Page 64 - CCD Magazine-Spring 2019

Timothy W. Gordon, Esq
Holland & Hart LLP | (303) 295-8173 www.hollandhart.com/tgordon tgordon@hollandhart.com
Timely and proper notice is key for preserving construction claims. Whether a contractor is seeking an equitable adjustment from the owner or looking to hold a subcontractor responsible for failing to perform, notice is always important. The same is true for subcontractor or owner claims against the general contractor. But the way that the law treats a failure to provide contractually- required notice can differ depending on which direction the claim is going.
Construction contracts typically almost universally require that the contractor provide the owner with prior notice
of any potential change order work or work that would entitle the contractor to an equitable adjustment in the contract price. Under the standard AIA General Conditions of the Contract for Construction, if the contractor wishes to make against the owner for additional costs, it must first provide notice to the owner before performing the work subject to the claim. See AIA A201-2017 § 15.1.5. Similarly, for a contractor to make a differing-site-conditions claim against the owner, the contractor must give the owner and the architect notice prior to disturbing the condition encountered, and in no case shall the contractor provide notice later than 14 days after first encountering the differing site condition. See AIA A201-2017 § 3.7.4.
The same is true for subcontractor claims against the general contractor. Under the AIA Standard Form of Agreement Between Contractor and Subcontractor, the notice requirements in the A201-2017 “flow down” and apply equally to subcontractor claims against the general contractor. See AIA A401-2017 Article 2. The subcontractor must also provide notice to the contractor of any claim that the contractor can pass on to the owner not less
than two working days preceding the time by which the contractor’s claim must be made to the owner. See AIA A401-2017 § 5.3.
64 | Colorado Construction & Design
Construction contracts also typically require that contractors be given notice and an opportunity to cure before the owner can impose a backcharge on the contractor. For example, under the A201-2017, before
the owner can backcharge the contractor for having to cure the contractor’s default, the owner must first provide the contractor with notice and a ten-day opportunity to cure. See AIA A201-2017 § 2.5. Similarly, the AIA standard subcontract also requires the contractor to give the subcontractor notice and five working days to commence efforts to cure its default before the contractor can hold the subcontractor liable for a backcharge. See AIA A401- 2017 § 3.5. The same subcontract form also requires the contractor to give the subcontractor seven days’ notice before supplementing the subcontractor’s work due to the subcontractor’s failure to prosecute the same. See AIA A401-2017 § 3.4.2.1.
How courts treat a failure to provide a contractually- required notice depends on the direction that the claim is going. Specifically, courts are more forgiving when a contractor or subcontractor fails to give contractually- required notice of a claim for a change order or equitable adjustment. The courts are more strict when an owner or contractor fails to provide notice of a backcharge.
In URS Group, Inc. v. Tetra Tech FW, Inc., 181 P.3d 380 (Colo. App. 2008), the Court held that a subcontractor’s failure to provide notice of a differing site condition (which would entitle subcontractor to a change order) would not preclude the subcontractor from recovering additional compensation from the general contractor. The contract, as is typical, required advance notice to the general contractor before the subcontractor proceeded with any additional work. But the Court noted that a notice requirement is fulfilled so long as the general contractor was aware of the claim. Id. at 387-88.
Construction Law
NOTICE FOR ME, NOT FOR THEE
by Timothy W. Gordon, Esq