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Wood Electric, Inc. v. Ohio Facilities Construction Commission

Court of Appeals of Ohio, Tenth District

May 9, 2017

Wood Electric, Inc., Plaintiff-Appellee,
Ohio Facilities Construction Commission, Defendant-Appellant.

         APPEAL from the Court of Claims of Ohio No. 2014-00987

         On brief:

          Kegler Brown Hill Ritter, LPA, Donald W. Gregory, and Michael J. Madigan, for appellee.

          Michael DeWine, Ohio Attorney General; William C. Becker, and David A. Beals, for appellant.


          Donald W. Gregory.

          William C. Becker.


          BRUNNER, J.

         {¶ 1} Defendant-appellant, Ohio Facilities Construction Commission ("OFCC"), appeals a judgment of the Court of Claims of Ohio, entered on August 12, 2016, which found against the OFCC in the amount of $254, 027. Because OFCC submitted no assignments of error and we find no merit in any of the OFCC's arguments, we affirm.


         {¶ 2} On February 19, 2013, the Dalton Local School District ("Dalton"), in connection with the OFCC, an architect (thendesign architecture, ltd. or "thendesign"), and a construction manager (Scaparotti Construction Group or "SCG"), issued a bidding package to invite bids to build a pre-kindergarten through eighth grade school. (Joint Ex.

          D.) The OFCC, Dalton, thendesign, and SCG are collectively referred to in the record as the "project team" or the "core."

         {¶ 3} A number of bids were received on the project, but ultimately three prime contractors were chosen. Guenther Mechanical, Inc. (which plays no role in this case) was the mechanical contractor responsible for heating, ductwork, and machinery. (Pl.'s Ex. 31.) Plaintiff-appellee, Wood Electric, Inc. ("Wood"), was the electrical contractor, responsible for all wiring, fixtures, switches, teledata, technology (for which Wood hired a subcontractor), and fire alarm systems. Id. CT Taylor was the general trades contractor, responsible for construction of the building itself. Id. SCG's role as construction manager was to manage the prime contractors and advise the OFCC on the project in keeping on schedule and within budget. (Tr. Vol. 3 at 784.)

         {¶ 4} CT Taylor and SCG were, at all relevant times, partners in a venture called ICON and collaborated on approximately $200 million in projects through that venture. (Tr. Vol. 2 at 441-44.) Without the partnership, in fact, SCG would not have obtained bonding capacity and would have been terminated from the Dalton project and others. (Tr. Vol. 2 at 444-46.)

         {¶ 5} The bidding package contained a number of construction milestone dates. (Pl.'s Ex. 11.) Among these were dates for temporary enclosure and full building enclosure. Id. The contract governing the construction defined the two states of enclosure as follows:

Enclosure, Temporary The condition in which the permanent exterior walls and roofs are in place, insulated and weathertight, and windows and entrances are provided with suitable temporary enclosures.
Enclosure, Permanent The condition in which the permanent exterior walls and roofs are in place, insulated and weathertight, and permanent windows and entrances are in place.

(Emphasis sic.) (Joint Ex. C at 5.) Almost immediately after the project began, different milestone dates were adopted in a baseline schedule. (Pl.'s Ex. 51 at 44.)

          {¶ 6} Multiple witnesses testified at trial that enclosure is important to electrical work because electrical equipment can be unsafe and will deteriorate if exposed to the elements; workers (who must use fine motor control) work more slowly when cold; elevated work is dangerous when floors are icy and certain electrical components cannot be installed until the building is warm and dry with a certain degree of interior finishes in place. (Tr. Vol. 1 at 178-79, 183-84, 189-90, 199, 214-15, 220-21; Tr. Vol. 2 at 286-88, 332, 414-15, 500-01; Tr. Vol. 3 at 542-43.) When working under a school project hard deadline (when students arrive), delays in enclosure leave less time for post-enclosure contractors to do their work, resulting in overtime and higher staffing expenses ("acceleration") and multiple contractors working simultaneously in the same spaces ("trade stacking"). (Tr. Vol. 1 at 193-94, 235-38, 249-50; Tr. Vol. 2 at 472, 500-02; Tr. Vol. 3 at 541-42.)

