Miami partners at Holland & Knight won a defense verdict for the Dominican Republic in a $35 million breach-of-contract case.
The federal court order entered Saturday came after years of litigation, including the initial entry of a $50 million default judgment against the country and its water resource agency, Instituto Nacional de Recursos Hidraulicos, or INDRHI.
“We’re obviously thrilled with the decision,” said Holland & Knight partner Eduardo Ramos, whose trial co-chair was fellow partner Gregory Baldwin.
Holland & Knight initially took over the case to knock out the default judgment, winning a 2015 reversal in the U.S. Court of Appeals for the Eleventh Circuit. The plaintiffs, two Doral contractors who worked on an irrigation project in the Dominican province of Azua, were allowed to refile.
Only one claim remained in the amended complaint that followed: The companies alleged the Dominican Republic and INDRHI breached the project contract in terminating it and by failing to pay one plaintiff the agreed price for completed work. The plaintiffs, Architectural Ingenieria Siglo XXI LLC and Sun Land & RGITC LLC, asked for more than $35 million in damages.
INDRHI was found liable in the summary judgment phase for breach of a contract provision requiring advance notice of pending termination. The ruling raised the stakes for the defendants at a Miami bench trial before U.S. Chief District Judge K. Michael Moore, where Ramos and Baldwin faced off against Christian Savio of Morgan & Morgan in Plantation.
The toughest part for the Dominican Republic’s lawyers was explaining the financing issues involved in the project, Ramos said. INDRHI terminated the contract in 2009 citing unforeseeable circumstances, later hiring another company. By that time, the credit agreement had been amended several times.
“It was a very complicated financing structure in an international marketplace,” Ramos said. “Basically, putting that evidence before the court, which was complicated, [was the biggest challenge]. The court actually did a good job of reducing it to its basic elements and made a decision which we think is the correct outcome.”
A 2004 agreement said the $51 million project would be financed in two parts, according to Moore’s findings: 85 percent of the funds would come from a U.S. bank, with a loan guarantee obtained by Sun Land from the U.S. Export-Import Bank, and the remaining amount would be financed through a lender engaged by Sun Land.
A disbursement date was set for October 2005, but the Dominican Congress did not approve the credit agreement until March 2006. The agreement was extended again and again, slowing down the project. But Moore found those delays were not the defendants’ fault.
“These delays are not attributed to any one party but were instead the result of bureaucratic delays and a complex approval system,” the judge wrote.
Moore ruled there was no evidence the Dominican Republic had a hand in terminating the contract, rejecting hearsay evidence that the Dominican president once said he didn’t like Sun Land and wouldn’t allow the country to keep working with the company. He found the country not liable for its water resource agency’s breach of contract.
He assigned about $576,000 in damages to INDRHI for lost profits to Architectural, finding the company would have made that amount if the project had been completed on schedule. But he ruled Sun Land had not suffered any damages as a result of the termination of the contract.
“We are pleased that [the] court found that the DR’s agent, INDRHI, was liable for breaching the contract and awarded damages,” Savio said in an email. ”However, we believe the court incorrectly apportioned damages and plan to address certain portions of the ruling accordingly.”
Ramos and Baldwin worked on the case with Holland & Knight appellate lawyer Ilene Pabian, who made the Eleventh Circuit arguments, and associates Da’Morus Cohen and Douglas Lehtinen.