According to reports, to avoid expensive and lengthy litigation the Louisiana Stadium and Exposition District board recently settled a case brought by a construction company against them. The construction company, McDonnel Group, alleged that LSED gave another construction company, Citadel Builders, which won the construction bid to renovate the New Orleans Arena, preferential treatment. McDonnel Group alleged that even though Citadel did not have all the required financial statements they won the bid. By not getting the bid for the renovation project, McDonnel claimed to lose nearly $3 million in profits.

LSED denied the allegations of preferential treatment, but indicated that rather than further delaying the nearly $50 million renovation project and spending many thousands of dollars to fight a case they could potentially lose in court, reaching settlement was the best option. Under the settlement agreement, the construction company received a payment of $110,000. Despite how a settlement may be perceived, management of the New Orleans Arena stated the decision to not pursue litigation was a business decision.

In any construction project, competitive bidding by various construction companies vying to win is likely to occur. Occasionally bid disputes can arise which affect the overall construction project and lead to unforeseen delays. This area of law is complex and can involve many parties. That is why it is essential for a company to examine all facets of the dispute at hand to ascertain the most appropriate course of action. As the case above illustrates, sometimes reaching a negotiated settlement may be a better option than litigation. However, the facts of every dispute and case are different.

Source: The Times-Picayune, “LSED pays $60,000 to settle lawsuit with construction company,” Terrance Harris, Aug. 14, 2013