Contractors Score Victory With Broad Interpretation of “Delay.”

Kegler Brown Construction Alert

The Ohio Supreme Court case of Dugan & Meyers, with its strict insistence on notice, greatly worried contractors who believed that they were being forced to give almost daily written notice of their project impacts and delays or risk the loss of an otherwise viable claim. Meanwhile, owners confidently believed that they finally had a shield against claims for delay costs at the conclusion of a project. Yet we cautioned clients that the Dugan & Meyers case might have little long-term precedential value as it was decided under a contract signed before the Fairness in Construction Contracting Act (R.C. 4113.62) was enacted, which (in relevant part) provides:

Any provision of a construction contract * * * that waives or precludes liability for delay * * * when the cause of the delay is a proximate result of the owner’s act or failure to act, or that waives any other remedy for a construction contract when the cause of the delay is a proximate result of the owner’s act or failure to act, is void and unenforceable as against public policy.

A case decided in the last few days by the Franklin County Court of Appeals has broadly defined “delay” within the meaning of the statute to include acceleration or other impact claims. Cleveland Construction, Inc. v. Ohio Public Employees Retirement System, No. 07AP-574 (April 3, 2008). Perhaps even more importantly, the Court has ruled that the statute eliminated the need for a time extension request as required by the contract. This case means that contractors will need to worry less about giving formal written notices of delay throughout the course of the project, and that owners have lost the means to defend an otherwise valid delay or impact claim on procedural grounds, such as lack of timely notice or the failure to timely request a time extension.

There is no question that this decision (if not reversed by the Ohio Supreme Court) will embolden contractors to assert claims, even long after the original delay occurrence, when the cause of the delay is arguably the owner’s “actions or inactions.” The pendulum has swung from owner to contractor with respect to delay claims in Ohio -- at least for now.