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General Contractor's Unjustified Threats to Assess Delay Damages Against Subcontractor Are a Material Breach of Contract

Randy Kinder Excavating, Inc. v. JA Manning Constr. Co. 2018 U.S. App. LEXIS 21878 (8th Cir. Aug. 7, 2018)

Author: Luke Nicholas Eaton

10/11/2018

Read the full post at Constructlaw

General Contractor's Unjustified Threats to Assess Delay Damages Against Subcontractor Are a Material Breach of Contract

This dispute arose from a contract to build a pumping station in Arkansas (the Project). In June of 2010, the U.S. Army Corps of Engineers (COE) awarded a contract to Randy Kinder Excavating, Inc. (Kinder) to serve as the general contractor on the Project. Kinder entered into a subcontract with J.A. Manning Construction Co. (Manning) to engineer, furnish and install a mechanically stabilized earth (MSE) wall at the Project.

The Project experienced significant delays which affected the Manning’s initial start date. By the time Manning could begin constructing the MSE wall, only six days remained until the original completion date of the entire Project. Unknown to Manning, however, Kinder was telling the COE that weather and other issues were delaying the Project and Kinder represented to the COE that its projected completion date for MSE wall was in the summer of 2012. At the same time, Kinder was telling Manning that the MSE wall needed to be completed by November of 2011 and repeatedly threatened to assess delay damages against Manning if this did not occur. In addition, during the construction of the MSE wall, Kinder and/or the COE demanded that Manning install the wall panels 0.75 inches apart with absolutely no variance, despite industry standard allowing a 0.25 inch variance. On March 7, 2012, Kinder terminated Manning, at which point Manning had constructed 27.5 feet of the 40-foot MSE wall. The MSE wall was later completed by a replacement contractor, although the wall as-accepted by the COE contained a number of defects that Kinder and the COE told Manning were unacceptable. 

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