A recent decision from a Virginia circuit court reminds us of the importance of following notice provisions in a construction contract. Notice obligations can often be found in contract provisions addressing change orders, claims for additional time and/or money, and differing site conditions. Oftentimes the contract will spell out what form the notice must take, what must be included in the notice, when the notice must be sent, and to whom and how it should be delivered. Strict notice requirements may include a waiver of the claim or right if notice is not given as specified.
In Faulconer Construction Co. v. Branch & Associates, Inc.,, the subcontract agreement contained a notice provision which provided in part:
Notice for any and all claims…shall be made in writing
immediately upon Subcontractor's first knowledge of the
claim condition or first event giving rise to such claim, and
under no condition shall such claim be provided to Contractor
later than seven calendar days after the event's occurrence.
The provision further specified that "failure to provide notice in such manner and time frame shall be deemed to be a waiver of the claim."
The sitework subcontractor Faulconer gave written notice to the general contractor Branch & Associates of a claim for additional costs based upon encountering rock in quantities far in excess of the amount Faulconer had estimated. The written notice was sent to the general contractor on March 30, 2010.
After the subcontractor had filed suit on its claim, and during the course of discovery involving the production and review of each party's construction files, the contractor came upon documentation indicating that the subcontractor was aware of the excess rock more than a month prior to furnishing notice of its claim. Armed with this information, the general contractor requested the court to rule that the claim was barred for failure to give the required timely notice.
The circuit court agreed with the general contractor and awarded judgment in its favor:
It is apparent that by February 24, 2010, if not earlier,
Faulconer had substantial and indisputable evidence
that the amount of rock it encountered on this project
for which it had the responsibility to remove exceeded
its estimate by somewhere between two (2) and
three (3) times. However, despite this knowledge,
Faulconer did not give any notice of any type to Branch
until March 30, 2010. If nothing else, on February 24, 2010
Faulconer surely knew that the cost for removing such rock
was going to be substantially more than it had anticipated
and included in its bid. Applying the contract language to
these circumstances, Branch was entitled to receive notice
if Faulconer intended to make a claim for the cost
of removing the additional rock.
The circuit court's decision is consistent with Virginia law that courts are obliged to hold parties to the terms of the contracts they have made and not to rewrite or make new contracts for the parties. Contractors and subcontractors must understand the notice requirements of their contracts before beginning work and assure that those requirements are properly met if circumstances arise on a project that give rise to claims or requests for additional time or compensation.