Aggressive Mechanical, Inc. v. Ohio School Facilities Comm.

[Cite as Aggressive Mechanical, Inc. v. Ohio School Facilities Comm., 2012-Ohio-6332.]
Court of Claims of Ohio
The Ohio Judicial Center
65 South Front Street, Third Floor
Columbus, OH 43215
614.387.9800 or 1.800.824.8263
www.cco.state.oh.us
AGGRESSIVE MECHANICAL, INC.
Plaintiff
v.
OHIO SCHOOL FACILITIES COMMISSION
Defendant
Case No. 2010-12745
Judge Joseph T. Clark
Magistrate Holly True Shaver
DECISION OF THE MAGISTRATE
{¶ 1} Plaintiff brought this action alleging breach of contract. The issues of
liability and damages were bifurcated and the case proceeded to trial on the issue of
liability.
{¶ 2} On May 2, 2007, plaintiff entered into a contract with defendant for the
heating, ventilation, and air-conditioning (HVAC) work of a public improvement project
known as Southwood Elementary School. The project called for multiple prime
contractors and consisted of both the renovation of an existing building and the
construction of a new, 20,000 square foot addition. The total HVAC contract price was
$1,767,000. The work was to be completed within 532 days after plaintiff’s receipt of
the notice to proceed, unless an extension of time were granted. The construction
manager, Smoot Elford Resources (SER) was responsible for monitoring the project
schedule for defendant.
{¶ 3} On June 18, 2007, the notice to proceed was issued, which resulted in a
contract end date of November 14, 2008. The work was to begin on the third floor of
the existing building and then flow in a logical sequence down through the lower floors
Case No. 2010-12745 -2- DECISION
and out into the new building as work was completed by predecessor trades. However,
from the outset, the project experienced delays due to problems with the design. An
updated schedule was issued on May 14, 2008, and a recovery schedule was issued on
September 11, 2008.
{¶ 4} On October 2, 2008, SER issued Construction Bulletin 63 (CB 63), which
extended the contract 110 working days (159 calendar days) to April 22, 2009.
(Defendant’s Exhibit DD.) Prior to the issuance of CB 63, SER had advised the
contractors that a bulletin would be issued to extend the contract and invited the
contractors to submit pricing for additional costs related to the extension. In response,
plaintiff submitted a pricing proposal to SER in the amount of $107,976.15.
(Defendant’s Exhibit F.) On December 18, 2008, Peggy Murphy, Project Manager for
SER, issued a letter to plaintiff’s owner, Kevin Hall, wherein she rejected plaintiff’s
pricing proposal. SER explained that plaintiff’s method of calculation was not an
acceptable means of determining costs for the extension of contract time per the
change order pricing guidelines set forth in Article 7.6 of the contract’s General
Conditions (GC). SER directed plaintiff to revise and resubmit its costs associated with
CB 63. (Defendant’s Exhibit H.) On January 22, 2009, plaintiff submitted a revised
proposal in the amount of $81,703.12. (Defendant’s Exhibit F2.)
{¶ 5} On February 13, 2009, SER rejected plaintiff’s revised pricing. SER
referred plaintiff to GC Sections 7.6.6 and 7.6.7 for allowable costs. In an email from
Murphy, she stated: “SER and the Owner agree that there are probable costs due for
the extension of time on this project, but they must be within the structure of the contract
and properly documented.” (Defendant’s Exhibit I.)
{¶ 6} On another matter, on April 21, 2009, Keith Davis, SER’s on-site
superintendent, sent Hall an email requesting something in writing that stated that
plaintiff’s work would not be completed by the April 22, 2009 finish date. Davis advised
Hall to list “all items for which your work is being held up by other trades. This is
Case No. 2010-12745 -3- DECISION
important to identify all items that will not be completed by the scheduled finish date and
a reason for the item’s status.” (Defendant’s Exhibit K.) In response, Hall sent the
following email: “This is to notify that Aggressive [M]echanical’s work on the southwood
elem project will not be complete by the April 22 2009 finish date due to change order
work[.] We will be working on bulletin 82#, bulletin 79#, bulletin 75#, this work should
be completed by 5-5-09 we will also have a little control and balance work to finish.” Id.{¶ 7} On July 17, 2009, SER sent plaintiff a letter wherein SER adjusted plaintiff’s
figures and issued a proposed change order for CB 63 in the amount of $13,879.20.
