This article was originally published on December 3, 2019 on ConsensusDocs. It is reprinted here with permission.

Construction contracts often include a “no damage for delay” clause that denies a contractor the right to recover delay-related costs and limits the contractor’s remedy to an extension of time for noncontractor-caused delays to a project’s completion date. Depending on the nature of the delay and the jurisdiction where the project is located, the contractual prohibition against delay damages may well be enforceable. This article will explore whether an enforceable no-damage-for-delay clause is also a bar to recovery of “acceleration” damages, i.e., the costs incurred by the contractor in its attempt to overcome delays to the project’s completion date.

Continue Reading Does a No-Damage-for-Delay Clause Also Preclude Acceleration Damages?

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

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

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

Time is money in construction, and project delays can cause contractors to incur substantial additional costs. To avoid responsibility for paying these costs, project owners often include a no-damage-for-delay (NDFD) clause in the contract, where legally permitted.[1] An example of a typical NDFD clause reads as follows:

The Contractor agrees to make no claim for damages for delay in the performance of this contract occasioned by any act or omission to act of the [Owner] or any of its representatives, and agrees that any such claim shall be fully compensated for by an extension of time to complete performance of the work as provided herein.[2]

An NDFD clause may bar a contractor from recovering delay damages. But, in most states, the enforceability of NDFD clauses is also subject to exceptions.[3] As shown in the clause quoted above, NDFD clauses often provide that the exclusive remedy for delay is an extension of time. The issue is whether an NDFD clause, which provides a time extension as an exclusive remedy, also bars claims for acceleration. As explained below, there are several approaches to this issue.


Continue Reading Do No-Damage-for-Delay Clauses Bar Acceleration Claims?

John Spearly Constr., Inc. v. Penns Valley Area Sch. Dist., 2015 Pa. Commw. LEXIS 337 (Pa. Commw. Ct. July 24, 2015)

This action arose out of the construction of a biomass boiler system for the Penns Valley Area School Districts (“District”) to house the District’s boiler plant  (“Project”).  The District contracted with general contractor John Spearly Construction, Inc. (“Contractor”) to construct the Project. The District entered into direct contracts with the Project Architect and other contractors responsible for other components of the work.

Construction began in July 2010 and was to be substantially completed no later than October 18, 2010.  From its inception, however, the Project was plagued with delays.  Project delays were caused by, among other things, delays by the District’s Architect in deciding on and responding to submittals relating to changes, disputes between the District and its HVAC contractor responsible for delivering the boiler, and work performed by a sewer contractor the District brought in toward the end of the Project to repair and replace storm water and sewer pipes. Ultimately, the Project was not substantially completed until August 11, 2011.


Continue Reading Pennsylvania Commonwealth Court Explains and Applies Active Interference Exception to No Damage for Delay Clause

C&H Electric, Inc. v. Town of Bethel, 312 Conn. 843, 2014 Conn. LEXIS 263 (Aug. 5, 2014)

This dispute arose out of a project to renovate and build an addition at a high school in the Town of Bethel, Connecticut.  The plaintiff, C&H Electric, entered into a contract with the defendant, the Town of Bethel, to perform the electrical work on the project.  The parties’ contract included a “no damages for delay” clause, limiting the defendant’s liability for delays it caused on the project.  The no damages for delay clause specified that an extension of time would be plaintiff’s “sole remedy” for “(1) delays in the commencement, prosecution or completion of the work, (2) hindrance or obstruction in the performance of the work, (3) loss of productivity, or (4) other similar claims whether or not such delays are foreseeable, contemplated, or uncontemplated . . .”  The contract included a single exception to the no damages for delay clause, which allowed the plaintiff to recover for delays caused by acts of the defendant “constituting active interference with [the plaintiff’s] performance of the work.”  While the contract did not define “active interference,” it did specify that the defendant’s exercise of its contractual rights, including its right to suspend, reschedule or change the work, would not constitute “active interference.”


Continue Reading Connecticut Supreme Court Construes “Active Interference” Exception to “No-Damage-for-Delay” Clause