skanska modular complaint

7/21/2019 Skanska Modular Complaint

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SUPREME COURT OF THE STATE OF NEW YORKCOUNTY OF NEW YORK

xFCRC MODULAR, LLC,

Plaintiff,

-against-

SKANSKA MODULAR LLC and RICHARD A.KENNEDY,

Defendants.

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Index No.

VERIFIED COMPLAINT

Plaintiff FCRC Modular, LLC (FCRC Modular), by its attorneys, Kramer Levin Naftalis & Frankel LLP, for its verified complaint against defendants Skanska Modular LLC

(Skanska Modular) and Richard A. Kennedy, alleges on personal knowledge as to its own

actions and on information and belief as to the actions of others, as follows:

Overview

1. On August 27, 2014, Richard A. Kennedy, President of both Skanska

Modular and FC+Skanska Modular, LLC (the Company), caused the Company to issue a

notice under the federal and state WARN Acts (warning of impending mass layoffs) and to

immediately furlough the Companys entire union labor force. This action was taken without the

required approval of a majority of the Companys board of directors, and contrary to the

instructions of FCRC Modular, which owns the Company jointly with Skanska Modular, thereby

wrongfully, needlessly, and callously laying off over 150 people. The Companys cessation of

work, and the loss of specially-trained union laborers, is irreparably harming FCRC Modular.

This action seeks injunctive and related relief to restore the status quo that existed immediately

before defendants improper conduct, and damages for the harm defendants have caused.

LED: NEW YORK COUNTY CLERK 09/05/2014 04:29 PM INDEX NO. 652721/2014SCEF DOC. NO. 2 RECEIVED NYSCEF: 09/05/2014


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2. Up until one week ago, the Companys sole business was manufacturing

and selling prefabricated modules to be used in an innovative high-rise residential development

project called B2 BKLYN (the Project or B2 BKLYN) that is being constructed using

modular technology. Although Skanska Modular is Manager of the Company, the Companys

Limited Liability Company Agreement (as amended, the LLC Agreement) mandates that

material changes in the Companys business are Major Decisions that require the approval of

the Companys Board of Directors, on which both FCRC Modular and Skanska Modular are

represented. It is hard to envision a more substantial change in the Companys business than

eliminating all the workers who build the modules. Yet the defendants acted unilaterally andwillfully in defiance of the LLC Agreements Major Decisions clause. These actions constitute a

clear breach of the LLC Agreement by Skanska Modular and bad faith and willful inducement of

that breach by Kennedy.

3. The express terms of the LLC Agreement provide that FCRC Modular is

entitled to injunctive relief to address this breach. That relief is also appropriate here because

defendants decision to furlough the Companys workforce is causing irreparable harm, both to

FCRC Modular and to the continued viability of the Project. B2 BKLYN is believed to be the

first high-rise building in the world designed to be constructed using modular technology and

represents a unique business opportunity for the Company. Only the Companys specially

trained workers are able to prepare the modules for B2 BKLYN, and they are only able to do so

at the Companys one factory, which has been customized to the Companys needs and

specifications. Moreover, it was and is still hoped by FCRC Modular that the Company would

be able to produce modules for other modular projects, and expand its start-up business

following a successful launch of the Companys technology at B2 BKLYN. Without the


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workers working at the factory, however, neither the modules nor B2 BKLYN can be built. As a

result, the Companys business opportunity to promote and develop modular construction will

fail, the reputation of modular technology will suffer, and FCRC Modulars investment in

modular technology and the Company will go to waste. Furthermore, the longer this work-

stoppage continues, the more workers will find other jobs, setting the Company back even

further.

4. The equities also favor FCRC Modular. Defendants had no legitimate

basis for stopping work. Instead, the sole motive for their wrongful conduct is to enhance their

position in a dispute involving construction of the Project. Specifically, the Project has been plagued by delays and cost overruns due to negligence and misconduct by Skanska USA

Building, Inc. (Skanska USA) the construction manager for the Project and the parent

company of Skanska Modular. Kennedy is also Co-Chief Operating Officer of Skanska USA,

which has refused to accept contractual responsibility for those overruns, as required either as (i)

construction manager under its agreement with B2 Owner, or (ii) as guarantor of Skanska

Modular under the LLC Agreement, instead fabricating the excuse that the delays and cost

overruns were caused by Atlantic Yards B2 Owner, LLC (B2 Owner).

