U.S. District Court for Western District of Virginia Allows Constructive Acceleration Claim to Proceed

SNC-Lavalin America, Inc. v. Alliant Techsystems, Inc.
2011 U.S. Dist. LEXIS 118312 (W.D. Va. Oct. 13, 2011)

SNC-Lavalin America, Inc. and Alliant Techsystems, Inc. (“ATK”) entered into a contract under which SNC would provide engineering, procurement, and construction services for the construction of a nitric acid and sulfuric acid concentration plant at the Radford, Virginia arsenal operated by ATK. SNC claimed that ATK’s delay in choosing an appropriate acid-resistant concrete for the ground floor and ATK’s denial of SNC’s request for an extension of time for severe winter weather each damaged SNC.

ATK moved for partial summary judgment, seeking to bar, among others, SNC’s claims (1) resulting from ATK’s delay in choosing a material and (2) resulting from severe winter weather.

With respect to ATK’s delay in choosing an appropriate acid-resistant concrete, ATK’s motion for partial summary judgment succeeded because SNC did not provide notice according to the terms of the contract. SNC argued unsuccessfully that a provision requiring SNC to provide written notice within 15 days of becoming aware of a changed condition did not apply because the decision to use acid-resistant concrete was an “ATK-Directed Change,” treated in a separate provision. The court indicated that it saw nothing in the contract that suggested that an ATK-Directed Change was exempt from the separate provisions requiring notice. The court noted a history of strict enforcement of similar notice provisions under Virginia law.

With respect to damages for severe winter weather, ATK’s motion succeeded in part and failed in part because the provisions of the agreements between the parties treated changes to Contract Time differently from changes to Contract Price. Severe winter weather was expressly included by the subcontract as a justification for extending Contract Time, but expressly excluded as a justification for increasing Contract Price. Thus, because Contract Price could not be increased due to severe winter weather, SNC could not recover costs incurred “during the period of severe weather, including the costs of additional items that became necessary for SNC to perform as a result of the weather, and any costs associated with lost productivity during that time.” However, the court held that SNC could nevertheless pursue a claim for constructive acceleration damages on the theory that ATK had improperly denied its request for extension of time based on severe weather. The court observed that a constructive acceleration claim “ordinarily arises when the [owner] requires the contractor to adhere to the original performance deadline set forth in the contract, even though the contract provides the contractor with periods of excusable delay that entitle the contractor to a longer performance period.”

The court adopted the Seventh Circuit’s formulation for constructive acceleration, embodying the following five elements:

(1) that SNC experienced an excusable delay entitling it to a time extension;
(2) that SNC properly requested the extension;
(3) that ATK failed or refused to grant the requested extension;
(4) that ATK demanded that the project be completed by the original completion deadline despite the excusable delay; and
(5) that SNC actually accelerated the work in order to complete the project by the original completion date and incurred added costs as a result.

The court held that material issues of fact precluding entry of summary judgment existed as to whether the weather experienced was severe enough to support an extension and as to whether SNC had properly requested an extension.

Click here for full text of decision courtesy of LexisNexis.

Joshua A. Roper

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