Severin Doctrine Barred Subcontractor's Delay Claim

A prime contractor's claim on behalf of its subcontractor for excess costs allegedly incurred as a result of government delays was summarily denied by the Court of Federal Claims because the contractor failed to establish it was potentially liable to the subcontractor, and therefore the claim was barred by the Severin doctrine. The dispute arose from a contract that called for demolition and removal of military housing units. According to the prime contractor, its subcontractor's progress was delayed by work performed by other contractors under the government's control who allegedly "took more time than called for to remove ... contaminated soils" at the work site. The government moved for summary judgment, arguing the contractor's delay claims were barred by the Severin doctrine because, under the subcontract's "no damage for delay" clause, the contractor had no potential liability to the subcontractor for project delays. Therefore, according to the government, the prime could not "pass through" the subcontractor's delay claims. The contractor countered that, under applicable state law, the "no damage for delay" clause did not, as a matter of law, completely immunize the prime from potential liability to its subcontractor.

Under the Severin doctrine, the government bears the burden "to prove that the prime contractor is not responsible for the costs incurred by the subcontractor that are at issue in the pass-through suit." For purposes of summary judgment, if the government meets this burden, then the contractor must present evidence of its potential liability to the subcontractor. Here, the government met its Severin evidentiary burden by relying on the unambiguous "no damage for delay" clause in the subcontract, which was enforceable as a matter of law and provided an "iron-bound" bar against liability for delay-related claims under state law. A state law exception that would exempt the clause from enforcement did not apply to subcontracts between private parties under a contract involving the federal government. Moreover, a state supreme court ruling on the enforceability of "no damage for delay" clauses in construction contracts between two parties held "[t]he parties had a right to agree upon the exclusive remedy available to the contractors by reason of... delay." Accordingly, the subcontract immunized the prime from any potential liability to its subcontractor for delay-related damages. (Harper/Nielsen Dillingham Builders, Inc. v. U.S., FedCl, 52 CCF ¶78,934)

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