Wood Elec., Inc. v. Ohio Facilities Constr. Comm'n

[Cite as Wood Elec., Inc. v. Ohio Facilities Contr. Comm., 2017-Ohio-2743.]
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
Wood Electric, Inc., :
Plaintiff-Appellee, :
No. 16AP-643
v. : (Ct. of Cl. No. 2014-00987)
Ohio Facilities Construction : (REGULAR CALENDAR)
Commission,
:
Defendant-Appellant.
:
D E C I S I O N
Rendered on May 9, 2017
On brief: Kegler Brown Hill + Ritter, LPA, Donald W.
Gregory, and Michael J. Madigan, for appellee. Argued:
Donald W. Gregory.
On brief: Michael DeWine, Ohio Attorney General; William
C. Becker, and David A. Beals, for appellant. Argued:
William C. Becker.
APPEAL from the Court of Claims of Ohio
BRUNNER, J.
{¶ 1} Defendant-appellant, Ohio Facilities Construction Commission ("OFCC"),
appeals a judgment of the Court of Claims of Ohio, entered on August 12, 2016, which
found against the OFCC in the amount of $254,027. Because OFCC submitted no
assignments of error and we find no merit in any of the OFCC's arguments, we affirm.
I. FACTS AND PROCEDURAL HISTORY
{¶ 2} On February 19, 2013, the Dalton Local School District ("Dalton"), in
connection with the OFCC, an architect (thendesign architecture, ltd. or "thendesign"),
and a construction manager (Scaparotti Construction Group or "SCG"), issued a bidding
package to invite bids to build a pre-kindergarten through eighth grade school. (Joint Ex.
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D.) The OFCC, Dalton, thendesign, and SCG are collectively referred to in the record as
the "project team" or the "core."
{¶ 3} A number of bids were received on the project, but ultimately three prime
contractors were chosen. Guenther Mechanical, Inc. (which plays no role in this case) was
the mechanical contractor responsible for heating, ductwork, and machinery. (Pl.'s Ex.
31.) Plaintiff-appellee, Wood Electric, Inc. ("Wood"), was the electrical contractor,
responsible for all wiring, fixtures, switches, teledata, technology (for which Wood hired a
subcontractor), and fire alarm systems. Id. CT Taylor was the general trades contractor,
responsible for construction of the building itself. Id. SCG's role as construction manager
was to manage the prime contractors and advise the OFCC on the project in keeping on
schedule and within budget. (Tr. Vol. 3 at 784.)
{¶ 4} CT Taylor and SCG were, at all relevant times, partners in a venture called
ICON and collaborated on approximately $200 million in projects through that venture.
(Tr. Vol. 2 at 441-44.) Without the partnership, in fact, SCG would not have obtained
bonding capacity and would have been terminated from the Dalton project and others.
(Tr. Vol. 2 at 444-46.)
{¶ 5} The bidding package contained a number of construction milestone dates.
(Pl.'s Ex. 11.) Among these were dates for temporary enclosure and full building
enclosure. Id. The contract governing the construction defined the two states of
enclosure as follows:
Enclosure, Temporary The condition in which the
permanent exterior walls and
roofs are in place, insulated and
weathertight, and windows and
entrances are provided with
suitable temporary enclosures.
Enclosure, Permanent The condition in which the
permanent exterior walls and
roofs are in place, insulated and
weathertight, and permanent
windows and entrances are in
place.
(Emphasis sic.) (Joint Ex. C at 5.) Almost immediately after the project began, different
milestone dates were adopted in a baseline schedule. (Pl.'s Ex. 51 at 44.)
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{¶ 6} Multiple witnesses testified at trial that enclosure is important to electrical
work because electrical equipment can be unsafe and will deteriorate if exposed to the
elements; workers (who must use fine motor control) work more slowly when cold;
elevated work is dangerous when floors are icy and certain electrical components cannot
be installed until the building is warm and dry with a certain degree of interior finishes in
place. (Tr. Vol. 1 at 178-79, 183-84, 189-90, 199, 214-15, 220-21; Tr. Vol. 2 at 286-88, 332,
414-15, 500-01; Tr. Vol. 3 at 542-43.) When working under a school project hard deadline
(when students arrive), delays in enclosure leave less time for post-enclosure contractors
to do their work, resulting in overtime and higher staffing expenses ("acceleration") and
multiple contractors working simultaneously in the same spaces ("trade stacking"). (Tr.
Vol. 1 at 193-94, 235-38, 249-50; Tr. Vol. 2 at 472, 500-02; Tr. Vol. 3 at 541-42.)
