Skanska, Forest City Ratner Sue Each Other Over Tallest Modular Building-To-Be
The developer and the construction manager for the world's tallest modular tower under construction—at the $4.9-billion Brooklyn, New York, development formerly known as Atlantic Yards—have sued each other over delays and cost overruns on the 32-story project, called B2 BKLYN and designed by SHoP Architects. The suits, filed September 2 just minutes apart in New York State Supreme Court, follow an August 27 stop-work notice at the jobsite.
The planned 322-foot-tall tower, now at 10 stories, is the first residential building to come out of the ground at the 22-acre complex, which includes the completed Barclays Center arena. B2 BKLYN and the arena are owned by Forest City Ratner Companies (FCRC). The future projects in the complex, recently renamed Pacific Park Brooklyn, are under development by Greenland Forest City Partners, which consists of Greenland Group and FCRC.
Skanska USA Building Inc. filed suit against FCRC affiliate Atlantic Yards B2 Owner LLC at 11:36 a.m., seeking damages related to continual unwillingness to address the issues with B2. "The work is currently stopped because Forest City Ratner has steadfastly refused over many months to engage in an honest dialogue about the serious commercial and design issues facing the project," says Richard A. Kennedy, co-chief operating officer of Skanska USA Building. "Forest City Ratner represented with great confidence they had developed the high-rise modular solution. That turned out not to be true," Kennedy adds. "Now, rather than acknowledging their problems, they are slinging mud.
"We remain hopeful commercial and economic sensibilities will prevail and these matters will be resolved so we can get back to building the B2 project," says Kennedy.
"Skanska's filing today is not unexpected and is in keeping with its unfounded attempts to blame the owner for Skanska's mismanagement of its obligations and responsibilities associated with the B2 project," responds Jeremy Soffin, a spokesman for FCRC. FCRC filed suit 16 minutes after Skanska, seeking damages and declaratory relief, citing Skanska's "multiple failures and missteps," which led to "massive delays and cost overruns." The complaint requests that the court void Skanska's stop-work notice.
FCRC and Skanska have a complicated relationship. In 2012, Skanska signed its $117-million, fixed-price construction management contract with Atlantic Yards B2 Owner LLC. The same year, FCRC Modular LLC and Skanska Modular LLC formed FC + Skanska Modular LLC (FC+S Modular), also in Brooklyn, to assemble the 930 modules of B2 and perhaps produce other modular buildings. Skanska's stop-work notice includes all of B2's subcontractors and suppliers, including FC+S Modular.
Last April, when it announced B2's delayed completion, FCRC issued the following statement: "FC+S Modular's setbacks are due to slower factory ramp-up and fit-out, purchasing and supply-chain challenges and slower-than-expected workforce hires." MaryAnne Gilmartin, FCRC's president and CEO, says, in a statement issued September 2: "Our priority is to reopen our factory and put  employees … back to work so we can resume construction."
Skanska maintains it issued the stop-work notice because the project was requiring a more significant investment than anticipated or agreed to. "There are site issues associated with the modular design and schedule and cost impacts associated with the design issues," says Kennedy, who declines to elaborate further. FCRC disagrees, claiming Skanska, faced with cost overruns, is trying to renege on its obligation under its contract.
FCRC says the dispute will have no impact on plans for three upcoming building starts at Pacific Park, announced recently. But FCRC has decided against more modular construction at the site.