(Defendant’s Exhibit L.) Plaintiff refused to sign the proposed change order. On July
30, 2009, Joe Studer, Project Engineer for SER, sent plaintiff an email confirming
plaintiff’s rejection of SER’s proposed change order, wherein he stated: “The change
order previously sent will not be executed and I will delete it from our system. I will
arrange to have a field level Article 8 meeting at SER’s office, just let me know when
works best for you.” (Defendant’s Exhibit Z2.)
{¶ 8} After Studer’s email, no correspondence regarding CB 63 occurred between
the parties until November 24, 2009, when plaintiff sent SER a letter requesting an
Article 8 hearing on its CB 63 claim in the amount of $81,703.12. In the letter, plaintiff
notified SER of an additional claim for an extension of time from April 22 to August 3,
2009 and related costs for that time period in the amount of $75,605.53. (Defendant’s
Exhibit M.) The itemized costs for the CB 63 claim were based on a time period of 110
days and included a daily cost for punch list items and close out, a 10 percent general
overhead charge for those two items, a profit of five percent of that total amount, a
monthly cost for attending progress meetings, a monthly charge for “gangbox and
tools,” a daily cost for extended supervision, a $42,000 charge for demobilization and
remobilization, and a charge for bond and insurance. The itemized costs for the second
claim included the same categories as the CB 63 claim but were based on a time period
of 103 calendar days. Id.Case No. 2010-12745 -4- DECISION
{¶ 9} On December 16, 2009, SER sent plaintiff a letter addressing plaintiff’s two
claims separately. First, with regard to the request for an equitable adjustment as a
result of CB 63, SER advised plaintiff to follow the specific requirements set forth in GC
Article 8. Murphy stated: “Please understand, that while the time constraints outlined [in
Article 8 of the contract] have been grossly surpassed, the Construction Manager, the
Architect and the Co-Ownership Team will consider your claim if properly documented
and supported.” (Defendant’s Exhibit N.) Second, with regard to the claim for an
extension of time and related costs, SER also advised plaintiff to review the
requirements as set forth in Article 8. Murphy stated: “Without a clear and substantiated
claim of the damages being sought, your request cannot realistically be evaluated.
Please be aware that to date, other than a very brief email sent exclusively to our on-
site superintendent on April 22, 2009, the Project has received no other written
communication regarding this claim and presently, Aggressive Mechanical still has
outstanding Contract Work which the completion of is in no way being impeded by the
Project.” Id.{¶ 10} On March 1, 2010, plaintiff filed two Article 8 claims with SER: one
regarding its rejected CB 63 pricing and the other regarding the extension of time
referred to in its November 24, 2009 letter. In both claims, plaintiff provided the
following language to correspond with GC Section 8.1.2.2: “The above extension of time
is due to many changes in the contract documents, changes in work and delays in work
caused by design issues and the very extensive time that was taken in resolving job
issues, resulting in the very slow progress of the job. We have provided estimate work
sheets for our claim of time extension. We have estimated our claim from our approved
schedule of values like we have done other Columbus Public School jobs. We used this
same format for Burroughs Elementary School, etc. which was approved by SER and
CPS. It is our hope and intent, that this issue can be resolved at the first step in the
dispute procedure. We are convinced that the extension of time in dispute is not our
Case No. 2010-12745 -5- DECISION
responsibility to burden the cost. Aggressive supplied the man power and equipment to
perform our work by the original completion date. Therefore a request of contract
adjustment is appropriate.” (Defendant’s Exhibits O and O2.)
{¶ 11} On March 15, 2010, SER held a preliminary Article 8 meeting to review
plaintiff’s claims. At the meeting, SER requested that plaintiff provide revised pricing to
include budgeted costs versus actual costs on the project. (Defendant’s Exhibit Q). On
March 17, 2010, SER sent a letter to Hall stating that the first field level Article 8 hearing
was set for March 23, 2010.1 (Defendant’s Exhibit R.) Plaintiff responded to SER’s
request for revised pricing and submitted its actual costs versus its budgeted costs for
the project. (Defendant’s Exhibits T and U.) On March 30, 2010, defendant and SER
held a field level Article 8 meeting with plaintiff to further review plaintiff’s claims based
on the newly submitted pricing. After the March 30, 2010 meeting, SER did not ask
plaintiff for any additional information.
