{"id":900179,"date":"2022-07-26T15:02:58","date_gmt":"2022-07-26T21:02:58","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=900179"},"modified":"2022-07-26T15:03:02","modified_gmt":"2022-07-26T21:03:02","slug":"consequential-damages-from-subcontractor","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/consequential-damages-from-subcontractor\/","title":{"rendered":"Arizona Trial Court Holds Owner May Recover First-Party Consequential Damages From Subcontractor Despite Prime Contract Waiver"},"content":{"rendered":"\n<p>Jason Ebe | <a href=\"https:\/\/www.jdsupra.com\/legalnews\/arizona-trial-court-holds-owner-may-3694200\/?origin=CEG&amp;utm_source=CEG&amp;utm_medium=email&amp;utm_campaign=CustomEmailDigest&amp;utm_term=jds-article&amp;utm_content=article-link\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Snell &amp; Wilmer<\/a><\/p>\n\n\n\n<p>In a recent Arizona case, the trial court held that an owner could sue a subcontractor directly for recovery of the owner\u2019s <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/waiver-of-consequential-damages-provision\/\" target=\"_blank\" rel=\"noreferrer noopener\">consequential delay damages<\/a> based on the subcontract\u2019s express indemnity clause, notwithstanding that recovery of those same damages against the prime contractor were barred by the language of the prime contract.<\/p>\n\n\n\n<p>In this case, a mechanical subcontractor on a high-rise project sued the general contractor, owner, and design professionals asserting delay and impact damages. The owner brought a counterclaim against the subcontractor seeking recovery of the owner\u2019s direct and consequential delay damages. The prime contract included a mutual waiver of consequential damages as between the owner and the general contractor and a cap on liquidated damages. The subcontract contained a similar mutual waiver of consequential damages between the general contractor and the subcontractor, but expressly carved out the subcontractor\u2019s indemnity obligations from the waiver. The subcontract further allowed the general contractor to pass through to the subcontractor the owner\u2019s liquidated damages and the general contractor\u2019s delay damages. The subcontract indemnity provision stated in pertinent part: \u201cTo the fullest extent permitted by law, Subcontractor agrees to indemnify \u2026 Owner \u2026 from and against all \u2026 damages, losses \u2026 and expenses \u2026 arising out of, or resulting from the performance, or failure of performance, of Subcontractor\u2019s Work and obligations as provided in the Contract Documents \u2026.\u201d<\/p>\n\n\n\n<p>The subcontractor moved for summary judgment on the owner\u2019s counterclaim, raising multiple arguments, primarily that the subcontract indemnity clause covered only third-party claims against the owner and not the owner\u2019s first-party damages, losses and expenses. The trial court, citing law of Arizona and other states, ruled that the subcontract indemnity language did encompass owner claims for first-party damages, losses and expenses.&nbsp;<em>See Skousen v. W.C. Olsen Investment Co.<\/em>, 149 Ariz. 251, 253 (1986);&nbsp;<em>Yan Ming Marin Transp. Corp. v. Okamoto Freighters Ltd.<\/em>, 259 F.3d 1086, 1092 (9th Cir. 2001);&nbsp;<em>Hot Rods, LLC v. Northrop Grumman Sys. Corp.<\/em>, 196 Cal. Rptr. 3d 53, 65 (2015).<\/p>\n\n\n\n<p>The subcontractor further argued that the parties could not possibly have intended the subcontractor to have unlimited consequential liability to the owner where the owner waived consequential damages and capped liquidated damages against the prime contractor. The subcontractor urged the court to interpret the subcontract indemnity provision in a manner so as to avoid what the subcontractor dubbed \u201cabsurd\u201d results. The court acknowledged the logic of the subcontractor\u2019s arguments. However, the court held \u201cthe problem is the way the Subcontract is written. [Subcontractor] agreed to an indemnity right for the owner. At the same time, [Subcontractor] did not include any language that limited that indemnity right to liquidated damages and did not include a provision where the owner waived consequential damages. [Subcontractor] could have avoided this situation by writing a better contract.