Blogs

By Matthew D. Holmes of Ernstrom & Dreste LLP
Published Fall 2021


A maxim of construction law stresses the importance of reading your contract. One critical purpose of this is to identify whether the contract imposes time limits on making claims. If it does, the language at issue may consist of only a few words. Do not ignore this language! New York courts consistently enforce contractual notice of claim requirements and impose the harshest result on contractors that fail to comply—the dismissal of their claims. Two recent examples highlight the importance of knowing and adhering to all contractual notice of claim provisions.

In Universal Constr. Resources, Inc. v. New York City Hous. Auth.,¹ the contractor filed three actions against the New York City Housing Authority (“NYCHA”) alleging failure to pay forced acceleration costs, damages due to delay, breach of contract, breach of the duty of good faith and fair dealing, unjust enrichment, and account stated. Overall, the contractor’s combined claims totaled close to $ 9 million.

NYCHA moved to dismiss the actions, arguing that the contractor’s notices were untimely under the contract. It also argued that these notice of claim requirements were conditions precedent to the contractor’s lawsuits, meaning the contractor’s failure to give the notice within the time required defeated its claims. The trial court found otherwise, concluding that the contractor’s allegations of NYCHA mismanagement and delays in reconciling payment for certain costs excused the contractor’s noncompliance and raised questions of fact sufficient to deny the motion.

The appellate court disagreed, ruling that NYCHA demonstrated that the contractor failed to serve a notice of claim within 20 days of the accrual dates of the alleged claims, as required by contract. The court rejected the contractor’s efforts to rely on various notices and letters sent throughout the project as proper notices of claim under the contract. First, any contractor letter that did not denote itself as a notice of claim, set out the basis of the alleged claim, or list the alleged claim amounts was not proper notice under the contract. Second, though some notices were in proper form, they were untimely, because the claims accrued when NYCHA notified the contractor of changes in or interpretations of the scope of the work. Finally, the court was not swayed by the argument that the contractor’s claims accrued when it submitted its last detailed invoice for the work, because that would eviscerate the contract’s notice provision. As such, because each of the notices of claim were untimely or otherwise improper, the contractor lost the right to pursue its substantial claims against NYCHA.

The court reached a similar conclusion in Aps Contrs. v. New York City Hous. Auth.,² reversing the trial court and dismissing the contractor’s complaint for additional compensation for painting and lead abatement of roof railings. The contractor argued that certain emails between the parties were sufficient to satisfy the contractual notice of claim requirements since they set forth the nature of the claim and the amount of damages. The court was unpersuaded since none of the emails was designated as a notice of claim, contained all of the information required by the contract in a single document, or expressed a clear intention by the contractor to bring a claim against NYCHA. The court also rejected the contractor’s demand that NYCHA’s motion be dismissed because it was made before any discovery. The contractor possessed all documents it sent to the NYCHA that it believed satisfied the notice of claim requirement, said the court. Because the contractor failed to produce any document that complied with the contractual notice of claim requirements, it lost the right to assert all of its claims, regardless of actual knowledge of the claims by NYCHA.

These cases demonstrate how important it is for contractors to identify and understand contractual time limits, and specific procedures, for asserting claims. Despite the realities of the on-the-ground pace of a project, being proactive and precise when it comes to claims can prevent the fatal results seen here.


1 192 A.D.3d 470 (1st Dep’t March 9, 2021)
2 193 A.D.3d 628 (1st Dep’t April 29, 2021).



Matthew D. Holmes is an Associate with Ernstrom & Dreste LLP. He represents sureties, corporations, contractors, subcontractors, design professionals, and construction managers on a wide array of commercial, construction, and surety issues. He can be reached at mholmes@ed-llp.com or 585.473.3100.