SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK — COMMERCIAL DIVISION
MERIDIAN INFRASTRUCTURE PARTNERS LLC,
Plaintiff,
— against —
NORTHGATE FIBER AMERICAS INC.,
Defendant.
Index No. 654321/2024 Assigned Justice: Hon. Eleanor M. Ricci Part 49
DEFENDANT NORTHGATE FIBER AMERICAS INC.'S RESPONSES AND OBJECTIONS TO PLAINTIFF'S FIRST SET OF INTERROGATORIES
PRELIMINARY STATEMENT
Defendant Northgate Fiber Americas Inc. ("NFA" or "Defendant"), by and through its attorneys, Calderwood & Harkness LLP, hereby serves its Responses and Objections to Plaintiff Meridian Infrastructure Partners LLC's ("Meridian" or "Plaintiff") First Set of Interrogatories (Nos. 1 through 25), dated and served on or about October 8, 2024 (the "Interrogatories"). These Responses and Objections are served pursuant to CPLR § 3130 et seq. and the applicable provisions of the Commercial Division Rules of the Supreme Court of the State of New York.
The Interrogatories were received by counsel for NFA on October 8, 2024. Pursuant to CPLR § 3133, NFA's responses are due within twenty days of service. NFA serves these Responses and Objections on October 22, 2024, within the time permitted by statute and the parties' agreement.
NFA's Responses and Objections are based upon information reasonably available to NFA and its counsel as of the date of service, and are made without prejudice to NFA's right to supplement, amend, or correct any response as additional information becomes available through continued investigation, discovery, depositions, expert analysis, or otherwise, as permitted by CPLR § 3101(h) and applicable court orders. Discovery in this matter is ongoing, and NFA expressly reserves all rights in connection therewith.
The making of any response to any interrogatory shall not be construed as an admission that the interrogatory is proper, relevant, or proportional, or that the information sought is relevant, material, or admissible at trial. By responding to any interrogatory, NFA does not concede the relevance, materiality, or admissibility of either the interrogatory or the response, and reserves all objections to the use of any response or the information contained therein at any hearing, deposition, or trial. NFA's responses are made subject to and without waiver of NFA's General Objections, set forth below, each of which is incorporated by reference into every specific response as though fully set forth therein.
This document is identified as Calderwood & Harkness LLP Matter No. 1022-00005.
GENERAL OBJECTIONS
NFA interposes the following General Objections, each of which applies to all of Plaintiff's Interrogatories, Nos. 1 through 25, and is incorporated by reference into each specific response below. NFA's assertion of these General Objections shall not be deemed a waiver of any specific objection set forth in connection with any particular interrogatory, nor shall the assertion of a specific objection be deemed a waiver of any General Objection.
A. Scope and Proportionality
NFA objects to any interrogatory that seeks information beyond the scope of permissible discovery under CPLR § 3101 or that is not reasonably calculated to lead to the discovery of admissible evidence, or that imposes undue burden or expense disproportionate to the needs of the case. NFA further objects to any interrogatory that seeks information not relevant to any claim or defense in this action or that seeks information regarding matters that are collateral to the issues in dispute. NFA will respond to each interrogatory only to the extent it is relevant, non-privileged, proportional to the needs of the case, and not otherwise objectionable.
B. Attorney-Client Privilege and Work Product Doctrine
NFA objects to any interrogatory that calls for, or may be construed as calling for, the disclosure of information or communications protected by the attorney-client privilege, the work product doctrine (including both opinion and fact work product), the common interest privilege, the joint defense privilege, or any other applicable privilege, immunity, or protection. No response to any interrogatory shall be construed as a waiver of any such privilege, protection, or immunity, whether by inadvertent or partial disclosure or otherwise. NFA expressly reserves all rights to assert privilege over any and all communications with Calderwood & Harkness LLP (litigation counsel), Pemberton Fox LLP (coverage counsel), and any other attorneys or law firms consulted in connection with the matters at issue in this litigation, including but not limited to communications, memoranda, analyses, notes, and other materials prepared in anticipation of litigation or for purposes of providing or obtaining legal advice. To the extent any privileged material has been inadvertently disclosed or is inadvertently disclosed in the future, NFA does not waive any applicable privilege and demands the immediate return or sequestration of any such material pursuant to CPLR § 3101(c) and the parties' Stipulation and Proposed Order Regarding Confidentiality of discovery Materials.
C. Premature Requests Regarding Expert Opinions
NFA objects to any interrogatory that prematurely seeks expert opinions, analyses, conclusions, methodologies, or draft materials in advance of the court-ordered expert report deadlines set forth in the Preliminary Conference Order issued by Justice Ricci on October 1, 2024. Pursuant to that Order, expert reports are due on March 31, 2025, and rebuttal expert reports are due on May 15, 2025. NFA will comply with its expert disclosure obligations in accordance with the court's scheduling order and will not be compelled to provide premature expert opinions through the interrogatory process. NFA reserves its rights to supplement its responses following the exchange of expert reports.
D. "All" and "Each" Qualifiers
NFA objects to any interrogatory that uses the terms "all," "each," "every," "any," "anyone," or similar exhaustive qualifiers to the extent such terms purport to impose an obligation on NFA to conduct an exhaustive, unlimited search beyond what is reasonable and proportional to the needs of the case, the amount in controversy, and the burden of production. NFA will construe such terms reasonably and will respond based on a diligent, good-faith search of reasonably available sources of information.
E. Ongoing Investigation
NFA's Responses and Objections are based on information and documents reasonably available to NFA and its counsel as of the date of service of these responses (October 22, 2024). Discovery in this matter is at an early stage. Investigation, document review, fact depositions, and expert analysis are ongoing and have not been completed. NFA expressly reserves the right to supplement, amend, or correct any response as additional facts, documents, or information become available, as permitted by CPLR § 3101(h) and applicable court orders, and as NFA's investigation and discovery continue. Nothing in these responses shall be construed as a representation that NFA's investigation or analysis of any factual issue is complete.