\u201d Ultimately the court denied the subcontractor\u2019s motion for summary judgment, and the parties\u2019 dispute is unresolved pending trial.<\/p>\n\n\n\n<p>Takeaways<\/p>\n\n\n\n<p>Several important takeaways are evident. From a general perspective, this court held, as most courts would be expected to hold, that parties are bound by the language they negotiate in their contracts, even if the consequences may seem illogical or absurd to one party. So, be careful what you negotiate, and consider seeking clarity to mitigate against competing arguments as to interpretation. From a specific perspective, in an indemnity clause, if the parties agree to allow, or alternatively to bar, the indemnitee\u2019s recovery of first-party damages, losses and expenses, the parties should consider expressly and clearly set forth their agreement and understanding in the indemnity clause.<\/p>\n\n\n\n<hr class=\"wp-block-separator\"\/>\n\n\n\n<p><strong>When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes &#8211; please call Advise &amp; Consult, Inc. at 888.684.8305, or email <a href=\"mailto:experts@adviseandconsult.net\" target=\"_blank\" rel=\"noreferrer noopener\">experts@adviseandconsult.net<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Jason Ebe | Snell &amp; Wilmer In a recent Arizona case, the trial court held that an owner could sue a subcontractor directly for recovery of the owner\u2019s consequential delay damages based on the subcontract\u2019s express indemnity clause, notwithstanding that recovery of those same damages against the prime contractor were barred by the language of&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/consequential-damages-from-subcontractor\/\">Continue reading <span class=\"screen-reader-text\">Arizona Trial Court Holds Owner May Recover First-Party Consequential Damages From Subcontractor Despite Prime Contract Waiver<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[9],"tags":[9895,9099,224,11726],"class_list":["post-900179","post","type-post","status-publish","format-standard","hentry","category-construction-contracts","tag-advise-consult","tag-consequential-damages","tag-construction-contract","tag-express-indemnity-clause","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Arizona Trial Court Holds Owner May Recover First-Party Consequential Damages From Subcontractor Despite Prime Contract Waiver - Advise &amp; Consult, Inc.<\/title>\n<meta name=\"description\" content=\"trial court held that an owner could sue a subcontractor directly for recovery of the owner\u2019s consequential delay damages\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/consequential-damages-from-subcontractor\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Arizona Trial Court Holds Owner May Recover First-Party Consequential Damages From Subcontractor Despite Prime Contract Waiver - Advise &amp; Consult, Inc.\" \/>\n<meta property=\"og:description\" content=\"trial court held that an owner could sue a subcontractor directly for recovery of the owner\u2019s consequential delay damages\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.myconstructionexpert.com\/blog\/consequential-damages-from-subcontractor\/\" \/>\n<meta property=\"og:site_name\" content=\"Advise &amp; Consult, Inc.\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Advise-Consult-Inc-126949043996790\/\" \/>\n<meta property=\"article:published_time\" content=\"2022-07-26T21:02:58+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-07-26T21:03:02+00:00\" \/>\n<meta name=\"author\" content=\"admin\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@adviseconsult\" \/>\n<meta name=\"twitter:site\" content=\"@adviseconsult\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"admin\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/consequential-damages-from-subcontractor\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/consequential-damages-from-subcontractor\/\"},\"author\":{\"name\":\"admin\",\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/person\/0a11abe008083d5fb19c2b0feefe7bd7\"},\"headline\":\"Arizona Trial Court Holds Owner May Recover First-Party Consequential Damages From Subcontractor Despite Prime Contract