{¶ 12} On May 6, 2010, Thomas Sisterhen, Senior Project Manager with SER,
issued a letter to plaintiff wherein he stated that in response to the field level Article 8
hearing, SER could not recommend a settlement. SER rejected both claims on the
basis of insufficient documentation. Sisterhen also stated that the two Article 8 claims
had not been submitted separately as SER had requested. Sisterhen stated, in relevant
part: “As we discussed, the documentation presented by Aggressive in support of your
response to the extension of time directed by Bulletin 63 is tainted with an additional
claim for costs reported to have been sustained for added manpower and inefficiencies
experienced by the Project. The additional ‘claim’ and the response to Bulletin 63 are
two distinct and separate items that must be supported as such. We also discussed our
concern that the back-up documentation that has been submitted is not sufficient in
either application.
1
At trial, the parties stipulated that the date of the letter was March 17, 2010, not 2009.
Case No. 2010-12745 -6- DECISION
{¶ 13} “This completes the job site dispute resolution procedure of General
Conditions Article 8.2. You are encouraged to review your options as outlined in Article
8.3 and 8.4.”2 (Defendant’s Exhibit W.) Plaintiff did not file an appeal to the
commission and the school district board as set forth in GC Section 8.3, but rather filed
its complaint in this court on December 13, 2010.
{¶ 14} Plaintiff asserts that defendant breached the contract when it failed to
compensate plaintiff for costs incurred as a result of delays on the project that were
caused by the architect and owner. Plaintiff also asserts that defendant owes it
damages for unpaid base contract work performed, along with a claim for unpaid
retainage. Defendant counters that plaintiff breached the contract when it failed to
follow the mandates of GC Articles 6, 7, and 8. Defendant also argues that the court
lacks jurisdiction over plaintiff’s claims in that it failed to exhaust its administrative
remedies before filing suit.
EXHAUSTION OF REMEDIES
{¶ 15} At the close of plaintiff’s case, defendant moved the court to dismiss this
action pursuant to Civ.R. 41(B)(2) on the ground that upon the facts and the law, plaintiff
had shown no right to relief. Defendant argued that the court lacked subject matter
2
GC Section 8.3 states:
“APPEAL TO COMMISSION AND SCHOOL DISTRICT BOARD
“8.3 .1 The Contractor may appeal the recommendation of the Construction Manager about a
Change Order by providing written notice to the Commission and the School District Board within 30 days
of the date of the Construction Manager’s recommendation.
“8.3.2 The Commission and the School District Board shall, within 30 days of receipt of the
Contractor’s notice, schedule a meeting in an effort to resolve the dispute or render a decision on the
dispute, unless an agreement is made between the Contractor, the School District Board, and the
Commission to extend such time limit. The purpose of the meeting shall be to settle the issues in dispute.
Chapter 119, ORC, shall not be applicable to any such meeting.
“8.3.3 The Commission and the School District Board shall, within 60 days of any meeting
scheduled pursuant to paragraph GC 8.3 .1, render a decision on the dispute, unless an agreement is
made between the Contractor, the Commission, and the School District Board to extend such time limit.
“8.3.4 The decision of the Commission and the School District Board shall be final and
conclusive, subject to trial in a court of competent jurisdiction.”
Case No. 2010-12745 -7- DECISION
jurisdiction over plaintiff’s claims in that plaintiff had failed to exhaust its administrative
remedies as required by R.C. 153.12(B)3 before filing suit. At trial, Hall admitted that
after SER denied plaintiff’s Article 8 claims, plaintiff did not appeal SER’s decision to the
Commission and the School District Board as outlined in Section 8.3 of the contract.
Instead, plaintiff filed its complaint in this court.
{¶ 16} As the Tenth District Court of Appeals has stated: “If * * * only an actual
final decision from the state could be deemed a rejection for purposes of when a cause
of action accrues, then the parties would be permitted to delay a decision indefinitely,
preclude the exhaustion of administrative remedies, and either forestall final resolution
of the claim through litigation or, at the least, render dubious the date the cause of
action accrued. Such an interpretation nullifies the ostensible purpose of R.C.
