Wood Elec., Inc. v. Ohio Facilities Constr. Comm’n, 10th Dist. Franklin No. 16AP-643, 2017-Ohio-2743, 2017 Ohio App. Lexis 1745 (May 9, 2017)

The Ohio Facilities Construction Commission (“OFCC”), together with a school district, an architect, and a construction manager, issued an invitation for bids to build a school. Three prime contractors were chosen: a general contractor, a mechanical contractor, and an electrical contractor, Wood Electric (“Wood”).

The general contractor failed to meet the contractual milestones for either temporary enclosure or full building enclosure, significantly delaying Wood’s work. Wood notified the OFCC of the likely impact on its work soon after the general contractor failed to meet the first milestone, and requested an extension of its own deadlines. The OFCC denied Wood’s request. Wood then requested an extension of time in which to prepare, substantiate, and certify a formal claim, which the OFCC also denied.  Wood hastened to submit a timely claim, projecting an impact of $207,467.57, and reserving its right to supplement the claim when the full impact on its work became known.

When OFCC denied Wood’s claim, Wood sued OFCC in the Court of Claims.  At trial, OFCC acknowledged that Wood had a proper claim, but disputed the $254,027 amount, which included $35,006 for home office overhead.  Wood’s expert testified that he had calculated the home office overhead using the “HOOP” formula adopted by the Ohio Department of Transportation.  The trial court ultimately entered judgment in favor of Wood for the full amount of its claim.

Continue Reading Ohio Appeals Court Holds That Contractor Who Seeks Application of HOOP Formula to Calculate Home Office Overhead Need Not Prove The Conditions Precedent For Application of Eichleay Formula

Balfour Beatty Rail, Inc. v. The Kansas City Southern Railway Company, 2016 U.S. Dist. LEXIS 39086 (N.D. Tex., March 25, 2016)

The contractor contracted with owner to install 65 miles of railroad track, for a price of $12,206,666.  The owner had engaged another contractor to grade and prepare the substrate for the railroad track, and was to furnish and deliver aggregate for track ballast and track rail material to various locations along the rail route.  The contractor’s scope included all other work.  The contractor fell behind in its work, and the owner hired additional contractors to complete a portion of its scope.  The contractor blamed the delays on the owner’s late delivery of aggregate and rail, and improper subgrade preparation under a theory of differing site conditions. It sought $4.35 million in unpaid change orders, delay damages, and penalties under Texas’ prompt payment statutes.  The owner in turn sought $2.6 million in completion costs and costs of wasted aggregate.

Continue Reading Texas District Court Rejects Rail Contractor’s Delay and Prompt Payment Claims and Awards Owner More Than $3 Million

Boone Coleman Constr., Inc. v. Vill. of Piketon, 2016-Ohio-628, 2016 Ohio LEXIS 441 (Ohio Feb. 24, 2016)

A general contractor entered into a construction contract with a public agency for a road construction project with a $700 per day liquidated damages provision. The contractor completed the project over one year late, and was assessed $277,900 in liquidated damages. The original contract price was $683,300. The trial court granted summary judgment for the public agency, awarding the full amount of the liquidated damages. An intermediate appellate court overturned the ruling based upon an after-the-fact comparison of the total liquidated damages imposed in relation to the contract price, stating, “the amount of damages [as a whole] is so manifestly unreasonable and disproportionate that it is plainly unrealistic and inequitable.” The Ohio Supreme Court vacated the decision of the appellate court and remanded for further consideration.

Continue Reading Ohio Supreme Court Holds Reasonableness of Liquidated Damage Provision to Be Determined Based Upon the Parties’ Knowledge at Time of Contracting Rather than After Performance

King County v. Vinci Construction Grands Projects/Parsons RCI/Frontier-Kemper, JV, 2015 Wash. App. LEXIS 2735 (Nov. 9, 2015)

The Court of Appeals of Washington recently decided King County v. Vinci Construction Grands Projects/Parsons RCI/Frontier-Kemper, JV, a dispute between a joint venture contractor (the Contractor) and King County, Washington (the County). The dispute stemmed from problems that arose and significant delays that occurred during a major expansion of the County’s wastewater treatment system, known as the Brightwater project. The case illustrates the potential pitfalls of a contractor’s claim of differing site conditions.

Continue Reading Washington State Court Affirms $155M Jury Award Against Contractor and Surety Stemming from Claim of Default Due to Delayed Performance, Sustaining Denial of Contractor’s Differing Site Condition Defense

Davis Group, Inc. v. Ace Electric, Inc., 2015 U.S. Dist. LEXIS 83368 (M.D. Fla. June 26, 2015)

This action arose out of a construction project to build a new Radar Approach Control Facility at Seymour Johnson Air Force Base in Goldsboro, North Carolina (“Project”). The United States Army Corps of Engineers (“COE”) contracted with general contractor Davis Group, Inc. (“TDG”) to construct the Project. TDG entered into a subcontract with Ace Electric, Inc. (“Ace”) to perform the electrical work on the Project (the “Subcontract”).

The Subcontract included various provisions addressing delays in completion of the work. In particular, the parties agreed that Ace was entitled to a reasonable extension of time and/or additional compensation if its work was delayed, through no fault of Ace, by the COE, TDG or other subcontractors. If on the other hand, Ace was responsible for a delay in completion of the work, then the parties agreed that Ace would “reimburse [TDG] for the entire cost and expense suffered or incurred as a result of” the delay, including any liquidated or other damages the COE might assess against TDG for delays to the Project as a whole. The Subcontract further provided that, if “such damages are caused by [Ace] and another person or entity,” TDG could “reasonably apportion such damages between the parties, and any such apportionment shall be final and binding upon [Ace].”

