Follow the Contract If You Want to Recover Liquidated Damages

G.C. Buildings hired RGS Contractors to build an apartment complex in Oklahoma, funded by a $7 million loan insured by the Department of Housing and Urban Development. The contract provided that the date of final completion was the date that the HUD’s representative signed its final “Trip Report,” which turned out not to be signed until 161 days after the completion of work date called for in the contract. The construction contract contained a liquidated damages clause providing for a daily deduction from the contract price for each day past the construction deadline, but G.C. did not make any such deductions, instead paying the contractor in full. More than two years later, G.C. sued RGS in an attempt to recover either actual or liquidated damages. After a bench trial, the trial court ruled in favor of the contractor, finding that G.C. had not established a proper measure of damages for breach of contract.

G.C. argued that the interest payments it made during the period of the construction delays constituted its damages, but the Court of Appeals rejected that claim because G.C. was obligated to make those payments regardless of when or whether the construction on the apartment complex was completed. As to liquidated damages, the Court held that such damages could not be recovered because G.C. had not followed the procedures of the contract to determine whether a flat $2,101.68 charge or the actual cost of interest, taxes, and other fees should have been deducted from its payments to the contractor. Thus, the trial court’s findings were supported by legally and factually sufficient evidence, and the judgment was affirmed.

G.C. Buildings, Inc. v. RGS Contractors, Inc., No. 05-13-00151-CV