Accurate Elec. Constr., Inc. v. Ohio State Univ.

• Decision Date: 05 December 2019
• Docket Number: No. 17AP-211,17AP-211
• Citation: 149 N.E.3d 1080,2019 Ohio 4992
• Parties: ACCURATE ELECTRIC CONSTRUCTION, INC., Plaintiff-Appellant, v. The OHIO STATE UNIVERSITY, Defendant-Appellee.
• Court: Ohio Court of Appeals

149 N.E.3d 1080

2019 Ohio 4992

ACCURATE ELECTRIC CONSTRUCTION, INC., Plaintiff-Appellant,

v.The OHIO STATE UNIVERSITY, Defendant-Appellee.

No. 17AP-211

Court of Appeals of Ohio, Tenth District, Franklin County.

Rendered on December 5, 2019

DECISION

BROWN, J.

{¶ 1} Plaintiff-appellant, Accurate Electric Construction, Inc. ("Accurate"), appeals from a judgment of the Court of Claims of Ohio granting the motion for summary judgment of defendant-appellee, The Ohio State University (the "University" or "OSU"). For the reasons which follow, we affirm in part and reverse in part the judgment of the Court of Claims.

{¶ 2} The present case arises from a construction contract dispute between Accurate and the University regarding the South High Rise Dormitory Project (the "Project"). The Project consisted of demolition, renovation, and expansion of five student housing facilities located on the University's main campus. The Project was constructed under the multi-prime model of contracting.

{¶ 3} There were "several moving parts and pieces" to the Project. (Purtee Depo. at 39.) The Project was split into three phases of construction with multiple bid packages. Phase one involved Bid Packages 1 through 5 and concerned utility relocation and chiller bunker work. Phase two involved Bid Package 6 and Bid Package 7 ("BP7") and concerned additions and renovations to the Stradley and Park dormitories. Phase three involved Bid Package 8 ("BP8") and concerned additions and renovations to the Smith, Steed, and Siebert dormitories.

{¶ 4} Accurate served as the electrical prime contractor on BP7 and BP8. A document titled "General Conditions" was "the contract between the University and Accurate for the electrical work on the Project." (Mot. for Summ. Jgmt., Ex. A ("Purtee Affidavit"), ¶ 3; Ex. 1004 (the "contract").)

{¶ 5} Smoot Construction Company ("Smoot") served as the University's construction manager on the Project, and Schooley Caldwell Associates ("Schooley") served as the associate architect on the Project (collectively, the University, Smoot, and Schooley will be referred to as the "Management Team"). When the Project began, contractors were informed that all communications regarding the Project were to be routed through Smoot. Greg Palmer was Smoot's project manager on the Project. Patricia Purtee was the University's senior construction manager on the Project.

{¶ 6} Both BP7 and BP8 were on aggressive scheduling timelines. There was "[i]ntercoordination amongst those phases" of the Project, and each phase of construction depended on the preceding phase being completed timely. (Palmer Depo. at 30.) The Project completion dates were critical because the dorms needed to be ready to house incoming students when they arrived at the University.

{¶ 7} As such, when contractors submitted their bids, the University informed them that all contractual milestone dates had to be met. Milestone dates "are target dates usually critical to certain activities on a schedule that will allow other work to follow." (Purtee Depo. at 52-53.) At pre-construction meetings, the University informed the contractors there would be no time extensions on the Project and no change to the contract end date.

{¶ 8} The parties had a pre-construction meeting for BP7 on June 3, 2011, and the contractual occupancy date for the BP7 buildings was July 6, 2012. By February 2012, BP7 had fallen behind schedule and Smoot expressed concerns over meeting the deadline. BP7 ultimately finished a couple weeks behind schedule; the state issued a certificate of occupancy for the BP7 buildings on July 25, 2012.

{¶ 9} Throughout the Project, the Management Team sought to take a "fair and reasonable" approach to dealing with contractor issues. (Palmer Depo. at 51.) Palmer noted that, if a contractor fell behind because of delays on predecessor activities, the Management Team would need the contractor to "make it up, then [the Management Team] would seek out to compensate them for whatever costs they incurred as a result of that." (Palmer Depo. at 51.)

{¶ 10} Accurate experienced delays and other issues throughout BP7. On March 31, 2012, Accurate sent Smoot an e-mail indicating it was seeking additional compensation for the issues that arose during BP7. Accurate and Smoot communicated regarding Accurate's BP7 claims throughout 2012 and early 2013. The Management Team and Accurate resolved Accurate's BP7 claims at a field level resolution meeting on January 24, 2013.

