Iowa Court of Appeals Says the COVID Pandemic Qualifies as an Excusable Delay for Contractor
“‘We are seeing the worst material shortage I've seen in my construction career which has led to delays on multiple ends.’ So said Jonathan Brundrett—the president of Johnny B's Construction, Inc., the general contractor that Timothy Doyle hired to remodel his hunting cabin—six months into the global COVID-19 pandemic.” Agreeing with that sentiment, the Iowa Court of Appeals affirmed the district court’s conclusion that the COVID pandemic triggers the parties’ contractual force-majeure clause and qualifies as an excusable delay in performance of the contractor’s work on the project. Doyle v. Johnny B’s Construction, Inc., 2024 WL 1295970 (Iowa Ct. App. Mar. 27, 2024).
The project owner (Timothy Doyle) and the contractor (Johnny B’s Construction, Inc.) had a written contract for the project, signed in January 2020, which included a force-majeure clause that provided, “The performance of [Johnny B's] and its subcontractors and suppliers is subject to ‘Unavoidable Delays’, which for purposes of this Agreement means any act of God, adverse weather conditions that could not be reasonably anticipated and that had an adverse effect on scheduled construction, casualties, war, embargo, riots, strikes, unavailability of materials (but not failure of a party to pay for such materials), litigation commenced by third persons (including litigation seeking to enjoin the ability of a party to act), and all other acts or omissions, causes or events which are beyond the performing party's reasonable control.” Id. at *1. Around February 2020, “the COVID-19 pandemic swept across the nation and into Iowa,” and “[a]ccording to Brundrett's testimony at trial, Johnny B's had ‘multiple delays’ obtaining materials, including ‘greater than normal’ lead time for ordering windows and delays in finding siding. A major subcontractor ‘had a lot of illnesses’ during the project and all contractors were ‘fighting their own battles with delays.’” Id. at *2. “On September 10, Doyle asked for an update and expressed his hope that repairs would be complete by October 17 for the start of the muzzleloader hunting season. Brundrett responded: ‘Yes, my goal is finished in the next 3–4 weeks as [Harms] said you would [be] going hunting. I'll believe that we will be up there by the end of next week to get windows in and trim finished. Sorry for such a delay as I'm sure you get it. I've never seen such a weird market as we have going. We are seeing the worst material shortage I've seen in my construction which has led to delays on multiple ends.’ Yet Johnny B's employees worked on the cabin for the last time on September 21.” Id. at *2-*3. “Beginning October 6, Doyle sent Brundrett increasingly exasperated text messages expressing his displeasure over the delays. On November 4, after a rancorous exchange with Brundrett, Doyle texted Harms notice that he changed the locks on his cabin.” Id. at *3. The next day, Doyle texted Brundrett to inform him of the lock change too: ‘I am the one in charge of the timeline, you are 7 months past estimated completion date. ALL work will be completed 100% to my satisfaction by 5:00 pm 12/4/2020. You need to provide me with 24 hours advance notice of any work that is going to be done on the project. I pulled the keypad and ... changed the locks yesterday. You or a representative of your company can come and pick up the key every morning and return it every evening with a full report of what's been done on it.’” Id. On November 20—with two weeks still to go to his December 4 deadline—Doyle sent Johnny B's a letter through his attorney terminating the contract ‘effective immediately.’ Doyle then carried on with repairs himself and redid work with which he was dissatisfied. He estimated that he spent about 300 hours doing so. And as of the time of trial, he thought the project was about 95% complete. Doyle did not pay Johnny B's any more money.” Id.
Doyle claimed that “Johnny B's breached the contract in two distinct ways: through its delays in completing the project and through defective workmanship in the repairs it did perform. The district court dismissed the first claim because it found that Johnny B's delayed performance was excused by the COVID-19 pandemic under the force-majeure clause in the parties’ contract.” Id. at *4. On appeal, Doyle did not dispute that “delays caused by the COVID-19 pandemic would fall within the scope of this [force majeure] clause . . . [b]ut maintain[ed] that Johnny B's did not carry its burden to prove that its delays in performance were caused by the pandemic.” Id. Specifically, Doyle argued that there were other reasons for the delays that were not excused, such as Johnny’s B’s lay-off of employees before the pandemic started. Id. In rejecting this argument, the Iowa Court of Appeals explained, “To be sure, the record contains evidence Johnny B's may have failed to perform for reasons other than the COVID-19 pandemic. It seems the lay-off of employees occurred in February 2020 before the pandemic had disrupted Iowa. Johnny B's progress on the cabin was slow even in January and February. And Brundrett also pointed to cash-flow difficulties arising from the process of releasing the insurance proceeds that prevented ordering materials as another source of delay. But at most, this evidence supports a contrary finding. And that is the wrong question. Our concern in substantial-evidence review is whether the evidence supports the finding actually made. . . . The testimony and text messages about delays because of the COVID-19 pandemic are substantial evidence to support finding Johnny B's nonperformance was excused by ‘unavoidable delays’ under the force-majeure clause in the parties’ contract. We thus affirm the district court's dismissal of Doyle's claim that Johnny B's breached the contract through its delays.” Id. at *5.
This case confirms what most everyone involved in the construction industry experienced and learned during the COVID pandemic: the pandemic caused a substantial disruption to construction projects, including major delays. As the Iowa Court of Appeals recognized, COVID-pandemic-caused delays not only can trigger force-majeure contract clauses, but they can overshadow many other inexcusable-delay-causing events.
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