153.16(B): to ensure a remedy against the state for claimants such as plaintiff by
defining when administrative remedies are exhausted, the cause of action accrues, and
a cause of action may be filed in the Court of Claims. Under the statutory provisions at
issue, the state is aware it must resolve disputes within 120 days or face legal action, so
its failure to determine a claim before that 120-day period lapses, in effect, rejects the
claim, withholds money allegedly owed to the plaintiff, and permits the plaintiff to
institute an action against the state.” Painting Co. v. Ohio State Univ., 10th Dist. No.
09AP-78, 2009-Ohio-5710, 2009 Ohio App. LEXIS 4809, ¶13.
{¶ 17} In this case, plaintiff submitted notice of an Article 8 claim to SER on
November 24, 2009, plaintiff filed its written Article 8 claims on March 1, 2010, SER
rejected plaintiff’s claims on May 6, 2010, and plaintiff filed its complaint in this court on
December 13, 2010. The 120-day period starts when a notice of claim is filed. See
R.E. Schweitzer Construction Co. v. Univ. of Cincinnati, 10th Dist. No. 10AP-954, 2011-
3
R.C. 153.12(B) states, in relevant part: “If a dispute arises between the state and a contractor
concerning the terms of a public improvement contract let by the state or concerning a breach of the
contract, and after administrative remedies provided for in such contract and any alternative dispute
resolution procedures provided in accordance with guidelines established by the director of administrative
Case No. 2010-12745 -8- DECISION
Ohio-3703, 2011 Ohio App. LEXIS 3122, ¶ 25. By operation of law, plaintiff’s
administrative remedies were deemed exhausted on March 24, 2010, 120 days after it
submitted its notice of Article 8 claims, despite the fact that plaintiff did not pursue the
appeal process set forth in GC Section 8.3. “R.C. 153.12(B) and 153.16(B)4, construed
together, provide that any claim submitted under a public works contract with the state
necessarily will accrue, at the latest, by the end of the 120-day statutory period when,
by operation of law, all administrative remedies are deemed exhausted under R.C.
153.16(B), the claim is deemed rejected, and money the state allegedly owes is
deemed withheld.” Painting Co., supra, ¶ 14. Accordingly, defendant’s argument that
plaintiff failed to exhaust its administrative remedies by failing to appeal SER’s decision
does not divest the court of jurisdiction over plaintiff’s claims. Defendant’s motion to
dismiss is DENIED.
LAW
{¶ 18} The purpose of contract construction is to give effect to the intention of the
parties, and such intent “is presumed to reside in the language they chose to employ in
the agreement.” Stoll v. United Magazine Co., 10th Dist. No. 03AP-752, 2004-Ohio-
2523, 2004 Ohio App. LEXIS 2129, ¶ 7. In construing a written agreement, common
words appearing in the written instrument are to be given their plain and ordinary
meaning “unless manifest absurdity results, or unless some other meaning is clearly
evidenced from the four corners of the documents.” ld. at ¶ 8, citing Alexander v.
Buckeye Pipe Line Co., 53 Ohio St.2d 241 (1978), paragraph two of the syllabus.
services are exhausted, the contractor may bring an action to the court of claims in accordance with
Chapter 2743. of the Revised Code.”
4
R.C. 153.16(B) states: “Notwithstanding any contract provision to the contrary, any claim
submitted under a public works contract that the state or any institution supported in whole or in part by
the state enters into for any project subject to sections 153.01 to 153.11 of the Revised Code shall be
resolved within one hundred twenty days. After the end of this one hundred twenty-day period, the
contractor shall be deemed to have exhausted all administrative remedies for purposes of division (B) of
section 153.12 of the Revised Code.”
Case No. 2010-12745 -9- DECISION
Additionally, a court is not required to go beyond the plain language of an agreement to
determine the parties’ rights and obligations if a contract is clear and unambiguous.
Custom Design Technologies, Inc. v. Galt Alloys, Inc., 5th Dist. No. 2001CA00153,
2002-Ohio-100, 2002 Ohio App. LEXIS 43. “If a contract is clear and unambiguous,
then its interpretation is a matter of law and there is no issue of fact to be determined.”
