When a general contractor and a surety argued that a plaintiff's damages were limited by a liquidated damages provision, those arguments failed. The liquidated damages clause in the construction contract is not exclusive. And the guarantor may owe damages under the performance bond.
background
ZP No. 332 LLC hired Huffman Contractors Inc. as general contractor for a real estate development project. Huffman allegedly failed to properly complete the work, resulting in ZP ultimately declaring a default on the construction contract.
The parties' surety, Travelers Casualty and Surety Company of America, elected to assume Huffman's contract, hire subcontractors and complete the project. ZP alleges that Travelers failed to properly perform the construction contract after the acquisition. ZP sued both Huffman and Travelers for breach of contract.
All three parties filed motions for partial summary judgment, and the defendants filed a motion to exclude an expert witness from ZP.
Huffman
The record does not support a ruling in Huffman's favor on the liquidated damages issue because the liquidated damages clause in the construction contract itself does not expressly provide for an exclusive remedy and another clause, applicable to the entire contract, confirms that liquidated damages are in addition to other remedies.
Huffman also contends that the mere existence of the liquidated damages provision suggests that it is exclusive, otherwise “Schedule J would and would only function as a penalty to Huffman [] Offer ZP a ruthless double recovery and windfall.” First of all, the court must not read into the contract any provision that the parties could have written but did not.
Furthermore, the mere availability of actual damages does not make liquidated damages a “punishment.” Huffman's summary judgment makes no attempt to establish the amount of actual damages, so it does not prove that there is no real dispute as to whether the liquidated damages in the construction contract are a “penalty.”
Likewise, Huffman fails to demonstrate that ZP would recover “double” if the contract allowed it to also seek actual damages. The parties cite no case – and this Court cannot find one – in which a Virginia court has directly determined whether a plaintiff suing for breach of a contract with a non-exclusive indemnity provision may prove actual damages in excess of the liquidated damages amount. However, considering other clear statements of Virginia law, this court concludes that such evidence must be admissible.
travelers
Because the surety's liability under the performance bond does not exceed the contractor's liability under the contract, Travelers contends that Travelers cannot owe actual damages for delay because Huffman cannot. This argument initially fails for the reasons described above.
Travelers are also wrong for another reason. Under the performance bond, travelers may owe actual damages caused by Huffman's late performance or failure to perform the contract only if the contract does not provide for liquidated damages. There remains a genuine dispute as to whether ZP incurred delay costs as a result of Travelers' acceptance of the construction contract in accordance with § 5.2, so the Court must refuse summary judgment on this ground.
Loss of value
Huffman and Travelers both argue that they are entitled to a judgment on ZP's claim for lost property value because ZP does not have an expert who can prove the lost value with admissible testimony. Since a difference in value – i.e. at least some damages – is an essential component of a claim for loss of value and ZP does not provide an admissible expert report to support the amount of damages, the defendants are entitled to a judgment here.
Kevin Coyne
Coyne is a “forensic planner” who claims to have conducted a “detailed root cause analysis” into alleged construction delays. Huffman argues: (1) he does not use the best available method claimed by Huffman; (2) his analysis ignores facts in favor of Huffman and (3) his opinions are too favorable to ZP. Given the weight of all of Huffman's concerns, the motion to exclude Coyne's testimony is denied.
Legal fees
As a matter of law, ZP cannot recover Travelers' attorney's fees due to Huffman's negligence, but there is a real dispute as to whether the attorney's fees would be available in the event that ZP prevails on its claims based on Travelers' own alleged breach of the performance warranty.
recovery cap
The acquisition agreement clearly limits Travelers' liability – for Huffman's alleged violations and its own – to the amount of the bond: $31,272,000. This limit is reduced by the amount already spent by the Traveler to fulfill Huffman's obligations under the Construction Contract and by any claims for damages that the Traveler owes to ZP in this case, but the Traveler's legal and expert costs are not included in the total amount.
Huffman Contractors Inc.'s motion for summary judgment was granted in part and denied in part. Huffman's request to exclude Kevin Coyne's testimony was denied. Travelers Casualty and Surety Company of America's motion for summary judgment was granted in part and denied in part.
ZP No. 332 LLC v. Huffman Contractors Inc., Case No. 2:24-cv-611, November 4, 2025. EDVA in Norfolk (Walker). VLW 025-3-466. 26 p.