F. Compound and Multi-Part Interrogatories
NFA objects to any compound or multi-part interrogatory that effectively constitutes more than one discrete interrogatory, in contravention of the twenty-five interrogatory limit applicable under the Rules of the Commercial Division of the Supreme Court of the State of New York (22 NYCRR § 202.70, Rule 11-a). NFA has endeavored to respond to each interrogatory in good faith notwithstanding such objection, but reserves the right to object to and decline to respond to any interrogatory that exceeds the permissible scope or number.
G. Definitions and Instructions
NFA objects to any definitions or instructions contained in Meridian's Interrogatories to the extent they purport to expand the scope of NFA's obligations beyond those imposed by the CPLR, the Commercial Division Rules, or applicable court orders. NFA will construe the Interrogatories in accordance with their plain meaning and in accordance with the governing rules and statutes, and will not be bound by any definitions or instructions that attempt to impose obligations inconsistent with applicable law or that unreasonably broaden the scope of NFA's duty to respond.
The foregoing General Objections are incorporated by reference into each of NFA's specific responses below and apply with equal force to each interrogatory, whether or not a particular General Objection is restated in connection with any specific interrogatory.
SPECIFIC RESPONSES AND OBJECTIONS
INTERROGATORY NO. 1
Interrogatory: Identify all persons with knowledge of the facts underlying NFA's decision to terminate the Master Construction Agreement ("MCA") dated March 15, 2020, between NFA and Meridian.
Objections: NFA objects to this interrogatory as overbroad and unduly burdensome to the extent it seeks identification of every person who may have any tangential, indirect, or attenuated knowledge of any fact that may bear on the termination decision. NFA further objects to this interrogatory to the extent it calls for the identification of persons whose knowledge is derived from, relates to, or would necessarily disclose privileged communications between NFA and its legal counsel regarding termination strategy, the legal sufficiency of grounds for termination, and the drafting and issuance of cure notices and termination notices. Such communications are protected by the attorney-client privilege and the work product doctrine, and NFA will not identify individuals solely on the basis of their participation in privileged communications. NFA incorporates its General Objections by reference.
Response: Subject to and without waiving the foregoing objections and the General Objections set forth above, NFA identifies the following individuals with knowledge of the facts underlying NFA's decision to terminate the MCA:
1. Renata Voss, Vice President of US Network Infrastructure, Northgate Fiber Americas Inc. — Ms. Voss oversaw the fiber build-out program from NFA's side, had direct responsibility for managing the contractual relationship with Meridian, and initiated the cure notice process. She is the signatory of Cure Notice No. 1, Cure Notice No. 2, and the Notice of Termination for Cause. Ms. Voss has knowledge of Meridian's schedule delays, the non-conformance report history, the failure-to-cure determination, and the decision-making process leading to termination.
2. Sean Calloway, Director of Construction Management, Northgate Fiber Americas Inc. — Mr. Calloway served as the day-to-day contract administrator for the MCA. He was responsible for monitoring Meridian's performance, documenting performance deficiencies, issuing and tracking non-conformance reports ("NCRs"), reviewing milestone completion certifications, and preparing schedule variance analyses. Mr. Calloway participated in the assessment of Meridian's Corrective Action Plan and the determination that it was inadequate.
3. Dominic Hale, General Counsel, Northgate Telecommunications PLC (NFA's parent company) — Mr. Hale provided legal oversight and advice regarding the termination process. NFA asserts attorney-client privilege over the substance of Mr. Hale's legal advice, communications with outside counsel, and his legal analysis of the grounds for and process of termination.
4. Helena Bright, Chief Financial Officer, Northgate Telecommunications PLC — Ms. Bright was involved in the financial analysis supporting the termination decision, including the assessment of costs and financial exposure associated with both continuing the MCA and terminating it. She has knowledge regarding the financial impact of Meridian's delays on NFA's capital expenditure program and network deployment schedule.
5. Sir Malcolm Ashford, Chief Executive Officer, Northgate Telecommunications PLC — Sir Malcolm, as the ultimate executive decision-maker for the Northgate corporate group, approved the termination of the MCA following review and recommendation by Ms. Voss, Mr. Hale, and Ms. Bright. Sir Malcolm has knowledge of the executive-level considerations and corporate governance process associated with the termination decision.
NFA reserves the right to supplement this response as discovery progresses and additional individuals with relevant knowledge are identified through depositions, document review, and ongoing investigation.
INTERROGATORY NO. 2
Interrogatory: State the factual basis for NFA's contention that Meridian committed a material breach of the Master Construction Agreement ("MCA") dated March 15, 2020.
Objections: NFA objects to this interrogatory as overly broad, compound, and multi-part in that it effectively seeks the entirety of NFA's factual case regarding material breach across multiple categories of performance deficiency, each of which could independently constitute a separate interrogatory. NFA further objects to the extent this interrogatory calls for disclosure of expert analysis, opinions, or conclusions that are not yet fully developed and that are subject to the court's expert report deadlines. NFA also objects to the extent this interrogatory seeks privileged legal analysis of what constitutes a "material breach" under the MCA or New York law. NFA incorporates its General Objections by reference.
Response: Subject to and without waiving the foregoing objections and the General Objections set forth above, NFA contends that Meridian committed a material breach of the MCA based on the following categories of facts:
Schedule Delays: Meridian failed to timely achieve multiple milestones across all three phases of the fiber build-out program. The MCA established a detailed milestone schedule for the construction of approximately 18,500 route miles of fiber-optic cable across a seven-state service territory. Meridian's performance failed to meet that schedule on virtually every significant milestone. Specifically:
• Phase 1 Milestone 3 was completed 47 days late, with actual completion occurring on October 14, 2021, versus the contractual target date of August 28, 2021.
• Phase 2 Milestone 5 was completed 22 days late relative to its contractual target date.
• Phase 2 Milestone 6 was completed 68 days late relative to its contractual target date.
• Phase 2 Milestone 7 was completed 91 days late relative to its contractual target date.
• Phase 2 Milestone 8 was never completed prior to the termination of the MCA and had accrued 134 days of delay as of the termination date of April 1, 2024. Milestone 8 represented the final Phase 2 deliverable and constituted a critical-path activity for the commencement of Phase 3 full mobilization.