Inland Refuse Transfer Co. v. Browning-Ferris Industries of Ohio, Inc., 15 Ohio St.3d
321, 322 (1984), citing Alexander, supra.
CONSTRUCTION BULLETIN 63
{¶ 19} SER issued CB 63 on October 2, 2008, which extended the contract time.
GC Section 7.1.1 states: “The School District Board, without invalidating the Contract,
may order changes in the Work consisting of additions, deletions or other revisions,
subject to approval by the Commission. To the extent the Contract Time or Contract
Price is affected, the Contract may be equitably adjusted by Change Order in
accordance with this Article.” The court finds that this contract language is
unambiguous. Thus, any costs that were associated with CB 63 were to be addressed
as an equitable adjustment pursuant to the change order provisions of Article 7.
{¶ 20} Hall testified that he had used an approved schedule of values to calculate
proposed change orders on other projects for the Columbus Public Schools in the past,
and that the pricing had been accepted on those jobs. According to Hall, he did not
believe that plaintiff was required to follow Article 7 to price its proposed change orders.
Hall admitted that he priced the claim according to plaintiff’s schedule of values, but that
Murphy requested that he price it according to the change order pricing guidelines
contained in Article 7.
{¶ 21} GC Section 7.6, titled “Change Order Pricing Guidelines,” sets forth the
method for pricing change orders. GC Section 7.6.3 states: “For each change, the
Contractor shall furnish a detailed, written Proposal itemized according to these Pricing
Guidelines. * * * In order to expedite the review and approval process, all Proposals
Case No. 2010-12745 - 10 - DECISION
shall be prepared in the categories and in the order listed below. These pricing
Guidelines are intended to establish the maximum amount which the School District and
the Commission will pay for any Change Order, including without limitation all amounts
for interference, delay, hindrance, or disruption of the Work. * * *” The court finds that
the language in GC Section 7.6 of the contract is unambiguous. Accordingly, plaintiff
was required to use the pricing guidelines in Article 7, not plaintiff’s own schedule of
values, to calculate its proposal in response to CB 63.
{¶ 22} Murphy used the Pricing Guidelines to calculate a proposed change order
in the amount of $13,879.20, which was rejected by plaintiff. GC Section 7.4.8 states:
“If the Contractor does not agree with the School District Board’s determination under
paragraph GC 7.4.7, [adjustment of Contract Price associated with the adjustment of
Contract Time] the Contractor shall request an equitable adjustment of the Contract
under GC Article 8. * * *” The court finds that the language in GC Section 7.4.8 is
unambiguous. Accordingly, when the parties could not reach an agreement on pricing
for a change order as a result of CB 63, GC Section 7.4.8 required plaintiff to request an
equitable adjustment of the contract under GC Article 8. Plaintiff clearly did so in this
case on March 1, 2010, when it submitted a formal claim letter.
{¶ 23} Defendant asserts that plaintiff cannot prevail on its Article 8 claim with
regard to CB 63 because it failed to comply with the 10-day notice requirement in Article
8.1.1.5 In response, plaintiff argues that defendant waived strict compliance with the
notice requirements of Article 8.1.1 by its words and actions. Specifically, plaintiff points
5
GC Section 8.1.1 states: “Any request for equitable adjustment of Contract shall be made in
writing to the Architect, through the Construction Manager, and filed prior to Contract Completion,
provided the Contractor notified the Architect, through the Construction Manager, no more than ten (10)
days after the initial occurrence of the facts which are the basis of the claim. To the fullest extent
permitted by law, failure of the Contractor to timely provide such notice and a contemporaneous
statement of damages shall constitute a waiver by the Contractor of any claim for additional
compensation or for mitigation of Liquidated Damages.” GC Section 8.1.2 states: “In every such written
claim filed in accordance with paragraph GC 8.1.1, the Contractor shall provide the following information
to permit evaluation of the request for equitable adjustment of the Contract.”
