Contractor sues for $1.2M in unpaid invoices for Florida baseball park

Dive Brief:

A North Carolina subcontractor has filed a lawsuit against Hunt Construction Group, a subsidiary of engineering and construction giant AECOM, alleging $1.2 million of unpaid bills for work performed on the FITTEAM Ballpark of the Palm Beaches in West Palm Beach, Florida, The Real Deal reported.
CCK Construction Services' complaint, which is for breach of contract and unjust enrichment, claims that it had a $6.2 million contract under which it provided cast-in-place concrete work for the Houston Astros' and Washington Nationals' spring training facility and that the $1.2 million in unpaid invoices are undisputed. Also named as defendants in the lawsuit are five insurance companies, including Liberty Mutual Insurance Company and Zurich American Insurance Company.
The MLB teams have reportedly complained that various elements of the project represent "shoddy construction" and, according to The Real Deal, have withheld a portion of payment due to Hunt and its joint venture partners. Other legal actions on behalf of ballpark contractors have been filed in an effort to collect past due payments totaling in the millions, including a $6 million claim from the electrician and $4 million demand by a tractor service company.

Dive Insight:

AECOM acquired Hunt in the summer of 2014 and rebranded the company AECOM Hunt last year. In 2017, the Palm Beach Post reported that more than a dozen contractors said they had been waiting for payment for work performed at the FITTEAM Ballpark for more than a year.

It's likely a sensitive topic for Palm Beach County and the state of Florida, both of which contributed public funds to the project and encouraged small business participation. According to the Post, some small contractors were in danger of going out of business because of the lengthy delays in payment.

In addition to pursuing legal action against contractors in the event of nonpayment, subcontractors, equipment rental companies and material suppliers often look to the insurance, or surety, companies – issuers of payment and performance bonds – to make good on past due bills. A payment bond guarantees the owner that the contractor will pay valid bills amassed as part of the construction process. Performance bonds ensure that the project's completion will be in accordance with the schedule and that the end result will be a quality job in accordance with the plans and specifications.

Although these bonds are issued by insurance companies, they're not insurance for construction firms. For example, if a general contractor secures a bond and then the bonding company has to pay a claim, the general contractor must reimburse the bonding company.