• Phase 3 progress was minimal. As of the termination date, only approximately 340 of the 9,700 planned Phase 3 route miles had been constructed, representing approximately 3.5% of the Phase 3 scope. This level of progress was substantially below the contractual schedule and demonstrated Meridian's inability to perform the remaining work within any reasonable timeframe.
The aggregate schedule delays across Milestones 3, 5, 6, 7, and 8 exceeded 362 days of delay. The pattern of delay was escalating, not improving — Milestone 3 involved a 47-day delay, while successive milestones showed progressively greater delays of 22, 68, 91, and 134+ days.
Quality Failures: NFA issued a total of 287 non-conformance reports ("NCRs") during the course of the project, documenting defects, deficiencies, and non-conformities in Meridian's work. Of the 287 NCRs, 43 were classified as "critical" — meaning they involved defects that compromised the integrity, reliability, or specification compliance of the installed fiber-optic network. Critical NCRs included the following categories of defects:
• Splice loss exceeding the requirements set forth in Northgate Technical Specification NS-FIBER-2020, which established maximum allowable splice attenuation values for single-mode fiber splices.
• Improper conduit depth, meaning that fiber conduit was installed at depths less than the minimum specified by NS-FIBER-2020, applicable municipal codes, and industry standards, creating risk of damage from surface activities and third-party excavation.
• Unauthorized route deviations, meaning that Meridian deviated from approved construction routes without obtaining prior written approval from NFA's engineering team as required by the MCA, resulting in as-built configurations that did not conform to NFA's network design.
An additional 12 critical NCRs were issued in February 2024 alone, following the issuance of Cure Notice No. 1 on January 18, 2024. This surge in critical defects during the very period in which Meridian was supposed to be curing its defaults demonstrated the seriousness and persistence of the quality issues. All work performed under the MCA was required to conform to NS-FIBER-2020 and applicable industry standards, including ANSI/TIA-568 (Telecommunications Infrastructure Standard for Customer Premises) and BICSI (Building Industry Consulting Service International) guidelines, as set forth in MCA § 12.4.
Failure to Cure: Despite receiving Cure Notice No. 1 on January 18, 2024, Meridian failed to cure its defaults within the 30-calendar-day cure period prescribed by MCA § 14.1. A second Cure Notice was sent by NFA on February 19, 2024, stating that Meridian had failed to cure and was in continuing material breach, and demanding a remediation plan within 15 days. Meridian submitted a Corrective Action Plan on March 5, 2024. NFA reviewed the Corrective Action Plan and rejected it on March 12, 2024, as inadequate. The plan was inadequate because, rather than demonstrating a credible path to cure the existing defaults, it proposed a nine-month extension to the contract schedule and sought approximately $87 million in additional compensation. The Corrective Action Plan did not constitute cure within the meaning of MCA § 14.1, and NFA proceeded to issue the Notice of Termination for Cause on April 1, 2024, after the expiration of the cure period.
NFA reserves the right to supplement this response as its investigation continues and as expert analysis is completed.
INTERROGATORY NO. 3
Interrogatory: Identify all cure notices, default notices, and termination notices sent by NFA to Meridian in connection with the MCA, and state the date, author, and recipient of each such notice.
Objections: NFA does not object to this interrogatory except to the extent it seeks privileged communications between NFA and its counsel regarding the preparation, drafting, review, or revision of such notices. Such communications are protected by the attorney-client privilege and the work product doctrine and will not be disclosed. NFA incorporates its General Objections by reference.
Response: Subject to and without waiving the foregoing objection and the General Objections set forth above, NFA identifies the following notices:
1. Cure Notice No. 1: Dated January 18, 2024. Sent by Renata Voss, Vice President of US Network Infrastructure, NFA, to Victor Sandoval, Chief Executive Officer, Meridian Infrastructure Partners LLC, and Bridget Yeung, Chief Operating Officer, Meridian Infrastructure Partners LLC. The notice cited Meridian's failure to achieve Phase 2 Milestone 8, inadequate mobilization and progress on Phase 3 construction, and the accumulation of 43 critical NCRs reflecting persistent quality failures. The notice demanded that Meridian cure all identified defaults within 30 calendar days, as required by MCA § 14.1.
2. Cure Notice No. 2: Dated February 19, 2024. Sent by Renata Voss, Vice President of US Network Infrastructure, NFA, to Victor Sandoval, Chief Executive Officer, Meridian Infrastructure Partners LLC. This second cure notice stated that Meridian had failed to cure the defaults identified in Cure Notice No. 1 during the initial cure period, and that Meridian was in continuing material breach of the MCA. The notice demanded that Meridian provide a detailed remediation plan within 15 days that addressed all outstanding defaults.
3. Notice of Termination for Cause: Dated April 1, 2024. Sent by Renata Voss, Vice President of US Network Infrastructure, NFA, to Victor Sandoval, Chief Executive Officer, Meridian Infrastructure Partners LLC. The notice terminated the MCA effective immediately under MCA § 14.1 for uncured material breach. The notice invoked NFA's contractual right under MCA § 14.5 to complete the remaining work using substitute contractors and to charge all excess costs to Meridian.
4. Liquidated Damages Assessment Letter (Phase 1): Dated November 5, 2021. Sent by Sean Calloway, Director of Construction Management, NFA, to Marcus Henley, Vice President of Field Operations, Meridian Infrastructure Partners LLC. The letter assessed $8,225,000 in liquidated damages for a 47-day delay on Phase 1 Milestone 3, calculated at the contractual rate of $175,000 per day pursuant to MCA § 9.1.
5. Periodic LD Assessment Communications (Phase 2): NFA also issued periodic liquidated damages assessment communications for Phase 2 milestone delays (Milestones 5, 6, 7, and 8), which are reflected in the project payment records, contract administration correspondence files, and payment application backup documentation produced in this litigation. These communications documented the calculation and deduction of liquidated damages from Meridian's Phase 2 progress payments.
NFA reserves the right to supplement this response to the extent additional responsive notices or communications are identified through continued document review.
INTERROGATORY NO. 4
Interrogatory: Describe in detail NFA's contention that the termination of the MCA on April 1, 2024, was procedurally and substantively proper under MCA § 14.1.
