DELAWARE CONSTRUCTION CLAIMS RESOURCES
- 1 CONSTRUCTION CLAIMS
- 2 CONSTRUCTION DAMAGES
- 3 COVERAGE TRIGGER OF COVERAGE
10 Del. C. § 8106 establishes the statute of limitations for breach of warranty and negligence claims, which states:
- No action to recover damages for trespass, no action to regain possession of personal chattels, no action to recover damages for the detention of personal chattels, no action to recover a debt not evidenced by a record or by an instrument under seal, no action based on a detailed statement of the mutual demands in the nature of debit and credit between parties arising out of contractual or fiduciary relations, no action based on a promise, no action based on a statute, and no action to recover damages caused by an injury unaccompanied with force or resulting indirectly from the act of the defendant shall be brought after the expiration of 3 years from the accruing of the cause of such action…
- The cause of action for a breach of warranty accrues on the date of the settlement. The cause of action for a negligence claim accrues at the time of injury. The time of injury is when “the plaintiff has reason to know that a wrong has been committed.” This is known as the “Time of Discovery Rule,” which may extend the limitations period beyond that established by statute.
10 Del. C. § 8127 establishes the statute of limitations for alleged deficiencies in the construction of improvements to commercial real property. The statute operates like a statute of repose stating: (b) No action, whether in or based upon a contract (oral or written, sealed or unsealed), in tort, or otherwise, to recover damages or for indemnification or contribution for damages . . . shall be brought against any person performing or furnishing, or causing the performance or furnishing of, any such construction of such an improvement or against any person performing or furnishing, or causing the performing or furnishing of, any such designing, planning, supervision, and/or observation of any such construction or manner of construction of such an improvement, after the expiration of 6 years from whichever of the following dates shall be earliest:
- The date of purported completion of all the work called for by the contract as provided by the contract if such date has been agreed to in the contract itself;
- The date when the statute of limitations commences to run in relation to the particular phase or segment of work performed pursuant to the contract in which the alleged deficiency occurred, where such date for such phase or segment of work has been specifically provided for in the contract itself;
- The date when the statute of limitations commences to run in relation to the contract itself where such date has been specifically provided for in the contract itself;
- The date when payment in full has been received by the person against whom the action is brought for the particular phase of such construction or for the particular phase of such designing, planning, supervision, and/or observation of such construction or manner of such construction, as the case may be, in which such alleged deficiency occurred;
- The date when the construction of such an improvement as called for by the contract has been substantially completed;
- The date when an improvement has been accepted, as provided in the contract, by the owner or occupant thereof following the commencement of such construction;
- For alleged personal injuries also, the date upon which it is claimed that such alleged injuries were sustained; or after the period of limitations provided in the contract, if the contract provides such a period and if such period expires prior to the expiration of 2 years from whichever of the foregoing dates is earliest.
There are no express statutory requirements that a party provide pre-suit notice prior to initiating an action. The courts can enforce contractual pre-suit notice provisions.
The Delaware Supreme Court defines contribution as “the right of one who has discharged a common liability to recover from another who is also liable.” Reddy v. PMA Ins. Co., 20 A.3d 1281, 1284 (Del. 2011). The right to contribution is triggered when it is appropriate for liability to be apportioned among codefendants. The right to contribution is governed by Delaware’s Uniform Contribution Among Tortfeasors Act 10 Del. C. § 6301 et. seq. (the “DUCATA”). Under the DUCATA, parties must be joint tortfeasors who share a common liability for contribution to be appropriate. A joint tortfeasor is not entitled to contribution until he has, by payment, discharged the common liability or has paid more than his pro rata share. In re Rural/Metro Corp. Stockholders Litig., 102 A.3d 205, 243 (Del. Ch. 2014).
As it pertains to indemnity, the general principal of Delaware law holds that in order for a party to be entitled to indemnification for the results of its own negligence, the contract must be unequivocal to show that the contracting party intended to indemnify the indemnitee for the latter’s own negligence. Sweetman v. Strescon Industrites, Inc. 389 A.2d 1319, 1321 (Del. Super. 1978). Delaware court have also recognized “implied indemnity.” For example, contractors may be liable on a theory of implied indemnity if they breach an obligation to perform work with due care. Diamond State Tel. Co. v. University of Del., 269 A.2d 52, 57 (Del. 1970).
