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WELBY, BRADY & GREENBLATT, LLP
LEGAL ALERT NO. 2
Is one notice of claim on a public project enough?
New York’s highest court said no in a ruling that all contractors doing public works contracting should know about.
The court threw out a portion of a bus company’s claim against a school district because the bus company did not continue to file notices of claim as its claim grew during the bus company’s law suit against the school district.
The bus company and the school district were litigating over a contract payment formula. Although the bus company filed a timely notice of claim before starting the action, which covered its claim as it then existed, the bus company continued to provide bus service to the school district and its claim continued to grow during the law suit. After winning its case as to the proper payment formula the bus company attempted to file a supplemental complaint to claim the additional monies that accrued for the bus services that were provided during the lawsuit. The school district objected, arguing that the bus company failed to file a notice of claim for theadditional monies. The court agreed with the school district, throwing out the bus company’s claim for the additional money. The court said this was a matter to be addressed by the state legislature, not the courts. The court also said that to avoid results like this plaintiffs with claims against governmental bodies that continue to grow need to continue to file notices of claim after starting a lawsuit as they already did before the lawsuit.
This should be a wake-up call to any company that does business with a public body in New YorkState. Companies doing public works business must pay close attention to statutory notice of claim provisions, as well as contractual notice provisions. If they fail to do so, they could forfeit any chance to recover monies owed to them by the governmental body. Notices of claim must be timely filed, and they must be updated and re-filed as claims grow and new claims arise.
Unless and until the legislature does something to settle this situation, the rule of thumb in public works contracting should be to file the initial notice of claim as soon as you know you have a claim – even if the claim is not yet disputed by the public body - and keep filing notices of claim to update previously filed claims or to cover new claims that have arisen. Time limits for filing can be as short as 90 days from when the claim accrues. Do you know when your claims “accrue”? Preservation of your claims can also improve your bargaining position when it comes time to sit down with the public owner to close-out your contract. You cannot afford to wait – speak with your attorney and get the time parameters that must be followed for your public works contracts – then follow through. File your notices of claim and continue to file your notices of claim until all of your claims are covered.
Also remember that even if you think you do not have any claims, your contract balance monies and your retainage monies held by the public owner, are claims. If you anticipate any delay in receiving your contract balance or retainage monies, you must file timely notices of claim to preserve your right to receive those payments.
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If you have any questions about the information set forth in this Legal Alert, call us at 914-428-2100. Please understand that this alert provides general information only. It is not intended to provide legal advice. We encourage you to contact an attorney should you desire to discuss specific situations for which you may need specific legal advice.
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