{¶ 7} CT Taylor did not complete building enclosure by the milestone dates of
either the bidding package or the revised baseline schedule. For example, Area B of the
building was vital to electrical work as it contained the stage (with all associated lighting
and audio/visual equipment), the cafeteria (with kitchen), the main electrical room and
the teledata room. (Tr. Vol. 1 at 143-47, 283; Pl.'s Ex. 403.) Area B was scheduled to be
temporarily enclosed no later than October 25, 2013 according to the bid and by
December 13, 2013 by the baseline schedule. (Pl.'s Ex. 11; Ex. 51 at 44.) The construction
manager, SCG, eventually claimed that temporary enclosure occurred by December 24,
2013. (Tr. Vol. 3 at 546-47; Pl.'s Ex. 108.) But pay applications from CT Taylor approved
by the OFCC show that the roof shingles were only 30 percent complete and the air
barrier (exterior walls) were only 60 percent complete by that time. (Pl.'s Ex. 901 at 8.)
Progress for siding and soffit were only 10 percent complete, and brick veneer was only
25 percent complete. Id.{¶ 8} In addition, classroom Areas A, C, and D, also were not temporarily
enclosed by the original bid or baseline schedule milestone dates. According to the
original bid specifications, classroom Areas A, C, and D were to be temporarily enclosed
by November 8, December 9, and October 11, 2013, respectively and by November 14,
December 13, and October 22, 2013, respectively, according to the baseline schedule.
(Pl.'s Ex. 11; Ex. 51 at 44.) SCG claimed to OFCC that temporary enclosure for Area A
occurred on November 14, 2013 but, as of November 30, 2013, pay reports showed
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90 percent progress on shingles and 0 percent progress on veneers, siding, and soffit.
(Pl.'s Ex. 901 at 9; Ex. 108.) As for Area C, which was to have been enclosed on
December 9 or 13 depending on bid or schedule milestone, pay reports of January 31,
2014 showed only 50 percent progress on shingles, 90 percent on exterior framing and
sheathing, 0 percent on air barrier, 10 percent on siding and soffit, and 0 percent on brick
veneer. (Pl.'s Ex. 901 at 8.) SCG claimed to OFCC that Area D was temporarily enclosed
on November 14, 2013, but photographs taken on January 8, 2014 showed water
intrusion owing to the fact that Area C (above Area D) had not yet been temporarily
enclosed. (Pl.'s Ex. 901 at 8.)
{¶ 9} The most delayed portion of the project, Area E (the gym), was to be
temporarily enclosed no later than November 22, 2013 according to the bid and
December 13, 2013 according to the baseline schedule. (Pl.'s Ex. 11; Ex. 51 at 44.) SCG
eventually claimed that Area E was temporarily enclosed on February 13, 2014. (Pl.'s Ex.
901 at 9.) But CT Taylor's pay application on February 28, 2014 showed 0 percent
progress on roofing, air barrier, brick veneer, siding, and soffits. Id. Testimony at trial
established that the gym was not permanently enclosed until June 23, 2014; the wood
floor was not installed until August 6 and the electrical work in that area was not finished
until after August 24, 2014. (Tr. Vol. 3 at 560-61, 614.) According to the bid, the entire
project was to have been substantially completed by July 3, 2014 and, according to the
baseline milestones, by July 10, 2014. (Pl.'s Ex. 11; Ex. 51 at 44.) The project was to be
finally completed under bid specifications by July 11, 2014 and under baseline
specifications by July 18, 2014. Id.{¶ 10} As enclosure delays became apparent, Wood forecasted impairment to its
ability to work efficiently and according to plan. Wood's project manager on the Dalton
project testified that productivity began being impacted in the Fall 2013 because
enclosure was not occurring on schedule and that the full extent of the problem could not
be predicted at that juncture. (Tr. Vol. 2 at 249, 264-65.) Wood provided notice of the
likely impact on December 20, 2013 under Article 8 of the general contract conditions.
(Pl.'s Ex. 87A.) Wood's notice read in relevant part:
The delay with obtaining temporary building enclosure will
have significant consequences, such as jeopardizing the
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No. 16AP-643
current completion date and increasing the costs for the
Project. * * *
* * *Wood [] finds it necessary to request an extension of time
* * * to make up for the lost time that will occur if these delays
are not quickly resolved. Should this extension request be
ignored, rejected, or not adequately addressed, Wood will
likely be forced to constructively accelerate1 its activities and
will expect additional compensation for its efforts.
Id. at 1.
{¶ 11} SCG responded through a project manager on December 26, 2013, by
setting a meeting to agree on a recovery schedule which was to put the project back on
track. (Pl.'s Ex. 90.) The next day, SCG's project manager also informed CT Taylor that
CT Taylor had missed the milestone enclosure deadlines and would be held responsible
for any claims asserted by other contractors impacted by the delays. (Pl.'s Ex. 91.)
Michael Scaparotti, president of SCG, told the letter's author to consult him in the future
before issuing such statements. (Pl.'s Ex. 93.) The letter-writer presented the excuse that
an official with the OFCC had "forced the issue" so "rather than rock the boat, [he] went
along with it." Id.
{¶ 12} On January 9, the contractors met to discuss a recovery schedule. (Def.'s
Ex. F2 at 176.) One week later, when no recovery schedule had been developed, Wood
requested an additional 60 days to prepare a certified claim since no recovery schedule
had yet been created and predicting the full impact caused by the delays was not yet
feasible. (Pl.'s Ex. 97A.) SCG granted the request on behalf of the project team. (Pl.'s Ex.
