Monthly Archives: May 2020

An Insurer’s Duty to Defend does not Extend to a Construction Claim that Falls Clearly Within a Policy Exclusion

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Amandeep Kahlon and Alex Purvis | Build Smart

On May 14, 2020, in James G. Davis Constr. Corp. v. FTJ, Inc., the Virginia Supreme Court upheld a judgment on an unjust enrichment claim in favor of FTJ, a drywall supplier on a condominium project, against Davis, the general contractor. Notably, FTJ did not have a purchase order with Davis, but FTJ was able to rely on the existence of a joint check agreement and Davis’s multiple assurances regarding payment and the resulting inducement for FTJ to continue performance to succeed on its theory of unjust enrichment.

Davis subcontracted with a drywall company to complete the drywall and metal framing for the building. The subcontractor hired FTJ to supply the drywall materials for the project. According to the court, to ensure the smooth operation of the project, Davis, its subcontractor, and FTJ executed a joint check agreement for Davis to make any and all checks out to both the subcontractor and its supplier. When the subcontractor fell behind on invoices for drywall, FTJ repeatedly contacted Davis about these past due payments, and each time, Davis assured FTJ that a check had been written or would be written for the materials at issue. As a result, FTJ continued to ship materials that it would have typically withheld on a past due account. During these interactions, Davis learned that its subcontractor was having trouble meeting payment obligations and worried that it would be unable to pay FTJ for materials.

When the subcontractor defaulted, Davis requested that FTJ not ship further materials and, again, assured FTJ that there were funds available to pay FTJ on past due amounts. FTJ did not file a lien, in part, because of its confidence that Davis would satisfy its subcontractor’s debts. However, after terminating the subcontractor, Davis incurred additional costs to complete the subcontractor’s work and informed FTJ that Davis could only pay a fraction of the past due invoices. FTJ filed suit, and, after finding the joint check agreement void for lack of consideration, the trial court ruled in FTJ’s favor on its claim for unjust enrichment.

On appeal, Davis argued the trial court decision should be overturned based on the following:

  1. The joint check agreement was valid, and the existence of a contract covering the subject matter of a dispute precluded recovery for unjust enrichment.
  2. The unjust enrichment claim should be barred because it forced Davis to pay for the same goods twice, first, under the subcontract and, again, under the court’s judgment.
  3. Because the joint check agreement required Davis to make payments only when Davis actually owed money to the subcontractor, and no such payments were actually owed, FTJ failed to satisfy one of the key elements of an unjust enrichment claim — that a defendant must reasonably have expected to repay the plaintiff for the benefit conferred.

The Virginia Supreme Court rejected each of these arguments finding:

  1. The existence of the joint check agreement, even if valid, did not foreclose recovery under a theory of unjust enrichment, where the benefit conferred was outside the scope of that agreement. The court concluded the joint check agreement governed the parties’ interactions only as to the form of payment, and, thus, FTJ’s claim regarding nonpayment of delivered materials fell outside the plain terms of the joint check agreement. The court also reasoned that Davis’ repeated assurances that it would pay FTJ for materials after the subcontractor fell behind on payment created separate expectations regarding payment outside the confines of the joint check agreement.
  2. Davis was not being asked to pay twice for the same goods because the dispute with FTJ involved payment for specific supplies and not the overall cost of the project. The evidence established that Davis did not pay for the delivered materials, Davis used the materials, and, absent those materials, Davis would have had to procure replacement supplies elsewhere, so, the court reasoned, Davis was only being required to pay once for those materials.
  3. The language in the joint check agreement limiting Davis’s obligation to payment for amounts actually owed to the subcontractor was undone by Davis’s course of conduct in repeatedly assuring FTJ of payment to induce further delivery of materials. Based on that course of conduct, the trial court could plausibly conclude that Davis expected to pay for the drywall delivered by FTJ.

In upholding the trial court’s decision, the Virginia Supreme Court emphasized the narrowness of its holding as to the specific facts at issue. The court appeared particularly troubled by Davis’s intrusion into the subcontract-supplier relationship by providing repeated promises of payment to encourage FTJ’s continued performance. The opinion also includes a lengthy dissent criticizing a number of legal positions staked out by the majority.

What lessons can be learned from this decision?

Under these circumstances, any broad takeaways or lessons from the court’s ruling are limited. The decision creates as many questions as it answers.  For example, progress billings often do not itemize expenditures from individual suppliers, but the court’s decision suggests a contractor will not be able to rely on progress payments to demonstrate payment of suppliers whose work should have been incorporated into the work during the applicable pay period.  How, then, can a contractor be expected to avoid double payment for work when sub-subcontractor raises a claim for unjust enrichment?