Waiver\",\"datePublished\":\"2022-07-26T21:02:58+00:00\",\"dateModified\":\"2022-07-26T21:03:02+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/consequential-damages-from-subcontractor\/\"},\"wordCount\":642,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#organization\"},\"keywords\":[\"Advise &amp; Consult\",\"Consequential Damages\",\"Construction Contract\",\"Express Indemnity Clause\"],\"articleSection\":[\"Construction Contracts\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.myconstructionexpert.com\/blog\/consequential-damages-from-subcontractor\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/consequential-damages-from-subcontractor\/\",\"url\":\"https:\/\/www.myconstructionexpert.com\/blog\/consequential-damages-from-subcontractor\/\",\"name\":\"Arizona Trial Court Holds Owner May Recover First-Party Consequential Damages From Subcontractor Despite Prime Contract Waiver - Advise &amp; Consult, Inc.\",\"isPartOf\":{\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#website\"},\"datePublished\":\"2022-07-26T21:02:58+00:00\",\"dateModified\":\"2022-07-26T21:03:02+00:00\",\"description\":\"trial court held that an owner could sue a subcontractor directly for recovery of the owner\u2019s consequential delay damages\",\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.myconstructionexpert.com\/blog\/consequential-damages-from-subcontractor\/\"]}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#website\",\"url\":\"https:\/\/www.myconstructionexpert.com\/blog\/\",\"name\":\"Advise &amp; Consult, Inc.\",\"description\":\"Construction Expert Witnesses\",\"publisher\":{\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.myconstructionexpert.com\/blog\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#organization\",\"name\":\"Advise & Consult\",\"url\":\"https:\/\/www.myconstructionexpert.com\/blog\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/www.myconstructionexpert.com\/blog\/wp-content\/uploads\/2015\/11\/AC-Red-Logo.png\",\"contentUrl\":\"https:\/\/www.myconstructionexpert.com\/blog\/wp-content\/uploads\/2015\/11\/AC-Red-Logo.png\",\"width\":162,\"height\":75,\"caption\":\"Advise & Consult\"},\"image\":{\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/logo\/image\/\"},\"sameAs\":[\"https:\/\/www.facebook.com\/Advise-Consult-Inc-126949043996790\/\",\"https:\/\/x.com\/adviseconsult\",\"https:\/\/www.linkedin.com\/company-beta\/204526\/\",\"https:\/\/www.youtube.com\/user\/MrConstructionExpert\"]},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/person\/0a11abe008083d5fb19c2b0feefe7bd7\",\"name\":\"admin\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/b01e71b7acadd7657af782b7ad1a30cc?s=96&d=mm&r=pg\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/b01e71b7acadd7657af782b7ad1a30cc?s=96&d=mm&r=pg\",\"caption\":\"admin\"},\"sameAs\":[\"http:\/\/www.expertwitnessinconstruction.com\"]}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Arizona Trial Court Holds Owner May Recover First-Party Consequential Damages From Subcontractor Despite Prime Contract Waiver - Advise &amp; Consult, Inc.","description":"trial court held that an owner could sue a subcontractor directly for recovery of the owner\u2019s consequential delay damages","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.myconstructionexpert.com\/blog\/consequential-damages-from-subcontractor\/","og_locale":"en_US","og_type":"article","og_title":"Arizona Trial Court Holds Owner May Recover First-Party Consequential Damages From Subcontractor Despite Prime Contract Waiver - Advise &amp; Consult, Inc.","og_description":"trial court held that an owner could sue a subcontractor directly for recovery of the owner\u2019s consequential delay damages","og_url":"https:\/\/www.myconstructionexpert.com\/blog\/consequential-damages-from-subcontractor\/","og_site_name":"Advise &amp; Consult, Inc.","article_publisher":"https:\/\/www.facebook.com\/Advise-Consult-Inc-126949043996790\/","article_published_time":"2022-07-26T21:02:58+00:00","article_modified_time":"2022-07-26T21:03:02+00:00","author":"admin","twitter_card":"summary_large_image","twitter_creator":"@adviseconsult","twitter_site":"@adviseconsult","twitter_misc":{"Written