Court Dismisses Claim, Enforcing No Damages for Delay Clause

On June 5, 2018, Justice Sherwood of the New York County Commercial Division issued a decision in Sciame Construction, LLC v. Trustees of Columbia University in the City of N.Y., 2018 NY Slip Op. 31167(U), dismissing a claim based on a construction contract's no damages for delay clause, explaining:

With respect to the third cause of action, entitled "Extra Work," that claim is barred only to the extent that it seeks delay damages on behalf of Sciame's subcontractors Di Fama and Permasteelisa. Columbia contends that the claims of Di Fama and Permasteelisa are delay claims, barred by the agreement's "no damages for delay" clause, and that Sciame fails to allege any basis for an exception to enforcing such a clause. Sciame asserts that these claims were submitted to Columbia, which discussed and negotiated the claims with Sciame, and the claims were carried on Sciame's cost reports that were reviewed by Columbia.

In Article 10.2.4 of the General Conditions, the parties clearly agreed that all extensions of time granted by Columbia "shall be in lieu of and in liquidation of any claims for compensation of delay damages against [Columbia], except for recovery of the Contractor's Reimbursable Expenses, resulting from the extension of time". That clause provided that the time extension and Reimbursable Expenses "shall be the sole remedy" for any delay, hindrance or obstruction in the performance of the work, or loss of productivity, or other similar claims. Such "no damage for delay" clauses are routinely upheld. There are four recognized exceptions to the enforcement of such clauses where: (i) delays are caused by the contracting party's willful or bad faith, malicious or grossly negligent conduct; (ii) uncontemplated delays; (iii) delays so unreasonable that they constitute intentional abandonment of the contract; and (iv) delays caused by a fundamental breach of a contractual obligation. Delays are not considered uncontemplated if they were reasonably foreseeable, are mentioned in the contract, or arise from the contractor's work during its performance. The party seeking to enforce these exceptions bears a heavy burden" of proof.

Columbia has submitted a letter dated April 25, 2014, from Di Fama to Sciame referring to its claims for delay, inefficiencies, and nonproductive work in the amount of $344,872.00. Columbia also submitted a claim by Permasteelisa to Sciame from August 2, 2013, seeking an extension of time, and money compensation for delays and loss of productivity, totaling $597,067.00. Even Sciame's September 28, 2015, change order log, showing change order amounts, contracts, and contractors, indicates that Di Fama and Permasteelisa were making claims for delays. This is sufficient to demonstrate that these claims from these two subcontractors are delay damages, which are barred under Article 10.2.4. Sciame fails to carry its heavy burden. It fails to show any basis for the application of an exception to the "no damage for delay" clause. Therefore, to the extent that the third cause of action is seeking such delay damages regarding amounts sought by Di Fama and Permasteelisa, such claims are dismissed. The remainder of the third cause of action, which seeks payment for extra work approved by change orders for other subcontractors, however, shall continue.

(Internal quotations and citations omitted).

One of the reasons parties often choose to have their contracts governed by New York law is that courts generally enforce agreements as written. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client face a situation where you are unsure how to enforce rights you believe you have under a contract.