Regardless, contractors should be mindful of the court’s approach in Davis. Strong legal arguments will not always be enough to overcome certain factual scenarios, and the reverse may also be true. The dispute in Davis was only over $160,000, and after extensive and expensive litigation, the court found the contractor responsible for the full amount. To avoid unfortunate and unpredictable results like the decision in Davis, it is important to spend time evaluating claims on the front end and exploring reasonable commercial resolutions to any dispute.

Virtual Arbitrations/Trials — Should You Use An Expanded Witness Oath?

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John E. Bulman and R. Thomas Dunn | Solid Foundation: A Construction Law Blog

For arbitrations and trials that are pending and/or are scheduled for the near term, the judges/arbitrators/counsel/parties are now confronting the decision on whether to proceed forward with conducting the proceedings remotely. If they decide to proceed forward, there will naturally be some reluctance to proceed forward. The reluctance is because it is new and unfamiliar. It is because there is a sense that it may be more challenging to evaluate a witness’ credibility and veracity.

There are also technological concerns of virtual hearings — both as to functionality (testing the video/audio connection) and the integrity of the testimony. In this post, I am sharing a contribution from my Pierce Atwood law partner John Bulman, FCIArb who regularly serves as an arbitrator handling construction and commercial cases domestically and internationally. In his post below, John addresses specifically the issue of additional measures that should be considered by arbitrators, attorneys, and witnesses to ensure the integrity of the virtual arbitration process.

* * *

Virtual Witness Integrity Steps,

Arbitrators, attorneys and witnesses have an obligation to ensure that in the context of virtual hearings, all forensic and procedural fairness requirements are met. The use of a virtual platform for arbitration proceedings gives rise to a number of issues, one of which is the swearing in of remote witnesses and adoption of safeguards to avoid problems. Ensuring that the witness does not utilize “crib notes” during testimony is one such issue. Another is improper coaching by a person in the room with the remote witness or otherwise in direct communication with the witness during examination. Of course, Parties should always be encouraged to negotiate a set of appropriate protocols for submission and adoption by the Panel. In the absence of such cooperation, there are a number of steps a Panel can take.

Everyone is familiar with variations of the standard oath: “Do you swear or affirm that the testimony you are about to give will be the truth, the whole truth, and nothing but the truth.” This, of course, is effective in the live face-to-face context. In the virtual context, this oath can literally be met even by a witness who is receiving information from others during his/her testimony. This reality requires adoption of some procedural safeguards and an expanded witness oath. Some of these are addressed here, but this piece is not an exhaustive treatment of issues or solutions.

1. When a hearing starts, all participants should be identified. The Panel Chair should conduct a colloquy with the parties and counsel to confirm that a) the only persons permitted to attend are those approved by opposing counsel and the Panel and b) no one shall be assisted during the course of examination. This colloquy, at least as to attending participants, should be repeated after hearing breaks.

2. For each remote witness, the Panel Chair should identify all individuals present in the location of the witness, and the witness should remain visible to the Panel and counsel at all times.

3. Counsel should confirm to the Panel that each remote witness has been apprised of the procedures or protocols relating to remote witnesses that have been adopted for the virtual arbitration proceeding.

4. Where the witness is not accompanied by counsel or other representative, steps must be taken to deliver potential exhibits prior to cross-examination. One mechanism is to deliver a sealed package of exhibits to the witness who will then open the sealed package on camera in front of the Panel and counsel at the onset of testimony. Another mechanism is the document sharing platform available on Zoom and other platforms.

5. Finally, an expanded oath should be given to the witness that addresses these concerns. One example is:

“Do you swear or affirm that the evidence you are about to give will be the truth, the whole truth, and nothing but the truth? Do you swear or affirm that you have followed the Panel’s procedures regarding your appearance as a witness in this matter? Do you affirm that there is no one else in the room with you [except those authorized], that no unauthorized person can communicate with me, and that I have not seen or reviewed the documents that may be shown to me by opposing counsel.”

First Circuit: No Coverage, No Duty to Investigate Alleged Loss Prior to Policy Period

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Eric B. Hermanson and Austin D. Moody | White & Williams

On April 1, 2020, the First Circuit, applying Massachusetts law, issued a potentially useful decision addressing the Montrose “known loss” language in ISO Form CGL policies. In Clarendon National Insurance Company v. Philadelphia Indemnity Insurance Company,[1] the court applied this language to allow denial of defense for claims of recurring water infiltration that began before the insurer’s policy period, and it found an insurer had no duty to investigate whether the course of property damage might have been interrupted, or whether other property damage might have occurred during the policy period, so as to trigger coverage during a later policy.

