusing the managing partner of breaching its fiduciary duties by refusing to pursue the proposed termination strategy, and alleging a conflict of interest due to overlapping ownership between the managing partner and the concessionaire. The other members responded by contributing additional funds to keep the project solvent and countersued for breach of contract and indemnity.The United States District Court for the Middle District of Florida held a bench trial and found that the managing partner had not breached any fiduciary duty or acted with gross negligence. The court also found that the dissenting member had materially breached the joint venture agreement by refusing to pay its share of capital calls, and ordered it to reimburse the other members, including prejudgment interest and attorneys’ fees.On appeal, the United States Court of Appeals for the Eleventh Circuit affirmed. The court held that the managing partner had acted in the best interest of the joint venture by not pursuing the proposed termination, and that there was no actionable conflict of interest under Florida partnership law. The court also concluded that the dissenting member’s failure to fund was a material breach, entitling the other members to indemnification and statutory prejudgment interest. View "The Lane Construction Corporation v. Skanska USA Civil Southeast, Inc." on Justia Law