NASDI LLc v. Skanska Koch Inc. Kiewit Infrastructure Co.

Background

NASDI LLC performed demolition work as a subcontractor for Skanska Koch Inc. Kiewit Infrastructure Co. (JV), doing business as Skanska Kiewit JV (SKK), on the Bayonne Bridge reconstruction project. NASDI completed work in Stages 1 and 2 but left the project just before Stage 4 began. It claimed that delays and changes to the demolition work caused additional costs. NASDI sought damages for breach of contract, recovery based on the reasonable value of services it performed, and breach of the implied duty of good faith and fair dealing.

The subcontract required NASDI to submit written notice and supporting details for claims for additional compensation, extensions of time, or other relief. It required notice within 24 hours after the claimed condition began and stated that strict compliance was a condition precedent to bringing claims or lawsuits. The subcontract also contained a no-damages-for-delay clause, except for claims submitted through the contractual claim procedure. SKK moved for summary judgment on NASDI’s claims and on its counterclaim for breach of contract.

Rulings on NASDI’s Claims

Delay damages. The court held that the no-damages-for-delay clause was valid, enforceable, and unambiguous. NASDI had not used the required claim procedure for costs from delays during Stages 1 and 2 or for costs incurred before Stage 4 began. Although NASDI submitted a June 2016 claim for approximately $7.5 million in anticipated Stage 4 costs, it never performed Stage 4 work and therefore did not show that it incurred those anticipated expenses.

New York law recognizes limited exceptions to no-damages-for-delay clauses, including abandonment of the contract, uncontemplated delays, certain bad-faith or willful conduct, and breaches of a fundamental contractual obligation. The court found that NASDI presented no evidence creating a genuine factual dispute under any exception. The subcontract contemplated schedule changes and delays, and the parties continued to operate under the subcontract. SKK’s calculation of the June claim also did not create a triable issue because NASDI offered no evidence showing that the calculation breached the subcontract.

Extra-work claims. NASDI sought additional compensation for deletion of the Sidewalk Conversion and for changes that required different sequencing and nighttime work during Stages 1 and 2. The court held that these claims were subject to the subcontract’s notice procedure. NASDI’s witnesses admitted that NASDI had not provided the required written notice or documentation. The court rejected NASDI’s arguments that a separate contract provision, SKK’s actual knowledge, or alleged difficulty tracking costs excused compliance with the notice requirements.

Recovery for services. NASDI’s claim for recovery based on the reasonable value of its services, sometimes called quantum meruit, covered the same work governed by the enforceable written subcontract. The court held that NASDI could not use that theory to recover outside the contract. The court also found no evidence that SKK had abandoned the subcontract.

Good faith and fair dealing. NASDI argued that SKK acted in bad faith by revising its internal estimates of the amount due to NASDI from the project’s global settlement. The court held that SKK had a contractual duty to allocate any unallocated settlement in good faith, but found that NASDI presented no evidence showing bad faith. SKK had explained its calculation and provided supporting materials, so the court granted summary judgment on this claim.

SKK’s Counterclaims

The court granted summary judgment to SKK on its counterclaim for breach of contract to the extent of finding NASDI liable. The court held that the subcontract remained in force when NASDI refused to perform Stage 4 work, that SKK was entitled to alter the project schedule and scope under the subcontract, and that NASDI defaulted after receiving notice and an opportunity to cure.

The court did not decide the amount of damages for that breach. It also did not resolve SKK’s counterclaim for contractual indemnification. Those matters were left for a later bench trial, at which the court would address the merits and, if appropriate, damages.

Disposition

SKK’s motion for summary judgment on NASDI’s claims was granted. SKK was also granted summary judgment on its breach-of-contract counterclaim to the extent of a finding of liability against NASDI. Damages on that counterclaim and SKK’s indemnification claim were reserved for trial.