Subscribe to USGNN!

USGNN Original Story Colorado Court of Appeal Upholds Subcontractor's Compensation for Delays By Others

The Colorado Court of Appeal's decision in Tricon Kent Co. v. Lafarge North America, Inc. et al. (Colo. App. 2008), upheld a subcontractors' right to be compensated for costly project delays caused by others. The court determined that while "no damage for delay" clauses are enforceable in Colorado, the "active interference" doctrine is a valid and recognized exception to the enforceability of such clauses.

The case stems from a 2003-2004 highway construction project supervised by the Colorado Department of Transportation (CDOT) in which Lafarge was the general contractor. In March 2004, Tricon and Lafarge entered into a subcontract that included a "no damages for delay" clause.

It provided that, "in the event the subcontractor's performance of this subcontract is delayed or interfered with by acts of the owner, contractor or other subcontractors, he may request an extension of time for the performance of same, as herein provided, but shall not be entitled to any increase in the subcontract price or to damages or additional compensation as a consequence of such delays or interference, except to the extent that the prime contract entitled the contractor to compensation for such delays and then only to the extent of any amounts that the contractor may, on behalf of the subcontractor, recover from the owner for such delays."

Under CDOT's phasing plan, another subcontractor had to complete its work before Tricon could proceed. However, correspondence from Lafarge indicated that Tricon had been directed by the Lafarge to proceed as scheduled as well threatened to seek liquidated damages if Tricon did not do so.

In December 2004, Tricon sought additional compensation from Lafarge based on the delays, which was denied. Moreover, at the end of the project, CDOT assessed Lafarge 27 days of liquidated damages for the entire project, and Lafarge passed on to Tricon the liquidated damages for three of the 27 days. Tricon denied responsibility for those damages.

During court proceedings, Tricon argued that the "active interference" exception to the "no damage for delay" clause applied since Lafarge knew of the delay and the consequences such a delay would mean to Tricon's progress. Lafarge countered that the "no damage for delay" clause precluded the company from paying any delay damages to Tricon and that any exception to the clause had to be based on delays caused in bad faith, which Lafarge denied.

The trial jury returned a verdict in favor of Tricon and awarded it $29,276 on the contract balance and $144,600 for additional compensation. The Colorado Court of Appeals upheld this decision.

Need more info and analysis about the issues?
CLICK HERE to subscribe to USGlass magazine.