{¶ 11} The pre-construction meeting for BP8 occurred on March 26, 2012. BP8 ultimately completed on time; the state issued a certificate of occupancy for the BP8 buildings on June 17, 2013. The University began occupying the BP8 dorms on August 15, 2013.

{¶ 12} Accurate experienced a number of issues throughout BP8. In September 2012, a pipe burst in an underground tunnel on the Project and caused substantial flooding. The flood caused "damage to a lot of equipment in the bunker," and Accurate "performed some of the remedial work to get things back up and running" after the flood. (Purtee Depo. at 200.)

{¶ 13} In January 2013, the Management Team realized that Accurate had installed flexible conduit on the fire alarms in both the BP7 and BP8 buildings. Although the contract specifications called for rigid conduit, Accurate had installed flexible conduit in the mockup room without objection from the Management Team. On January 21, 2013, Smoot issued a notice to comply to Accurate stating the flexible conduit did not comply with the Project documents.

{¶ 14} Purtee informed Accurate the University could force Accurate to "tear off the drywall in five buildings" and "backcharge them" for the related costs. (Purtee Depo. at 209.) Purtee explained that, although it "wouldn't be appropriate" to actually make Accurate tear out the drywall, it remained "an option for the University." (Purtee Depo. at 211; Palmer Depo. at 184.) The University ultimately sought to obtain a credit from Accurate for the flexible conduit. The University "established a change order and provided [Accurate] with the opportunity to sign the change order" regarding the proposed credit for the flexible conduit, but Accurate did not agree with the amount of the credit and refused to sign the change order. (Purtee Depo. at 211.)

{¶ 15} On February 13, 2013, Smoot sent change order 363 to Tony Evans, Accurate's project manager, and asked Evans to sign the change order. Change order 363 was a zero cost change order which revised a number of the milestone dates in BP8. Although change order 363 pushed some of the milestone dates back by several months, it did not change the Project completion date. Accurate refused to sign change order 363 and the University processed it unilaterally, i.e., without Accurate's signature.

{¶ 16} Accurate was supposed to install spare conduit in a trench at the 12th Avenue crossing. Due to miscommunication between Accurate and the geothermal contractor, Accurate missed the initial trench opening. The trench had to be reopened for Accurate to install the conduit. In a June 10, 2013 e-mail, Palmer informed Evans that the Management Team believed both contractors should share the expense of reopening the trench. Accurate did not agree that it should have to share the cost of the trench work and the issue was resolved by "a unilateral process change order." (Palmer Depo. at 208.)

{¶ 17} Thus, throughout BP8, the Management Team unilaterally processed a number of change orders concerning Accurate. Purtee explained she processed change orders unilaterally in order "to make sure that the contractors got paid something on their change orders, whether they agreed to the amount or not." (Purtee Depo. at 284.) Purtee admitted she did not know if the contract allowed for change orders to be processed unilaterally.

{¶ 18} Article 7 of the contract, titled "Contract Modifications," provided for three different methods of a contract modification: a change order, a field work order, or a minor change in the work. Minor changes were changes which did not affect the contract sum (the amount payable to the contractor) or the contract time (the time period for the completion of the work). A change order was a written instrument "signed" by the Management Team and the contractor, stating their agreement on the change to the work, the amount of adjustment to the contract sum, and the extent of adjustment to the contract time. Thus, a change order had to be signed by both the Management Team and the contractor. By signing a change order "the Contractor irrevocably certifie[d] that the elements of a Change Order [were] completely satisfied, and waive[d] all rights, if any, to seek further adjustment of the Contract Sum or Contract Time." (General Conditions, 7.3.2.)

{¶ 19} In contrast, the contract provided that a field work order "shall be used to direct a change in the Work in the absence of total agreement on the terms of a Change Order." (General Conditions, 7.2.2.3.) Upon receipt of a field work order, the contractor had to "promptly proceed with the change in the Work involved." (General Conditions, 7.2.2.4.) A contractor could sign the field work order to indicate acceptance of its terms. If the contractor did not sign the field work order, the University was obligated to determine the adjustments, if any, to the contract sum and contract time caused by the field work order. If the contractor did not agree with the University's determination regarding the adjustment to the contract sum and/or contract time resulting from a field work order, the contractor was obligated to "initiate a claim under Article 8 within 10 days of the date on which the [University] issues its determination." (General Conditions, 7.2.2.7.)

{¶ 20} Article 8 of the contract, titled "Dispute Resolution," obligated a contractor to "initiate every claim by giving written notice of the claim" to the Management Team "within 10 days after occurrence of the event giving rise to the...