Court Clarifies Use of Measured Mile Theory, Notice of Claims Provisions

For more than 20 years, it has been accepted practice in construction litigation to measure damages through the “measured-mile” method of damages calculation. However, despite its widespread use within the industry, no Pennsylvania appellate court had ever ruled that the measured mile was an appropriate measure of damages in Pennsylvania. The Commonwealth Court of Pennsylvania finally closed this gap in James Corporation v. North Allegheny School District when, in a matter of first impression, it adopted the measured mile as the preferred measure of damages in construction disputes tried in Pennsylvania courts.

In the same opinion, the court considered whether a contractor could assert a viable claim against a project owner when the parties’ contract contained a provision requiring the contractor to make a written claim for damages within 21 days after the event giving rise to the claim, and the contractor failed to strictly comply with the provision. Despite the prevalence of 21-day notice requirements in construction contracts, the court refused to enforce that limitation based on the owner’s knowledge of the underlying facts giving rise to the claim.