100.)
{¶ 13} On February 27, 2014, CT Taylor and the project team signed a change
order form which, among other things, adjusted the milestone dates "at no cost to [OFCC
and Dalton] or penalty to [CT Taylor]" in "full and complete satisfaction for all direct and
indirect costs." (Pl.'s Ex. 118 at 1.) The same change order was presented to Wood in
order to obligate Wood to meet the new schedule with no additional compensation, but
Wood refused to sign and only signed the recovery schedule with a written reservation of
rights. (Pl.'s Ex. 128 at 1, 5; Tr. Vol. 3 at 419-21, 503-04.) The recovery schedule did not
1 Accelerate, as used in this construction context, means to do more work in less time. (Tr. Vol. 3 at 572.)
2 Also labeled, in some places, as Exhibit I.
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No. 16AP-643
grant the extension of the project requested by Wood. The baseline final completion date
of July 18, 2014 was entirely unaltered by the recovery schedule. (Pl.'s Ex. 51 at 44; Ex.
108; Tr. Vol. 4 at 808-09.) SCG's recovery schedule falsely represented that temporary
enclosure had been accomplished in Areas A and D on November 14, 2013 and in Area B
on December 24, 2013. (Pl.'s Ex. 108.)
{¶ 14} At the time the recovery schedule was issued, Wood requested an additional
60 days to formally substantiate and certify its claim. In an April 2, 2014 letter, the OFCC
denied Wood's requested extension. (Tr. Vol. 4 at 824-25.) On April 11, 2014, Wood
formally certified a claim for $207,467.57 for projected impacts arising from the failure to
have "the temporary and permanent building enclosure complete by December 20, 2013"
and reserved the right to supplement the claim for further delays or based on additional
information that may become available. (Pl.'s Ex. 131 at 2, 3.) Citing the confidential
business nature of bid and internal cost documents, Wood did not submit with its claim
copies of supporting materials but, rather, offered to make them available for inspection
upon request. Id. at 3. The same day, a representative of the OFCC instructed SCG to
notify CT Taylor of the certified claim because CT Taylor was "the responsible contractor
for missing the enclosure date." (Pl.'s Ex. 132.)
{¶ 15} Five days following Wood's claim submission, the project team met. (Pl.'s
Ex. 136.) In the minutes of that meeting, the following appears:
All parties feel that the claim and the dollar figure associated
with the claim are unjustified and will work in a unified
fashion, within the guidelines of the General Conditions to
dispute the merits of the claim.
Id. at 3. On May 2, 2014, SCG requested further substantiation of Wood's claim. (Pl.'s Ex.
139.) On May 16, 2014, Wood provided it. (Pl.'s Ex. 141.)
{¶ 16} On June 11, 2014, thendesign drafted a one-page letter to the OFCC in
which it opined that nothing at the site suggested that Wood's work needed to be
accelerated or required additional manpower. (Pl.'s Ex. 148.) It also accused Wood of
falsely certifying its claim. Id. On June 18, 2014, following a request from OFCC, SCG
provided information to supplement thendesign's letter. In its letter, SCG stated that
Areas A, B, and D were temporarily enclosed and heated on or before December 13, 2013.
(Pl.'s Ex. 156 at 2.) At trial, SCG's project manager (who authored the letter) was cross-
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No. 16AP-643
examined about this representation and he admitted to using his own looser definition of
temporary enclosure rather than the contract definition. (Tr. Vol. 3 at 721-22; Tr. Vol. 4 at
766-69.) SCG in its letter to OFCC accused Wood of falsely certifying its data and advised
that the claim should be denied, citing that false certification is grounds for the State to
"debar the Contractor from future State contracting opportunities." (Pl.'s Ex. 156 at 3.)
Relying on SCG's letter and recommendation and despite no independent assessment,
OFCC denied Wood's claim. (Pl.'s Ex. 160; Tr. Vol. 4 at 827-28.)
{¶ 17} On July 9, 2014, as the project neared the original final completion date set
by the bid specifications, Wood appealed the decision on its claim to the OFCC. (Pl.'s Ex.
162A.) Wood attached photographs to its appeal depicting the building without a roof in
December 2013 and included a report from an expert who concluded that temporary
enclosures were delayed more than three weeks while permanent enclosures were delayed
more than eight weeks. Id. at 2, 7. At the appeal meeting on August 11, 2014, Wood
provided an updated damages amount of $238,727.96. (Pl.'s Ex. 180 at 1-2.) However, as
that amount had not been certified in the original claim, the OFCC declined to consider it.
Id. at 2. On December 17, 2014, the OFCC issued a decision written by its counsel denying
the claim. Id. at 3.