Objections: NFA objects to this interrogatory to the extent it calls for legal conclusions regarding the interpretation of MCA § 14.1 and the applicable standards under New York law. NFA will provide the factual basis for its position on procedural and substantive compliance, but objects to the extent this interrogatory seeks privileged legal analysis performed by NFA's counsel regarding the sufficiency of the termination. NFA incorporates its General Objections by reference.
Response: Subject to and without waiving the foregoing objections and the General Objections set forth above, NFA states as follows:
Procedural Compliance: MCA § 14.1 permits the Owner (NFA) to terminate the MCA for cause if the Contractor (Meridian) commits a "material breach" of any obligation under the MCA that remains uncured for 30 calendar days after written notice specifying the breach and demanding cure. NFA complied with the procedural requirements of MCA § 14.1 in the following respects:
(a) NFA issued Cure Notice No. 1 on January 18, 2024, specifying the breaches (schedule delays, failure to achieve Milestone 8, inadequate Phase 3 mobilization, and 43 critical NCRs) and demanding cure within 30 calendar days.
(b) More than 30 calendar days elapsed between the issuance of Cure Notice No. 1 and the issuance of the Notice of Termination for Cause on April 1, 2024 — specifically, 74 calendar days.
(c) NFA issued a second Cure Notice (Cure Notice No. 2) on February 19, 2024, providing additional notice and an additional opportunity for Meridian to demonstrate cure. This second notice was not required by MCA § 14.1 but further confirms that NFA afforded Meridian more than adequate notice and opportunity to cure.
(d) Meridian submitted a Corrective Action Plan on March 5, 2024. NFA reviewed the Corrective Action Plan and rejected it on March 12, 2024, as inadequate. The plan did not constitute cure because it proposed a nine-month schedule extension and approximately $87 million in additional compensation rather than demonstrating a credible and concrete path to cure the identified defaults within the existing contractual framework.
(e) NFA's Notice of Termination for Cause, dated April 1, 2024, was issued after the expiration of the cure period and after Meridian's demonstrated failure to cure. The termination therefore satisfied all procedural prerequisites of MCA § 14.1.
Substantive Justification: Meridian's persistent and escalating schedule delays across multiple milestones — aggregating more than 362 days of delay across Milestones 3, 5, 6, 7, and 8 — its accumulation of 287 NCRs (43 of which were classified as critical), and its achievement of only 3.5% progress on Phase 3 (340 of 9,700 planned route miles) constituted material breach of the MCA under both the contract's express terms and New York law. The pattern of delay was escalating, not improving, over the life of the contract. Milestone delays grew from 47 days (Phase 1 Milestone 3) to 134+ days (Phase 2 Milestone 8), demonstrating a worsening trajectory of performance failure. The quality defects documented in the 43 critical NCRs further demonstrated Meridian's inability or unwillingness to perform the work in accordance with contractual specifications. Taken together, these deficiencies constituted material breach going to the essence of the MCA and entitled NFA to terminate the contract.
INTERROGATORY NO. 5
Interrogatory: Identify all liquidated damages assessed against Meridian under MCA § 9.1, including the milestone, number of delay days, daily rate, amount assessed, and any cap applied.
Objections: NFA does not interpose any specific objection to this interrogatory beyond the General Objections set forth above, which are incorporated by reference.
Response: NFA assessed the following liquidated damages against Meridian pursuant to MCA § 9.1:
MCA § 9.1 provides for liquidated damages at a rate of $175,000 per day per milestone for each day of delay beyond the contractual milestone completion date. Each milestone is subject to a per-milestone cap equal to 10% of the milestone value. The aggregate liquidated damages under the MCA are subject to an overall cap of 5% of the total Contract Price ($1,200,000,000 × 5% = $60,000,000). The total amount assessed ($49,000,000) is below the aggregate cap.
The per-milestone cap was applied only to Milestone 8, where the calculated amount ($23,450,000) exceeded 10% of the Milestone 8 value ($91,000,000 × 10% = $9,100,000). For all other milestones, the calculated amount fell below the per-milestone cap, and no cap reduction was necessary.
Liquidated damages were deducted from Meridian's payment applications as contractually permitted under MCA § 9.1. Phase 1 liquidated damages ($8,225,000) were deducted pursuant to the assessment letter dated November 5, 2021. Phase 2 liquidated damages ($40,775,000) were deducted from Phase 2 progress payments over the course of Phase 2 performance.
INTERROGATORY NO. 6
Interrogatory: State the total amount paid to Meridian under the MCA, broken down by phase, and identify all amounts withheld or deducted.
Objections: NFA does not interpose any specific objection to this interrogatory beyond the General Objections set forth above, which are incorporated by reference.
Response: NFA states as follows regarding payments made to Meridian under the MCA:
Phase 1 Payments: NFA paid Meridian a total of $199,775,000 for Phase 1 work. This represents the Phase 1 milestone value of $208,000,000 less $8,225,000 in liquidated damages assessed for the 47-day delay on Phase 1 Milestone 3.
Phase 2 Payments: NFA paid Meridian a total of $281,225,000 for Phase 2 work. This represents $322,000,000 in approved progress payments for Phase 2 work less $40,775,000 in liquidated damages assessed for delays on Phase 2 Milestones 5, 6, 7, and 8.
Phase 3 Payments: NFA paid Meridian a total of $31,700,000 for Phase 3 work. Meridian submitted $48,200,000 in Phase 3 payment applications. NFA approved and paid $31,700,000 of that amount. The remaining $16,500,000 in Phase 3 payment applications was disputed by NFA and not paid, on the grounds of defective work and inflated unit counts, as described in greater detail in NFA's response to Interrogatory No. 7 below.
Total Paid to Meridian: $512,700,000.
Retainage Held: NFA holds $56,966,667 in retainage, representing 10% of $569,666,670 in gross certified work, as provided for under MCA § 18.1. The retainage has not been released, for the reasons set forth in NFA's response to Interrogatory No. 24 below.
