Matthew C. Long | Construction Law Now
Nearly all construction contracts contain terms dictating when and how a contractor must pursue claims for contractual relief. However, these terms are not always strictly enforced. A contractor’s failure to timely submit a claim may not prevent recovery if, for example, the contractor can demonstrate that the owner had actual knowledge of the circumstances giving rise to the claim.
Mandatory Requirements Under the Virginia Public Procurement Act
No such leeway exists under the Virginia Public Procurement Act (the VPPA)—the act governing most Virginia public construction contracts—and other Virginia statutes governing the submission of claims. The VPPA imposes two mandatory pre-litigation claim requirements, and failure to comply with either results in a waiver of the claim.
- First, contractual claims, whether for money or other relief, must be submitted in writing no later than 60 days after final payment. Then, the public entity has 90 days to respond. Contractors can typically comply with this requirement as a claim is usually fully matured by the time of final payment. However, contractors are often unaware of the unique pre-litigation requirements concerning claims against Virginia counties. Pursuant to a separate Virginia statute not contained in the VPPA, with limited exception, claims against counties must first be received and reviewed by the county’s board of supervisors. If the claim is denied in whole or in part, the claimant must, within 30 days, provide the clerk of the board of supervisors notice of the contractor’s intent to litigate and post a cash or surety bond in the amount of $250. Again, failing to comply with either of these requirements is fatal to a contractor’s claim.
- Second, pursuant to the VPPA, a contractor must provide written notice of its “intention to file a claim” “at the time of the occurrence or beginning of the work upon which the claim is based.” Of the VPPA’s two pre-litigation requirements, this one is less clear and more frequently missed by contractors. However, failure to provide this written notice waives the claim, regardless of whether the public entity was otherwise aware of the basis for the claim. As one Virginia court explained, it is “not enough that the contracting agency could have intuited the contractor’s intent to file a claim based upon the nature of the dispute.”
Understanding Compliance and Court Guidance
Despite the harsh consequences of non-compliance, the VPPA provides no further guidance regarding how or when a contractor must provide its notice of intention to file a claim. The VPPA does not further describe the form or content of a notice of “intention to file a claim.” Likewise, the VPPA does not specify when a notice may be submitted and still be considered “at the time of the occurrence.” In fact, the Virginia Supreme Court has held that the form and timing of an alleged notice of intent to file a claim requires an examination of the circumstances of each case.
Luckily, Virginia courts have provided guidance regarding compliance with the VPPA. Courts have cautioned that the notice must be more than a mere “heads-up” regarding a problem on the project, and the Virginia Supreme Court has held that meeting minutes, even if expressly recording the contractor’s intent to file a claim, do not constitute sufficient notice. However, courts have also recognized that a simple invoice could “arguably” be written notice of an intention to file a claim.
With respect to timing, the Virginia Supreme Court has held that a written notice submitted six months after the event that caused the claim is untimely. In contrast, the Virginia Supreme Court has indicated that providing written notice 18 days after an occurrence may be timely. Additionally, lower Virginia courts have held that a notice of intent to file a claim given a full month after the relevant occurrence may be timely. Virginia courts have also held that the relevant “occurrence” may be the denial of a request for contractual relief, such as a proposed change order. As a result, a contractor may only be required to provide written notice of its intent to file a claim after a clear dispute arises with the public owner.
Flexibility and Risks for Contractors
Accordingly, while the consequences of failing to comply with the VPPA’s claim submission requirements are harsh, certain flexibility exists concerning the form and timing of a notice of intent to file a claim. In addition, contractors should be aware of the unique pre-litigation requirements applicable to claims against Virginia counties. A skilled construction and public contracts attorney can help you navigate this process and rebut claims of non-compliance. Please contact Cohen Seglias if you need assistance complying with the VPPA or other Virginia claim requirements.
When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.