Owner Need Not Respond to Contractor’s Claims Within Any Timeframe
Contractors often face strict or limited notice periods, in which to advise the project owner of a claim or issue. Some contracts even include forfeiture provisions, where the contractor’s failure to give timely notice acts to nullify the claim. But what about the owner’s timeframe for response? A New York court has reminded the contractor that there is no implied timetable for the owner to respond, when the contract has no deadline.
A project for the NY City Dept. of Transportation (NYCDOT) began at least by 2019. From the outset, Tutor Perini, the contractor, has given notice of various delays and claims. But NYCDOT has apparently not been responding to those claims, at least until Tutor Perini filed suit in the summer of 2021.
Tutor Perini then filed for summary judgment, asking the court to rule that NYCDOT had an obligation to timely respond to the pending claims. The court has declined to do so.
In response to Tutor Perini’s argument that the contract expressly requires action or a response by NYCDOT, the court noted:
Tutor Perini contends that the language of Article 11 compels judgment in its favor because it "expressly and unambiguously sets forth" NYCDOT's "obligations to review and respond" to Tutor Perini's claims and requests. However, this argument is wholly unsupported by the text. A plain reading of Article 11 reveals that while it contains numerous requirements that Tutor Perini must adhere to in order to preserve its delay-related claims, not a single provision requires NYCDOT, the Comptroller, or the City of New York to respond to or otherwise process such claims. Tutor Perini's numerous summary declarations to the contrary does not alter this simple fact.
Tutor Perini’s argument that there is an implied obligation on the owner’s part to timely respond did not succeed, either:
Tutor Perini asks, in effect, for this court to read implied obligations into the parties' contract corresponding to its own notice obligations . . . [T]he parties' contract was negotiated by sophisticated parties at arms' length, spans hundreds of pages, and contains detailed procedures and obligations applicable the NYCDOT in the event of other types of contractual disputes. These are all compelling indicators that the parties considered the sort of provisions Tutor Perini proposes and chose not to include them.
The court also rejected an argument that NYCDOT’s failure to respond to the claims is contrary to public policy. The court’s final words: “Contract No. HBM1147 . . . does not require any of the defendants to issue a determination, settlement offer, or other response to the plaintiff's delay notices, delay damages notices, or delay claims submitted pursuant to the contract.”
To most contractors, this seems to be an unfair outcome. Why must strict time limits applied to the contractor not also apply to the owner? This decision provides the answer: if the contractor wants an owner response within a certain timeframe, that language will need to be included in the contract.
The case is Tutor Perini Corporation v. City of New York, etc., 2022 N.Y. Misc. LEXIS 2980 (July 11, 2022) (subscription required).