Unjustified 'Hurry Up' Threats To A Sub Will Cost A Contractor $200,000

Thursday, August 30, 2018 6:25 am
September 2018 - Volume 40 Number 9

Contract Breach --- Contract Termination

Randy Kinder Excavating, Inc. v. JA Manning Constr. Co., 2018 U.S. App. Lexis 21878 (8th Cir. Ct. Aug. 7, 2018)

A contractor learned the hard way--to the tune of more than $200,000---that threatening a subcontractor to speed up or pay up is considered a material breach of contract.

In June 2010, the U.S. Army Corps of Engineers (Corps) awarded a $9.5 million contract to Randy Kinder Excavating, Inc. (Kinder) to build a pumping station to manage water levels on the White River in Arkansas. Kinder then entered into a $950,000 subcontract with J.A. Manning Construction Co. (Manning) to engineer, furnish, and install a mechanically stabilized earth wall (MSEW).

The original project schedule was 425 days in duration, beginning in June 2010 and ending on September 26, 2011. But, about six months into the project, delays began. First, Kinder submitted revised schedules to the Corps because work that needed to be completed before Manning could begin its performance---namely, dirt excavation and concrete inlet wall installation---was not yet done. Second, significant amounts of rain further delayed progress. After a year, in June 2011, the job was about a year behind schedule (for reasons not divulged in the opinion). The Corps agreed to extend the contract deadline, but by just over a month, to November 1, 2011. The Corps granted no further time extensions.

In the end, Kinder completed the project late in 2012---but without Manning, whose subcontract Kinder terminated for allegedly failing to perform under the subcontract.

Afterward, Kinder sued Manning for contract breach and tortious interference. Manning counterclaimed, alleging wrongful termination and slander, and sought to recover the cost of unpaid labor and materials incurred prior to the termination. A district court ruled in Manning’s favor, designating Kinder’s wrongful subcontract termination the “first material breach of the contract,” and awarded Manning more than $215,000 in damages. Kinder’s appeal failed.

Sub’s work was slow and noncompliant, contractor charged

On several occasions during the project---in 2010 and 2011---Manning requested to begin its subcontract work. Kinder held the sub off each time because of the delay in completing the prerequisite portions of the project. As a result of the continued delay, Manning was forced to terminate its contract with its intended supplier of the MSEW panels. Then the Corps rejected the proposed materials from a second supplier. Manning hired a third company to finish constructing the necessary panels.

Manning finally arrived on site on August 16, 2011, about a year later than originally planned. Kinder told the sub it had to be done with its work by November 2011[..]