The enforcement of liquidated damages provisions is a topic that gets a lot of attention in construction-contract disputes. Some of the most popular posts on this blog include examples of courts refusing to enforce liquidated damages provisions. (Click here for one example and click here for another example.)

One reason a court may refuse to enforce a liquidated damages provision is because the specified daily rate of liquidated damages is “grossly disproportionate” to the actual damages that are expected to be suffered due to the contractor not completing the project on time.

In addition, even if a liquidated damages clause is enforceable, it is possible that an owner can waive the right to claim liquidated damages. Under Florida law, to establish waiver, a party must show an intention to give up a known right. A waiver can be express or implied through conduct.

A federal court recently considered whether a project owner waived its right to seek liquidated damages as a matter of law.

Continue Reading Can a Project Owner Waive Its Right to Claim Liquidated Damages?

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

The governor of Florida recently signed Florida Senate Bill 1718 into law. The bill includes Florida’s new E-Verify law. Under the new law, private employers must use the federal government’s E-Verify system to confirm each new employee’s eligibility for employment within three business days after the new employee starts work. The above requirement applies to all private employers with 25 or more employees, including construction contractors and subcontractors.

Continue Reading How Florida’s New E-Verify Law Will Affect Government Construction Projects

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

When an owner terminates a prime contractor or a prime contractor terminates a subcontractor, it almost always costs more for the terminating party to complete the work under the contract. Fortunately, if the termination was proper, the owner should be able to recoup the extra cost to complete the work from the terminated contractor. The same is true when a contractor terminates a subcontractor.

Often, the terminated party will argue that the excess completion costs were unreasonable. Generally, the burden will be on the terminated party to prove that the cost to complete the work was unreasonable. This can be very difficult to prove.

Continue Reading Construction Completion Costs and the Burden of Proof

When a contractor’s work on a project is impacted due to no fault of the contractor, the contractor may consider bringing a claim to get paid additional compensation for that impact. Oftentimes, the contractor may assert that its work was delayed, disrupted, or it was otherwise more inefficient than planned.

A contractor asserting a delay, disruption, or inefficiency claim against a project owner can expect the owner to look to any available defenses it has to the claim. After having read many cases involving these types of claims, one can see that the same defenses are frequently asserted.

The top three defenses to delay, disruption, and inefficiency claims include failing to timely submit a contractually compliant claim, waiver / release, and the contract expressly barring such claims. The rest of this post will provide a quick overview of those common defenses.

Continue Reading Top Three Defenses Against Delay, Disruption, and Inefficiency Claims

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.