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No Damages for Delay Clause Found to be Enforceable, Despite 22 Month Project Delay

Although it is settled law that a no-damages-for-delay clause which exculpates a contractor from liability for damages resulting from delays in the performance of the work is generally enforceable, various courts have applied the exceptions enunciated by the Court of Appeals in Corinno Civetta Constr. Corp. v. City of New York, 67 NY2d 297 (1986) in denying dismissal motions based upon the clause. Those exceptions are:

"(1) delays caused by the contractee's bad faith or its willful, malicious, or grossly negligent conduct, (2) uncontemplated delays, (3) delays so unreasonable that they constitute an intentional abandonment of the contract by the contractee, and (4) delays resulting from the contractee's breach of a fundamental obligation of the contract."

[id., at 309]

Justice Marcy Friedman of the New York Supreme Court recently determined that no Corinno Civetta exceptions applied in dismissing an action for delay damages arising out of a 22 month project delay. Advanced Automatic Sprinkler Co. Inc. v. Seaboard Surety Co., 650321/2011, NYLJ1202678994141, at 1 (Sup., NY, Decided December 3, 2014).

In Advanced, supra, Advanced Automatic Sprinkler Co. ("Advanced"), a subcontractor of Dart Mechanical Corporation ("Dart"), a non-party brought suit against defendant Seaboard Surety Company ("Seaboard") for delay damages under a payment bond issued by Seaboard on behalf of Dart. The parties agreed that the liability of Seaboard would be measured by the liability of its principal. Seaboard, in moving to dismiss based up on the no-damage-for-delay clause in the Advanced-Dart contract, acknowledged that the entire project had been repeatedly delayed. Rather, it argued that the following causes did not fall within the exceptions enunciated in Corinno Civetta:

"(1) The original property owner did not vacate the site in a timely fashion; (2) contaminated soil was encountered at the Project; (3) the prime electrical contractor failed to perform its work; and (4) DSNY's engineers made design errors, including the design of the sprinkler system that Advanced was to install."

[id., at 4]

Justice Friedman agreed with Seaboard's position. In dismissing Advanced's delay claims, with prejudice, the Court wrote:

"The categories of delay alleged in the complaint-denial of access to the Project site, flawed design, failure to adhere to or properly coordinate the progress schedule, delays due to the work of another (the electrical) prime contractor-are all delays within the scope of the contractual provisions."

[id., at 4]

These decisions illustrate the importance of insuring that the contractual provisions be carefully drafted. A contractor seeking to avoid a potential or future delay claim on the part of its subcontractor should seek the advice of counsel so as to insure that the no-damage-for-delay clause contains the broadest possible language. At a minimum, the clause should insure that the subcontractor's sole remedy as a result of project delays will be an extension of time, and that the subcontractor waives any claim for damages on account of any delay, obstruction or hindrance for any cause whatsoever, whether or not anticipated. As illustrated in the Advanced case, a carefully worded no-damage-for-delay clause should result in substantial savings to the contractor if delay issues arise in the performance of the subcontractor's work. Our attorneys are available to assist clients in drafting appropriate contract language.

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