Wood Elec., Inc. v. Ohio Facilities Constr. Comm’n, 10th Dist. Franklin No. 16AP-643, 2017-Ohio-2743, 2017 Ohio App. Lexis 1745 (May 9, 2017)

The Ohio Facilities Construction Commission (“OFCC”), together with a school district, an architect, and a construction manager, issued an invitation for bids to build a school. Three prime contractors were chosen: a general contractor, a mechanical contractor, and an electrical contractor, Wood Electric (“Wood”).

The general contractor failed to meet the contractual milestones for either temporary enclosure or full building enclosure, significantly delaying Wood’s work. Wood notified the OFCC of the likely impact on its work soon after the general contractor failed to meet the first milestone, and requested an extension of its own deadlines. The OFCC denied Wood’s request. Wood then requested an extension of time in which to prepare, substantiate, and certify a formal claim, which the OFCC also denied.  Wood hastened to submit a timely claim, projecting an impact of $207,467.57, and reserving its right to supplement the claim when the full impact on its work became known.

When OFCC denied Wood’s claim, Wood sued OFCC in the Court of Claims.  At trial, OFCC acknowledged that Wood had a proper claim, but disputed the $254,027 amount, which included $35,006 for home office overhead.  Wood’s expert testified that he had calculated the home office overhead using the “HOOP” formula adopted by the Ohio Department of Transportation.  The trial court ultimately entered judgment in favor of Wood for the full amount of its claim.

On appeal, the OFCC argued that the Court of Claims’ award of home office overhead was contrary to the 2002 decision of Ohio Supreme Court in Complete General Construction Co. v. Ohio Department of Transportation.  In Complete General, the Supreme Court set forth two prima facie elements that a contractor must demonstrate before the Eichleay formula, a formula developed by the federal Armed Services Board of Contract Appeals to calculate home office overhead, may be applied in awarding damages: (1) the contractor was on standby, and (2) that it was unable to take on other work while on standby.

Wood, however, never sought to use the Eichleay formula to compute its home office overhead; rather, it relied upon a similar, but not identical, HOOP formula.  The court noted that nothing in the parties’ contract required Wood to use the Eichleay formula in computing home office overhead and the use of the Eichleayformula is discretionary.  Because Wood did not seek to apply the Eichleay formula, Complete General did not apply, and Wood was not required to meet the conditions precedent for its application.

The OFCC also argued that Wood should have been forbidden from asserting higher damages in its action in the Court of Claims than in its initial certified claim, but was unable to cite any statute, case, or rule in support of its argument.  The Court of Appeals found that after timely noticing its claim, Wood had requested and been denied an extension of the claim certification deadline.  This forced Wood to submit a certified claim without taking account of the full impact of the ongoing delays caused by the general contractor.

The Court held that it would have been inequitable for the trial court to have restricted Wood to its certified claim when the OFCC forced it to submit its claim before being able to take the full measure of its damages. Had Wood waited to submit its notice until it became aware of the full extent of damages, that notice would have been untimely, and the OFCC would likely have denied it for that reason.  Accordingly, there was no basis for constraining the monetary amount of Wood’s suit in the Court of Claims to match the amount asserted in its certified claim.

Finally, the OFCC argued that the trial court impermissibly shifted the burden of proof to OFCC to prove a lack of liability when it observed that the OFCC had not offered evidence of an alternative damages calculation.  The Court of Appeals reproduced the trial court’s reasoning, in which the trial court found both that Wood had proved its case and that it had offered a reasonable computation of damages.  In light of these findings, no burden-shifting had occurred.

The Court of Appeals affirmed the judgment of the trial court.

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