Presentation on theme: "Managing Claims and Disputes Presented by John J. Lavin, Esq."— Presentation transcript:
Managing Claims and Disputes Presented by John J. Lavin, Esq.
Notices of Claim – How, When, Who and What ► Four primary questions: How do I provide notice of my claim? When do I provide notice of my claim? Whom do I notify? What do I put in the notice?
Notices of Claim – How, When, Who and What ► Four Brief Answers: Look to your contract. Look to your contract Look to the Law ► Mantra – First, look at your contract; Second Look at to the Law “ Why should I memorize what I can so easily get from a book. ” Albert Einstein
Notices of Claim – Contract Requirements ► What does the contract say? Courts will uphold contract notice provisions. Carefully follow the terms of the contract to avoid any problems with your notice. ► May provide for: Time to file claim ► AIA – 21 days Method of providing notice ► In writing Who is to be notified? ► Owner and Architect What is to be included in the notice? ► A description of the claim
Notice of Claim – Sample Contract Provisions ► AIA Contracts Section – Claims must be initiated in writing. Section – Time Limits on Claims. Claims by either party must be initiated within 21 days after the occurrence of the event giving rise to such Claim or within 21 days after the claimant first recognizes the condition giving rise to the Claim, whichever is later. Sections – – Specifies additional requirement as to each type of possible claim. ► Concealed or unknown condition ► Additional cost ► Additional time
Notices of Claim – Common Contract Provisions ► Public Contracts – New Jersey former SCC Contract Section 7.1 – All Claims asserted against the Authority shall be subject to the New Jersey Tort Claims Act and the New Jersey Contractual Liability Act Section 7.3 – The Design Consultant shall file notice of the Claim on a form provided by the Authority…
Notice of Claim – Statutory Requirements ► Examples of statutory claims requiring special attention: New Jersey Prompt Payment Act (N.J.S.A. 2A:30A-1 et seq.) New Jersey Construction Lien Law (N.J.S.A. 2A:44A-1 et seq.)* ► If your project is public: New Jersey Bond Act (N.J.S.A. 2A: et seq.)* New Jersey Contractual Liability Act (N.J.S.A. 59:13-1 et seq.) New Jersey Tort Claims Act (N.J.S.A. 59:1-1 et seq.). New Jersey Municipal Mechanics Lien Law (N.J.S.A. 2A: et seq.).*
Notice of Claim – Contractual Liability Act o New Jersey Contractual Liability Act: “ It shall be the responsibility of parties contracting with the State to promptly notify the State in writing of any situation or occurrence which may potentially result in the submission of a claim against the State. Except as otherwise provided in section 6, no notice of claim for breach of contract, either express or implied in fact, shall be filed with the contracting agency later than 90 days after the accrual of such claim. A notice of claim shall include the following information: the name of the claimant, the nature of the claim, specific reasons for making the claim, and the total dollar amount of the claim if known. After the expiration of 90 days from the date the notice of claim is received by the contracting agency, the claimant may file suit in a court of competent jurisdiction of the State of New Jersey. ” N.J.S.A. 59:13-5 (2008).
Notice of Claim – Tort Claims Act ► New Jersey Tort Claims Act: “ No action shall be brought against a public entity or public employee under this act unless the claim upon which it is based shall have been presented in accordance with the procedure set forth in this chapter. ” N.J.S.A. 59:8-3 (2008). “ A claim shall be presented by the claimant or by the person acting on his behalf and shall include: ► The name and post office address of the claimant; ► The post office address to which the person presenting the claim desires notices to be sent; ► The date, place and other circumstances of the occurrence or transaction which gave rise to the claim asserted; ► A general description of the injury, damage, or loss incurred so far as it may be known at the time of presentation of the claim; ► The name or names of the public entity, employee or employees causing the injury, damage or loss, if known; and ► The amount claimed as of the date of the presentation of the claim, including the estimated amount of any prospective injury, damage or loss, insofar as it may be known at the time of the presentation of the claim, together with the basis of computation of the amount claimed. ” N.J.S.A. 59:8-4 (2008)
Notice of Claim - Tort Claims Act - Continued ► “ A claim for damage or injury arising under this act against the State shall be filed either with (1) the Attorney General or (2) the department or agency involved in the alleged wrongful act or omission. A claim for injury or damages arising under this act against a local public entity shall be filed with that entity. ” N.J.S.A. 59:8-7 (2008). ► “ A claim relating to a cause of action for death or for injury or damage to a person or property shall be presented as provided in this chapter not later than the ninetieth day after accrual of the cause of action. After the expiration of six months from the date notice of claim is received, the claimant may file suit in an appropriate court of law. The claimant shall be forever barred from recovering against a public entity or public employee if: He failed to file his claim with the public entity within 90 days of accrual of his claim except as otherwise provided in section 59:8-9; or Two years have elapsed since the accrual of the claim; or The claimant or his authorized representative entered into a settlement agreement with respect to the claim…. ” N.J.S.A. 59:8-8 (2008).
