Martin Brothers Contractors (contractor) entered into a contract with Virginia Military Institute (owner) to renovate its campus dining facility. Changes requested by the owner delayed the project by 270 days. The contractor claimed site delay damages amounting to $225,937, and home office delay damages amounting to $204,305, plus the cost of recovery. The owner admitted that the contractor was without fault for the delay, but paid only $99,646 of the contractor’s claimed damages. The owner contended that the contractor’s amount of damages was limited by the terms of its contract. The contract stated that unreasonable owner caused delays were treated as change orders and were subject to a maximum markup of 15% for overhead and profit. The contractor conceded that the contract purported to limit recoverable damages, but argued that such terms were void and unenforceable as against public policy under Va. Code Ann. § 2.2-4335 (damages statute). The contractor filed suit for the full amount of damages sought. Both parties motioned for summary judgment. The owner’s motion for summary judgment was granted after the trial court concluded that the provisions were enforceable as liquidated damages which were expressly permitted by the damages statute and further that the owner was not unfairly insulated from damages for delay. The contractor appealed.

The owner argued that all of the claimed home office expenses and all site expenses beyond the $99,646 it paid were excluded by the markup provisions of its contract. The owner maintained the provisions constituted liquidated damages which were permitted under the damages statute. The court noted that the contract’s markup provisions provided compensation to the contractor for added work required by the owner’s change orders, but provided no compensation for additional expense incurred as a result of delay. The provisions were liquidated damage provisions only insofar as they covered additional expenses incurred for contract administration, plus agreed profit for extra work required by the owner. They were not an agreed upon formula for calculating damages for delay, and thus were not liquidated damages for the purposes of the damages statute. Because the provisions were not covered by the damages statute, they operated as a bar to most of the contractor’s delay expenses and were thus void and unenforceable as against public policy under the damages statute. Reversed and remanded.