{¶ 18} Two days later, on December 19, 2014, Wood sued OFCC in the Court of
Claims of Ohio. (Dec. 19, 2014 Compl.) Following discovery and the filing of motions,
trial began on March 31, 2016. At trial, Wood presented evidence that included the
testimony of Wood's foreman, project manager, and president to substantiate its
increased labor costs experienced as a result of the delays and having to do the same work
in less time in environments exposed to poor weather and under "stacked contractor"
conditions. (Tr. Vol. 1 & 2 at 135-321; Vol. 2 & 3 at 468-533.) However, much of what was
initially disputed about the claim no longer appeared to be in serious dispute at trial. A
representative of the OFCC testified that she considered it reasonable for Wood to have
relied on the bid schedule in submitting a bid (Tr. Vol. 4 at 790.) On behalf of OFCC, she
acknowledged that it would have been difficult for Wood to be more definite in its claim,
since the project was not complete at the time of Wood's claim submission and did not
strictly follow a recovery schedule to allow Wood to accurately predict cost overruns. (Tr.
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Vol. 4 at 789-90, 806.) By this time, OFCC's testimony was that Wood had a valid claim
but its representative simply disputed the proper amount of it. (Tr. Vol. 4 at 834-35.)
{¶ 19} On the topic of damages, both Wood and the OFCC presented witnesses
who offered and were allowed to testify as experts although not explicitly qualified on the
record pursuant to Evid.R. 702. (Tr. Vol. 3 at 533-667; Tr. Vol. 4 at 970-1019.) Wood's
expert, Timothy Calvey, presented a damage calculation. (Tr. Vol. 3 at 623; Pl.'s Ex. 901
at 21.) OFCC's expert, Joseph Raccuia, did not present a calculation but, instead,
criticized Calvey's approach. (Tr. Vol. 4 at 1006-07.)
{¶ 20} Calvey testified that he performed a "measured mile" analysis, which is the
industry-preferred method of calculating damages under such circumstances. (Tr. Vol. 3
at 584-91.) The "measured mile" is performed by calculating the productivity of the work
force on the project at times when they were not impacted by whatever conditions
occasioned the claim, comparing that level of productivity to times when they were
impacted. (Tr. Vol. 3 at 587.)
{¶ 21} Specifically, Calvey considered June through September 2013 and June
through August 2014 to be times when Wood was not impacted by conditions such as
unfinished interior work, exposure to bad weather, and conflict in trying to work in the
same space as other contractors. (Tr. Vol. 3 at 566-67, 571-72, 581, 595-96; Pl.'s Ex. 901 at
18.) He removed from the analysis supervisor hours (workers who are not actually
directly producing constructed products) and hours accrued pursuant to approved change
orders and then calculated the number of worker-hours spent per 1 percent of project
completion. (Tr. Vol. 3 at 596-98; Pl.'s Ex. 901 at 18.) On average, he found that during
these periods, approximately 105.5 worker-hours were spent per 1 percent of completion.
(Tr. Vol. 3 at 601-02; Pl.'s Ex. 901 at 18.) By contrast, he found that during the periods
when the building was open to harsh winter weather and when other workers were trying
to work at the same time as Wood and in the same space, Wood expended an average of
162.3 worker-hours per 1 percent of completion. (Tr. Vol. 3 at 601-02; Pl.'s Ex. 901 at 18.)
Because approximately 53.2 percent of the total project duration was impacted, he
concluded, using the difference between the impacted and unimpacted periods, that
3,024 non-supervisor hours were added to Wood's labor cost as a result of CT Taylor's
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failure to timely meet project enclosure milestones. (Tr. Vol. 3 at 601-02; Pl.'s Ex. 901 at
18.)
{¶ 22} Using the journeyman labor rate and taking into account 10 percent
overhead, 5 percent profit, and 2 percent bonding, Calvey calculated the dollar figure for
lost productivity at $201,000. (Pl.'s Ex. 901 at 20; Tr. Vol. 3 at 614-16.) Calvey testified
he considered the journeyman rate a fair rate to use in the calculation because it was the
rate used in change orders, which are the normal mechanism by which additional,
unexpected hours are paid. (Tr. Vol. 3 at 609-11.) He also testified that he considered it
fair because, although there were apprentices and not just journeyman workers on site, he
had excluded supervisor hours from the calculation. Id. If a blended rate for all of
Wood's workers present on the job were used and supervisor hours included, he testified
that the resulting total would be substantially the same. (Tr. Vol. 3 at 611.)
{¶ 23} Calvey included in his overall calculation the daily cost of equipment rental
and multiplied that amount by the number of days the project ran beyond the substantial
completion date of the baseline schedule. (Tr. Vol. 3 at 613-16; Pl.'s Ex. 901 at 21.) He
performed the same calculation with respect to supervisor hours for work days beyond the
substantial completion date of the baseline schedule. (Tr. Vol. 3 at 617-18; Pl.'s Ex. 901 at
22.) The totals for these two amounts were $849 and $17,172, respectively. (Pl.'s Ex. 901
at 21-22.)