In the underlying dispute, a condominium owner (Doherty) asserted negligence claims against her association’s property management company (Lundgren) stemming from alleged water infiltration into her condominium. The complaint said leaks developed in 2004 in the roof above Doherty’s unit, and repairs were not made in a timely or appropriate manner. The following year, the complaint said, a Lundgren employee notified Doherty that the threshold leading to her condominium’s deck was rotting. In February 2006, Doherty discovered a mushroom and water infiltration on the threshold and notified Lundgren. At that time, Lundgren asked its maintenance and repair contractor (CBD) to replace the rotting threshold. According to the complaint, CBD did not do this repair in a timely manner and left debris exposed in Doherty’s bedroom.

In March 2006, the complaint said, a mold testing company hired by Lundgren found hazardous mold in Doherty’s unit, caused by water intrusions and chronic dampness. Lundgren’s attempts at remediation were ineffectual. In September 2008, Doherty’s doctor ordered her to leave the condominium and not to return until the leaks were repaired and mold was eliminated.

In February 2009, Doherty filed suit. Lundgren tendered defense to two different insurers: Clarendon, which insured Lundgren from June 24, 2004, to June 24, 2005, and Philadelphia Indemnity (Philadelphia), which insured the company from September 1, 2007, to September 1, 2008. Clarendon agreed to defend under reservation of rights. Philadelphia declined to defend, based on the “known loss” provision in its CGL insuring agreement:

b. This insurance applies to “bodily injury” and “property damage” only if:

. . . .

(3) Prior to the policy period, no insured listed . . . and no “employee” authorized by you to give or receive notice of an “occurrence” or claim, knew that the “bodily injury” or “property damage” had occurred, in whole or in part. If such a listed insured or authorized “employee” knew, prior to the policy period, that the “bodily injury” or “property damage” occurred, then any continuation, change or resumption of such “bodily injury” or “property damage” during or after the policy period will be deemed to have been known prior to the policy period.

After the underlying case settled, Lundgren assigned its rights to Clarendon, which sued Philadelphia. Clarendon argued that Doherty’s complaint could be read to suggest that leaks prior to Philadelphia’s policy period had been repaired. It argued that new leaks might have arisen during the period of Philadelphia’s policy. At a minimum, Clarendon argued, Philadelphia had an obligation to investigate the underlying allegations before denying defense.

The District of Massachusetts rejected Clarendon’s arguments. Clarendon appealed, and the First Circuit affirmed. It found the underlying complaint unambiguously alleged damage resulting from continuing leaks that began prior to the Philadelphia policy’s inception, and it found nothing in the complaint was “reasonably susceptible” to an interpretation in which the original leaks were resolved prior to Philadelphia’s policy inception.

Finally, and importantly, the First Circuit held that when an underlying complaint does not contain allegations that would implicate coverage, the insurer has no duty to investigate further. An insurer cannot ignore known facts extrinsic to the complaint, but it has no duty to go looking for such facts.

The First Circuit’s decision provides helpful guidance for insurers faced with allegations of property damage prior to policy inception, and clarifies – importantly – that an insurer in this situation has no independent duty to investigate for damage during the policy period.

[1] No. 19-1212, 2020 U.S. App. LEXIS 10257 (1st Cir. Apr. 1, 2020).

Facts Required to Plead a Bad Faith Cause of Action

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Barry Zalma | Zalma on Insurance

Generalities and Charges are not Sufficient to Maintain a Bad Faith Suit

Some plaintiffs suing insurance companies use a “standard” bad faith set of allegations charging breach of the tort of bad faith without stating any facts specific to the case brought against the insurer. They do so because it is easy.

In Frank Cappuccio, et al. v. State Farm Fire & Casualty Insurance Company, Civil Action No. 19-3025-KSM, United States District Court For The Eastern District Of Pennsylvania (May 8, 2020) the USDC was faced with a claim by State Farm that the allegations of bad faith were insufficient and called to task the use of a form complaint.

FACTS

Frank and Linda Cappuccio sued for breach of contract and bad faith against State Farm Fire & Casualty Insurance Company for failing to pay benefits allegedly owed to Plaintiffs under their insurance policy after Plaintiffs’ property was damaged by a fire. State Farm moved to dismiss Count II, the statutory bad faith claim, arguing that the Cappuccios’ allegations are conclusory and therefore are insufficient to state a plausible claim.