Continue Reading Federal District Court in Florida Holds that Contract Provision Giving General Contractor Discretion to Apportion Damages Does Not Confer Authority to Determine That Subcontractor Caused Delay

C&H Electric, Inc. v. Town of Bethel, 312 Conn. 843, 2014 Conn. LEXIS 263 (Aug. 5, 2014)

This dispute arose out of a project to renovate and build an addition at a high school in the Town of Bethel, Connecticut.  The plaintiff, C&H Electric, entered into a contract with the defendant, the Town of Bethel, to perform the electrical work on the project.  The parties’ contract included a “no damages for delay” clause, limiting the defendant’s liability for delays it caused on the project.  The no damages for delay clause specified that an extension of time would be plaintiff’s “sole remedy” for “(1) delays in the commencement, prosecution or completion of the work, (2) hindrance or obstruction in the performance of the work, (3) loss of productivity, or (4) other similar claims whether or not such delays are foreseeable, contemplated, or uncontemplated . . .”  The contract included a single exception to the no damages for delay clause, which allowed the plaintiff to recover for delays caused by acts of the defendant “constituting active interference with [the plaintiff’s] performance of the work.”  While the contract did not define “active interference,” it did specify that the defendant’s exercise of its contractual rights, including its right to suspend, reschedule or change the work, would not constitute “active interference.”

Continue Reading Connecticut Supreme Court Construes “Active Interference” Exception to “No-Damage-for-Delay” Clause

Boone Coleman Construction, Inc. v. Village of Piketon, 2014-Ohio-2377, 2014 Ohio App. LEXIS 2317 (Ohio Ct. App. May 22, 2014)

The Court of Appeals of Ohio held that a liquidated damages provision in a public construction contract constituted an unenforceable penalty because the amount of liquidated damages sought – nearly one-third of the total contract price – was “so manifestly unreasonable and disproportionate” to the contract price that it was unenforceable.

The defendant in that case was the Village of Piketon, Ohio, which solicited bids for a public construction project for roadway improvements. Plaintiff, Boone Coleman Construction, Inc., was the low bidder on the project. The parties entered into a contract under which Boone Coleman agreed to construct the project for $683,300. The contract further provided that if Boone Coleman had not substantially completed its work within 120 days, it would pay the Village $700 per day in liquidated damages until the project was substantially completed. Ultimately, Boone Coleman did not complete its work until 397 days after the agreed project completion date. Upon completion, the Village paid Boone Coleman $535,823 for its work.

Continue Reading Ohio Court of Appeals Holds Liquidated Damages Unenforceable Where Amount of Liquidated Damages Is Disproportionate to Contract Price

Oceanside Pier View, L.P. v. Travelers Property Casualty Co. of American
2008 U.S. Dist. LEXIS 37755 (S.D. Cal. May 6, 2008)
The U.S. District Court for the Southern District of California considered whether the basic coverage of a $28 million Builders Risk policy applied to the increased cost to complete construction of the unbuilt portion of a mixed use project attributable to delays which resulted from the failure of a shoring wall during construction. The court held that the basic Builders Risk coverage did not apply, and that coverage for increased costs of completing structures which were not under construction at the time of failure was subject to the $100,000 limit of “additional coverage” provided for “Expediting Costs and Additional Cost of Construction Materials and Labor”.
Continue Reading US District Court in California Holds Basic Builder’s Risk Coverage Inapplicable to Increased Cost Of Completing Portion Of Project Which Was Not Built At Time Of Failure – Rather Coverage of Such Losses Was Restricted to More Limited Additional Coverage Part

Construction Co, Inc. v. United States
2008 U.S. Claims LEXIS 137 (May 21, 2008)
The United States Court of Federal Claims discussed the measurement of equitable adjustment for standby equipment costs in a case involving the United States Department of the Navy.
Metric Construction Co. entered into two contracts with the Navy to perform construction work on the small island of San Nicolas off the coast of California. Under the first contract, Metric agreed to make improvements and repairs to the Navy’s airfield runway on the island. The second contract called for repairs to certain of the islands roadways and storm drainage systems. Certain conditions on the island created logistical challenges for Metric in performing the work. These included limited landing areas for barges carrying equipment, bad weather, and the existence of a salt water spray over the site.
Continue Reading Federal Claims Court Approves Contractor’s Use of Blue Book Rates to Calculate of Standby Equipment Costs in Constructive Change Claims Against the Navy

James Corp. v. North Allegheny School District
No. 1268 C.D., 2007 Pa. Commw. LEXIS 636 (Pa. Commw. Ct. Nov. 30, 2007)
The Pennsylvania Commonwealth Court held that the “measured mile” method of proving damages for an acceleration claim was legally sufficient to establish the extent of the contractor’s damages. The Court also held the contractor’s failure to provide notice in accordance with the contract was not fatal to the claim, and that attorney fees and expenses under the Prompt Payment Act must be apportioned to those fees and expenses associated with recovering payment’s due under the contract.

Continue Reading Pennsylvania Commonwealth Court Holds Written Notice of Claim Requirement Excused and Accepts “Measured Mile” Method of Proving Inefficiency Damages