Liquidated Damage Provision

Bell BCI Company v. United States
81 Fed. Cl. 617; 2008 U.S. Claims LEXIS 116, (April 21, 2008)
Note: This case was affirmed in part, vacated in part, and remanded in Bell BCI Co. v. United States, 570 F.3d 1337 (Fed. Cir. 2009), to be discussed in a a future issue of Constructlaw.
Plaintiff, Bell BCI Company (Bell), a general contractor, sued the Government for $6,200,672 in damages plus interest under the Contract Disputes Act for unpaid balance of the price, unresolved changes, delay damages, labor inefficiency costs and profit thereon. Bell also asserted claims on behalf of five subcontractors.
Continue Reading United States Court Of Federal Claims Recognizes General Contractor’s Claim For Cumulative Impact Resulting From Many Modifications And Rejects Defense That Modifications Constituted Accord And Satisfaction

Metric Construction Co., Inc. v. United States
2008 U.S.Claims LEXIS 5 (Fed. Cl., Jan. 7, 2008)
Metric Construction was awarded the contract to construct a warehouse for the United States Army Corps of Engineers at an Air Force base in Utah. After the roof developed serious leaks, the Corps required Metric to replace the roof. Metric then submitted a request for equitable adjustment in the amount of $2,173,091.85 for costs incurred in repairing water damage caused by the leaks, replacing damaged property in the warehouse, and installing a new roof, under the theory that the Corps’ design specifications for the structural steel underlying the roof were defective, and that defective specifications and the Corps’ communications with Metric regarding the roof installation were misrepresentations on which Metric relied to its detriment.
Continue Reading Federal Claims Court Finds Contractor Entitled to Equitable Adjustment Based on Corps’ Defective Specifications and Misrepresentation

1800 Ocotillo, LLC v. WLB Group, Inc.
2008 Ariz. App. LEXIS 9 (Jan. 29, 2008)
The Court of Appeals of Arizona held that a state statute prohibiting design professionals for contracting for indemnity for their sole negligence does not as matter of law prohibit the use of limitation of damages provisions in professional service contracts.
In 1998, a real estate developer, 1800 Ocotillo, undertook the development of a townhouse project in Phoenix that bordered the Arizona Canal. Developer hired an engineering-architectural firm, The WLB Group, to perform surveying, engineering and landscape architecture services on the project. Developer had its design-build contractor sign the contract with the engineering-architectural firm, which included a limitation of damages provision limiting its exposure to the amount of its fees. While the parties never specifically discussed this provision, the entire contract was incorporated into a supplemental contract between the Developer and the engineering architectural firm approximately two years later.
Continue Reading Arizona Court Enforces Limitation of Damages Provision in Engineering Agreement

Tennessee Gas Pipeline Co. v. Technip USA Corp.
2007 Tex. App. LEXIS 9951, No. 01-06-00535-CV (Tex. App. Dec. 21, 2007)
The Court of Appeals of Texas for the First District was asked to review a trial court’s limitation of a jury award for damages to only those damages associated with defective work. In making its ruling, the Court of Appeals was asked to assess the extent of a waiver of consequential damages clause and which damages were considered consequential barred by said clause. After overlapping contract provisions and the damages sought, the Court of Appeals found that damages flowing from delay were recoverable so long as they were direct, meaning that they flowed naturally and necessarily from the delay.

Continue Reading Texas Court of Appeals Considers Effect of Consequential Damages Bar on Recovery of Damages for Delay By Owner

Copper Mountain, Inc. v. Industrial Systems, Inc.
2007 Colo. App. LEXIS 2298 (Colo. App. Ct. Nov. 29, 2007)
Copper Mountain, Inc. hired Amako Resort Construction, Inc. as the general contractor to renovate and expand a mountain resort lodge. Amako subcontracted with Industrial to build the steel framework for the project. The parties signed a standard American Institute of Architects (AIA A201) contracts, which required Copper to obtain property insurance to cover damages for the work. To comply with this requirement, Copper relied on its all-purpose insurance policy that provided coverage for all of Copper Mountain, including the work and adjacent properties, instead of purchasing separate insurance policy, which would cover only the expansion and renovation work.

