John E. Green Plumbing and Heating Co., Inc. v. Turner Const. Co.

• Decision Date: 29 August 1984
• Docket Number: No. 83-1116,83-1116
• Citation: 742 F.2d 965
• Parties: JOHN E. GREEN PLUMBING AND HEATING COMPANY, INC., Plaintiff-Appellant, v. TURNER CONSTRUCTION COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 965

742 F.2d 965

JOHN E. GREEN PLUMBING AND HEATING COMPANY, INC., Plaintiff-Appellant, v. TURNER CONSTRUCTION COMPANY, Defendant-Appellee.

No. 83-1116.

United States Court of Appeals Sixth Circuit.

Argued June 7, 1984.

Decided Aug. 29, 1984.

Bruce L. Sendek, argued, C. William Garratt & Associates, Bloomfield Hills, Mich., for plaintiff-appellant.

William Wallace, argued, Thompson, Hine & Flory, Stephen F. Gladstone, Cleveland, Ohio, for defendant-appellee.

Before MARTIN and KRUPANSKY, Circuit Judges, and McRAE, Chief District Judge. ^*

BOYCE F. MARTIN, Jr., Circuit Judge.

In this diversity case, Green Plumbing and Heating appeals the district court's summary judgment and directed verdict in favor of Turner Construction Company. The main issues on appeal are the effect to be given a "no-damage-for-delay" clause in Green's construction contract with the City of Detroit and the adequacy of Green's proof of damages.

Green Plumbing was the plumbing and fire-sprinkler contractor for construction of the new Detroit General Hospital. Turner Construction was the construction manager for the project. As such, its duties included reviewing work schedules for the project to eliminate potential conflicts between the various contractors and conducting job-site meetings to resolve those conflicts which did arise despite all precautions. Green's contract with the City of Detroit Building Authority included a "no-damage-for-delay" clause. ¹ This clause prevented Green from collecting damages for delay caused by anyone connected with the project, including Turner.

In carrying out its duties under its contract, Green claims to have encountered numerous problems caused by Turner's mismanagement of its oversight responsibilities: contractors were doing work out-of-sequence, no temporary heat was provided, and design changes took too long to be approved. Some of these problems, like the slow approval of design changes, simply caused a delay in the completion of Green's work. Other problems, like the lack of temporary heat and the out-of-sequence work, caused Green to employ more manpower resources to get the job done. As a result of these difficulties, Green claims to have lost a great deal of money.

In 1979, some three years after the project began, Green filed suit against Turner on two separate theories of liability: (1) Turner intentionally interfered with Green's contractual relationship with the City of Detroit; and (2) Turner negligently performed its construction management duties. The trial judge granted summary judgment in favor of Turner on the second count, see John E. Green Plumbing & Heating Co. v. Turner Construction Co., 500 F.Supp. 910 (E.D.Mich.1981), ruling that the "no-damage-for-delay" clause prohibited all claims by Green against Turner based on negligence. ² At trial, he granted a directed verdict for Turner on the first count at the close of Green's evidence because Green failed to show that Turner acted with fraud, bad faith or malice towards Green. Green now appeals from both rulings.

No-damage-for-delay clauses "are commonly used in the construction industry and generally recognized as valid and enforceable." W.C. James, Inc. v. Phillips Petroleum Co., 485 F.2d 22, 25 (10th Cir.1973). See also 74 A.L.R.3d 187 (1976); 13 Am.Jur.2d, Building and Construction Contracts, Sec. 52 (1964). However, because of their harsh effects, these clauses are to be strictly construed. See, e.g., E.C. Ernst, Inc. v. Manhattan Construction Co. of Texas, 551 F.2d 1026, 1029 (5th Cir.1977), cert. denied, 434 U.S. 1067, 98 S.Ct. 1246, 55 L.Ed.2d 769 (1978). In our case, the clause at issue forbids damages "should the Contractor be delayed in the commencement, prosecution, or completion" of the project. Green argues rather forcefully that this phrase, strictly construed, only bars delay damages and not other kinds of damages, such as damages for hindering work on the project. Accord Lichter v. Mellon-Stuart Co., 305 F.2d 216, 218-19 (3d Cir.1962). Under this interpretation, delay means time lost where work cannot be performed because essential supplies have not been delivered or necessary preliminary work has not been performed. Delay damages, then, refers simply to the cost of an idle workforce.

We agree with Green. In this context, Green is not arguing that it suffered damages from delay, but rather that it suffered damages from obstacles created by Turner. ³ And because at least a portion of Green's claimed damages related to extra manpower costs incurred as a result of Turner's hindrances--failure to properly coordinate work on the project and failure to ensure that temporary heat was provided--, it was error for the trial judge to grant summary judgment against Green on this issue.

We note that our reading of this clause is not inconsistent with results reached in other cases where "no-damage-for-delay" clauses were used to deny recovery. In many of those cases, the damages being sought were simply delay damages. Moreover, the clauses being construed often barred damages resulting from any delay or hindrance. See, e.g., Chicago College of Osteopathic Medicine v. George A. Fuller Co., 719 F.2d 1335, 1339 (7th Cir.1983) ("delayed ... or obstructed or hindered"); Peter Kiewit Sons Co. v. Iowa Southern Utilities Co., 355 F.Supp. 376, 383 (S.D. Iowa 1973) ("no claim ... for hindrances or delays"); Siefford v. Housing Authority, 192 Neb. 643, 223 N.W.2d 816, 822 (1974) ("no payment ... for damages because of hindrance or delay"); Western Engineers, Inc. v. State Road Comm'n, 20 Utah 2d 294, 437 P.2d 216, 217 (1968) (no damages for "any delay or hindrances").

Nonetheless, we do not believe that the trial judge's error requires a reversal of the ultimate decision in this case. Green was still allowed to go to trial on its first theory of liability, intentional interference with contract. After reviewing the record, we are confident that Green did not remove from its case any of its damage claims because of the trial judge's erroneous ruling on the negligence count. Instead, it is apparent that Green simply attempted to prove that all of Turner's wrongful acts were done intentionally rather than...