California Court Confirms that Contractors Need to Strictly Follow Notice and Claim Procedures

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Construction contracts usually include detailed notice and claim provisions which are often ignored by the parties. Many contractors operate under the assumption that regardless of the “fine print” in their contracts requiring timely notice of a claim, ultimately a change order or favorable court judgment can be secured so long as the contractor can prove that the owner (or non-contractor caused factors) caused a delay or additional costs. A recent California Court of Appeal decision, Greg Opinski Construction, Inc. v. City of Oakdale (2011) 199 Cal. App. 4th 1107, makes clear that contractors should strictly comply with these “fine print” provisions or risk losing the right to additional time or compensation.

In 1963, the California Supreme Court in Peter Kiewit Sons’ Co. v. Pasadena City Junior College Dist. (1963) 59 Cal. 2d 241, held that even if a public works prime contract required the contractor to notify the owner of delays – whether to make a claim, or to avoid liquidated damages – the failure to do so was not necessarily fatal. The failure to request a time extension, make a delay claim, or give notice of a delay event as required in the prime contract was excused where the delays involved were caused by the owner. However, the California legislature, just two years later in 1965, responded to the Peter Kiewit Sons’ Co. decision by amending California Civil Code section 1511 to allow parties to contractually agree to specific claims and time extension procedures.

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