LEGAL ISSUES


Notice Requirements: A Closer Look At The 2015 Standard Specifications


By Erin K. McDonough, OTMK Law I


n recent years, California courts have shown an increasing tendency to strictly enforce notice requirements


in public works’ contracts, even where the contractor had an otherwise merito- rious claim. Caltrans’ 2015 Standard Specifications, which will be used for all projects bid after June 30, 2016, contain a number of notice requirements that can be a trap for the unwary. Tis article examines a few of them.


Changes and Extra Work Section 4-1.05 of the 2015


Standard Specifications allows Caltrans to make changes or add extra work and states “[u]ntil the Department approves a Change Order, continue to perform the work under the Contract unless the engineer orders you to start the work described in the Change Order before its approval.” In other words, the contractor


should not begin any extra or changed work unless the change order is approved or the engineer orders the contractor to begin the extra or changed work. If the contractor performs extra


or changed work prior to receiving an order from the engineer or an executed


Change Order, it risks waiving any claims for compensation for that work. For example, in P&D Consultants v. City of Carlsbad, 190 Cal.App.4th 1332 (2010), P&D and the City entered into a contract, which stated that there could be no amendments, modifica- tions, or waivers without written agreement by the parties. P&D claimed that the City’s


project manager directed P&D to perform extra work and promised that the City would pay for that work. P&D sued for the City for the extra work, but the court denied P&D’s claim because P&D performed the extra work without a written change order. Id. at 1341-42. Fortunately, unlike the contract in


P&D, the 2015 Standard Specifica- tions allow the engineer to direct the contractor to begin extra or changed work before executing a change order. However, the contractor should demand that the engineer provide such order in writing to avoid any disputes.


Differing Site Conditions Pursuant to Section 4-1.06 of


the 2015 Standard Specifications, a contractor shall “[p]romptly notify the Engineer” upon discovery of a differing site condition or waive its


Wide Range of Legal Issues Impact the Industry


The California Constructor gives special thanks to the AGC Legal Advisory Committee, whose members prepared articles on a host of legal issues that are impacting the construction industry and your business. Additional legal articles that could not be included in this issue will be featured in upcoming months in our Legal News column.


Look for in-depth, informative articles on a variety of other legal topics in the months ahead including:


 “Eichleay Comes to California” by By Laurence P. Lubka, Lubka & White LLP


 “Contract Retention Is Not What It Used to Be” by Nicholas A. Merrell, Varela, Lee, Metz & Guarino, LLP, San Francisco.


20 May/June 2016


claim from the date of discovery to the date of notification. Although


the Standard Specifications do not define “promptly,” the contractor should provide notice as soon as it encounters a differing site condition even if the nature or extent of the condition is not yet known. Fortunately, federal courts have recognized that it may take the contractor time to realize that it actually encountered a differing site condition. See, e.g., Dawco Constr., Inc. v. United States, 18 Cl.Ct. 682, 693-94 (1989). Federal courts have also found that,


where a contractor does not give timely notice of a differing site condition, it “will not be barred from recovery unless the government is prejudiced by the lack of notice.” Ace Constructors, Inc. v. United States, 70 Fed.Cl. 253, 272 (2006). California courts have not yet


decided whether late notice if a differing site condition may be excused if the owner is not prejudiced. However, California courts have held that insurance companies cannot deny insurance coverage based on lack of timely notice unless the insurance company shows actual prejudice. See, e.g., Moe v. Transamerica Title Ins. Co., 21 Cal.App.3d 289 (1971). Tus, although the contractor may be able to recover for a differing site condition if notice is late, it is certainly safer to provide notice very soon after discovery.


Delays Section 8 of the 2015 Standard


Specifications requires the contractor to submit a Time Impact Analysis (TIA) “with each request for adjustment of contract time or


California Constructor


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