On July 25, 2025, Justice Masley of the New York County Commercial Division issued a decision in BLDG 44 Developers LLC v. Pace Companies N.Y., LLC, 2025 NY Slip Op. 32881(U), holding that a plaintiff was not entitled to consequential damages of lost rent and revenue for breach of a construction contract, explaining:
In claims for breach of contract, a party’s recovery is ordinarily limited to general damages which are the natural and probable consequence of the breach; any additional recovery must be premised upon a showing that the unusual or extraordinary damages sought were within the contemplation of the parties as the probable result of a breach at the time of or prior to contracting. A party may seek consequential damages if they were foreseeable and contemplated by the contracting parties at the time the contract was made.
BLDG argues that Pace explicitly agreed to indemnify BLDG for damages incurred resulting from Pace’s delay. Specifically, BLDG argues that the language in Section 7.2 (e) of the Subcontract – “damages (including liquidated damages if applicable), the Contractor shall be responsible for same and shall indemnify and hold harmless the Architect, Construction Manager and Owner on account of any such damages” – is inclusive of consequential damages. The court disagrees as the evidence fails to demonstrate that consequential damages of lost rents and revenues were contemplated by the parties to the Subcontract.
First, the plain language of the Subcontract, itself, does not specifically provide for indemnification of consequential damages. Consequential damages in a breach of contract case are not allowable where the contract contains no provision or language indicating that recovery of consequential damages was within the contemplation of the parties. The terms of the Subcontract do not suggest that consequential damages would be covered. BLDG has not identified to any other term in the Subcontract that would support such damages. Absent a contractual provision providing for such coverage, in order to determine whether consequential damages were reasonably contemplated by the parties, courts must look to the nature, purpose and particular circumstances of the contract known by the parties as well as what liability the defendant fairly may be supposed to have assumed consciously, or to have warranted the plaintiff reasonably to suppose that it assumed, when the contract was made. Thus, the question is whether Pace and Noble reasonably foresaw or contemplated Pace being held liable for BLDG’s consequential damages of lost rents and revenues due to Pace’s alleged delays at the time they entered the Subcontract. There is no evidence of such contemplation. For example, there is no evidence that establishes, or at a minimum raises an issue of fact, that the issue of liability for lost revenue and rents was contemplated by the parties at the time of contract negotiations.
BLDG asserts that consequential damages are common in the construction industry and asks that the court take judicial notice of the American Institute of Architects form agreement, which includes a provision waiving consequential damages. BLDG argues that this provision evidences that consequential damages are negotiated, and the exclusion of such a provision evidences that Pace did not seek to limit its liability regarding consequential damages. However, there is no need to turn to extrinsic evidence where the contract is clear and unambiguous. Silence does not make it ambiguous. Further, the agreement itself suggests the omission was purposeful. Amendment No. 2 to the Prime Agreement contains a provision limiting JV’s liability for consequential damages. If the parties intended to include consequential damages as part of the Subcontract, they would have specifically so stated.
The best and only evidence that the court has is the Subcontract itself, which makes no mention of consequential damages, unlike liquidated damages, which are specifically referenced.
(Internal quotations and citations omitted).