WSP USA Services Post-Closing M&A Dispute with Versar: A Lesson in Remedy Hierarchy

A seller lost $5MM+ due to missing one key provision in its purchase agreement. In WSP USA Services Inc. v. Versar Inc. decided by the Delaware Chancery Court on July 2, 2026, plaintiff’s case was dismissed for a missing a hierarchy proviso in its purchase agreement.

In 2024, WSP USA Services (WSP), a company listed on the Toronto Stock Exchange with over $11B in revenue, sold one of its businesses, Louis Berger Services, to global engineering, environmental, and security services firm Versar.

This was not a simultaneous sign and close transaction, but rather a transaction where the seller’s reps and warranties do not survive the closing. As such, the transaction typically requires the buyer to seek remedy for any breach of seller reps and warranties (other than fraud) from rep and warranty insurance (RWI).

This rep and warranty policy, as is custom, did not allow for double counting, stating that the buyer could not seek for the same recovery from both the insurer as well as in the purchase price adjustment.

Here, Versar proposed a purchase price adjustment of $9.3MM, of which $5.3MM was with respect to $5.3MM in WSP contracts with the Florida Department of Transportation that Versar alleged WSP underperformed. Versar stated this $5.3MM as a liability under the purchase price adjustment.

WSP argued that the buyer could not seek remedy from the purchase price adjustment, only from RWI. However, the court noted the following:

“The Purchase Agreement does not contain a hierarchy proviso. The lack of hierarchy proviso suggests that there is no remedy hierarchy. If there is no remedy hierarchy, and the Purchase Agreement’s plain terms contemplate Buyer choosing a purchase price adjustment over the representations and warranties insurance policy, it is unreasonable to conclude that Buyer breached the Purchase Agreement by doing exactly that.”

To avoid this scenario, WSP should have included a provision in the purchase agreement that in the case of a conflict between the provisions of a purchase price adjustment and RWI, the RWI provision would control. WSP did not include such a hierarchy proviso, which allowed Versar to choose its path of recovery, a $5MM+ mistake.

Jerome Fogel is co-founder of Fogel & Potamianos LLP, a firm recognized by Chambers & Partners’ California Spotlight Guide for excellence in corporate law. A partner in the Corporate Practice Group, he is known as an innovator and dealmaker in the legal community. He serves as a general counsel to privately held companies, including representation in mergers and acquisitions. 

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