Subcontractors Win Right to Sue for Delay Damages

Nearly three months after filing a “friends of the court” brief with the Appellate Division of the state of New York, the American Subcontractors Association (ASA) won its appeal of the state’s decision to deny subcontractors the right to sue for delay damages. The decision of the appeals court makes it more likely that subcontractors will be fairly compensated for owner-caused delays on a project.

The ASA was appealing the earlier trial court’s decision to deny general and subcontractors the ability to change “no damage for delay” clauses without owner approval. After that decision, subcontractors had no recourse for recouping profits lost as a result of delays caused by the owner. The appellate court reversed the decision and ruled that the general contract language, which required owner "approval of the Subcontractor and the form of the Subcontract," only gave the owner the right to pre-approve subcontractors, and not to pre-approve particular terms of any and all agreements between the general contractor and a subcontractor, such as "no damage for delay" terms or liquidating agreements.