Can A Subcontractor Recover When Delays Are Caused By Another Subcontractor?04 October 2016
In Foster & Creighton Company v. Wilson Contracting, the Tennessee Court of Appeals reviewed a case involving a project at Key Field in Mississippi. The improvements included resurfacing certain existing runways and grading and paving new runways.
The Facts. The prime contractor, Wilson, subcontracted the paving work (including the resurfacing of existing runways and paving of new runways) to Foster. Accordingly, the resurfacing part of Foster’s work did not depend on the work of any other subcontractor.
Despite delays in the work of the grading subcontractor, Foster proceeded to assemble its mixing machinery and began to resurface existing runways ahead schedule. However, Foster notified Wilson that it would not be able to proceed with new paving until some of the grading work had been completed. Thereafter, Foster ceased operations because all of the resurfacing had been completed and none of the grading had been completed for new paving.
Months later, Foster returned its equipment and crew to the job site, but no grading was complete for paving at that time. Foster informed Wilson that the delays to the paving work would result in extra expense of $6,000 per week. Ultimately, after a few mobilizations and additional delays due to the winter months, Foster completed the paving.
The Rule of Law. Foster filed suit against Wilson for damages on the theory of breach of express and implied contractual obligations. The court held that when a general contractor engages a subcontractor to perform a part of the general contract, “there is an implied understanding that the subcontractor will be given a reasonable opportunity to perform.” The court also recognized that a general contractor may, in a proper case, be liable to a subcontractor for wrongfully interfering with the performance by the subcontractor.
The Lesson. Although the court ruled against Foster on its claims, it did so because the subcontractor failed to prove its case. Rather than relying on the implied obligation not interfere with one’s performance, Foster instead claimed that it began work as a result of the threat of Wilson to find another subcontractor. In fact, the court held that such a threat would not be enforceable, and that Foster could have refused to begin work until the grading was almost complete on the grounds that: (1) the prime contractor may not wrongfully interfere with performance by the subcontractor; and (2) must provide the subcontractor a reasonable opportunity to perform.
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