Title: State ex rel. Am. Subcontractors Ass'n v. Ohio State Univ.

State: ohio

Issuer: Ohio Supreme Court

Document:

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as 
State ex rel. Am. Subcontractors Assn., Inc. v. Ohio State Univ., Slip Opinion No. 2011-Ohio-
2881.] 
 
 
 
 
NOTICE 
This slip opinion is subject to formal revision before it is published in 
an advance sheet of the Ohio Official Reports.  Readers are requested 
to promptly notify the Reporter of Decisions, Supreme Court of Ohio, 
65 South Front Street, Columbus, Ohio 43215, of any typographical or 
other formal errors in the opinion, in order that corrections may be 
made before the opinion is published. 
 
SLIP OPINION NO. 2011-OHIO-2881 
THE STATE EX REL. AMERICAN SUBCONTRACTORS ASSOCIATION, INC. ET AL. v. 
OHIO STATE UNIVERSITY. 
[Until this opinion appears in the Ohio Official Reports advance sheets, it 
may be cited as State ex rel. Am. Subcontractors Assn., Inc. v. Ohio State 
Univ., Slip Opinion No. 2011-Ohio-2881.] 
Public construction contracts — Bond of contractor — R.C. 153.54 and Section 8 
of 2009 Sub.H.B. No. 318. 
(No. 2010-2059 — Submitted May 10, 2011 — Decided June 21, 2011.) 
IN MANDAMUS. 
__________________ 
 
Per Curiam. 
{¶ 1} This is an original action for a writ of mandamus to compel 
respondent, Ohio State University, to require that a bond be furnished by Turner 
Construction Company as construction manager at risk for a construction project.  
Because relators are not entitled to the requested extraordinary relief, we deny the 
writ. 
 