Case No. 2010-12745 - 11 - DECISION
to SER’s December 16, 2009 letter wherein Murphy stated: “while the time constraints
outlined [in Article 8 of the contract] have been grossly surpassed, the Construction
Manager, the Architect and the Co-Ownership Team will consider your claim if properly
documented and supported.” (Defendant’s Exhibit N.) “[W]aiver of a contract provision
may be express or implied. * * * ‘[W]aiver by estoppel’ exists when the acts and conduct
of a party are inconsistent with an intent to claim a right, and have been such as to
mislead the other party to his prejudice and thereby estop the party having the right
from insisting upon it. * * * Waiver by estoppel allows a party’s inconsistent conduct,
rather than a party’s intent, to establish a waiver of rights. * * * Whether a party’s
inconsistent conduct constitutes waiver involves a factual determination, * * * and such
a factual determination is properly made by the trier of fact.” Lewis & Michael Moving
and Storage, Inc. v. Stofcheck Ambulance Serv., Inc., 10th Dist. No. 05AP-662, 2006-
Ohio-3810, 2006 Ohio App. LEXIS 3775, ¶ 29-30. (Internal citations omitted; emphasis
in original.) Waiver is an affirmative defense and defendant bears the burden of proving
such defense at trial. See Cleveland Constr., Inc. v. Kent State Univ., 10th Dist. No.
09AP-822, 2010-Ohio-2906, 2010 Ohio App. LEXIS 2407, ¶ 48.
{¶ 24} At trial, Murphy testified that CB 63 was issued because in the summer of
2008 it became clear that the original contract end date could not be met. Murphy
attributed the need for a time extension to the architect’s failure to timely answer
requests for information (RFIs) that various contractors had submitted during the
project. Murphy also testified that the contractors were informed in advance that a
bulletin would be issued to extend the contract end date and that the contractors were
encouraged to submit pricing in response to the bulletin. Murphy did not testify that
plaintiff or any other contractor was responsible for delays on the project which led to
the contract end date being extended.
{¶ 25} The evidence shows that plaintiff submitted a request for an Article 8
hearing to SER on November 24, 2009. In the November 24, 2009 letter, plaintiff
identified two claims: one with regard to CB 63, and another with regard to an additional
Case No. 2010-12745 - 12 - DECISION
extension of time past April 22, 2009, and related damages. At the time it was
submitted, SER was aware that no agreement had been reached with regard to CB 63
at the Article 7 stage and that the claim remained unresolved. Indeed, Studer’s July 30,
2009 email shows that SER expected plaintiff’s claim regarding CB 63 to proceed to the
Article 8 stage, inasmuch as Studer inquired about plaintiff’s availability for a field level
Article 8 meeting. In the December 26, 2009 letter, SER acknowledged that even
though plaintiff’s Article 8 request was untimely, SER would consider plaintiff’s CB 63
claim if it were properly documented. Based upon the evidence presented, the court
finds that defendant waived the 10-day notice requirement set forth in Article 8 with
regard to the CB 63 claim. SER’s conduct as shown in the July 30 and December 16,
2009 correspondence is inconsistent with an intent to claim strict compliance with the
10-day notice requirement in Article 8. Indeed, the parties engaged in the Article 8 field
level process in an effort to compromise the CB 63 claim. Therefore, the court finds that
defendant waived the 10-day notice requirement with regard to plaintiff’s Article 8 claim
for CB 63.
{¶ 26} During the Article 8 process, defendant requested additional information
from plaintiff in an effort to compromise the claim. Hall testified credibly that he
attempted to comply with Article 8 during the meetings about plaintiff’s claims, but he
felt that SER was never satisfied with any of the information that plaintiff submitted to
substantiate its claims. Murphy also testified credibly that she and Hall went back and
forth in an effort to come to a resolution, but that they were not “on the same page”
regarding plaintiff’s claim. It is clear to the court that while plaintiff requested
compensation for items that were not included in Article 7’s change order pricing
guidelines, such as punch lists and closeout, many of the items that plaintiff requested
were recoverable costs, such as overhead and profit. Murphy consistently testified that
SER was trying to decipher plaintiff’s claims, had requested that they be in a certain
format, and that although plaintiff did provide additional information, the form of the
Case No. 2010-12745 - 13 - DECISION
information did not comply with her request. The evidence shows that the parties had
substantially different ways of analyzing the information and significant disputes on what
was a proper measure of damages with regard to CB 63.
