Federal Court in California Holds That Subcontractor May Proceed With Claim for Delay Damages, Despite No-Damage-For-Delay Clause, Where Changes to the Work Amount to an Implied Abandonment of the Subcontract

Rai Indus. Fabricators, LLC v. Fed. Ins. Co., 2018 U.S. Dist. LEXIS 74612 (N.D. Cal., May 2, 2018)

Sauer Incorporated (“Sauer”) contracted with the U.S. Army to design and construct the Operational Readiness Training Complex at Fort Hunter, California.  Sauer subcontracted with Agate Steel, Inc. (“Agate”) for the erection of steel for the project.  Agate’s subcontract with Sauer contained a no-damage-for-delay clause, which generally provided that extensions of time were Agate’s sole remedy for delay.

According to Agate, the project suffered from substantial delays because of the acts and omissions of Sauer.  In particular, Agate alleged that Sauer failed to properly coordinate the work of its subcontractors, failed to follow the project’s schedules, failed to follow the subcontract’s change order procedures, and made unanticipated changes to the project’s scope and work flow sequence. Agate argued that these delays constituted a cardinal change and/or abandonment of the subcontract, which rendered the no-damage-for-delay clause unenforceable.  Agate sued Sauer for damages from the delays and disruptions to its work.  Continue reading “Federal Court in California Holds That Subcontractor May Proceed With Claim for Delay Damages, Despite No-Damage-For-Delay Clause, Where Changes to the Work Amount to an Implied Abandonment of the Subcontract”

Federal District Court in Virginia Holds That Prime Contractor’s Payment Bond Surety Cannot Rely on No-Damages-For-Delay Clause in Subcontract to Limit Liability to Subcontractor Under Miller Act

United States v. John C. Grimberg Co., Case No. 1:16-cv-991, 2017 U.S. Dist. LEXIS 173362 (E.D. Virginia, October 19, 2017)

John C. Grimberg (“Prime Contractor”) was awarded a contract (the “Prime Contract”) to design and complete certain improvements at the FBI Academy in Quantico, Virginia (the “Project”).  Hartford Accident and Indemnity Company (“Surety”) issued payment and performance bonds for the Project pursuant to the Miller Act.  The Prime Contractor thereafter entered into a subcontract (the “Subcontract”) with Kitchens-to-Go (“Subcontractor”) to furnish, install, lease and remove a temporary kitchen facility for the Project.  The Subcontract contained a “no-damages-for-delay” clause, which provided that the Prime Contractor shall not be liable for delays beyond its control and that the Subcontractor is “entitled only to reimbursement for damages for delay actually recovered from the Owner.”  The Subcontract also incorporated the dispute resolution procedures in the Prime Contract, which required that all “disputes arising out of Owner acts, omissions or responsibilities” be submitted through an administrative process with the government’s contracting officer under 41 U.S.C. §§7101 et. seq.

The Subcontract originally contemplated a Project duration of approximately 13 months, ending on April 5, 2014, but was ultimately extended until June 27, 2015.  The Subcontractor submitted its Application for Payment to the Prime Contractor, which included $607,221 for extended rental of the kitchen facilities.  Although the Prime Contractor submitted a payment request to US Department of the Navy (“Owner”), for the extended rental and use of Subcontractor’s temporary kitchen facilities, this request was rejected by the Owner.  The Prime Contractor refused to pay Subcontractor’s Application for Payment and the Subcontractor filed a complaint against the Surety under the Miller Act.  Continue reading “Federal District Court in Virginia Holds That Prime Contractor’s Payment Bond Surety Cannot Rely on No-Damages-For-Delay Clause in Subcontract to Limit Liability to Subcontractor Under Miller Act”

Massachusetts Appellate Court Holds That No-Damages-for-Delay Clause Does Not Bar Claim for Schedule Compression and Affirms Award of Total Cost Damages

Central Ceilings, Inc. v. Suffolk Constr. Co., Inc., 2017 Mass App. Lexis 36 (March 29, 2017).

 The Massachusetts State College Building Authority contracted with Suffolk Construction Company (“Suffolk”) to serve as the general contractor for the construction of dormitories at Westfield State University (“the Project”). Suffolk subcontracted with Central Ceilings, Inc. (“Central”) to install interior and exterior framing, drywall, and door frames for the Project.

Central’s work was impeded by Suffolk’s failure to: coordinate the work of other trades; establish proper elevation, column, and control lines; timely and properly coordinate delivery of the door frames; and ensure that the buildings were weather-tight and properly heated. Its workers were forced to repeatedly demobilize from one area and remobilize in another, and to work in the same space and at the same time as other subcontractors, i.e. stacking of trades.  Central’s project manager and other supervisors were forced to coordinate and administrate the remobilizations.  Both the remobilizations and the stacking of trades significantly increased Central’s labor costs. Continue reading “Massachusetts Appellate Court Holds That No-Damages-for-Delay Clause Does Not Bar Claim for Schedule Compression and Affirms Award of Total Cost Damages”