Facts and Claims
The complainant, White Oak Corporation, is a construction firm that, on April 17, 1974, signed a written contract with the defendant Connecticut Department of Transportation (DOT) for building Route 72 in New Britain and Berlin (217 Conn. 281). In November of 1979, White Oak Corporation finished the job (217 Conn. 281). On October 18, 1983, White Oak filed a lawsuit under General Statutes 4-61 (217 Conn. 281). Among other things, they were seeking payments allegedly owing on the contract with DOT and losses sustained by the plaintiff due to DOT’s allegedly prolonged conclusion of the project. The trial court assigned the matter to a panel of three judges for a determination of secondary facts upon a petition filed by White Oak under General Statutes 13b-57a.
Holdings
The arbitrators found that external factors caused all 392 days of postponement. The arbitration ruled in favor of White Oak in most of its claims. The panel ruled that DOT had not made the contract’s regular payments when project sections were finished or cleared by the DOT’s expert. The ruling held that DOT also owed White Oak for unexpected work it requested. Finally, the arbitrators found that DOT overcharged White Oak for material taken during the job and entitled White Oak to the extra sum withheld from DOT’s reimbursements.
Judgment was issued after the trial court accepted all factual conclusions made by the arbitration board but upheld several challenges raised by DOT. The court ruled against White Oak and its request for prejudgment interest. It invalidated the award of damages caused by the gas company’s delay while reducing the damages permitted for idle machinery caused by DOT’s additional postponements. White Oak eventually appealed all three of these holdings.
Major Issues
One of the main points of contention is whether or not the plaintiff’s ability to collect damages is affected by a “no damages for delay” provision in the contract. The following issue to be addressed was whether or not the plaintiff’s idle machinery compensation should be reduced for the absence of wear and tear. The third and final issue was whether or not the state was responsible for the plaintiff’s prejudgment interest.
Supreme Court Rulings
Specifically, the Supreme Court upheld the lower court’s ruling concerning the reduction of delay damages for the gas company delay and the reduction of idle machinery damages, both of which were contested. Given that the plaintiff misinterpreted a contract clause, the Court denied the plaintiff’s claim without addressing bad faith and gross negligence. The NDFD clause showed that the delay was predictable and anticipated, so it rejected the plaintiff’s exception claim. To the extent that the ruling exempted DOT from paying prejudgment interest in accordance with Section 37-3a of the General Statutes, that provision was overturned (217 Conn. 281). Additionally, they sustained DOT’s counter-appeal that sought to reduce some of the damages caused by the gas company’s holdup.
Impact
Owners should beware of contractor delay allegations, as they are detrimental to the owner’s financial stability and pose a direct danger to their work. Therefore, owners look for no-damages-for-delay (“NDFD”) provisions in building contracts to transfer the risk of their delay-causing actions to the contractor. Most states consider NDFD provisions legitimate, enforceable, and not objectionable to the public interest, primarily due to the policy supporting freedom of contract. In 1991, Connecticut state started following a similar pattern regarding this issue (217 Conn. 281). Most importantly, the Supreme Court approved the four exceptions to implementation in White Oak Corporation v. Department of Transportation (217 Conn. 281). It upheld the trial court’s ruling that the clauses were legitimate and actionable.
Work Cited
Supreme Court of Connecticut. White Oak Corporation v. Department of Transportation. 1991. Caselaw Access Project, Harvard Law School. Web.