More Than Expression of Concern Needed to Establish Waiver of Notice Clause
A subcontractor seeking to establish estoppel or waiver of a contract clause precluding prosecution of a claim unless notice is given within 21 days of the event giving rise to the claim must provide more evidence than an oral expression of concern to defeat a motion for summary judgment, according to a New York Appellate Division brought to my attention by the Contracts Prof Blog.
The subcontractor claimed that the general contractor and other subcontractors caused it to incur additional costs, but did not make written demand or otherwise give written notice of a claim until 11 months after the project was completed.
The contract provided that no claim could be made unless written notice was given with 21 days after occurrence of the event giving rise to the claim or the subcontractor learned of it.
The court held the trial court should have granted summary judgment to the general contractor because no evidence of waiver or estoppel had been offered:
Advancing a theory of waiver or estoppel to overcome its lack of timely written notice, plaintiff submitted a two-page affidavit of its secretary/treasurer which alleged that conversations occurred with defendant "during the Fall of 2000" regarding plaintiff's inability to complete its work due to the failure of other contractors to first complete their portion of the work. It further alleged that plaintiff had expressed concern to defendant that these delays were costing it money, yet plaintiff provided no details of these conversations nor did it allege that defendant, by its words or conduct, waived the written notice of claim provision or told plaintiff that the claim did not have to be in writing.
Kingsley Arms, Inc. v. Sano Rubin Construction Co.
My Observation: Why do notice clauses derail claims so often? The stated purpose of the clauses is benign--the owner/contractor/surety--needs notice so they can take steps to stop the claim generating conduct or mitigate damages. But the clauses can also become a trap. The injured party may not realize the significance of an event within the short time frames provided for giving notice. Or the inured party may realize the possibility of being hurt but be undecided over whether to pursue a claim for it. And many fear, correctly or incorrectly, that giving notice will hack the other construction players off and make securing cooperation on other issues more difficult. The latter concern is especially evident early in a project when everyone is often doing their best to get along and not rock the boat.