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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.

Dallas Law Firm Libby Sparks Willis Starnes Joins BMD Business Family

The business law firm of Brennan, Manna, Diamond (BMD) – with over 75 attorneys and eight offices across the country, has announced its first south-central U.S. location with the acquisition of Dallas law firm Libby Sparks Willis and Starnes (LSWS). LSWS is a team of trusted advisors practicing in the areas of M&A, Commercial Litigation, Construction, Finance, Intellectual Property, Estate Planning and Taxation. The LSWS firm includes seven attorneys and four paralegals with offices located in the University Park area of Dallas, Texas.

Work Environment Industry Leaders Join to Create Akros Network

Four industry leading firms that specialize in the critical building blocks of successful organizations have formed a network giving employers one place to go for answers to high-risk workplace issues including security and safety measures, ethics and fraud reporting, human resources compliance and employment law training, crisis and issues communication and more.

BMD Assists Olympic Steel on Recent Acquisitions

BMD recently assisted client Olympic Steel on two deals.

BMD Client Eating Recovery Center and Pathlight Mood & Anxiety Center Announce New Partners

BMD President and Healthcare Member Matthew Heinle advised Eating Recovery Center as they announce new partners

David Scott & Amanda Waesch Promoted to Vice President Roles as Part of Continued Succession Planning

Brennan, Manna and Diamond (BMD), an entrepreneurial business law firm with six offices in Ohio and Florida, has promoted Columbus Office Managing Partner David Scott and Executive Committee Member Amanda Waesch to the position of Vice President.