Supreme Court of Alaska Tosses Contractor Claim for Failure to Timely Submit Notice

On May 1, 2020, the Supreme Court of Alaska issued a decision upholding the Alaska Department of Transportation's (ADOT) decision to deny a contractor's claim for additional compensation due to the contractor's failure to provide notice of its claim within the time frame required by the contract.

In State of Alaska, Dept. of Transportation and Public Facilities v. Osborne Construction Company, 2020 WL 2091831, Supreme Court No. S-17048, the Supreme Court reversed the Superior Court, which had reversed ADOT's decision based on the fact that ADOT had actual notice of the claim and was not prejudiced by the contractor's failure to provide timely notice per the contract terms.

While the contractor did provide a written claim, it did so after project completion. Based on the Contracting Officer's determination, the contractor's written claim was "at best was just under a year late and at worst over a year and four months late[.]"

In the decision, the Court focused almost entirely on the contract's 90-day requirement for submission of a written claim and did not substantively discuss the question of actual notice and the lack of prejudice to ADOT. Rather, the Court's analysis focused on the interpretation of the contract requirements. The issue of actual notice is addressed in a footnote, in which the Court simply states that it did not reach that issue "[b]ecause the terms of the contract clearly support [ADOT's] decision and bar Osborne's claim[.]"

In this case, the contractor submitted its formal claim more than a year after substantial completion of the project, which may have contributed to ADOT's decision to strictly enforce the contract's notice and claim procedures. Regardless, this decision confirms Alaska construction contractors should strictly follow the terms of the contract with regard to written notice and claim requirements, even if the project owner is well aware of the claim during the course of the project.