Owner’s Claim For Defective Work Tripped Up By AIA’s Notice Of Claim Requirement

Notice of claim requirements in construction contracts are standard and often the cause of bad news to contractors pursuing claims for additional costs. However, these clauses can be, though not always, two-way streets. As a reminder to owners that notice of claim requirements under the AIA General Conditions apply equally to owners as to contractors, a trial court in New York recently dismissed a claim for defective work against a plumbing contractor because it was not the subject of a previous notice of claim.

A plumbing contractor performed work on a municipal pier including the installation of a fire suppression system. The specifications required the system to be tested at a pressure of 200 psi. The contract incorporated the AIA A201-1997 General Conditions. Section 4.3.2 required claims by either party to be brought within 21 days “after the claimant first recognizes the condition giving rise to the Claim.”

The system was tested on June 23, 2006 and the plumbing contractor notified the municipality on July 28, 2006 that the system failed. After repairs and further tests, the system was only able to achieve 100 psi. The municipality subsequently commenced an action against the plumbing contractor.

While the municipality contended that the plumbing contractor had actual notice of the failed conditions, the court found that there was no evidence of a written notice of claim by the municipality to the plumbing contractor. The only written notice was not initiated by the municipality nor did it advise the plumbing contractor that the municipality was making a demand against the plumbing contractor. Furthermore, since there was no claim submitted to the architect under the AIA’s dispute resolution clause requiring an initial decision by the architect (¶4.4.1), there was no initial decision made thereon. Dismissal of the action was warranted because the plaintiff failed to comply with the contractual requirement for timely notice of its claim which was a condition precedent to suit or recovery. See the decision here.