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When Contractual Claim Requirements Are Met, Government Code Claim Unnecessary
Construction Practices Newsletter
The California statutory procedure for claims against local public entities under the Government Code is an alternative to, rather than in addition to, any contractual procedure within the contract between the contractor and the public entity. In other words, if the contractor satisfies the contractual claim requirements, then the submission of a Government Code claim is unnecessary unless the contract expressly requires the same.
The Arntz Builders v. City of Berkeley (2008) 166 Cal.App.4th 276 decision should create less uncertainty for contractors asserting claims against the owners of local public works projects. Where the prime contract establishes a protocol for the submission of claims, compliance with the applicable contractual provisions obviates the need to present a separate Government Code claim before filing suit unless the contract expressly states otherwise.
In Arntz, the general contractor on a project to restore and expand a library owned by the City asserted claims against the City for additional compensation and time extensions. After submitting a claim against the City pursuant to the claim procedures under the prime contract, the contractor sued the City for breach of the contract. The City asserted an affirmative defense that the complaint was barred by the contractor's failure to comply with the Government Claims Act (Gov. Code, sections 900 et seq.), specifically the failure to submit a statutory claim pursuant to Government Code sections 905 and 910.
The case proceeded to trial on the issue of whether the contractor complied with any applicable Government Code claim requirements. The trial court found that the contractor was required to submit a timely statutory claim, in addition to complying with the contractual claim procedures, in order to assert a valid cause of action against the City. Because the contractor had failed to submit a Government Code claim under section 910, its complaint was barred under section 945.4 (providing that, where a Section 910 claim is required, such a claim must be presented to and rejected by the local public entity before the claimant is entitled to file suit). The contractor appealed.
The appeals court reversed the trial court's decision on three grounds. First, in construing the express statutory language permitting a local public entity to include claim presentation procedures in its contracts, namely sections 930.2, 930.4 and 930.6, the court found that contractual claim procedures will exclusively govern claim presentation unless the contract expressly states that a Government Code claim also is required.
Second, in examining the legislative history underlying the statutory scheme permitting a local public entity to include claim presentation procedures in its contracts, the court found a legislative intent to authorize the creation of contractual claim procedures that are parallel with, instead of sequential to, the Government Code claim procedure under sections 905 and 910. Put differently, where contractual claim procedures are specified and complied with, a further, separate Government Code claim is not necessary.
Finally, the court noted the policy and common sense reasons supporting its holding. The fundamental purpose of the claim presentation statutes – to provide a public entity with an early opportunity to investigate, analyze and, as applicable, resolve claims before litigation is filed – is fully served by appropriate contractual claim procedures. To require an additional Government Code claim would impose an unnecessary burden on the claimant, while offering no additional benefit to the public entity and extending the claim process.
The court stopped short of precluding a public entity from requiring the submission of a statutory claim as part of its contractual claim procedures, thus leaving public entities with the flexibility to tailor contractual claim procedures to meet their individual needs. Where a public entity wishes to mandate submission of a Government Code claim, however, the contract must specifically so provide. Summarizing its holding, court stated that "if a local entity contract includes a claim procedure, that procedure exclusively governs the claims to which it applies unless the contract expressly requires the presentation of a statutory claim as well." (Emphasis in original.)
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