5. Building on this falsehood, Kennedy, on behalf of Skanska USA,

threatened to terminate the construction management agreement between B2 Owner and Skanska

USA (the CM Agreement) unless, among other things, B2 Owner provides adequate

assurances of its ability to pay the increased costs that Skanska USA alleges it is owed.

Although Skanska USA was and is not contractually entitled to stop work in the absence of such

assurances, B2 Owner provided them. Nevertheless, Skanska USA stopped work on the Project

and issued a stop-work notice to the Company, as managed by Skanska Modular and Kennedy,


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its President in essence a notice from the company of which Kennedy is a key executive to

himself.

6. Knowing that the Project cannot be completed as a modular building

without an operating factory, defendants are holding the Company hostage to the wrongful

demands of Skanska USA. Relying on a trumped up notice from one Skanska entity to another

managed by Skanska, they have laid off more than 150 workers and essentially closed the

factory, all in an effort to force B2 Owner to pay the cost overruns for which Skanska USA is

responsible.

The Parties, Jurisdiction and Venue7. Plaintiff FCRC Modular is a New York limited liability company with its

principal place of business in New York.

8. On information and belief, defendant Skanska Modular is a Delaware

limited liability company with its principal place of business in New York.

9. On information and belief, defendant Kennedy is a citizen of New Jersey.

Kennedy is a Director of the Company, as well as its President. He also is President of Skanska

Modular and Co-Chief Operating Officer of Skanska USA.

10. This Court has jurisdiction over Skanska Modular and Kennedy under

CPLR Sections 301 and 302. Skanska Modular and Kennedy regularly conduct business in the

State of New York, including in connection with the transactions from which this action arises.

11. Venue is appropriate in New York County under CPLR Sections 501 and

503 because the forum selection clause in the LLC Agreement so provides, and because Skanska

Modular and Kennedy maintain offices in New York County.


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The Pacific Park Project and the B2 Site, Building and Modules

12. B2 BKLYN is the first residential building to be constructed at the Pacific

Park, Brooklyn site (formerly known as Atlantic Yards). Located directly adjacent to the

Barclays Center, in Prospect Heights, Brooklyn, B2 BKLYN is expected to contain 363 rental

apartments, 50 percent of which will be affordable housing. Upon completion, it is expected that

B2 BKLYN will contain 346,000-square-feet and stand 32-stories high, making it the tallest

modular building in the world.

13. B2 BKLYN was designed to be built using unique and innovative modular

construction practices and technology. B2 BKLYN is planned to consist of 930 pre-fabricated

steel modules, which fit together to create completed apartments. The modules are required to

be fabricated at an off-site factory, trucked from the factory to the Project site, and then stacked

like blocks to form the finished building.

14. The Company was formed pursuant to the LLC Agreement on October 31,

2012, with FC Modular LLC and Skanska Modular LLC, both single-purpose entities, as the sole

Members. This followed a request for proposals to companies with experience in modular

design, manufacturing and construction issued by Forest City Ratner Companies, LLC

(FCRC), as developer of Pacific Park Brooklyn. Skanska USA submitted a proposal, and was

selected in large part because of representations that, among other things, it had experience in

modular building and manufacturing know-how. Skanska USA and B2 Owner then embarked

on an information sharing, due diligence and negotiation process that lasted approximately 10

months.

15. Also on October 31, 2012, Skanska USA and B2 Owner entered into the

CM Agreement by which Skanska USA agreed to construct the Project, including all module


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fabrication and on-site work, such as the structural brace frame, module erection, and connection

of the modules to one another, for a fixed price of $116,875,078.

16. Pursuant to a Purchase Order dated December 21, 2012, the Company was

hired as a subcontractor to Skanska USA and agreed to furnish it with prefabricated modules for

the B2 Project for a fixed-price of $31,450,087 (the Purchase Order). Skanska Modular

undertook responsibility for all cost overruns in performing the Purchase Order and provided

security for this responsibility through a corporate Parent Guaranty by Skanska USA.

17. The Company leased a factory at the Brooklyn Navy Yards where it would

prefabricate the modules for the Project (the Factory). Significant time went into designingand then fitting out the Factory i.e. , renovating the Factory such that it could be equipped for

fabrication of modules for the Project. Once the Factory was fitted out, Skanska Modular, which

was designated in the LLC Agreement as Manager of the Company, spent months training

unionized Factory workers, instilling them with the skill-set and know-how to fabricate the

Projects modules.

