By Annie D. Rosenthal of Saul Ewing Arnstein & Lehr LLP
Published July 18, 2022
Earlier this year, the Second District Court of Appeal of Florida held that a “no damages for delay” clause “will not be enforced in the face of governmental fraud, bad faith, or active interference with performance under the contract.” Sarasota County, Fla. v. Southern Underground Industries, Inc., 333 So. 3d 285 (Fla. 2d DCA 2022) (emphasis in original) (internal citations omitted).
Sarasota County (the “County”) contracted Southern Underground Industries, Inc. (“SUI”) to install a sanitary force main pipe and water transmission line. The County issued a stop work order because an owner of nearby property complained that the vibrations were causing damage to his home. Pursuant to the County’s contract, the County was permitted to suspend the work for a period not exceeding 90 days. On the 90th day, a structural engineer issued a report indicating that it was safe to proceed with construction. However, the County continued the suspension of the work for an additional 74 days.
As a result of the suspensions, SUI requested compensation due to the delay, which was denied by the County. SUI proceeded to file suit against the County for breach of contract. The trial court awarded SUI for the expenses incurred due to the County’s “wrongful continuation of the stop work order.”
On appeal, the County argued that SUI was not entitled to an award of damages because the contract contained a no damages for delay clause.
The Appellate Court affirmed the award of damages for SUI based on the County’s active interference. While the Appellate Court did not explicitly define “active interference,” the court found that the County actively interfered because it continued the stop work order “long after it was determined that is was safe to proceed with minimal damage to adjacent homes.”
This case provides notice to contractors and owners that a “no damages for delay” clause may not prohibit a contractor for recovering delay damages if the owner interferes with the contractor’s ability to timely perform its work.