From Smiles to Stares

It was all smiles and handshakes when Apogee Enterprises purchased the stock of EFCO Corp. from Pella Corp. in June, 2017. But the smiles around the $195 million deal have long since faded and handshakes turned to clenched fists as Pella filed a multi-million dollar lawsuit against the glass industry giant on Friday.

In a two-count breach of contract complaint filed in U.S. District Court, Southern District of Iowa (Central Division), Pella contends that Apogee has refused to make annual purchase price payments due under the parties’ agreements. The complaint further alleges that Apogee has failed to honor those agreements by not fully removing Pella as an indemnitor for construction bonds and other obligations incurred by EFCO. Pella has sued both the publicly-held Apogee and EFCO Corp.

The case involves a high-rise project known as the Wanda Vista, located on Wacker Drive in downtown Chicago. General contractor James McHugh Construction Co. awarded the curtainwall work to EFCO in October 2016.

Pella contends it executed a General Contract of Indemnity with Travelers Insurance, so that EFCO could obtain bonds from the insurer for its work, including jobs such as the Wanda Project. Pella says the contract made each party jointly and severally liable to Travelers for premiums as well as bound for any deposits and reserves Travelers demanded. Pella further says Travelers provided the bond to EFCO as principal in February 2017 and that EFCO agreed to a hold McHugh harmless from loss, damages, attorney’s fees, etc., as a condition of that bond.

The sale closed on June 12, 2017 and Pella says the sales contract called for Apogee to make three annual payments of $2.5 million each annually, beginning on June 12, 2018. Apogee has not made the 2018 nor 2019 payments and, according to the complaint, its counsel has told Pella that it will not be making any future installment payments.

The complaint also alleges that Apogee has not used reasonable efforts to secure Pella’s unconditional release on guaranties, letters of credit, etc. It further alleges that Apogee declined to accept a specific offer that Travelers made in February of last year to “swap Apogee for Pella as indemnitor under certain conditions.” Pella says it made repeated demands to no avail that Apogee and EFCO “take actions necessary to secure the unconditional release of Pella from the General Contract of Indemnity, the Wanda bond and additional bonds.”

Pella is asking for an award of $5 million for contractual damages to date and pre-judgement interest, plus a $2.5 million award for the payment due in June 2020, and a judicial order that Apogee and EFCO must secure Pella’s release from the liabilities mentioned as well as suit costs and attorney’s fees.

The suit, filed on July 12, tells Pella’s side of the story. Apogee has not yet had a chance to respond to the court nor filed its side of the story and we will cover that as well. Click here for a copy of the full complaint.

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