18. As Co-Chief Operating Officer of Skanska USA, President of Skanska

Modular, and President and a Director of the Company, Kennedy was involved in every step of

the Project starting from the initial negotiations with B2 Owner through the Factory fit out and

fabrication of the modules. And, though he has mismanaged every aspect of the Project over

which he had responsibility, Kennedy was undoubtedly aware from the start that B2 BKLYN

could not be built modularly without access to the Factory and a core of specially-trained Factory

workers.

The LLC Agreement

19. The provisions of the LLC Agreement most relevant to this dispute are as

follows:


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20. Purpose and Business of the Company: The LLC Agreement repeatedly

states that the purpose and business of the Company is to fabricate and sell modules. For

example, Article III of the LLC Agreement describes the Companys business as being to

fabricate and sell Modules (LLC Agreement at 3.1(a)) or to fabricate, deliver and sell

Modules. Id. at 3.1(b) and (c).

21. Similarly, Section 2.3 states expressly that [t]he purpose of the Company

shall be to conduct the Business. Id. at 2.3. The term Business is defined as owning,

leasing and operating the Factory . . . for the off-site fabrication and sale of prefabricated

modular units for use in building construction[.] Id.

at 1.1 Definitions, p. 4 and Recitals, p. 2.22. The parties recognized in the LLC Agreement that the engagement of

workers is crucial to the Company being able to conduct its business. Accordingly, the LLC

Agreement states that the Company shall conduct [its] business through independent contractors

and employees, in each case as engaged from time to time. Id. at 9.3(a). The engagement of

such employees and contractors is required to be done in accordance with the Annual Business

Plan and Operating Budget. Id. at 9.3(b).

23. The Annual Business Plan is, as its name suggests, the Companys plan

for conducting the aforementioned module fabrication and sale business. Id . at 9.1(a). The

annual Operating Budget is a component of the Annual Business Plan. Id. As Manager,

Skanska Modular is responsible for preparing the Annual Business Plan. Id. at 9.1(b) .

24. Members and Board: The LLC Agreement states that FCRC Modular and

Skanska Modular are Members in the Company. Id. at 2.6. The LLC Agreement also

specifies that [t]he Company shall have a Board of Directors . . . to oversee the operations of the

Company in furtherance of the Companys Business and strategic direction and to make Major


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Decisions [defined below]. Id. at 8.1. The Board is to have six Directors, three appointed by

FCRC Modular and three appointed by Skanska Modular. Id. Kennedy is one of Skanska

Modulars appointed Directors.

25. Manager: The LLC Agreement states that Skanska [Modular] is hereby

appointed as the manager of the Company. Id. at 7.1(a). The powers of the Manager set forth

in the LLC are subject to the Boards control. Section 7.1(b)(i) states that the Manager will

direct and manage the day-to-day affairs of the Company and shall make all decisions related

thereto. However, this authority is expressly subject to the control and direction of the Board

as expressly provided in this Agreement (including Section 8.9 [concerning MajorDecisions])[.] Id. Similarly, Section 7.1(b)(ii) states that Manager shall be in charge of the

operations of the Factory . . . except, however, as otherwise expressly provided in this

Agreement (including Section 8.9 [concerning Major Decisions])[.]

26. President: The LLC Agreement also states that the Company will have a

President, appointed by the Manager, whose responsibilities include managing and administering

the day-to-day business and the Major Decisions of the Board. Here, too, however, the authority

is limited because it is [s]ubject to the control and direction of the Board as expressly provided

in this Agreement (including Section 8.9 [concerning Major Decisions])[.] Id. at 7.2.

27. Major Decisions: Section 8.9 of the LLC Agreement identifies a series of

Major Decisions that are the exclusive purview of the Board: notwithstanding anything to the

contrary in this Agreement, neither the Manager, the President, nor any other officer of the

Company . . . shall cause or permit the Company . . . to take [such action] . . . nor shall the

Company . . . take any such action . . . without the approval of the Board[.] Id. Some of those

Major Decisions are not subject to a Project Decision Exception that would allow the Manager


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to act without Board approval in certain circumstances. Among the Major Decisions that may

never be undertaken without Board approval are those that would effect any material changes in

the Business or the strategic direction of the Company that are not specified in an Annual

Business Plan approved by the Board. Id. at 8.9(a)(iii).

