PALOS VERDES, CA - In the realm of liquidated damages, an owner’s delay has traditionally been recognized as a reasonable contractor defense, but things are not so straightforward in 2019. Christopher Brasco, senior partner, Watt, Tieder, Hoffar & Fitzgerald, LLP, led a group of panelists on day one of Construction Super Conference to explore; Who’s fault is it anyway?
In recent years, traditional contractor defenses have gradually eroded, fueled by contractual provisions designed to prevent contractors from raising owner-caused (or owner’s concurrent) delay as a defense against the assessment of liquidated damages.
“Let’s say it’s a 10-day project, and it actually takes 20, and the owner is responsible for most of the delay,” said Brasco, a panelist on Damages Without A Cause, an educational session held on day one of CSC at the Terranea Resort in Palos Verdes, Calif. “Now let’s say the contractor sleeps on provisions that say you must, after each day, request time extensions if the other party is at fault.”
From the contractor’s position, what can be done? Brasco and colleagues discussed legal principles via a hypothetical case related to enforcement of liquidated damages (LD) provisions, including the law's evolving approach to apportioning LD assessments.
What are the standard defenses against LD assessments? How can contractors challenge arguments that they have waived owners’ concurrent delay as a defense to an LD assessment? How can contractors position themselves to defeat an assessment of LDs?
Panelists pointed out that liquidated damages provisions are generally enforceable when:
• they are intended to be compensatory rather than punitive;
• the injury from the contractual breach is difficult to precisely quantify; and
• the amount of stipulated damages is a reasonable forecast of future loss.
• Bob Majerus, vice president and general counsel, Hensel Phelps
• Christopher Brasco, senior partner, Watt, Tieder, Hoffar & Fitzgerald, LLP
• Kathleen Barnes, senior partner, Watt Tieder Hoffar & Fitzgerald, LLP
• Ken Smith, group counsel, Granite Construction
• Vivian Katsantonis, senior partner, Watt Tieder Hoffar & Fitzgerald, LLP
CSC will be again be in full swing on day two (Dec. 17) with an early morning Keynote speech, educational sessions throughout the day, and exhibitors available during Knowledge Exchange Expo Hall hours. See constructionsuperconference.com for details and specific hours.