{¶ 27} Based upon the evidence presented, the court finds that plaintiff has
proven, by a preponderance of the evidence, that CB 63 was issued as a result of
delays caused by the owner. The court further finds that plaintiff has proven both that
defendant waived the 10-day notice requirement in GC Section 8.1.1, and that plaintiff
complied with Sections 8.1.1 and 8.1.2 by filing its written claim on March 1, 2010.
Moreover, the court finds that defendant’s failure to provide a written recommendation
about a change order for plaintiff’s Article 8 claim with regard to CB 63 was a breach of
GC Section 8.2.3 and that defendant’s failure to recommend any compensation for that
claim violates the prohibition of the waiver of liability for delay as set forth in R.C.
4113.62, inasmuch as defendant denied plaintiff compensation for delay on the project
that was caused by the owner. Accordingly, plaintiff is entitled to compensation for
damages it incurred as a result of CB 63. The court finds that defendant’s refusal to
compensate plaintiff for CB 63 on the basis that plaintiff failed to comply with the
requirements of Article 8 is without merit. Indeed, “an owner cannot cause a delay, and
then avoid the natural consequences for causing the delay by using boilerplate contract
language.” Cleveland Constr., Inc. v. Ohio Pub. Emples. Ret. Sys., 10th Dist. No.
07AP-574, 2008-Ohio-1630, 2008 Ohio App. LEXIS 1403, ¶ 19. The court further finds
that defendant acknowledged that plaintiff was owed at least $13,879.20 with regard to
CB 63 when it was engaged in the Article 7 process. Accordingly, defendant’s failure to
compensate plaintiff for costs it incurred as a result of CB 63 was a breach of contract.
{¶ 28} Inasmuch as the court has found that the contract language in Article 7 is
unambiguous, plaintiff shall be limited by the change order pricing guidelines in GC
Section 7.6 when presenting its claim for damages related to CB 63.
Case No. 2010-12745 - 14 - DECISION
EXTENSION OF TIME AND RELATED DAMAGES
{¶ 29} The second claim for which plaintiff requested an Article 8 hearing in its
November 24, 2009 letter was an extension of time from April 22, 2009 to August 3,
2009, along with a claim for damages in the amount of $75,605.53. (Defendant’s
Exhibit M.) For the following reasons, the court finds that plaintiff failed to prove by a
preponderance of the evidence that defendant waived the contractual requirements
found in Articles 6, 7, or 8, and, therefore, plaintiff cannot prevail on this claim.
{¶ 30} The court notes that on April 22, 2009, plaintiff sent SER the following
email: “This is to notify that Aggressive [M]echanical’s work on the southwood elem
project will not be complete by the April 22 2009 finish date due to change order work[.]
We will be working on bulletin 82#, bulletin 79#, bulletin 75#, this work should be
completed by 5-5-09 we will also have a little control and balance work to finish.”
(Defendant’s Exhibit K.)
{¶ 31} GC Section 7.4.5.2 states: “By signing a Change Order, the Contractor
irrevocably certifies that the scope of the change in the Work, the associated adjustment
Contract Time (if any), and the associated adjustment of the Contract Price (if any) are
completely satisfied, and waives all rights to seek a further adjustment of the Contract
Time, the Contract Price, or both, at a later date with respect to the associated change
in the Work.” At trial, Hall admitted that change orders were issued in connection with
Bulletins 82, 79, and 75, and that plaintiff was paid in accordance with such change
orders even though plaintiff’s work was not complete by April 22, 2009. The court finds
that the language in GC Section 7.4.5.2 is unambiguous. Inasmuch as plaintiff
accepted payment for the change orders issued with regard to bulletins 82, 79, and 75,
plaintiff has waived any additional compensation with regard to those claims.
{¶ 32} Furthermore, to the extent that plaintiff seeks damages related to the
delayed completion of the work, Section 6.4.1 of the contract states: “Any request by the
Case No. 2010-12745 - 15 - DECISION
Contractor for an extension of time shall be made in writing to the Construction Manager
no more than ten (10) days after the initial occurrence of any condition which, in the
Contractor’s opinion, entitles the Contractor to an extension of time. Failure to timely
provide such notice to the Construction Manager shall constitute a waiver by the
Contractor of any claim for extension, damages or mitigation of Liquidated Damages, to
the fullest extent permitted by law.” Although plaintiff notified SER on April 22, 2009
that it was continuing to work on the project past the contract end date, Hall admitted at
trial that the first notice of a claim with regard to a request for an extension of time from
April 22 to August 3, 2009 was made on November 24, 2009.
