Notice of Claim Must be Given Before Bringing Contract Actions Against the State
Most people would agree that, if a state or the federal government breaches a contract, it should be subject to a civil action for breach of contract as if it were an individual or private company. The problem is that, like many of our laws, the concept that the King could do no wrong, i.e. sovereign immunity, was carried over to our system from the old English common law. Thus, if the states or the federal government chose, they could breach contracts with impunity. Of course, the problem with that approach in our capitalistic society is that, if governments could not be sued when it breached a contract, no one would be willing to work for the government and our city and state roads, public facilities, and government buildings would never be built.
In light of the foregoing, the states and the federal government have generally decided that, when they engage in commerce, they should be subject to lawsuits, but they have not completely levelled the playing field. In Connecticut, there used to be only one way to obtain permission to bring a lawsuit against the state, which was to file a claim with the state Claims Commission. In a nutshell, the Claims Commission process involves submitting a statement of acts to the Claims Commissioner in which you allege support for a specific legal cause of action, and, in your submission, you ask the Claims Commissioner for permission to sue the state. Originally, contractors performing work for the state had to follow this process if they were wrongfully denied payment. However, most contractors felt this process was too burdensome and discretionary to rely upon and the state’s ability to obtain competitive bids was affected.
In or about 1957, the state enacted legislation which made it easier for contractors to bring lawsuits against the state for claims arising out of public works construction projects. Today, Conn. Gen. Stat. § 4-61 provides that anyone who performs work for the state may bring a claim against the state in the Superior Court provided notice is given to the applicable department head within two (2) years of the acceptance of the subject project or the termination of the contract. Conn. Gen. Stat. § 4-61. In addition, a lawsuit must be brought seeking to enforce that same claim within three (3) years of the acceptance of the subject project or the termination of the contract. Alternatively, a contractor may bring a demand for arbitration, but the time limits for giving notice and filing the claim remain the same as stated above for a court action.
The state’s § 4-61 waiver of sovereign immunity still imposes greater obligations than would be necessary to sue a private company or an individual, but the current system is sufficient for the state to obtain competitive bids for its construction projects. The main differences between §4-61 and the rules that apply to everyone else are the time to commence a lawsuit and the notice requirement. Under Connecticut law, actions on written contracts may be brought up to six (6) years after the breach, but, as indicated above, claims against the state must be brought within (3) years. In addition, except as explained below, prior notice is not a jurisdictional requirement to file a lawsuit against an individual or private company – at least not in the construction context.
Initially, the state would use the notice requirement as a defense to meritorious claims, but subsequent legislative amendments and court decisions have made the notice requirement less of a burden for contractors to overcome.
In each chamber of the General Assembly, when the 1991 amendment was introduced, its sponsor stated that the notice requirement should be liberally construed so as not to defeat any claim in close cases. Representative Godfrey explained that notice would be sufficient if it communicates to the state the nature of the claim based on what is known at the time so that the state may attempt to resolve the problem short of arbitration. Senator Herbst explained similarly: The amendment requires a contractor to provide more information to the state in their notice of claim so that the state may attempt to resolve the problem short of arbitration.
(Internal citations and quotations omitted) C.R. Klewin Northeast, LLC v. State, 299 Conn. 167, 183. In addition, our Supreme Court stated that:
Although § 4-61 was reworded in 1991 to require somewhat greater detail as to claims, that rewording was designed to prevent ambushes, not to provide a vehicle to defeat valid claims, and it was accompanied by other changes to § 4-61 that gave the state greater power to seek documentation from contractors and more time in which to evaluate the documentation, lessening the need for a highly specific notice of claim. Furthermore, pursuant to the 1961 amendments, contractors are allowed limited time in which to give notice and to bring actions, ensuring that claims remain fresh. Finally, the legislature clearly intended that, in close cases, the scale tip in favor of affording the contractor the right to pursue its claim. This in turn promotes the policy objectives underlying § 4-61 by encouraging competitive bidding, resulting in greater quality construction and lower costs to the state.
Id. at 183-184.
Notwithstanding the foregoing, state departments may include extensive requirements for submitting claims in their contracts. For example, the Department of Transportation in a provision in its Standard Specifications, Section 1.11, which has onerous requirements for submitting a claim. The important point to remember, however, is that these requirements are contractual and are not jurisdictional.
The state cannot argue against a contractor’s claim on jurisdictional grounds merely because it does not satisfy all the elements of a contract. As long as the requirements of § 4-61 are met, a contractor may commence a lawsuit or an arbitration against the state. Once the lawsuit or the arbitration is commenced, the state’s ability to defend the claim by arguing that there was an alleged failure to comply with a contractual requirement will be subject to the same rules that apply to individuals and private companies.
If you should have any questions about bringing claims against the state, please give me a call at (203) 640-8825.
Scott Orenstein