The headlines are mesmerizing, though not in a good way.  On the heels of a pandemic that has cost thousands of citizens their lives, a Caucasian man kills an African American man in the upper Midwest.  Protests break out that devolve into riots and spread to other cities.  The National Guard is called out.  The economic health of the country and income security of millions of Americans, both convalescing from the pandemic, hang in the balance.  The year is 1919.  And 2020.  

As the old adage says, those who cannot remember the past are condemned to repeat it.  But history rarely replicates itself exactly.  Instead, like some form of torture, we are perpetually condemned to repeat a variant of the past.  If we can see the semblance of past events in time, we can take corrective action for future matters.  If not, we are condemned.     

In that vein, we revisit the applicability of force majeure to civil disobedience and riots, having previously discussed in the context of the coronavirus and COVID-19 pandemic. 

A.    The Past

The Spanish Flu pandemic of 1918 hit the US in three waves, with the first wave beginning in March 1918 and lasting through the summer.  The second and third waves, considered by some to be the more devastating ones, occurred in the fall of 1918 through early spring of 1919.     

In the middle of the second wave, at 11 a.m. on November 11, 1918, the Allies and Central Powers signed the Armistice ending World War I.  America’s build-up to enter the War and join the Allies in World War I was impacted by several events.  European immigration to the US was curtailed by the War.  At the same time, men aged 21 and older were drafted to fight the War.  The combination led to labor shortages.  For many years before the War, but accelerated by the labor shortages during the War, African Americans fled Jim Crow strictures of the South, beginning the Great Migration to the North.  Chicago, home to infamous stockyards and meatpacking industries, absorbed and employed many newly arriving African Americans. 

When the War ended, thousands of veterans returned home. The federal government failed to develop a plan to reabsorb the veterans into the civilian workforce, leading to mass unemployment in places like Chicago.  Some Caucasian veterans were upset to find jobs they held prior to the War were now held by African Americans. At the same time, some African American veterans returned from the War emboldened to fight for their civil rights.  

Beginning in April 1919 in the South and reaching a climax in July 1919 in Chicago, race riots shook the country.  The Chicago riots were precipitated by a Caucasian man throwing rocks at African American swimmers at a segregated beach on the South Side of Chicago.  One of swimmers, Eugene Williams, drowned due to, according to the official inquest, being “compelled to remain in deep water because of stone throwing until he became exhausted”.  The Chicago police failed to arrest the Caucasian man who threw the stones and caused Williams’ death.  

In the ensuing riots in Chicago, alone, at least 38 people were killed and over 500 injured.  Businesses and houses owned by African Americans were destroyed, leaving at least 1,000 people homeless. The governor of Illinois mobilized the National Guard.  Riots spread to other cities. 

B.    The Present

The events surrounding the Spanish Influenza pandemic and race riots of 1919 bear enough similarity to the COVID-19 pandemic and current social unrest to warrant reexamining whether force majeure clauses in most construction contracts are broad enough to excuse performance for these types of events.    

Most force majeure clauses in construction contracts agreements are modelled after the American Institute of Architects (AIA) standard form agreements.  The typical force majeure clause contains a list of specific events that comprise an Act of God followed by catch-all provisions to cover any other items beyond the contractor’s control.  

Notably missing from the list of specific events are riots, civil disobedience, and viral infections. To obtain an extension of time for one these events, the contractor would have to invoke one of two catch-all provisions of the AIA clause, for “fire”, “unavoidable casualties or “other causes beyond the contractor’s control”, and for “other cause” that the contractor asserts and the architect determines justifies delay.  

At least one Texas court has imposed an “unforeseeability” requirement on catch-all provisions in force majeure clauses.  In 2018, the Houston Court of Appeals in TEC Olmos, LLC v. ConocoPhillips Company, examined a force majeure clause in a drilling contract.  The force majeure clause suspended a party’s obligations if that party’s performance was prevented or hindered by “any other cause not enumerated herein but which is beyond the reasonable control of the party”.  The party invoking the clause sought to prevent paying liquidated damages of $500,000 by arguing that a significant downturn in the oil and gas market dried-up available financing, comprising a force majeure event.

The Olmos court imposed a “gap filler”, common-law requirement that the event be “unforeseeable” to invoke the catch-all provision of the force majeure clause.  The court reasoned that when the alleged force majeure event is not specifically listed in the contract, it is unclear whether the parties intended to assume that particular risk at the time they entered into the contract.  As applied to the dispute in Olmos, the court held that a downturn in future market prices for oil and gas is foreseeable and may provide the basis for parties entering into long-term contracts. 

As applied to the standard language found in AIA and other contracts, riots, civil disobedience and the pandemic likely fall into one of the catch-all provisions rather than a delineated list of events. In determining whether a force majeure event will extend the contract time or contract performance, the foreseeability of the event should be considered. 

C.    The Future 

Although it may not assist you with the current set of crises, including more specific language about riots, civil disobedience and viral and bacterial infections in force majeure clauses is one means of making the parties’ intent clear and preventing a court from imposing “gap filler” requirements such as unforeseeability. 

In determining whether a force majeure clause provides the protection you seek, it is always advisable to consult with legal counsel.  The attorneys in our Austin and Dallas offices are available to answer any questions you may have.

Legal Disclaimers

This blog is made available by Gerstle Snelson, LLP for educational purposes and to provide general information about the law, only.  Neither this document nor the information contained in it is intended to constitute legal advice on any specific matter or of a general nature.  Use of the blog does not create an attorney-client relationship with Gerstle Snelson, LLP where one does not already exist with the firm.  This blog should not be used as a substitute for competent legal advice from a licensed attorney.   

©Gerstle Snelson, LLP 2020.  All rights reserved.  Any authorized reprint or use of this material is prohibited.  No part of this blog may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage or retrieval system without the express written permission of Gerstle Snelson, LLP.