A recent decision by the Virginia Supreme Court may make a huge difference to utility contractors who are fighting claims for loss-of-use damages.
The court recently ruled that in the event of a damaged fiber-optic cable, loss-of-use damages could not be claimed by a telecommunications carrier when the carrier did not either need or hire a substitute cable during the time the damaged cable remained unavailable.
“This decision is a huge win for the utility construction industry,” said Andrew Crowshaw, chairman of a National Utility Contractors Association subcommittee that supports legal, legislative and regulatory projects that have national significance to the utility construction industry. “Utility contractors across the country can cite this important precedent to fight claims for loss-of use damages.”
The ruling was made in a case in which OSP Consultants severed a fiber-optic cable operated by MCI/WorldCom Network Services. OSP paid repair damages after the cable was cut, but contested MCI/WorldCom’s claim that it was entitled to more than $454,000 in loss-of-use damages.
The Virginia Supreme Court ruled that MCI/WorldCom was not entitled to loss-of-use damages because it was able to accommodate the traffic on the severed cable using available capacity on the remaining network — capacity that was acquired and maintained for the general uses of the business and not reserved specifically for use in emergencies.
Because the Virginia court cited U.S. Supreme Court precedents in its decision, NUCA hopes the ruling will be helpful to contractors in other jurisdictions as well, Crowshaw said.