         {¶ 7} CT Taylor did not complete building enclosure by the milestone dates of either the bidding package or the revised baseline schedule. For example, Area B of the building was vital to electrical work as it contained the stage (with all associated lighting and audio/visual equipment), the cafeteria (with kitchen), the main electrical room and the teledata room. (Tr. Vol. 1 at 143-47, 283; Pl.'s Ex. 403.) Area B was scheduled to be temporarily enclosed no later than October 25, 2013 according to the bid and by December 13, 2013 by the baseline schedule. (Pl.'s Ex. 11; Ex. 51 at 44.) The construction manager, SCG, eventually claimed that temporary enclosure occurred by December 24, 2013. (Tr. Vol. 3 at 546-47; Pl.'s Ex. 108.) But pay applications from CT Taylor approved by the OFCC show that the roof shingles were only 30 percent complete and the air barrier (exterior walls) were only 60 percent complete by that time. (Pl.'s Ex. 901 at 8.) Progress for siding and soffit were only 10 percent complete, and brick veneer was only 25 percent complete. Id.

         {¶ 8} In addition, classroom Areas A, C, and D, also were not temporarily enclosed by the original bid or baseline schedule milestone dates. According to the original bid specifications, classroom Areas A, C, and D were to be temporarily enclosed by November 8, December 9, and October 11, 2013, respectively and by November 14, December 13, and October 22, 2013, respectively, according to the baseline schedule. (Pl.'s Ex. 11; Ex. 51 at 44.) SCG claimed to OFCC that temporary enclosure for Area A occurred on November 14, 2013 but, as of November 30, 2013, pay reports showed 90 percent progress on shingles and 0 percent progress on veneers, siding, and soffit. (Pl.'s Ex. 901 at 9; Ex. 108.) As for Area C, which was to have been enclosed on December 9 or 13 depending on bid or schedule milestone, pay reports of January 31, 2014 showed only 50 percent progress on shingles, 90 percent on exterior framing and sheathing, 0 percent on air barrier, 10 percent on siding and soffit, and 0 percent on brick veneer. (Pl.'s Ex. 901 at 8.) SCG claimed to OFCC that Area D was temporarily enclosed on November 14, 2013, but photographs taken on January 8, 2014 showed water intrusion owing to the fact that Area C (above Area D) had not yet been temporarily enclosed. (Pl.'s Ex. 901 at 8.)

         {¶ 9} The most delayed portion of the project, Area E (the gym), was to be temporarily enclosed no later than November 22, 2013 according to the bid and December 13, 2013 according to the baseline schedule. (Pl.'s Ex. 11; Ex. 51 at 44.) SCG eventually claimed that Area E was temporarily enclosed on February 13, 2014. (Pl.'s Ex. 901 at 9.) But CT Taylor's pay application on February 28, 2014 showed 0 percent progress on roofing, air barrier, brick veneer, siding, and soffits. Id. Testimony at trial established that the gym was not permanently enclosed until June 23, 2014; the wood floor was not installed until August 6 and the electrical work in that area was not finished until after August 24, 2014. (Tr. Vol. 3 at 560-61, 614.) According to the bid, the entire project was to have been substantially completed by July 3, 2014 and, according to the baseline milestones, by July 10, 2014. (Pl.'s Ex. 11; Ex. 51 at 44.) The project was to be finally completed under bid specifications by July 11, 2014 and under baseline specifications by July 18, 2014. Id.

