Matthew DeVries | Best Practices Construction Law | November 26, 2019
I just blogged about asking for what you want and the importance of complying with notice provisions in pursuing a construction claim. A court in Oklahoma just reminded me that not all claims require notice. Here’s what I mean.
In WinCo Foods, LLC v. Crossland Construction Co., No. CIV-18-175-HE (Nov. 21, 2019) (PDF), the U.S District Court for the Western District of Oklahoma recognized the distinction between “notice” for purposes of asserting a delay claim by the contractor and “notice” for purposes of assessing liquidated damages by the Owner. The contractor failed to attain substantial completion of the construction of a new grocery store by the contractually required deadline. The contractor argued that the owner failed to comply with the notice provision when making its claim for liquidated damages.
The court held that the “notice of claims” provision in the parties’ contract was a separate provision from the liquidated damages provision and, thus, inapplicable to the claim for liquidated damages. The court reasoned:
As set forth above, the terms of the liquidated damages provision govern the issue of liquidated damages “notwithstanding anything to the contrary in the Contract Documents”. Thus, any additional requirements set forth in the notice of claims provision, that are not included in the liquidated damages provision, would not apply. Because the liquidated damages provision does not require [the owner] to provide notice of any claim for liquidated damages and makes the entitlement to liquidated damages automatic where the circumstances warrant, [the owner] was not required to comply with that notice procedure.
It is important to note that the court’s decision was made at the summary judgment stage—first, finding that the liquidated damages provision was enforceable; and, second, finding that the owner was not bound by any notice provision in assessing liquidated damages. However, since there were disputed issues of material facts as to the delays on the project and the architect’s bias conduct against the contract, summary judgment was not proper on either the contractor’s claim for additional time or the amount of the owner’s claim for liquidated damages. Those issues would proceed to trial.
So what? The primary lesson that comes to mind from WinCo is one of mutuality, or making sure that the contract provisions that apply to one party apply equally to the other party. This is especially true when one party is attempting unfairly to shift risk of attorney fees, indemnification or otherwise to the other party. In this instance, the contractor could have made sure that notice of any type of claim by any party shall be made within the time proscribed.