Termination Damages Awarded As If Work Was Complete

Friday, February 23, 2018 4:34 am
March 2018 - Volume 40 Number 3


John Begnaud Elec. Motors, Inc. v. Alt. Well Intervention, LLC, 2017 La. App. Lexis 2389 (4th Cir. Dec. 20, 2017)

After an oil/gas market downturn, a project owner halted construction on an oil rig. The contractor sought---and won---nearly the full contract price though it had completed just over half the work.

Alternative Well Intervention, LLC (AWI) hired John Begnaud Electric Motors, Inc. (JBEM) to construct four oil rigs in the Gulf of Mexico. JBEM built and AWI paid for the first three rigs by the time JBEM began construction of the fourth under a separate contract valued at $387,029. The parties agreed to three payments for the work: (1) a down payment of 25 percent, (2) 50 percent at the halfway mark, and (3) 25 percent upon completion. AWI paid JBEM an initial 25 percent: $96,757.

Sometime later, AWI ordered JBEM to halt construction and submit an invoice for the work completed on rig 4. It was undisputed that JBEM had completed more than 50 percent of the work by this point. JBEM submitted an invoice for $262,500---not 50 percent of the contract, which would have been $193,515, but almost the full balance due on the contract. AWI never paid this invoice.

A trial court found for JBEM and awarded $262,500 plus interest and all costs. AWI appealed.

AWI’s primary objection was that the amount JBEM sought included $174,500 to pay for a transformer that JBEM special ordered from Bayou Buff Electric (Bayou Buff) but never received. AWI cont[..]