Notice of Claim – Prompt Payment Act ► New Jersey Prompt Payment Act: “ The billing shall be deemed approved and certified 20 days after the owner receives it unless the owner provides, before the end of the 20-day period, a written statement of the amount withheld and the reason for withholding payment…. ” N.J.S.A. 2A:30A-2(a) (2008). “ A prime contractor, subcontractor or sub-subcontractor may, after providing seven calendar days ’ written notice to the party failing to make the required payments, suspend performance of a construction contract, without penalty for breach of contract…. ” N.J.S.A. 2A:30A-2(c) (2008)
Alternatives to Immediately Pursuing Claims ► Proceeding under protest Common when there is a dispute over: ► Unforeseen site conditions ► Change order ► Excusable delay ► Payment (percent completion) Requires notice
Alternatives to Immediately Pursuing Claims ► Tolling Agreements Intent ► To extend the time in which the bringing of a claim is required in order to complete the project or move it along. ► To allow to the project to move forward unfettered and without delay. ► To allow the parties to focus on performing their respective contract obligations as opposed to pursuing claims during construction.
Tolling Agreement Whereas, the parties have agreed to make best efforts to resolve the dispute through settlement efforts and believe that asserting an arbitration claim will be counterproductive and a waste of valuable resources; Whereas, John Smith is a home improvement contractor as defined and governed by the New Jersey Consumer Fraud Act, as codified by N.J.S.A. 56:8-1 et seq., Whereas, Jane Doe is a home owner as defined and governed by the New Jersey Consumer Fraud Act, as codified by N.J.S.A. 56:8-1 et seq., Whereas, N.J.S.A. 56:8-1 requires that any claim brought pursuant to the act be brought within six years of the date of the accrual of the claim. Whereas, the parties desire to be free from any time constraints during their settlement efforts. NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is hereby agreed, by and between the John Smith and Jane Doe: The recitals set forth above are incorporated herein by reference and are made an integral part hereof. Therefore; the parties agree that any applicable statute of limitation be and is hereby tolled pending the outcome of the settlement efforts undertaken by the parties. In the event that the parties believe that settlement efforts should be terminated, then, said party, or its attorney, must notify the other parties in writing, via facsimile and regular mail. The time in which to bring an action against John Smith will begin to run again from the date of the notice terminating the settlement discussions.
Liquidating Agreements ► Purpose Allows contractors to assign their respective claims to another contractor in order to simplify the litigation of claims and encourage the parties to complete the project. Common in scenarios where: ► Prime contractors and subcontractors have similar claims – i.e. claims for delay or unforeseen site conditions. Subcontractor liquidates its claim to prime in order to minimize costs of pursuing claims and to encourage the project to completion.
Liquidating Agreements ► Subcontractor often releases the Prime Contractor from any claims; ► Subcontractor and Prime Contractor share in the costs of litigation; ► Prime Contractor admits limited liability – subcontractor ’ s claims are only paid in the event that the Prime Contractor recovers from the owner for said claims;
Critical Documentation for Providing Liability and Damages Presented by John J. Lavin, Esq. Coppel, Laughlin, Blount & Lavin, LLP
Complete Project Documentation ► Plans and Specifications ► The Contract Documents ► Project Schedule ► Minutes of Job Meetings ► Daily Reports ► Letters (Including CYA letters) ► Requests for Information ► Change Order Logs
Complete Project Documentation ► s and Electronic Communication ► Pictures/Video ► Payment Requisitions ► As Builts ► Shop Drawings ► Product Manuals ► Lien Releases/Waivers ► Building Department Documents ► Certificates of Final Completion ► Final Payment
Sample Letters Dear Subcontractor: As you know, Article … of the Subcontract requires that you adequately man this project. For the past week, your company has been represented by no more than two workers, each of whom has worked no more than 2 hours in a single day. Please accept this letter as formal notice of your breach of contract. In accordance with the terms of the subcontract, unless the project is properly manned within 3 business days, (contractor) will supplement your labor force and deduct those costs from your contract balance. Very truly yours, Contractor
Sample Letters Dear Construction Manager: Dear Construction Manager: At yesterday ’ s weekly project meeting, I specifically advised you that the failure of the HVAC prime contractor to provide his schedule, which is now three weeks past due, is impacting our ability to coordinate and schedule the other contractors on this Project. Despite several hours of discussion on this subject, the meeting minutes that you prepared do not reflect our concern or the HVAC Prime ’ s verbal commitment to provide a schedule by this Friday. Please accept this letter as our formal objection to the minutes of the meeting and our demand that the minutes be adjusted to accurately memorialize the discussion that took place. Very truly yours, Contractor