The Cappuccios own property in Doylestown, PA 18901, which was insured by State Farm under a rental dwelling insurance policy. On or around June 8, 2018, the Cappuccios “suffered direct physical loss and damage to the insured Property.” The Cappuccios assert that the damage was caused by a fire, “a peril insured against under the Policy.” The Cappuccios reported the loss to State Farm. The Cappuccios allege that State Farm subsequently refused to pay them “monies owed for the damages suffered as a result of the loss.”

The Cappuccios claimed that their statutory bad faith claim should survive the motion to dismiss because they satisfied the notice pleading standards and the complaint alleges that State Farm denied their claim without a reasonable basis to do so.

ANALYSIS

Pennsylvania’s bad faith statute, 42 Pa.C.S.A. § 8371, allows the court to award interest, punitive damages, court costs, and attorney’s fees if it “finds that the insurer has acted in bad faith toward the insured.” To succeed on a claim for bad faith, a plaintiff must show by clear and convincing evidence that: (1) that the insurer lacked a reasonable basis for denying benefits; and (2) that the insurer knew or recklessly disregarded its lack of reasonable basis.

Actions taken by insurers that can rise to the level of bad faith include a frivolous or unfounded refusal to pay, lack of investigation into the facts, or a failure to communicate with the insured. Bad faith claims are fact specific and turn on the specific conduct of the insurer towards the insured. A plaintiff must plead specific facts as evidence of bad faith and cannot rely on conclusory statements. A plaintiff cannot merely say that an insurer acted unfairly, but instead must describe with specificity what was unfair.

Put simply, given the likeness between the Cappuccios’ bad faith allegations and those in the myriad of cases available to the court it became clear that the Cappuccios failed to plead sufficient factual content to withstand State Farm’s motion to dismiss their bad faith claim.

The Cappuccios’ assertion that State Farm’s investigation of their claim was not “prompt” or “thorough” lacks plausibility. The Cappuccios also allege that State Farm acted in bad faith by “flatly misrepresenting pertinent facts or policy provisions relating to coverages at issue” but, they fail to explain what those misrepresentations were. Absent such facts, a court cannot infer bad faith on State Farm’s part. Additionally they fail to plead any additional facts regarding their insurance claim and the accompanying investigation, negotiations, or communications that took place. Without such facts, the Cappuccios’ conclusory allegations are not entitled to a presumption of truth.

The Cappuccios’ bad faith allegations are identical to those in numerous other cases with no allegations specific to their claim to State Farm.

The dismissal is without prejudice and with leave to amend the claim set forth in Count II only. Counsel is advised that any amended complaint shall be consistent with this Memorandum and “must specifically include facts to address who, what, where, when, and how the alleged bad faith conduct occurred.”

ZALMA OPINION

The USDC granted State Farm’s motion but it is a Pyrrhic victory since the court allowed the Cappuccios time to amend their complaint to allege sufficient facts to allow them to go forward with their claim of statutory bad faith. The effort will make the pleadings better, advise State Farm why it was sued, and what it needs to defend against. If the Cappuccios can’t amend they probably have no case for bad faith and will be required to limit their suit to breach of contract. At best, this case teaches that policyholder lawyers should not be lazy and simply copy complaints by others without specific allegations to support the suit.

Maybe Relief for Public Contractors Should Come from Thoughtful Legislation

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Lexie R. Pereira | The Dispute Resolver

With loss, comes suffering; and, when it comes to the coronavirus, loss exists in many forms. Attorneys across the country – particularly those representing contractors on public projects – are asking themselves, generally, “how can my client suffer less?” Or, more pointedly, “is there an argument to support my client’s right to entitlement to compensation for COVID-19-related costs?”

On public projects, the short answer is maybe not until the government steps in. Construction lawyers are faced with the unfortunate reality that public sector contracts appear to preclude contractors from seeking adjustments to the contract price because these contracts commonly include (1) a clear “no-damages-for-delay” provision, (2) time as the sole remedy for “force majeure” delays, and (3) a “compliance with laws” provision that is silent as to which party bears the risk of a change in laws. These provisions help public owners properly protect the interests of the citizens by appropriately allocating their tax dollars to a construction project that follows a carefully thought-out contract. However, as a result of these well-intentioned owner-friendly provisions, public contracts can make it difficult for contractors to receive compensation for COVID-19-related costs.

