While we’re in the midst of talking about consequential damages here, a name synonymous with them is disappearing.
The Perini Case
The name Perini gained notoriety, or infamy, depending on your point of
view, in 1992 when the New Jersey Supreme Court decided the case of Perini Corporation v. Greate Bay Hotel & Casino, Inc. In that case Perini worked as prime contractor building a the now demolished Sands Casino in Atlantic City, New Jersey. The original guaranteed maximum price was around $16,800,000, later increased to $24,000,000. Perini’s fee was only about $600,000. But when Perini finished the work late, the owner claimed over $14,500,000 in damages for lost profits because of time that the casino was not open to the gaming public.
Perini and the owner went to arbitration and the arbitrators awarded the owner over $14,500,000 in damages – much of them categorized as consequential damages (e.g., lost profits from missed casino operating opportunities). Perini appealed the arbitrators’ decision all the way to the New Jersey Supreme Court. The New Jersey’s Supreme Court’s affirmed the arbitrators’ award. That decision forever became known as “The Perini case.” And with it the name Perini became synonymous with consequential damages.
The effects of the Perini case were so dramatic that when the American Institute of Architects revised the A201 General Conditions part of their standard form construction contract in 1997, they added a mutual waiver of consequential damages from both the owner and the contractor.
The Merger and Name Change
As with many mergers and acquisitions, not long after the deal closes names get changed. So it’s become with the Perini Corporation. Not completely gone, but no longer the same.
Whether you loved or hated the The Perini case, it’s namesake has become a kind of cherished byword in construction industry and construction lawyer jargon. I’ll be sad to see it go. But still, at least among construction lawyers, “Perini” will endure as the most used shorthand way to refer to consequential damages.