Opinion ID: 2514285
Heading Depth: 1
Heading Rank: 12

Heading: Enforcement of Contract Provisions

Text: [ś 89] The City filed motions for judgment as a matter of law based in part on its assertion that HCI failed to comply with the contract notice provisions. The City argues the district court erred as a matter of law in denying its motions on those grounds. The City cites the following contract provisions: 4.3.1 Definition. A Claim is a demand or assertion by one of the parties seeking, as a matter of right, adjustment or interpretation of Contract terms, payment of money, extension of time or other relief with respect to the terms of the contract. The term Claim also includes other disputes and matters in question between the Owner and Contractor arising out of or relating to the Contract. 4.3.2 Time Limits on Claims. Claims by either party must be initiated within 21 days after occurrence of the event giving rise to such claim or within 21 days after the claimant first recognizes the condition giving rise to the Claim, whichever is later. Claims must be initiated by written notice to the Architect and the other party. .... 4.3.5 Claims for Additional Cost. If the Contractor wishes to make a Claim for an increase in the Contract Sum, written notice as provided herein shall be given before proceeding to execute the Work. 4.3.6 If the Contractor believes additional cost is involved for reasons including but not limited to ... (7) other reasonable grounds, Claim shall be filed in accordance with this Paragraph 4.3. 4.3.7.1 If the Contractor wishes to make Claim for an increase in the Contract Time, written notice as provided herein shall be given. The Contractor's Claim shall include an estimate of cost and of probable effect of delay on progress of the Work. In the case of a continuing delay only one Claim is necessary. .... 13.3.1 Written notice shall be deemed to have been duly served if delivered in person to the individual or a member of the firm or entity or to an officer of the corporation for which it was intended, or if delivered at or sent by registered or certified mail to the last business address known to the party giving notice. [ś 90] Pursuant to these provisions, the City maintained HCI was required to give written notice of its breach of the implied covenant claim to both the architect and the City in person or by certified mail within 21 days after it first recognized at the August 31, 2000, project meeting that it would not be allowed to order the precast panels until Winfrey was certified. The City further argued HCI was required to include in the notice an estimate of the cost and of the probable effect of the delay on the progress of the work. The City contended that HCI failed to comply with these requirements because it did not provide written notice of its claim to the architect and the City in person or by certified mail by September 21, 2000, and did not include an estimate of the cost or probable effect of the delay. [ś 91] The evidence presented at trial showed that after learning that the City was requiring Winfrey to be certified before HCI placed the precast panel order, Mr. Hladky took a number of steps to move the project along as scheduled and prevent delay. He testified that he met the same day with Mr. Roberts and Mr. Gillette in an effort to persuade them to allow him to place the order. He testified that he also informed Winfrey that day that it needed to obtain its certification before he could place the order. He testified that he offered to take a City representative to inspect Winfrey's plant to ensure that its manufacturing process was adequate to allow HCI to place the order. He proposed hiring an inspector or paying a city representative to watch Winfrey's manufacturing process to assure the quality of the precast panels. He submitted a change order request substituting Gage Brothers as the precast panel supplier on September 18; met with Mr. Darrington on October 5 in the hope of obtaining his approval of the change order request; proposed by letter dated October 30 to deduct the price of the precast panels from HCI's bid and let the City find another supplier; submitted a second change order request to that effect on October 31; and met with the city council to obtain approval of the change order request. [ś 92] Viewed in the light most favorable to HCI, this evidence raised a reasonable inference that HCI first recognized the condition giving rise to [its] claim within the meaning of Article 4.3.2 of the contract only after Mr. Hladky had unsuccessfully exhausted efforts to prevent delay damages. Thus, the 21 days for initiating the claim began to run not on August 31, as the City asserts, but from some later date when HCI recognized there was nothing it could do to prevent the delay. Mr. Hladky testified that he could not put an exact date on when he first recognized the condition giving rise to the claim. He testified, however, that if the City had acted two weeks before the October 31, 2000, notice of claim letter, HCI's subcontractor could have completed the concrete work and much of the delay could have been avoided. On that basis, he testified that HCI first recognized the condition giving rise to its claim when the City had not acted by mid-October of 2000. From this evidence it can reasonably be concluded that the 21 days began to run in mid-October. Thus, HCI's October 31, 2000, letter met the requirements of the contract and the district court's rulings to that effect were proper. [ś 93] The City asserted the October 31, 2000, letter did not meet the contract requirements because HCI did not deliver it in person or by registered or certified mail. A close look at the language of Article 13.3.1 demonstrates that delivery in person or by registered or certified mail is not mandated. While written notice shall be deemed to have been duly served if delivered in person... or if ... sent by registered or certified mail, the contract does not preclude service by regular mail. Additionally, Mr. Gillette testified that he received the October 31, 2000, notice of claim; therefore, the evidence was undisputed that he had actual notice of the claim. Given the actual notice, the district court was not willing to conclude that HCI's failure to serve the notice of claim personally or by certified mail was fatal to its claim. We agree. [ś 94] The City contends that Article 4.3.2 of the contract required HCI to provide written notice of its claim to the architect, Mr. Gillette, and the City and the fact that the October 31 letter went only to Mr. Gillette caused the claim to be legally defective. An abundance of evidence was presented from which it could be reasonably concluded that Mr. Gillette was the City's representative on the City Hall project and that notice to him was sufficient to constitute notice to the City. Given that evidence, the district court concluded that HCI complied with the contract claim provisions. [ś 95] The City further argues HCI failed to comply with the contract provisions because its October 31, 2000, notice of claim did not include an estimate of the cost and probable effect of the delay. Article 4.3.7.1 applied to claims for additional time. HCI's claim was for the additional costs caused by the delay, not for additional time. The contract did not require submission of an estimate of the cost and effect of the delay for a damages claim.