The grAde
Court Denies Subcontractor’s
Constructive Acceleration Claim
O
n any troubled or delayed construction project, work
acceleration can occur in one of two ways. In the first,
the owner or contractor can affirmatively direct that the
remaining work be performed in a compressed period and agree
to cover the resultant costs. In the second, through what is called
constructive acceleration, the party that directs the acceleration
must cover the resultant costs even if it does not consider itself
responsible for those costs. In a case of first impression, the Seventh
Circuit Court of Appeals recently had occasion to consider a sub
-
contractor’s constructive acceleration claim.
The facts in this case,
Murdock & Sons Construction Co., Inc. v. Goheen
General Con
struction,
arose from the construction of a maximum secu
-
rity prison near Terre Haute, Indiana. Goheen General Construc
-
tion, Inc., was awarded the prime contract by the state for the prison
housing. Construction costs were expected to
be approximately $6,970,000. Goheen subcon
-
tracted the masonry work to the lowest bidder,
Murdock & Sons, as a result of a fixed-price
bid of $1,629,825. The other two masonry bids
came in at $2,747,000 and $2,475,000 and did
not include a price for rebar.
The subcontract called for the construc
-
tion of 288 cells having very dense masonry
walls. Each wall consisted of individual
cement blocks arranged in a “large honey
-
comb fashion.” The blocks were reinforced
with both horizontal and vertical rebar every
8 in. (20.3 cm). The specifications called
for continuous grouting with cement rather
than mortar. They also required the extensive
placement of embedments, necessitating that
a significant number of cuts be made in the
blocks. Although Murdock was an experienced masonry subcon
-
tractor, it had no experience with the amount of reinforcement
required on this project.
To make matters more difficult, the union masons Murdock
was required to use did not keep pace with the projections set forth
in its bid. While a mason can typically lay 200 blocks a day on a
typical project, Murdock had estimated that, given the difficulty
of this particular project, the masons would lay only 150 blocks a
day. Despite its estimate, however, Murdock’s masons were laying
just 50 blocks a day from the beginning of the project. Even though
Murdock dismissed slow workers, increased its crew from 35 to
83, provided additional equipment, and modified the construction
process, it still fell behind. The project experienced serious delays
and cost overruns, and the state was unwilling to grant Murdock
an extension. Murdock eventually walked off the job and filed suit
against the state and the general contractor, lodging a construction
acceleration claim. After the federal court at the district level ruled
against Murdock, the company took its case to the Seventh Circuit
Court of Appeals.
The appellate court began its analysis by noting that there was
no Indiana case law recognizing or applying a constructive accel
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er at ion cl a i m . O n t he ba si s of dec i sion s i n ot her ju r i sd ic t ion s , how
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ever, the court stated that it was a viable claim. The court set forth
the five elements for proving a constructive acceleration claim: (1)
the contractor experienced the delay entitling it to an extension;
(2) the contractor properly requested the extension; (3) the project
owner failed to grant or refused to grant the extension; (4) the proj
-
ect owner demanded that the project be completed by the original
completion date despite the excusable delay; and (5) the contractor
accelerated the work in order to complete the project by the origi
-
nal completion date and incurred added costs as a result.
Although the district court determined that Murdock could not
show that it provided written notice of the delays in a timely fashion, the
appellate court assumed that the formal notice requirement had been
waived by the general contractor. The latter
court explained, however, that Murdock’s delay
claim was ultimately without merit because the
firm had not established that the “slower than
anticipated pace of the masons” was beyond its
control. In fact, Murdock testified that it had
“no clue, really” as to the cause of the productiv
-
ity problem. And although it alleged that there
had been an organized work slowdown by the
masons, it was unable, beyond mere speculation,
to substantiate the charge. The court concluded
that Murdock’s estimate “grossly understated”
the time and effort required to perform this kind
of unique masonry work and that such a risk
should fall “squarely” on the subcontractor. The
court also rejected Murdock’s argument that a
force majeure event had occurred, noting that
Murdock had knowingly taken the risk of its
own productivity and that the force majeure clause was not a “buffer”
against the normal risks of contracting.
Construction litigators may find it difficult to believe that a party
would invest such a substantial amount of time and money in a fed
-
eral trial and an appeal without sufficient proof of its constructive
acceleration claim. Here, the court even quoted from Murdock’s
opening brief, which stated that “the reason for the [mason work]
slowdown was never determined.” At trial, Murdock’s witnesses
conceded they could only speculate as to why the productivity was
so low. The court asked how it was to determine the cause if the
claimant had not been able to do so. For those about to take a posi
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tion in a lawsuit, this question is worth remembering.