Pizzarotti, LLC v. X-Treme Concrete Inc., 205 A.D.3d 487 (N.Y. App. Div. 2022)
A New York appellate court recently affirmed the dismissal of a subcontractor’s counterclaims for delay damages and for unpaid amounts because they were barred by the parties’ no-damage-for-delay provision and executed lien waivers, respectively.
Pizzarotti LLC, a construction manager, sued its subcontractor, X-Treme Concrete, Inc., seeking to recover amounts it paid X-Treme for uncompleted work and amounts it paid a replacement contractor. X-Treme filed counterclaims seeking to recover delay damages and unpaid amounts.
The appellate court affirmed the dismissal of the counterclaim for delay damages, concluding that the subcontract’s no-damage-for-delay provision barred such damages:
The Subcontractor [X-Treme] expressly agrees for itself, its sub-subcontractors and suppliers not to make, and hereby waives, any claim for damages on account of any delay, obstruction or hindrance. The Subcontractor’s sole remedy for any delay, obstruction, or hindrance shall be an extension of the time in which to complete the Work.
The court rejected X-Treme’s argument that the no-damage-for-delay provision did not bar its claim because the cause of the delay (incomplete drawings) was not within the parties’ contemplation when they executed their subcontract. It found that the alleged delay was “expressly mentioned” in the subcontract as a possibility, and thus, by definition, “contemplated” by the parties.
The court also affirmed the dismissal of X-Treme’s counterclaim for unpaid amounts. It found that the subcontract required X-Treme to execute waivers and releases of liens when submitting requisitions for progress payments. X-Treme had executed eight such waivers, including a final one in February 2017. The waivers each acknowledged that X-Treme had been paid in full through the date of the waiver, and provided that X-Treme waived and released all claims whatsoever arising in connection with its work up through the date of the waiver. Because X-Treme’s claim for unpaid amounts arose prior to February 2017, it was barred by the waivers’ “unambiguous language.”
The court rejected X-Treme’s argument that the waivers did not bar its claim because Pizzarotti’s conduct demonstrated that it intended to treat the waivers as mere receipts of progress payments. The waivers each expressly provided, in capital letters, that X-Treme “AGREES THAT THIS WAIVER OF LIEN AND RELEASE IS NEITHER A RECEIPT FOR PAYMENT NOR A CONDITION PRECEDENT TO PAYMENT, BUT A KNOWING AND WILLFUL ACKNOWLEDGEMENT THAT SUBCONTRACTOR HAS BEEN FULLY PAID … THROUGH THE ABOVE-REFERENCED DATE.”
While the court’s holding will not come as a surprise to those in the construction industry, it reinforces the importance of getting the basics right — no-damage-for-delay provisions and lien waivers matter.
Reprinted from LexisNexis with permission. Copyright 2022 LexisNexis. All rights reserved.