One can draw a parallel between public contracts and some of the insurance industry’s business interruption coverage policies. Of course, every insurance policy is different and must be analyzed on a case-by-case basis; however, the business interruption policies at issue often (1) have a clear “virus” exclusion, (2) require “property damage” to trigger coverage, and (3) are silent as to the application of the “civil authority” exclusion when it comes to partially mandated shutdowns (i.e. when the case is that construction offices, but not jobsites, may have been required to shut down). As a result, policyholders’ business interruption claims arising from COVID-19 are facing blanket denials from insurance carriers.

However, the denials of claims in both the insurance and construction industries alike can have potentially crippling effects. With respect to insurance, the consensus is becoming somewhat clear: the federal and/or state governments may need to step in. In response, several states (including Massachusetts, Rhode Island, New York, and New Jersey) have sponsored bills to provide long-term reimbursement relief to insurance companies and even to create exceptions to the policies’ strict exclusions, like the “virus” exclusion. As follows, attorneys are advising policyholders to follow the old adage “a claim never made is a claim never paid.” Therefore, attorneys who want to help their clients suffer less should encourage strict compliance with the “prompt” notification mechanisms to preserve claims under their insurance policies.

Similarly, attorneys are encouraging contractors to comply with the claim procedures in their public contracts, despite the currently-present contractual roadblocks. This advice is perhaps motivated with the hope that relief will be provided, whether it comes from the owner or as a part of a government-sponsored relief scheme similar to that of the insurance industry. The good news is: over one-hundred and thirty-five members of Congress agree with this approach, at least when it comes to supporting State Departments of Transportation (DOTs). On May 11, 2020, Representatives Conor Lamb and Bob Gibbs led the House in calling on Speaker Pelosi and Leader McCarthy to support approximately $49.95 billion in federal funding for State DOTs in the next COVID-19 response package.1 The request explained how support of State DOTs can help ensure planned transportation projects proceed as planned, which in turn supports the economy by protecting the jobs of State DOT employees and construction workers. Comparably, the Under Secretary of Defense released a memorandum on March 30, 2020, with the subject “Managing Defense Contracts Impacts of the Novel Coronavirus,” stating that “Where the contracting officer directs changes in the terms of contract performance, which may include recognition of COVID-19 impacts on performance under that contract, the contractor may also be entitled to an equitable adjustment to contract price using the standard FAR changes clauses (e.g., FAR 52.243-1 or FAR 52.243-2).”2 This memorandum suggests that contracting officers may have the authority to treat COVID-19 impacts as compensable delays under the FAR Changes clause.

As a matter of public policy, government intervention in line with the above makes sense. Despite the general rules that deny contractor recovery in the face of (1) a clear “no damages for delay” provision,3 (2) time as the sole remedy,4 and (3) a silent compliance with law provision,5 these rules are unfair (and perhaps unlikely to be upheld) considering the ongoing global pandemic. For example, on lump sum and GMP projects in particular, it would be inequitable for a public owner to completely deny claims for additional costs – like those of COVID-19-required demobilization and remobilization – on the basis of (1) a clear “no damages for delay” provision, (2) time as the sole remedy, and (3) a silent compliance with law provision. What’s more, public contracts are often procured via competitive bidding, which naturally means that contractors cut as many costs as safely as possible, not pricing out a ‘just in case a global pandemic shuts down this project for a couple weeks’ cushion. In fact, because public owners want to ensure that workplaces, including construction jobsites, are operating safely and in full compliance with new COVID-19 safety measures, they have a competing interest when it comes to compensating COVID-19-related costs. Since their competing interest brings with it some additional costs that were in no way contemplated by contractors when they priced their jobs, they ought to have some skin in the efforts for recovery as it would be unfair for public owners to ask contractors to simply absorb COVID-19-related costs.

Indeed, the ramifications of allowing owners (and insurers) to benefit from such harsh claim denials could have detrimental effects on the entire construction industry. Consider the alarming fact that if contractors continue to be denied compensation for COVID-19-related costs, then numerous contractors, subcontractors, and suppliers will inevitably goes out of business, thereby crumbling the industry and, likewise, the economy. While public owners and insurance companies may suffer in the short-term in light of legislation that requires exceptions to their contracts, they are in a much more stable position to weather this storm over the long-term. In other words, at present, they are not the string that will make the sweater unravel. After all, the greater suffering ought to be borne by the owner anyway, even if it is the state. One can reason that even though neither the owner nor the contractor could have ever predicted COVID-19, it is the owner – not the contractor – who remains the ultimate beneficiary of the project. As follows, maybe relief for public contractors should come from thoughtful legislation, like that already pending for the benefit of the insurance industry.

