But enough of daydreams. The purpose of this column is to tell readers about the case that prompted the daydream. In Holloway Construction Company v. Department of Transportation, 461 S.E.2d 257 (Georgia Court of Appeals 1995), the Georgia Court of Appeals affirmed a partial summary judgment in favor of the Georgia DOT on the grounds that the DOT's "no damage delay" clause limited the DOT's liability for delays caused by separate prime contractors.
The DOT contracted with multiple prime contractors to construct the project. Holloway, the grading contractor, failed to timely complete its work within the times specified in the contract, resulting in the DOT's assessment of liquidated damages. Holloway then filed suit against the DOT seeking not only to recoup the liquidated damages, but also to recover delay damages and expense involved in relocation of some pipe.
The court held that Holloway could not recover delay damages from the DOT attributable to another contractor's completion of its bridge construction work. The court relied on the clause found in most state DOT spec books which provides: When separate contracts are let within the limits of any one project, each contractor shall conduct his work so as not to interfere with of hinder the progress or completion of the work being performed by other contractors. Contractors working on the same project shall assume all liability, financial or otherwise, in connection with his contract and shall protect and save harmless (DOT) from any and all damages or claims that may arise because of inconvenience, delay, or loss experienced by him because of the presence and operations of other contractors working within the limits of the same project. The court found that under the clause Holloway's sole remedy was to seek a time extension.
Holloway argued that the DOT breached an implied and express obligation to coordinate separate prime contractors. The court disagreed, stating it had previously found Section 105.07 to be a valid "no damage for delay" clause.
Holloway also argued that the DOT breached its contract by failing to insert intermediate completion dates in its contracts to ensure the work would be properly sequenced. The court disagreed, stating that the failure to impose such deadlines-which Holloway never required as part of its contract-can impose no liability on the DOT. The court suggested that Holloway could simply have insisted upon a contract provision requiring intermediate completion dates and stating that if the dates were breached, only delays would not fall under the "no damages" clause.
Holloway next argued that the DOT breached the contract by changing the sequence of Holloway's work. The court found that Holloway had actually decided to change the sequence of its work and on that basis ruled against Holloway.
Holloway then argued that the DOT breached the contract by threatening to terminate the contract if Holloway suspended its work in order to reduce its damages. The court noted that Holloway failed to cite any specific contract provision, which was breached, or any legal authority supporting its argument. The court also noted that Holloway acquiesced in the alleged breach by continuing to work.
Nothing frustrates a contractor more than being unable to work productively as a result of problems by others. The contractor watches as its margin is eaten away day after day and the rhythm of the job is lost. I simply believe that a "no damage for delay" clause unfairly shifts the risk to contracts who are unable to account for the risk in their bids and unable to eliminate the risk during construction.
Parvin is a shareholder in the law firm of Leonard, Hurt & Parvin, P.C., which has offices in Austin, Texas; Dallas; Houston; Richmond, Va; and Washington, D.C. Leonard, Hurt & Parvin provides services for the construction industry, including claim preparation and analysis, negotiation, environmental law, alternative-dispute resolution, privatization financing, labor law and litigation. You may write to him in care of the editor.
