Georgia Appeals Court Holds Contractor’s Delay Claim Barred by Exculpatory Clause and Failure to Provide Timely Notice

Holloway Constr. Co. v. Department of Transportation
218 Ga. App. 243, 461 S.E. 2d 257, 1995 Ga. App. LEXIS 693 (July 13, 1995).

One of several multiple prime contractors was not entitled to sue owner for delays attributable to other prime contractor — on theory of breach of implied or express obligation — in light of clear contractual provision stating that owner would not be liable for delays attributable to contractors. Contractor barred from pursuing claim for extended overhead and equipment costs allegedly attributable to owner-directed changes in the work and owner’s failure to make prompt decisions because contractor did not provide timely request for an extension of time in accordance with contract. 

A highway contractor (“Contractor”) failed to complete its work related to highway grading within the time required by its contract with the Georgia Department of Transportation (“DOT”). DOT withheld liquidated damages from the Contractor pursuant to the contract and the Contractor sued DOT to recoup the liquidated damages and to recover damages for extended overhead and equipment costs caused by DOT’s alleged breach of contract. DOT moved for partial summary judgment arguing that the damages the Contractor sought for extended overhead and equipment costs were attributable solely to delays caused by other contractors and were therefore not the responsibility of DOT. In an earlier case involving this same construction project, the court found that the contract contained a “clear and unambiguous expression of the mutual intent that DOT was not to assume vicarious contractual liability for any losses and expenses incurred by [the Contractor] as a result of delay and performance of the grading work which is attributable to [another prime contractor’s] bridge construction work.” The trial court granted DOT partial summary judgment. Both the Contractor and DOT appealed the trial court’s decision.

The Contractor first argued that it was entitled to recover its extended overhead and equipment costs because DOT breached an implied contractual obligation by failing to coordinate the other contractors on the project. The court found that the Contractor was merely attempting to recover damages attributable to the delays of other contractors and, as discussed above, the court had previously held that DOT was not liable for delays of other contractors.

The Contractor also argued that DOT breached an express contractual obligation to coordinate the contractors on the project. The court found, however, that none of the contractual provisions identified by the Contractor impose such a duty to coordinate on DOT. The Contractor relied primarily upon a contract provision discussing the public convenience and minimal interference with traffic during the project’s duration. The court found that the last sentence of the provision, which states that the “rights of the [prime contractors] will be established by the [DOT] in order to secure the completion of the various parts of [the project] in general harmony,” failed to impose a duty upon the DOT to coordinate the work. The appellate court affirmed the summary judgment in favor of DOT on this claim.

In its cross-appeal, DOT argued that it should be granted summary judgment on the Contractor’s claim for damages caused by DOT’s alleged design errors and failure to make a timely decision concerning certain pipe relocations. DOT argued that the Contractor’s claim was barred because the Contractor failed to submit a written request for an extension of time as required by the contract. The appellate court agreed and reversed the trial court’s denial of DOT’s summary judgment. The court noted that the Contractor conceded that this claim for overhead and equipment costs represented delay damages attributable to the DOT and found that the Contractor failed to make a request for an extension of time.

Finally, DOT argued that the trial court erred in denying its motion for summary judgment on the Contractor’s claim that the DOT breached the contract by failing to review in good faith and grant the Contractor’s request to permit certain detours for traffic during the project. The contract provided that the Contractor could submit for DOT approval plans for temporary bypasses or detours. The appellate court affirmed the trial court’s decision that issues of material fact existed concerning the DOT’s denial of the Contractor’s requests for detours.

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