delay damages – Duane Morris Construction Law

August 21, 2025August 21, 2025 by Jose A. Aquino

Judicial Caution in Determining Liability for Withheld Payments Under Public Works Contracts

In public construction projects, disputes over payment obligations between contractors and subcontractors often depend not only on the terms of the contract but on the resolution of underlying factual questions. A recent decision from the Appellate Division, First Department in Brownie Companies of Long Island, LLC v. Volmar Construction, Inc., illustrates the court’s cautious approach to summary judgment where material facts remain unresolved. The case, arising from work performed under New York City’s Build It Back Program, underscores the issues that can arise when payments are withheld due to alleged delays and potential liquidated damages. This blog examines the court’s reasoning and considers its implications for payment disputes arising from public construction contracts.

The subcontractor had entered into an agreement with the contractor to perform house lifting and repair services for homes damaged by Superstorm Sandy. The subcontractor alleged that the contractor breached the subcontract by failing to pay $474,000 for work performed and invoiced.

The court found that the subcontractor established a breach of contract, as the contractor failed to pay for work that had already been paid for by the City. It further held that, under established case law, contractors are obligated to pay subcontractors amounts received from the owner for their work. However, unresolved factual issues precluded summary judgment.

The court noted that key factual issues remained unresolved, including how damages should be calculated and whether the City had reduced its payments to the contractor due to delays caused by the subcontractor. The contractor had withheld payments in anticipation of liquidated damages the City intended to impose. The court acknowledged that such delays if proven could justify the withholding. As a result, the judgment in favor of the subcontractor was vacated, and the matter was remanded for further proceedings to address factual questions.

The court also held that the contractor’s motion for leave to amend its answer should have been granted. Through the proposed amendment, the contractor sought to assert counterclaims for indemnification, contending that if the City’s deductions were upheld and exceeded the amount remaining unpaid to the subcontractor, the subcontractor should be liable for the difference.

The decision highlights the importance of resolving factual disputes prior to summary judgment. By vacating the judgment and permitting amended pleadings, the court left open questions regarding the parties’ payment obligations, requiring further proceedings.

Jose A. Aquino (@JoseAquinoEsq on X) is a special counsel at Duane Morris LLP’s New York office, where he is a member of Construction Group, specializing in construction law, lien law, and government procurement law. He is also a member of the Cuba Business Group.

This blog is prepared and published for informational purposes only and should not be construed as legal advice. The views expressed herein are those of the author and do not necessarily reflect the views of Duane Morris LLP or its individual attorneys.

June 9, 2025June 9, 2025 by Jose A. Aquino

If It’s Not In The Contract, Don’t Count On Consequential Damages

A recent decision by the New York State Supreme Court, Appellate Division, Fourth Department, in James Vermillion v. The Roofing Guys, Inc., sheds light on the limitations of consequential damages in breach of contract cases. The ruling reinforces the principle that damages are only recoverable if they were reasonably contemplated by both parties at the time the contract was formed.

In this case, the plaintiff hired the defendant to reroof his home. During construction, however, a severe storm caused extensive water damage. The plaintiff sought to introduce expert testimony on damages related to delays—such as increased mortgage rates, rising material costs, and disruptions to financing. However, the trial court excluded this evidence, and the appellate court unanimously upheld that decision.

The appellate court emphasized that consequential damages require clear evidence that both parties anticipated such risks when entering the contract. Here, the agreement focused solely on roofing services and did not address financing risks or potential delays. Because the contract didn’t mention these damages and there was no evidence the parties expected them, the court didn’t allow the plaintiff to recover them.

This ruling underscores the importance of drafting contracts that clearly define the scope of potential damages, especially in construction projects where external factors like weather can significantly impact timelines and costs. To protect against such risks, parties must include specific clauses addressing delays, financing impacts, or other foreseeable complications.

Ultimately, Vermillion reaffirms that courts will enforce contracts as written. If consequential damages are not expressly included, parties may be limited to recovering only direct losses.

January 3, 2019 by Jose A. Aquino

NY Governor Vetoes Bill To Allow Delay Damages On Public Contracts

New York Governor Andrew Cuomo ended 2018 by vetoing New York Senate Bill 6686 to amend the state finance law by adding a new section 138-b to allow contractors working on public construction projects seek delay damages against government agencies. The vetoed bill would have required all public contracts to contain a clause allowing a contractor, subcontractor or supplier to make a claim for costs due to excusable delays resulting from actions or omissions by a public owner or any of its representatives. The bipartisan bill sponsored by Senators Michael Ranzenhofer (Republican) and Luis Sepulveda (Democrat) passed the Assembly by a vote of 103 to 40 and the Senate 59 to 0. The text of the bill can be seen here.

Jose A. Aquino (@JoseAquinoEsq on Twitter) is a special counsel in the New York office of Duane Morris LLP, where he is a member of the Construction Group and of the Duane Morris Cuba Business Group. Mr. Aquino focuses his practice on commercial litigation with a concentration in construction law, mechanics’ lien law and government procurement law. This blog is prepared and published for informational purposes only and should not be construed as legal advice. The views expressed in this blog are those of the author and do not necessarily reflect the views of the author’s law firm or its individual attorneys.