11th Circuit affirms delay damages award to subcontractor despite the existence of a “no-damages-for-delay” provision in the subcontractor agreement, finding that general contractor was aware of conditions causing delays and potential solutions, but did not enact those solutions. The opinion provides a thorough analysis of the types of damages awardable under these provisions and the causal link necessary to prove delay damages.
GLF Construction Corp. v. Fedcon Joint Venture arises from a dispute over a project to repair and reinforce levee along a section of the Mississippi River in Louisiana. In 2013 a general contractor entered into two contracts with the Army Corp of Engineers to repair two different sections of the levees along the Mississippi River. The contracts indicated they were governed by Florida law. A year later, the general contractor entered into two subcontracts with a subcontractor for the installation of sheet pilings, pipe pilings, and forming and pouring concrete T-walls (the “Piling Subcontractor”). The general contractor also entered into a separate subcontract with another subcontractor for the purpose of constructing access roads, flood protection, and constructing work platforms.
The temporary access roads failed multiple times, and were impassable when it rained. The Piling Subcontractor repeatedly expressed concerns to the general contractor about the conditions of the roads, and the general contract issued non-compensable time extensions for the resulting delays. The general contractor also consulted with engineers to find solutions to the issues with the roads, but determined the solutions were too expensive and made no changes to the roads. Ultimately, in 2015, the Piling Subcontractor gave notice to the general contractor that it would have to demobilize from the project until access roads were provided in compliance with the subcontract terms. The Piling Subcontractor also submitted claims for damages to the general contractor under the subcontracts.
The Piling Subcontractor also had issues with the work platforms. In several places the work platforms were not sufficiently compacted, and would sink under the weight of the cranes on the project. This caused the Piling Subcontractor to have to purchase and use 180 crane mats. Due to the wet conditions, the crane mats would sink into the mud, creating additional labor and time to dig them out and move them as the cranes moved down the work platforms. A nearby Chevron plant also prevented a sufficiently sized work platform from being constructed in one area. In 2016, the Piling Subcontractor submitted claims for damages relating to the issues with the work platforms.
While the Piling Subcontractor continued to express concerns over the access roads and the work platforms, the general contractor ultimately demanded that the subcontractor proceed with work anyway. When the Piling Subcontractor refused, the general contractor terminated the Piling Subcontractor. The Piling Subcontractor then sued, and following a bench trial, the Piling Subcontractor was awarded $577,000 for damages relating to one subcontract and $2.4 million in damages relating to the other subcontract. This included $880,000 in demobilization damages.
The two main issues on appeal were whether the general contractor properly terminated the Piling Subcontractor and whether the trial court erred in awarding certain damages to the Piling Subcontractor. The 11th Circuit affirmed the trial court’s determination that the general contractor’s termination was not justified because the construction of adequate access roads and work platforms were all predecessor work activities to the work of the Pilings Subcontractor. Accordingly, because these items were not done sufficiently at the time of the termination, the general contractor had not contractual basis to terminate the Piling Subcontract for refusing to proceed with work.
The 11th Circuit affirmed in part and reversed in part the damages award. The general contractor argued that the trial court erred in awarding damages for the issues relating to the access roads because the contract had a no-damages-for-delay provision. The 11th Circuit disagreed with this argument, noting that while such provisions are enforceable, damages could still be awarded where there was a “knowing delay” which is sufficiently egregious or where a party has violated an implied promise not to hinder performance of a contract. The 11th Circuit specifically noted that the general contractor was well aware of the issues with the access roads, and despite available solutions, refused to implement them to the detriment of the Piling Subcontractor.
The Piling Subcontractor also appealed part of its damages award, arguing that the trial court erred in not awarding damages for additional disruptions caused by the general contractor’s breaches of the subcontracts. The 11th Circuit reversed the trial court to the extent the trial court had refused to award the costs of the additional crane mats to the Piling Subcontractor, finding that those causes arose from the general contractor’s failure to construct properly the work platforms and not because of a delay or hindrance caused by the general contractor. However, the 11th Circuit affirmed the trial court’s refusal to award damages based on the additional labor costs for moving the mats due to the muddy conditions, finding that the conditions were a hindrance that fell within the language of the no damages for delay provision.
The 11th Circuit also reversed an award of demobilization costs, finding that such costs were not awardable under the language of the subcontracts because they occurred post-termination by the general contractor.