IS THE ENFORCEABILITY OF A NO-DAMAGE-FOR-DELAY PROVISION INAPPROPRIATE FOR SUMMARY JUDGMENT

Is the enforceability of a no-damage-for-delay provision inappropriate for resolution on a summary judgment?  The recent decision in U.S. f/u/b/o Kingston Environmental Services, Inc. v. David Boland, Inc., 2019 WL 6178676 (D. Hawaii 2019), dealing with Florida law, suggests that it is inappropriate for a summary judgment resolution, particularly when there is a right to a jury trial.

In this case, a prime contractor was hired on a federal construction project in Hawaii.  The prime contractor hired a subcontractor and the subcontractor sued the prime contractor and its surety under the Miller Act.  Of interest, the subcontractor was seeking to recover for the costs it incurred due to construction delays.  The prime contractor moved for summary judgment as to the no-damage-for-delay provision in the subcontract.  The no-damages-for-delay provision read as follows (and it is a well-written no-damage-for-delay provision):

The Subcontractor expressly agrees that the Contractor shall not be liable to the Subcontractor for any damages or additional costs, whether foreseeable or unforeseeable, resulting in whole or in part from a delay, hindrance, suspension, or acceleration of the commencement or execution of the Work, caused in whole or in part by the acts or omissions, whether negligent or not, of the Contractor including other subcontractors or material suppliers to the Project, its agents, employees, or third parties acting on behalf of the Contractor. The Subcontractor’s sole remedy for any such delay, hindrance, suspension, or acceleration shall be a noncompensable time extension.

It is well-settled in Florida that a no-damage-for-delay provision is enforceable.

But, there are three main exceptions to the enforceability of a no-damage-for-delay provision:  “if the delays were occasioned by [1] the [contractor]’s fraud, [2] concealment, or [3] active interference with [the subcontractor]’s performance under the contract.”  David Boland, Inc., 2019 WL at *3 (citation omitted).

Here, the prime contractor wanted the Court to enforce the no-damage-for-delay provision.  The subcontractor, no different than any other subcontractor, claimed that the exceptions to the enforceability of the no-damage-for-delay provision applied.   In addressing this issue, the Court noted: “At the outset, it bears emphasis that whether a party has actively interfered with another party’s contractual obligation is a question usually inappropriate for resolution at the summary judgment stage because the issue is highly case-specific and fact intensiveDavid Boland, Inc., 2019 WL at *4 (internal quotation and citation omitted).

The Court found that the prime contractor and subcontractor disputed facts relevant to the enforceability of the no-damage-for-delay provision (shocker!) and a jury could find that the prime contractor knowingly delayed or actively interfered with the subcontractor’s performance.  Such facts included:

  • Correspondence between the prime contractor and government that the prime contractor was unresponsive;
  • Correspondence that the government noted that the prime contractors’ schedules were fatally flawed and unreliable because they contained erroneous logic ties, unrealistic activity durations, and inaccurate scopes of work;
  • Correspondence that the government noted that the prime contractor’s poor schedule management was a detriment to the job;
  • Correspondence that the government accused the prime contractor of deceitfully and unethically manipulating schedule logic and durations to eliminate its own delays; and
  • Testimony from the subcontractor that the prime contractor prevented the subcontractor from accessing planned construction areas, resolving issues to allow the subcontractor to proceed, and failing to complete other activities which disrupted and impacted the subcontractor’s performance.

Think about it.  Such facts can ultimately be found on any delayed project, particularly a project where the owner is claiming the contractor is liable for the delays while not recognizing its own delays.  Also, it is expected that the subcontractor would claim that but for the delays and impacts it was ready, willing, and able to productively proceed with its work.  Hence, all of the facts that the Court took into consideration as stating there to be a question of fact for the jury are facts that would seem to universally make the enforceability of the no-damage-for-delay provision a finder of fact (jury) question.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

 

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