28. Limited Exculpation: The LLC Agreement provides limited exculpation

for conduct undertaken by the Manager or a Director. Neither the Manager nor a Director shall

be liable to the Company for losses incurred by reason of acts or omissions performed in good

faith on behalf of the Company. Id. at 16.2(a). By contrast, the Manager or a Director shall

be liable for any such Losses incurred by reason of its gross negligence, fraud, willfulmisconduct or willful breach of this Agreement, or other acts or omissions that are not performed

or omitted in good faith. Id. (emphasis added).

29. Specific Performance and Other Injunctive Relief: The parties agreed that

a breach of the LLC Agreement would cause irreparable injury and would warrant specific

performance or injunctive relief, among other remedies. Each of the Members acknowledges as

follows:

. . . (a) irreparable injury will result from a breach by such Memberof any of its obligations hereunder; (b) monetary damages wouldnot be an adequate remedy to fully remedy the injury; and (c) any

party who may be injured, including the Company, shall be entitledto seek specific performance or other injunctive relief with respectthereto (without posting of a bond), in addition to any otherremedy that it or they may have in equity or at law.

Id. at 19.17.

30. Additional Remedies: All rights and remedies set forth in the LLC

Agreement are cumulative and in addition to any other rights, obligations or remedies otherwise

available at law and shall not be mutually exclusive so that the exercise of one or more of the

rights or remedies hereunder shall not preclude the exercise of any other. Id. at 19.19.


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31. Choice of Law: The LLC Agreement states that it is governed by

Delaware law. Id. at 19.2.

Project Delays and Skanska USAs Requests for Assurance

32. From the start, the Project was riddled with delays and cost overruns. This

was due in substantial part to delays by Skanska Modular in fitting out the Factory and its

ineptitude in procuring essential building materials needed to fabricate modules. Ultimately, due

to mismanagement, the Factory fit out was delayed by seven months, significantly delaying the

production of modules, and in turn, the entire Project. Moreover, by the time production of the

first modular floor began, Skanska Modular had secured less than 20% of the materials needed to

fabricate those modules, compounding the Factory fit out delays. Skanska USA, which is

responsible under the CM Agreement for the performance of its subcontractors (CM Agreement

3.6(a)), took insufficient steps, if any, to address Skanska Modulars failures. The

Construction Schedule in the CM Agreement stipulated that the building would be substantially

completed by July 25, 2014. That date has come and gone and, as of today, only 10 floors of the

planned 32 stories have been erected at the Project site.

33. To mitigate these delays, B2 Owner repeatedly asked Skanska USA to

implement a schedule recovery plan under the CM Agreement to accelerate the progress of the

work on the Project. Skanska USA rebuffed these requests.

34. As the Project has advanced and the cost overruns have mounted, Skanska

USA has manufactured a number of excuses for Project delays, asserting that they were all due

to the fault of B2 Owner. These excuses were both false and untimely, as they were not made in

accordance with the procedures set forth in the CM Agreement, but were rather nothing more

than belated attempts by Skanska USA to foist responsibility for delays and cost overruns for

which it bore responsibility on to B2 Owner.


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35. In addition, on several occasions, Skanska USA requested assurances of

B2 Owners ability to perform its financial obligations and threatened to stop work under Section

4.3 of the CM Agreement if they were not provided. B2 Owner provided those assurances even

though the conditions for permitting Skanska USA to stop work under that provision non-

payments of amounts due or a change in the work that materially increased the price owed to

Skanska USA under the CM Agreement had not occurred.

The Notice of Termination and Stop Work Notice

36. On August 8, 2014, Skanska USA issued a Notice of Termination of the

CM Agreement to B2 Owner (the Notice of Termination) in which it stated its intent toterminate the CM Agreement if the defaults it alleged were not cured. The purported defaults

were largely the same disputes that had been alleged in the prior communications. The increase

in the Contract Price that Skanska USA demanded had ballooned to almost $50 million, but this

demand was based on undocumented and untimely claims for cost overruns for which Skanska

USA bore responsibility. Among other grounds, Skanska USA also asserted that it had the right

to terminate the CM Agreement based on B2 Owners ostensible failure to provide adequate

financial assurances.

37. The Notice of Termination provided that the termination would become

effective in the event that the purported breaches were not cured to the extent that any cure

period is applicable under the CM Agreement. The 45-day cure period provided in the CM

Agreement expires on September 22, 2014.

