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City's 'No Liability' Clause Can't Shield It From Delay Damages It Caused

Monday, September 03, 2012 05:52 am

 

Delay Damages

Technology Construction, Inc. v. City of Kingman, 2012 Ariz. App. Lexis 98 (June 12, 2012)

Relying on California precedent, an Arizona appeals court took a narrow reading of a contract clause eschewing liability for the expenses of a city construction project.

The City of Kingman, Arizona (the City) hired Technology Construction, Inc. (TCI) to construct an underpass railroad crossing for $5.2 million. The work included paving. When City-caused delays pushed the project back from June to November 2005, TCI found that the price of asphalt had risen dramatically compared to the price relied on in its bid. (Hurricane Katrina had occurred in the interim--in August 2005--and driven FOB oil prices up from $190/ton at the time of TCI's bid to $340/ton at the time of delivery of the materials to the project.) TCI sought additional payment for the increased cost of materials, but the City refused to pay. A trial court found in TCI's favor and awarded the contractor $325,000 plus interest. The City's appeal failed.

'No liability' applies to original contract scope, not changes

The City argued that TCI could not recover additional work expenses because the parties' contract contained a "no liability" clause, which stated that the City would not be "liable for any portion of the expenses of the work aforesaid ...".

However, the contract also incorporated a delay damages clause and a changed conditions clause contained in the 2004 Edition of the Uniform Standard Specifications for Public W [...]

 
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