Subcontractor was granted summary judgment on its suit against Prime to recover damages for Prime’s failure to prosecute a pass-through claim for delay damages against the City of New York. Court stated that the claim against the Prime was not barred by the no-damages-for-delay clause in the Prime Contract. Here, the Prime failed to timely prosecute the claim against the City resulting in it being dismissed. Prime also breached its duty of good faith and fair dealing when it filed to inform the Subcontractor of a settlement with the City and failed to provide the Sub any proceeds from that settlement. Rad & D’Aprile, Inc., v Arnell Construction Corp., 163 N.Y.S. 3d 653 (2022).
The plaintiff established that the defendant breached the implied covenant of good faith and fair dealing by failing to timely prosecute the plaintiff’s pass-through claim against the City. The implied covenant of good faith and fair dealing between parties to a contract embraces a pledge that neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract. It encompasses any promises that a reasonable person in the position of the promisee would be justified in understanding were included…. The covenant of good faith and fair dealing required the defendant to take all reasonable steps so that the plaintiff’s right to an eventual recovery, if any, from the City would be protected…. Here, the defendant did not take all reasonable steps to protect the plaintiff’s right to recovery….”
Comment: This decision shows the importance of the doctrine of good faith and fair dealing. This duty is imposed by common law on the parties even when the contract does not expressly state that duty in the text.
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 ConstructionRisk 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 Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932. This article is published in ConstructionRisk Report, Vol. 24, No. 6 (July 2022).
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