Pella Corp. is alleging that Apogee Enterprises has failed to make payments for its purchase of EFCO Corp. from Pella in June 2017, and that the company has failed to release Pella from a General Contract of Indemnity (GIC) since the purchase. The allegations were brought up in a complaint filed in the U.S. District Court of the Southern District of Iowa (Central Division) on Friday against both Apogee and EFCO. Pella is seeking more than $7.5 million in damages.

In the complaint, Pella alleges that despite a stock purchase agreement signed prior to its sale of EFCO, Apogee has failed to make $2.5 million payments to Pella on the first and second anniversaries of the closing date, which was June 12, 2017. According to the document, Apogee agreed to make the payments “regardless of any dispute that may exist with respect to any of the parties.” Apogee’s counsel also informed Pella that Apogee would not be making any of the third installment payment, according to the filing. Apogee purchased all of EFCO’s stock in a sale totaling approximately $195 million in June 2017.

The second part of the complaint focuses on a GIC executed by EFCO, Pella and Travelers Casualty and Surety Company of America in January 2016 for the Wanda Vista Tower Project in Chicago. The James McHugh Construction Co., the general contractor for the project, awarded the curtainwall scope to EFCO under a subcontract in October 2016. Travelers later entered into a performance bond and a payment bond in the amount of nearly $69 million regarding the Wanda project in February 2017.

The filing states that Apogee also agreed to “at Apogee’s own expense, use commercially reasonable efforts to secure the unconditional release of Pella and its affiliates from all ‘seller collateral,’ i.e., letters of credit, bonds, and other such obligations of EFCO, and return to Pella such ‘seller collateral.’”

It also states that as a wholly owned subsidiary of Apogee, EFCO is bound to take all steps necessary to assist Apogee in performing the above obligations. However, Pella alleges that neither company have complied with their obligations under the agreement to secure Pella’s unconditional release from the GCI and the Wanda bond.

“Apogee declined to accept a specific offer that Travelers made on February 1, 2018, to swap Apogee for Pella as indemnitor under certain conditions,” reads the filing.

In the filing, Pella states that it demanded that EFCO cover the entire letter of credit as required under the CGI and Wanda bond, but that the company failed to do so. It also states that Apogee failed to provide the letter of credit demanded by Travelers, despite Pella’s demand letter. Both demands were requested on May 21, 2018. Since then Pella’s counsel has requested repeatedly that Apogee and EFCO take the necessary actions to secure Pella’s unconditional release from the CGI, the Wanda bond and additional bonds, according to the filing.

For both counts of breach of contract that Pella is alleging, the company is seeking:

▪ $5 million in contractual damages plus pre-judgment interest against Apogee;

▪ An order that Apogee has anticipatorily breached its obligation to pay $2.5 million on or before June 12, 2020 and an additional award of damages in the amount of $2.5 million against Apogee;

▪ Post-judgment interest;

▪ Judgment for costs of the suit and attorney’s fees;

▪ Other relief the court deems just.

Apogee has not yet filed a response to the complaint.

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