CONTRACTORS MUST BE AWARE OF SHORTENED STATUTE OF LIMITATIONS IN CONTRACTS
Updated: Jul 12, 2022
In June 2022, an Appellate Court in New York upheld the dismissal of a contractor’s 23 million dollar delay claim against the DOT since it was filed more than six (6) months after issuance of a substantial completion certificate. Tutor Perini Corporation v. New York City Department of Transportation, 2022 NY Slip Op 31893 (Sup. Ct., Kings Cnty. 2022).
Under the DOT Contract, a contractor was required to commence an action against the DOT no later than 6 months after issuance of the certificate of substantial completion, which Tutor Perini failed to do.
The court rejected Tutor Perini’s claim that the DOT somehow duped it into believing that its claim was first subject to the dispute resolution procedure of the contract, since that procedure specifically excluded claims for delay damages. Instead, claims for delay damages had to brought in a breach of contract suit which had to be filed no later than 6 months from substantial completion.
Generally, under New York law, the statute of limitations for breach of contract is six (6) years. However, public agencies typically shorten the statute of limitations sometimes to as little as six (6) months. Many owners on private projects and contractors in general also shorten this period in their contractual forms. Such shortened limitations periods are routinely upheld by the courts in New York and therefore could have drastic consequences if not strictly complied with.
To avoid losing your rights, contractors and subcontractors should routinely review the terms of their contracts to ascertain all limitation periods on the filing of claims and mark them well in advance. Also, while the general conditions of a prime contract with a public agency generally cannot be modified, contractors in private work and subcontractors, in general, should attempt through negotiation to revise shortened limitations periods in their respective contracts prior to signing.
About the author: George Marco is an attorney practicing in the field of construction law. He also holds a Bachelor of Science in Mechanical Engineering and was previously employed as a Project Manager for a public improvement contractor.
Disclaimer: This article is for informational purposes only and not intended to serve as legal counsel.