ALEXANDRIA, VA - On Sept. 15, 2009, the American Subcontractors Association, along with ASA of Baltimore and the D.C. Metropolitan Subcontractors Association, filed an amici curiae, or "friends of the court," brief in the case Board of Education of Worcester County v. BEKA Industries, Inc., arguing that Maryland construction subcontractors are entitled to damages when they incur costs because of project delays that aren't their fault.
In the underlying case, a Maryland school board contracted with subcontractor BEKA for site work for a new elementary school. Due to circumstances acknowledged by the board as beyond the subcontractor's control, BEKA's work was delayed for almost six months. Later, disputes arose over the amounts owed to the subcontractor. With more than $1.1 million in outstanding debts owed to it, BEKA sued the school board to recover damages. At trial, the school board argued that: school boards are "state agencies," thus entitled to sovereign immunity under Maryland state law and exempt from judgments in excess of $100,000; and that the $1.1 million BEKA was seeking qualified as unrecoverable delay damages. After hearing arguments, the trial court rejected the school board's position and sided with BEKA. The school board immediately appealed.
In their brief, ASA, ASAB and DCMSA asked the Court of Special Appeals of Maryland to upholding the lower court's ruling in favor of the subcontractor and deny the appeal of the owner. In addressing the owner's claim of sovereign immunity, ASA said: "The ability of the government to avoid its contractual obligations by invoking the doctrine of sovereign immunity would significantly impact its ability to efficiently conduct the business of government, to the ultimate detriment of the taxpayers. The disincentive created by the government's ability to invoke the doctrine of sovereign immunity to avoid its contractual obligations would harm private industry as a significant portion of private industry is devoted to doing business with the government." With regard to the owner's claim that the payment BEKA was seeking qualified as unrecoverable delay damages, ASA further stated that "It is manifestly inequitable for a contractor who neither caused nor contributed to a project delay to be penalized by being precluded from recovering the damages it suffered as a result of the delay and that "blind application of 'no damages for delay clauses' are to the detriment of a contractor."
The Towson, Md.-based law firm of Harrison Law Group prepared ASA's brief. ASA tapped its Subcontractors Legal Defense Fund to pay the fees associated with its filing in this case. The SLDF supports ASA's critical legal activities to protect the interests of all subcontractors, and is funded solely by contributions. SLDF funds are invested in precedent-setting cases across the country. To learn more about this case and the SLDF, visit www.sldf.net.
