September 2009

In This Issue

• Important Time Limit for Filing Against the State
• What Proof is Required to Cover Lost Profits?
• Firm News

Important Time Limit for Filing Against the State

Donald W. Gregory, Construction Law Chair

Contractors doing public work in Ohio are generally familiar with the "Article 8" dispute resolution process and delays that often occur with it. However, many do not realize that a contractor need not wait more than 120 days from the filing of an Article 8 claim to file suit. R.C. §153.16(B) provides that the contractor can file suit if that 120-day period expires. In that circumstance, the contractor's administrative remedies are deemed exhausted. So, if the State delays a resolution, or settlement talks drag on, the contractor can take action.

However, if the contractor fails to file a lawsuit in the Court of Claims for more than two (2) years after the 120-day period is exhausted, the claim will be dismissed. In the case of The Painting Co. v. Ohio State University, 2009-Ohio-645 (2009), the contractor's claim was tossed out because the contractor waited more than two (2) years before filing suit.

The moral of the story is that contractors should press the State to resolve the Article 8 process within 120 days from submission of the claim, but also be sure to file suit before more than two (2) years expire.

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What Proof is Required to Cover Lost Profits?

Unless a contract provision provides otherwise, a contractor can normally recover lost profits on unperformed work when the owner breaches the contract. However, a recent case has held that a contractor cannot just rest on its planned profit margin pre-construction to calculate its losses.

In Alliance Excavating, Inc. v. Triangle Real Estate Servs., Inc., 2009-Ohio-2761, the Franklin County Court of Appeals threw out the contractor's jury verdict because there was no evidence of the costs that the contractor would have incurred had it been permitted to continue work. The Court of Appeals emphasized that a contractor must prove the further compensation the contractor would have received under the contract if it had been performed, less the value to the contractor of his being relieved of the obligation of completing performance.

Therefore, contractors who seek to recover damages for breach of contract must be prepared to not only show the balance of contract due, but also a credit for the cost of the unperformed work.

Firm News

Mike Madigan has passed the examination to become a LEED accredited professional in the area of Green Building. He is speaking to the National Association of Elevator Constructors in Orlando this month on "Key Contract Clauses."

Eric Travers has been conducting national podcasts to the American Subcontractors Association on "Payment Assurances" and other subcontract topics.

Don Gregory is speaking on "Construction Defects" for the National Business Institute and on "Win-Win Negotiation Strategies" for CISCA in a national webinar this month. He also recently conducted a webinar on the "New Sub-subcontract" document (No. 725) for ConsensusDOCS.
The construction area has been recognized by Chambers USA for 2009, with this quote:

"The team is renowned for its strength when it comes to representing subcontractors and trade associations, but it is also recommended for its prowess in litigation. The group has an impressive list of national and local clients that includes the American Subcontractors Association, the Catholic Diocese of Columbus, and the National Groundwater Association."

Further, Don Gregory was singled out by Chambers with this comment:

"As chair of the firm's construction and litigation departments, Donald Gregory enjoys a reputation as one of the state's foremost subcontractor experts, possessing a wealth of experience handling construction assignments across Ohio and the USA."