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CLIENT ALERT: Construction Law Update: Communication is Key! And Other Lessons Learned From A Recent Public Project Court Decision

In a recent decision, the Ohio Court of Claims entered a $2.2 million judgment in favor of the general trades contractor, and against a public university, in connection with an on-campus renovation project. Mid American Construction, LLC v. Univ. of Akron, Ct. of Cl. No. 2016-00685JD, 2018-Ohio-4513.

Delivered as a “multi-prime” project, the university entered into separate contracts with a construction manager and an architect, in addition to separate contracts with the general trades, plumbing, HVAC, and electrical contractors. The project was delayed and the general trades contractor and university asserted breach of contract claims against one another, each arguing that the other party’s delays and failure to perform caused the other to suffer damages.

Following trial, Judge Crawford entered a decision finding that the university’s ongoing failure to pay for work, as well as problems with coordination and schedule, not only justified the contractor’s decision to walk-off the job, but also prevented the contractor from completing its work. Thus, the university was found liable to the general trades contractor in the amount of $2.2 million, while the university’s counterclaim was denied.

The Court’s detailed thirty-three (33) page decision offers many rules and reminders for public owners, contractors, construction managers, construction claims consultants, and damages experts alike:

1.  Communication is Key. In observing the risk inherent in all construction projects, Judge Crawford aptly noted: “[p]ublic construction contracts are vast documents containing thousands of construction and procedural details, all of which amount to legal promises, and some of which would be difficult to perform. Business at the construction site is performed by skilled and unskilled workers who seek to coordinate a schedule that is often developed at a laboratory away from the work site and without communication with those individuals putting one brick on top of another.”

The point is clear. Communication delivers results. The more communicative, transparent and effective the construction team functions, the better the results. In his opinion, Judge Crawford identified thirty (30) separate reasons for delays on construction projects, the majority of which arise in the pre-construction phase and can easily be avoided with more effective communication.

What are you doing to improve communication, both internally and with other project participants? 

2.  Control What You Can Control. This decision also serves as a reminder to project owners of the importance of selecting an appropriate project delivery method, taking steps to ensure that the design is adequately developed, considering input from all stakeholders, issuing payment in a timely manner, issuing timely approvals, delivering the site to the contractor in a timely manner, hiring qualified design and construction teams, and following the contract’s written notice requirements.

Likewise, it is incumbent on contractors to identify and provide notice of unrealistic schedules, errors in contract documents, apparent design errors, constructability concerns, and questions concerning scope. Contractors are also reminded that so long as they make an honest effort to perform their contracts, and do not willfully refuse to perform, they are entitled to some portion of the contract price so long as they achieve substantial completion.

3.  The Value (or Cost) of a Good (or Bad) Construction Manager. This decision is a cautionary tale for owners and construction managers alike as the university’s liability arose, in part, from the failings of its construction manager. If the owner chooses to implement the Construction Manager At-Risk project delivery method, it must carefully select a qualified construction manager. Equally important, construction managers must deliver value to the project and their owner clients by following contract requirements such as conducting partnering sessions with contractors, providing monthly progress reports, providing look-ahead schedules, maintaining accurate and current schedule updates, timely responding to RFI’s and executing CCDs, and appropriately coordinating among contractors.

4.  Credibility Matters. If a claim arises that escalates to litigation or arbitration, judges and arbitrators tend to believe and find credibility with witnesses who are not evasive when asked tough questions, maintain a patient and frank demeanor, and provide consistent answers supported by the project documents.

5.  Battle of the Experts. Along the same lines, if a claim arises that requires expert testimony, judges and arbitrators have a tendency to agree with experts who are well-qualified, thorough, maintain an objective demeanor and deliver objective explanations, and offer testimony that is not conclusory, but is based on support and factual detail.

6.  Liquidated Damages or Compensatory Damages, But Not Both. Liquidated damages are not available under Ohio law where the party seeking to impose them is found to have contributed to an unreasonable delay. However, even in instances where a court may find a liquidated damages clause enforceable, and the party seeking damages is not in breach, it is well-settled law in Ohio that a non-breaching party may not recover both compensatory and liquidated damages.

For additional information, please feel free to contact Attorney Justin Alaburda at Brennan Manna & Diamond. He can be reached at www.jmalburda@bmdllc.com, or (330) 253-9134. 

Changes to Physician Assistant Statutes in Florida

In the last year, there have been many changes to the scope of practice and collaboration/supervision requirements for advanced practice providers such as APRNs and physician assistants in the state of Florida. In a previous Client Alert we discussed House Bill 607, which expanded the autonomous practice of APRNs providing primary care services in Florida.

Ohio Senate Bill 49 – Ohio Expands Lien Rights for Design Professionals

Effective September 30, 2021, Ohio granted limited lien rights to design professionals, including architects, landscape architects, engineers, and surveyors. Ohio Governor Mike DeWine signed Senate Bill 49 into law on July 1, 2021. This new law established a statutory right to lien commercial real estate by Ohio design professionals who, until now, could not file a lien for non-payment of professional services. Senator Vernon Sykes, a primary sponsor of Senate Bill 49, stated that the “legislation ensures that architects, engineers and other designers will get paid for their work, regardless of the outcome of their projects . . . It will support hardworking Ohioans by protecting the value of their labor . . ..”

Primary Care Practice Officially Defined in Florida for APRNs Practicing Autonomously

As many providers in Florida are aware, House Bill 607 (the “Bill”), which was passed in February of last year, gives certain APRNs in Florida the ability to practice autonomously. The only catch is that they must work in primary practice. When the Bill was initially passed, there was question as to what was exactly considered primary care, absent a definition from the Florida Board of Nursing. However, as of February 25, 2021, “primary care practice” has officially been defined.

Part II of the No Surprises Act

The Department of Health and Human Services (“HHS”) published Part II of the No Surprises Act on September 30, 2021, which will take effect on January 1, 2022. The new guidance, in large part, focuses on the independent dispute resolution process that was briefly mentioned in Part I of the Act. In addition, there is now guidance on good faith estimate requirements, the patient-provider dispute resolution processes, and added external review provisions.

Safer Federal Workforce Task Force - Guidance for Federal Contractors and Subcontractors

The Safer Federal Workforce Task Force has issued its Guidance for Federal Contractors and Subcontractors (Guidance). Note that the Guidance applies only to “covered contracts,” which are contracts that include the clause (Clause) set forth in Sec. 2(a) of Executive Order 14042 (Ensuring Adequate COVID Safety Protocols for Federal Contractors). The Federal Acquisition Regulatory Council (FARC) is to conduct rulemaking and take related action to ensure that the Clause is incorporated into federal contracts. Until that happens, federal contractors likely will not see the Clause in its contracts. Following is a broad summary of the Guidance.