Background
In February 2017, CNB Contracting Corp. entered into a $2,157,320 contract with GS Utah Wind Acquisition, LLC to construct and install three modular homes in New Rochelle. The contract included milestone deadlines, a final completion deadline of 180 days after the first payment, and a liquidated damages clause for missed deadlines. The contract also allowed CNB time extensions for delays not attributable to its performance, and required CNB to procure a commercial general liability insurance policy naming GS Utah as an additional insured.
The project encountered delays. CNB submitted change orders claiming entitlement to extensions and additional compensation totaling $155,245.10. Beginning in March 2018, GS Utah refused to pay further installments, citing CNB’s alleged delays and failure to procure insurance. CNB filed a mechanic’s lien for $611,902.17 and brought this action to foreclose the lien and recover unpaid contract amounts. GS Utah counterclaimed for liquidated damages, alleging CNB’s delays were “inexcusable and wrongful.”
Following a bench trial, the Supreme Court, Westchester County, found that the project delays were not caused by CNB, that GS Utah’s refusal to pay constituted a breach, and that GS Utah was not entitled to liquidated damages. A judgment was entered awarding CNB $848,660.68 in breach of contract damages (after a $28,500 setoff for insurance premiums) and $611,902.17 on the mechanic’s lien foreclosure. GS Utah appealed.
The Court’s Holding
The Appellate Division affirmed in full. In reviewing a bench trial, the court has broad authority to review the facts, including the power to render the judgment it finds warranted — while giving appropriate weight to the trial judge’s credibility assessments. The court found that the record supported each of the trial court’s determinations: the delays were caused by GS Utah and factors outside CNB’s control, entitling CNB to time extensions; the liquidated damages clause therefore could not be enforced against CNB; CNB had performed the contract work and was entitled to the remaining unpaid installments; and CNB properly established its right to foreclose the mechanic’s lien.
Key Takeaways
- A liquidated damages clause in a construction contract will not be enforced when the delays giving rise to it were caused by the owner or factors beyond the contractor’s control — particularly where the contract itself includes an excused-delay provision.
- A contractor who establishes that the project owner caused or contributed to delays can foreclose a mechanic’s lien and recover both unpaid contract installments and the full lien amount — here, over $1.46 million in combined recovery.
- On appeal of a bench trial, factual determinations — especially regarding causation of construction delays — are given substantial deference; the burden on the appealing party to overturn trial-level fact findings is high.
Why It Matters
This decision illustrates why documentation is critical in New York construction disputes. CNB prevailed at trial — and on appeal — because it maintained a contemporaneous record of delays, change orders, and communications demonstrating that the project setbacks were not its fault. For general contractors and subcontractors in New York, the case reinforces that mechanic’s liens are a powerful tool: they survive the underlying contract dispute and provide a significant additional path to recovery when a property owner refuses to pay.
For project owners and developers, the case is a reminder that liquidated damages provisions are not self-executing. If the contract also contains excused-delay provisions, the owner must be prepared to prove at trial that the contractor — not the owner or external factors — caused the delays before invoking those provisions. A refusal to continue making progress payments in the middle of a project, without that evidentiary foundation, can itself constitute a breach that opens the owner to the full range of contractor remedies.