If you’re in the dark regarding some issue, you aren’t getting the facts you need for making an informed choice. The delay claims in a construction may be confusing, particularly when you consider delays to the work that is being done as well as the disruption to other tasks. Some time ago, I came across an instance that shed insight into the delay distinction between delay.
In the case of County of Galveston v. Triple B Services, LLP, which was decided on the 26th of May, 2016, The Court of Appeals of Texas looked into a contractor’s claim to recover damages from the road’s expansion project. The legal question was focused on the County’s right to rely on sovereign immunity contractor’s (and its expert’s) description of the damage was vital to the final outcome of this case. The applicable statute grants the sovereign immunity of a county in breach-of-contract claims which are “a direct result of owner-caused delays,” the Court was required to determine if disruption damages — as distinct from delay damages were recoverable.
The contract. The County entered into a contract in conjunction with the Contractor to construct the road by three miles. The contract stipulated that the County was charged with moving water, gas and fiber-optic utilities. According to the contractor’s expert the contract established an “baseline schedule … created by the County’s engineer,” which included the date of start and unhindered access to the portion of the road on which the utilities were. The contract also allowed the possibility of “delay damages” if the contractor’s request for these damage “is determined to be compensable.”
Owner-Related Delays. The plans of the Contractor of the project envisioned that the County would transfer the utilities by a certain date, the utilities were moved nearly one year further. However, the Contractor was able to complete its work within its contract deadline. As per the Contractor the Contractor incurred additional costs for hand-forming manholes as well as to set and reset barricades and extended overhead for the field office and also additional equipment, work streets cleaning and flagging and traffic control. All of this resulted from the County’s delay in moving utilities.
sovereign Immunity The argument. The County argued that Section 262.007 of the Local Government Code waives the sovereign immunity of a county in construction contracts that involve delays and claims to recover damages. The County relied heavily upon the testimony of the expert witness who testified regarding the damage suffered by the Contractor as a result of the delay of the County. As the County was unable to immediately move utilities, as originally planned in the construction plan, the schedule for work had to be “disrupted.” By seeking damages for disruption according to the County’s argument that the Contractor demanded damages that were not eligible for reimbursement pursuant to the statute.
Also, are these delay-related damages or disruption damages?
In the appeal on appeal, the Contractor acknowledged it was correct that “disruption damages” do not satisfy criteria of “delay damages” as traditionally used in the context of construction law. It argued, however, that the sovereign’s statutory waiver of immunity from damages that are “a direct result of owner-caused delays or acceleration” encompasses the more extensive category of “delay damages” as defined in the law of construction: “Disruption and lost productivity costs are … recoverable damages under the clear meaning of the words of the statute.”
The Court went on the construction law book composed by Phillip Bruner and Patrick O’Connor to respond to the question and noted that delay damages are the technical definition of disruption damages:
Delay damages are those “arising out of delayed completion, suspension, acceleration or disrupted performance” They are damages are paid to the person who suffers injury in the event that a project takes more time than what is stipulated in the contract. . . .
Damages for disruption, on the other hand, apply to projects that are time-bound, but still causes disruption to the contractor. It compensates the contractor in the event of “a reduction in the expected productivity of labor and equipment–a loss of efficiency measured in reduced production of units of work within a given period of time.” . . . Damages to disruptions may also result from an “event [that] interrupts and delays a crucial process ….” An undertaking that is completed on time, but at more expense due to disruptions or scheduling mistakes can be a cause for claim for damages caused by disruption.
The Court’s decision. Based upon a simple reading of the statute, the Court determined that section 262.007 permits a claim for disruption damages against the county “if the injuries directly stem from the delay of the county when it is performing the contractual obligation it has to fulfill. ….” In addition, it was not clear that the statute would make a distinction between “delay damages” as well as “disruption damages,” which are directly triggered by the delay caused by the breaching party.
Leçon learned. According to the expert, in this case, the Contractor had to pay a significant increase in expenses to complete the work within the timeframe. The Court’s decision offers a great guideline of the kind of evidence necessary to establish the damages demanded by the Contractor. This includes the following:
- The expert reviewed”the “daily summaries” of work and “the manner [the project] was intended to be executed … [and] the manner by which the project was actually executed and some of the specific things that caused that deviation.”
- Based on this data the expert testified the Contractor was forced to modify its strategy to accommodate the County’s delays through “segmenting the work into smaller segments of the roadway, waiting on the utilities … just a various sundry of impacts that caused them to not be as productive from a direct labor standpoint.”
- “waiting on the utilities “waiting on the utilities” resulted in the Contractor to spend “man-hours trying to deal with working around utilities and bouncing around back and forth and dealing with not being able to set barricades and … progress the roadway [in the way] that they thought they would be able to in an unhindered manner.”
- The expert also stated that the contractor had to create “a number of teams because the work was in diverse areas in order to make sure they could progress the project ….”
- In the end, the expert suggested that the Clean-up crew of the Contractor was also required to do additional tasks due to “whenever you slow down that progression and create situations where you’re excavating and you’re staging materials in one location[,] … you wind up with … more debris than if you were just moving in a steady progressive manner.”
While the work in this case was completed in time and the Contractor was never entirely “stopped” its work, the Court was able to determine it was it was the Contractor had been “hindered” because of the County’s actions. The types of damages that are recoverable include those which result from “a direct result of owner-caused delays,” the Contractor may be able to recover damages.