Contractor Denied Loss Of Productivity Claim On Water Main Project
An Ohio Court of Appeals recently issued a decision overturning a jury verdict that awarded a contractor $604,602 for loss of productivity caused by the project’s owner. Although the project was completed on time, the contractor claimed that errors in the project plans and specifications reduced its productivity. Yet, the Court, relying on the express language of the contract, denied the contractor’s claim. In so doing it failed to even consider an Ohio statute on this subject.
DiGioia Brothers Excavating, Inc. entered into a contract with the City of Cleveland for the installation of water mains. Cleveland hired the engineering firm of Stilson & Associates to prepare the plans and specifications for the project. Stilson was required to identify the location of existing underground utilities within the project’s right-of-way. The plans prepared by Stilson identified 455 utility interferences that DiGioia would have to work around. However, the plans failed to show 26 other underground utility interferences that existed. At the end of the project DiGioia sought additional compensation for loss of productivity related to these additional 26 interferences.
The trial court found that Cleveland had breached its contract with DiGioia by failing to show the additional 26 interferences on the project plans. The jury awarded damages to DiGioia of $604,602.
In reversing the trial court, the Court of Appeals relied upon the express language of the contract between Cleveland and DiGioia that contained a specific clause that prohibited recovery for delays related to undisclosed or mislocated utility interferences. The Court also noted that the contract included a clause that limited Cleveland’s liability for delays to an extension of time in the project schedule.
Although the court based its opinion on the contract language, it also outlined several other factors that supported its decision. First, the plans and specifications correctly identify approximately 95% of the utility interferences. Second, DiGioia acknowledged that every utility project would contain some unanticipated utility interferences. Third, Cleveland did in fact pay DiGioia $90,000 for its direct costs related to the 26 unidentified interferences. Fourth, the project was completed on schedule. Fifth, DiGioia never submitted a claim for the loss of productivity until after the project was complete.
Interestingly, the Court did not address the issue of whether Cleveland had complied with the statutory requirements set forth in the Ohio Revised Code as to marking utility lines. The statute requires a public authority to contact all owners of underground utilities within the construction area prior to preparing the project plans and specifications. It must then place on the plans and specifications the markings provided by the utility. Failure to comply will result in a change order to the contractor. That section strikes down the contract language in DiGioia that would preclude recovery for undisclosed utilities. If the public authority fails to contact the underground utility owners prior to preparing the plans and specifications, then a contractor that encounters unmarked utilities that should have been identified will be entitled to additional compensation and time to complete the project.
DiGioia Brothers Excavating, Inc. v. City of Cleveland, Dept. of Public Utilities, Division of Water (1999), Court of Appeals of Ohio, Eighth Appellate District, Cuyahoga County.
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