Construction contracts typically contain various notice requirements in order for a contractor to initiate a claim. For a claim to survive, many jurisdictions require strict adherence to these provisions. For example, a recent Ohio case found that even though a contractor submitted a claim, it did not adhere to specific contractual provisions and the claim was defeated.
Northern Valley Contractors, Inc. and Ohio School Facilities Commission contracted for work at one of the owner’s schools. The contractor had a surety issue performance and payment bonds for the project, and the surety became the assignee of the contractor and filed a complaint against the owner asserting various claims, including breach of contract. The breach of contract claim sought damages as a result of the acceleration and compression of the construction schedule and for the owner’s failure to remit the remaining contract balance. The owner asserted the surety and the contractor were barred from pursuing the breach of contract claim because they failed to file a claim pursuant to the dispute resolution procedure set forth in Article 8 of the construction contract.
Article 8 required notice of all claims made in writing to the construction manager not more than ten days after the claim occurred; that all claims be certified; and for a written recommendation from the construction manager after a job site dispute resolution process defined in the contract. The trial court ruled that although the contractor had complied with the ten-day notice provision in Article 8 with respect to their claim, the contractor had not subsequently filed a written claim as required by contract and granted summary judgment to the owner.
The appellate court held that the contractor only provided notice of the potential of a claim, not a final claim. Further, the contractor did not supply a certificate as required by the contract. Therefore, the contractor waived its claim. It is important to get a good understanding of a contract’s notice provisions early on during a project because notices can sometimes be rushed to comply with timing deadlines. Further, when preparing a notice, it is essential to go through the provisions again to make sure every requirement is met.
Ohio Farmers Ins. Co. v. Ohio Sch. Facilities Comm’n, 2012 Ohio 951, 2012 Ohio App. LEXIS 856 (10th App. Dist., Franklin Co. March 6, 2012).