Michael Baker Corporation: Appeals Court Reverses ADF Judgement

Business Wire, Feb 12, 2002

Business Editors

PITTSBURGH--(BUSINESS WIRE)--Feb. 12, 2002

Michael Baker Corporation (Baker) (AMEX:BKR) announced today that in an opinion filed February 8, the 11th Circuit Court of Appeals reversed the summary judgment of the U.S. District Court for the Middle District of Florida as to liability against its Baker Mellon Stuart Construction, Inc. (BMSCI) subsidiary arising out of ADF International, Inc.'s structural steel subcontract for the Universal Studios CityWalk Project, and remanded the matter to the District Court for further proceedings consistent with the opinion.

As a result of this opinion, the District Court's award of $10.0 million in damages in favor of ADF against BMSCI has been vacated. Accordingly, Baker expects to receive the proceeds of the $11.3 million escrow account it had provided previously as financial security for the award plus interest during the appeals process. BMSCI's liability, if any, must now be proved by ADF in further proceedings.

The Circuit Court also concluded, as BMSCI contended, that as a matter of law, the $11,875,903 Payment Bond issued by Travelers on BMSCI's behalf secures only payment obligations for work provided under the initial Notice to Proceed and not the work provided under the General Contract. Since the General Contract superceded and replaced the Notice to Proceed, and ADF's claims relate to matters after the Notice to Proceed was superceded and replaced, the Circuit Court found that Travelers can no longer be held liable under the Payment Bond and the Payment Bond is no longer in effect.

Commenting on the opinion, Donald P. Fusilli, Jr., president and chief executive officer, said: "We are obviously pleased with the courts decision. A successful conclusion of this matter and of our ongoing litigation against HOK, the designer of CityWalk, will bring an end to this project. Our focus has been and will continue to be maximizing the growth and optimizing the financial performance of our core businesses -- engineering and energy services."

Michael Baker Corporation (www.mbakercorp.com) provides engineering and energy expertise for public and private sector clients worldwide. The firm's primary services include engineering design for the transportation and civil infrastructure markets, operation and maintenance of oil and gas production facilities, architecture, environmental services, and construction management for building and transportation projects. Baker has more than 3,800 employees in over 30 offices across the United States and internationally.