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Rosenberg & Estis, P.C. Obtains $50 Million Settlement For Developer Through Mediation

On Behalf of | Jan 13, 2022 | Press Releases

Michael C. Castellon of Rosenberg & Estis, P.C., a premier New York City real estate law firm with an award-winning Litigation and Construction Department, recently mediated an action pending in the Supreme Court of New York, on behalf of a developer client, against the surety of a general contractor, obtaining a settlement payment to the developer in excess of $50 million.

The developer contracted with the general contractor to construct a multi-story, mixed-use retail and residential project, and the contractor filed for bankruptcy prior to completing the work.  The surety had issued a performance bond for the amount of the construction contract.  After filing suit and conducting mediation, the developer obtained a payment from the surety in excess of the penal sum of the bond, minus contract balance and minus the amounts spent by the surety on construction completion.

The settlement was achieved within six months after the filing of a summons and complaint against the surety.

“While it is common for some developers to not require (and therefore not incur) the upfront costs of performance and payment bonds, this is an example in which having the bonds saved the developer many millions of dollars in losses it otherwise would have incurred,” said Mr. Castellon. “Unfortunately, in the past couple of years, there have been many contractor defaults in which there were no performance bonds, leaving the developer with little or no recourse against the contractor.”

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