My commute home last night took longer than usual. It was not excessive traffic, an accident, or a stalled car. Rather, the cause of my delayed commute was a turtle: one single turtle crossing the road, holding up about 30 cars for what seemed like an eternity. (Never mind the fact that no one got out of their car to help the little guy!)
When we think of delays on a construction project, the first inquiry is to identify the turtle—the one party holding up progress or causing the delay. Many times, the parties’ contract will dictate whether the contractor can recover delay damages or will be limited to a time extension for delays beyond the contractor’s reasonable control.
In Sarasota County, Fla. v. Southern Underground Industries, Inc., 333 So. 3d 285 (Fla. 2d DCA 2022), the court recently held that a “no damages for delay” clause did not preclude an award of damages to the contractor following the County’s suspension of work. In that case, the County issued a stop work order to the contractor installing a sanitary pipe and water line when an adjacent homeowner complained that vibration from the drilling caused damage to his home. The contractor secured an engineer’s report that concluded the damage was cosmetic only and that the vibration did not exceed the acceptable threshhold. The adjacent homeowner rejected the contractor’s offer to fix the damages. Ultimately, the County continued the suspension of work for an additional two months while attempting to address the adjacent homeowner’s concerns.
The contractor sought additional compensation for the two extra months of suspension. The County rejected the claim, arguing that the “no damages for delay” clause in the parties’ contract precluded the award of delay damages. The court found in favor of the contractor, relying on an exception to the general rule:
Although “no damages for delay” clauses are recognized in the law, they will not be enforced in the face of governmental “fraud, bad faith, or active interference” with performance under the contract. The record supports the trial court’s finding that the County impeded work on the project, at [the contractor’s] expense, long after it was determined that it was safe to proceed with minimal damage to the adjacent homes.
What is “active interference”? While not explicitly defined in the Sarasota County case, it requires the showing of an affirmative willful act of the owner that unreasonably interferes with the contractor’s work. Here are a few more lessons when dealing with a delay on a project:
- As a contractor, you need to first review your contracts for a “no damages for delay” clause. If one is present, then you will want to negotiate an “active interference” clause that defines what constitutes an active interference.
- An “active interference” could mean that the owner knows about the delay and still proceeds; or it could mean that the owner conceals or actively interferes by affirmative conduct.
- During performance, you should document the impact of the owner’s actions, including whether the owner failed in coordinating other trade contractors for which it alone is responsible.
- Even if your contract does not have an “active interference” exception, there may be a common law remedy of bad faith or negligence on the owner’s part, which causes the delays. That would depend on your particular state.
In the end, active interference to overcome a “no damages for delay” clause involves more than a turtle crossing the road. The dispute will be decided on the express contract language and the offending conduct giving rise to the additional damages and delays.