 
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Facts 
{¶ 2} In 2005, Ohio State began work on a $1 billion expansion of its 
Medical Center, which has been referred to as “ProjectOne.”  In February 2009, 
Ohio State entered into an agreement for construction-management services with 
Turner on the project.  Construction work on the project began in the fall of 2009 
and is scheduled to be completed in 2014. 
{¶ 3} Under the usual construction method, public institutions of higher 
education like Ohio State would be required to employ multiple prime contractors 
for constructing, renovating, or improving capital facilities.  That method would 
require Ohio State to first engage a company to design the project and then seek 
bids from contractors to do the construction and would prohibit having one prime 
contractor holding all trade contracts for a project.  It is alleged that the multiple-
prime-contractor system has resulted in delays and increased costs. 
{¶ 4} In December 2009, the General Assembly enacted Section 8 of 
Sub.H.B. No. 318 (“H.B. 318”), a temporary uncodified law that directed the 
chancellor of the Ohio Board of Regents to designate during 2010 one 
construction project at each of three different state institutions of higher education 
as a Construction Reform Demonstration Project.  The purpose of the law was to 
test alternative methods of securing public construction projects to determine if 
they would afford greater flexibility in increasing efficiency and lowering costs. 
{¶ 5} Pursuant to H.B. 318, Ohio State requested that the Ohio Board of 
Regents designate certain core phases of the overall project as a Construction 
Reform Demonstration Project.  On March 24, 2010, the chancellor designated 
portions of the project as a Construction Reform Demonstration Project, and on 
April 5, 2010, the Ohio Controlling Board approved the designation.  The core 
phases of the project encompassed in the designation are (1) constructing a new 
cancer and critical-care tower, (2) relocating and upgrading infrastructure and 
roadways, (3) upgrading current space in existing Medical Center facilities, (4) 
January Term, 2011 
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landscaping and urban planning, (5) demolition of Cramblett Hall, and (6) 
constructing a chiller plant, with the estimated cost of these phases being $658.3 
million. 
{¶ 6} One of the specified alternative methods of construction delivery 
authorized by Section 8 of H.B. 318 is designated “construction manager at risk.”  
On July 8, 2010, Ohio State entered into a construction-manager-at-risk 
agreement with Turner for the project.  Ohio State selected Turner to serve as 
construction manager at risk through a qualifications-based selection process.  
This process differed from traditional competitive bidding, which requires 
selection of a contractor based on the lowest responsive and responsible bidder. 
{¶ 7} Ohio State did not require Turner to furnish a surety bond to secure 
the performance of Turner and its subcontractors.  Requiring Turner to provide a 
bond would have increased the cost of the project by as much as $11.9 million.  
Instead, under the agreement, Turner provided to Ohio State a $20,000,000 
irrevocable standby letter of credit.  Turner also purchased subcontractor-default 
insurance to protect Turner against default by the subcontractors performing the 
construction.  Turner has entered into subcontracts for performance of some of the 
work on the project.  As of February 2011, Turner and its subcontractors had 
entered into 47 subcontracts with 43 subcontractors, and Turner had paid out $5 
million, with all payments made within five days of payment to Turner, as 
required by the contract. 
{¶ 8} Relators American Subcontractors Association (“ASA”) and 
American Subcontractors Association of Ohio, Inc. (“ASA Ohio”) are trade 
associations of suppliers who work primarily as subcontractors on construction 
projects.  Their purpose is to protect and advance the interests of subcontractors 
and suppliers, including those in Ohio.  Relator the Surety and Fidelity 
Association of America (“SFAA”) is a national trade association of companies 
licensed to write fidelity and surety bonds and comprises 451 members, including 
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33 members with their principal places of business in Ohio.  SFAA’s purpose is to 
protect and advance the interests of sureties in the nation and in Ohio. 
{¶ 9} On November 30, 2010, relators filed this action for a writ of 
mandamus to compel Ohio State to require that Turner furnish a bond as 
construction manager at risk.  After Ohio State filed an answer, we granted an 
alternative writ.  127 Ohio St.3d 1530, 2011-Ohio-376, 940 N.E.2d 984.  The 
parties submitted briefs and evidence. 
{¶ 10} This cause is now before the court for our consideration of 
relators’ mandamus claim. 
Legal Analysis 
Standing 
{¶ 11} Ohio State asserts that relators lack standing to institute this 
mandamus action.  “A preliminary inquiry in all legal claims is the issue of 
standing.”  Cuyahoga Cty. Bd. of Commrs. v. State, 112 Ohio St.3d 59, 2006-
Ohio-6499, 858 N.E.2d 330, ¶ 22.  “Before an Ohio court can consider the merits 
