Opinion ID: 1874151
Heading Depth: 1
Heading Rank: 1

Heading: User Costs

Text: The Highway Department argues that the trial court erred because it dismissed the amended counterclaim, which sought a recovery of user costs allegedly caused by Milton Construction's breach of the contract. The Highway Department says that even though this Court held that the disincentive provision of the contract was void, the language of that provision still allows the Highway Department to prove and recover user costs caused by Milton's delay. The disincentive clause states as follows: The contractor's attention is directed to the fact that it is in the public's best interest to complete the project at the earliest possible date taking into account the traffic control plan and sequence of construction specified in the plans. The final completion of the entire project and final acceptance by the department must be accomplished within 330 calendar days [in the I-65 project; 210 in the I-59 project]. Milton I, 568 So.2d at 786. The Highway Department relies in large part on the decision in Cook v. Brown, 408 So.2d 143 (Ala.Civ.App.1981). In Cook, the Court of Civil Appeals held that a liquidated damages provision contained in a contract between the parties was void as a penalty. The court reversed the trial court's judgment and remanded the case with instructions. In its opinion, the court stated that its finding that the liquidated damages provision was void did not prevent Cook from recovering actual damages caused by Brown's breach of the contract. The Highway Department urges this Court to apply Cook to this case and hold that although the disincentive clause was void, the Highway Department may amend its counterclaim to seek user costs caused by Milton Construction's delay in completing the contract. We hold, however, that Cook is distinguishable from this case. In Milton I we held that the disincentive clause of the contract between Milton Construction and the Highway Department was void as a penalty and that it was not intended to provide compensation for any delay caused to the Highway Department or to the public.  Milton I, 568 So.2d at 791 (emphasis added). Unlike the contract in Cook, the instant contract contained a liquidated damages clause and the invalid disincentive clause. When the court in Cook invalidated the liquidated damages clause as a penalty, the parties were left to recover actual damages. Here, the Highway Department has already recovered under the default and liquidated damages clauses of the instant contract. Milton I, 568 So.2d at 786-87, 791. Now the Highway Department seeks to recover user costs in addition, on the ground that the contract provided that both the disincentive clause and the liquidated damages clause applied in case of deadline overruns. We have already held the following: The recovery of `all costs' by the Highway Department upon Milton's default in either the I-65 Project or the I-59 Project, along with the additional recovery of liquidated damages for delay, would certainly justly compensate the Highway Department for any injury; any further compensation would pass the limit of reasonableness. Id. That is, the Highway Department's recovery under the contract's default provisions and liquidated damages provisions provide it with full compensation. Whether the additional damages are characterized as disincentives or as user costs, they would pass the limit of reasonableness. The Highway Department's recovery of such damages was specifically foreclosed by our decision in Milton I, wherein this Court held that the disincentive clause was a penalty and not a means of recovering damages for the travelling public. The same analysis applies to the claim for recovery of user costs, and the Highway Department is equally foreclosed. Although the Highway Department can not recover user costs in this case, we do not foreclose the possibility that the Highway Department may recover such costs caused by contract delays in highway construction contracts where the contract allows for such damages and those damages do not constitute a penalty. Therefore, we hold that the trial court did not err in dismissing the Highway Department's amended counterclaim seeking an award of user costs.