General Contractor Who Delayed Project Held to Have Breached Contract with Subcontractor

March 13, 2014

A Massachusetts Superior Court recently ruled on a case involving a construction contract between a subcontractor and a general contractor, where the contract included a provision that prohibited the subcontractor from recovering damages from the contractor for a delay in the project. The court held that the "no damages for delay" clause did not prevent the plaintiff-subcontractor from recovering damages from the contractor, as the contractor denied the subcontractor of its only available remedy under the contract.

In Central Ceilings, Inc. v. Suffolk Construction Company, Inc., et al., Central Ceilings, Inc. agreed to furnish labor and material for the drywall and ceiling portions of a project under the control of the general contractor, Suffolk Construction Company. Central agreed to respond to change order requests promptly, and to work under a specific schedule, while Suffolk Construction supervised and coordinated the project and job site.

Central alleged that Suffolk Construction was obligated to set the work schedule and direct the construction site's operation, but that Suffolk Construction failed to properly manage the project by failing to effectively coordinate the project's various subcontractors and by repeatedly changing the construction plan. Central presented various pieces of evidence that Suffolk Construction delayed the project, and that Central had requested extra time to address the project's issues, but that Suffolk Construction denied all requests. As a result, Central was forced to increase its manpower and supervision at the jobsite in order to comply with a compressed schedule that Suffolk Construction insisted be upheld. Central sued Suffolk Construction for money damages for its loss of productivity caused by Suffolk's breach of contract.

Suffolk Construction relied upon a "no damages for delay" clause appearing in the parties' contract to defend against Central's claims. The clause provided that Central would have no claim for money damages against Suffolk Construction for a delay in the project, no matter how it was caused, and that for any delay not caused by Central, the only remedy Central would have would be extra time for performance of its obligations under the contract.

The court analyzed the no-damages-for-delay clause, and determined that when Suffolk Construction refused to allow Central additional time to perform, Suffolk effectively denied Central of the only remedy that the contract did provide Central in the event of a delay. Accordingly, the court held that Suffolk Construction's denial of additional performance time constituted a breach of contract, and that Central's damages for loss of productivity were a direct result of the breach.

Additionally, the court noted that events involving some hindrance or interference by Central with the project schedule would typically be sufficient to constitute a delay that would trigger the no-damages-for-delay clause, barring Central from recovery. In this instance, where Central was forced to hire more workers and incur greater expenses in order to meet Suffolk's schedule, the court found that there was no delay at all that could prohibit Central from recovering damages under the contract. Rather, the court found that Suffolk Construction's breach of contract impacted Central's ability to complete the work within budget, and entered judgment in favor of Central, ordering Suffolk Construction to pay Central more than $320,000 in damages.