It happens every day! The contract between the owner and contractor contains the “no damages for delay” clause, a clause that requires all modifications to be put in writing prior to work being completed, and a clause that requires release and waiver of lien in part for each installment. We also have an action for delays as well as extras that are filed at the end of construction, which is a violation of these exact contractual provisions.
The Court of Appeals of North Carolina recently faced the exact situation within Gamewell Mechanical, LLC v. Lend Lease Construction(Sept. 1st, 2020) (PDF). The case involved the building of three within Durham, North Carolina. The mechanical subcontractor sued the principal contractor for $2.7m in breach of contract due to non-payment of delay damages and for enforceability of lien rights. The prime contractor claimed that the subcontractor’s claim ought to be restricted only to the contract balance of around $500k as retainage. The trial court ultimately gave the subcontractor more than $800k in compensation for its claims.
In the Appeal, the contractor claimed that it was not appropriate to award restricted to the retainage of $500k. Through the execution of lien waivers and releases along with each payment made on a regular basis, according to the contractor, the subcontractor absolved itself of all rights other than retention. The lien waiver of the parties included language that said the subcontractor was able to reserve any claims that were disputed, but the subcontractor did not do this. The appellate court decided that the trial judge correctly denied a majority of claims made by the subcontractor that were dependent on or governed by the “no damages for delay” clause or the”no damages for delay” waivers.
In addition, the trial court distinguished between “day-to-day” or “daily” modifications in the field to allow for additional work. This was acknowledged in the appeals court like this:
It is well-known that delays occurred, many Change Orders were issued, and re-sequencing and coordination issues occurred throughout the entire project. In light of the everyday problems that occurred because of these issues, the subcontractor’s refusal to hold back claims on the simple miscellaneous things that were carried out under the direction of the contractor is not a significant breach of contract. . . . Release and waiver papers included with every pay application may not be sufficient to cover any claims that are not immediately evident because of the constant adjustments in the workplace.
The appellate court ruled that the evidence was sufficient to support the trial court’s decision on all of these issues.
Do you have any notice or other requirements?
Yes, federal contractors covered by the law must display signs at the entry points to workplaces covered by the law that provide the safety guidelines. These protocols should define the requirements for those who have been vaccinated as well as not fully vaccinated employees, as well as any social distancing or masking rules.
The person who is designated is accountable for distributing the required information. Along with announcements at entry points, the information may be shared via emails, website memos, flyers, advertisements on job sites, or any other method.