Summary of Amounts Withheld or Deducted:
• Liquidated damages (Phase 1): $8,225,000
• Liquidated damages (Phase 2): $40,775,000
• Disputed Phase 3 payment applications: $16,500,000
• Retainage: $56,966,667
Additional detail regarding the foregoing payments, deductions, and withholdings is set forth in the payment records, payment application files, and related financial documentation produced by NFA in this litigation.
INTERROGATORY NO. 7
Interrogatory: Describe the factual basis for NFA's dispute of $16,500,000 in Phase 3 payment applications submitted by Meridian.
Objections: NFA does not interpose any specific objection to this interrogatory beyond the General Objections set forth above, which are incorporated by reference.
Response: NFA disputed $16,500,000 in Phase 3 payment applications submitted by Meridian based on the following grounds:
First, certain payment applications included charges for work that did not conform to the quality standards established under MCA § 12.4 and Northgate Technical Specification NS-FIBER-2020. Work that fails to conform to contractual quality standards is not eligible for payment under the MCA. NFA's construction management team documented the quality deficiencies at issue through NCRs issued in connection with Phase 3 work.
Second, certain payment applications contained inflated unit counts, meaning that Meridian claimed credit and payment for more route-mile footage, bore footage, or other measurable quantities than had actually been completed and verified in the field by NFA's construction management team. The MCA provides for payment on a progress basis tied to verified quantities of work completed. Meridian's claims for quantities in excess of verified installed quantities did not comply with the payment provisions of the MCA.
Third, Sean Calloway, Director of Construction Management for NFA, conducted field verifications in connection with the disputed payment applications. Mr. Calloway's field verifications identified material discrepancies between Meridian's claimed quantities and the actual installed quantities for portions of the Maryland Phase 3 work. These field verifications are documented in NFA's project records and have been produced in this litigation.
Specific disputed invoices, payment applications, field verification reports, and supporting documentation have been produced in NFA's document production in this action and are available for Meridian's review.
INTERROGATORY NO. 8
Interrogatory: Identify all non-conformance reports ("NCRs") issued to Meridian, and for each NCR state the date, defect type, severity classification, milestone, and current cure status.
Objections: NFA objects to this interrogatory as unduly burdensome in interrogatory format given the volume of NCRs at issue. A total of 287 NCRs were issued during the project. Requiring NFA to provide a narrative description of each of 287 NCRs in interrogatory format, including date, defect type, severity classification, milestone, and cure status, would impose a burden disproportionate to the needs of the case, particularly where the identical information is available in a more organized and usable format through NFA's document production. NFA has produced in its document production the complete set of NCR documents and a comprehensive summary spreadsheet cataloging each NCR. NFA directs Meridian to those productions pursuant to CPLR § 3131, which permits a responding party to specify the records from which the answer may be derived and to afford the interrogating party a reasonable opportunity to examine such records. NFA incorporates its General Objections by reference.
Response: Subject to and without waiving the foregoing objection and the General Objections set forth above, NFA provides the following summary response. A total of 287 non-conformance reports were issued by NFA's construction management team during the course of the project. Of these, 43 were classified as "critical" and 244 were classified as "non-critical." The critical NCRs involved defect types including, but not limited to, splice loss exceeding specification limits set forth in NS-FIBER-2020, improper conduit depth (installation below minimum depth requirements), and unauthorized route deviations from NFA-approved construction routes. The NCRs span Phase 2 (which accounts for the majority of the NCRs by volume) and Phase 3. Twelve critical NCRs were issued in February 2024 alone, during the cure period following Cure Notice No. 1.
A detailed spreadsheet cataloging each NCR by date, phase, milestone, defect type, severity classification (critical or non-critical), cure status, and estimated remediation cost has been produced by NFA in this litigation. NFA refers Meridian to that spreadsheet and to the underlying NCR documents, which have been produced at Bates numbers NFA-00245001 through NFA-00248700 (approximate range). NFA believes that a review of those documents and the summary spreadsheet will provide Meridian with the detailed information sought by this interrogatory in a format substantially more useful and organized than a narrative interrogatory response.
INTERROGATORY NO. 9
Interrogatory: State the factual basis for NFA's Counterclaim I (liquidated damages in the amount of $49,000,000).
Objections: NFA does not interpose any specific objection to this interrogatory beyond the General Objections set forth above, which are incorporated by reference.
Response: NFA incorporates by reference its response to Interrogatory No. 5 above, as though fully set forth herein. NFA's Counterclaim I seeks $49,000,000 in liquidated damages assessed under MCA § 9.1 for Meridian's delays on Phase 1 Milestone 3 and Phase 2 Milestones 5, 6, 7, and 8. As set forth in NFA's response to Interrogatory No. 5, the liquidated damages were calculated at the contractual rate of $175,000 per day per milestone, subject to a per-milestone cap of 10% of the milestone value and an aggregate cap of 5% of the total Contract Price ($1,200,000,000 × 5% = $60,000,000). The total assessed amount of $49,000,000 is below the aggregate cap.
NFA contends that the liquidated damages provisions of MCA § 9.1 are enforceable under New York law, as they represent a reasonable estimate of the damages NFA would suffer as a result of milestone delays, which damages would be difficult or impracticable to calculate with precision at the time of contracting. The $175,000 daily rate reflects NFA's estimated per-day cost of delayed network deployment, including lost revenue from delayed service activation, extended carrying costs on NFA's capital investment, and related consequential impacts on NFA's business plan. NFA contends that the LD provisions are not penalties and are enforceable under applicable New York precedent.
Although NFA has already deducted these amounts from Meridian's progress payments, Meridian disputes those deductions and seeks their return as part of its claims in this action. NFA's Counterclaim I seeks affirmative relief to confirm NFA's entitlement to the $49,000,000 in liquidated damages and to recover any amounts that may be awarded to Meridian on its claims through offset.
INTERROGATORY NO. 10
Interrogatory: State the factual basis for NFA's Counterclaim II (excess completion costs in the amount of $81,700,000).
