In the recent decision of Commonwealth of Virginia v. AMEC
Civil, LLC, the Supreme Court of Virginia affirmed that a
contractor pursuing an administrative claim against the Virginia
Department of Transportation ("VDOT") must give timely
written notice to VDOT clearly stating the contractor's
intention to file a claim. AMEC involved a $73 million contract for
the construction of the Route 58 Clarksville Bypass in Mecklenburg
County. The scheduled completion date was November 1, 2003, but the
project was not substantially completed until June 2005. Following
completion, AMEC submitted an administrative claim to VDOT seeking
approximately $25 million in additional compensation. The claim
consisted of over a dozen individual claim items for various
impacts related to differing site conditions, defective design,
delay and acceleration. VDOT denied the claim, and AMEC filed
suit.
During the course of the trial, VDOT argued that AMEC had failed to
give timely written notice of many of its claims as required by
AMEC's contract with VDOT and by the Virginia Code. The trial
court rejected VDOT's notice arguments, ruling that actual
notice was an appropriate substitute for written notice and further
determining from the evidence that VDOT had received written notice
of many of AMEC's claims. The trial court rendered a verdict
for AMEC of nearly $22 million.
VDOT appealed to the Virginia Court of Appeals, and the Court of
Appeals reversed the trial court's decision on a number of
claims, including claims subject to VDOT's lack of notice
defense. The Appeals Court held that a contractor is required to
give timely written notice to VDOT of claims and that AMEC had not
done so for a number of its claims. This ruling resulted in a
substantial reduction in the award to AMEC.
AMEC then appealed to the Supreme Court of Virginia. The Supreme
Court agreed with the Court of Appeals that written notice is
required. The Court then addressed the requirements for written
notice. First, the Court noted that the Virginia Code specifies
that written notice "must announce the contractor's
'intention to file [a] claim.'" The statute also
requires that such notice be given either "at the time of the
occurrence" of the claim, or at the "beginning of the
work upon which the claim...is based." Thus, wrote the Court,
"[a]t a minimum, to satisfy the written notice requirement,
the written document at issue must clearly give notice of the
contractor's intent to file its claims and must be 'given
to [VDOT]' by letter or equivalent communication directed to
VDOT at the appropriate time."
The Supreme Court of Virginia then analyzed all of AMEC's
claims that were challenged by VDOT for lack of notice. With the
exception of one small claim, the Supreme Court agreed with the
Court of Appeals, resulting in final judgment for VDOT on a
substantial portion of the initial verdict for AMEC.
Contractors should always be aware of and closely follow all
contract provisions requiring notice, whether in contracts with
VDOT or other public agencies or in the private sector. Typically,
contract documents specify the manner of giving notice, the time
for giving notice and the person to whom the notice should be
furnished. Such provisions often include a statement that failure
to give notice as specified will result in a waiver of the claim.
Virginia courts will enforce these provisions: failure to give
notice in the manner and within the time specified can lead to the
dismissal of a claim.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