Continue Reading Colorado Appeals Court Holds that AIA Contract Waiver of Subrogation Extends to “Non-Work” as Well as “Work”

Dooley & Mack Constructors, Inc., v. Developers Surety & Indemnity Company
2007 Fla. App. LEXIS 17769 (Fla. Ct. App. Nov. 7, 2007)
Dooley & Mack Constructors, Inc. (“Contractor”), the general contractor on a Miami-Dade Community College project, was the obligee on a performance bond issued by Developers Surety and Indemnity Company (“Surety”), on behalf of Buildtec Construction Group, Inc., the masonry subcontractor (“Subcontractor”). After Subcontractor defaulted by abandoning the job, Contractor completed the masonry work itself and sued the Surety for the resulting damages.

Continue Reading Florida Court Holds Notice of Default to Surety Not Required Where Subcontract Provision as to Rights on Default Was Incorporated in Bond

ACE Constructors, Inc. v. U.S.
2007 U.S. App. Lexis 22309 (Fed. Cir. September 19, 2007)
The US Court of Appeals for the Federal Circuit upheld a contractor’s claim for additional compensation due to differing site conditions.
ACE Constructors, Inc. (“Contractor”) entered into a contract with the United States Army Corps of Engineers (“Government”) to build a structure designated as the Ammo Hot-Load Facility, at Biggs Army Airfield at Fort Bliss in El Paso, Texas. The project included construction of a loading area for cargo planes, various roadways, buildings, a storage pad, a loading apron, and a taxiway for airplanes. The site contained hills and other terrain that needed to be excavated, leveled, and filled. The bid solicitation materials included architectural drawings and engineering specifications prepared for the government by the engineering firm of Crawford, Murphy & Tilly, Inc., which plans were incorporated into the contract.
Continue Reading Federal Circuit Court Of Appeals Upholds Claim For Differing Site Conditions

U.S. ex. rel. Straightline Corp. v. American Casualty Corp.
2007 U.S. Dist. LEXIS 50688 (N.D. W.Va 2007)
The United States District Court for the Northern District of West Virginia held that a “pay-if-paid” clause was not a valid defense to a Miller Act claim. Straightline, involved a contract dispute between a general contractor’s surety (“surety”)

Hutton Contacting Company, Inc. v. City of Coffeyville
2007 U.S. App. LEXIS 9914, (10th Cir., April 30, 2007)
Contractor contracted to construct power and fiber-optic lines for the City. Upon completion of the project, the City refused to pay the final balance of the contract price, claiming that it was entitled to the funds as liquidated damages because the project was not completed on time. The Contractor sued to obtain the unpaid contract balance. The trial court ordered the City to pay the Contractor the retainage due minus $85,000 in liquidated damages. On appeal, the United States Court of Appeals for the Tenth Circuit, applying Kansas law, considered: 1) whether the contract’s force-majeure clause excused the Contractor for delays caused by late deliveries from its pole supplier; 2) whether the contract’s liquidated-damages provision was enforceable; and 3) whether the contract’s liquidated damages provision allowed the District Court to apportion delays between the Contractor and the City.
Continue Reading Tenth Circuit Holds Supplier Delay Does Not Excuse Contractor Delay Under Force Majeure Clause; Holds Liquidated Damages Provision Allows For Apportionment Of Damages Where Owner Responsible for Some Delays

Menorah Home and Hosp. for the Aged and Infirm v. Fireman’s Fund Ins. Co.
2007 U.S. Dist. LEXIS 27684 (E.D.N.Y., April 13, 2007)
The District Court for the Eastern District of New York held that a liquidating agreement between an Owner and a Surety was valid and enforceable, even though it permitted the Owner to retain any recovery it obtained from the third-party, rather than having money pass-through to the surety.
The case arose out of a project to build and renovate facilities for Menorah Home and Hospital for the Aged and Infirm (“Owner”). The Owner entered into a contract with J.A. Jones Construction Group, LLC (“Jones”) for the Project. When Jones defaulted, Fireman’s Fund Insurance Company (“FFIC”), Jones’ surety, took over and completed the Project. The Owner subsequently sued FFIC alleging that FFIC had breached its performance bond obligations by failing to complete the Project in a timely manner and correct deficiencies in the work performed by Jones.
Continue Reading NY District Court Enforces Liquidating Agreement Between Owner And Surety That Permitted Owner To Retain Recovery Obtained From Third Party To Satisfy Owner’s Claim For Damages Against Surety