{¶ 24} The final element of Calvey's calculation was for home office overhead using
the HOOP formula. (Tr. Vol. 3 at 618-23; Pl.'s Ex. 901 at 23.) Under this formula, Calvey
set overhead for the project at 8 percent of the total contract amount, then divided that by
the total number of scheduled days in the project for a figure for overhead cost per day.
(Tr. Vol. 3 at 618-23; Pl.'s Ex. 901 at 23.) He set the number of scheduled days in the
project using the contract start date in the notice to proceed and the scheduled final
completion date of the baseline schedule. (Tr. Vol. 3 at 618-23; Pl.'s Ex. 901 at 23.; Ex. 35
at 2; Ex. 51 at 44.) He multiplied the overhead cost per day by the number of days
between the baseline schedule completion date and the actual final completion date. (Tr.
Vol. 3 at 618-23; Pl.'s Ex. 901 at 23.) Including a 2 percent bond, this figure was $35,006.
(Pl.'s Ex. 901 at 23.)
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{¶ 25} The sum of all these figures was $254,027. (Tr. Vol. 3 at 623; Pl.'s Ex. 901 at
23.)
{¶ 26} OFCC's expert, Raccuia, testified that he saw no evidence in the daily
reports or meeting notes that Wood was reporting productivity problems during the
project. (Tr. Vol. 4 at 984-86.) He also criticized Wood's failure to track productivity
throughout the project. Id. He testified that Wood's expert, Calvey, should have counted
the tasks completed as a means of determining productivity rather than relying on the
contractor's schedule of values. (Tr. Vol. 4 at 981-83.) He additionally testified that
Calvey should have considered only the same type of activities when calculating the
measured mile (that is, for instance, laying conduit could only be compared to laying
conduit). (Tr. Vol. 4 at 1014-15.)
{¶ 27} Raccuia admitted that at the time of his deposition he thought that Wood
was entitled to something on its claim but changed his mind based on SCG's
representations about when the project was enclosed. (Tr. Vol. 4 at 989-90, 996-98,
1017-18.) Although he criticized Calvey as not properly employing the measured mile
approach, he admitted that his criticism was not supported by citation to any publication
or industry-recognized material. (Tr. Vol. 4 at 1002-05.) Raccuia also testified that he
was not offering an opinion on the proper calculation of Wood's damages and that if the
court were to find that Wood was entitled to something, he offered no opinion on how
much that would be. (Tr. Vol. 4 at 1006-07.)
{¶ 28} On August 12, 2016, the Court of Claims issued a judgment entry in favor of
Wood in the amount of $254,027. (Aug. 12, 2016 Decision & Jgmt. Entry at 11.) The
Court of Claims found that the OFCC had breached its contract with Wood by failing to
enforce milestone deadlines against CT Taylor. The court noted that SCG had used a
definition other than the contract definition to falsely deem areas of the school building to
be enclosed and that the OFCC had denied Wood's claim on such basis. Id. at 8-9. The
Court of Claims found that the HOOP method was an appropriate method for calculating
home office overhead. Id. at 10. The court found Raccuia's testimony unconvincing
because it was based on false enclosure dates provided by SCG and presupposed that
Wood was obligated to consistently complain about the effects of late enclosure dates on
its projected productivity rather than simply file the contractually required notice and
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claim. Id. at 8, 10. The Court of Claims further stated that, even had Raccuia been
credible, he had offered no opinion as to what damages were owed if the court were to
conclude that damages were warranted. Id. at 10-11. The Court of Claims found that,
though there were potentially other ways damages could have been calculated, Calvey's
opinion set forth Wood's damages with a reasonable degree of certainty, and without a
competing opinion, the court would not speculate on other potential measures of
damages. Id. at 11.
{¶ 29} The OFCC now appeals.
II. ASSIGNMENTS OF ERROR
{¶ 30} The OFCC's brief does not contain assignments of error or a statement of
issues presented for review as required by Ohio Appellate Rule 16(A)(3) and (4). Under
Loc.R. 10(D) of the Tenth District Court of Appeals, failure to file assignments of error is
cause to dismiss an appeal unless the appellant demonstrates that neither undue delay
nor prejudice was caused by the failure to comply with the rules. However, as appellee
has not raised the issue, we elect, in our discretion, to treat the OFCC's argument section
headings as assignments of error. But we note that a potentially independent ground for
the denial of appellate relief to the OFCC could be its failure to set forth assignments of
error.
{¶ 31} The OFCC's section headings read as follows:
[1.] THE TRIAL COURT'S DECISION IS CONTRARY TO
THE SUPREME COURT'S PRECEDENT IN COMPLETE
GENERAL
[2.] THE TRIAL COURT IMPERMISSIBLY AWARDED
APPELLEE-CONTRACTOR DAMAGES THAT EXCEEDED
THEIR STATUTORILY CERTIFIED AMOUNT
[3.] THE TRIAL COURT IMPERMISSIBLY SHIFTED THE
BURDEN OF PROOF
(Nov. 14, 2016 OFCC Brief at i.)3
3In its reply brief, the OFCC sets forth three somewhat similar but not identical argument headings. (OFCC
Reply Brief at i.)
