Subcontractors at Peril for Claims Asserted by Third Parties

Kegler Brown Construction Newsletter

For more than a decade, those working in Ohio's construction industry have relied upon the Floorcraft case for assurance that only the party they had contracted with could sue them for "economic loss," such as alleged construction defects. This means that subcontractors could not sue architects for bad plans anymore than an owner could sue the subcontractor directly for construction defects. In these instances, "privity of contract" was typically required.

However, a recent case out of the Franklin County Court of Appeals threatens to change this landscape and allow claims to fly from all different directions. The Court in the Corporex case allowed an owner to sue a subcontractor directly for alleged delay and defects, even though the general contractor was unable to assert such claims.

The good news is the Ohio Supreme Court, at the urging of an amicus (friend of the court) brief filed by our office on behalf of the Subcontractors Legal Defense Fund of the American Subcontractors Association (ASA), took the unusual step of accepting the case for review.

The hope is the Ohio Supreme Court will realize that if the Corporex case is not reversed, Ohio's entire construction industry will suffer, and litigation will explode, as any party in the construction "food chain" who feels aggrieved may sue anyone else, including those with whom they have no contractual relationship. Our firm will be filing an amicus brief (on behalf of ASA) on the merits urging the decision be reversed and certainty returned to the construction process.