United States District Court, W.D. Oklahoma
case arises out of the construction of a new WinCo Foods
grocery store in Oklahoma City, Oklahoma. The parties have
filed cross motions for partial summary judgment on the issue
of liquidated damages.
judgment is warranted "if the movant shows that there is
no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law." Fed.R.Civ.P.
56(a). Material facts are those which "might affect the
outcome of the suit under the governing law."
Anderson v. Liberty Lobby, Inc.. 477 U.S. 242, 248
(1986). A dispute is genuine "if the evidence is such
that a reasonable jury could return a verdict for the
nonmoving party." Id. To determine whether this
standard is met, the court views the evidence in the light
most favorable to the non-moving party. See Estate of
Booker v. Gomez, 745 F.3d 405, 411 (10th Cir. 2014).
"[T]he plain language of Rule 56(c) mandates entry of
summary judgment. . . against a party who fails to make a
showing sufficient to establish the existence of an element
essential to that party's case, and on which that party
will bear the burden of proof at trial." Celotex
Corp. v. Catrett 477 U.S. 317, 322-23 (1986).
background facts are substantially undisputed. On March 31,
2017, WinCo Foods, LLC ("WinCo"), as owner, and
Crossland Construction Company, Inc. ("Crossland"),
as general contractor, entered into an agreement for the
construction of WinCo Store #149 (the "Project") in
Oklahoma City. Crossland was required to begin work on the
Project on April 3, 2017 and to achieve substantial
completion 224 days later. The contract documents contained
the following liquidated damages provision:
Further notwithstanding anything to the contrary in the
Contract Documents, the Owner and the Contractor recognize
that in the event the Contractor fails to achieve Substantial
Completion of the Project by the Projected Completion Date
(plus any proper extension granted pursuant to a Change Order
issued under paragraph 8.3.1), the Owner will incur
substantial damages and the extent of such damages shall be
incapable of accurate measurement. Nonetheless, the Owner and
the Contractor acknowledge that on the date of this Contract,
the amount of this Contract, the amount of liquidated damages
set forth below represents a good faith estimate as to the
actual potential damages that the Owner will incur as a
result of late Substantial Completion of the Project. Such
liquidated damages shall be the sole and exclusive remedy of
the Owner for late completion of the Project, and the Owner
hereby expressly waives all other remedies available at law
or in equity with respect to losses resulting from late
completion. The amount of the liquidated damages calculated
hereunder does not include any penalty. This liquidated
damages Clause covers delay damages only and the Owner
reserves the right to recover from the Contractor all other
damages the Owner may incur as a result of any breach of this
Contract, including but not limited to direct damages,
consequential damages, attorneys' fees and costs. The
Owner and the Contractor agree that the Contractor shall pay
the Owner, as liquidated damages for delay, the following
amount for each day that expires after the Projected
Completion Date (plus any proper extension granted pursuant
to a Change Order issued under paragraph 8.3.1) until such
time as all requirements for Substantial Completion have been
satisfied by the Contractor: $5, 000 per
WinCo Store No. 149 Supplementary Conditions, § 8.3.3.
site conditions were discovered almost immediately after work
began on the Project and delayed the progress of
Crossland's work. Weather events and Crossland's
issues with one of its subcontractors also impacted the
construction schedule. Additionally, portions of
Crossland's concrete work at the storm refuge area of the
Project was rejected and had to be fixed. No. extensions of
time were granted to Crossland, and the Project was not
substantially completed by the projected completion date.
WinCo asserts the Project was substantially completed on
April 5, 2018; Crossland asserts the Project was
substantially completed much earlier. WinCo Store #149 opened
for business on April 18, 2018.
asserts Crossland owes it $715, 000 in liquidated damages.
Crossland contends (1) the liquidated damages provision is
void and unenforceable; (2) WinCo did not make a timely claim
for liquidated damages; (3) the Project was substantially
completed no later than January 8, 2018; and (4) Crossland
was entitled to additional time based upon events beyond its
Whether the liquidated damages provision is valid and
Oklahoma law, a contractual, non-penal liquidated damages
provision is valid and enforceable when it would be
impracticable or extremely difficult to fix the amount of
actual damages. See 15 Okla. Stat. § 215(A).
Oklahoma courts have set forth the following three criteria
by which a valid liquidated damages clause may be
distinguished from a penalty: (1) the injury caused by the
breach is difficult or impossible to estimate accurately; (2)
the parties intended to provide for damages rather than for a
penalty; and (3) the sum stipulated is a reasonable
pre-breach estimate of the probable loss. See Sun Ridge
Inv'rs, Ltd. v. Parker, 956 P.2d 876, 878 (Okla.
1998). "Whether the damages were difficult of
ascertainment is to be determined as of the time the contract
was entered into and not at the time of the breach."
Waggoner v. Johnston, 408 P.2d 761, 769 (Okla.
1965). The burden of establishing that damages would be
difficult to ascertain and that the liquidated damages
provision does not impose a penalty rests on the party
seeking to enforce the liquidated damages provision. See
Id. at 768.
court concludes the undisputed facts establish the
enforceability of the liquidated damages provision - that
damages would be difficult to ascertain and that the
liquidated damages provision did not impose a penalty. Courts
have consistently held that delay damages in construction
contracts are inherently difficult to accurately predict.
See, e.g., Carr-Gottstein Props., Ltd. P'ship v.
Benedict 72 P.3d 308, 311 (Alaska 2003) ("it is
generally accepted that injuries caused by construction
delays are nearly always difficult to determine.59). In this
case, the extent of damages caused by a delay in the
completion of the construction of the WinCo grocery store was
made more difficult to accurately predict in light of the
undisputed facts that WinCo was new to the Oklahoma City
grocery store market and that the particular location had
never before housed a grocery store. Further, the parties agreed
in the contract documents that the extent of the damages
incurred due to a delay "shall be incapable of accurate
the parties agreed that on the date of the contract,
"the amount of liquidated damages ... represents a good
faith estimate as to the actual potential damages that
[WinCo] will incur as a result of late Substantial Completion
of the Project." These parties were experienced and
sophisticated commercial entities, and no basis appears for
discounting their negotiated agreement. Further, the fact
that WinCo may use the same amount for daily liquidated
damages in all of its contracts does not, in and of itself,
undercut the reasonableness of the estimate of probable
losses caused by the delay. See Bowbells Pub. Sch. Dist.
No. 14, Bowbells v. Walker, 231 N.W.2d 173, 177 (N.D.
1975); DJ Mfg. Corp. v. U.S., 86 F.3d 1130 (Fed.
Cir. 1996). Further, WinCo's evidence, not challenged by
Crossland, is that WinCo's average loss per store per day
is $12, 000. Fixing the amount of liquidated damages at less
than half of the average loss is certainly reasonable.
the language of the provision indicates the parties intended
to provide for damages rather than for a penalty,
specifically stating that the amount of liquidated damages
does not include any penalty. WinCo's belief that the
liquidated damages clause would have the effect of
encouraging prompt performance by Crossland does not turn the
provision into a penalty. See Robinson v. United
States.261 U.S. 486, 488 (1923) ("In construction
contracts a provision giving liquidated damages for each
day's delay is an appropriate means of inducing due
performance, or of giving compensation, in case of failure to
perform.'9). Further, the fact that $5, 000 is likely
less than the damages WinCo incurred as a ...