Objections: NFA objects to this interrogatory to the extent it seeks disclosure of the complete terms and conditions of NFA's replacement contract with Crestline Construction Group Inc. NFA notes that the Crestline contract and related documents have been designated "Confidential" under the parties' Stipulation and Proposed Order Regarding Confidentiality of discovery Materials, filed October 1, 2024, and any disclosure of the terms of the Crestline contract is subject to the protections of that Stipulation. NFA incorporates its General Objections by reference.
Response: Subject to and without waiving the foregoing objection and the General Objections set forth above, NFA states as follows:
Following the termination of the MCA on April 1, 2024, NFA exercised its right under MCA § 14.5 to complete the remaining work using substitute contractors and to charge excess costs to Meridian. MCA § 14.5 expressly provides that, upon termination for cause, the Owner may complete the work by whatever method it deems expedient and may recover from the Contractor the excess cost of completion over the contract price for the remaining scope.
On June 10, 2024, NFA entered into a replacement construction contract with Crestline Construction Group Inc. ("Crestline"), a Virginia corporation with its principal office at 8200 Greensboro Drive, Suite 900, McLean, Virginia 22102. Frank DiBello is the Chief Executive Officer of Crestline. The Crestline contract covers the completion of the remaining Phase 2 scope (Milestone 8) and the entirety of the remaining Phase 3 scope.
The Crestline contract price is $712,000,000 for the remaining scope. The original MCA value attributable to the remaining unperformed scope at the time of termination was approximately $630,300,000, calculated as the total MCA Contract Price of $1,200,000,000 less approximately $569,700,000 in contract value earned by Meridian prior to termination (based on NFA's assessment of verified completed work).
The excess completion cost is therefore $712,000,000 minus $630,300,000, equaling $81,700,000. This represents the additional cost NFA must incur to complete the same scope of work that Meridian was contractually obligated to perform under the MCA, solely as a result of Meridian's material breach and the resulting termination.
The Crestline contract has a term of 30 months from notice to proceed, with an estimated completion date of December 2026. The contract was procured through a competitive process, as described in NFA's response to Interrogatory No. 12 below, and the $712,000,000 contract price reflects an arms-length, market-rate price for the remaining scope.
NFA's excess completion cost claim is supported by the competitively procured Crestline contract and reflects the actual, quantifiable additional cost NFA must incur as a direct and proximate result of Meridian's material breach of the MCA. NFA reserves the right to supplement this response if the Crestline contract price is adjusted through change orders or other modifications during the course of performance.
INTERROGATORY NO. 11
Interrogatory: State the factual basis for NFA's Counterclaim III (cost of remediation of defective work in the amount of $18,300,000).
Objections: NFA objects to this interrogatory to the extent it prematurely seeks detailed expert analysis or opinions. NFA's remediation cost estimate is based in part on preliminary engineering assessments conducted by NFA's construction management team and may be refined, supplemented, or updated as a result of expert analysis that is currently ongoing. NFA's expert, Dr. Elinor Chazen of Lakeview Consulting Group LLC, is expected to provide a detailed assessment of remediation costs in her expert report due March 31, 2025. NFA reserves the right to supplement this response following the completion of that expert work. NFA incorporates its General Objections by reference.
Response: Subject to and without waiving the foregoing objections and the General Objections set forth above, NFA states as follows:
NFA's Counterclaim III seeks $18,300,000 in costs to remediate defective work performed by Meridian under the MCA. This claim is based on NFA's engineering assessment of the 287 NCRs issued during the project, which assessment estimated the cost to bring the defective work into conformity with the contractual quality requirements.
The estimated remediation costs break down as follows:
• 43 Critical NCRs: Estimated average remediation cost of approximately $275,000 per NCR, totaling approximately $11,825,000. Critical NCR remediation work includes re-splicing fiber segments where splice loss exceeded the maximum attenuation values specified in NS-FIBER-2020, re-routing and re-installing conduit to achieve the minimum depth requirements specified in NS-FIBER-2020 and applicable municipal codes, and correcting unauthorized route deviations to bring as-built configurations into conformity with NFA's approved network design.
• 244 Non-Critical NCRs: Estimated average remediation cost of approximately $26,500 per NCR, totaling approximately $6,466,000. Non-critical NCR remediation work includes minor repairs, replacements, and adjustments to bring the work into full compliance with specification requirements.
• Total Estimated Remediation Cost: Approximately $18,300,000 (rounding).
The remediation work encompasses all engineering, construction, materials, equipment, labor, and related costs necessary to bring the defective segments of the installed fiber network into full conformity with NS-FIBER-2020 and the applicable provisions of ANSI/TIA-568 (Telecommunications Infrastructure Standard for Customer Premises) and BICSI (Building Industry Consulting Service International) guidelines, as required by MCA § 12.4.
NFA expects its construction and delay expert, Dr. Elinor Chazen of Lakeview Consulting Group LLC, to provide a detailed and item-by-item assessment of remediation costs in her expert report, which is due on March 31, 2025 pursuant to the court's scheduling order. NFA reserves the right to supplement this response following the completion of Dr. Chazen's analysis.
INTERROGATORY NO. 12
Interrogatory: Describe the process by which NFA selected Crestline Construction Group Inc. as the replacement contractor, including any competitive bidding.
Objections: NFA objects to this interrogatory as overly broad to the extent it seeks every detail of an extensive procurement process that involved commercially sensitive information, proprietary evaluation criteria, and internal deliberations. NFA further objects to the extent this interrogatory seeks documents and information designated as "Confidential" under the parties' Stipulation and Proposed Order Regarding Confidentiality of discovery Materials. NFA incorporates its General Objections by reference.
Response: Subject to and without waiving the foregoing objections and the General Objections set forth above, NFA states as follows:
Following the termination of the MCA on April 1, 2024, NFA initiated a procurement process to identify and engage a qualified replacement contractor to complete the remaining fiber-optic construction scope. NFA solicited proposals from multiple qualified fiber-optic construction firms with demonstrated experience in large-scale, multi-state fiber build-out programs comparable to the NFA project. The proposals were evaluated by NFA's procurement and engineering teams based on a range of criteria, including but not limited to technical qualifications, relevant experience, proposed pricing, proposed schedule, available construction capacity and labor resources, safety record, financial stability, and ability to mobilize within the required timeframe.