of a legal claim, the person or entity seeking relief must establish standing to sue.”  
Ohio Pyro, Inc. v. Ohio Dept. of Commerce, 115 Ohio St.3d 375, 2007-Ohio-
5024, 875 N.E.2d 550, ¶ 27.  “ ‘[T]he question of standing depends upon whether 
the party has alleged such a “personal stake in the outcome of the controversy * * 
*” as to ensure that “the dispute sought to be adjudicated will be presented in an 
adversary context and in a form historically viewed as capable of judicial 
resolution.” ’ ”  State ex rel. Dallman v. Franklin Cty. Court of Common Pleas 
(1973), 35 Ohio St.2d 176, 178-179, 64 O.O.2d 103, 298 N.E.2d 515, quoting 
Sierra Club v. Morton (1972), 405 U.S. 727, 732, 92 S.Ct. 1361, 31 L.Ed.2d 636, 
quoting Baker v. Carr (1962), 369 U.S. 186, 204, 82 S.Ct. 691, 7 L.Ed.2d 663, 
and Flast v. Cohen (1968), 392 U.S. 83, 101, 88 S.Ct. 1942, 20 L.Ed.2d 947. 
{¶ 12} “[A]n association has standing on behalf of its members when ‘(a) 
its members would otherwise have standing to sue in their own right; (b) the 
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interests it seeks to protect are germane to the organization’s purpose; and (c) 
neither the claim asserted nor the relief requested requires the participation of 
individual members in the lawsuit.’ ”  Ohio Contractors Assn. v. Bicking (1994), 
71 Ohio St.3d 318, 320, 643 N.E.2d 1088, quoting Hunt v. Washington State 
Apple Advertising Comm. (1977), 432 U.S. 333, 343, 97 S.Ct. 2434, 53 L.Ed.2d 
383; see also Ohio Hosp. Assn. v. Community Mut. Ins. Co. (1987), 31 Ohio St.3d 
215, 218, 31 OBR 411, 509 N.E.2d 1263.  We have emphasized that “to have 
standing, the association must establish that its members have suffered actual 
injury.”  Bicking, 71 Ohio St.3d at 320.  At least one of the members of the 
association must be actually injured.  See, e.g., Warth v. Seldin (1975), 422 U.S. 
490, 511, 95 S.Ct. 2197, 45 L.Ed.2d 343; Ohio Licensed Beverage Assn. v. Ohio 
Dept. of Health, Franklin App. No. 07AP-490, 2007-Ohio-7147, ¶ 21.  “[T]he 
injury must be concrete and not simply abstract or suspected.”  Bicking at 320. 
{¶ 13} ASA and ASA-Ohio claim that their members have been injured in 
two distinct ways caused by the lack of a bond provided by Turner on the project:  
(1) lost business opportunity for those members who decline to provide labor and 
material for the project and (2) increased risk of loss and potential default in other 
areas of business for those members who provide labor and material for the 
project without the guarantee of payment under a bond. 
{¶ 14} They have not supported these claims, however, with any credible 
evidence.  All subcontractors working on the project have been timely paid.  No 
subcontractor working on the project has complained to Ohio State or Turner 
about the lack of a bond, and the bidding for work on the project by 
subcontractors has been at the expected level.  The evidence shows that Turner 
has finished many construction projects for Ohio State and has completed many 
of them without a surety bond, and the construction-manager-at-risk agreement 
has multiple safeguards to ensure that subcontractors are timely paid for their 
performance of services and provision of materials. 
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{¶ 15} In fact, if Ohio State had requested that Turner furnish a bond, 
Turner would have required bonds from its subcontractors, which might have 
inhibited EDGE-certified subcontractors from bidding.  See R.C. 123.152(A), 
defining “EDGE business enterprise” as “a sole proprietorship, association, 
partnership, corporation, limited liability corporation, or joint venture certified as 
a participant in the encouraging diversity, growth, and equity program by the 
director of administrative services under this section of the Revised Code.” 
{¶ 16} Therefore, ASA and ASA-Ohio have not established that any of 
their members have been injured by Ohio State’s decision not to require Turner to 
provide a surety bond.  At best, they raise an “abstract or suspected” claim rather 
than an “actual” or “concrete” one.  See Bicking, 71 Ohio St.3d at 320, 643 
N.E.2d 1088.  ASA and ASA-Ohio thus lack standing to raise their mandamus 
claim. 
{¶ 17} Conversely, SFAA has established that at least one of its members 
is actually injured by the lack of a surety bond provided by Turner.  Turner has a 
multisurety agreement with five companies that have agreed to provide 
performance and payment bonds to Turner when a bond is required for a project.  
SFAA is a trade association of these bond companies, and relators have 
established by affidavit that each of these sureties is a member of SFAA.  Ohio 
State concedes that “these companies stand to lose the profit they would have 
earned—a handsome profit no doubt—on any bond Ohio State required from 
Turner.” 
{¶ 18} Because these SFAA members would otherwise have standing to 
sue in their own right, the interests SFAA seeks to protect are germane to its 
organizational purpose of advancing sureties’ interests, and the individual 
sureties’ participation is not required for this mandamus case, SFAA has 
established that it possesses the requisite standing to raise the mandamus claim.  
Bicking, 71 Ohio St.3d at 320, 643 N.E.2d 1088. 
January Term, 2011 
7 
 
