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Volume 7 - Number 18 | May 4, 2009

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Recent Issues

  EDITOR'S NOTES | Issue 7-18
One of the most contentious issues that face contractors and owners is compensation for delay damages. To get around the issue, many owners will include a contractual no-delay-for-damages clause or other similar waiver to protect themselves from what they believe are excessive expenses. While this is common practice in private contracting, particularly the waiver of home office overhead expenses (as established by the AIA in 1997), public contracting does not necessarily follow the same rules. A 1992 law enacted by the Virginia General Assembly (at the request of contractors) prohibits public owners from categorically denying owner-caused delay damages. In the most recent interpretation of that law, presented in this week’s first case summary, the Virginia Supreme Court has determined that home office overhead expenses associated with owner delays fall within the protection of that law.

Our second case is a lesson in business discretion. A homeowner was outraged after learning that his contractor was making a 30 percent profit on the home renovation. The ensuing litigation involved countersuits, a jury verdict, a judge’s decision to reverse the verdict, an appellate overruling of the trial judge and a less-than-accurate award for lost profits. One must wonder if the project would have had a happier ending had the contractor not disclosed his profit margin to the owner.

The last case this week may be a lesson in sibling relations as well as in lien laws. A mother decided to sell her house for the benefit of her adult children and asked her daughter to clean the place. When the son filed an ownership partition action, his sister filed a lien on the property for her services. The case made its way to the Nebraska Supreme Court for a determination on what constitutes lienable improvements.
  DELAY DAMAGE LIMITATION WAS VOID UNDER VIRGINIA LAW
The Virginia Supreme Court overrides a contract’s limitation on delay damages clause because the clause violates state law.
  CONTRACTOR RECOVERS LOST PROFIT DESPITE ROUGH CALCULATION
A wrongful termination on a residential construction project results in a contractor’s recovery of lost profits. An appeals court lets the jury award stand, despite a less than accurate calculation.
  NEBRASKA SUPREME COURT ADDRESSES LIENABLE IMPROVEMENTS
Cosmetic upgrades to a property do not qualify as lienable improvements. Improvements must be of a more permanent nature, rules the Nebraska Supreme Court.
 
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