Pleading Delay Damages Claims in New York: Bald and Conclusory Allegations to Avoid a 'No-Damages-For-Delay' Provision May Result in Dismissal

Through a “no-damages-for-delay” provision limiting a party’s ability to recover delay damages, contracting parties allocate the risk associated with time for performance and the burden of increased cost associated therewith. ^[1] Deemed exculpatory in nature, New York courts enforce clear and unambiguous no-damages-for-delay provisions that do not fall within one of the four exceptions recognized by the Court of Appeals. Specifically, the exceptions are “(1) delays caused by the contractee’s bad faith or its willful, malicious, or grossly negligent conduct, (2) uncontemplated delays, (3) delays so unreasonable that they constitute an intentional abandonment of the contract by the contractee, and (4) delays resulting from the contractee’s breach of a fundamental obligation of the contract.”^[2]

In a recent decision, the First Department evaluated whether a subcontractor bound by a no-damages-for-delay provision sufficiently pled any one of the Court of Appeals’ recognized exceptions. In Gamma USA, Inc. v. Pavarini McGovern, LLC,^[3] the First Department evaluated the subcontractor’s complaint against the no-damages-for-delay provisions (and the subcontract as a whole) and found that the subcontractor’s allegations were insufficient to maintain its delay damages claim. Moreover, the Gamma USA court provided insight as to the type of allegations that are likely, on their own, to be insufficient. For instance, allegations of “inept administration or poor planning” on the part of the general contractor did not rise to the level of intentional wrongdoing or reckless indifference necessary to avoid the no-damages-for-delay provision. Similarly, the Gamma USA court held that the subcontractor’s allegations of unanticipated delay were not only insufficient, but the no-damages-for-delay provisions at issue specifically included the type of delay of which they complained. In considering whether the general contractor breached fundamental contractual obligations, the Gamma USA court noted that such obligations must not only derive from the subcontract itself but must relate to affirmative duties. In this regard, the subcontractor’s allegations, which included the general contractor’s failure to provide a critical path schedule, removal of equipment and modification of a site logistics plan, were insufficient as the subcontract did not support a finding that these items were the general contractor’s fundamental and affirmative obligations.

Beyond reminding practitioners that New York courts uphold enforceable no-damages-for-delay provisions, Gamma USA affirms that courts may test the sufficiency of allegations and construe the relevant contract at the pleading stage—without the benefit of discovery. On the transactional side, Gamma USA is also a reminder that contracting parties must clearly express their intentions and expectations before signing up.

Author Gaetano Piccirilli, partner, is a member of the Litigation Department and construction practice group at Klehr Harrison.

[1] New York’s Court of Appeals has broadly interpreted “delay damages claims” as claims that “seek compensation for increased costs […] whether the costs result because it takes longer to complete the project or because overtime or additional costs are expended in an effort to complete the work on time. It is of no consequence that the obstruction, whatever its cause, occurs during the term of the contract or afterwards or whether it disrupts the contractor’s anticipated manner of performance or extends his time for completion.” Corinno Civetta Const. Corp. v. City of New York, 67 N.Y.2d 297, 310, 493 N.E.2d 905 (1986).

[2] Corinno Civetta Const. Corp., 67 N.Y.2d at 310.

[3] https://nycourts.gov/courts/AD1/calendar/AppsMots/2025/apps/20250605/2024-06455.pdf