City Charter Bars Contractor\'s Claim - Harsh Reminder of what to Know when Contracting with Municipalities

Statutes of limitations set time periods by which a lawsuit must be commenced. Under New York\'s statute of limitations, a breach of contract claim must be brought within six years from the date upon which the cause of action accrued. Contractors should be aware that their contract may substantially reduce the statutory period to bring an action. Likewise, local and state laws may reduce the period to bring an action in a contract dispute against municipal corporations and public benefit corporations.

In Frank Tricarico Contractors, Inc. v. City of New Rochelle (2012 N.Y. Slip Op. 02450 [2012]), the Appellate Division, Second Department, affirmed, a dismissal of a breach of contract claim, by a contractor that performed work for the City of New Rochelle, as time-barred. In Contractors, the City of New Rochelle entered into contract whereby contractor was to provide trenching for underground services to install conduit at an agreed upon price. After partial completion of the job, the contractor submitted a requisition to the City of New Rochelle, and shortly thereafter filed a Notice of Claim with the City dated July 5, 2006, setting forth a claim for \"a sum in excess of $500,000.\" By letter dated July 19, 2006, the City rejected Plaintiff\'s claim. Although, the Notice of Claim was rejected contractor continued work on the project until about May 2008, and during this time took no further steps to commence legal action. On August, 30 2008, contractor filed a Summons and Complaint seeking an unpaid contract balance of $200,688.03.

The City quickly moved to dismiss the claim based on the one year statute of limitations. The City of New Rochelle Charter Section 127, perhaps unbeknownst to contractor, states \"all actions brought against the city upon a contractual liability, expressed or implied, must begin within one year from the time when the cause of action accrued.\" The Trial Court dismissed the action rejecting contractor\'s contention that his claim did not accrue, i.e., the statute of limitations did not begin to run, until completion of work on the project. The Appellate Division agreed stating that \"the period of limitations began to run when its damages became ascertainable, which occurred in this case on or before the date on which plaintiff filed its initial notice of claim.\" Thus, contractor\'s breach of contract claim was barred.

Courts do not have discretion to extend the statute of limitations periods. Contractors, subcontractors, suppliers and materialmen far too often lose out on their right to bring a lawsuit. Acting quickly when disputes arise can make the difference between full recovery and a complete loss not to mention avoiding responsibility for attorney\'s fees and litigation costs.

Please be advised you should contact an attorney to ensure proper commencement of an action due to the highly technical and rigidly enforced accrual dates (when the time to bring an action starts) and notice of claim requirements (how to notify a municipality). As of April 23, 2012, the table below provides a summary of the current notice of claim deadlines and the statutes of limitations for contract disputes with some local municipalities and authorities. Contractors have to be mindful of two periods of limitations: the Notice of Claim deadlines and the Statutes of Limitations. It is necessary to comply with both otherwise your claim will be lost.

* Accrual dates and notice of claim requirements not identified.

If you would like more information on this issue or any other construction related issue, please contact Welby, Brady & Greenblatt, LLP at (914) 428-2100.

If you would like more information regarding this topic please contact Robert W. Bannon II at rbannon@wbgllp.com or call (914) 607-6455