1. NOTICE OF CLAIM – HOW TO AVOID THE TRAP© LAW OFFICES OF MICKEY BEISMAN 2015 1

2. DON’T PUT YOUR FOOT IN THE TRAP History: *Historically, whether a contractor gave an adequate notice of a potential claim was not a major issue with the NMDOT. *Historically, the NMDOT referred contractor claims to Claims Boards who were not interested in the legal aspects of notice. 2

3. HISTORY (CON’T) ● 2007 Specifications (Section 105.19)– The Contractor had to notify the Project Manager in writing of the intention to make a claim: ■ before beginning the work that is the subject of the Claim -- or – ■ within 30 days of an effective termination date. 3

4. HISTORY (con’t) THINGS HAVE CHANGED –DON’T PUT YOUR FOOT IN THE TRAP. THE 2014 SPECIFICATIONS HAVE ADDED SPECIFIC NEW REQUIREMENTS THAT CAN TRAP A CONTRACTOR INTO WAIVING HIS CLAIM. 4

5. 2014 NOTICE REQUIREMENTS Section 105.19 of the 2014 Specifications requires the Contractor to provide: * a contemporaneous statement of estimated damages before beginning the work on which the Claim is based; 5

6. * a revised schedule when Contractor intends to seek time, delay damages, a reduction in liquidated damages ETC. TRANSLATION: AN ESTIMATE OF DAMAGES AND A REVISED SCHEDULE ARE ALWAYS REQUIRED IN A CONTRACTOR’S NOTICE OF CLAIM 6

7. TIMING OF NOTICE REQUIREMENTS Section 105.19 of the 2014 Specifications has strict time requirements for a Notice of Claim. * The Contractor must submit his Notice of Claim w/in 7 days of discovering the condition giving rise to the Claim --or— w/in 7 days of receiving notice of a differing site condition from the PM 7

8. TIMING OF NOTICE REQUIREMENTS (CON’T) -- or – w/in 30 days of the effective date of a convenience termination. RESULT OF NOT MEETING NOTICE OF CLAIM REQUIREMENTS: CONTRACTOR’S CLAIM IS WAIVED. 8

9. LEGAL SIGNIFICANCE OF NOTICE OF CLAIM REQUREMENTS Legal concept – Exhaustion of Administrative Remedies. Means you have to exhaust any process set up by an agency – in this case the NMDOT Specifications. 9

10. LEGAL SIGNIFICANCE (CON’T) Legal Significance: Section 105.19 of the 2014 Specifications states that if you do not comply with the requirement that a Notice of Claim contain a revised schedule: “failure to include a revised schedule shall render the notice of intent to Claim incomplete.” 10

11. LEGAL SIGNIFICANCE (CON’T) What does it mean if your Notice of Claim is “incomplete”? ● The NMDOT can legally refuse to consider your Claim if your Notice of Claim is not complete because this would mean you had failed to exhaust the NMDOT’s administrative remedies in its 2014 Specifications. 11

12. LEGAL SIGNIFICANCE (CON’T) ● If you take your claim to Court, the Court can refuse to hear it because it lacks “subject matter jurisdiction” due to your failure to exhaust your administrative remedy. In other words, the court has to know that the dispute is “ripe” and the fight is over at the agency level. 12

13. Why Does Submitting A Complete Notice of Claim Matter? Submitting a complete Notice of Claim matters because of the options given to the NMDOT Secretary when the Contractor appeals the denial of a Claim. 13

14. THE SECRETARY’S CHOICES Under Section 105.19 in both the 2007 and the 2014 Specifications, the Secretary has two choices when the Contractor appeals the denial of a Claim: 1. Refer the Claim to a Claims Board; -- or -- 2. Provide a written decision on the rejection of the Claim. 14

15. THE 2014 SPECIFICATIONS Although the 2014 Specifications (105.20.2) have the same language as the 2007 Specifications (105.20) about the option of the NMDOT Secretary to refer a Claim to a Claims Board for a recommendation, the Secretary is not doing this. 15

16. IMPORTANCE OF LEGAL ISSUES To date, the Secretary appears to have agreed with every decision to deny a Contractor’s claim, thereby forcing a Contractor to accept whatever the NMDOT is willing to pay or to go to Court. 16

17. IMPORTANCE OF LEGAL ISSUES (CON’T) ● When Claims were heard by Claims Boards, legal issues, such as complying with the requirements for a Notice of Claim were not a focus of the NMDOT or the Claims Boards - BUT NOW THINGS HAVE CHANGED. 17

18. THE CHANGES 1. Under the 2007 Specifications, you only had to notify the PM in writing before beginning the work on which the Claim was based --or— w/in 30 days of the effective date of a convenience termination. 18