Sample Letters Dear Architect: It has come to our attention that the architectural plans are inconsistent with the structural engineer ’ s plans. Twenty days ago, we submitted a request for information, to which you are required to provide a response within 7 days. We have received no response. As you know, our work on that phase of the contract cannot proceed without this clarification. The impact of this delay is both financial and in the need for an extension of time to complete the project. Accordingly, please accept this letter as our formal notice of claim, pursuant to section “ ___ “ of the contract. According to our calculations, each day of delay will result in a cost to us of $... Please be guided accordingly. Very truly yours, Contractor cc: Owner
Sample Letters Dear Architect: As you know, the contract provides that shop drawings must be reviewed and returned within __ days. It has now been 21 days since we submitted the shop drawings prepared by our HVAC subcontractor. No response has been received. Please be aware that your delay in responding to these shop drawings is interfering with our ability to proceed with this Project and is delaying the Project. If this delay continues, we will have no choice but to file an appropriate claim. As you know, the contract provides that shop drawings must be reviewed and returned within __ days. It has now been 21 days since we submitted the shop drawings prepared by our HVAC subcontractor. No response has been received. Please be aware that your delay in responding to these shop drawings is interfering with our ability to proceed with this Project and is delaying the Project. If this delay continues, we will have no choice but to file an appropriate claim. Very truly yours, Very truly yours, Contractor cc: Owner
Sample Letters Dear Co-Prime: Your delay in providing your contractually required submittals is interfering with our ability to proceed with our (steel work) which is on the critical path of this project. Pursuant to the supplemental general conditions to my contract with the Owner, I am required to provide you with notice that this delay is causing us damages. Please accept this letter as a formal notice of claim. According to our calculations, each day of delay will result in a cost to us of $..., resulting from your failure to provide contractually required submittals. Very truly yours, Contractor cc: Owner
Statutory Defenses of Untimely Notice ► New Jersey Tort Claims Act: “ A claimant who fails to file notice of his claim within 90 days as provided in section 59:8-8 of this act, may, in the discretion of a judge of the Superior Court, be permitted to file such a notice at any time within one year after the accrual of his claim provided that the public entity or public employee has not been substantially prejudiced thereby. ” N.J.S.A. 59:8-9 (2008). ► New Jersey Contractual Liability Act: “ A claimant who fails to file notice of his claim within 90 days as provided in section 6 of this chapter, may, in the discretion of a judge of the Superior Court of the State of New Jersey, be permitted to file such notice at any time within one year after the accrual of his claim provided that the State has not been substantially prejudiced thereby. ” N.J.S.A. 59:13-6 (2008).
Defenses of Untimely Notice ► Constructive Notice The other party should have known about the claim based upon various circumstances ► design defect causing revision to plans and specifications after work commences ► Unknown conditions ► Excusable delay Constructive notice arguments rely on project documentation and circumstance.
Defenses of Untimely Notice ► Actual Notice Relies on project documentation ► Letter from owner to contractor identifying a change resulting in delay ► Change in project schedule/critical path
Statutes of Limitations ► “ The primary purpose of the statute of limitations is to provide defendants a fair opportunity to defend and to prevent plaintiffs from litigating stale claims. ” Price v. New Jersey Mfrs. Ins. Co., 182 N.J. 519, 524 (2005). ► Time limit to bringing claim based on the type of claim Contract Claim Tort Claim
Statutes of Limitation - Contracts ► Against contractors and design professionals – 10 years from the issuance of a certificate of occupancy. The Statute of Repose. ► Against Counties or Municipalities – 6 years ► Against State (including State Colleges) – Notice of claim within 90 days of accrual of claim, suit within 2 years or within 1 year of completion – whichever comes first. ► Against Municipal School Boards (excluding SCC projects) – 1 years.
Statutes of Limitation - Torts ► Against all private persons or entities – 2 years from the date of discovery. ► Against Counties, Municipalities or the State (including agencies) – Notice of claim within 90 days of accrual of claim, suit after 6 months of notice.
Conclusion ► Know your contract – it sets forth the how, when, who and what of notices of claim. ► Know the law – failure to follow notice requirements may result in forfeiture of your claim. ► Don ’ t wait – file notice of your claim. ► Create sufficient documentation of your claim. ► “ If its not in writing, it did not happen. ”