11/4/2015. Notice Provisions: Does Colorado Require Strict Compliance? Colorado Construction Law Update

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1 Colorado Construction Law Update Trip DeMuth Faegre Baker Daniels Notice Provisions: Does Colorado Require Strict Compliance? 2 Notice provisions require that contractors give immediate notice of claims for extra work and costs, and Provide that a failure to give notice results in a waiver of the claim. But notice provisions can be waived by words or conduct, Processing payments without requiring notice can waive the notice provision. Actual notice of the problem can alleviate the need for written notice. 3 1

2 Waiver Of Notice Provisions By Words and Conduct James H. Moore & Assocs. Realty, Inc. v. Arrowhead at Vail, 892 P.2d 367, 372 (Colo. App. 1994) Contract provisions may be waived if a party; engages in conduct which manifests an intent to relinquish the right, or acts inconsistently with its assertion. 4 Ebrahimi v. E.F. Hutton & Co., 794 P.2d 1015, 1019 (Colo. App. 1989) Waiver of a contract term occurs when a party to the contract; is entitled to assert a particular right, knows the right exists, but intentionally abandons that right. 5 Waiver By Words Hahl v. Langfur Const. Corp., 529 P.2d 1369, (Colo. App. 1974) The owner waived the written-notice provision by telling the contractor to go ahead with the work. 6 2

3 Waiver By Conduct Hi-Valley Constructors, Inc. v. Heyser, 428 P.2d 354, 357 (Colo. 1967). Owners conduct waived the requirement of getting written authority for additional or extra work. The owners frequently visited the project, paid monthly statements, but [t]here was never any written authority signed for changes or extras. 7 Waiver Of Notice Provision By Silence Metro. Paving Co. v. City of Aurora, Colo., 449 F.2d 177, 182 (10th Cir. 1971) (applying Colorado law). Contractor incurred additional costs for extra work excavating an unexpectedly large concentration of boulders. But the contractor did not provide the required notice of the problem. When he made his claim, the owner denied the claim on the grounds it wasn t a material change. But the owner did not object to the contractor s failure to give prompt written notice. The Court ruled that the Owner waived the failure of Contractor to give prompt written notice. 8 Actual Notice Can Suffice The majority of states don t require strict compliance; notice provisions are liberally construed, compliance is determined by whether, the notice given satisfies the purposes of the clause, and prejudice did not result. These are the Prejudice States. A second line of authority establishes the no-prejudice states; contractors must comply with notice requirements, regardless of whether the owner is prejudiced. No cases establish whether Colorado requires strict compliance. But one case suggests Colorado doesn t require strict compliance. URS Grp., Inc. v. Tetra Tech FW, Inc., 181 P.3d 380, 388 (Colo. App. 2008). 9 3

4 URS Group, Inc. v. Tetra Tech, FW, Inc. URS was a soil remediation contractor at the Rocky Mountain Arsenal That made a claim for unanticipated subsurface conditions it encountered. The contracts differing site condition clause required; The Contractor shall promptly, and before conditions are disturbed, give written notice of subsurface conditions which differ materially The Colorado Court of Appeals held: The notice need not be in any particular form. It need only generally inform the government of the facts. Failure to give notice will not bar a claim unless the government is prejudiced. Because the purpose of the notice provision is to allow the government to mitigate costs that might result. 10 United States for Use & benefit of Fisher Sand & Gravel Co. v. Kirkland constr., LLP A recent federal judge has taken a hard line on notice provisions. United States for Use & benefit of Fisher Sand & Gravel Co. v. Kirkland constr., LLP, 2014 WL (D. Colo. Dec. 19, 2014). Marcia S. Krieger, Chief United States District Judge 11 United States for Use & benefit of Fisher Sand & Gravel Co. v. Kirkland constr., LLP The case involved a Highway Project. Kirkland was the general contractor. Arizona Drilling and Blasting was the blasting subcontractor. Arizona claimed a host of contract breaches due to; A delayed start, Over-excavation of blast areas, Insufficient access, Acceleration of work without pay, Project delays, And others. 12 4

5 Kirkland Arguments Kirkland filed a motion for summary judgment; Alleging that Arizona failed to give notice of its claims. The notice provision read; notice of any damage which Arizona alleges Kirkland caused must be filed in writing with Kirkland within ten days from commencement of such alleged damage Arizona argued notice wasn t required because Kirkland had actual notice of every problem. Citing URS Group, Inc. v. Tetra Tech, FW, Inc., 181 P.3d 380 (Colo. App. 2008). 13 URS Group, Inc. v. Tetra Tech, FW, Inc. Remember, in URS Group, Inc. v. Tetra Tech, FW, Inc., The contracts differing site condition clause required; The Contractor shall promptly, and before conditions are disturbed, give written notice of subsurface conditions which differ materially The Colorado Court of Appeals held: The notice need not be in any particular form. It need only generally inform the government of the facts. Failure to give notice will not bar a claim unless the government is prejudiced. Because the purpose of the notice provision is to allow the government to mitigate costs that might result. 14 United States for Use & benefit of Fisher Sand & Gravel Co. v. Kirkland constr., LLP Judge Krieger refused to follow URS Group, Inc. v. Tetra Tech, FW, Inc., Because URS involved a differing site condition clause (DSC), Which allows the contractor and Contracting Officer to remedy a mutual mistake about the site, The notice provision in the Kirkland case; Had the purpose of giving Kirkland prompt notice of an alleged breach of contract, Designed not to remedy a mutual mistake, but to give Kirkland the opportunity to; Preserve evidence, Prepare a defense, Notify its insurers, Investigate counterclaims, Or begin efforts to secure a replacement contractor. 15 5

6 United States for Use & benefit of Fisher Sand & Gravel Co. v. Kirkland constr., LLP Again, the Kirkland notice provision read; notice of any damage which Arizona alleges Kirkland caused must be filed in writing with Kirkland within ten days from commencement of such alleged damage Another contract provision stated; It is specifically understood that no verbal notice by either party shall be of effect or binding Therefore, Judge Krieger ruled; informal notice (which presumably includes Kirkland s actual notice) did not forgive Arizona s noncompliance with the written notice provision, that oral notice would not be enough to comply with the contract, and Kirkland did not need to show that it was prejudiced by the lack of notice. 16 QUESTIONS? 17 6