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III. DISCUSSION
A. Whether the Trial Court's Decision was Contrary to Complete Gen.
Constr. Co. v. Ohio Dept. of Transp., 94 Ohio St.3d 54 (2002)
{¶ 32} In Complete Gen. Constr. Co. v. Ohio Dept. of Transp., 94 Ohio St.3d 54(2002), the Supreme Court of Ohio considered when compensation for home office
overhead is available under the Eichleay formula.4 That formula is:
1. (Total billings for the contract at issue/Total billings from
all contracts during the original contract period) x (Total
overhead during the original contract period) = Overhead
Allocable to the Contract.
2. (Overhead Allocable to the Contract)/(Original planned
length of the contract in days) = Daily Contract Overhead
Rate.
3. (Daily Contract Overhead Rate) x (Compensable period in
days) = Unabsorbed Overhead Damages.
Complete Gen. at 58, citing West v. All State Boiler, Inc., 146 F.3d 1368, 1379, fn. 4
(Fed.Cir.1998).
{¶ 33} The Supreme Court also set forth two prima facie elements that must be
proved before the Eichleay formula may be applied in awarding damages:
Before the Eichleay formula may be applied, the contractor
must demonstrate two important elements in order to
establish a prima facie case for the award of damages. First,
the contractor must demonstrate that it was on "standby."
Interstate Gen. Govt. Contractors, 12 F.3d at 1056. A
contractor is on standby "when work on a project is
suspended for a period of uncertain duration and the
contractor can at any time be required to return to work
immediately." All State Boiler, 146 F.3d at 1373. In effect, the
contractor is not working on the project, yet remains bound to
the project. The contractor must be ready to immediately
resume performance at any time.
The second element in a prima facie case is that the contractor
must prove that it was unable to take on other work while on
standby. Id. That is, the contractor must show that the
uncertainty of the duration of the delay made it unable to
4 This formula originates in Eichleay Corp., ASBCA No. 5183, 60-2 B.C.A. (CCH) ¶ 2688.
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No. 16AP-643
commit to replacement work on another project.
Impracticability, rather than impossibility, of other work is
the standard, and the contractor is entitled to damages " 'only
if its inability to take on additional work results from its
standby status, i.e., is attributable to the government.' "
(Emphasis sic) Id., 146 F.3d at 1375, quoting Satellite Elec.
Co., 105 F.3d at 1421.
Complete Gen. at 58-59.
{¶ 34} Wood has never sought to use the Eichleay formula to compute its home
office overhead in this case. Rather, Wood relies on the HOOP formula as adopted by the
Ohio Department of Transportation ("ODOT"). And nothing in the contract terms forbids
Wood from using the HOOP formula or requires Wood to use the Eichleay formula in
computing home office overhead for purposes of a claim. (Joint Ex. B.) Nonetheless, the
OFCC argues that we should reverse the trial court's decision for failing to require proof
by Wood on the two elements set forth in Complete General. (OFCC Brief at 8-12.)
Although the method of calculation employed by Calvey essentially used steps 2 and 3 of
the Eichleay formula and thus was similar to the Eichleay formula, it was not identical to
it. (Tr. Vol. 3 at 618-23; Pl.'s Ex. 901 at 23.) As such, this case does not exactly mirror the
fact pattern of Complete General.
{¶ 35} This case does, however, mirror the fact pattern of J&H Reinforcing &
Structural Erectors, Inc. v. Ohio School Facilities Comm., 10th Dist. No. 12AP-588, 2013-
Ohio-3827, ¶ 100-06, in which J&H (also using Calvey as an expert) sought to recover
home office overhead using the same HOOP ODOT method; in that case, the Ohio School
Facilities Commission5 ("OSFC") also argued that Complete General controlled the result.
In J&H, this Court reasoned:
OSFC contends that J&H is not entitled to any damages for
home office overhead. OSFC insists that home office overhead
may only be calculated using the Eichleay formula. The
Eichleay formula is an equation employed by federal courts in
calculating home office overhead attributable to owner-caused
delay. Complete Gen. Constr. at 57. However, an owner-
caused delay in construction does not necessarily lead to an
award of damages for home office overhead:
5 The OSFC is apparently the predecessor entity to the OFCC.
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Before the Eichleay formula may be applied, the
contractor must demonstrate two important
elements in order to establish a prima facie case
for the award of damages. First, the contractor
must demonstrate that it was on "standby." * * *
The second element in a prima facie case is that
the contractor must prove that it was unable to
take on other work while on standby. * * *
(Internal citations omitted.) (Emphasis sic.) Id. at 58-59.
The Supreme Court continued:
The Eichleay formula goes nowhere without
causation. A contractor may recover only if
there is an owner-caused construction delay.
Moreover, the "standby" character of the delay
must also be caused by the owner, and must
prevent the contractor from finding
replacement projects to cover the overhead.
(Emphasis sic.) Id. at 60.
