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Contract Prevented Sub From Pinning $1M Delay Damages On Contractor Misconduct

Monday, December 03, 2018 02:24 pm


Delay --- Damages --- Breach of Contract

Hailey Insulation Corp. v WDF, Inc., 2018 N.Y. Misc. Lexis 4845 (October 22, 2018)

A subcontractor could not use one of four exceptions recognized in New York to get around a no-damages-for-delay clause---despite the general contractor's apparent mismanagement of the project. 

Columbia University hired Lend Lease to manage a construction project at the Columbia Mind and Brain Building in New York City. Lend Lease hired general contractor WDF, Inc. (WDF) to perform plumbing and HVAC work, and, in July 2014, WDF hired subcontractor Hailey Insulation Corporation (Hailey) to install fireproofing on the plumbing and HVAC systems.

Hailey claimed it completed all its subcontract work, despite extensive delays caused by WDF's mismanagement. In its complaint, the sub sought $1,341,480 allegedly still owed on the subcontract, as well as delay damages, and charged WDF with breach of contract. WDF countered that the subcontract's one-year statute of limitations on all causes of action barred Hailey's complaint since it was filed outside that timeframe. WDF moved to dismiss, and the court agreed but only in part.

Contractor told sub: Don't sue, I'm handling it

WDF alleged that Hailey's complaint was commenced well beyond a year after Hailey had knowledge of WDF's alleged breaches. WDF also claimed that Hailey failed to provide the "contractually necessary pre-litigation notice of its claims before commencing the action"---i.e., proper written notice of the complaint.

The subcontract stated: "No action or proceeding shall be maintained by Subcontractor...against Contractor...unless the following occur: (a) Such action or proceeding is commenced within one (1 [...]

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