For years, general contractors and trade contractors have faced very strict “no damages for delay” clauses on New York State construction projects. The tides are changing.  If signed into law, S. R. 06686, Reg. Sess. 2017-2018 (NY 2017) will require public entities to allow contractors, subcontractors and suppliers to recover for costs associated with project delays to the extent the delays were caused by the entity’s actions or inactions. Public entities would include, without limitation, any state agency, department, board, bureau, municipal corporation, school district or any instrumentality or public subdivision of the State of New York.
Continue Reading Will Strict “No Damages for Delay” Clauses Be Outlawed on New York Public Construction Projects? Stay tuned.

Construction projects are no stranger to delays and the inevitable resulting disputes. To allocate such risks, parties frequently include no damage for delay causes in their contracts. These provisions commonly provide that in the event of a delay the contractor’s remedy is limited to an extension of time. Given that there are often multiple causes of delays and a variety of types of delay damages it is critical that at the onset of a construction project the parties consider and properly allocate the risk of such delays and the potential resulting costs in the contract documents.

A recent Massachusetts Superior Court decision offers further insight into the importance of the contract in allocating the risk of delay damages. In Cumberland Farms, Inc. v. Tenacity Constr., Inc. (Mass.Super, 2016), the court held that the terms of the contract precluded the contractor from recovering lost productivity and costs associated with work inefficiencies incurred while performing Winter work. The case arose from two distinct construction projects involving the plaintiff Cumberland Farms, Inc. (“CFI”) as the owner and Tenacity Construction, Inc.(“Tenacity”) as the contractor. Both projects suffered severe delays. As a result CFI granted Tenacity an extension of time and agreed to pay Tenacity time and materials for costs incurred while performing work during the Winter months. Prior to performing the work Tenacity claimed that reimbursement for time and materials would likely not fully compensate Tenacity for any lost productivity or inefficiency costs incurred during the Winter and that Tenacity may seek such costs at a later date. Although CFI did not deny this request it also did not agree to the request. A couple months after completing the Winter work, Tenacity sent CFI a letter claiming that it was entitled to an equitable adjustment of the contract price for lost productivity and inefficiency costs attributable to Winter conditions. In response CFI requested back-up information in support of Tenacity’s claim but ultimately denied the request.
Continue Reading Contract Barred Recovery of Lost Productivity Damages Suffered by Contractor

My last article examined strategies for construction managers facing an owner bankruptcy. Now, looking through the lens of the owner, let’s examine best practices when it is the contractor who has filed for bankruptcy.

Throughout New England and the United States the construction industry continues to thrive with several new projects underway and on the horizon. Last month, Dodge Data & Analytics projected that total U.S. construction will increase in 2017 by five percent. Lenders and sureties continue to aggressively underwrite contractors and subcontractors allowing businesses to grow quickly. But growing too quickly can lead to cash flow and labor allocation issues both of which are ingredients for a project bankruptcy.


Continue Reading Recipe for a Project Bankruptcy: Part 2 The Contractor in Bankruptcy Through the Lens of the Owner

My last article examined strategies for construction managers facing an owner bankruptcy. Now, looking through the lens of the owner, let’s examine best practices when it is the contractor who has filed for bankruptcy.

Throughout New England and the United States the construction industry continues to thrive with several new projects underway and on the horizon. Last month, Dodge Data & Analytics projected that total U.S. construction will increase in 2017 by five percent. Lenders and sureties continue to aggressively underwrite contractors and subcontractors allowing businesses to grow quickly. But growing too quickly can lead to cash flow and labor allocation issues both of which are ingredients for a project bankruptcy.


Continue Reading Recipe for a Project Bankruptcy: Part 2 The Contractor in Bankruptcy Through the Lens of the Owner

On most construction projects, a project owner will require the contractor to certify that it has fully paid each of its subcontractors as a condition to the owner making  payment to the contractor.  The purpose of these certifications is to ensure timely payment to all subcontractors and to protect the owner from claims or liens by unpaid subcontractors. A recent Massachusetts decision highlights the importance of these certifications and the harsh consequences the contractor may expect if the contractor intentionally submits false payment certifications to the owner.

In G4S Tech., LLC v. Mass. Technology Park Corp., 2016 Mass. Super. LEXIS 36, 33 Mass. L. Rep. 301 (Mass. Super. March 30, 2016), the Contractor sought millions of dollars for alleged extra work and its contract balance for work performed on a state and federally funded project to design and construct a fiber optic network in western Massachusetts. The Owner disputed the extra work and contract balance claims because the Contractor intentionally breached the contract by submitting false payment certifications. The Contractor did not deny that it submitted false payment certifications but stated that because it eventually paid the subcontractors, and the late payments did not cause a delay on the completion of the project, any harm that arose was “de minimis”. Therefore, the Contractor argued that its submission of false payment certifications should not prevent it from collecting its contract balance and pursuing its multi-million dollar claim.  In addition, the contractor argued that it should be entitled to recover the cost of the work performed under the equitable theory of quantum meruit, which entitles one who performed work to recover the cost of that work in the absence of a contract or agreement.


Continue Reading Harsh Consequences for Contractor’s False Payment Certifications in Massachusetts

In the hustle and bustle of completing a construction project it can be easy to overlook the importance of the contract.  However, when a dispute arises the contract generally dictates the outcome of that dispute.  A recent unpublished Massachusetts Appeals Court decision serves as a reminder of the importance of the contract.

In ACME Abatement

In a recent decision, Elec. Contractors, Inc. v. Fid. & Deposit Co. of Maryland, No. 3:13-CV-00514 MPS, 2015 WL 1444481 (D. Conn. Mar. 30, 2015), the United States District Court for the District of Connecticut dismissed on summary judgment a subcontractor’s claims for delay damages against the general contractor on a construction project (“Project”)