Opinion ID: 686513
Heading Depth: 2
Heading Rank: 3

Heading: Unavoidable Delay

Text: 35 There is some dispute between the parties as to whether a theory of unavoidable delay based on the 614 Company litigation was submitted to the jury as a separate ground upon which it could find the City liable for breach of contract. LSGI contends that it did not affirmatively argue unavoidable delay to the jury as a separate ground for finding a breach, but at the same time, it maintains that termination during a period of unavoidable delay would be improper. Further, it has argued that the 614 Company lawsuit did represent an unavoidable delay under the terms of the Development Agreement. Because the verdict form simply asked whether the City breached the Development Agreement and because the district court instructed the jury that unavoidable delay, not caused by either party, would excuse nonperformance, we will assume for purposes of analysis that a theory of unavoidable delay was presented to the jury as an independent theory of the City's breach of the contract. This approach is consistent with our duty to analyze the evidence in the light most favorable to the prevailing party when reviewing the denial of judgment as a matter of law (JNOV). White v. Pence, 961 F.2d 776, 779 (8th Cir.1992). 36 Under the Development Agreement, a third party lawsuit constituted an unavoidable delay and postponed the timing for the fulfillment of obligations made subject to any unavoidable delay. Therefore, LSGI's argument is that the City's termination of the Development Agreement was wrongful because LSGI's failure to obtain a second anchor tenant could not serve as a proper basis for the City's action in light of the 614 Company lawsuit. The City asserted in its brief that the evidence was uncontradicted that the 614 Company lawsuit was not caused by the MCDA and that the 614 Company litigation was still pending. Therefore, the third party action was an Unavoidable Delay as that term is defined by the Development Agreement. Section 15.03 of the Development Agreement provided that the City's right to terminate the contract was subject to Unavoidable Delays. The language of this section requires us to consider the provisions of Section 17.08 entitled Enforced Delay in Performance Beyond Control of Party. This section allowed an extension for performance of any obligation made subject to unavoidable delays provided, that the party seeking the benefit of the provision of this section shall, within thirty (30) days after the beginning of any such Unavoidable Delay, have first notified the other party thereof, and requested an extension for the period of such delay. In considering the parties' motions for summary judgment, the district court noted that the 614 Company lawsuit was commenced on November 18, 1987, and that LSGI's first written assertion of unavoidable delay did not occur until January 28, 1988. Further, the district court noted that LSGI did not dispute the fact that its notice was tardy. The district court ruled, however, that the notice provision should not be enforced under Minnesota law unless the party who was to receive notice could prove prejudice. La Societe Generale Immobiliere v. The Minneapolis Community Dev. Agency, No. 3-89-372, slip op. at 12 (D.Minn. July 19, 1990) (Summary Judgment Order). Finding that prejudice to the MCDA was unlikely here, the district court denied summary judgment on this ground. 37 To support its understanding of Minnesota law on the enforcement of notice provisions, the district court relied on two cases which involved circumstances unique to the insurance industry. See St. Paul Fire & Marine Ins. Co. v. Wabash Fire & Casualty Ins. Co., 264 F.Supp. 637 (D.Minn.1967); Reliance Ins. Co. v. St. Paul Ins. Co., 307 Minn. 338, 239 N.W.2d 922 (1976). The district court improperly relied on these insurance cases in order to disregard the clear language of the commercial development contract at issue in the present case. In Reliance, for example, the Supreme Court of Minnesota was called upon to decide whether an attorney being sued for malpractice lost the benefit of her liability insurance policy by failing to notify her insurer in the timely manner required by the policy. Concluding that the insured's late notification did not bar coverage, the court stated: 38 One of the prime reasons for this type of liability insurance is to pay damages caused by certain acts or omissions of the insured.... The very nature of these peculiarities insured against indicates that this type of insurance is not only a contract between the insurer and the insured but also a contract for the benefit of the public. Therefore, we hold that despite delay in notification the insurers are required to afford coverage under their contracts in the absence of actual prejudice, should liability be otherwise shown according to the terms of the policies. 39 239 N.W.2d at 924. The limited nature of this holding does not fairly support the district court's expansive conclusion that notice provisions in all types of contracts will not be enforced in the absence of actual prejudice. But for the district court's summary judgment order in this case, we have found no authority for the broad application of Reliance to contracts in general. 5 When interpreting commercial contracts like the one before us, we will give notice provisions their plain and ordinary meaning. Therefore, LSGI could not seek the benefit of the extension for performance provided under Section 17.08 of the Development Agreement because, by its own admission, it did not timely notify the City of its desire to take advantage of the unavoidable delay extension. Consequently, it was not improper for the City to base its decision to terminate the Development Agreement on LSGI's inability to secure a second anchor tenant. The City was therefore entitled to judgment as a matter of law on the unavoidable delay theory.