OSFC contends that J&H is not entitled to damages under the
Eichleay formula because J&H failed to establish a prima
facie case for such an award. More particularly, OSFC argues
that J&H's evidence established that its work was never
suspended and that it was never unable to bid on other
projects. OSFC further contends that J&H could not recover
under the Eichleay formula because the post-CO 29 delays
were caused by other prime contractors, not OSFC.
OSFC's contentions regarding the Eichleay formula are
unavailing, as use of the Eichleay formula is discretionary. In
Complete Gen. Constr., the court expressly stated, "[w]e do
not find that the Eichleay formula is the exclusive manner of
determining unabsorbed home office overhead." Id. at 55.
Indeed, the court held in the syllabus that "[t]he Eichleay
formula, modified for use in Ohio courts, is one way of
determining unabsorbed home office overhead damages in
public construction delay cases." (Emphasis added.) Id. at
syllabus. Pursuant to Complete Gen. Constr., the referee acted
within its discretion in applying a formula other than the
Eichleay formula in calculating home office overhead
damages.
(Emphasis sic.) J&H at ¶ 103-06.
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No. 16AP-643
{¶ 36} This Court has previously concluded that the two elements of prima facie
proof discussed in Complete Gen. are applicable to the Eichleay formula and not
necessarily to other formulas (like HOOP) for calculating home office overhead. J&H is a
recent case and for reasons of stare decisis, we adhere to that decision. Accordingly, we
conclude that the trial court did not err in failing to require proof of the Complete Gen.
factors before considering the HOOP calculation.
B. Whether the Trial Court Erred in Awarding Wood Damages That
Exceeded the Amount Wood Certified in Their Article 8 Claim
{¶ 37} The OFCC argues that Wood was forbidden from asserting higher damages
in its action in the Court of Claims than Wood asserted when it certified its claim for
resolution during the course of construction. (OFCC Brief at 12-19.) To support this
proposition, the OFCC relies on R.C. 153.12(B) and cases stating that, as a matter of
statute, a contractor in a public contract with the State must exhaust contractual remedies
before pursuing a suit in the Court of Claims. (OFCC Brief at 13-16.) The OFCC does not
argue that Wood failed to exhaust the contract remedies in respect to its original claim. It
rather argues that Wood should not have asserted an amount beyond or different from its
original certified claim when it sued in the Court of Claims. (OFCC Brief at 12-19.) The
OFCC has not cited a statute, case, or rule in support of its argument and we find no case
law to support such a position.
{¶ 38} Though the OFCC implies that some bad-faith after-construction inflation
of the claim occurred, we find this assertion to be consistent with the evidence in the
record. Wood first gave notice of the claim on December 20, 2013, soon after CT Taylor
missed the baseline schedule enclosure milestones for Areas B, C, and E. (Pl.'s Ex. 87A.)
It certified the claim on April 11, 2014. (Pl.'s Ex. 131.) It supplemented the claim on
May 16, 2014. (Pl.'s Ex. 141.) It updated damages at a commission hearing on August 11,
2014. (Pl.'s Ex. 180 at 1-2.) According to the pay schedules and construction manager
documents, construction was not actually substantially completed until August 24, 2014
and not finished completely until October 6, 2014. (Tr. Vol. 3 at 614, 621, 626.)
Calculating HOOP, for example, requires knowledge (or an accurate estimate) of the
length of the project overrun. The OFCC does not explain how Wood was supposed to
have performed that calculation before the termination of the project given that not one of
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No. 16AP-643
the schedules produced in the course of this project was even substantially followed by CT
Taylor.
{¶ 39} The OFCC's argument is also not consonant with the procedural history of
the claim. After timely notifying the OFCC of its claim under the terms of the contract,
Wood twice requested extensions of the certification deadline in order to appropriately
take account of the full impact of the ongoing delays caused by CT Taylor's failure to meet
the enclosure milestones. (Pl.'s Exs. 87A, 97A, 100; Tr. Vol. 4 at 824-25.) The first such
request was granted. (Pl.'s Exs. 97A, 100.) However, the OFCC denied the second and
thereby forced Wood to submit a certified claim when the extent of its damages was still
in question. (Tr. Vol. 4 at 824-25.) It would have been inequitable for the trial court to
have restricted Wood to its certified claim when OFCC forced Wood to submit its claim
before being able to take the full measure of their damages.
{¶ 40} Finally, OFCC's interpretation of the contract would create a manifest
absurdity for a claimant. That is, because Wood submitted timely notice and was denied
extensions to certify, it could not accurately predict its full damages at the time it was
required to certify. Thus, OFCC now argues that Wood should be limited to its estimation
of damages set forth in the certified claim. But conversely, had Wood delayed in
submitting a notice until after it became aware of the full extent of its damages to ensure
that its certified claim was timely and complete, that notice would have been untimely and
OFCC would doubtless argue that the claim should then have been denied on that basis.
(Joint Ex. B at 44.) Thus, according to OFCC's view of the contract, there is no scenario
under which Wood could have been compensated for its full damages. This interpretation
is a manifest absurdity and, for that reason, is to be avoided. See Laboy v. Grange Indem.
