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By: Thomas H. Welby Gregory J. Spaun Published: May 2019

Contractor's Delay Claim Survives Despite Failure to Provide Notice Required Under Contract

Contractual notice provisions are one of the biggest landmines that contractors face since the failure to strictly comply with such provisions can preclude recovery on otherwise valid claims. Further, notice provisions vary greatly from contract to contract. Additionally, contractors, being a practical lot, often focus on working to minimize or resolve the situation that led to the claim in the first place, sometimes to the detriment of complying with such notice requirements.

In the recent case of R-J Taylor General Contracting, Inc., v Fairport Central School District, an appellate court permitted a delay claim to survive despite the contractor’s clear failure to make its required notices under the contract.

Background

R-J Taylor General Contracting entered into two identical contracts with the Fairport Central School District for work at various schools within the district. These contracts included no-damages-for-delay provisions, and also provided specific time periods under which R-J Taylor had to notify the School District of any claims under the contract. R-J Taylor’s scope of work included, amongst other things, the removal of unsuitable soil. As to this work, R-J Taylor was to provide a unit price for such work undertaken above or below a set quantity.

During the course of its work, R-J Taylor exceeded the set quantity for soil removal. The School District refused to pay for the additional removal work, and R-J Taylor commenced a lawsuit to recover the amounts owed. In that lawsuit, R-J Taylor also sought damages related to the School District’s “unforeseeably excessive number of changes and corrections to the original contract documents.” It was agreed that these claims (one on each contract) actually sought damages for delay.

The School District moved for summary judgment dismissing R-J Taylor’s delay claims, arguing that they were barred by the no-damages-for-delay provisions. The School District also argued that regardless of the contractual bar, R-J Taylor failed to provide the requisite notice under the contracts.

Decision

The motion court denied the School District’s motion for summary judgment, and the appellate court affirmed the lower court’s holding. In doing so, the appellate court cited to well settled case law that no-damages-for-delay clauses are generally enforceable, but that exceptions exist where: (1) the delays are caused by the owner's bad faith or its willful, malicious, or grossly negligent conduct, (2) there are uncontemplated delays, (3) the delays are so unreasonable that they constitute an intentional abandonment of the contract by the owner, and (4) the delays result from the owner's breach of a fundamental obligation of the contract. Both courts held that there were questions of fact at to whether R-J Taylor could establish that one of the exceptions to a no-damages-for-delay provision existed.

As to the failure to comply with the contractual notice provisions, the appellate court held that such a failure generally constitutes a waiver of such claims. However, in light of the no-damages-for-delay provisions of the contracts, the delay claims were held to be outside of the contracts. As such, the delay claims were not subject to the notice provisions contained within the contracts, and were permitted to survive.

Comment

While R-J Taylor’s delay claim, as an extra-contractual claim, was permitted to survive notwithstanding the contractor’s failure to comply with the contractual notice provisions, contractors should not take this as holding that they need not comply with those notice provisions. Rather, the fact that the appellate court described the claim as one seeking relief wholly outside of the contract should serve as a warning that such situations are the rare exception, rather than the general rule. Clearly, had the notice provision in the contract read that notice had to be provided for “all claims”, and not just “all claims under the contract”, the outcome would have been different, and R-J Taylor’s delay claims would have met their end. The prudent course of action would have been for R-J Taylor to have provided its notices in accordance with the contracts, thus saving it from having to make an argument at to why its failure needed to be excused.

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