Where a general contractor failed to follow contract procedures to submit a time extension request, a city was entitled to collect liquidated damages from the contractor despite the fact that the city caused the delay.  Since the contractor failed to follow the procedures to claim an extension of time, the trial court would not even consider the evidence of whether the late completion was caused by actions of the city.  The appellate court affirmed that parties are permitted to specify by contract that a contractor intending to assert that delay was caused by the owner so as to avoid the effect of the contractor’s failure to complete its work on schedule must give written notice of its intention to assert such a claim within a reasonable time.  The court explained that “To alter the contract by time—regardless of reason—the contract required the party seeking the alteration to obtain a change order either by mutual agreement or by submitting a claim to the engineer with a request for a formal decision in writing.”  Since neither procedure was used, “the time was not extended, regardless of which party was to blame for the late completion.”  The contractor argued that liquidated damages could not be awarded for any part of the delay caused by the city even if the contractor failed to follow the contract procedures for obtaining a time extension.  In rejecting that argument, the appellate court in Greg Opinski Constr. v. City of Oakdale, 132 Cal.Rptr.3d 170 (2011), stated:

The court was correct to rely on [contractor’s] failure and enforce the terms of the contract.  It makes no difference whether [Contractor’s] timely performance was possible or impossible under these circumstances.  The purpose of contract provisions of the type authorized by [civil code] is to allocate to the contractor the risk of delay costs—even for delays beyond the contractor’s control—unless the contractor follows the required procedures for notifying the owner of its intent to claim a right to an extension.

Comment:  The holding of this case should be a powerful reminder that contract terms establishing procedural conditions for changes are generally enforced by courts even when the results may seem unfair – such as imposing liquidated damages when the delays were not necessarily caused by the contractor.  When a schedule is starting to slip because of conditions or changes beyond the control of the contractor, a contractor is well advised to promptly advise the owner in writing of the reasons for the schedule slippage and to follow the contractual requirements for promptly submitting a written request for a change order seeking a time extension.

About the author: Article written by J. Kent Holland, Jr.,  a construction lawyer located in Tysons Corner, Virginia,  with a national practice (formerly with Wickwire Gavin, P.C. and now with Construction Risk Counsel, PLLC) representing design professionals, contractors and project owners.  He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects.  He is publisher of ConstructionRisk.com Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932.  This article is published in ConstructionRisk.com Report, Vol. 14, No.4 (April 2012).

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