By: Alexander A. Miuccio Gregory J. Spaun Published: March 2018

Contractor Not Liable to Owner for Delay Damages

A contractor who fails to complete performance by a fixed time set forth in the contract will be liable to the owner for the damages caused by the delay. Damages may be recovered by the owner via a liquidated damages provision in which the contractor is liable for a fixed sum for each day that the work is not finished.

In the recent case of Wavertree Corp. v Bellet Construction Co., Inc., the appellate court addressed the issue of whether the contractor was at fault for delay damages and attorney’s fees incurred by the owner.

Background

In August of 2006, Wavertree, the owner and manager of a cooperative apartment building, contracted with Bellet to restore and repair the building’s façade. Work was to commence on October 5, 2006, and the project was to be substantially completed within 120 days.  The contract further provided that the contractor would be liable for liquidated damages of $250 for each day that the work was not finished beyond the 120-day time limit. Ultimately, the project was not completed until December 5, 2008, 665 days after the agreed upon date.

In June of 2011, Wavertree sued Bellet for $166,250 in delay damages ($250 x 665 days), plus its attorney’s fees, as provided in the contract. Wavertree argued that the delays were primarily caused by Bellet’s delays in procuring needed equipment, its failure to timely pay its vendors, its failure to maintain an on-site supervisor, and its improper suspension of work when Wavertree refused to pay additional sums.

Bellet denied that it caused any delays, and argued that the delays arose due to the inevitable unforeseen issues that often arise during complex façade jobs, necessitating additional work. Bellet also attributed the delays to Wavertree’s failure to timely approve the additional expenses, its removal of the scaffolding over the winter—against Bellet’s advice—and to Wavertree’s requiring the replacement of bricks which it had initially approved.

Decision

Wavertree moved for summary judgment on its delay claim, arguing that it was entitled to delay damages at the $250 daily rate set forth in the contract. Bellet counter-argued that Wavertree was responsible for its own delays and, therefore, could not recover damages from Bellet. The trial court found that the conflicting factual arguments needed to be determined by a jury and, accordingly, denied the summary judgment motion. After the subsequent trial, the jury ruled in favor of Bellet. Judgment was entered on the jury’s verdict and Wavertree’s lawsuit was dismissed. Wavertree appealed.

On appeal, the appellate court ruled in favor of the contractor, finding that the trial court properly found that the conflicting claims had to be left to a jury to decide, and that a rational jury could have found that Bellet did not breach the contract. Accordingly, Wavertree was not entitled to delay damages. The appellate court also found that a rational jury could have concluded that Wavertree, by issuing final payment in full without deducting the claimed liquidated damages, waived its claim to such delay damages.

Comment

A breach of contract action involving a delay claim requires that an aggrieved owner or upstream contractor establish that the defendant contractor was actually in breach of the contract; merely counting days and multiplying that number by the contract’s daily liquidated damages value is not sufficient. A party looking to assess delay damages needs to make certain that not only is its claim well documented, but that it is not in breach of the contract itself. As this case demonstrates, where the question of whether a party is in breach of the contract is determined by a jury, an appellate court will only set aside a jury’s findings of fact if those factual findings are implausible, illegal or without support in the trial record.

© Welby, Brady & Greenblatt, LLP.
All Rights Reserved. By visiting this site, you agree to our Terms of Service. For more information please read our Privacy Policy Attorney Advertising