Decision Strengthens Public Agency Authority to Require Reasonable Notice of Delay Claims

In a recent case, Greg Opinski Construction, Inc. vs. City of Oakdale (October, 2011), the California Court of Appeal strengthened the position of public agencies asserting notice of claim requirements against contractors in their public works contracts. The Court based its decision on Civil Code section 1511, which expressly permits a public entity to require the other party to give notices of delay claims caused by the party receiving the notice. The key is that the delay claim requirements must be “reasonable,” and, as the court noted, “just.”

This decision expressly overturned a decision from 1963 in the case of Peter Kiewit Sons’ Co. vs. Pasadena City Junior College, in which the California Supreme Court held that even if a public works prime contract requires the contractor to notify the owner of delays (whether to make a claim, or to avoid liquidated damages), the failure to meet such a requirement was excused where the delays involved were caused by the owner. As the Court in Greg Opinski Construction, Inc. noted, however, Civil Code section 1511 was amended soon after the Peter Kiewit Sons’ Co. case to add language allowing public entities to conditions delay claims on contractor compliance with reasonable notice procedures in the contract.

School and community college districts should take advantage of the ruling in the Greg Opinski Construction, Inc. by confirming their general conditions contain express requirements that the contractor provide reasonable notice of any delay claims or any other claims for time extensions whether or not they involve additional money. Failure to follow such notice requirements could bar a contractor from offering evidence in trial that the delays were the owner's fault and that liquidated damages were not appropriate. The keys for public entities will be: 1) ensuring that the claims notification requirements in the contract are clear; and 2) making sure that the claims notification requirements are reasonable and just. Since the interpretation of Civil Code section 1511 in Greg Opinski Construction, Inc. is new, we don’t have much guidance on where the courts will come down on what provisions are fair and just, and which are not. For a more complete analysis of the Greg Opinski Construction, Inc. vs. City of Oakdale.

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