One practice that all contractors should get in the habit of is to provide timely written notifications of all delay and extra work claims. Simply put, do not be lulled into noncompliance even if you believe the owner/general contractor is aware of your claim—it will likely result in a loss of an otherwise viable claim. Of course, delivering high quality construction services is important, but it is also important to keep “high quality records”. Undoubtedly, if reviewing well-kept records and notifications permits an owner/general contractor to more efficiently complete a project and minimize delays, they are more likely to pursue a continued business relationship with that contractor. Again and again, contractors are advised to document all claims on a construction project, provide timely notice and to familiarize themselves with any contractual notification requirements. In the recent decision in Fahs Construction Group, Inc. v. State of New York (123 A.D.3d 1311 [3d Dept 2014]), the Appellate Division, Third Department, highlights the costs of a failure to do so.
The dispute in Fahs Construction Group arises out of a 2003 project for the reconstruction of a bridge and stretch of a state highway. The contractor completed the project after the project deadline, allegeing that the delays were caused by the owner’s addition of work to the contract without a sufficient extension of time. The contractor filed a breach of contract claim, which was dismissed upon the owner’s motion for summary judgment. The contractor appealed.
The Appellate Division upheld the lower court’s decision, finding that contractor failed to provide contractual notification for its delay and extra work claims, and failed to keep and furnish certain records of damages to the owner. The contractor had argued that the owner had waived its noncompliance, had actual knowledge of the contractor’s claim, and had prevented it from complying with the contractual requirements. The Appellate Division was not persuaded by these arguments and enforced the contractual provision that required strict compliance with all notice requirements and explicitly made all such requirements a condition precedent to payment. Importantly, the Appellate Division was unmoved by the contractor’s claims that the owner had actual timely knowledge of the delay and extra work claims. The contractor’s “actual notice” argument was doomed by a contractual provision stating that even if the owner may “have actual notice of the facts and circumstances which comprise such dispute”, its failure to supply required notice and records is deemed a waiver of any related claim.
The contractual notice and record keeping provisions clearly placed a burden on the contractor and required it to document any delay or extra work claims. However, from the owner’s perspective, such provisions are in place to ensure that costs and delays are minimized. In this case, the contractor has only itself to blame for the failure of its claims because it either failed to read and understand the notice requirements or ignored them to its detriment.
Fahs Construction Group provides a reminder to all contractors to carefully read and understand the notice and record keeping requirements set forth in the contract. For more complicated contractual provisions, it is advisable to review these requirements with an attorney—both before entering into the contract and during a project so as to ensure continued compliance. Moreover, even without contractual notice and record keeping requirements, contractors should strive to follow the best practice of providing notice of any potential claim at the earliest possible time—and supplementing the claim with additional information as it becomes available. In doing so, a contractor may avoid the fate of Fahs Construction Group and recover for meritorious delay and extra work claims.
This Legal Alert is supplied for informational purposes only and it is not intended to constitute legal advice. You should consult competent legal counsel depending on the specific issues of your matter.