## Facts

- Tully Construction Co., Inc. served as general contractor on a City of New York Department of Sanitation garage project under a prime contract executed in 2000.
- In August 2003, Tully subcontracted with Schindler Elevator Corporation to furnish and install five elevators.
- The subcontract incorporated the prime contract’s Article 11, which governed delay-damages claims and required strict, periodic notice.
- Article 11.1.2 required, within 45 days after delay damages were first incurred (and every 30 days thereafter while incurred), verified statements detailing the amounts of delay damages with documentary support.
- Article 11.2 stated that failure to strictly comply with Article 11.1.2 would be deemed a conclusive waiver of all delay-damages claims arising from the condition.
- Schindler claimed it sustained delay damages due to project delays and sued Tully in 2010 for breach of contract seeking those damages.
- Schindler relied on letters and emails to argue it provided notice and that Tully had actual knowledge of the delays and claims.
- Schindler did not submit verified, itemized statements with documentary evidence within the timing and format required by Article 11.1.2.

## Issues

1. Whether Article 11’s delay-damages notice provisions, incorporated into the subcontract, operated as an express condition precedent requiring strict compliance.
2. Whether Schindler’s letters and emails satisfied the contractual notice requirements despite lacking verified damage statements and supporting documentation.
3. Whether Tully’s actual knowledge of the delays and claims excused Schindler’s noncompliance with the formal notice procedure.
4. Whether Tully’s alleged breach of the subcontract excused Schindler from complying with Article 11’s notice requirements.

## Decision

- The Appellate Division dismissed Tully’s appeal from the intermediate summary-judgment order because that appeal terminated upon entry of final judgment, but reviewed the issues on the appeal from the judgment.
- The court reversed the judgment entered after the nonjury trial and dismissed the complaint.
- The court held that Article 11 created an express condition precedent to recovery of delay damages and required strict compliance.
- The court found Schindler’s correspondence did not strictly comply because it lacked verified statements of amounts and was unsupported by documentary evidence.
- The court held that Tully’s actual knowledge did not relieve Schindler of its contractual obligation to serve proper notice.
- The court held that Tully’s alleged breach did not excuse Schindler’s noncompliance with the notice requirements under the circumstances presented.
- Costs were awarded to Tully.

## Legal Principles

- On appeal from a nonjury trial, the appellate court’s fact-review power is as broad as the trial court’s, while recognizing the trial court’s advantage in observing witnesses in close cases.
- When a construction contract contains a condition-precedent notice provision that specifies waiver consequences for noncompliance, strict compliance is required.
- Express conditions precedent must be literally performed; substantial performance is insufficient, and noncompliance generally waives the claim.
- Informal communications and general notice (including letters and emails) do not satisfy a contract requiring verified, itemized damage statements supported by documentation.
- A counterparty’s actual knowledge of delays and claims does not substitute for compliance with an agreed notice-of-claim procedure.
- An opposing party’s alleged breach does not necessarily excuse compliance with an express condition-precedent notice clause.

## Conclusion

The court enforced a subcontract’s incorporated delay-damages notice regime as an express condition precedent, holding that failure to submit timely verified, documented statements constituted a conclusive contractual waiver, unaffected by the general contractor’s alleged actual knowledge or alleged breach.


Schindler Elevator Corp. v. Tully Constr. Co., 139 A.D.3d 930 (N.Y. App. Div. 2d Dep’t 2016)