Background
Black & Veatch Construction hired The Boldt Company as a subcontractor to assemble a 60-turbine wind farm in Illinois. The subcontract designated an aggressive construction schedule as a material provision and included procedures for Boldt to notify Black & Veatch if delays were caused by Black & Veatch or its parts supplier, General Electric. The project quickly fell behind schedule due to missing plans, unsuitable soil conditions, inadequate crane platforms, and GE’s failure to deliver turbine parts on time. Boldt notified Black & Veatch of these delays through multiple written memos and formal letters over more than a month, but without turbines being constructed, Black & Veatch issued three notices of default and ultimately terminated Boldt’s involvement for cause, invoking the for-cause termination provision of the subcontract.
Boldt sued for wrongful termination and breach of contract. The district court granted summary judgment in Black & Veatch’s favor on all breach claims, finding that Boldt failed to adequately notify Black & Veatch of delays and was responsible for falling behind schedule. The case proceeded to trial solely on damages. At trial, Black & Veatch claimed approximately $39 million in damages to complete Boldt’s work (compared to the original $15.4 million contract price), but Boldt’s expert identified $17.7 million in cost-coding errors in Black & Veatch’s damages calculation. The jury determined that Black & Veatch failed to provide a proper basis for computing damages and awarded only $1 in nominal damages.
The Court’s Holding
The Seventh Circuit affirmed the jury’s $1 nominal damages verdict, finding substantial cost-coding errors and inadequate support for Black & Veatch’s claimed damages. Although Black & Veatch presented evidence of actual injury, the jury could reasonably conclude that Black & Veatch failed to establish damages to a reasonable degree of certainty under Illinois law. The court rejected Black & Veatch’s arguments for a new trial based on evidentiary rulings, expert disclosure issues, and the nominal damages instruction, finding no abuse of discretion and no prejudicial errors.
The court reversed in part the district court’s grant of summary judgment on Boldt’s wrongful termination claim. Although the subcontract required performance on schedule and included provisions for Boldt to notify Black & Veatch of delays caused by others, the court found the contract ambiguous regarding whether Boldt bore responsibility for all delays or only those inadequately notified. This material factual dispute—whether Boldt provided adequate notice and whether the contract allocated delay responsibility to Boldt only when notice was lacking—must be decided by a jury, not determined at the summary judgment stage. The court affirmed summary judgment on Boldt’s claim regarding Black & Veatch’s failure to provide adequate construction works, as the subcontract included exculpatory clauses barring such claims.
Key Takeaways
- A party seeking actual damages must establish a reasonable basis for computing them; failure to do so can result in nominal damages only, even if actual injury occurred.
- Ambiguous contract provisions regarding allocation of responsibility for project delays require jury interpretation rather than summary judgment, particularly when the contract does not expressly establish a bright-line default rule.
- Cost-coding systems used to support damages claims must be accurate and verifiable; unexplained cost-coding errors of significant magnitude can undermine an entire damages calculation.
- Exculpatory clauses in subcontracts can bar claims arising from the general contractor’s performance of construction works it provided.
Why It Matters
This decision reinforces critical principles for contractors in construction disputes. General contractors cannot assume they will recover substantial damages for completing a subcontractor’s work; they must maintain meticulous records and provide clear documentation of costs actually incurred. Courts will not permit a party to recover damages based on unreliable cost-coding or speculative calculations, regardless of the ultimate contract value disparity.
The decision also establishes important limits on summary judgment in construction contract disputes. When a subcontract’s allocation of responsibility for delays is reasonably susceptible to multiple interpretations, courts will allow juries to determine the parties’ actual intent rather than imposing a default rule favoring one party. This protects subcontractors from having their defenses eliminated at the summary judgment stage and ensures that disputed factual issues regarding notice and causation receive full jury consideration.