IndyCar/F1: Lawsuit filed, Andretti Global HQ construction halted
–by Mark Cipolloni-
In December 2022, ground was broken and construction of the pad site was underway for the new Andretti Global Headquarters in Fishers, Indiana.
However, construction has now been halted and a lawsuit filed against the company that was formed to represent the owners’ interests.
A Brief History
According to the lawsuit filed, the following is alleged:
Dillon Construction Group (DCG) was the lead Design-Build firm that was originally selected to lead the effort. Dillon had previously built the current Andretti Autosport facility, the Ganassi Racing Facility and the Dallara facility (among others) in and around Indianapolis.
In July 2022, Andretti informed DCG that it had retained Bradford Allen Realty Services, LLC (“Bradford Allen”), which had created a single-purpose entity named Cardinal XLIIII, LLC (“Cardinal”) to act as the Project Owner and to represent the investors’ interests.
At their initial meeting, DCG explained to Cardinal the work that DCG had already performed, its current and ongoing activities, and the planned upcoming work activities, requirements, and deadlines.
Acknowledging the immovable late-2024 deadline for Andretti’s occupancy of the Project, Cardinal instructed DCG to “keep going as fast as it could.
Hence, DCG continued to work with subcontractors, potential subcontractors, engineers, testing agencies, architects, City of Fishers officials, Hamilton County officials, Andretti, and numerous other entities to keep the Project on schedule.
During a Project Design Meeting on July 28, 2022, DCG, Andretti, and Cardinal selected Fishers, IN, as the location for the Project, discussed Andretti’s Project criteria, discussed the bid package for MEP systems, and reviewed the location and design of the building, the exterior material for the building, building entry points, and energy conservation measures.
Many subsequent meetings followed.
At the August 5, 2022, Project Design Meeting, DCG provided to Cardinal a draft contract for the Project.
DCG and Cardinal engaged in extensive contract negotiations and exchanged multiple contract forms and revisions that were drafted and reviewed by counsel for both parties.
Effective November 4, 2022, Cardinal and DCG executed an AIA A141-2014 Standard Form of Agreement between Owner and Design-Builder (the “Design-Build Contract”) pursuant to which Cardinal agreed that DCG was to continue to design and build the Project.
Unlike a design-bid-build project delivery method, under which a project owner first retains a design professional who develops a relatively complete design for a project that is only then released for bidding, under a design-build project delivery method a single design-builder is responsible for both the design and construction of a project and can thus “fast track” a project and begin construction before the design is complete.
The Design-Build Contract for the Andretti Global HQ was a “cost-plus” contract under which DCG was to receive payment for actual costs it incurred plus a fee equal to 5.5% of those costs.
The Design-Build Contract required DCG to design and to build the Project in accordance with Cardinal’s criteria, program, design requirements, and physical characteristics as set forth in Design-Build Contract Exhibits.
Change in Direction
However, the new investment group behind the Andretti Global team has decided it wanted to use Clark Construction to now lead the effort and told DCG either they have to agree to be a sub to Clark Construction, or their contract would be terminated.
On March 10, 2023, Cardinal transmitted to DCG a letter that called for the Design-Build Contract to be terminated following 7-days’ notice to DCG.
DCG’s position is that Cardinal breached the Design-Build Contract and is demanding payment of costs and fees already incurred by DCG, payment of reasonable, overhead and profit on the remainder of the Project work, and warning Cardinal that its breach of the Design-Build Contract invalidated its license to use DCG’s Project design documents, and demanded mediation.
Then on March 17th DCG was given a letter reinstating them and were told their work could continue.
Notwithstanding Cardinal’s express revocation of the 7-day notice of termination letter on March 17th, on May 11, 2023, counsel for Cardinal transmitted to counsel for DCG a letter claiming that the Design-Build Contract had been terminated for ’cause’ on April 7, 2023.
Lawsuit filed by DCG
On May 22, 2023 DCG filed a lawsuit in Hamilton County Court of Indiana for:
- Breach of Contract,
- Fraudulent Transfer of Project Ownership
- Copyright infringement
- Lein Foreclosure
- CARDINAL XLIII, LLC;,
- MOTORSPORT REAL ESTATE VENTURES, LLC d/b/a ANDRETTI MOTORSPORTS
- STUDIO M ARCHITECTURE AND PLANNING, LLC;
- GRADEX, INC;
- GLENMARK CONSTRUCTION COMPANY, INC.
DCG alleges that Bernstein (Legal entity of of Cardinal?) decided to terminate the Design-Build Contract and hire Clark Construction but did not want to pay DCG overhead and profit on the remaining work as required by the Design-Build Contract.
DCG alleges that instead of terminating the Design-Build Contract “for convenience,” Cardinal fabricated reasons to terminate the Design-Build Contract “for cause” that are non-substantial, specious, and a pretext to disguise Cardinal’s true intent: to avoid the
terms of a contract it had negotiated and executed and to replace DCG with Clark Construction.
Cardinal alleges several reasons for the termination of the contract for ’cause’ which DCG disputes in the lawsuit.
There is more to the lawsuit than time allows here, but I feel I have hit the highlights. You can read the entire complaint in full here.
Needless to say, this will delay the final construction of the new Andretti Global Headquarters unless this matter can be resolved via Mediation or through a court trial in an expedited manner.