1 https://www.agc.org/sites/default/files/State%20DOT%20House%20Support%20Letter_Signed.pdf↩

2 https://federalconstruction.phslegal.com/2020/04/articles/contractor-information-sources/delays-resulting-from-coronavirus-may-be-both-excusable-and-compensable/; https://www.nationaldefensemagazine.org/articles/2020/3/16/industry-may-find-relief-for-coronavirus-delays; https://www.jdsupra.com/legalnews/delays-resulting-from-coronavirus-may-58448/↩

3 Although a contract has a clear “no damages for delay” clause, the contractor is not necessarily foreclosed from recovery if there exist other avenues for recovery within the contract. In fact, in many jurisdictions, “no damages for delay” clauses are not enforced where the delay for which recovery is sought was not reasonably contemplated by both parties at the time of contracting. JWP/Hyre Elec. Co. v. Mentor Village Sch. Dist., 968 F. Supp. 356, 360 (N.D. Ohio 1996); see Corinno Civetta Const. Corp. v. City of New York, 493 N.E.2d 905, 910 (N.Y. 1986). That is not necessarily the case in Massachusetts; however, there exist other ways a contractor can avoid the harsh effects of a “no damage for delay” clause. Joel Lewin & Eric Eisenberg, Delays, Suspensions and interruptions—No damage for delay clauses—Exceptions, Massachusetts Practice Series on Construction Law § 6:22 (2018). For example, a contractor may point to other contract provisions that provide relief. Id. (citing Stone/Congress v. Town of Andover, 6 Mass. L. Rptr. 330, 1997 WL 11737 (Mass. Super. Ct. 1997) (denying a summary judgment motion in favor of a contractor that argued that its damages were not for delays, but rather for changes in the work for which it was entitled to compensation under the changes clauses in the general contract). A closer look into the specific contract language is necessary in order to determine whether there exist other avenues for recovery.↩

4 Despite the fact that the sole remedy is time, there may still be room for a claim for additional compensation if contractor has a separate delay claim. “Force majeure” events, like abnormally bad weather and presumably the COVID-19-related costs at issue here, normally entitle the contractor to time, but not money. However, similar to the idea above that a contractor can avoid the harsh effects of a “no damage for delay” clause by pointing to other contract provisions, a contractor may recover for “force majeure” events when they are coupled with other compensable delay events. See id.; Philip J. Bruner & Patrick J. O’Connor, Jr., §3.7.2—Contractor’s Compliance with Law, Bruner & O’Connor on Construction Law, § 5:80 (Jan. 2020 Update). For example, in Appeals of Bechtel Environmental, Inc., a contractor was adversely affected by weather when a government-caused design delay pushed toxic waste landfill remediation activities into the hotter summer months, resulting in lower efficiency. Philip J. Bruner & Patrick J. O’Connor, Jr., §15.1.6.2—Weather delays, Bruner & O’Connor on Construction Law, § 5:80 (Jan. 2020 Update) (citing Appeals of Bechtel Environmental, Inc., E.N.G.B.C.A. No. 6137, E.N.G.B.C.A. No. 6166, 97-1 B.C.A. (CCH) ¶ 28640, 1996 WL 686423 (Corps Eng’rs B.C.A. 1996)). Perhaps the express language in the AIA A201-2017’s § 8.3.3 provides the support for this: “This Section 8.3 does not preclude recovery of damages for delay by either party under other provisions of the Contract Documents.”↩

5 As a general rule, if the contractor agrees to perform the work for a stipulated sum and further agrees to comply with all laws and regulations governing the performance of the work, then, in the absence of any contractual provision permitting relief, it bears the risk. Philip J. Bruner & Patrick J. O’Connor, Jr., Bruner & O’Connor on Construction Law, § 5:80 (Jan. 2020 Update) (citing DiCara v. Jomatt Const. Corp., 52 Misc. 2d 543, 276 N.Y.S.2d 11 (Dist. Ct. 1966) (contractor who agreed to sell a house at a specified price bore a responsibility for increased costs due to a 2% sales tax made applicable to the sale after the parties had reached agreement); Edwards v. United States, 19 Cl. Ct. 663 (1990) (government contract’s “permits and responsibilities” clause obligated the contractor to comply with all local laws and regulations regardless of whether they became effective before or during the term of the contract and applied to zoning changes affecting the work)).↩