19. THE CHANGES (CON’T) NOW under the 2014 Specifications, you have to notify the PM w/in 7 days of discovering the condition giving rise to the Claim – or - receiving notice from the PM of a differing site condition --or— w/in 30 days of the effective date of a convenience termination. 19

20. THE CHANGES (CON’T) 2. Under the 2007 Specifications, there were no specific requirements of what your notice to the PM must include. NOW under the 2014 Specifications, you are required to include a statement of estimated damages and a revised schedule. 20

21. THE CHANGES (CON’T) 3. Under the 2007 Specifications, the Contractor waived his right to a Claim if he did not afford the NMDOT proper facilities to keep account of the actual costs of a Claim. The NMDOT rarely, if ever, enforced this requirement. 21

22. THE CHANGES (CON’T) NOW the NMDOT is enforcing this requirement under the 2007 Specifications. 22

23. HOW TO AVOID THE TRAP OF A NOTICE OF CLAIM 1. Know the requirements of a Notice of Claim. 2. Train your organization about the requirements for a Notice of Claim. 3. Have a consistent philosophy about filing a Notice of Claim that applies to all projects. 23

24. THE REQUIREMENTS OF A NOTICE OF CLAIM If you are under the 2007 Specifications: 1. Notify the PM in writing of your Notice of Claim (intention to make a Claim): b/f beginning work on which the claim is based – or – w/in 30 days of the effective date of a convenience termination; AND 2. Provide proper facilities to the NMDOT to keep account of actual costs of your Claim. 24

25. THE REQUIREMENTS OF A NOTICE OF CLAIM (CON’T) Providing proper facilities to the NMDOT is an issue that has never come up. Therefore, to be sure that you comply with providing the proper facilities, when you submit your Notice of Claim, you should include a written request that the NMDOT clarify what it would consider to be the proper facilities for you to provide. This is true for Notices of Claim under both the 2007 and the 2104 Specifications. 25

26. THE REQUIREMENTS OF A NOTICE OF CLAIM (CON’T) If you are under the 2014 Specifications: 1. Notify the PM in writing of your Notice of Claim (intention to make a Claim): ● w/in 7 days of discovering the condition giving rise to your Claim or ● w/in 7 days of receiving notice of a differing site condition from the PM or ● w/in 30 days of the effective date of a convenience termination. 26

27. THE REQUIREMENTS OF A NOTICE OF CLAIM (CON’T) 2. Include and IDENTIFY a statement of estimated damages in your Notice of Claim. 3. Include and IDENTIFY a revised schedule in your Notice of Claim AND 4. Provide proper facilities to the NMDOT to keep account of actual costs of your Claim. 27

28. TRAINING YOUR ORGANIZATION ● Your organization is the key to your success. ● Everyone in your organization should have access to the same information. ● A training session can be done in a couple of hours one morning. ● A training session can bring up questions that are better answered at the beginning than during a project. 28

29. HAVE A CONSISTANT PHILOSOPHY Decide your criteria for submitting a Notice of Claim – remember you are under a time pressure: ● what do you do if there are defective drawings? Differing site condition? NMDOT interference? ● what do you do to document the condition and who is in charge of doing this? 29

30. HAVE A CONSISTENT PHILOSOPHY (CON’T) ● How is the 7 or 30 day deadline going to be kept track of? Who is going to do this? Are several people going to be aware of the deadline?Will there be a meeting before the deadline is up to decide whether to send a Notice of Claim? ● How long will you give the NMDOT to say in writing that a Change Order will be issued? Don’t be misled by constant conversations. 30

31. THINGS TO REMEMBER ABOUT A NOTICE OF CLAIM ● a Notice of Claim (intention to make a Claim) is SEPARATE from a Claim. If you simply submit a Claim with no Notice, your Claim will be defective and under Section 105.20 of the 2007 and 2014 Specifications, the NMDOT is entitled to dismiss your Claim. It is highly unlikely that you would get a different ruling from a Court. 31

32. THINGS TO REMEMBER ABOUT A NOTICE OF CLAIM (CON’T) ● There is no disadvantage to you in submitting a Notice of Claim and not following through by submitting a Claim. If you do decide to file a claim, though, you are protected if you have filed a proper Notice of Claim. Claim deadlines: 2007 – w/in 60 days after final acceptance. 2014 – w/in 30 days after completion of work but in no case more than 30 days after receiving NMDOT’S proposed final estimate. 32

33. FINAL POINTS It is almost always a better business decision to work things out, but you must be cautious when negotiating that you do not miss deadlines or fail to submit required documents that will protect your rights on a project. 33