by":"admin","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.myconstructionexpert.com\/blog\/consequential-damages-from-subcontractor\/#article","isPartOf":{"@id":"https:\/\/www.myconstructionexpert.com\/blog\/consequential-damages-from-subcontractor\/"},"author":{"name":"admin","@id":"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/person\/0a11abe008083d5fb19c2b0feefe7bd7"},"headline":"Arizona Trial Court Holds Owner May Recover First-Party Consequential Damages From Subcontractor Despite Prime Contract Waiver","datePublished":"2022-07-26T21:02:58+00:00","dateModified":"2022-07-26T21:03:02+00:00","mainEntityOfPage":{"@id":"https:\/\/www.myconstructionexpert.com\/blog\/consequential-damages-from-subcontractor\/"},"wordCount":642,"commentCount":0,"publisher":{"@id":"https:\/\/www.myconstructionexpert.com\/blog\/#organization"},"keywords":["Advise &amp; Consult","Consequential Damages","Construction Contract","Express Indemnity Clause"],"articleSection":["Construction Contracts"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/www.myconstructionexpert.com\/blog\/consequential-damages-from-subcontractor\/#respond"]}]},{"@type":"WebPage","@id":"https:\/\/www.myconstructionexpert.com\/blog\/consequential-damages-from-subcontractor\/","url":"https:\/\/www.myconstructionexpert.com\/blog\/consequential-damages-from-subcontractor\/","name":"Arizona Trial Court Holds Owner May Recover First-Party Consequential Damages From Subcontractor Despite Prime Contract Waiver - Advise &amp; Consult, Inc.","isPartOf":{"@id":"https:\/\/www.myconstructionexpert.com\/blog\/#website"},"datePublished":"2022-07-26T21:02:58+00:00","dateModified":"2022-07-26T21:03:02+00:00","description":"trial court held that an owner could sue a subcontractor directly for recovery of the owner\u2019s consequential delay damages","inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.myconstructionexpert.com\/blog\/consequential-damages-from-subcontractor\/"]}]},{"@type":"WebSite","@id":"https:\/\/www.myconstructionexpert.com\/blog\/#website","url":"https:\/\/www.myconstructionexpert.com\/blog\/","name":"Advise &amp; Consult, Inc.","description":"Construction Expert Witnesses","publisher":{"@id":"https:\/\/www.myconstructionexpert.com\/blog\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.myconstructionexpert.com\/blog\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/www.myconstructionexpert.com\/blog\/#organization","name":"Advise & Consult","url":"https:\/\/www.myconstructionexpert.com\/blog\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/logo\/image\/","url":"https:\/\/www.myconstructionexpert.com\/blog\/wp-content\/uploads\/2015\/11\/AC-Red-Logo.png","contentUrl":"https:\/\/www.myconstructionexpert.com\/blog\/wp-content\/uploads\/2015\/11\/AC-Red-Logo.png","width":162,"height":75,"caption":"Advise & Consult"},"image":{"@id":"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.facebook.com\/Advise-Consult-Inc-126949043996790\/","https:\/\/x.com\/adviseconsult","https:\/\/www.linkedin.com\/company-beta\/204526\/","https:\/\/www.youtube.com\/user\/MrConstructionExpert"]},{"@type":"Person","@id":"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/person\/0a11abe008083d5fb19c2b0feefe7bd7","name":"admin","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/b01e71b7acadd7657af782b7ad1a30cc?s=96&d=mm&r=pg","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/b01e71b7acadd7657af782b7ad1a30cc?s=96&d=mm&r=pg","caption":"admin"},"sameAs":["http:\/\/www.expertwitnessinconstruction.com"]}]}},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p2ztG6-3Mb1","jetpack_likes_enabled":true,"_links":{"self":[{"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/posts\/900179","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/comments?post=900179"}],"version-history":[{"count":1,"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/posts\/900179\/revisions"}],"predecessor-version":[{"id":900180,"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/posts\/900179\/revisions\/900180"}],"wp:attachment":[{"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/media?parent=900179"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/categories?post=900179"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/tags?post=900179"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}