LAW: The Contractor's Side

Providing some direction

Trucks Article October 04, 2001
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Sometimes I read court decisions backward

Sometimes I read court decisions backward. First, I find out who won and then I find out why. Mississippi Transportation Commission v. Ronald Adams, 753 So.2d 1077 (2/17/2000) is a case I read from beginning to end. Interestingly, I could not ascertain how the court would ultimately rule until I got to the end.

In February 1995, Adams was awarded a contract by the commission. The proposal and contract documents stated that the Notice to Proceed (NTP) would be issued by May 8, 1995, and stated that all arrangements had been made for the removal of all utilities from the right-of-way prior to the date the NTP was to be issued.

In April, the commission informed Adams there were problems with the right-of-ways due to relocation of utilities. Adams placed crews and equipment on standby during the delay. The NTP was not issued until Aug. 2, 1995, 86 days after the date indicated in the contract. Because the delay added a second winter, the commission extended the project completion date 222 days to April 24, 1997.

Dated argument

When Adams sued to recover delay damages, the commission filed a motion for summary judgment arguing that the NTP date specified in the contract was merely anticipated and argued that Adams was not entitled to delay damages because of two "no damage for delay" clauses contained in the State Standard Specifications Book. The trial court ruled that the jury should interpret the contract language.

The jury awarded Adams $387,923 in damages. The commission appealed. The commission first argued the contract unambiguously stated that the project start date of May 8, 1995, was merely an anticipated date. It relied on a section of the Standard Specifications, which stated that the "anticipated date" of the NTP would be specified in the bid proposal.

Adams argued that the special provisions took precedence over the Standard Specifications. The special provisions stated that except as provided in another Standard Specification section, the NTP would be issued no later than May 8, 1995. The court concluded the phrase "[e]xcept as therein provided" clearly referred to a section of the Standard Specifications, which did not address the NTP.

The court construed the ambiguity in favor of Adams for two reasons. First, on the basis that ambiguities in a contract are to be construed against the party who drafted the contract. Second, because special provisions govern over boilerplate Standard Specification provisions.

The commission argued that the "no damage for delay" provisions found in §§105.06 and 107.04 of the Standard Specifications prevented Adams from recovering monetary damages. Adams countered that §§105.06 and 107.04 did not apply to a delay issuing the NTP and that delay in issuing the NTP was covered by §108.02, which did not include a "no damage for delay" clause. The court disagreed with Adams’ interpretation because the NTP delay occurred because of a delay in the relocation of certain utility lines, which was covered by the "no damage for delay" clause.

With exceptions

At this point in the decision the reader may conclude that Adams lost. But, the court continued, turning to the four exceptions to the application of "no damage for delay" clauses. Damages may be recovered for any delay that: (1) was not intended or contemplated by the parties to be within the purview of the provision; (2) resulted from fraud, misrepresentation or bad faith on the part of one seeking the benefit of the provision; (3) has extended such an unreasonable length of time that the party delayed would have been justified in abandoning the contract; or (4) is not within the specifically enumerated delays to which the clause applies.

The court found the delay in the issuance of the NTP was a specifically enumerated delay to which the "no damages for delay" provision applied. Thus, the fourth exception was of no benefit to Adams. With respect to the first exception, the court referred to testimony by the commission’s own engineer that he never contemplated the delay that occurred. Regarding the second exception, the court noted that the jury had before it the Utility Certification which "certified" that the water line would be removed on May 6, 1995. Regarding the third exception, the court noted that because the three-month delay in issuing the NTP delayed the project 222 days, adding a second winter season, the jury could have determined the delay was unreasonable.

"No damage for delay" provisions are difficult to overcome. The exceptions listed above were carved out by courts deciding it was unfair to penalize a contractor in those circumstances.

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