In Arntz Builders v. City of Berkeley, (— Cal.Rptr.3d —, 2008 WL 3893218, Cal.App. 1 Dist., Aug. 25, 2008), a California Court of Appeal considered a city’s assertion that it could not be sued unless the plaintiff had previously filed a claim against it as mandated by the plaintiff’s contract with the city, and had also filed a statutory claim as mandated by the Government Code.
The court ruled that those two procedures are intended to be parallel, not sequential, and the claims procedure prescribed by the contract therefore satisfied the requirements of the Government Code. The plaintiff could therefore sue the city after filing only the contractually mandated claim.
Facts
In 1999, Arntz Building (“Arntz”) entered into a contract with the City of Berkeley (“City”) for the restoration and expansion of the Berkeley Central Library.
The contract provided that in the event Arntz disagreed with City decisions about work to be performed, payment, time extensions and compliance with contract procedures, “the Contractor’s sole and exclusive remedy is to file a claim in accordance with this paragraph.” That paragraph spelled out a several-step process of notifying the City of the dispute, awaiting a determination, appealing it, and awaiting a “final determination” of the appeal before filing a lawsuit.
Over the next several years, several disputes arose between Arntz and the City over costs and timetables which were not resolved through the contractual claims process. In 2003, Arntz filed suit against the City alleging breach of contract and negligence. The City responded that Arntz’ suit was barred because Arntz had not filed a claim pursuant to Government Code Section 910, which states that a local government agency is entitled to receive a written claim against it prior to the filing of a legal action. The trial court ruled that Arntz’ claims under the terms of its contract did not satisfy the demands of Section 910 and its lawsuit against the City was therefore barred. Arntz appealed.
Decision
The question before it, the court said, was whether a claimant, having complied with a contractually mandated claims procedure, was still required to comply with the statutory requirements of Section 910 before filing a lawsuit. The court reviewed the history of the law on the subject, and the language of Sections 910 and 930, which allows for a contractual claims procedure.
The laws stemmed from a 1959 report of the California Law Revision Commission recommending an overhaul of the government claims laws and procedures, the court noted. The report recommended a statute requiring that local governments receive written notification of claims prior to being sued, but also that entities be permitted to “waive by contract compliance with the claims statutes as to causes of action founded upon express contract.” Subsequently, the statue was enacted specifying how claims must be submitted, but with exceptions, including “alternative claims procedures provided for by contract or ordinance.” That history and language, the court said, “supports the conclusion that the contractual claims procedure was intended to provide an alternative to, rather than an addition to, the statutory claim.
When agreeing to a contract, the court said, a public entity can include in the contract any reasonable requirement it deems necessary to accomplish its purpose. “From a practical standpoint, the imposition of an obligation to present a second, statutory claim would serve only to burden the claimant and protract the claims process while providing no additional benefits to the public entity,” the court said. Therefore, the court held, if a local entity contract includes a claims procedure, that procedure exclusively governs the claims to which it applies unless the contract expressly requires a statutory claim as well.
Having complied with its contractual claims obligations, Arntz should have been allowed to proceed with its lawsuit. The trial court’s contrary judgment was reversed and the matter remanded for further proceedings.