731 St. Charles Avenue

INVESTIGATION DETERMINED WRONGFUL TERMINATION AWARDING PAYMENT

Overview

731 St. Charles Avenue is a 5-story mixed-use residential and commercial building with a construction value of $21.9 million in New Orleans, Louisiana. The residential portion of this property offers 67 luxury units with 1-to-2-bedroom floor plans which embody the city’s southern sophistication and elegance. Offering the best of downtown New Orleans, this property faces both St. Charles Avenue and Carondelet Street making it an attractive location for those who enjoy the city’s unforgettable events. Residents of 731 St. Charles Avenue have access to a private balcony, a private courtyard, a rooftop entertainment area, a swimming pool, a fitness room, a sun deck, secure parking, and 24/7 concierge services. The property is a transformation and expansion of an older masonry and steel office building which sat on the former site of the Exposition Hall built in 1865. The property location offers a rich history as the Exposition Hall was used for the 1872 Grand Industrial Exposition and later became the Washington Artillery Hall. From 1879-1906, the site, previously referred to and used as the Washington Artillery Hall, served as the Carnival Palace of Rex and his royal consort.

The primary contractor of the project, Gibbs Construction, was terminated for default by the owner during the property’s construction. The owner filed suit against Gibbs Construction and their bonding company for approximately $5.5 million to complete the work. Gibbs Construction disputed the owner’s basis for termination stating that the owner directly and constructively changed the scope of work, failed to provide information necessary to complete the work, wrongfully terminated the contract, and failed to pay sums due and owing. Gibbs Construction requested a determination that the owner’s termination for cause was invalid and that it be deemed as a termination for convenience. The contractor sought an award of its unpaid job costs and attorney fees totaling $3.8 million, as well as a dismissal with prejudice to the owner’s claims. Peritia was then engaged by Riess LeMieux, a legal partner representing Gibbs Construction, to perform a contractor standard of care review and a post-construction schedule analysis of Gibbs Construction’s performance to sue for breach of contract.

Solution

Peritia assessed the direct and constructive changes incurred during performance, the owner’s provision of information, Gibbs Construction’s supply of manpower and materials, the amounts invoiced and paid, and the true reason for the termination action. Through this assessment, Peritia was able to assess that the contractor provided sufficient manpower, the owner failed to provide design information in a timely manner, monies were due and owing to the contractor, and evidence that the owner’s true reason for the termination action was delay in completing interior units and achieving TCO to facilitate the owner’s efforts to market and sell units – an improper reason for a termination for default action. Peritia identified those delays which were excusable or inexcusable, and compensable or non-compensable, and opined that the termination action by the owner was for its convenience, not for a default. Peritia’s team then provided Riess LeMieux with a final report of opinions, a rebuttal report of the owner’s schedule consultant’s opinion, depositions, and testimony before the arbitration panel. Based on the findings and reports of incurred damages and delays, our client received a decision from the arbitrators which ruled in favor of Gibbs Construction. As a result, the owner’s claims were dismissed with prejudice and Gibbs Construction was awarded nearly all the money claimed including legal fees and interest charges.

PROJECT DETAILS

Client
Riess LeMieux
Gibbs Construction

Location
New Orleans, LA

Value
$21,900,000

Size
5-story building, including first-floor commercial units and 67 residences

Completion
May 2021

Industry
Residential & Mixed-Use

Services
Project Reviews & Audits; Time Impact Analysis; Acceleration, Delay & Disruption Claims; Scope Changes; Termination Claims; Damage Quantification