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County of Hudson v. State of New Jersey, Department of Corrections

A-3511-05T2 (N.J. Super. App. Div. 2007) (Unpublished)

CONTRACTS; GOVERNMENTS; CLAIMS — Even a county, in making a claim against the State of New Jersey, must be bound by the ninety day notice of claim rule under the Contractual Liability Act.

Pursuant to the County Correctional Policy Act, a county contracted with the New Jersey Department of Corrections (DOC) to reserve 50 beds for use by the DOC in each of two new county correctional facilities to house state prisoners for the DOC. In return, the DOC agreed to make per diem payments to the county at a rate specified in the contract. The payments were made on a monthly basis pursuant to two contracts executed in 1987 and 1988. In 2003, the DOC notified the county that payments made for July 1, 2001 through March 31, 2003 were calculated using a per diem rate. The DOC advised the county it would make the retroactive adjustment as an incorrectly high credit against monthly payments during the following year. In a letter received by the DOC on September 4, 2003, the county asserted that it has been underpaid by the DOC for that same period. Ultimately, on September 21, 2004, the county filed a complaint alleging breach of contract. The DOC answered, and filed a motion to dismiss asserting that the county failed to file a timely claim. The lower court granted DOC’s motion to dismiss, holding the county did not file a timely notice of claim, thus the entire action was barred by the Contractual Liability Act (CLA). The merits of the county’s claim were not address by either court.

On appeal, the Appellate Division held that the CLA requires a party contracting with the State, even a county, to promptly notify the State in writing of any situation or occurrence which may potentially result in the submission of a claim against the State. A notice of claim for breach of contract, express or implied in fact, must be filed with the contracting agency within 90 days after the accrual of such a claim. The accrual of a claim occurs on the date on which the claim arose. The accrual date of claims based on monthly payments made pursuant to contracts governing the housing of DOC prisoners in county facilities accrues every time the State does not pay the correct amount. The Appellate Division determined that because the county did not give the DOC notice of any contractual claim until September 4, 2003, all claims that had accrued prior to June 6, 2003 were barred. However, the county could pursue claims accrued on or after June 6, 2003.

The DOC further argued that the letter it received on September 4, 2003 failed to give adequate notice. According to the New Jersey statute governing such notices, adequate notice must be given to the contracting agency and must include the name of the claimant, the nature of the claim, the specific reasons for making the claim, and the total dollar amount of the claim, if known. The Appellate Division determined that the letter received on September 4, 2003 included all of the information required to provide adequate notice. While the letter did not include an express demand for future payments in the full amount, the Appellate Division deemed that such a demand was implicit in the notice. Further, the Appellate Division held that while the statute lists express requirements, it does not require that a notice be in any specific language or form.

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