Garden City, NY, September 24, 2009 – Cullen and Dykman LLP, a general practice law firm and the fifth oldest in New York State, today announced it has successfully vacated a significant settlement agreement with the New York State Department of Transportation ("NYSDOT") on behalf of its client, Grace Industries Inc. ("Grace"). Specifically, the NYSDOT’s settlement agreement with Grace, which capped the amount Grace could collect for extra work it did on the Rte 9A-West Side Highway Project because of a differing site condition, was found to be unenforceable by the Chief United States Bankruptcy Judge for the Eastern District of New York.
The decision, which followed a four-day trial conducted earlier this year, allows Grace to receive the full amount owed to it rather than the cap found in the agreement, a difference of more than $10 million. Grace was represented by Cullen and Dykman partners Thomas Baylis, C. Nathan Dee and Tim Flanagan.
The Court based its decision on its finding that the NYSDOT’s standard letter agreement, which the agency uses to settle disputes with contractors arising out of public construction contracts, lacked consideration in the Grace case. In short, the Court found that Grace had received no benefit and the NYSDOT had suffered no detriment as a result of the parties entry into the NYSDOT’s standard agreement to settle Grace ’s claim for time related delay compensation arising out of a differing site condition on the project. Lead trial counsel, Tom Baylis, said: "The Court correctly applied the legal principle that to have an enforceable contract there needs to be an offer, an acceptance and consideration. We were able to demonstrate to the Court that the NYSDOT’s use of its standard letter agreement with Grace was entirely devoid of consideration; therefore there was no enforceable agreement between the parties."
The decision comes near the end of a successful reorganization of Grace in the Bankruptcy Court under the supervision of Ronald J. Eagar, of Grassi & Company, who serves as Grace’s chief restructuring officer. A second trial, this one on damages, is to be scheduled by the Court.
For more information or to direct media inquiries, please contact: Matthew G. Roseman, Esq. at mroseman@cullenanddykman.comor Thomas Baylis, Esq. at tbaylis@cullenanddykman.com or via telephone at (516)-357-3700.
Lawyers practicing in Cullen and Dykman’s bankruptcy group represent businesses in distress, lenders, secured and unsecured creditors and other parties in interest in bankruptcies, workouts, restructurings and related litigation. The Firm’s lawyers have developed an expertise in representing general and subcontractors in out of court workouts, bankruptcies and claims litigation. As debtors’ counsel we have successfully represented Grace Industries, Inc., one of New York’s largest heavy construction companies, in its chapter 11 bankruptcy which included a multimillion dollar sale of the company’s assets pursuant to a confirmed plan and the prosecution of multimillion dollar claims against the City and State agencies of New York. Our attorneys have also represented debtors in In re Athlete’s Foot Stores, In re Cedar Chemical Corp, In re Bi County Paving Corp and In re Montcalm Publishing. Additionally, Cullen and Dykman’s bankruptcy lawyers have represented lenders, secured creditors and general contractors in numerous bankruptcies concerning cash collateral matters, negotiation and documentation of debtor in possession financing ("DIP") and related litigation.
