No-Damage-for-Delay Clause Did Not Bar Acceleration and Inefficiency Claim

Where a sub was told that no additional time would be granted under any circumstances, the additional costs it incurred for acceleration and inefficiency could be recovered, even with a contract no-damages-for-delay clause. Also, the sub’s use of a total cost claim was upheld by the appellate court under the circumstances presented.

The project was construction of three interconnected dormitories for the Massachusetts State College Building Authority. Substantial completion was to be July 1, 2005, with a bonus for timely completion and liquidated damages starting at $30,000/week for late completion.

The sub, performing heavy- and light-gauge framing, sheathing and drywall, was told that no time extensions would be considered or allowed. When early trades ran behind, the sub’s work was compressed. There were apparently significant issues with the design; the decision notes more than 500 RFIs, including 200 from this sub. The sub claimed – and the trial court found – that the sub’s work was repeatedly redirected and the flow of its work disrupted, all for reasons not of its own doing.

The subcontract clause read, in part:

The Subcontractor agrees that it shall have no claim for money damages or additional compensation for delay no matter how caused, but for any delay or increase in the time required for performance of this Subcontract not due to the fault of the Subcontractor, the Subcontractor shall be entitled only to an extension of time for performance of its Work.

The appeals court cited Massachusetts cases upholding no-damage-for-delay clauses (subject to certain exceptions), but said the clause simply did not apply in this case. There was no dispute at trial that the sub was not going to be granted any time extensions, and it was not seeking damages for “delay.” The trial court ruled, and the appeals court affirmed, that this clause did not bar the sub’s claim, for two reasons. First, the GC had deprived the sub of its only remedy under that clause by refusing to grant any extension for delays caused by others, which the court held to be a material breach. Second, the GC never disagreed with the sub’s position that the GC was not going to agree to any time extensions.

And the GC’s argument, that the sub’s damages were “caused by delay” and thus barred by the clause, did not hold water with the court. No-damage-for-delay clauses are to be strictly construed, and this was not a case where the sub sought damages for “delay.”

The court also affirmed calculation of damages using the total cost method. Acknowledging that the total cost method is one of “last resort,” the appeals court noted the sub’s expert opinion that there was no other feasible way to calculate damages under the circumstances. Further, the expert had opined that the sub’s original bid was realistic, and the trial judge had found that the GC’s actions were responsible for the added costs. The case is Central Ceilings, Inc. v. Suffolk Construction Company, Inc., Mass. App. Ct. (Mar. 29, 2017).