Claims and Disputes Against a State or Local Government Owner: What Construction Attorneys Should Know

• Author: By Kelli E. Goss, L. Tyrone Holt, and James F. Butler III
• Pages: 15-24

THE CONSTRUCTION LAWYER 15Winter 2020

Kelli E. Goss

James F. Butler III

Tyrone Holt

Published in The Construction Lawyer, Volume 40, Number 1 Winter 2020. © 2020 American Bar Association. Reproduced with permission. All rights reserved. This information or any portion

thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

Winning a public project can

be a signicant victory for a

contractor. But if a dispute

arises, the contractor may

face challenges in pursuing a

claim against the government

owner that do not arise on

private projects. This article

discusses some of the more

signicant issues construction

professionals face when

bringing a claim against a state

or local government owner.

Sovereign Immunity May Bar Some Claims Against a

Public Owner

Public works contracting involves many potential pitfalls

for a contractor. One of the most substantial risks might

be a basic inability to sue a public owner in the event

something goes wrong. Whether dealing with a federal

agency or a state or local government, the concept of

sovereign immunity includes both immunity from suit

and immunity from liability.1 While a government owner’s

right to immunity from liability is generally waived by

entering into a contract, this does not automatically

mean a public owner may be sued in the same way a

Claims and Disputes Against a State or Local

Government Owner: What Construction Attorneys

Should Know

By Kelli E. Goss, L. Tyrone Holt, and James F. Butler III

CLAIMS AGAINST PUBLIC OWNERS

Kelli E. Goss is a partner with Conner Gwyn Schenck

PLLC in Raleigh, North Carolina. L. Tyrone Holt is the

Managing Principal of The Holt Group LLC in Denver,

Colorado. James F. Butler III is a partner with Smith

Currie & Hancock LLP in Atlanta, Georgia.

private owner could in the event of a dispute. In the state

and local contracting process, state legislatures provide

the rules by which public owners may be sued. Many,

but certainly not all, states have enacted laws waiving

immunity for certain types of claims. Therefore, anyone

contracting with a public entity should pay close attention

to the terms of the agreement as well as any state or local

statutes governing suits against public entities.

Claim Procedures Must Be Followed

Where sovereign immunity is not a barrier to a claim

against a public owner, a contractor generally can bring

any claim against a public owner that it could assert against

a private owner.

2

The contractor, however, must pay careful

attention to contractual and statutory claim requirements.

Compliance with Notice Requirements

On essentially every public project, a contractor will be

required to provide notice to the owner prior to submitting

a claim. In many circumstances, failure to provide such

notice in strict accordance with the contract documents

and any applicable statutes or regulations could result

in the loss of the claim.3 The rst consideration of a

notice requirement is timing. Public contracts, like most

contracts on private projects, ordinarily require that a

contractor provide the owner with notice of a claim

within a set period of time.4 For example, a contract

may require that the contractor provide the owner with

written notice of a claim within twenty-one days of the

event giving rise to the claim. Where a contract is silent

on the timing of notice, however, the contractor must still

consider whether there are any statutes or regulations

that may impose a timing requirement.

5

For example, a

New York statute requires notice of claims on school-

construction projects be provided within three months

of the accrual of the claim.

6

Some jurisdictions may also

require a contractor to submit claims on public projects

within a set time period after substantial completion.7

In the absence of a contractual provision, statute, or

regulation, a contractor may still be required to provide

notice of a claim within a “reasonable” amount of time,

which may vary depending on the circumstances and

jurisdiction.

8

In short, contractors have to pay attention to

the time requirements for notice or risk losing their claim.

Contractors should also consider the adequacy of the

notice of the claim. What constitutes adequate notice is