In May 2021, an Appellate Court in New York affirmed the dismissal of a contractor’s complaint against the Dormitory Authority based on its failure to file written notices of claim under the terms of the Contract. MLB Construction Services, LLC, v. Dormitory Authority of the State of New York, 194 A.D.3d 1140 (2021), 149 N.Y.S.3d 271.
There, the contractor had originally sought recovery of alleged change order work and delay damages in the amount of $1,274,027. However, Article 10 of the contract required that the contractor provide 15 day’s prior written notice of any claim for increased costs and that any failure to do so would result in a waiver. In dismissing the contractor's complaint, the Court held that “[t]hese clauses, which ‘require the contractor to promptly notice and document its claims made under the provisions of the contract governing the substantive rights and liabilities of the parties[,]... are ... conditions precedent to suit"” and that “strict compliance with these clauses is required”.
The court further noted that because strict compliance is required, it was irrelevant whether the Dormitory Authority had previously negotiated change orders with the contractor, despite a lack of written notices of claim or whether it had prior knowledge of the claims themselves, since neither basis is a valid excuse for failing to comply with a notice of claim provision under New York law.
Contractors and subcontractors alike must carefully review all written agreements for contractual notice of claim provisions, and strictly comply with them, as they are routinely upheld in New York whether in connection with public or private work. Contractors should never rely upon promises to negotiate change orders at the end of a project as so often happens on construction projects. While an owner may choose to do so, if it doesn’t and fails to pay the contractor, you may have waived your rights to recover substantial amounts for extra work by not complying with contractual notice provisions.
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.