Timely Assertion of Contract Claims is Required

posted by Michael Fortney  |  Jan 13, 2010 2:30 PM in Construction Law:Construction Claims

In a series of recent court opinions, Ohio’s courts have held that a contractor’s failure to strictly adhere to the requirements in the contract with regard to the filing of a claim waives the contractor’s claims.

In Maghie & Savage, Inc. -v- P.J. Dick, Inc., M&S was a subcontractor to P.J. Dick on a project to construct a building at the Ohio State University.  P.J. Dick was the general trades contractor for OSU, M&S was the interior framing, drywall and ceilings subcontractor.  

The building was not enclosed as scheduled when M&W was to perform its work.  Nonetheless, P.J. Dick demanded that M&S perform its work in the building protected by visqueen.  M&S protested, then complied.  Upon completion of its work, M&S initiated a claim against P.J. Dick for increased labor costs caused by performing its work without the planned for interior climate control.  

The subcontractor agreement contained the following provision: 

 

If Subcontractor's Work is delayed, accelerated, compressed, re-sequenced or if Subcontractor is adversely impacted in any way in the prosecution of the Work due to the schedule, or the acts of . . . Contractor, or Contractor's other subcontractors, and Subcontractor suffers delay, acceleration, compression, loss of efficiency, extended overhead, or any other type of damages, losses or impacts therefrom, or if Subcontractor has any other type of claim for additional compensation to be asserted against Contractor or any of such other entities, Subcontractor agrees to provide written notice within two (2) business days of the event or occurrence giving rise to the impact to Subcontractor's Work, or such claims shall be barred. Time shall be of the essence.

 

The Franklin County Court of Appeals held that, because M&S did not provide specific notice to P.J. Dick that it was experiencing increased labor costs due to the lack of interior climate control, M&S waived its claim.  Therefore, the Court overturned a jury award in favor of M&S and entered judgment on P.J. Dick’s behalf.  The Court rejected M&S’s argument that the provision was waived by P.J. Dick when it directed M&S to proceed with its work after M&S’s protests.

Similarly, the Ohio Supreme Court recently held that a contractor waives its claim for a time extension under the contract if the contractor failed to specifically follow the contract’s written notice procedures, despite the fact that the owner knew of the facts causing the delays.  Dugan & Meyers Construction -v- Ohio Dept. of Adm. Services

The lesson to be learned from these cases is that:

 

  • contractors need to be aware of all notice provisions in the contract;
  • contractors need to provide notice of delay and any type of damages caused by the delay consistent with the contract provisions.

 

 


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