By: Alexander A. Miuccio Published: February 2017

Contractor Waived Claims Not Set Forth in Request for Extension of Time

New York courts have consistently enforced waivers of claim in connection with a contractor’s request for an extension of contract time to complete the work on a public project. Under some government  contracts, if a contractor does not seek to waive its claims in its application for an extension of time, it must provide a statement in detail of its claims in its request .

In the recent case of Matter of LAWS Construction Corp. v Contract Dispute Resolution Board, an appellate court held that a contractor waived its claims because the contractor did not specifically set forth its claims with clarity in its request for an extension of time.

Background

In July of 2009, LAWS entered into a contract with the New York City Department of Parks and Recreation to build a  golf course at Ferry Point Park in the Bronx, atop a former landfill. The contract required LAWS to backfill trenches that were dug to install the irrigation system. It was anticipated that LAWS could utilize material excavated from the site to use as fill. However, the excavated material turned out to be full of rocks and debris and was unsuitable for use in the top 10 inches of the trenches, which had to be filled with clean fill. Accordingly, LAWS sought a change order for the additional cost of the clean fill. In November of 2011, the Parks Department’s construction manager issued a construction change directive to LAWS directing it to provide the clean backfill at no cost to the Parks Department, advising that the contract provides that LAWS was responsible for these costs. LAWS promptly filed a dispute with the Parks Commissioner disputing the construction change directive, arguing that it was entitled to be compensated via a change order.

Nearly two years later, in August of 2013, LAWS submitted its sixth request for an extension of time to the Parks Department.  The contract states that if the contractor does not seek to waive a claim in its extension of time request, it must provide a statement of the particulars of its claims.  In submitting its request for the extension of time, LAWS did not specifically set forth its claim for the change order seeking compensation for the clean backfill. The Parks Department granted the time extension on September 4, 2013.

Less than two weeks after granting the extension of time, the Parks Department denied LAWS’s 2011 change order for the clean backfill, adopting its construction manager’s view of the contract that LAWS was responsible for those costs because they were included in its lump sum bid. LAWS promptly filed a notice of claim with the City Comptroller, maintaining that it was entitled to compensation for the change order for various reasons, including the argument that the parties past practice that the Park Department approved five prior extension requests and the contractor’s claims were approved without raising the waiver of claims argument.  The Comptroller denied LAWS’s claim, finding that LAWS waived its claim to the clean backfill change order when it sought the extension of time without specifically setting forth and preserving that claim.  LAWS appealed  the Comptroller’s determination before  the Contract Dispute Resolution Board.  The CDRB similarly found that LAWS waived its claim because it did not sufficiently set forth the claim in its extension of time request.

LAWS commenced an Article 78 proceeding challenging the CDRB’s findings, arguing that it never intended to waive its claim for the clean backfill, and that the CDRB’s determination is inconsistent with the parties’ past practice of seeking and granting time extensions without raising the issue of waiver.

Decision

The lower court agreed with the CDRB and denied the petition. The appellate court affirmed, finding that the CDRB had a rational basis—specifically, the contract language itself—to find that LAWS had waived its right to pursue claims not set forth in the extension of time request.

As for LAWS’ argument that the Department of Park’s past practice of failing to raise a waiver argument in connection with claims paid to LAWS following the approval of five prior extension requests, the Court held that the parties past practice does not estop the Park’s Department from raising wavier as a defense.  The Court relied upon the contractual provision stating that the “City of New York and its agents may not be estopped by any decision made by the City’s agents, as well as the general unavailability of estoppel against governmental entities.”

Comment

As this case demonstrates, courts will not hesitate to strictly enforce contractual provisions requiring the contractor to set forth the particulars of any claims which they contractor does not agree to waive.  Contractors would be well advised to consult with counsel to review the contract and make sure that its claims are submitted and preserved in accordance with the contractual requirements.  

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