How a $2.3 Billion Florida Highway Project Became an $80 Million Court Battle

This article is part of "The Dotted Line" series, which takes a deep dive into the complex legal landscape of the construction industry. To view the entire series,click here。

A $2.3 billion Florida highway project that once promised its contractors about $255 million in profit ultimately turned into a loss of more than $500 million, according to a recent ruling by a U.S. federal appeals court.

The ruling offers contractors a case study in how public-private partnership (P3) projects can become mired in litigation. In April, the Eleventh Circuit Court of Appeals affirmed an $80 million award in favor of Skanska USA and Granite Construction against their joint venture partner, Lane Construction. The companies were partners on the I-4 Ultimate project, a massive P3 reconstruction effort for the Florida Department of Transportation.

At the heart of the dispute was Lane's attempt to seek legal theories that would allow the joint venture to exit the project before completion. The appeals court ultimately sided with Skanska and Granite. Following the ruling, these contractors did not respond to requests for comment.

"In almost any construction project, when costs exceed expectations, parties start looking for ways to shift responsibility," said Matthew Skaroff, an attorney at the Philadelphia law firm Cohen Seglias. "P3 infrastructure projects often use unique contractual structures and forms of entity that are typically quite different legally from standard design-bid-build models."

Joint venture disputes can worsen when incentives differ

Skaroff said the case offers lessons for coordination among joint venture partners, especially on large-scale projects.

"Contractors and joint venture partners should understand the makeup and future plans of the companies they are working with," Skaroff said. "This dispute shows what can happen when the wrong parties are involved, with different incentives and a focus on self-preservation rather than the success of the collaboration."

The court opinion noted that Lane had worked successfully with Skanska and Granite before Lane was acquired by Italian contractor WeBuild in 2015. According to the ruling, the relationship deteriorated after the acquisition. By 2018, the joint venture expected a $108 million loss on the project. By the time of the trial among the builders in 2023, the loss had ballooned to more than $500 million.

"The court found that WeBuild appeared to be the main driver behind the termination plan, disregarding the advice of legal counsel and Lane's CEO," Skaroff said. "Joint venture parties not only need to get to know each other when they first partner, but this dispute also shows that it is crucial to understand the plans of each partner that could significantly impact the joint venture's leadership or operations."

The structure of the I-4 Ultimate project added another layer of complexity to the dispute.

Unlike traditional public construction contracts, the project used a P3 model, where the concessionaire, I-4 Mobility Partners, financed the project and bore the responsibility of delivering it to the state. In return, the concessionaire was entitled to milestone payments and a long-term maintenance agreement reportedly worth about $75 million per year, according to the court ruling.

Meanwhile, Skanska's parent company also held an ownership interest in the concessionaire, which Lane later argued constituted a conflict of interest after project losses began. The appeals court ultimately rejected this argument because the overlapping structure was disclosed from the outset and that aspect is relatively common in P3 arrangements, according to court documents.

Termination rights rarely favor contractors

The case shows how dangerous termination strategies can become in large infrastructure projects where contracts favor project completion.

"Construction contracts typically do not grant contractors termination rights, and even when they do, they are not broad rights," Skaroff said. "Most construction contracts require continued performance in the face of disputes, and the consequences of abandoning a project without justification are usually extremely unfavorable to the contractor."

In a legal analysis of the ruling, attorneys John Mark Goodman and Lee-Ann Brown of the Birmingham, Alabama law firm Bradley Arant Boult Cummings wrote that the dispute highlights the danger of using termination threats as leverage rather than a last resort. The attorneys also noted that the case demonstrates the importance of reviewing terms in layered P3 agreements.

"This case is a must-read, offering a behind-the-scenes look at a large project in distress due to unexpected cost overruns," the attorneys wrote in the post. "This case serves as a warning to contractors and attorneys in complex construction disputes to carefully consider the grounds and consequences of termination before pulling the trigger."

One focus of the litigation involved a drafting error in the project documents. Lane argued that the error could shift construction obligations away from the joint venture. The appeals court rejected that interpretation.

"In large infrastructure projects involving billions of dollars, small wording issues can trigger very large disputes," Skaroff said. "When millions of dollars are at stake, some parties get creative, and they will find anything that gives them cover."