Construction Law Insights

Henderson v. Senior Living Choices of Va., Inc., No. CL17-1634 (Chesterfield Cnty. Cir. Ct. Apr. 4, 2019)

Defendant owner Senior Living Choices of Virginia, Inc. (“SLC”) retained plaintiff contractor Henderson, Inc. (“Henderson”) to manage a major $42 million expansion and renovation of the Brandermill Woods assisted living facility in Chesterfield County, Virginia. In June 2017, Henderson sued SLC for breach of contract in the amount of $1.4 million, including “failing to obtain the required permits and respond to requests and proposed change orders.” SLC counterclaimed for Henderson’s alleged “failing to obtain required permits, failing to properly manage the project” and for unnecessary charges. SLC alleged its damages for delay in completion, loss of revenue, and other costs in the amount of $7.1 million.

The parties’ contract, based on AIA Document A201, included a “specific mutual waiver of certain damages”:

The Contractor and Owner waive Claims against each other for consequential damages arising out of or relating to this Contract. This mutual waiver includes . . . damages incurred by the Owner for rental expenses, for losses of use, income, profit, financing, business and reputation, and for loss of management or employee productivity or of the services of such persons.

Noting that “[w]hether damages are direct or consequential is a question of law” Roanoke Hospital Ass’n v. Doyle & Russell, Inc., 215 Va. 796 n.4 (1975), the court held that the plain language of the parties’ contract barred over $7 million of the damages alleged in the defendant’s counterclaim. SLC’s “Expenses Relating to Loss Revenues” fell within the scope of the contractual damages waiver. In its Opposition, SLC argued that Virginia law permitted its delay-related damages to be measured by “lost rental value due to delayed openings of buildings of $7,000,179.75” citing to Roanoke Hospital Ass’n, 215 Va. at 802 and William H. Gordon Assocs. V. Heritage Fellowship, 291 Va. 122, 151 (2016).

Although SLC was correct in its discussion of these cases, the court held that “the parties themselves, in their contract, expressly provided, not only that consequential damages generally are not compensable, but that certain specified owner damages are defined as consequential damages and they are likewise not compensable.” If the court adopted SLC’s position, it would “render the contractual waiver of damages mothing more than a meaningless restatement of existing law.” Under longstanding Virginia law, “no word or clause” of a contract “will be treated as meaningless if a reasonable meaning can be given to it, and there is a presumption that the parties have not used words aimlessly.” Ames v. Am. Nat. Bank of Portsmouth, 163 Va. 1, 38 (1934).

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