On December 17, 2014, New York Governor Cuomo signed into law a bill to amend the New York Public Authorities Law, in relation to contractual claims and actions against the New York City School Construction Authority (“SCA”). The amendment adds an additional sentence to §1744(2) of the Public Authorities Law to provide that in the case of an action or special proceeding for monies due arising out of contract, accrual of such claim shall be deemed to have occurred as of the date payment for the amount claimed was denied.
Public Authorities Law §1744(2) is problematical to contractors engaged on SCA projects due to the three-month filing period from the “accrual of claims.” Courts have interpreted the three-month period to commence when the contractor’s damages are “ascertainable,” and “ascertainable” has been interpreted to mean “once the work is substantially completed or a detailed invoice of the work performed is submitted.” See C.S.A. Constr. Corp. v. NYC School Constr. Auth., 5 N.Y.3d 189, 800 N.Y.S.2d 123 (2005).
The failure to have a clear and precise point that determines when a claim accrues has led many contractors to lose a claim before it was denied by the SCA, or even before a contractor knew that the SCA disputed its claim. The purpose of the amendment is to establish an unambiguous point in time for the filing of a notice of claim against the SCA. Accordingly, the amendment establishes the accrual of a claim for notice of claim purposes as the point at which the claim is denied. The amendment will prevent the unintentional and unfair waiver of claims, and will reduce paperwork for both the SCA and its contractors.
The statute as amended brings §1744 of the NY Public Authorities Law into conformity with the similar notice of claim provisions of §3813 of the NY Education Law. Under §3813 of the Education law, the accrual date on any action or proceeding against a school district arising out of a contract shall be the date when payment was denied.
The amendment is effective only for SCA contracts signed on or after Dec 17, 2014. The text of NY Public Authorities Law § 1744(2) as amended can be seen here.