Court of claims jurisdiction clarified in mechanics’ lien case

The purpose of the Court of Claims of Ohio is to hear most, but not all, civil actions against the state of Ohio. Sometimes, determining which cases should be heard by a county Court of Common Pleas and the Court of Claims can be tricky, as a recent case involving a defaulted contractor, the contractor’s surety, an unpaid supplier to the contractor, and the Ohio Department of Rehabilitation and Correction illustrates.

In Selective Ins. Co. of America v. ODRC (Franklin App. No. 11AP-597), 2012 Ohio 1314, an unpaid supplier on a state prison construction project filed both a mechanics’ lien against funds due to the general contractor and a payment bond claim against the contractor’s surety. Unfortunately, the state failed to set aside the liened funds as required by Ohio Revised Code 1311.28 and paid the contractor, leaving insufficient security for the supplier’s lien claim.

The supplier settled its payment bond claim against the surety, which included an assignment of the supplier’s claims against the state for failing to set aside the liened funds. The surety sued the state in the Court of Claims, but the Court of Claims dismissed the case for lack of jurisdiction, holding that the claim was being made under ORC 1311.32, whereby a lien claimant is authorized to sue the state in the Court of Common Pleas when foreclosing upon a mechanics’ lien against funds. (Usually the state, or any other public owner, is not a very active participant in such a case. The main contest is between the lien claimant and the state’s contractor. But with the state already in the case, it is easier to direct payment to whomever the court declares the winner.)

The Court of Appeals held that a) the action was best characterized as a complaint under ORC 1311.28 for the state’s failure to set aside the liened funds, and b) the Court of Claims had jurisdiction to hear a claim under 1311.28 because such a lawsuit was for money damages for the state’s negligence in paying the contractor over the lien, which is the type of case for which the Court of Claims was created.