A certificate of merit is not required against construction litigants.
Generally, plaintiffs cannot recover in tort for intangible economic losses. The majority rule holds that a plaintiff cannot recover purely economic damages in tort. The economic loss rule prevents recovery in tort where only the product itself has been damaged. Danforth v. Acorn Structures, Inc., 608 A.2d 1194 (Del. 1999).
Delaware has enacted the Home Owner's Protection Act. 6 Del. C.§§ 3651. As a result, the economic loss rule no longer precludes negligence actions in cases involving the construction of residential buildings. The Act reads:
§ 3652. Economic loss relating to improvements to residential real property.
No action based in tort to recover damages resulting from negligence in the construction or manner of construction of an improvement to residential real property and/or in the designing, planning, supervision and/or observation of any such construction or manner of construction shall be barred solely on the ground that the only losses suffered are economic in nature.
Any contractors conducting business activity in Delaware are required to register with and obtain a business license from the Delaware Division of Revenue.
1. Breach of Contract
The standard remedy for breach of contract is based on the reasonable expectations of the parties. Reliance, however, is not a necessary element in the breach of contract analysis.
In determining whether a failure to render or to offer performance is material, the following circumstances are significant: (a) the extent to which the injured party will be deprived of the benefit which he reasonably expected; (b) the extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived; (c) the extent to which the party failing to perform or to offer to perform will suffer forfeiture; (d) the likelihood that the party failing to perform or to offer to perform will cure his failure, taking account of all the circumstances including any reasonable assurances; (e) the extent to which the behavior of the party failing to perform or to offer to perform comports with standards of good faith and fair dealing.
Delaware follows the general rule that the employer of an independent contractor is not liable for the negligence of the contractor or his employees, Exceptions are found in § § 411 and 413 of the Restatement. The Particular Risk Doctrine, states that a general contractor may be liable for the actions of the independent contractor if the work was inherently dangerous. Delaware courts have held that as long as property owners do not control the scope of independent contractor’s work, an independent contractor's employee cannot use the Particular Risk Doctrine to sue employers that hire independent contractors for work-related injuries.
3. Breach of Warranty
Express/Implied warranty causes of action are available. A developer may contract away the implied warranty by including clear, unambiguous language in the contract specifically excluding the implied warranties. Council of Unit Owners of Breakwater House Condominium v. Simpler, 603 A.2d 792, 793 (Del. 1992). The implied warranties does not exist to subsequent purchasers.
4. Fraud and Misrepresentation
5. Delaware Consumer Fraud Act
6. Deceptive Trade Practices Act
Individuals do not have standing to bring a claim under the Act; only those involved in a trade or business or the Attorney General have standing to assert a claim under the Act.
Delaware courts have generally adhered to the Restatement of the Law in determining damages in construction defect cases: “[I]f a party to a construction contract fails to perform its obligations under the contract, the aggrieved party is entitled to damages measured by the amount required to remedy the defective performance unless it is not reasonable or practicable to do so.” Thus, the appropriate measure of damages is the cost of repair unless that is not feasible, then the measure of damages will be diminution in value. Universal Enter. Grp., L.P. v. Duncan Petroleum Corp., 2013 WL 3353743, at *19 (Del. Ch. July 1, 2013).
Punitive damages generally are not recoverable in a breach of contract action. However, the Delaware Supreme Court has stated that punitive damages are recoverable where “the defendant’s conduct exhibits a wanton or willful disregard for the rights of [the] plaintiff.”A finding of “ill-will, hatred or intent to cause injury” is required in order to support a claim for punitive damages in a contract action. Enrique v. State Farm Mut. Auto. Ins. Co., 142 A.3d 506, 512 (Del. 2016).
