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It's Always Risk Management Season in the Construction Industry

For the second time in just nine months, the Ohio Supreme Court issued a major decision affecting project-related risk and exposure for members of Ohio’s construction industry. The first of those decisions – Ohio N. Univ. v. Charles Constr. Servs., Inc., 2018-Ohio-4057, issued in October 2018 – expands contractor and subcontractor exposure to uninsured risks and claims by determining that a subcontractor’s faulty workmanship is not a covered “occurrence” under a typical Commercial General Liability (“CGL”) insurance policy.

More recently, however, in New Riegel Local School District v. Buehrer Group Architecture & Engineering, Inc., 2019-Ohio-2851, the Court issued a decision limiting contractor, subcontractor and design professional exposure to stale claims by clarifying that Ohio’s ten-year statute of repose applies not just to tort claims, but contract claims as well.  This decision is significant because a statute of repose, unlike a statute of limitations, is intended to begin to run at an identifiable time or event and bars any claim that is brought after a specified amount of time. In the context of the construction industry, a statute of repose is important because it provides risk managers certainty and predictability concerning the ability – and inability – of project participants to assert stale claims, which may influence other business decisions such as project close-out and document retention practices.

There are many sources of risk in the construction industry: project risk, contractual risk, occupational risk, financial risk, and the list goes on.  By issuing these two major construction law decisions in less than one year’s time, the Ohio Supreme Court reminds all project participants – owners, design professionals, general contractors, subcontractors, sureties and insurers alike – that it is always the right time to revisit your comprehensive risk management strategies.  While not all risk is avoidable, careful planning and the proper use of resources can allow you to transfer or mitigate certain risks in a way that maximize rewards.  

If you have any questions about this, or other matters affecting your business, do not hesitate to contact Justin M. Alaburda or Justin M. Lovdahl of BMD’s Construction Law Group.

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