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

Background

The Port Authority of New York and New Jersey selected SKK as general contractor for the demolition and reconstruction of the Bayonne Bridge. SKK hired NASDI in 2013 to perform demolition work under a subcontract worth approximately $20 million.

The subcontract required strict compliance with a claim procedure for requests for additional compensation or other relief. It required a claim to be submitted within 24 hours after it arose, followed by updates every 30 days, and stated that failure to comply would conclusively waive the claim. The subcontract also contained a “no damages for delay” provision limiting claims for losses caused by delay, disruption, suspension, interference, interruption, compression, or acceleration.

The project proceeded in four phases. NASDI worked during phases 1, 2, and 4, but the start of phase 4 was delayed by almost two years. NASDI submitted a June 2016 claim for additional costs it expected to incur because of the delay. After further communications about payment and scheduling, NASDI sent SKK a notice of termination on February 17, 2017, asserting that SKK had abandoned the subcontract. NASDI later attempted to rescind that notice, but SKK treated the rescission as ineffective and hired another company to perform part of the phase 4 work before completing the remainder itself.

NASDI sued for breach of contract, quantum meruit, and breach of the implied covenant of good faith and fair dealing. SKK asserted counterclaims for costs associated with covering NASDI’s alleged breach. In an opinion dated September 28, 2020, the court granted summary judgment to SKK on NASDI’s claims and SKK’s counterclaims, leaving SKK’s indemnification counterclaim for trial and reserving a determination of damages on SKK’s breach-of-contract counterclaim.

Motion for Reconsideration

NASDI moved to reconsider the 2020 decision as to its quantum meruit and good-faith-and-fair-dealing claims and as to SKK’s counterclaim that NASDI breached the subcontract. The court explained that reconsideration is available only under a strict standard, such as an intervening change in controlling law, new evidence, or a need to correct clear error or prevent manifest injustice. It is not a way to relitigate old issues or present new theories.

Abandonment and Quantum Meruit

NASDI argued that the no-damages-for-delay provision did not bar its quantum meruit claim because SKK had abandoned the subcontract through the lengthy delay. The court held that this argument had already been raised and rejected. NASDI relied primarily on the delay itself and did not identify evidence that SKK intended to give up the subcontract. The earlier decision had found that SKK continued to make payments and schedule work and had presented uncontradicted evidence of its commitment to the subcontract.

The court also stated that, even if the subcontract had been abandoned, NASDI had not shown that it could recover in quantum meruit. Quantum meruit generally permits recovery of the fair and reasonable value of services provided, but NASDI presented no evidence that it had performed work in preparation for phase 4. The court therefore concluded that NASDI had nothing to recover for the delay in starting that phase.

Uncontemplated Delay

NASDI argued that the no-damages-for-delay provision was unenforceable because the delay was unreasonable or unforeseeable. The court noted that NASDI had not relied on this argument in its summary-judgment briefing. In any event, the court found that NASDI had not met its heavy burden of showing that the delay was so severe as to make the provision unenforceable.

The court found that the delay itself did not establish that it was uncontemplated. A document describing poor planning and multiple delays did not establish that the provision was unenforceable, because poor planning or ineffective administration does not by itself defeat a no-damages-for-delay clause. The length of the delay also was not enough, particularly because New York courts had found delays of similar or greater length insufficient as a matter of law.

Riggs Report

NASDI argued that the court should have considered a report by its witness Richard Riggs, who offered opinions about abandonment and uncontemplated delay. The court stated that it need not consider an unsworn letter submitted in opposition to summary judgment. It also concluded that the report’s arguments had already been considered and rejected.

The report described changes during phases 1 and 2, including removal of sidewalk demolition and a change in the sequencing of demolition work, and called those changes a “cardinal change” to the subcontract. But the report did not explain that conclusion, did not address the parties’ continued operation under the subcontract, and did not address the relevant standard for contract abandonment. It also did not explain why phase 4 was delayed or show that the delay was uncontemplated. The court therefore concluded that the report did not prevent summary judgment against NASDI’s claims.

Good Faith and Fair Dealing

NASDI also sought reconsideration of summary judgment on its claim that SKK acted in bad faith by refusing to provide NASDI funds from SKK’s settlement dealings with the Port Authority. NASDI pointed to SKK’s internal revisions of its assessment of NASDI’s claims, SKK’s consideration and later rejection of a possible incentive payment, the higher cost SKK incurred to complete phase 4, and evidence that SKK knew NASDI might lose money by completing the work.

The court found that these facts did not show bad faith. SKK had explained its calculation that it did not owe NASDI money, and NASDI identified nothing in that calculation suggesting bad faith. NASDI also did not identify a specific internal revision that indicated bad faith and offered only conclusory assertions about the proposed incentive payment and SKK’s higher completion costs. Because NASDI had not provided evidence of bad faith, the court declined to reconsider summary judgment on this claim.

Disposition

The court denied NASDI’s October 13, 2020 motion for reconsideration. The case will proceed to trial on SKK’s counterclaim for indemnification and on the damages for SKK’s breach-of-contract counterclaim.