July 12, 2005
Suppose you're a contractor whose retention funds are being improperly withheld by a government entity, and you want your money. Or maybe you're a government entity that just received a claim notice for breach of contract. What do you do?
The first thing to do is to know your rights under the Government Claims Act. This law requires anyone who has a claim for damages against a public entity in California to present a written claim to the entity before a lawsuit may be filed. Otherwise, the right to sue can be forfeited altogether.
Like most laws, the Government Claims Act can be complicated. But the main things to know are: (1) the deadline to present a claim; (2) what the claim must say; (3) how the claim must be presented; (4) how the entity must respond, and (5) when to file a lawsuit.
First, the deadlines. If the claim is related to death, personal injury or property damage, the claim must be presented within six months after the cause of action accrued. All other claims - and most contract claims fall into this category - must be presented within one year after the cause of action accrued. Note, however, that sometimes it is unclear exactly when a cause "accrued," so a claimant should never wait too long to act.
To be valid, the claim must include: (1) the names and addresses of the claimant and the entity; (2) the date, place and circumstances of the incident; (3) a general description of the damages; (4) the names of the entity's employees who caused the damage (if known); (5) the signature of the claimant or representative, and; (6) if the claim is for less than $10,000, the amount claimed and the computation; if the amount exceeds $10,000, no dollar amount should be stated. If the entity has its own claim form, that form must be used.
Satisfying the delivery requirement can be tricky. The claim must be presented by either: 1) delivering it to the clerk, secretary or auditor of the entity, or; 2) mailing it to the clerk, secretary, auditor, or to the governing body at its principal office. This may sound simple, but it can trap the unwary. The statutory officers can be difficult to identify or locate (try calling a large county and asking for the "secretary"). And, if the above requirements are not strictly complied with, then the claim is invalid unless the claimant can prove the claim was actually received by a statutory officer within the time period.
Once the claim is presented, the entity has 45 days to "allow," "allow in part," or "reject" the claim. If the entity takes no action by the 45th day, the claim is deemed rejected on the 45th day. The entity waives any defense based on timeliness if it does not give written notice, by the 45th day, that the claim was untimely and is being returned without further action. And, the entity also waives any defense based on the insufficiency of the claim due to a defect unless the entity gives written notice, within 20 days after the claim is presented, stating that the claim is insufficient and describing the defect. Once an entity gives notice that a claim is insufficient, it may not act on the claim for 15 days thereafter.
If the entity "allows" the claim or any portion of it, and the claimant accepts, the claimant may not sue the entity on whatever portion of the claim was allowed and accepted. If the entity, in writing, rejects the claim or any portion of it, the claimant has six months from the rejection notice to file a lawsuit. If the entity gives no written notice by the 45th day, the claimant has two years from the 45th day to file a lawsuit.