Following the evaluation process, Crestline Construction Group Inc. was selected as the most qualified and cost-effective contractor for the remaining scope. The Crestline contract was executed on June 10, 2024, at an arms-length, market-rate price of $712,000,000. NFA is satisfied that the Crestline contract price represents a fair and reasonable market price for the scope of work involved, given current market conditions in the fiber-optic construction industry.
Frank DiBello, Chief Executive Officer of Crestline Construction Group Inc., is scheduled for a non-party deposition in this action on March 4, 2025, at which time Meridian's counsel will have the opportunity to examine Mr. DiBello regarding the procurement process, the terms of the Crestline contract, and related matters.
Further details regarding the procurement process, including the identity of other firms solicited and the evaluation materials, are contained in documents that have been produced or will be produced in NFA's document production in this litigation, subject to the applicable confidentiality designations.
INTERROGATORY NO. 13
Interrogatory: Identify all scope changes, change orders, or modifications to the MCA during the term of the contract.
Objections: NFA does not interpose any specific objection to this interrogatory beyond the General Objections set forth above, which are incorporated by reference.
Response: NFA is not aware of any formally executed Change Orders under MCA § 16.1 during the term of the MCA. MCA § 16.1 provides that all changes to the scope of work, contract schedule, contract price, or other material terms of the MCA must be documented in a written Change Order signed by authorized representatives of both parties. No such written Change Orders were executed during the term of the MCA.
To the extent Meridian contends that 14 alleged "Owner-directed scope changes" occurred during the course of performance, NFA disputes that characterization. NFA contends that any adjustments in the field were within the original scope of the MCA as defined by the contract documents, including the drawings, specifications, and technical requirements incorporated by reference, or were initiated by Meridian for its own convenience, methods, or means of construction. NFA did not direct any changes to the scope, sequence, or methods of work that would constitute a "change" within the meaning of MCA § 16.1.
NFA further contends that Meridian's failure to follow the written Change Order procedure set forth in MCA § 16.1 — which requires written notice, written proposal, and written approval by both parties before any change becomes effective — bars any equitable or contractual claim by Meridian for additional compensation, schedule relief, or extension of time based on alleged scope changes. Under New York law and the express terms of the MCA, the written Change Order requirement is a condition precedent to any claim for additional compensation arising from alleged changes to the work.
INTERROGATORY NO. 14
Interrogatory: Describe NFA's contention regarding the allocation of permitting responsibilities under MCA § 5.3, and identify which permits NFA contends were the Contractor's responsibility.
Objections: NFA objects to this interrogatory to the extent it calls for a legal interpretation of MCA § 5.3, as distinguished from a statement of NFA's factual position. NFA will provide its factual and contractual position on the allocation of permitting responsibilities but reserves all legal arguments for dispositive motions, trial, and other appropriate proceedings. NFA incorporates its General Objections by reference.
Response: Subject to and without waiving the foregoing objection and the General Objections set forth above, NFA states as follows:
NFA contends that MCA § 5.3 allocates permitting responsibilities between the Owner and the Contractor as follows:
Contractor's Responsibility (Meridian): MCA § 5.3 assigns to the Contractor responsibility for obtaining all local permits, rights-of-way, licenses, consents, and governmental approvals necessary for the performance of the construction work at each construction site and along each construction route. These include, without limitation:
• Street-opening permits issued by municipal departments of transportation or public works
• Bore permits (horizontal directional drilling permits) issued by municipal authorities
• Aerial attachment permits for attachment to utility poles, issued by pole owners and/or governing utility commissions
• Railroad crossing permits
• Environmental and erosion control permits required at the local level
• Any other permits, licenses, or approvals required by municipal, county, or local governmental authorities for the construction activities
These permits were required across the seven-state service territory encompassed by the MCA, including jurisdictions in New York, New Jersey, Connecticut, Massachusetts, Pennsylvania, Maryland, and Virginia.
Owner's Responsibility (NFA): MCA § 5.3 limits the Owner's permitting responsibility to system-level regulatory approvals required for NFA to operate the fiber-optic network after construction is complete. These include state public utility commission approvals and federal regulatory authorizations (e.g., FCC authorizations) that are obtained at the corporate or system level and are not site-specific construction permits.
NFA contends that Meridian's assertion — that NFA failed to timely obtain municipal permits, thereby causing or contributing to Meridian's schedule delays — is both factually and contractually incorrect. The municipal permits at issue were Meridian's contractual responsibility under MCA § 5.3, and any delays in obtaining such permits are attributable to Meridian's performance, not NFA's. NFA will provide further detail regarding the permitting allocation and its impact on the project schedule in its expert reports, due March 31, 2025.
INTERROGATORY NO. 15
Interrogatory: State NFA's position regarding Meridian's force majeure defense, and identify any facts supporting NFA's contention that Meridian is not entitled to schedule relief on force majeure grounds.
Objections: NFA objects to this interrogatory to the extent it calls for legal conclusions regarding the interpretation and application of the MCA's force majeure clause and the doctrine of force majeure under New York law. NFA will provide its factual position. NFA incorporates its General Objections by reference.
Response: Subject to and without waiving the foregoing objection and the General Objections set forth above, NFA states its position as follows:
NFA contends that COVID-19 aftereffects on labor supply and supply chain disruptions for fiber cable do not constitute force majeure events excusing Meridian's delays under the MCA or under New York law. NFA bases this contention on the following facts:
First, the MCA was executed on March 15, 2020, at the onset of the COVID-19 pandemic. Both parties were aware of the existence and potential impact of the pandemic at the time of contracting. The risks associated with a pandemic that was already underway were known and foreseeable as of the contract date and were therefore assumed by both parties as part of the bargained-for allocation of risk reflected in the MCA.
Second, the MCA's force majeure clause, to the extent Meridian invokes it, requires the Contractor to provide timely written notice of any force majeure event, specifying the nature of the event, its anticipated duration, and the steps the Contractor is taking to mitigate its impact. NFA is not aware that Meridian provided timely written force majeure notices as required by the MCA at any point during the contract term. The failure to provide timely notice, if established, independently bars Meridian's force majeure defense under the express terms of the MCA.