38. Also on August 8, 2014, Kennedy, now acting as President of the

Company, issued a notice for a Company Board Meeting to be held on August 19, 2014 to

discuss the advisability of proceeding under the [federal and state WARN Acts], as may be


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applicable, and the necessary steps to take to address the potential of a mass layoff of the

employees working [at the Company Factory in the Brooklyn Navy Yard]. Those statutes

require the giving of advance notice of a plant closing or mass layoffs in certain circumstances.

39. As Kennedy apparently recognized, the decision to issue mass layoff

notices (or warnings thereof) is a Major Decision under the LLC Agreement and is not subject to

a Project Decision Exception because such actions would obviously effect [a] material

change[] in the Business or the strategic direction of the Company. The only Annual Business

Plan prepared by Skanska Modular, as Manager, was a budget and therefore such actions were

not specified in an Annual Business Plan approved by the Board. LLC Agreement 8.9(a)(iii).

40. Shortly after notice of the Board meeting was issued, FCRC Modular

sought adjournment of the meeting to a date in early September due to preexisting scheduling

conflicts of the FCRC Modular representative Directors. Kennedy insisted that the Board

proceed as noticed and reiterated that the main topic to be discussed at the August 19 meeting

would be the advisability of proceeding under the WARN Acts. Kennedy claimed it would be

potentially detrimental to the interest of [the Company] to postpone the Board meeting.

41. Two days later, FCRC Modular reiterated its request to reschedule the

Board meeting until September, explaining that the FCRC Modular representative Directors

would be unable to join either in person or by phone and that the Company Board should meet

only after B2 Owner and Skanska USA attempted to resolve disputes around the Notice of

Termination, because the determination of whether to provide the notices required under the

WARN Acts must be informed by an understanding of the facts and circumstances that relate to


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issues between [B2 Owner and Skanska USA]. Kennedy refused to reschedule the meeting,

deeming it contrary to the best interest of [the Company] to delay the meeting of the Board.

42. One day prior to the August 19 Board meeting, Kennedy again advised the

Directors that the main topic for the meeting would be the advisability of proceeding under the

WARN Acts and the necessary steps to take to address the potential mass layoff at the Factory

and distributed a legal opinion and summary presentation that Skanska Modular had solicited to

aid the Boards discussion concerning the [WARN] Acts and their applicability in the current

commercial circumstances facing [the Company]. The Skanska Modular Board representatives

convened on August 19, 2014. However, as FCRC Modular had advised, none of the Directorsrepresenting FCRC Modular were present. Lacking a quorum, Kennedy rescheduled the meeting

for August 25, 2014. Once again, notice for the August 25 meeting stated that the topic to be

discussed relates to [the Company] proceeding under the [federal and state WARN Acts] to

address the potential of a plant closing and/or mass layoff of the employees working there.

43. The Company Board of Directors met on August 25, 2014. But Kennedy

did not seek the advice of the Board, as his notices had indicated he would, or call for a vote on

laying off employees or the issuance of WARN Act notices, or report any new information

relevant to the issuance of such notices or the taking of such steps. The meeting adjourned with

no action having been approved by the Board. One of FCRC Modulars designated Directors,

MaryAnne Gilmartin, asked Kennedy if, as President, he had any recommendation to make

regarding the advisability of sending the WARN Act notices, and Kennedy said he did not.

44. On the very next day, Kennedy this time wearing his Skanska USA hat

issued a notice to B2 Owner stating that Skanska USA intended to stop work pursuant to Section

4.3 of the CM Agreement until it received reasonable evidence that B2 Owner had made


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financial arrangements to fulfill its obligations under the CM Agreement. Also on August 26,

Kennedy this time wearing his Company hat sent a letter to the FCRC Modular appointed

Directors advising them that, in view of the stop work notice, the Company would stop work

under the Purchase Order and furlough all union employees of the Company.

45. Later that same day, FCRC Modulars counsel wrote to Kennedy advising

him that FCRC Modular considered the unilateral and surreptitious issuance of the letter and

notices by Skanska Modular to be a bad faith breach of Section 8.9 of the LLC Agreement

because the furloughing of employees had not been done with Board approval and is a Major

Decision that would effect material changes in the Business or the strategic direction of theCompany that are not specified in an Annual Business Plan approved by the Board. FCRC

Modular demanded that the threat to issue the notices be immediately rescinded.