         {¶ 10} As enclosure delays became apparent, Wood forecasted impairment to its ability to work efficiently and according to plan. Wood's project manager on the Dalton project testified that productivity began being impacted in the Fall 2013 because enclosure was not occurring on schedule and that the full extent of the problem could not be predicted at that juncture. (Tr. Vol. 2 at 249, 264-65.) Wood provided notice of the likely impact on December 20, 2013 under Article 8 of the general contract conditions. (Pl.'s Ex. 87A.) Wood's notice read in relevant part:

The delay with obtaining temporary building enclosure will have significant consequences, such as jeopardizing the current completion date and increasing the costs for the Project. * * *
** *Wood [] finds it necessary to request an extension of time ** * to make up for the lost time that will occur if these delays are not quickly resolved. Should this extension request be ignored, rejected, or not adequately addressed, Wood will likely be forced to constructively accelerate[1] its activities and will expect additional compensation for its efforts.

Id. at 1.

         {¶ 11} SCG responded through a project manager on December 26, 2013, by setting a meeting to agree on a recovery schedule which was to put the project back on track. (Pl.'s Ex. 90.) The next day, SCG's project manager also informed CT Taylor that CT Taylor had missed the milestone enclosure deadlines and would be held responsible for any claims asserted by other contractors impacted by the delays. (Pl.'s Ex. 91.) Michael Scaparotti, president of SCG, told the letter's author to consult him in the future before issuing such statements. (Pl.'s Ex. 93.) The letter-writer presented the excuse that an official with the OFCC had "forced the issue" so "rather than rock the boat, [he] went along with it." Id.

         {¶ 12} On January 9, the contractors met to discuss a recovery schedule. (Def.'s Ex. F[2] at 176.) One week later, when no recovery schedule had been developed, Wood requested an additional 60 days to prepare a certified claim since no recovery schedule had yet been created and predicting the full impact caused by the delays was not yet feasible. (Pl.'s Ex. 97A.) SCG granted the request on behalf of the project team. (Pl.'s Ex. 100.)

         {¶ 13} On February 27, 2014, CT Taylor and the project team signed a change order form which, among other things, adjusted the milestone dates "at no cost to [OFCC and Dalton] or penalty to [CT Taylor]" in "full and complete satisfaction for all direct and indirect costs." (Pl.'s Ex. 118 at 1.) The same change order was presented to Wood in order to obligate Wood to meet the new schedule with no additional compensation, but Wood refused to sign and only signed the recovery schedule with a written reservation of rights. (Pl.'s Ex. 128 at 1, 5; Tr. Vol. 3 at 419-21, 503-04.) The recovery schedule did not grant the extension of the project requested by Wood. The baseline final completion date of July 18, 2014 was entirely unaltered by the recovery schedule. (Pl.'s Ex. 51 at 44; Ex. 108; Tr. Vol. 4 at 808-09.) SCG's recovery schedule falsely represented that temporary enclosure had been accomplished in Areas A and D on November 14, 2013 and in Area B on December 24, 2013. (Pl.'s Ex. 108.)

         {¶ 14} At the time the recovery schedule was issued, Wood requested an additional 60 days to formally substantiate and certify its claim. In an April 2, 2014 letter, the OFCC denied Wood's requested extension. (Tr. Vol. 4 at 824-25.) On April 11, 2014, Wood formally certified a claim for $207, 467.57 for projected impacts arising from the failure to have "the temporary and permanent building enclosure complete by December 20, 2013" and reserved the right to supplement the claim for further delays or based on additional information that may become available. (Pl.'s Ex. 131 at 2, 3.) Citing the confidential business nature of bid and internal cost documents, Wood did not submit with its claim copies of supporting materials but, rather, offered to make them available for inspection upon request. Id. at 3. The same day, a representative of the OFCC instructed SCG to notify CT Taylor of the certified claim because CT Taylor was "the responsible contractor for missing the enclosure date." (Pl.'s Ex. 132.)

         {¶ 15} Five days following Wood's claim submission, the project team met. (Pl.'s Ex. 136.) In the minutes ...

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