In Westcon Construction Company v. County of Sacramento, (— Cal.Rptr.3d —, 2007 WL 1620763, Cal.App. 3 Dist., June 6, 2007), a California Court of Appeal considered the issue of whether the time period to submit a claim under the Government Claims Act was tolled while a contractor attempted to resolve a related claim submitted to a county under the Public Contract Code. The Court of Appeal held that the one-year period for submitting a contract claim under the Government Claims Act was not tolled while the parties attempted to resolve the related claim under the Public Contract Code.
Facts
The County of Sacramento (“County”) awarded Westcon Construction Company (“Westcon”) a contract to construct a security fence in August 2000. After Westcon encountered delays and changes to the project, it requested extensions on the completion date and additional compensation for the project. Westcon requested final inspection of the project on May 15, 2001, and gave County notice of final completion on June 14, 2001. At that time, Westcon informed County that it had performed over $300,000 in additional work on the project. County recorded a notice of completion for the project on September 6, 2001. However, on October 2, 2001, Westcon again informed County that $300,000 was outstanding and Westcon indicated that it would be filing a claim for finance charges. Westcon also requested that the parties set a time and place to meet to discuss the matter. County informed Westcon that most of the construction delays were the result of contractor-related issues but it offered to review any of Westcon’s claims that had been caused solely by County.
On November 12, 2001, Westcon submitted to County a log for the project. In response, County acknowledged that, while some items on the log were undisputed, County had already rejected other items. County asked for additional adequate documentation so that it could review the disputed claims. County and Westcon met on December 13, 2001. County again insisted that Westcon provide it with a firm claim amount and documentation in support of the claim. In March 2002, County informed Westcon that all the work was complete, that the one-year guarantee period had begun, and that it would release a $5,000 retention amount. County discharged the final payment to Westcon on March 26, 2002. Westcon sent a packet of information on April 18, 2002, supporting its claim to the County engineer in charge of the project. County issued a final acceptance of the project on July 16, 2002. Westcon learned in the spring of 2003 that County claimed that it never received the packet of information and Westcon re-sent the claim packet on June 9, 2003. The County rejected Weston’s claim on July 1, 2003.
Westcon submitted a Government .Claims Act claim for $353,926.04 on December 30, 2003. The County rejected the claim as untimely. Westcon filed a lawsuit against County on March 17, 2004. The trial court granted summary judgment in favor of County.
Decision
Westcon argued on appeal that the period for submitting its Government Claims Act claims was tolled while the parties attempted to resolve Westcon’s Public Contract Code claim. The Court of Appeal rejected this argument and affirmed the trial court’s decision.
Before a lawsuit may be filed against a public entity, the person or organization must present a claim to the public entity in the form required by the Government Claims Act. A claim against a public entity for breach of contract must be submitted within one year of accrual of the cause of action. Westcon claimed that the one-year period was tolled, or delayed, because it was attempting to resolve a Public Contract Code claim with County. Westcon claimed that its Public Contract Code claim was not resolved until July 1, 2003, when County expressly rejected the claim. The Court of Appeal disagreed.
Under Public Contract Code section 20104.2 construction claims not exceeding $375,000 must be presented by a contractor to a local public entity in writing and the contractor must include all the documents necessary to substantiate the claim. The claim must be filed “on or before the date of final payment.” If the claim is for more than $50,000, the local agency must either respond in writing within 60 days or request additional documentation within 30 days. If such additional documentation is requested, it must be provided upon mutual agreement between the parties. After the documentation is received, the local agency has to respond to the claim within 30 days or within the same amount of time that it took the claimant to produce the documentation, whichever is greater. The claimant may then demand a “meet and confer conference.” If the matter is still not resolved, the claimant may file a claim under the Government Claims Act. The period for submitting a claim will be tolled “from the time the claimant submits his or her [Public Contract Code claim] until the time that claim is denied as a result of the meet and confer process, including any period of time utilized by the meet and confer process.”
Westcon claimed that either its October or November 2001 letter constituted a claim under the Public Contract Code. The parties then met in December 2001 to resolve the claim. Westcon contends that the claim was not formally rejected until July 2003 and that it filed its Government Claims Act claim in December 2003, which was within one year of the County’s rejection. The court rejected Westcon’s contention.
The contract between Westcon and County provided that “tender of final payment shall constitute denial by the County of any unresolved claim of the Contractor not specifically excepted by the County.” The court concluded that, due to the terms of the contracts, “upon payment by the County and receipt by Westcon of the final payment in March 2002, all remaining claims of Westcon had effectively been denied by the County.” At the time the final payment was made, “any tolling of the one-year period for filing a Government Claims Act claim ended.”
The court further found that Westcon did not substantially comply with claim-filing requirements of the Government Claims Act by submitting the packet of documents to County on June 9, 2003. Westcon claimed that using the July 22, 2002, project completion date as the date of accrual, its claim was timely when it submitted the packet of documents in June 2003. While it is true that the Government Claims Act only requires “substantial compliance” with its claims presentation requirement, Westcon did not substantially comply. Government Code section 915 requires that a claim against a public entity must be “presented by either ‘delivering it to the clerk, secretary, or auditor’ of the entity, or ‘mailing it to the clerk, secretary, auditor, or to the governing body.'” Notice to a subordinate employee is not sufficient to meet this requirement. Here, Westcon delivered the packet of documents to a subordinate employee, the county engineer in charge of the project, and not the clerk, secretary, auditor, or governing board of the County. Also, Westcon did not show that the engineer notified County of the claim. Therefore, Westcon failed to show that is substantially complied with the notice requirement.
The court concluded that Westcon’s December 2003 Government Claims Act claim was untimely and that its submission of documents in June 2003 to the engineer did not satisfy the Government Claims Act because it was not served on the proper entity. Accordingly, the court upheld the trial court’s grant of summary judgment in favor of County.