46. Although it had no contractual obligation to do so, B2 Owner immediately

provided Skanska USA with additional assurances that it has made financial arrangements to

satisfy its obligations under the CM Agreement. Despite these assurances, on August 27, 2014,

Skanska USA, directed all of its subcontractors and suppliers including the Company to stop

work on the Project. Thereafter at Kennedys instruction, in addition to issuing the unlawful

WARN Act notices, the Company issued a letter and a notice to the laborers at the Factory

advising them that they had been immediately furloughed.

47. Kennedy obviously knew on August 25 that Skanska USA was going to

direct issuance of the stop work notice that, in turn, provided his justification for laying off the

Factory employees two days later indeed Kennedy obviously orchestrated the entire sequence

of events. Notably, however, he said nothing about it, or about the letter and furlough or WARN


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Act notices he knew he was going to be sending, at the Company Board meeting he had called to

discuss this very issue.

48. On August 27 Skanska Modulars counsel responded to the letter from

FCRC Modulars counsel, asserting that the issuance of these notices did not require any Board

approval because the Manager had the authority to control the Factory pursuant to Sections

7.1(b)(i) and (ii) of the LLC Agreement and that the prior Board meetings had been called

merely to report to the Board. On September 2, FCRC Modulars counsel again demanded, in

a letter to Skanska Modulars counsel, that Skanska Modular immediately withdraw the furlough

and WARN Act notices and take steps to restart work at the Factory, or that management of theFactory be turned over immediately to FCRC Modular so it could attempt to prevent further

harm and mitigate damages caused by Skanska Modular. These requests were rejected by

Skanska Modulars counsel on September 4.

Related Events

49. On August 28, 2014, counsel for the Modular Construction Division

Affiliates of the Building and Construction Trades Council of New York City and Vicinity

(BCTC Modular Affiliates), the trade unions representing the Factorys workers, issued a letter

to Susan Jenkins, the Factorys Plant Manager, grieving the Companys furloughing of its

employees and deeming such action to be a violation of the collective bargaining agreement

between the Company and BCTC Modular Affiliates (the CBA). Specifically, the grievance

letter stated that the [t]he parties CBA does not give the authority to the employer to

unilaterally implement a furlough policy that impacts wages, benefits and other contractual and

statutory rights under federal and state law.


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50. On September 2, 2014, B2 Owner and Skanska USA both filed complaints

against each other in this Court. In its action, B2 Owner asserted claims for breach and

anticipatory breach of the CM Agreement arising from delays in Skanska USAs performance

and supervision of the work and the work stoppage, and for a declaratory judgment that the

Notice of Termination is void, that Skanska USA may not terminate the CM Agreement for

cause, and that Skanska USA may not suspend Work under Section 4.3 of the CM Agreement.

Skanska USAs complaint alleges a claim for breach of contract that largely parrots the

allegations in its Notice of Termination. Skanska USA also alleges, under a veil piercing theory,

that FCRC should be responsible for B2 Owners liabilities. Skanska USA seeks upwards of $50million in damages.

51. Upon information and belief, Skanska Modular is planning to completely

shut down the Factory imminently, and by the time this Complaint is filed, may have already

done so.

Irreparable Harm and Balance of the Equities

52. The furloughing of workers and the issuance of a WARN Act notice has

caused significant and irreparable harm to FCRC Modular, as well as significant monetary

damages.

53. Every day that the work stoppage continues adds significant delay to the

completion of the Project, which is already over a year behind schedule due to the ineptitude of

Skanska USA. Most critically, construction of B2 BKLYN cannot continue modularly without

access to the Factory and the workers that have been specifically trained to fabricate modules for

the Project. If the Factory is not up and running again soon, Factory workers will be forced to

find other jobs and the Company will lose the skilled workforce that it spent months training.


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54. Moreover, the work stoppage jeopardizes the viability of the Project as a

whole. Without an operating Factory, B2 Owner may have to abandon the modular concept

entirely and instead resort to completing B2 BKLYN using traditional construction techniques,

resulting in a loss to the Company of this unique business opportunity. The actions of Skanska

Modular and Kennedy also threaten the viability of a continuing modular business because,

without a completed hi-rise building, the practicality of modular construction, and therefore the

need for a modular factory business, will have been called into question.

55. All of the foregoing, while causing harm that is unquantifiable and

irreparable, will also have the effect of substantially increasing costs to produce modules due toneedless shut-down and ramp-up costs.

