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Burden of Proof for Delay Damages

Burden of Proof for Delay Damages

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Delay damages are usually difficult to prove with absolute certainty, and it is the party claiming the injury that has the burden of proving the damages claimed. However, the impossibility of determining the precise amount of damages or their apportionment will not bar recovery of delay damages (Rusciano Const. Corp. v. State, 37 A.D.2d 745, 323 N.Y.S.2d 21 (3d Dep’t 1971)), but damages cannot be wholly speculative. Hirsch Elec. Co., Inc. v. Community Services, Inc., 145 A.D.2d 603, 536 N.Y.S.2d 141 (2d Dep’t 1988).

To recover for delay damages, a plaintiff must show “that defendant was responsible for the delay; that these delays caused delay in completion of the contract (eliminating overlapping or duplication of delay); and that the plaintiff suffered damages as a result of these delays; and plaintiff must furnish some rational basis for the court to estimate those damages, although obviously a precise measure is neither possible nor required.” Manshul Const. Corp. v. Dormitory Authority of New York, 79 A.D.2d 383, 436 N.Y.S.2d 724 (1st Dep’t 1981). A party must prove that there was an increase in costs and that the increase was due to the delay. Id.Furthermore, damages cannot be based solely on a comparison of bid estimates with actual costs, as the elements of bid estimates are inherently unreliable. Novak & Co., v. Facilities Development Corp., 116 A.D.2d 891, 498 N.Y.S.2d 492 (3d Dep’t 1986).

There are two methods usually employed when calculating delay damages, the Total Cost method and Jury Verdict method. The total cost method seeks to convert a standard fixed-price construction contract into a cost reimbursement arrangement. R. Cushman & D. Carpenter, Proving and Pricing Construction Claims 36 (1990). The total estimated cost of performance is subtracted from total actual cost of performance. Since the total cost figure generally represents actual direct expenses (D’Angelo v. State, 41 A.D.2d 77, 341 N.Y.S.2d 84 (3d Dep’t 1973)), overhead and profit based on fair and reasonable percentages determined by the court will usually be added. Westcott v. State, 264 A.D. 463, 36 N.Y.S.2d 23 (3d Dep’t 1942). When implementing the total cost method, a contractor must establish 1) that the nature of the particular losses makes it impossible or highly impracticable to determine them within a reasonable degree of accuracy; 2) the plaintiff’s bid or estimate was realistic; 3) the plaintiff’s actual costs were reasonable; and 4) the plaintiff was not responsible for the added expense. Cushman and Carpenter, Proving and Pricing Construction Claims 136 at 36. However, the total cost method fails to assign specific damages to specific delays, and does not account for delays caused by the contractor itself. Therefore, the total cost method is considered a method of last resort and only accepted in limited circumstances. Simon, Construction Contracts and Claims 240 (McGraw-Hill Book Co. 1979).

The jury verdict method of assessing damages is similar to that of the total cost method.  However, in the jury verdict method the triers of fact weigh the elements of the contractor’s claim and derive a total value of the claim, often expressed as a lump sum. Cushman and Carpenter, Proving and Pricing Construction Claims 136 at 163. The court will deduct from the lump sum a percentage that it believes represents the damages attributed by the contractor or causes not chargeable to the owner, the remainder of which is the contractor’s compensable loss. Id.The court must be persuaded that 1) entitlement exists; 2) there is no more reliable method for computing damages; and 3) the record affords a basis for a fair and reasonable approximation of damages. Id.

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