Opinion ID: 2608725
Heading Depth: 1
Heading Rank: 2

Heading: Liquidated Delay Damages Where Both Parties Have Contributed to the Delay

Text: Since there is no serious dispute that the appellee caused at least some of the delay, we have directed our attention first to the issue of whether the delay caused by the appellee disentitles him to collect any liquidated delay damages from the appellant for any delay which the appellant may have caused. Our review of the law persuades us that 5 Williston on Contracts, Third Edition § 789, pp. 764-766, correctly states the general rule: Where both parties are in fault a party who has contributed to the breach cannot recover a sum stipulated as liquidated damages, even though performance of the contract is continued, and the other party thereafter is at fault: ... The author goes on, however, to notice an exception where he says: In building contracts, there is often inserted a provision giving the architect power to certify an extension of time in certain cases, by virtue of which the effect of a delay caused by the owner operates merely as an extension of the time for performance, and a new time is substituted for the old. In that event though the owner causes delay the builder is liable in liquidated damages, but the period of delay caused by the owner is deducted from the total delay. Unless the contract contains such a provision the delay due to each party will not generally be apportioned. The exception discussed in Williston is based in large part on two United States Supreme Court decisions. In United States v. United Engineering and Contracting Company, 234 U.S. 236, 34 S.Ct. 843, 58 L.Ed. 1294 (1914), the government sought liquidated delay damages on a construction project which was initially delayed through the sole fault of the United States. Supplemental contracts were entered into. The supplemental contracts did not provide for liquidated delay damages, but the government relied on the liquidated delay damage provisions of the original contract to argue a claim for damages for subsequent delay by the contractor. In affirming the Court of Claims' decision against the government, the Supreme Court said: `... If a man agrees to do something by a particular day or in default to pay a sum of money as liquidated damages, the other party to the contract must not do anything to prevent him from doing the thing contracted for within the specified time.' The same rule was followed with approval by the New York Court of Appeals in a well considered case, Mosler Safe Co. v. Maiden Lane S.D. Co., 199 N.Y. 479 [93 N.E. 81], in which it was held that, even where both parties are responsible for the delays beyond the fixed time, the obligation for liquidated damages is annulled, and in the absence of a provision substituting another date it cannot be revived, and the recovery for subsequent delays must be for actual loss proved to have been sustained. This principle is applicable here, the conduct of the Government's agents had caused the delays up to May 1, 1903, and the subsequent delays though chargeable to the claimant would only give rise to a claim for damages measured by the actual loss sustained. Mosler Safe Co. v. Maiden Lane S.D. Co., supra . We think the application of this rule is not changed by the difficulty suggested that it might be impracticable to prove actual damages. This fact, if such it be, would not permit the Government by its own fault to prevent the performance of the contract and to do that which amounts to a waiver of the stipulation and then insist upon it as a rule of damages. We think the Court of Claims was right upon this principal branch of the case. 234 U.S. at 243-244, 34 S.Ct. at 845. This case was distinguished in Robinson v. United States, 261 U.S. 486, 43 S.Ct. 420, 67 L.Ed. 760 (1923). In Robinson, the contract between the contractor and the United States expressly provided for liquidated delay damages and also provided for a time limit extension of one day for each day of delay caused by the government. Both the government and the contractor contributed to the delay and the Supreme Court affirmed the Court of Claims' award of apportioned liquidated damages to the government. After stating that liquidated damages were not against public policy and, indeed, after pointing out that federal law required a liquidated-damage provision in the instant contract, the court stated: ... The fact that the Government's action caused some of the delay, presents no legal ground for denying it compensation for loss suffered wholly through the fault of the contractor. Since the contractor agreed to pay a specified rate for each day's delay not caused by the Government, it was clearly the intention that it should pay for some days' delay at that rate, even if it were relieved from paying for other days, because of the Government's action. If it had appeared that the first 61 days' delay had been due wholly to the contractor's fault, and the Government had caused the last 60 days' delay, there could hardly be a contention that the provision for liquidated damages should not apply. Here the fault of the respective parties was not so clearly distributed in time; and it may have been difficult to determine, as a matter of fact, how much of the delay was attributable to each. But the Court of Claims has done so in this case. Its findings are specific and conclusive.... 261 U.S. at 488-489, 43 S.Ct. at 421. Recent cases adhering to the distinction between United Engineering and Robinson include: Jasper Construction, Inc. v. Foothill Junior College District, 91 Cal. App.3d 1, 153 Cal. Rptr. 767, 774 (1979), as modified on denial of rehearing; and Haggerty v. Selsco, 166 Mont. 492, 534 P.2d 874, 879 (1975), rehearing denied. See, also, Flour Mills of America, Inc. v. American Steel Bldg. Co., Okl., 449 P.2d 861 (1969), rehearing denied. We have discovered no Wyoming cases directly in point, although in a case involving different facts and different issues on appeal, we recently upheld an arbitrator's award of apportioned liquidated delay damages. Matter of Town of Greybull, Wyo., 560 P.2d 1172 (1977). In examining the contract involved in the matter here on appeal, we note the liquidated damages provision, which provides: ARTICLE III. Liquidated Damages. If the work, or any part thereof, is not completed within the number of consecutive calendar days specified above, subject to any extension of time granted under provisions specified in the General Conditions or Special Conditions, the Contractor shall pay to the Owner, as liquidated damages and not as penalty, the following sum for each and every calendar day that the Contractor is in default ; one hundred fifty and no/100 dollars, ($150.00). (Emphasis supplied.) Article V of the contract expressly incorporates into the contract, inter alia, the General Conditions. In his decision letter, the trial judge directed attention to Paragraph 37 [2] , which contemplates that the owner may unilaterally delay the project, in which case the contractor is allowed an extension of time for the owner's delay. Thus, as in Robinson, supra, the contract contemplates that where both the owner and the contractor cause delays, the contractor shall still be liable for liquidated damages for the delay he causes. The contract may be harsh, but no issue of unconscionability has been raised. Moreover, this court is reluctant to interfere with the terms of a contract. E.g., Quin Blair Enterprises, Inc. v. Julien Const. Co., Wyo., 597 P.2d 945 (1979); and Matter of Estate of Frederick, Wyo., 599 P.2d 550 (1979). The case law and the contract refute appellant's claim that the trial court committed an error of law in entertaining appellee's claim for liquidated delay damages despite the fact that appellee caused some of the delay.