Geneseo Central School v. Perfetto & Whalen Constr. Corp., 417 N.E.2d 309 (N.Y. 1980)
A general contractual clause preserving rights and remedies “otherwise imposed or available by law” does not waive a school district’s right to assert Education Law § 3813’s statutory notice of claim requirements as a condition precedent to arbitration.
Summary
Geneseo Central School (the district) sought to stay arbitration demanded by Perfetto & Whalen Construction Corporation (the contractor), arguing the contractor failed to comply with Education Law § 3813’s requirement to file a written, verified notice of claim within three months of accrual. The contract between the parties contained a dispute resolution procedure and a clause stating that contractual rights and remedies would not limit other rights available by law. The Court of Appeals held that the general clause preserving other legal remedies did not waive the district’s right to assert the statutory notice of claim requirement, emphasizing that waivers of such statutory protections must be explicit or plainly inconsistent with the statute.
Facts
The Geneseo Central School District contracted with Perfetto & Whalen Construction Corporation for construction work. A dispute arose regarding additional compensation for increased costs due to changed conditions and delays. The contractor notified the district of its claim in a letter dated November 24, 1975. Following the contract’s dispute resolution procedure, the claim was referred to the project architect, who rejected it. The contractor then served a notice of claim under Education Law § 3813 on December 22, 1975. The school district did not adjust or pay the claim within 30 days, prompting the contractor to demand arbitration per the contract. The contract included a clause (7.6.1) stating that contractual rights would not limit other rights available by law.
Procedural History
The school district initiated a proceeding to stay arbitration, alleging the contractor failed to comply with Education Law § 3813. The trial court granted a permanent stay, finding the claim accrued on June 24, 1975, making the December 22 notice untimely. The Appellate Division reversed, holding that a contractual stipulation for notification of claims “within a reasonable time” superseded the statute’s temporal restriction, and deemed the reasonableness of the notice timeliness an issue for the arbitrator. The School District appealed to the New York Court of Appeals.
Issue(s)
Whether a general contractual clause preserving rights and remedies “otherwise imposed or available by law” waives a school district’s right to assert Education Law § 3813’s statutory notice of claim requirements as a condition precedent to arbitration.
Holding
No, because the contract language did not explicitly waive the statutory requirement. The clause stating that contractual remedies are “not a limitation of any duties, obligations, rights and remedies otherwise imposed or available by law” indicated an intent to preserve, not relinquish, statutory rights.
Court’s Reasoning
The Court of Appeals emphasized that Education Law § 3813 is designed to provide school districts with prompt notice of claims, allowing for efficient investigation. Compliance with this section is a condition precedent to arbitration unless explicitly waived. The court stated, “Consistent with this policy, a waiver is not to be presumed. The parties must either affirmatively agree that the statutory notice clause be inapplicable…or, at least, set out detailed procedures which are ‘plainly inconsistent with those contained in that section.’” The court found that section 7.6.1 of the agreement, which stated that the contractual “rights and remedies available thereunder shall not be a limitation of any duties, obligations, rights and remedies otherwise imposed or available by law,” was dispositive, as it was inconsistent with an intent to relinquish statutory rights. The court also clarified that the agreement for a “reasonable time” to file a claim did not enlarge the statutory period, given the subordination of contractual rights to the provisions of section 3813. The court referenced previous holdings, including Matter of Board of Educ. [Wager Constr. Corp.], 37 NY2d 283, 289, which held that the statutory notice of claim is required before the start of arbitration. The court concluded that the Appellate Division erred in finding a waiver and remitted the matter for a review of the facts, stating, “To say the least, it is inconsistent with an intent to relinquish statutory rights.”