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Third Circuit Applies “Reasonable Time” Standard For Missed Completion Date

4/22/2013 | Construction Blog

The United States Court of Appeals for the Third Circuit recently affirmed 3 orders issued by the District Court for the Eastern District of Pennsylvania, the net effect of which was to uphold a finding that a defined completion date in a construction contract must be completed in a reasonable amount of time if change order work results in the original deadline being missed. The ruling confirmed an award of $422,923.83 in breach of contract damages and $539,521.15 in attorneys’ fees.

The facts which led to the Court’s holding in Evergreen Community Power, LLC v. Riggs Distler & Company, Inc., began when Riggs agreed to install, among other things, piping at an Evergreen power plant. Under the terms of the contract, Riggs was to complete work by January 31, 2009. Both parties agreed that the agreed upon completion date was missed, but they disagreed on the ramifications. Evergreen contended that Riggs was still required to complete the contract within a reasonable amount of additional time, while Riggs maintained there was no longer a strict completion date. Citing the Pennsylvania Superior Court’s holding in Hodges v. Pa. Miller’s Mutual Insurance Co., the Third Circuit agreed with Evergreen.

The decision hinged on a contract clause that required Riggs to complete the work by the date certain if “no additions were made to the agreed upon scope of work”. The Court rejected Evergreen’s argument that this meant no “net” additions and determined that the language actually required no “gross” additions”. Finding that Evergreen caused delays by adding scope, the Court nevertheless concluded that Riggs should still have finished its work by April 27 based on the evidence presented at trial. Because Riggs did not finish until May 17, it was responsible for the damages that resulted from the 20 day difference.

The Court’s decision makes practical sense. When parties agree contractually to a date certain for completion of the work, it conveys a sense that there is a time consideration. Missing the date due to changes or other delays outside the control of the contractor does not change that conceptual element. The work remains time sensitive. It seems sensible, therefore, for the Court to impose a “reasonable time” standard to complete the work. The parties will inevitably quibble over what constitutes a reasonable amount of time, but there appears to be little support for an argument that the completion date for the project can be stretched out indefinitely.