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N.L. Construction Corporation v. Ohio Department of Administrative Services

August 30, 2012


The opinion of the court was delivered by: Judge Alan C. Travis

Cite as

N.L. Constr. Corp. v. Ohio Dept. of Adm. Servs.,

65 South Front Street, Third Floor Columbus, OH 43215 614.387.9800 or 1.800.824.8263


{¶1} On July 2, 2012, plaintiff/counter defendant/third-party plaintiff, N.L. Construction Corporation (NLC), filed a motion for partial summary judgment as to Count I and II of its complaint and as to the counterclaim of defendants/counter plaintiffs, Ohio Department of Administrative Services (ODAS) and Ohio Department of Transportation (ODOT). On July 24, 2012, ODAS and ODOT filed a memorandum in opposition.

{¶2} Civ.R. 56(C) states, in part, as follows:

{¶3} "Summary judgment shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, written admissions, affidavits, transcripts of evidence, and written stipulations of fact, if any, timely filed in the action, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. No evidence or stipulation may be considered except as stated in this rule. A summary judgment shall not be rendered unless it appears from the evidence or stipulation, and only from the evidence or stipulation, that reasonable minds can come to but one conclusion and that conclusion is adverse to the party against whom the motion for summary judgment is made, that party being entitled to have the evidence or stipulation construed most strongly in the party's favor." See also Gilbert v. Summit Cty., 104 Ohio St.3d 660, 2004-Ohio-7108, citing Temple v. Wean United, Inc., 50 Ohio St.2d 317 (1977).

{¶4} NLC contracted with ODAS for the general trades scope of work at the ODOT Noble County Maintenance Facility project in Caldwell, Ohio.*fn1 The first phase of the project, which involved the design, manufacture and delivery of a pre-engineered metal building (PEMB), was to be completed by May 25, 2011. Phase II, which included demolition of the old building, was to be completed on or before October 12, 2011. The contract was executed on June 14, 2010, in the total amount of $2,611,368.

{¶5} According to the affidavit of Bruce Ratekin, an architect employed by the State Architect's Office, NLC failed to timely provide a PEMB that met project specifications and, accordingly, on October 14, 2010, ODOT notified NLC that it intended to exercise its termination rights pursuant to Article 12.3 (5-day notice). NLC responded with three correspondence, one each on October 19, 20, and 28, 2010. A meeting was subsequently held on November 3, 2010, to discuss the issue. As a result of the meeting, ODOT terminated NLC's contract for cause on November 5, 2010.

{¶6} NLC subsequently requested an extension of time to respond to the 5-day notice in a letter dated November 12, 2010. As a result of another meeting between the parties, which took place on November 17, 2010, ODOT agreed to rescind the termination in return for NLC's promise to complete Phase I of the project by the end of July 2011. The agreement was memorialized on December 14, 2010, and therein, each of the parties reserved their respective claims and defenses.

{¶7} Subsequently, on February 23, 2011, ODOT sent a 5-day notice identifying four specific items of defective work. The parties met on March 11, 2011, to discuss the notice, at which time NLC was given a 7-day extension of time to complete the identified items. On March 15, 2011, NLC sent a second written response wherein it memorialized some of the discussions that had occurred and set forth its plan to address the remaining items identified in the February 23, 2011 notice. The state architect on the project reviewed NLC's March 15, 2011 correspondence and, after consulting with a scheduling specialist, he determined that NLC had not complied with the requirements of the 5-day notice and he recommended that ODOT terminate NLC's contract. (Affidavit of Lane Beogher.) ODOT issued a letter on March 23, 2011, terminating NLC's contract. As of that date, ODOT had paid NLC a total of $773,662.98.

{¶8} The crux of NLC's motion is that ODOT failed to follow the contractually mandated procedures when it terminated NLC's contract without first providing it with a 72-hour notice and without permitting NLC to cure any deficiencies in its performance.*fn2 In the alternative, NLC argues that even if the notice of termination was procedurally valid, ODOT has presented no evidence to support a termination "for cause" as that term is defined in the agreement. NLC seeks both a declaration that ODOT breached the contract and a judgment as to the issue of ODOT's liability. NLC further contends that, in the absence of a valid termination of its contract, ODOT cannot recover upon its counterclaim, as a matter of law. Accordingly, NLC seeks judgment in its favor on the counterclaim.

{¶9} Contract interpretation is a matter of law for the court. City of St. Marys v. Auglaize Cty. Bd. of Commrs., 115 Ohio St.3d 387, 2007-Ohio-5026, ¶ 38. When interpreting a contract, a court's principle objective is to ascertain and give effect to the intent of the parties. Hamilton Ins. Servs., Inc. v. Nationwide Ins. Cos., 86 Ohio St.3d 270, 273 (1999). "The intent of the parties to a contract is presumed to reside in the language they chose to employ in the agreement." Kelly v. Med. Life Ins. Co., 31 Ohio St.3d 130 (1987), paragraph one of the syllabus. In determining the parties' intent, a court must read the contract as a whole and give effect, if possible, to every part of the contract. Foster Wheeler Enviresponse, Inc. v. Franklin Cty. Convention Facilities Auth., 78 Ohio St.3d 353, 361-362 (1997).

{ΒΆ10} The portion of the contract most relevant to this dispute is Article 5.3 of the "General Conditions," ...

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