Matt Bouchard’s N.C. Construction Law, Policy & News blog continues to provide, as I noted last year, “two qualities essential for a highly useful blog: Focus and depth.” This is an exceptionally thorough and well-maintained blog, with frequent postings on the relevant subject matter.
Consider, for example, the recent posting where Bouchard cites an unpublished decision of the North Carolina Court of Appeals in Lost Profit Claims in Construction Litigation: Speak Now, Or Forever Hold Your Peace? I like especially that he provides tangible, court-based information but not simply stuff lifted from elsewhere to create this blog posting. In the posting, he describes how an owner tried to add additional losses to the total when it was appealing a court decision that narrowed the scope of damages it could claim. Big mistake. The court wasn’t buying the story and the contractor didn’t have to pay the large additional claims.
He writes: The takeaway? Two points spring immediately to mind:
- Whether you’re an owner, prime contractor, subcontractor, supplier or surety, don’t overlook damages, particularly lost profit damages, during the early stages of construction claim assessment and pleading. Lost profits are considered “special damages” in North Carolina, and therefore must be specifically averred. See Stanford v. Owens, 46 N.C. App. 388, 398, 265 S.E.2d 617, 624 (1980); N.C. R. Civ. P. 9(g). Since there’s no guarantee a trial court judge will allow amendment of a complaint, counterclaim, crossclaim or third-party claim once the parties are waist-deep into litigation, it’s best to consider, develop and assert all viable theories of damages sooner as opposed to later.
- If you’re a prime contractor, mutual waiver of consequential damages clauses, such as those set forth in § 15.1.6 of the AIA-A201™ 2007 General Conditions and § 6.6 of the ConsensusDOCS 200 General Conditions, are your friend. Such clauses bar owners from recovering the very type of lost profit damages SBP actually recovered in round 1 and sought to recover during round 2 of its case. True, because these waiver clauses are “mutual,” they bar your own recovery for lost profits not related to the project, damages to your business reputation, etc. In my experience, however, that’s a trade-off prime contractor’s should be happy to make; in the usual case, your exposure for the owner’s consequential damages will exceed the owner’s exposure for yours. I recommend negotiating your next contract accordingly.
Other entries have similar depth and relevance. Obviously, this blog is most relevant (and I think is essential reading) if you do business in North Carolina, but the concepts here can be applied — with local review — elsewhere.