{¶ 33} Additionally, GC Section 6.4.2 outlines the requirements that must be
contained in the request.6 Hall’s April 22, 2009 email does not contain the required
information as set forth in Section 6.4.2.1-9 of the contract. The court finds that the
language in Article 6 is unambiguous. Therefore, inasmuch as plaintiff failed to comply
with the requirements of Article 6 with respect to a time extension from April 22 to
August 3, 2009, plaintiff’s claim in this regard has been waived.
{¶ 34} With regard to plaintiff’s Article 8 claim for damages related to such
extension in the amount of $75,605.53, plaintiff failed to comply with the 10-day notice
requirements of Article 8. Although plaintiff argues that SER waived strict compliance
with Article 8, the court finds that neither Studer’s July 30, 2009 email nor Murphy’s
December 15, 2009 letter constitutes conduct inconsistent with an intent to enforce the
notice requirements of Article 8. Studer’s email related solely to the unresolved change
order contemplated by CB 63. Murphy’s letter separated plaintiff’s two claims, and with
regard to plaintiff’s claim for an extension of time and related damages, she advised
plaintiff to review the requirements as set forth in Article 8 and stated: “[w]ithout a clear
and substantiated claim of the damages being sought, your request cannot realistically
6
GC Sections 6.4.2.1-6.4.2.9 set forth the specific information that the request for an extension of
time must include, such as nature of the interference, disruption, hindrance or delay; the identification of
Case No. 2010-12745 - 16 - DECISION
be evaluated. Please be aware that to date, other than a very brief email sent
exclusively to our on-site superintendent on April 22, 2009, the Project has received no
other written communication regarding this claim and presently, Aggressive Mechanical
still has outstanding Contract Work which the completion of is in no way being impeded
by the Project.” Id. SER’s conduct with regard to plaintiff’s request for an extension of
time and related damages shows that it did not have timely notice of this claim and that
it did not waive its right to enforce the contractual provisions regarding notice.
{¶ 35} Inasmuch as plaintiff has failed to comply with the contractual
requirements and has failed to prove that defendant waived such compliance, plaintiff’s
claim for an extension of time from April 22 to August 3, 2009, and related damages
must fail.
{¶ 36} Lastly, at trial, plaintiff presented some evidence with regard to unpaid
contract balance and retainage, but it is unclear to the court what amount remains
outstanding. Therefore, the parties shall be permitted to present evidence regarding
those claims at the damages trial.
{¶ 37} For the foregoing reasons, the court finds that plaintiff has proven its
claims regarding CB 63, contract balance, and retainage by a preponderance of the
evidence and, accordingly, judgment is recommended in favor of plaintiff.
{¶ 38} A party may file written objections to the magistrate’s decision within 14
days of the filing of the decision, whether or not the court has adopted the decision
during that 14-day period as permitted by Civ.R. 53(D)(4)(e)(i). If any party timely files
objections, any other party may also file objections not later than ten days after the first
objections are filed. A party shall not assign as error on appeal the court’s adoption of
any factual finding or legal conclusion, whether or not specifically designated as a
finding of fact or conclusion of law under Civ.R. 53(D)(3)(a)(ii), unless the party timely
the reason for the delay; activities on the construction schedule that may be affected; the recommended
action to minimize delay, etc.
Case No. 2010-12745 - 17 - DECISION
and specifically objects to that factual finding or legal conclusion within 14 days of the
filing of the decision, as required by Civ.R. 53(D)(3)(b).
_____________________________________
HOLLY TRUE SHAVER
Magistrate
cc:
David A. Beals Douglas M. Beard
Jon C. Walden Michael F. Copley
Assistant Attorneys General 1015 Cole Road
150 East Gay Street, 18th Floor Galloway, Ohio 43119
Columbus, Ohio 43215-3130
002
Filed September 18, 2012
To S.C. Reporter January 28, 2013