The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Baha Mar’s main contractor has been accused of citing “false reasons” to excuse non-payment of an outstanding $555,000 balance owed to a US firm for work on the $3.5 billion project.

Novum Structures, a specialist contractor that provides architectural and structural services, is alleging that China Construction America Bahamas (CCA) “unjustly enriched” itself at its expense by not paying for services rendered.

The action, filed with the southern New York federal courts, is the second to be launched against CCA (Bahamas) in that jurisdiction by a disgruntled US contractor that was hired to work on Baha Mar.

The move indicates that US construction firms are increasingly running out of patience with CCA (Bahamas), and its failure to pay for services rendered to the Baha Mar project, which remains in provisional liquidation/receivership.

Novum, in court documents obtained by Tribune Business, alleges that it agreed to “provide certain designer assist, engineering and professional services” to Baha Mar’s construction via two contracts it signed with CCA (Bahamas).

These contracts, signed on February 7, 2013, and April 22, 2014, required CCA (Bahamas) to pay Novum a combined $2.135 million for its role as a sub-contractor on the Baha Mar project.

“Novum fully and timely performed and completed its work under the contract, and has performed all terms and conditions of the contract that it was obligated to perform,” the US contractor’s August 3, 2016, lawsuit alleged.

“Novum properly invoiced CCA Bahamas for the full contract sum in accordance with the terms of the contract. CCA Bahamas has paid Novum the sum of $1.581 million, leaving a balance due and owing of $554,758 on the contract sum.”

And Novum further claimed: “CCA Bahamas has breached the contract by .... failing and refusing to fully pay Novum for the work it performed on the project, directing Novum to perform change order work at an agreed-upon price and then refusing to pay for it; asserting false, pretextual reasons for not paying; approving Novum invoices and then failing to pay them in full; and breaching the contract’s implied covenant of good faith and fair dealing.”

Novum is thus seeking an Order for the $555,000 plus interest from the New York court, alleging that CCA (Bahamas) had “received and retained” all invoices submitted to it, and had never disputed the sums claimed or “made any timely protest”.

“CCA Bahamas has failed, refused and neglected to pay the balance of the account stated despite Novum’s stated demand for payment,” the lawsuit added.

It emphasised that the contract between Novum and CCA (Bahamas) stated that New York was to be the sole location where any commercial disputes between the two parties are to be litigated.

The Novum action is almost identical to the action brought by fellow US firm and Baha Mar sub-contractor, Controlled Demolition Inc (CDI), against CCA (Bahamas) last year.

CDI is itself seeking to collect an outstanding $754,704 balance for work on the $3.5 billion project, having been hired to demolish the former Nassau Beach Hotel and towers ‘F’ and ‘J’ at the Wyndham resort - thus making way for the $3.5 billion Baha Mar campus.

Mark Loizeaux, CDI’s president, claimed in a November 4, 2015, affidavit that CCA “continually stalled” in paying the contract balance and led his company on a ‘merry dance’ for two-and-a-half years in its quest for payment.

Tribune Business reported earlier this year how CCA (Bahamas) lost its bid to stay the CDI action, with the southern New York court also refusing its request to send the two sides into arbitration over their dispute. Their legal battle thus continues to make its way through the New York courts.

The Novum allegations are the latest headache for CCA (Bahamas), and will add to the unwanted controversy created by the CDI action, given that it has been blamed by Baha Mar’s former developer for the project’s descent into insolvency, due to the failure to complete ‘on time’ and to budget.

However, CCA (Bahamas)defence to the Novum action is likely to follow a similar approach to the tactics employed in the CDI case.

There, the Chinese state-owned contractor had alleged that Baha Mar “tied our hands” over resolving the CDI payment dispute, which was placed on the back burner due to the $3.5 billion project’s “implosion”.

Pengfel Yu, CCA (Bahamas) commercial manager, alleged in a November 12, 2015, affidavit that CDI had failed to comply with its contract, and was seeking to “circumvent” the requirement to take its claim before a Disputes Resolution Board (DRB) specifically created for the Baha Mar project.

Mr Yu, denying that CCA (Bahamas) was deliberately ‘stalling’ due payment, instead alleged that CDI had failed to perform the work demanded by its Baha Mar contract.

He argued that the developer, then-headed by Sarkis Izmirlian, had refused to approve changes to CDI’s scope of works and the release of the last payment portion.

“Baha Mar never approved CDI’s claimed change orders or released retainage for CDI’s work, despite CCA Bahamas’s repeated requests for it to do so,” Mr Yu alleged, placing the blame squarely on the Cable Beach developer for the payments dispute. “CCA Bahamas was stuck in the middle and left with its hands tied.”

He then claimed that CDI’s demands for full, and final, payment in mid to late-2014 had to play ‘second fiddle’ to CCA (Bahamas) efforts to save the Baha Mar project.

Mr Yu alleged: “During the time that CDI was filing its claim, CCA (Bahamas) was focusing on completing and saving a project that, due to the owner’s mismanagement, was on the verge of implosion.

“CCA (Bahamas) never acted in bad faith or inconsistently with its right to arbitrate, and instead has sought to negotiate with Baha Mar regarding CDI’s claim, all the while attempting to complete construction of the project.”