Commercial Division Blog

Posted: April 5, 2014 / Categories Commercial, Contracts, Arbitation, Mediation and Other ADR, Motion to Dismiss; Motion for Judgment on the Pleadings

Compliance with Notice and Cure Provision Condition Precedent to Bringing Suit

On March 28, 2014, the Fourth Department issued a decision in Accadia Site Contracting, Inc. v. Erie County Water Authority, 2014 NY Slip Op. 02194, affirming the dismissal of a breach of contract claim for failure to provide notice and an opportunity to cure.

In Accadia Site Contracting, the plaintiff sought to excuse its failure to perform a condition precedent to bringing a lawsuit: notice of the breach and an opportunity to cure the breach. The Fourth Department affirmed the dismissal, explaining:

the court properly granted defendant's motion on the ground that plaintiff failed to satisfy a condition precedent. A condition precedent is an act or event, other than a lapse of time, which, unless the condition is excused, must occur before a duty to perform a promise in the agreement arises. Here, paragraph 10.05 of the contract mandated that plaintiff provide the project engineer with "[w]ritten notice stating the general nature of each Claim, dispute, or other matter" within 20 days of the event giving rise to the claim. It is well settled that contract clauses that require the contractor to promptly notice and document its claims made under the provisions of the contract governing the substantive rights and liabilities of the parties are conditions precedent to suit or recovery. . . . .

Plaintiff further contends that it was excused from compliance with the notice and reporting requirements of paragraph 10.05 based on defendant's breach of the contract; that such compliance was prevented or hindered because of misconduct by defendant; and that such compliance would have been futile. Those contentions are unavailing. First, it is well settled that a party's obligation to perform under a contract is only excused where the other party's breach of the contract is so substantial that it defeats the object of the parties in making the contract, and plaintiff failed to raise a triable issue of fact whether defendant's actions defeated the parties' objectives in entering into the contract. With respect to plaintiff's remaining two contentions, we conclude that there is no evidence to support plaintiff's contentions that defendant's misconduct frustrated its ability to comply with the applicable notice provision or that notice to the engineer would have been futile. We note in any event with respect to plaintiff's second contention that, although it is undisputedly the rule that one who frustrates another's performance cannot hold that party in breach, plaintiff failed to raise a triable issue of fact whether its performance with the notice and reporting requirements was prevented or hindered by defendant's alleged misconduct.

(Internal quotations and citations omitted) (emphasis added).

This decision not only shows the general enforceability of notice and cure provisions, it shows the unwillingness of courts to accept pro forma excuses for failure to comply with those provisions.