Ins. Co., 144 Ohio St.3d 234, 2015-Ohio-3308, ¶ 8.
{¶ 41} The trial court did not err in failing to limit Wood to the damages set forth
in its original certified claim.
C. Whether the Trial Court Shifted the Burden of Proof from Wood to the
OFCC
{¶ 42} The OFCC argues that the Court of Claims in its decision improperly shifted
the burden of establishing damages from Wood to OFCC. However, the court merely
noted the OFCC's strategy had been to criticize Calvey's methods, not to offer an
alternative. (Aug. 12, 2016 Decision & Jgmt. Entry at 10-11.) The Court of Claims did not
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No. 16AP-643
find the testimony of OFCC's expert to be credible. Id. Instead, it concluded that Calvey,
Wood's expert, had "set[] forth Wood Electric's damages within a reasonable degree of
certainty," and there were no further arguments or measures of damages to address. Id.
at 11.
{¶ 43} Specifically, the Court said:
OFCC asserts that while ODOT recognizes the HOOP method
for determining home office overhead, OFCC does not
recognize the method and sought to have the Court reject the
method. OFCC offered no alternative calculation. The Court
realizes that every department of the State of Ohio has the
authority to set its own rules for enforcing their own
contracts. In this case, OFCC has not established their own
method for determining home office overhead so the Court
believes that a reasonable method for determining the HOOP
figure is the figure recognized by ODOT. Furthermore, OFCC's
expert's opinion was somewhat discounted by the Court
because he relied upon completion dates given to him by
[SCG's project manager], which all parties know were false.
The Court also notes that while it has accepted Calvey's
measured mile and HOOP calculations as proper for this case,
the measured mile and HOOP analyses may not be
appropriate methods to calculate damages in other situations.
The Court must consider the facts of each case and the
methodology used in determining whether those methods
should be applied. In this case, the only opinion given to this
Court regarding the overall damages incurred by Wood
Electric was the expert opinion of Calvey. While OFCC's
expert testified that in his opinion, Calvey's figures were
flawed, he offered no alternative opinion. The Court is aware
that its responsibility as the fact finder is to weigh all of the
evidence and reach an independent decision on the amount of
damages proximately caused by OFCC's breach. In doing so,
the Court cannot speculate.
"[T]he extent of damages suffered by a plaintiff is a factual
issue, it is within the jury's [or fact finder's] province to
determine the amount of damages to be awarded." Arbino v.
Johnson & Johnson, 116 Ohio St.3d 468, 475, 2007-Ohio-
6948, 880 N.E.2d 420 (2007). "Where a right to damages has
been established, such right will not be denied merely because
a party cannot demonstrate with mathematical certainty the
amount of damages due." Tri-State Asphalt Corp. v. Ohio
Dept. of Transp., 10th Dist. Franklin No. 94API07-986, 1995
Ohio App. LEXIS 1554 (Apr. 11, 1995), citing Geygan v. Queen
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No. 16AP-643
City Grain Co., 71 Ohio App.3d 185, 195, 593 N.E.2d 328(12th Dist.1991). Furthermore, "a party seeking damages for
breach of contract must present sufficient evidence to show
entitlement to damages in an amount which can be
ascertained with reasonable certainty. Id. at 14.
The Court has applied the proper standards and has
determined that the expert opinion rendered by Calvey sets
forth Wood Electric's damages within a reasonable degree of
certainty. Although, the comparisons used for impacted and
non-impacted periods in the measured mile calculations may
not be identical, the Court finds that Calvey reasonably
calculated damages with the data available to him.
Accordingly, judgment shall be rendered in favor of Wood
Electric in the amount of $254,027.00.
(Aug. 12, 2016 Decision & Jgmt. Entry at 10-11.)
{¶ 44} We do not discern burden-shifting in this reasoning; instead, we see merely
an observation by the trial court that having failed in the gambit to discredit Calvey's
analysis, the OFCC offered no other testimony-based calculation for the trial court to
consider in the alternative. The Court of Claims' finding that Wood had proved its case
but that OFCC had not presented reason to doubt Wood's proof was not burden shifting to
OFCC to prove a lack of liability. The trial court did not err.
IV. CONCLUSION
{¶ 45} Based on our prior precedent and stare decisis we conclude that Complete
General does not apply in this case because Wood sought to employ the HOOP formula
rather than the Eichleay formula. There exists neither a precedential nor persuasive
circumstantial basis for constraining the monetary amount of Wood's suit in the Court of
Claims to match the amount asserted in its Article 8 contract claim. When the Court of
Claims found that Wood had proved its case and offered a reasonable computation of
damages, its finding did not result in burden-shifting when it observed that the OFCC had
not offered evidence of an alternative damages calculation. The OFCC offered no
assignments of error and its arguments are unavailing. Accordingly, we affirm the
judgment of the Court of Claims of Ohio.
Judgment affirmed.
KLATT and DORRIAN, JJ., concur.