Attorney's Column
Appellate Court Protects Downstream Beneficiary Against Improper Uses of Statutory Trust Funds
By THOMAS H. WELBY, P.E., ESQ., and GREGORY J. SPAUN, ESQ.
It is well known in the construction industry that contracts almost universally contain provisions requiring that a contractor provide notice to the other party to the contract when certain events arise, such as a change order, a delay, a dispute, or a claim. What is not as well-known are the myriad of municipal entities to which you have to give additional, separate notice of a claim pursuant to a statute—regardless of whether or not your contract provides for giving such notice. As an appellate court reminds us in N&P Engineering, Architecture & Land Surveying, PLLC v Ridge Fire Department, the failure to timely and precisely comply with these statutory provisions is often fatal.
Background
In September of 2018, N&P Engineering, Architecture and Land Surveying entered into a contract with the Ridge Fire District to provide engineering services for the construction of a new addition to its firehouse. N&P performed work for the district through 2022. However, the district stopped remitting regular payment on N&P’s invoices in July of 2020, and only made limited payments thereafter, in response to N&P’s threats to cease work. Ultimately, N&P was owed $209,189.86
In March of 2023, negotiations between the parties regarding the outstanding balance broke down, and N&P served a Notice of Claim on the Ridge Fire Department (as opposed to the district, with which it contracted) seeking to collect the past due amounts. In the contractual Notice of Claim, N&P alleged that the department failed to pay invoices ranging from July of 2020 through September of 2022. Neither the district nor the department responded to the Notice of Claim, and N&P commenced suit against the department two months later.
In response to the lawsuit, the department moved to dismiss N&P’s claims, alleging that it failed to timely serve a proper Notice of Claim on the district under Section 180 of the Town Law, which requires that a Notice of Claim be served upon a fire district within six months of the accrual of the claim, and a lawsuit on that claim be commenced within 18 months of that accrual—relatively short time periods. The department also alleged that the Notice of Claim was improperly verified since it was verified in the signer’s personal capacity, and not as a member of N&P.
N&P opposed the motion, arguing that service was proper on the district because the department and the district shared the same Secretary, and in serving the department’s Secretary, they also served the district’s Secretary. As to the accrual of the claim, N&P argued that as there was still work to be performed, and as no party declared a default or otherwise sought to terminate the contract, the time periods set forth in Section 180 had not begun to run. N&P also pointed to the first formal rejection of its claim as being the motion to dismiss its lawsuit in July of 2023, and argued that such date was the accrual date for its claims. N&P further argued that regardless of the above, the district’s repeated, empty promises of payment in order to forestall a timely filing by N&P should prevent it from relying on the statute. Finally, N&P cross-moved, in the alternative, to file a late Notice of Claim against the district, and to amend the caption to reflect the district as the defendant. In opposition to the cross-motion, the district argued that the court did not have the authority to waive any non-compliance with the Notice of Claim requirement.
Decision
The motion court granted the motion to dismiss, and denied the cross-motion to serve a late Notice of Claim. In doing so, the motion court held that it was without authority to excuse the non-compliance with the requirements of Section 180 and, because the verification of the Notice of Claim in the signer’s individual capacity was defective, such required the complaint to be dismissed. The motion court also noted that in light of its determination, it did not need to address any other arguments. N&P appealed, and the appellate court affirmed the decision. However, instead of addressing the verification argument, the appellate court held that serving and naming the department, and not the district, was fatal to the Notice of Claim—and the lawsuit itself—because it had no authority to excuse the non-compliance with the statute.
Comment
New York municipal agencies enjoy the protection of various Notice of Claim requirements. Many of these are found in a variety of statutes, but some are found unexpectedly in municipal charters, and in other authorities. Unfortunately, the terms of many of these statutes vary, so a contractor is left with no general rule as to when, and how, to file a Notice of Claim. Regrettably, the failure to comply with the “when” and “how” provisions of these requirements is often fatal as many of these statutes do not have savings clauses, which would allow a court to permit the service of a late (and compliant) Notice of Claim. In fact, many meritorious claims meet their demise on this technicality, all to the detriment of the contractors who did nothing but perform good work, and then exhibit flexibility in working with the municipal entity as to payment. If there is any hard-and-fast rule to be gleaned from these myriad of Notice of Claim requirements, it is that a contractor should consult with experienced construction counsel promptly once a claim arises so that its interests can be best protected from these landmines.
About the authors: Thomas H. Welby, Esq., P.E., is General Counsel to the CIC and the BCA, and founder Senior Counsel to Welby, Brady & Greenblatt, LLP. Gregory J. Spaun, Esq., is General Counsel to the Queens and Bronx Building Association and a partner with the firm.
Published: March 17, 2026.