A court in the US state of Florida has dismissed Fluor Enterprises' claim that Duke Energy wrongfully drew down a US$67 million letter of credit (L/C) issued in connection with Fluor's construction of a gas-fired electrical generation facility in Citrus County, Florida.

Fluor, an engineering, procurement and construction (EPC) firm headquartered in Texas, claimed it agreed an EPC contract with Duke Energy in 2014 to build facilities at a US$566.6 million gas-fired power generation plant.

Contract terms

The contract specified that if Fluor failed to meet construction completion dates then Duke Energy would be able to claim various costs incurred as a result of delays.

In December 2018, following delays in the EPC process, Duke Energy submitted an invoice demanding payment of nearly US$109 million in 15 days. On Fluor's request, Duke provided a more detailed cost summary on 4 January 2019.

L/C drawdown

Fluor assumed the parties would continue their discussions but on 8 January 2019, Duke Energy drew down the full amount of the L/C requiring Fluor to immediately reimburse the issuing bank.

The EPC contractor claimed Duke's draw on the L/C was "wrongful, premature, in bad faith, deceitful, unreasonable and in material breach" of the contract.

The court however summarily dismissed the primary claim for wrongful draw on the L/C for procedural reasons, including Fluor's failure exhibit the applicable L/C and contract.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.