In U.S. v. Gilbane Building. Co., 2008 U.S. Dist. LEXIS 81217 (N.D. Ill. Oct. 10, 2008), the United States Government Services Agency entered into a contract with Gilbane to perform alteration and modernization work on a federal building in Chicago. Gilbane then entered into a subcontract with Gurtz to complete certain electrical, security, and fire alarm work. Under the subcontract, Gurtz agreed to substantially complete its work by January 3, 2006.
Gurtz was unable to substantially complete the work by January 3, 2006 and subsequently filed a three-count complaint alleging damages against Gilbane and Travelers, asserting claims under the Miller Act, for breach of contract, and alternatively, for unjust enrichment. In particular, Gurtz alleged Gilbane caused its delay in performance by furnishing defective plans; demanding performance not specified in the subcontract; interfering with Gurtz’s reasonable access to the project; failing to cooperate with Gurtz and failing to properly schedule and coordinate its other subcontractors. Gurtz alleged that under the subcontract these acts entitled Gurtz to time extensions that Gilbane refused to provide.
Defendants filed a motion to strike and dismiss Gurtz’s unjust enrichment count and to dismiss certain allegations set forth in Gurtz’s complaint, arguing that the contract between Gurtz and Gilbane bars recovery by Gurtz based on those allegations. At issue in the Motion to Dismiss were the following three contract provisions: (1) a limitations clause in the prime contract limiting the liability of GSA and Gilbane for delay, hindrance, or interference in the performance of the work, except for delay or hindrance resulting from either active interference of GSA or Gilbane or defective plans and specifications; (2) a provision in the subcontract which obligated Gilbane to work with GSA to extend the period of time for Gurtz to complete if delayed by “any act or neglect” on the part of Gilbane or GSA, by changes ordered in the work, or by “any causes beyond Gurtz control;” and (3) a provision in the subcontract prohibiting Gurtz from bringing claims against Gilbane for delays caused by other subcontractors.
While defendants argued the limitations clause sets forth Gurtz’s recovery for damages for delays, the court pointed out that Illinois law recognizes exceptions to no-damages-for-delay clauses, such as: (1) delay not within the contemplation of the parties; (2) delay of unreasonable duration; and (3) delay attributable to inexcusable ignorance or incompetence of the engineer. The court underlined that no-damages-for-delay clauses may be enforceable when the clause is “fairly restrictive.”
The court noted the limitations clause in this case was possibly more restrictive since it prevented recovery for out-of-pocket expenses, lost profits and overhead costs, which did not result from “active interference” or “defective plans or specifications.” Further, it did not allow recovery if Gilbane mismanaged other subcontractors or if Gilbane did not cooperate with Gurtz. The court concluded the exceptions to the enforceability to no-damages-for-delay clauses may apply and that such a determination must go to the merits. Thus, the court denied the motion to dismiss these allegations.
