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Contribution and Indemnification Unavailable in Breach of Contract Action; Notice of Claim Requirement Under Education Law Never Triggered by Denial of Payment

In a complicated breach of contract action arising out of construction projects for defendant school district, the Second Department determined contribution and indemnification were unavailable for purely economic loss from breach of contractual obligations (CPLR 1401, 1403, 3019).  In addition, the Second Department determined that the need to file a notice of claim pursuant to Education Law 3813 was never triggered by a denial of payment.  On the notice of claim issue, the Second Department wrote:

Education Law § 3813(1) requires a party to serve a notice of claim upon a school district within three months after the accrual of such claim as a condition precedent to the commencement of an action …. Claims arising out of a breach of contract accrue when “payment for the amount claimed was denied” (Education Law § 3813[1]). A denial of payment is only deemed to occur “upon an explicit refusal to pay” or when a party should have viewed its claim as having been constructively rejected …. Where no express or constructive denial of payment has been made, the obligation to serve a notice of claim is not triggered…. Here, the District failed to demonstrate that it expressly or constructively denied payment to PGA for its continued work on the projects. Thus, the District did not establish its prima facie entitlement to judgment …based upon PGA’s failure to serve a notice of claim in accordance with Education Law § 3813(1)… .  Capstone Enters of Port Chester, Inc v Board of Educ Irvington Union Free Sch Dist, 2013 NY Slip Op 03448, 2nd Dept, 5-15-13

 

 

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