Courts in many states recognize exceptions and permit a contractor to pursue a claim against the government in the absence of formal written notice of intent if the government (1) possessed actual knowledge of the impending claim in a timely manner; (2) through its actions, waived the written-notice requirement; or (3) acted in some manner to compromise the contractor’s opportunity to provide written notice. However, as illustrated in a recent Virginia case, courts in other states enforce written-notice requirements strictly and without exception.
In Commonwealth of Virginia Department of Transportation v. AMEC Civil, LLC, 2009 WL 1661773 (Va. App.), the Virginia Department of Transportation (VDOT) appealed a lower court award of over $21 million to a highway contractor for approximately 11 individual claims the contractor submitted to VDOT and which VDOT denied. Both the underlying contract and the state statute that authorized contractors receiving adverse decisions on claims to file suit against the state expressly required that as a precondition of such suit, the contractor must have provided timely written notice to VDOT of its intent to file a claim.
VDOT contended at trial that the contractor failed to provide advance written notice of nearly all of the claims that composed the lawsuit, and the evidence supported its contention. However, the trial court determined the evidence also showed that despite the absence of written notice, VDOT was well aware of the contractor’s objections and complaints when they arose on the project and thus had actual knowledge the contractor would be tracking its costs and submitting claims. Based upon further evidence, the court awarded the contractor the entire amount it sought.
On appeal, the Virginia Court of Appeals reversed the trial court’s decision and made it clear that at least with respect to public contracts, only formal written notice will suffice. The court of appeals based its ruling solely on the statutory language and the doctrine of sovereign immunity and ignored altogether nearly identical written-notice provisions in the contract. In essence, the court of appeals held that absent the statute granting a contractor permission to sue VDOT, no such right exists. Furthermore, the court added, when the legislature prescribes a process under which an entity may sue the state, that process must be strictly followed. The contractor’s failure to provide written notice to VDOT thus proved fatal and the $21 million award vanished.
Prove the exception
Courts in a few other states adopt the “statutory rationale” of the Virginia Court of Appeals regarding public contracts. Others simply rule that a written-notice provision in a contract is a material term with which the contractor must comply. This “contract rationale” is much broader in reach and would apply equally to private contracts.
The lesson for contractors is simple: Procrastinate at your peril. Project-management personnel should always strive to provide timely formal written notice to owners of their intent to file a claim because even in states willing to overlook this requirement, the burden will be on the contractor to prove after the fact that one of the exceptions applies. For a contractor that finds itself in the situation of the contractor in the VDOT case, efforts should be taken to cull the project correspondence, meeting minutes and other records to establish the foundation for application of one of the three exceptions.