- A Delaware Chancery Court Judge has ordered Sylmar, California-based general contractor Tutor Perini to pay the former owners of Greenstar Services Corp., which Tutor Perini acquired as a wholly-owned subsidiary in 2011, $8 million.
- In his opinion, Vice Chancellor Joseph R. Slights III said that during the negotiation for Tutor Perini's acquisition of Greenstar, Tutor Perini was concerned that Greenstar had overestimated the amount of cash it would collect from its customers in the future. Therefore, the two agreed to several holdback provisions that tied the amount of cash Greenstar actually collected with extra payments to Greenstar's sellers. Tutor Perini argued that it owed Greenstar nothing according to its interpretation of the holdback provisions.
- In his opinion, Slights said Greenstar collected enough of the change orders and other items identified in the contract, more than $60 million, to justify a payout of $8 million. In a separate letter, Slights also ordered Tutor Perini to pay Greenstar attorney fees and expenses of $52,436 within 20 days of the Dec. 4 ruling.
Almost two years after the acquisition, Tutor Perini and Greenstar amended the holdback provisions, Slights wrote, in order to provide clarity, an endeavor that failed since the two still ended up in court.
Tutor Perini did not respond to Construction Dive's request for comments about the Chancery Court's decision.
In a July 2011 announcement, Tutor Perini said that it acquired Greenstar and its three operating entities — Five Star Electric Corp., plumbing, HVAC and specialty general contractor WDF Inc. and Nagelbush Mechanical — for the sum of $208.4 million plus a structured earnout based on Greenstar meeting certain profitability targets during the five-year period following the acquisition.
Greenstar had more than 1,900 employees at the time of the acquisition and had a project backlog of about $1.2 billion. Greenstar's 2010 revenues were approximately $560 million. Tutor Perini said senior management for each entity would stay on post-acquisition, although, according to Slights, opinion, the company fired Five Star CEO Gary Segal, who is also one of Greenstar's former owners and a plaintiff in the $8 million lawsuit.
Tutor Perini generally is regarded as a tough negotiator, especially when it comes to getting its clients to recognize and pay up for change orders. For example, in September, the company was able to secure a $31 million change order for delays on the San Francisco Municipal Transportation Agency's $1.6 billion Central Subway project. The agency has already paid Tutor Perini the extra money in full less retainage of $1.5 million.
The company also announced it had collected $101 million of $125 million in change orders for unnamed projects.
In addition to the companies that Tutor Perini acquired with its purchase of Greenstar, the company's specialty group also include Desert Mechanical Inc., Fisk Electric Co. and Superior Gunite. In the company's second-quarter earnings call, Tutor Perini CEO and Chairman Ronald Tutor announced that the company had brought on Jean Abiassi, former president and COO of Zachry Construction Corp., as president and CEO of Tutor Perini's Building and Specialty Contractors groups, the latter of in the wake of the specialty division's "poor performance" in the quarter.