56. Defendants actions are also inequitable. Skanska USA engineered a

dispute, predicated on delays and massive cost overruns for which they are responsible. Then, to

gain leverage in connection with that dispute, and while wearing multiple hats, Kennedy caused

Skanska USA to issue a stop work notice to the Company and on that basis caused Skanska

Modular to willfully breach the LLC Agreement by unilaterally dismissing the Factorys union

employees.

57. Defendants actions also have a significant negative impact on third

parties. The decision to lay off over 150 workers (over 70% of whom are minorities) and stop

fabrication of modules hurts not only the workers themselves, who are now left to hunt for new

employment, but also the community and government officials who were relying on a speedy

and affordable solution to mitigate the Citys current housing crisis.

First Cause of Action for Breach of Contract(against Skanska Modular)

58. FCRC Modular repeats the allegations of paragraphs 1 through 57 above.


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59. The LLC Agreement between FCRC Modular and Skanska Modular

constitutes a valid and enforceable contract between the parties.

60. The LLC Agreement requires Skanska Modular to obtain approval from

the Companys Board of Directors before causing or permitting the Company to take any action

that constitutes a Major Decision not subject to a Project Decision Exception, including

effect[ing] any material changes in the Business or the strategic direction of the Company that

are not specified in an Annual Business Plan approved by the Board. Skanska Modular

engaged in ultra vires acts and willfully breached the LLC Agreement by stopping work and

issuing furlough and WARN Act notices to Factory workers without approval from theCompanys Board of Directors.

61. Skanska Modulars decisions to stop work and issue furlough and WARN

Act notices to the Factory workers effected material changes in the Business or strategic

direction of the Company, were not specified in an Annual Business Plan approved by the Board

and were made in bad faith.

62. FCRC Modular has performed all of its obligations under the LLC

Agreement.

63. FCRC Modular has demanded that Skanska Modular rescind the furlough

and WARN Act notices and resume work at the Factory under the LLC Agreement, but Skanska

Modular has refused.

64. As a result of Skanska Modulars breaches and ultra vires acts, FCRC

Modular has suffered irreparable harm and unquantifiable damages for which there is no remedy

at law.


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65. FCRC Modular also has suffered monetary damages, proximately caused

by Skanska Modulars breaches.

Second Cause of Action for Tortious Interference With Contract

(against Kennedy)

66. FCRC Modular repeats the allegations of paragraphs 1 through 57 and 59

through 65 above.

67. The LLC Agreement is an existing, valid contract to which FCRC

Modular and Skanska Modular are both parties.

68. Skanska Modulars decisions to stop work, and issue furlough and WARN

Act notices to the Factory workers, as directed and carried out by Kennedy, effected material

changes in the Business or strategic direction of the company and were not specified in an

Annual Business Plan approved by the Board, and were made in bad faith without Board

approval.

69. As President and Director of the Company, and signatory to the LLC

Agreement, Kennedy had actual knowledge of the provision in the LLC Agreement requiring

Board approval for Major Decisions not subject to a Project Decision Exception, including a

decision effect[ing] any material changes in the Business or the strategic direction of the

Company that are not specified in an Annual Business Plan approved by the Board. Moreover,

prior to furloughing the employees and issuing WARN notices in the Companys name, Kennedy

was advised that FCRC Modular would consider such actions to be in violation of the LLC

Agreement.

70. Kennedy, with knowledge of the LLC Agreement between FCRC Modular

and Skanska Modular, did knowingly, wrongfully, intentionally, maliciously, in bad faith and

without reasonable justification or excuse induce, persuade and entice Skanska Modular to


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engage in ultra vires acts causing it to violate and breach that contract with FCRC Modular in

order to further the interests of Skanska USA and contrary to the interest of the Company.

71. As a direct and proximate result of Kennedys tortious conduct, FCRC

Modular has suffered irreparable harm and unquantifiable damages that cannot be remedied at

law.

72. FCRC Modular also has suffered monetary damages, proximately caused

by Kennedys tortious conduct.

WHEREFORE, FCRC Modular, LLC respectfully requests judgment on all

Causes of Action:

(i) awarding a temporary, preliminary and permanent injunction

returning matters to the status quo as they were prior to Skanska Modulars issuance of furlough

and WARN Act notices and a stoppage of work at the Factory;

(ii) awarding FCRC Modular monetary damages in an amount to be

determined at trial;

(iii) awarding FCRC Modular its costs, including attorneys fees

insofar as recoverable, and


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skanska modular complaint

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