Richard E. Lambert, Ltd. v. City of Tucson Department of Procurement – 12/16/2009

December 16, 2009

Arizona Court of Appeals Division Two Holds That Assessment of Liquidated Damages Against Contractor Because There was Sufficient Evidence to Support the Procurement Director’s Determination That the Contractor’s Delays Were Not Excusable.

Richard E. Lambert, Ltd. v. City of Tucson Department of Procurement (12/8/2009): Arizona Court of Appeals Division Two Upholds Assessment of Liquidated Damages Against Contractor Because There was Sufficient Evidence to Support the Procurement Director’s Determination That the Contractor’s Delays Were Not Excusable

Richard Lambert contracted with the City of Tucson to improve a city-owned neighborhood center.   After several delays, Mr. Lambert completed the project nearly one year after the agreed-upon completion date.  Pursuant to the contract, the City assessed Mr. Lambert with liquidated damages of $500 for each day he was late.  Mr. Lambert appealed the assessment to the City Director of Procurement, which appointed a hearing officer to evaluate the assessment.  The officer conducted an evidentiary hearing and concluded that the City was entitled to liquidated damages because Mr. Lambert was responsible for the delays.  The Direct of Procurement affirmed the officer’s findings.  Mr. Lambert filed a special action in superior court, challenging the Director of Procurement’s decision.  The superior court granted Mr. Lambert’s motion for summary judgment, concluding that the Director’s factual findings were arbitrary, capricious, and unsupported by the facts.  This appeal followed.

The Arizona Court of Appeals held that the superior court erred in setting aside the Procurement Director’s determination.  Under construction law and the general law of government contracts, a contractor seeking to justify delays has the burden of proving (1) that there were delays, (2) that the delays were excusable, and (3) that the excusable event caused a delay to the overall completion of the contract.  In this case, although Mr. Lambert identified three circumstances that delayed his project, there was sufficient evidence from which the Procurement Director could have concluded that those delays were either not excusable or did not cause a delay to the overall completion of the contract.  Because the Procurement Director’s determination was not arbitrary and capricious or an abuse of discretion, the court of appeals vacated the decision of the superior court and reinstated the Procurement Director’s decision. 

Judge Howard authored the opinion; Judges Espinosa and Soto concurred.