Third, the force majeure clause requires that the claimed event be unforeseeable and beyond the Contractor's reasonable control. As noted above, the COVID-19 pandemic was known and ongoing at the time of contracting. Labor shortages and supply chain disruptions arising from or related to the pandemic were foreseeable as of March 15, 2020, and do not qualify as unforeseeable events.
Fourth, the milestone delays at issue primarily occurred in 2022 through 2024, well after the acute phase of the COVID-19 pandemic. Labor shortages in the construction industry during this period were a market-wide condition affecting all participants in the industry. Other fiber-optic construction contractors operating in the same geographic areas and labor markets during the same period managed their labor resources and performed their contractual obligations. A market-wide condition that was known and that other contractors managed does not constitute a qualifying force majeure event under the MCA or New York law.
Fifth, supply chain disruptions for fiber cable similarly affected all market participants and were reasonably foreseeable as of the MCA execution date. Meridian, as a sophisticated construction contractor with a $1.2 billion contract, had the contractual obligation under the MCA to manage its supply chain, including by procuring materials in advance, diversifying suppliers, and taking other reasonable steps to ensure timely availability of materials.
NFA reserves the right to supplement this response following further discovery into Meridian's supply chain management practices, labor procurement efforts, and any force majeure notices (or lack thereof) during the contract term.
INTERROGATORY NO. 16
Interrogatory: Identify all communications between NFA and Ironclad Surety Group Inc. regarding Meridian's performance under the MCA or the performance bond (Bond No. ISG-2020-NE-04417).
Objections: NFA objects to this interrogatory as overbroad to the extent it seeks all communications with Ironclad Surety Group Inc. without limitation as to time period, subject matter, or relevance. NFA further objects to the extent this interrogatory seeks communications that are protected by the attorney-client privilege, including communications involving NFA's counsel (Calderwood & Harkness LLP) or coverage counsel (Pemberton Fox LLP) regarding bond claim strategy, the legal analysis of bond coverage, and related legal advice. NFA also objects to the extent this interrogatory seeks communications with Ironclad that post-date the commencement of this litigation and are protected by the work product doctrine, as such communications were prepared in anticipation of litigation and at the direction of counsel. NFA incorporates its General Objections by reference.
Response: Subject to and without waiving the foregoing objections and the General Objections set forth above, NFA identifies the following categories of communications with Ironclad Surety Group Inc.:
1. Pre-Termination Communications: NFA communicated with Ironclad Surety Group Inc. regarding Meridian's performance issues under the MCA and NFA's assessment of potential claims on the performance bond (Bond No. ISG-2020-NE-04417, with a penal sum of $120,000,000). This correspondence included communications with Patricia Dwyer, Vice President of Claims at Ironclad, and addressed the growing pattern of schedule delays, the issuance and accumulation of NCRs, and NFA's concerns regarding Meridian's ability to complete the work.
2. Post-Termination Communications: Following the termination of the MCA on April 1, 2024, NFA communicated with Ironclad regarding Meridian's April 15, 2024 demand on the $120,000,000 performance bond and Ironclad's position with respect to that demand. These communications addressed Ironclad's obligations under the bond and the parties' respective positions on coverage.
3. Defense Cost Contributions: NFA and Ironclad have communicated regarding Ironclad's agreement to contribute up to $2,000,000 toward NFA's defense costs in this litigation under a reservation of rights. The terms and conditions of that arrangement have been discussed in correspondence and meetings between NFA, Ironclad, and their respective counsel.
Specific documents reflecting these communications have been produced in NFA's document production in this litigation or have been withheld and logged on NFA's privilege log, as applicable. NFA's privilege log identifies 214 documents withheld on the basis of attorney-client privilege and/or work product protection, some of which relate to communications with or concerning Ironclad.
INTERROGATORY NO. 17
Interrogatory: State whether NFA considered or made any decision to bring fiber construction work in-house or to re-procure the work at lower cost, and if so, describe such consideration or decision.
Objections: NFA objects to this interrogatory on the ground that it is designed to elicit information in support of Meridian's pretextual-termination theory — i.e., Meridian's contention that NFA terminated the MCA not because of Meridian's material breach, but rather as a pretext to obtain a lower-cost contractor or to bring the work in-house. NFA objects to the extent this interrogatory seeks disclosure of privileged communications between NFA and its counsel, including Calderwood & Harkness LLP, regarding business strategy, the evaluation of alternatives, and decision-making in the context of anticipated or pending litigation. Such communications are protected by the attorney-client privilege and the work product doctrine. NFA further objects that NFA's internal business deliberations regarding its future fiber construction strategy, to the extent they are not privileged, are not relevant to the central issue in this case — whether Meridian committed a material breach of the MCA. NFA incorporates its General Objections by reference.
Response: Subject to and without waiving the foregoing objections and the General Objections set forth above, NFA states as follows:
The termination of the MCA on April 1, 2024, was based solely and exclusively on Meridian's material breach of the MCA, as documented in the cure notices, the Notice of Termination for Cause, the NCR record, the milestone delay history, and the other contemporaneous project documentation described in NFA's responses to these Interrogatories. NFA denies that the termination was pretextual or was motivated by any desire to obtain a lower-cost contractor, bring work in-house, or otherwise alter NFA's fiber construction strategy.
NFA's post-termination decision to engage Crestline Construction Group Inc. as a replacement contractor, at a cost of $712,000,000 (representing an $81,700,000 premium over the remaining MCA contract value), was a consequence of — not a motivation for — the termination. The fact that NFA's replacement contractor is more expensive than Meridian would have been had it performed the remaining work further undermines any inference that cost reduction motivated the termination.
To the extent NFA conducted any internal analysis regarding its fiber construction strategy, alternative approaches to completing the network build-out, or the implications of terminating the MCA, such analysis is protected by the attorney-client privilege and/or the work product doctrine, to the extent it was conducted in connection with or in anticipation of legal advice or litigation. NFA's privilege log, which identifies 214 documents withheld, reflects the withheld documents, including documents relating to internal strategic deliberations conducted in consultation with counsel.