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

Tri-State Elec., Inc. ex rel. Apex Enters. v. Western Sur. Co., 1:14-CV-00245, 2017 U.S. Dist. LEXIS 4974 (D. Idaho Jan. 11, 2017)

The United States Department of Veterans Affairs (the “VA”) contracted with Sygnos, Inc. (“Sygnos”) for improvements to the electrical system at a VA hospital in Boise, Idaho. Sygnos subcontracted a portion of the work to Apex Enterprises, Inc. (“AEI”), who in turn subcontracted a portion of its work to Tri-State Electric, Inc. (“Tri-State”).  Delays plagued the project from the outset, and the work – originally scheduled for completion in 240 days – ultimately took more than 950 days to perform.  Disputes concerning responsibility for and the amount of delay damages ensued.

Sygnos submitted a request for equitable adjustment to the VA as a result of the delays. Receiving no timely response from the VA, Sygnos converted the request for equitable adjustment to a claim for delay damages under the Contract Disputes Act, which the VA and Sygnos settled for $645,000.  AEI and Tri-State subsequently sued Sygnos for delay damages they incurred on the project.  Sygnos did not dispute that AEI and Tri-State had suffered delays but it disputed some categories of damages claimed and cited the no-damage-for-delay clause in Tri-State’s contract as barring its claims.

Continue Reading Federal Court in Idaho Rules That a Government Contractor May Recover Consultant Fees, So Long as Those Fees Were Incurred in Contract Administration and Negotiation of an Equitable Adjustment But Denies Recovery Because the Consultant Failed to Maintain Proper Records

Roy A. Elam Masonry, Inc. v. Fru-Con Construction Corporation,
1996 Mo. App. LEXIS 481 (March 26, 1996).
On November 14, 1988, the general contractor, Fru-Con Construction Corp. (Fru-Con) entered into a construction contract with Southwestern Redevelopment Corp (SRC), the owner. In early 1989, Fru-Con and a subcontractor Roy A. Elam Masonry (Elam) entered into a

United States of America, for the Use and Benefit of Evergreen Pipeline Construction Co., Inc. v. Me,
No. 90 Civ. 5106, 890 F. Supp. 1213, 1995 U.S. Dist. LEXIS 9385 (S.D.N.Y. July 7, 1995)
Oral Requests for Extra Work – Under New York law, either oral directions to perform extra work, or a general course of dealing may effectuate a waiver or modification of contract provisions which otherwise expressly require written authorization or notice of such extra work claims. No Damage for Delay – Under New York law, an exculpatory “no damage for delay” clause will not be enforced where the delay was: 1) not contemplated by the parties 2) caused by the contractor’s bad faith, or willful, malicious, or grossly negligent conduct; 3) so unreasonable that it constituted an intentional abandonment of the contract; or, 4) the result of a fundamental breach of the contract by the contractor. Punitive Damages – Punitive damages on purely contractual claim will not be awarded where there is insufficient evidence for a jury to conclude that public rights were implicated or that objectionable conduct was directed at the public generally. Prejudgment Interest – Subcontractor is entitled to prejudgment interest for services rendered seven years before judgment was entered. Rule 11 Sanctions – Defendants’ assertion of a civil RICO counterclaim without sufficient basis therefor warrants imposition of sanctions under Rule 11. Attorney’s fees awarded as a Rule 11 sanction is a matter committed solely to the discretion of the district court. In ascertaining “reasonable” fees, the court must bear in mind that the principined a verdict in favor of subcontractor Evergreen and found that Merritt materially breached the subcontract and that certain provisions regarding extra work and delay damages were either waived or eliminated by the parties. Merritt filed various post trial motions challenging the jury’s verdict regarding: the oral requests for extra work under a contract which required that all such requests be in writing; the award of delay damages under a contract with an express “no damage for delay” provision; and challenging the propriety of permitting a claim for punitive damages to be submitted to the jury. Evergreen also filed various post trial motions seeking prejudgment interest and attorney’s fees incurred in defending baseless civil RICO claims.

Continue Reading District Court in New York Finds Evidence Sufficient to Support Waiver of Written Change Order Requirement and Bad Faith Exception to Enforceability of "No Damage for Delay" Clause in Subcontractor Miller Act Suit