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February 2011

Gordon & Rees Construction Group Secures $1.5 Million Arbitration Award for Client

Partner Ken Strong of the San Francisco office and Partner Andrew Wallace of the Dallas office received an arbitration award of $1,548,338, plus an attorneys fee award of $750,000 in favor of G&R’s engineering, design and construction services client after a two week binding arbitration in Dallas Texas. 

Gordon & Rees’ client acted as a design build contractor for a national cellular equipment company, assisting wireless carriers in upgrading their cellular wireless facilities for 3G service. The work, involving site acquisition, engineering and construction services, was performed under a Master Agreement covering multiple markets nationwide. The dispute that resulted in arbitration pertained to two of the markets; North and South Carolina and South Florida. 
 
The Carolinas project involved 300 cell sites with an ultimate total contract value in excess of $20 million dollars. Approximately 75% of this work was performed as “change orders” without a single formal contract amendment. Unit Prices were negotiated through emails and specific site work was authorized in daily meetings, phone conferences and emails. As work was nearing completion, the equipment company unilaterally sought to reinterpret the pricing agreements and refused to pay for work not approved through written change orders. In the south Florida project, G&R’s client was terminated for convenience on 55 sites as it mobilized for the construction phase having performed substantial pre construction work in anticipation of being compensated for that work under construction phase pay points. The equipment supplier refused to pay any compensation claiming the work was done “at-risk” and also disputed substantial change order work.

The arbitration before a three arbitrator panel involved 8 days of testimony and argument over two weeks. Evidence consisted of complex project management and accounting spreadsheets, site photos and plans and hundreds of emails. The equipment company had a substantial counterclaim most of which had been stipulated to by G&R’s client prior to arbitration. The award represents 94% of the amount sought by G&R’s client.
 
This represents the second substantial recovery Gordon & Rees has obtained for this client on telecom projects. Previously, Ken Strong of the San Francisco office negotiated a settlement shortly before commencing trial in New Jersey with another equipment supplier in a dispute over projects in Washington D.C., Baltimore and Arizona resulting in a payment to G&R’s client in excess of $4 million.



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