Construction Claims

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In construction disputes, one of the most important issues is whether the party claiming damages can adequately prove its damages at trial. Under Florida law, the burden is on the party seeking damages to prove its damages with a reasonable degree of certainty. While difficulty proving your damages may not be a bar to recovery, the award of damages cannot be based on mere speculation or guesswork. (For more on the burden of proof for construction damages under Florida law, click here.)

Florida law also specifies a “time of breach” standard that requires a party seeking damages based on defective construction work to calculate its damages as of the date of the breach of contract. A recent Florida appellate decision demonstrates the importance of proving damages under the time of breach standard.Continue Reading Court Reverses Award of Damages to Owners Due to Lack of Evidence

Construction contracts often give one party discretion over certain aspects of the administration of a project. For example, a contract may give the owner the “sole discretion” to approve the use of contingency on a job or whether to give a contractor a time extension for an excusable delay.

Even where an owner has discretion to make specific determinations under the contract, there is generally at least one legal principle that limits how the discretion may be exercised—the implied duty of good faith and fair dealing.

I have written about how a contractor may breach the implied duty / covenant of good faith and fair dealing (click here for that post). This post shows how an example of how a public owner breached the implied duty of good faith and fair dealing by, among other things, improperly assessing liquidated damages.Continue Reading The Implied Duty of Good Faith and Fair Dealing

When a contractor or subcontractor is terminated for default, the terminating party may seek its damages for completing the defaulted contractor or subcontractor’s scope of work. The cost to complete the work will almost always exceed whatever money was left in the contract to complete the work.

Construction contracts will often expressly allow the terminating party to obtain the above excess completion costs. And under Florida law, “controlling weight should be given to the actual expenditures, made in good faith, that are necessary to complete the job covered by the original contract.” R.K. Cooper Builders, Inc. v. Free-Lock Ceilings, Inc.

But what happens when the excess completion costs include the cost to construct a second building when only one building was contemplated under the parties’ contract?

Will those excess completion costs be considered a form of consequential damages that may be barred under the parties’ contract? A federal court recently considered that question in United States ex rel. Sustainable Modular Management, Inc. v. JE Dunn Construction Company.Continue Reading Does a Consequential Damages Waiver Bar the Recovery of Completion Costs?

Constructive acceleration occurs when a project owner requires the contractor to comply with the original completion deadline, even though the contractor has encountered an excusable delay.

Some courts have held that there are three “essential elements” of a constructive acceleration claim: (1) the contractor encountered an excusable delay, (2) the owner issued an acceleration order, and (3) the contractor incurred additional costs to accelerate its work.

Sometimes there are disputes about whether the owner or prime contractor issued an acceleration order.

Recently, a federal court considered whether a subcontractor adequately alleged a constructive acceleration claim against a prime contractor, which included a discussion of implied acceleration orders.Continue Reading What Is Constructive Acceleration on a Construction Project?

When a contractor bids a job, it does so based on a planned sequence of work and productivity of job labor. There are many issues that can arise while building a project that affect labor productivity, and many of those issues are not the contractor’s responsibility. The terms of the contract will often dictate whether a loss of productivity is compensable.

A contractor that suffers a loss of productivity may be entitled to additional compensation. Many methods have been used to calculate loss-of-productivity damages.

In JH Kelly, LLC v. AECOM Technical Services, Inc., a federal court recently considered several different methods for calculating a loss of productivity on a project.Continue Reading Three Ways to Potentially Calculate Lost Productivity Damages

To win on a breach-of-contract claim, the party asserting the claim must prove that the other party to the contract caused the non-breaching party to incur damages. In construction disputes, the non-breaching party (e.g., a contractor or subcontractor) will often claim that it incurred lost profits due to the other party’s breach.

For example, if an owner wrongfully terminates a contractor, the contractor may be entitled to the profit that it was going to make on the project but for the owner’s termination of the contract. But to obtain those lost profits, the contractor will have to offer supporting evidence.Continue Reading How to Prove Lost Profits in Construction Disputes

Frequently, the parties involved with building a construction project believe that one of the other parties is acting unreasonably. There are times where one of those parties — the owner, the prime contractor, a subcontractor, or a design professional — act so unreasonably that they may violate the implied covenant of good faith and fair dealing.

Under Florida law, every contract contains an implied covenant of good faith and fair dealing. The purpose of the implied covenant of good faith and fair dealing is to protect the reasonable expectations of the contracting parties in light of their express agreement.

While not a Florida case, a recent federal court case that went to trial in Idaho shows an example of a prime contractor acting unreasonably with its subcontractors on a federal government project.Continue Reading How the Implied Covenant of Good Faith and Fair Dealing Can Apply in Construction Disputes

I write a fair amount about construction claims, and I frequently emphasize the importance of properly proving damages in connection with construction claims (e.g., a general contractor only being awarded $22,000 on its $1.3 million claim against a subcontractor, in part, because the general contractor failed to adequately prove its damages).

Under Florida law, the burden is on the party seeking damages to prove its damages with a reasonable degree of certainty. While difficulty proving your damages may not be a bar to recovery, the award of damages cannot be based on mere speculation or guesswork.

A recent federal court trial illustrates the difficulty contractors and subcontractors can have proving claims against each other for breach of a construction contract.Continue Reading The Burden of Proof for Construction Damages

When an owner provides design plans and specifications for building a project, there is an implied warranty that if the contractor follows those plans and specifications, a satisfactory result will be produced. This principle is called the Spearin doctrine, which comes from the United States Supreme Court case United States v. Spearin. 

Under the Spearin doctrine, if a contractor incurs additional costs due to the defective design of a project, the contractor may assert a defective specification claim, which may also be called a claim for breach of the implied warranty of design.

Generally, proving such a defective specification claim requires the contractor to show that the defective specification:

  1. was a design specification, not a performance specification;
  2. contained a latent (not obvious) error; and
  3. caused the contractor’s damages (e.g., additional construction costs).

Although it can be difficult to satisfy all three requirements, a recent Armed Services Board of Contract Appeals case–Appeal of KiewitPhelps–shows that it can be done. Continue Reading Contractor Wins on $40.7 Million Defective HVAC Design Claim

If a project takes longer than expected due to unforeseeable reasons beyond the contractor’s control, then the contractor may have a delay claim against the owner. Typical delay-claim damages include extended general conditions, home office overhead, and financing costs.

Delay claims are one of the most common issues that arise on construction projects. Typically, the burden is on the contractor to prove a delay claim, and the contractor must prove the following three elements:

  1. the length of the delay;
  2. the causal link between the delay and the owner’s wrongful acts; and
  3. the harm to the contractor due to the delay (i.e., the contractor’s damages).

The second element can be the most difficult to prove. To show a causal link between the owner’s wrongful acts and the delay, the contractor must show that the owner’s actions affected the activities on the critical path of the project.Continue Reading No Critical Path Analysis for a Contractor Delay Claim? Expect Your Claim to Be Denied.