March 6, 2013

State laws governing state highway contracts are typically, but not always, set out in different statutes than those applicable to other state and local public contracts.

State laws governing state highway contracts are typically, but not always, set out in different statutes than those applicable to other state and local public contracts.

In Barber Bros. Contracting Co., LLC v. State of Louisiana Dept. of Transp. and Dev., 2012 WL 5456099 (La.App. 1st Cir. 11/8/12), the courts found overlap in the laws.
The case involves a highway-construction contract between the Louisiana Department of Transportation and Development (LA DOTD) and Barber Brothers Contracting Co. LLC. The contract included a relocation of utilities provision, which provided that LA DOTD will “notify all known utility companies, pipeline owners or other parties affected by the work and endeavor to have the necessary adjustments of public or private utility fixtures, pipelines and other appurtenances within or adjacent to the limits of construction made as soon as possible.”

When the engineer determines that the contractor is experiencing significant delays in the controlling items of work because of delays by others in removing, relocating or adjusting utility appurtenances, contract time credits will be considered for such delays.

Hence, the contractor’s sole remedy for utility-related delays was the extension of time, and the contract foreclosed any possibility for delay damages.  

At the conclusion of the project, the contractor filed suit alleging that it incurred in excess of $1 million in damages when existing third-party-owned utilities that were slated for removal and/or relocation caused delays to construction. In response, the LA DOTD filed a motion for summary judgment seeking dismissal of the case based upon the No Damage for Delay provision.  

The contractor countered by citing Louisiana Statutes 38:3216(H), which provides that “any provision in a public contract which purports to waive, release, or extinguish the rights of a contractor to recover cost of damages, or obtain equitable adjustment, for delays in performing such contract, if such delay is caused in whole or in part by acts or omissions within the control of the contracting public entity or persons acting on behalf thereof, is against public policy and is void or unenforceable and shall be severed from the other provisions of the contract.”

The trial court agreed with the contractor and ruled that the No Damage for Delay provision is void. The LA DOTD appealed to the Court of Appeal of Louisiana for the First Circuit.
On appeal, the LA DOTD argued that the statute cited by the contractor that invalidates No Damage for Delay provisions in public contracts is inapplicable to LA DOTD and, in support, pointed to a provision in Title 48 of the Louisiana Revised Statutes that covered LA DOTD contracts.

The LA DOTD argued that because Section 38:3216(H) appears in a title of the Louisiana statutes that governs public contracts in general and does not appear in Title 48, the law has no application to a LA DOTD contract.  

The Court of Appeal disagreed. In doing so, it held that LA DOTD’s argument improperly focused on the words, “shall exclusively govern” and overlooked the provision stating that other laws relating to LA DOTD that are not in conflict with the provisions of Subpart A, “Contracts and Contractors for Department Projects,” also are applicable to LA DOTD contracts.

The Court of Appeal ruled that the law invalidating No Damage for Delay clauses did, in fact, “relate” to the LA DOTD and that law was not in conflict with any other LA DOTD-related law.  

Contractors performing laws in various states should review those laws covering public contracts in general as well as those established under the “Highways” portion of the state statutes and should fully acquaint themselves with all provisions that govern bidding and contracting for highway work within the particular state. R&B

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