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An appellate court reversed the trial court judgment that held a Contractor was not entitled to costs associated with delays (including overhead) on a city building project.  The city argued that the contractor was late in submitting its claim for damages and it also argued that the city was not responsible for causing the delay to the contractor’s work. Specifically, the contract permits a contractor to recover for “any increase in the cost of performance of the contract (excluding profit),” if the contractor’s performance of all or any part of the work is, for an unreasonable period of time, delayed by the contracting officer’s act or failure to act. The only type of damages expressly precluded by the contract were “profit.” Plaintiff-Appellant,  Jindal Builders & Restoration Corp. v. Cincinnati Metropolitan Housing Authority,  157 N.E.3d 279 (Ohio 2020)

The court found that the city was the sole cause of the contractor’s delay and it found that the contractor gave notice of the delay within 20 days as required by the contract.  The fact that it did not file suit until months later did not cause it to lose its right to litigate over the properly noticed claim.  On the notice of claim issue, the court analyzed the contractual requirements and concluded that although there were two distinct requirements applicable to a contractor filing a delay claim, the contractor need not tender this “written monetary claim” within 20 days of experiencing the increased costs, but instead “as soon as practicable after the termination of” the delay.

“Jindal needed only to submit written notification (not a full claim delineating costs incurred) within 20 days from when it should have notified CMHA of the outset of the delay. And this makes sense—the purpose of the first provision is to place the contracting officer on notice in order to ameliorate any damage, and it would be unrealistic to expect the contractor to completely itemize all of its damages on such short notice (particularly when the harm might be on-going)….”

“[We] find that Jindal satisfied the notice requirements for the period between July 27 and October 17. As established above, July 26 represented the actual start date for Phase II. Jindal satisfied the 20-day notice requirement by sending various emails in mid-August notifying CMHA of Jindal’s inability to begin work on Phase II and warning of the increased costs that would be incurred from this delay.”

“Although this notice came five months after Jindal commenced work, based on the facts of this case, we find that Jindal tendered CMHA its written claim for overhead damages “as soon as practicable” after the termination of the delay pursuant to section 30(c)(2), especially in light of Jindal’s hiring a CPA to calculate the overhead damages for the relevant period. Certainly, it submitted a little over eight months after the termination of the delay satisfied the “as soon as practicable” requirement). Certainly, it tendered this claim well in advance of “final payment.”  For these reasons the court granted the contractor a partial reversal of the underlying adverse court determination.”

 

About the author: Article written by J. Kent Holland, Jr., a construction lawyer located in Tysons Corner, Virginia, with a national practice (formerly with Wickwire Gavin, P.C. and now with ConstructionRisk Counsel, PLLC) representing design professionals, contractors and project owners.  He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects.  He is publisher of ConstructionRisk Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932.  This article is published in ConstructionRisk Report, Vol. 23, No. 1 (Jan 2021).

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