As a general rule, in the absence of a contractual provision or statutory authorization, the prevailing party may not recover his or her attorney’s fees from the losing party. A court has discretion to award a prevailing party his or her attorney’s fees as costs, even in the absence of a contract or statute. CM & M Group, Inc. v. Carroll, 453 A.2d 788, 795 (Del. 1982);The Delaware Supreme Court has stated, as a general matter, that “[a] court of equity has jurisdiction to award counsel fees as part of costs in a proper case, but in an action at law, absent a statutory or contractual provision, a court may not ordinarily order the payment of attorneys’ fees as costs to be paid by the losing party. Dover Historical Society, Inc. v. City of Dover Planning Commission, 902 A.2d 1084, 1090 (Del. 2006)
In Delaware, joint and several liability applies, so a plaintiff may recover the entirety of his damages from any one of multiple tortfeasors. 10 Del. Code § 6301 (1953); Blackshear v. Clark, 391 A.2d 747 (Del. 1978). The joint and several tortfeasors have a right of contribution against each other. 10 Del. Code § 6302 (1953); Reddy v. PMA Insurance Co., 20 A.3d 1281 (Del. 2011). Where the plaintiff bears no more than 50 percent of the fault, his recoverable damages are limited proportionately. In case of a partial settlement, the non-settling tortfeasor’s liability is reduced by the amount of the settlement or by what would have been the settling tortfeasor’s pro ratashare of the judgment, whichever is greater. 10 Del. Code § 6304 (1953); Medical Center v. Mullins, 637 A.2d 6 (Del. 1994)
This may be grouped as part of consequential damages. See below.
Consequential damages are defined as damages that "do not flow directly or immediately" from the breach. Pharm. Prod. Dev., Inc. v. TVM Life Sci. Ventures VI, L.P., 2011 Del. Ch. LEXIS 33, 2011 WL 549163, at *6 (Del. Ch. Feb. 16, 2011); A plaintiff only can recover consequential damages if they were foreseeable at the time of contracting. Pharm. Prod., 2011 Del. Ch. LEXIS 33, 2011 WL 549163, at *6.
Pursuant to Delaware common law, an “accident” is an event happening without human agency, or, if happening through such agency, an event which under circumstances, is unusual and not expected by the person to whom it happens. See State Farm Fire and Cas. Co. v. Hackendorn, 605 A.2d 3 (Del. Super. Ct. 1991). Conduct that leads to the damage of the property of another that is clearly within the control of a contractor or construction company, and is not a fortuitous circumstance happening without human agency, will likely not be found to be an “occurrence” and will likely not trigger coverage under a commercial general liability policy. Westfield Ins. Co., Inc. v. Miranda & Hardt Contracting and Building Services, L.L.C., 2015 WL 1477970, at 4 (Del. Super. 2015).
It is well settled that an insurer's duty to defend is broader than its duty to indemnify. See Charles E. Brohawn & Bros. Inc. v. Employers Commercial Union Ins. Co., Del. Supr., 409 A.2d 1055, 1058 (1979); New Castle County v. Hartford Accident & Indem. Co., 673 F. Supp. 1359, 1366-7 (D.Del. 1987). The duty to defend is determined by comparing the allegations contained in the underlying complaint with the terms of the policy. See Continental Casualty Co. v. Alexis I. du Pont School Dist., Del. Supr., 317 A.2d 101, 103 (1974); The test is whether the underlying complaint, read as a whole, alleges a risk within the coverage of the policy. Continental Casualty, 317 A.2d at 103, 105 (1974); The Delaware Supreme Court has articulated the following principles to be applied in determining whether an insurer has a duty to defend an action against its insured:
(a) where there exists some doubt as to whether the complaint against the insured alleges a risk insured against, that doubt should be resolved in favor of the insured;
(b) any ambiguity in the pleadings should be resolved against the carrier;
(c) if even one count or theory of plaintiff's complaint lies within the coverage of the policy, the duty to defend arises.
Continental Casualty, 317 A.2d at 105.
Late notice: An insurer does not have to show prejudice when it denies coverage under a claims-made policy; Prejudice must be demonstrated in an occurrence made policy. State Farm Mut. Auto. Ins. Co. v. Johnson, Del. Supr., 320 A.2d 345 (1974). Other defenses may include failure to provide sufficient notice; failure to provide proof of loss; failure to comply with conditions precedent; failure to cooperate with the insurer; and lack of standing under the policy.
Delaware courts will honor a contractually-designed choice-of-law provision so long as the jurisdiction selected bears some material relationship to the transaction. The existence of a choice-of-law clause establishes a material relationship between the chosen state and the transaction. Title 6, section 2708(a) of the Delaware Code recognizes that a choice-of-law clause is a significant, material and reasonable relationship with this State and shall be enforced whether or not there are other relationships with Delaware (Oak Private Equity Venture Capital Ltd. v. Twitter, Inc., 2015 WL 7776758, at *9 (Del. Super. Ct. Nov. 20, 2015)).