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Court Upholds Damages Over Bridge Job Delays

Wednesday, September 6, 2017

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A Michigan appeals court ruled last week that nearly $2 million in damages issued to a bridge-painting firm over delays on a 2008 job are appropriate, despite the contractor’s contention that site conditions and issues on the part of the Michigan Department of Transportation itself were at the root of many of the setbacks.

An Aug. 29 opinion issued by State of Michigan Court of Appeals judges Karen M. Fort Hood, Mark J. Cavanaugh and Amy Ronayne Krause affirms a lower court’s decision that MDOT was within its rights to charge Abhe & Svoboda Inc., of Jordan, Minnesota, more than $1.9 million in liquidated damages due to delays on a repainting job on the Mackinac Bridge. The job in question was a contract issued in 2007 for work to be completed in by Oct. 30, 2009; the project was ultimately completed in 2011.

Mackinac Bridge
Lars Lentz, CC BY-SA 1.0, via Wikimedia Commons

An appeals court upheld $1.9 million in liquidated damages assessed by the Michigan Department of Transportation in relation to cleaning and coating work performed by contractor Abhe & Svoboda Inc. between 2008 and 2011.

Abhe & Svoboda, in its suit over the charges, argued that some of the lost time on the job was caused by site conditions and by oversights on the part of MDOT. The project lost 56 days due to the agency’s delays in approving a scaffolding plan for the job. Another 459 days of delay, the firm argued, came as a result of site conditions that were “substantially worse than what could have reasonably been anticipated,” and the need for stripe coating, which Abhe & Svoboda said was outside the scope of the contract.

At the time of the project, a supervisor from the firm told the local St. Ignace News that unexpectedly cool temperatures had prevented paint application and set back the job’s completion date.

The work performed as part of the 2007 contract was $11 million in cleaning and recoating of steel on the 5-mile-long suspension bridge’s north end, from the north tower to St. Ignace. The bridge, opened in 1957, connects Michigan’s upper and lower peninsulas. It is currently undergoing a separate cleaning and recoating job, a $6.3 million contract awarded earlier this year to Seaway Painting LLC.

Extension Request Timing

The appeals judges’ opinion hinges largely on communication between Abhe & Svoboda and MDOT regarding the delays and potential contract extensions. According to the court, the contract stipulated that the contractor could seek an extension based on weather concerns, but that the request had to be filed with MDOT within 14 days “following the end of the delay” or “following the end of the calendar month in which the delay occurred.”

The contractor argued that it had requested an extension twice. MDOT countered that it had requested the agency waive liquidate damages, but had never formally requested an extension of time as per the contract. The court ruled that even if the firm had requested extensions when it said it did—Oct.14, 2010, and Nov. 2, 2011—there was no evidence that either date fell within the specified period in which the contractor was permitted to do so.

The 2011 date was nearly three months after the job was finished, the court notes, and there was no indication in either party’s case that the 2010 date immediately followed a specific delay in the project.

The liquidated damages were calculated based on the 644 days between the completion date the contract had stipulated, in October 2009, and the date the project was actually done, in August 2011.

Winter Days Irrelevant

Abhe & Svoboda argued in the suit that the liquidated damages as assessed were unenforceable penalties, because they applied in part to dates in the winter when work could not have been done, and when both parties agreed work would be shut down. The time between the original deadline and the project’s completion included two winters.

The contractor said that liquidated damages are to be calculated based on “an honest attempt to estimate damages that are not easily ascertainable with precision, rather than a penalty,” and that charging the firm $3,000 per day in damages amounted to a penalty if the fines included days when work couldn’t have been done.

The appeals court judges say in their ruling, however, that the damages aren’t based on specific periods of time within the overall project, but on the overall period the project ran past its agreed-upon deadline. “The liquidated damages clause reflects the parties’ agreement that defendants [MDOT] would suffer harm if the project was incomplete after a certain date, irrespective of how or why it was incomplete.”

“It is simply irrelevant whether plaintiff could or could not work during any part of the contract term,” the judges add.

Abhe & Svoboda did not immediately respond to a request for comment on the ruling Tuesday (Sept. 5).

   

Tagged categories: Abhe & Svoboda; Bridges; Contractors; Contracts; Government contracts; Lawsuits; NA; North America; Program/Project Management

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