Douglas L. Patin and Sabah Petrov | BuildSmart
A recent decision from the U.S. District Court for the Southern District of Florida demonstrates how facts supported by documents generated during the project can be vital to prime contractor/subcontractor disputes. In Berkley Ins. Co. v. Suffolk Constr. Co., No. 19-23059-CV, 2024 WL 3631226 (S.D. Fla. July 22, 2024), following a two-week bench trial on a breach of contract claim, the court issued a decision holding that the prime contractor’s mismanagement of the project ultimately caused the project’s overall delay entitling the subcontractor to recover its damages.
This case involved a dispute between a prime contractor, Suffolk Construction Co., its drywall subcontractor, Titus Construction Group, Inc., and Titus’ surety, Berkley Insurance Company, regarding a mixed-use real estate development project located in Miami, Florida. The parties blamed each other for the delays impacting the project’s substantial completion date, which ultimately slipped by 17 months.
Central to this delay dispute was identifying the controlling construction schedule for the project. The construction schedule attached to Titus’ subcontract set the substantial completion date for January 31, 2018. Suffolk alleged that the owner extended the substantial completion date to March 12, 2018, and, during trial, Suffolk referenced “look-ahead” schedules in support of this extended completion date. The court wasn’t buying it. In fact, the court noted that no witness was able to show these “look-ahead” schedules were produced or maintained during the project, and Suffolk could not show that these schedules were ever uploaded to the project’s document management system, Procore. Moreover, because the subcontract required that all amendments must be confirmed in writing or agreed to by the parties, this “ghost schedule” relied upon by Suffolk was not controlling.
With respect to the delays caused by Suffolk, the court found that Titus’ and Berkley’s recounting of the events was supported by the evidence and its testimony persuasive. In reviewing the evidence, the court determined that Suffolk’s handling of the project materially breached the terms of the subcontract. According to the court, Suffolk failed to coordinate trades and prepare each floor to allow Titus to complete its work timely and efficiently. Suffolk also directed Titus to jump from floor-to-floor exacerbating impacts to Titus’ productivity. As the court noted, “the workflow devolved from a hoped-for orderly process to demands for piecemeal work all over the building.” At one point during the project, Titus was spread out over 21 floors. Suffolk also admitted in internal emails that it disrupted and delayed Titus’ work.
The facts of an analogous case in Massachusetts involving Suffolk and another subcontractor on a separate project also helped persuade the court in finding for Titus and Berkley. The case, Cent. Ceilings, Inc. v. Suffolk Constr. Co., Inc., 91 Mass. App. Ct. 231 (2017), addressed a dispute between Suffolk and Central Ceilings, its framing and drywall subcontractor on a different project. The court noted that the Massachusetts case involved “nearly identical facts” to those before the court. In Cent. Ceilings, Suffolk similarly failed to coordinate the work of its trades and forced its subcontractor to work out of sequence. Based, in part, on Suffolk’s troubling history with this other subcontractor, the court concluded that Suffolk had breached its subcontract with Titus by failing to coordinate other trades, directing Titus to perform work out of sequence, and inadequately managing access to the project. The court awarded Titus and Berkley approximately $4.1 million for the unpaid subcontract balance and lost productivity damages.
In reaching its conclusion, the court also rejected Suffolk’s various contractual and legal defenses. The court refused to apply the contract’s “no damage for delay” clause because Suffolk actively interfered with Titus’ work by failing to, for example, prepare floors for Titus to proceed with its work sequentially and mismanaging other trades that then damaged Titus’ work. Likewise, the court refused to strictly apply the contract’s formal notice requirements. The court found that Titus adequately preserved its claims through dozens of informal email communications and PCO submittals that kept Suffolk informed of Titus’ pending claims. Finally, in declining to apply lien releases to bar Titus’ claims, the court concluded that the releases, while limiting Titus’ right to claim a lien, did not extinguish Titus’ right to pursue causes of action arising out of the subcontract.
This case highlights the importance of project documentation in construction disputes. Here, Suffolk could not support its factual arguments with schedules and other project documentation. Suffolk’s own internal records often contradicted the testimony and evidence it presented at trial. Further, Suffolk was unable to convince the court to enforce its technical contract defenses against Titus’ claims. Suffolk’s lack of a compelling factual narrative or strong legal arguments resulted in a bad day for the contractor.
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