By: WBG, LLP Published: September 2013

Pay Attention to Those Notice Provisions in Your Contract

The importance of accurately following the notice provisions in your construction contract has been reiterated by the Appellate Division inDiPizio Construction Company, Inc. v. Niagara Frontier Transportation Authority, 2013 WL 2678511 (4th Dept. 2013). DiPizio Construction Company, Inc. ("DiPizio") entered into a contract with the Niagara Frontier Transportation Authority ("NFTA") to construct and/or renovate runways and taxiways at the Buffalo Niagara International Airport. DiPizio encountered delays during the project, and sought extensions of time from the NFTA to complete its work. The NFTA denied DiPizio's requests for extensions, and DiPizio asserted delay claims for the extra costs it subsequently incurred.

Following the completion of the project, DiPizio sued the NFTA, seeking damages under several theories, including for breach of contract due to the NFTA's refusal to grant DiPizio's requested extensions of time. In a motion for partial summary judgment, the NFTA argued that DiPizio had failed to strictly comply with the requisite contractual notice provisions when it asserted its delay claims.

The contract specifically required that claims for extra costs "be in sufficient detail to enable the [e]ngineer to ascertain the basis and amount of said claims...any claim for equitable adjustment on account of delay for any cause must be accompanied by a revised schedule reflecting the effects of the delay and proposals to minimize those effects." Id. at 1 (emphasis supplied).

The above-cited contractual provision clearly places a burden on DiPizio to first prove the amounts of any extra costs allegedly incurred because of a delay, and to further assist the NFTA in remedying the delay with minimization solutions.

DiPizio did not provide the requisite detail, and, in countering the NFTA's argument of non-compliance with the notice provision, argued that it did not provide said detail because it was too difficult to precisely calculate those extra costs. It is unknown if DiPizio included such a statement in his actual notice. Unfortunately for DiPizio, the Court disagreed and upheld the lower court's determination that DiPizio was not entitled to recovery under its breach of contract cause of action.

This is certainly not a new principle in New York. The oft cited Court of Appeals case, A.H.A. General Construction v. New York City Housing Authority, 92 N.Y.2d 20 (1998), held, in part, that strict compliance with contractual notice provisions was a condition precedent to suit or recovery for extra costs, where the contractor has not otherwise been prevented from complying. Notice provision for extra costs can impose even more stringent requirements than those in DiPizio's contract - such as descriptions as to each laborer associated with the extra cost, the materials and equipment associated with the extra cost and daily reports for each and every day associated with the claimed delay, as inA.H.A. It is therefore necessary to refer back to the contract to remind oneself of those requirements.

DiPizio serves as a good reminder for all contractors: follow, to the letter, the requirements of notice provisions in your contracts, or else you may have to swallow those extra costs.

If you have any questions about the information set forth in this Legal Alert, call us at 914-428-2100.

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