In 2013, the Florida Department of Transportation solicited bids for the I-4 Ultimate Project, a massive public-private partnership to reconstruct a twenty-one-mile stretch of highway. Three contractors—Skanska USA Civil Southeast, Inc., Granite Construction Company, and The Lane Construction Company—formed a joint venture called SGL to undertake the work. The project quickly encountered severe financial difficulties due to hurricanes, labor shortages, and unforeseen geological hazards, turning a projected profit into a loss exceeding $500 million. Lane Construction, whose parent company had recently been acquired by WeBuild, proposed that the joint venture threaten to terminate the construction contract with the state to force a renegotiation or escape liability. Skanska and Granite rejected this proposal, citing legal risks and reputational damage. Lane subsequently refused to make mandatory capital contributions, sued Skanska for breach of fiduciary duty alleging a conflict of interest due to Skanska's parent company also owning the concessionaire, and sought to be relieved of funding obligations. The district court held a ten-day bench trial, finding that Skanska acted in the best interest of the joint venture and ordered Lane to pay $80 million for its breach of contract.
The Eleventh Circuit, in an opinion by Judge Tjoflat, addressed two primary issues: breach of contract and breach of fiduciary duty. Regarding the contract claims, the court held that Lane materially breached the Joint Venture Agreement by refusing to pay capital calls. The court rejected Lane's argument that the capital calls were procedurally defective, applying the doctrine of substantial performance to excuse minor technical deficiencies in the notice process. Furthermore, once Lane repudiated its obligation to pay, it lost its voting rights on the Executive Committee, rendering subsequent calls unanimous and valid. The court also affirmed the award of prejudgment interest, noting that Florida law entitles successful plaintiffs to such interest as a matter of law to make them whole, and the Joint Venture Agreement did not explicitly exclude this remedy. On the fiduciary duty claim, the court analyzed Florida's Revised Uniform Partnership Act (FRUPA). The court explained that while FRUPA imposes a duty of loyalty, it does not prohibit all dual-stake arrangements. To establish a breach, Lane had to prove that Skanska acted 'as or on behalf of' a party with an interest 'adverse' to the partnership. The court found no evidence that Skanska acted on behalf of the concessionaire, I4MP, or that I4MP's interests were adverse to SGL regarding the termination request. The record showed that rejecting termination was the only sensible option to avoid uncapped liability and reputational ruin. The court noted that the district court's finding that Skanska acted in the best interest of the joint venture was not clearly erroneous. The opinion also left open the question of whether Florida partnership law recognizes a 'fairness defense' for conflicted-interest transactions, but declined to decide it because Lane failed to prove an adverse interest in the first place.
The decision reinforces the strict liability of partners to fund capital calls in a joint venture once they have repudiated their obligations, even if they allege fiduciary breaches by managing partners. It clarifies that under Florida law, a partner's dual stake in a related entity does not automatically constitute an adverse interest requiring fiduciary liability; the partner must prove the managing partner acted on behalf of the adverse party. The ruling leaves unresolved whether Florida courts will adopt a 'fairness defense' for conflicted-interest transactions in partnerships, a question the court noted could be addressed by the Florida Supreme Court. Lane Construction remains liable for the $80 million judgment, and the I-4 Ultimate Project continues under the original contract terms.