Public Owner Prevails on Claim
Kegler Brown Construction Alert August 10, 2005
The Court of Appeals in Franklin County recently ruled in a very negative way for contractors that will be appreciated by public owners. The Court in that case was dealing with a substantial award out of the Court of Claims in favor of prime contractor Dugan & Meyers against The Ohio State University arising from the Fisher College of Business (Phase II) project. In that case, there were allegations that the Spearin doctrine (which says that the public owner impliedly warrants that the bid documents are constructible) applied because the plans as designed and bid were not "constructible" without great additional expense and time. The Court of Appeals reversed the existing trend in Ohio and specifically said that the Spearin doctrine did not apply to this circumstance. The Court also expressed skepticism of cumulative impact claims when the State's change order form says that it is compensating all direct and indirect costs.
The decision also placed great weight on the contractor's obligation to let the architect know in writing of a claim for additional time (and money) within ten days of the initial occurrence of the condition.
As a result, the Court of Appeals knocked out a multi-million dollar judgment in favor of Dugan & Meyers.
This case will encourage public owners to vigorously dispute claims and may force contractors to begin a "paper war" routinely giving notice of potential impacts on an almost daily basis and reserving rights in change orders, to try to preserve their rights, hardly a formula for cooperative team based construction efforts.
It is unknown whether the Ohio Supreme Court will elect to take on this important issue in the coming months.