California Civil Jury Instructions (CACI) (2017)

4543. Contractor’s Damages for Breach of Construction Contract—Owner-Caused Delay or Acceleration

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4543.Contractor’s Damages for Breach of Construction
Contract—Owner-Caused Delay or Acceleration
[Name of plaintiff] claims that [name of defendant] breached the parties’
contract by [delaying/accelerating] [name of plaintiff]’s work, causing
[name of plaintiff] harm. If you find that [name of defendant] [delayed/
accelerated] the work, you may award damages to [name of plaintiff] for
all harm caused by the [delay/acceleration], including the following:
1. Expenditures that [name of plaintiff] made for labor, services,
equipment, or materials that [he/she/it] otherwise would not have
made but for the [delay/acceleration];
2. Overhead that [name of plaintiff] otherwise would not have
incurred but for the [delay/acceleration]; and
3. Increase in the cost of labor, services, equipment, or materials
already required under the contract that resulted from the
New December 2010
Directions for Use
This instruction should be used in an action by the contractor against the owner for
economic loss incurred because the owner either delayed or demanded acceleration
of the work.
For additional instructions on contract damages generally, see CACI No. 350 et
seq. in the Contracts series, particularly CACI No. 351, Special Damages.
Sources and Authority
• Unreasonable Delay. Public Contract Code section 7102.
• “Delay damages are a common element recoverable by a party aggrieved by the
breach of a construction contract.” (JMR Construction Corp. v. Environmental
Assessment & Remediation Management, Inc. (2015) 243 Cal.App.4th 571, 585
[198 Cal.Rptr.3d 47].)
• “A subcontractor who is responsible for delaying the progress of a construction
project may be held liable for delay damages incurred by the general contractor
or by another subcontractor.” (JMR Construction Corp,supra, 243 Cal.App.4th
at p. 586.)
• “ ‘A building contractor whose performance is delayed by the owner may have
increased overhead and fixed costs resulting from a delay and may suffer labor
and material cost increases or loss of labor productivity due to delays for all of
which he or she would be entitled to damages.’ Extended home office overhead
is one type of delay damages for which a contractor may seek recovery.” (JMR
Construction Corp,supra, 243 Cal.App.4th at p. 586, internal citation omitted.)
• “Overhead expense allocable to the period of delay is allowed to the extent the
evidence shows an increase in overhead because of the breach; or where other
jobs, but for the delay, would have been obtained to absorb such overhead.” (A.
A. Baxter Corp. v. Colt Industries, Inc. (1970) 10 Cal.App.3d 144, 158 [88
Cal.Rptr. 842], internal citations omitted.)
• “We conclude the trial court did not err in applying the Eichleay formula as a
legally permissible method of determining JMR’s home office overhead
damages. We base this conclusion upon the expert evidence presented at trial,
the general recoverability of extended home office overhead as an element of
delay damages, and the federal courts’ general acceptance of the Eichleay
formula.” (JMR Construction Corp,supra, 243 Cal.App.4th at p. 587.)
• “The federal courts have identified three Eichleay requirements. ‘[T]he
contractor [must] establish: (1) a government-caused delay; (2) that [the
contractor] was on “standby”; and (3) that [the contractor] was unable to take
on other work. [Citation.]’ ” (JMR Construction Corp,supra, 243 Cal.App.4th
at p. 588.)
• “[A] contractor cannot recover on a claim for unabsorbed office overhead where
it is able to meet the original contract deadline or finish early despite a
government-caused delay. An exception applies where the contractor
demonstrates from the outset an intent to complete the work early, a capacity to
do so, and a likelihood of early completion but for the government’s delay.
Application of the three-prong test requirement . . . , however, is required only
where the contractor finishes the work by the original specified contract
completion date or earlier.” (Howard Contracting, Inc. v. G.A. MacDonald
Construction Co. (1998) 71 Cal.App.4th 38, 54–55, [83 Cal.Rptr.2d 590].)
Secondary Sources
1 Witkin, Summary of California Law (10th ed. 2005) Contracts, § 999
1California Construction Contracts, Defects, and Litigation (Cont.Ed.Bar) Ch. 5,
Private Contracts: Disputes and Remedies, § 5.107
1 California Construction Contracts, Defects, and Litigation (Cont.Ed.Bar) Ch. 6,
Public Contracts: Disputes and Remedies, § 6.86
2 California Construction Contracts, Defects, and Litigation (Cont.Ed.Bar) Ch. 9,
Handling Disputes During Construction, §§ 9.105–9.106
12 California Real Estate Law and Practice, Ch. 434, Government Contracts,
§ 434.90 (Matthew Bender)
42 California Forms of Pleading and Practice, Ch. 481, Public Works, § 481.90
(Matthew Bender)
10 Miller & Starr California Real Estate 4th Ch. 31, Construction Law and
Contracting, §§ 31.76, 31.85 (Thomson Reuters)
Acret, California Construction Law Manual (6th ed. 2005) Ch. 1, Contracts,
§§ 1:89–1:91 (Thomson Reuters)
Acret, California Construction Law Manual (6th ed. 2005) Ch. 7, Public Contracts,
§§ 7:88–7:90 (Thomson Reuters)
6 Bruner & O’Connor on Construction Law (2002) Ch. 19, Remedies and Damage
Measures, § 19:73 (Thomson Reuters)
Gibbs & Hunt, California Construction Law, Ch. 4, Breach of Contract by Owner,
§ 4.10 (Aspen Pub. 16th ed. 1999)
Kamine, Public Works Construction Manual, Ch. 19, Recovery of Delay Damages
When the Owner Prevents Early Completion (BNI Publications, Inc. 1996)