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Ohio Supreme Court Liquidated Damages Analysis: Hindsight is not 2020!

In a case decided on February 24, 2016, the Ohio Supreme Court construed the enforceability of a liquidated damages provision in a public works construction contract. The Court held that when evaluating the enforceability of a liquidated damages provision in a construction contract, the court must conduct its analysis prospectively, based on the per diem amount of the liquidated damages at the time the contract is executed, and not retrospectively, based on the total amount of liquidated damages that ultimately accrue.

In reversing the Court of Appeals, the Ohio Supreme Court determined that the mere fact that the liquidated damages totaled $277,900 (calculated at $700 per day times 397 days late) did not result in a finding that the amount of liquidated damages was unreasonable where the base contract amount was $683,300. The flaw in the Court of Appeals reasoning was that it applied a retrospective analysis using hindsight. The long-standing test in Ohio requires the analysis to be considered at the time the parties entered into the contract.

The Ohio Supreme Court also held that “liquidated damages are not deemed a penalty simply because a project consists of new construction of an improvement that did not exist previously and no proof of damages is required to enforce liquidated damages pursuant to such a contract.”

This decision also includes an interesting overview of the Samson Sales tripartite test for distinguishing between an unenforceable penalty clause and a valid liquidated damages clause.

To read the Slip Op. No. 2016-Ohio-628, Boone Coleman Constr., Inc., v. Piketon, visit: http://www.supremecourt.ohio.gov/rod/docs/pdf/0/2016/2016-Ohio-628.pdf

Should you wish to consult with the author of this article, please feel free to contact Attorney Robert A. Hager at (330) 253–4925.

BMD Congratulates Tony Manna and Signet Capital Advisors - 2018 ACG Deal of the Year

BMD Congratulates Tony Manna and Signet Capital Advisors - 2018 ACG Deal of the Year

BMD Making a Real Impact through the Bridges Program

When the State of Ohio announced the Bridges Program in early 2018, it was an opportunity for real change - it was a commitment to change the narrative for young adults in the foster care system. The program is designed to help young adults aging out of the foster care system prepare for adulthood. BMD has been at the forefront of this initiative providing legal support for the program.

BMD 2019 OHIO SUPER LAWYERS AND OHIO RISING STARS

BRENNAN, MANNA & DIAMOND is proud to announce RICHARD W. BURKE (Estate Planning and Probate), ROBERT A. HAGER (Construction Litigation), MICHAEL A. STEEL (Bankruptcy, Business) and RICHARD L. WILLIGER (Workers’ Compensation, Employment & Labor) have been selected as 2019 Ohio Super Lawyers by Law and Politics magazine, Northern Ohio Live magazine, and Cincinnati Magazine in their respective area of practice. BMD’s 2019 Rising Stars include: JUSTIN M. ALABURDA (Business Litigation), VICTORIA L. FERRISE (Government Relations), ALEX J. McCALLION (Business Litigation), BRANDON T. PAULEY (Business/Corporate) and DANIEL J. RUDARY (Business Litigation)

Family and Friends Remember Brennan Manna Diamond co-Founder

At 6 fee 6 inches and wearing a white cowboy hat, Brennan Manna Diamond co-founder David L. Brennan was known for rescuing failing businesses and blighted areas and initiating and shepherding Ohio's school choice movement.

Amanda Waesch Weighs in on Leasing v. Buying Medical Office Space

Amanda Waesch weighs in on leasing v. buying medical office space