In re the Arbitration between the Board of Education & Wager Construction Corp.

333 N.E.2d 353, 37 N.Y.2d 283, 372 N.Y.S.2d 45, 1975 N.Y. LEXIS 1963
CourtNew York Court of Appeals
DecidedJuly 2, 1975
StatusPublished
Cited by96 cases

This text of 333 N.E.2d 353 (In re the Arbitration between the Board of Education & Wager Construction Corp.) is published on Counsel Stack Legal Research, covering New York Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re the Arbitration between the Board of Education & Wager Construction Corp., 333 N.E.2d 353, 37 N.Y.2d 283, 372 N.Y.S.2d 45, 1975 N.Y. LEXIS 1963 (N.Y. 1975).

Opinion

Chief Judge Breitel.

These are two separate appeals in proceedings to stay arbitration (CPLR 7503, subd [b]). The proceedings were brought by two boards of education in resisting demands for arbitration by building contractors with whom they had disputes. Each board contends that its contractor failed to comply with section 3813 of the Education Law, which requires that a verified written claim must have been presented to the board "within three months after the accrual of such claim”, before bringing any "action or special proceeding” against the board.

The principal issue is whether section 3813 applies to arbitration, notwithstanding that CPLR no longer classifies arbitrations as "special proceedings”, as had the former Civil Practice Act (§ 1459). If section 3813 is applicable, a further issue is whether , the contractors’ notices of claims were served upon the boards within three months after their respective claims accrued.

In the proceeding brought by the Ogdensburg Board of Education against the Wager Construction Corporation, the Appellate Division (Third Department) (45 AD2d 63) unanimously reversed a judgment at Special Term, held there was a failure to satisfy section 3813, and stayed the arbitration. In the proceeding brought by the Pearl River Board of Education against Gramercy Contractors, Inc., on the other hand, the Appellate Division (Second Department) (45 AD2d 935) unanimously affirmed a judgment at Special Term denying a stay of arbitration and holding that the statute was satisfied by the filing of timely notice of claims.

The order of the Appellate Division in the Wager proceeding should be affirmed and the order in the Gramercy proceeding should be reversed and the stay of arbitration granted. By repealing the classification of arbitrations as "special proceedings” under CPLR, the Legislature did not alter the application of section 3813 of the Education Law to claims against boards of education. As this court has twice held since the adoption of CPLR, timely notice of claim pursuant to section 3813 is a condition precedent to arbitration, as it is to a judicial action or proceeding. Respondents’ claims accrued when their alleged damages were ascertainable. In each case this was more than three months before service of the notice of claim on the board. The arbitrations should therefore be stayed.

The Ogdensburg Board of Education contracted with the [288]*288Wager Construction Corporation to erect a new physical education building. The contractor contends that the board’s delay in making the construction site available required revision of its construction schedule and caused it to incur substantially higher costs. The contractor first noted its grievance to the board’s architect by letter of August 12, 1971. By October 6, 1972, all but a small fraction of the work had been completed, and the contractor in a letter of November 6, 1972 to the architect itemized over half of its claim and estimated its remaining damages at over $65,000. The contractor submitted its entire delay claim on February 12, 1973, with the remaining damages itemized at $62,489, and when informed of the board’s reluctance to pay, served a notice of claim on March 10, 1973.

In the second proceeding, Gramercy contracted with the board for additions and alterations to a high school. It submitted three distinct claims in a letter of February 15, 1973 to the board’s architect. The first claim was for $10,000 balance due on a "semi-final” payment certificate accepted October 13, 1972, which had been withheld pending final payment on the contract. Also sought were expenses of $39,925.63 for extra work between July 14, 1971 and March 23, 1972, as a result of storm damage to the high school building. Finally, Gramercy charged $233,983.38 in additional costs to delays caused by the board’s architect and other prime contractors, incurred between September 7, 1971 and the completion of the project on April 10, 1972. Gramercy served a notice of claim on March 19, 1973, covering these three claims, and when the board rejected them, demanded arbitration on June 19, 1973.

Preliminarily, the applicability of section 3813 is properly determined by the courts rather than by the arbitrators. This is true at least in the absence of agreement to the contrary, an agreement not now involved and therefore not considered. If, as contended by the boards, compliance with section 3813 is a condition precedent to the right to arbitration, then the arbitrator cannot himself construe the statute and thus determine in the first instance his own jurisdiction (Matter of Board of Educ., Union Free School Dist. No. 7 [Heckler Elec. Co.], 7 NY2d 476, 481-482). On the other hand, of course, under a broad arbitration clause timely compliance with contractual notice provisions (sometimes characterized as "notice of claim” provisions), as well as various time requirements in grievance procedure, pose issues whose resolution [289]*289lies solely with the arbitrator (see Matter of Novelty Fabrics Corp., 1 AD2d 949, affd 2 NY2d 894, involving a commercial transaction; see, also, Matter of City School Dist. of City of Poughkeepsie, 35 NY2d 599, 606-607; Matter of Long Is. Lbr. Co. [Martin], 15 NY2d 380, 384-385, involving collective bargaining agreements, and in the instance of the Long Is. Lbr. case, interstate commerce).

As held by the court in the Heckler case (7 NY2d 476, 482-483, supra) compliance with section 3813 is a condition precedent to arbitration when a claim is lodged against a board of education. True, the statute by its terms applies to an "action or special proceeding”, and under CPLR, an arbitration is no longer classified as a "special proceeding” as it was under the former Civil Practice Act (compare CPLR 7502 with Civ Prac Act, § 1459; see, generally, 8 Weinstein-Korn-Miller, NY Civ Prac, par 7502.04). Nevertheless, the rationale for the Heckler rule remains decisive and indeed, since CPLR’s adoption, the rule has twice been reaffirmed by this court (see Matter of Central School Dist. No. 1, Town of Highlands v Double M. Constr. Corp., 34 NY2d 695, affg 41 AD2d 771; Matter of Board of Educ. of Cent. School Dist. No. 2 [Hanover Ins. Co.], 16 NY2d 673, affg 22 AD2d 936). Notably, the Heckler case in its reasoning did not depend solely upon the existence of the now repealed Civil Practice Act section (§ 1459).

The purpose of section 3813 of the Education Law is to give a school district prompt notice of claims "so that investigation may be made before it is too late for investigation to be efficient” (Matter of Board of Educ. [Heckler], 7 NY2d 476, 483, supra, citing Winbush v City of Mount Vernon, 306 NY 327, 333; cf., e.g., General Municipal Law, § 50-e). Applied to arbitrations, this purpose is equally well-served as it is when applied to actions and special proceedings. Indeed, judicial proceedings and arbitrations for enforcing claims against school districts and boards of education may be inextricable, as a practical matter. If, for example, a board of education refused to submit to arbitration, a special proceeding would be available to compel arbitration; and of course to enforce an award in arbitration. In short, even if an arbitration is not a "special proceeding” in the narrow judicial sense of the term, it is not divorced from all judicial special proceedings.

True, the court in Heckler

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333 N.E.2d 353, 37 N.Y.2d 283, 372 N.Y.S.2d 45, 1975 N.Y. LEXIS 1963, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-the-arbitration-between-the-board-of-education-wager-construction-ny-1975.