{¶ 19} Therefore, we dismiss ASA’s and ASA-Ohio’s claims for lack of 
standing and proceed to address the merits of SFAA’s mandamus claim. 
Mandamus 
{¶ 20} SFAA requests a writ of mandamus to compel Ohio State to 
require Turner to furnish a surety bond for its position as construction manager at 
risk.  To be entitled to the writ, SFAA must establish a clear legal right to the 
requested relief, a corresponding clear legal duty on the part of Ohio State to 
provide it, and the lack of an adequate remedy in the ordinary course of the law.  
State ex rel. Am. Civ. Liberties Union of Ohio, Inc. v. Cuyahoga Cty. Bd. of 
Commrs., 128 Ohio St.3d 256, 2011-Ohio-625, 943 N.E.2d 553, ¶ 22. 
{¶ 21} SFAA bases its entitlement to the writ on Section 8 of H.B. 318 
and R.C. 153.54.  Section 8(A) of H.B. 318 states, “During fiscal year 2010, the 
Chancellor of the Ohio Board of Regents, in consultation with representatives of 
state institutions of higher education and with Controlling Board approval, shall 
designate one construction project at each of three different state institutions of 
higher education as a Construction Reform Demonstration Project that may utilize 
alternative methods of construction delivery in accordance with this section.”  
Under Section 8(C)(1)(a), one of the authorized alternative methods of 
construction delivery to develop the project using a construction manager at risk: 
{¶ 22} “For purposes of this section, ‘construction manager at risk’ means 
a person with substantial discretion and authority to plan, coordinate, manage, 
direct, and construct all phases of a project for the construction, demolition, 
alteration, repair, or reconstruction of any public building, structure, or other 
improvement and who provides the state institution of higher education a 
guaranteed maximum price utilizing an open book pricing method, wherein the 
construction manager at risk provides the state institution of higher education all 
books, records, documents, and other data in its possession related to itself, its 
subcontractors, and material suppliers pertaining to the bidding, pricing, or 
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performance of a construction management contract. The construction manager at 
risk shall be selected using a qualifications based selection process, including best 
value criteria. ‘Best value criteria’ includes technical design, technical approach, 
quality of proposed personnel, management plan, or other factors that are 
determined to derive or offer the greatest value to the state institution of higher 
education.” 
{¶ 23} Pursuant to Section 8 of H.B. 318, certain core phases of 
ProjectOne were designated as a Construction Reform Demonstration Project, and 
Ohio State used the required qualifications-based selections process to choose 
Turner as the construction manager at risk on the project.  Section 8(C)(2) states: 
{¶ 24} “In developing their Construction Demonstration Reform Projects, 
the state institutions of higher education are not exempt from the applicable 
provisions of law concerning any of the following: 
{¶ 25} “* * * 
{¶ 26} “(b) Bonding.” 
{¶ 27} SFAA claims that R.C. 153.54 is a bonding provision that is 
applicable to Construction Reform Demonstration Projects like ProjectOne.  R.C. 
153.54 provides: 
{¶ 28} “(A) Each person bidding for a contract with the state or any 
political subdivision, district, institution, or other agency thereof, excluding 
therefrom the department of transportation, for any public improvement shall file 
with the bid, a bid guaranty in the form of either: 
{¶ 29} “(1) A bond in accordance with division (B) of this section for the 
full amount of the bid; 
{¶ 30} “(2) A certified check, cashier's check, or letter of credit pursuant 
to Chapter 1305. of the Revised Code, in accordance with division (C) of this 
section. * * * 
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{¶ 31} “(B) A bid guaranty filed pursuant to division (A)(1) of this section 
shall be conditioned to:  
{¶ 32} “(1) Provide that, if the bid is accepted, the bidder, after the 
awarding or the recommendation for the award of the contract, whichever the 
contracting authority designates, will enter into a proper contract in accordance 
with the bid, plans, details, specifications, and bills of material. * * * 
{¶ 33} “* * * 
{¶ 34} “(C)(1) A bid guaranty filed pursuant to division (A)(2) of this 
section shall be conditioned to provide that if the bid is accepted, the bidder, after 
the awarding or the recommendation for the award of the contract, whichever the 
contracting authority designates, will enter into a proper contract in accordance 
with the bid, plans, details, specifications, and bills of material.  * * *  
{¶ 35} “If the bidder enters into the contract, the bidder, at the time the 
contract is entered to [sic], shall file a bond for the amount of the contract to 
indemnify the state, political subdivision, district, institution, or agency against all 
damage suffered by failure to perform the contract according to its provisions and 
in accordance with the plans, details, specifications, and bills of material therefor 
and to pay all lawful claims of subcontractors, material suppliers, and laborers for 
labor performed or material furnished in carrying forward, performing, or 
completing the contract * * *. 
{¶ 36} “(2) A construction manager who enters into a contract pursuant to 
sections 9.33 to 9.333 of the Revised Code, if required by the public owner at the 
time the construction manager enters into the contract, shall file a letter of credit 
pursuant to Chapter 1305. of the Revised Code, bond, certified check, or cashier's 
check, for the value of the construction management contract to indemnify the 
state, political subdivision, district, institution, or agency against all damage 
suffered by the construction manager's failure to perform the contract according to 
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its provisions, and shall agree and assent that this undertaking is for the benefit of 
the state, political subdivision, district, institution, or agency.”  (Emphasis added.) 
{¶ 37} In determining whether R.C. 153.54 is the applicable bonding law 
for Construction Reform Demonstration Projects under Section 8 of H.B. 318, we 
must read words and phrases in context according to the rules of grammar and 
common usage, and we may not add words to the statute if it is unambiguous.  
See Hudson v. Petrosurance, Inc., 127 Ohio St.3d 54, 2010-Ohio-4505, 936 
N.E.2d 481, ¶ 30, and cases cited therein. 
{¶ 38} The plain language of R.C. 153.54(A) specifies that the bonding 
requirement applies to persons “bidding for a contract * * * for any public 
improvement.”  See R.C. 153.54(A).  “Bid” generally means a “submitted price at 
which one will perform work or supply goods.”  Black’s Law Dictionary (9 
Ed.2009) 183. 
{¶ 39} But “[u]nder the standard for construing statutes in pari materia, 
statutes relating to the same subject matter must be construed together to give full 
effect to the provisions.”  State ex rel. Lucas Cty. Republican Party Executive 
Commt. v. Brunner, 125 Ohio St.3d 427, 2010-Ohio-1873, 928 N.E.2d 1072, ¶ 14.  
As used in R.C. Chapter 153, “bidding” on a public-improvement contract is tied 
to awarding the contract to the “lowest responsive and responsible bidder in 
accordance with section 9.312 of the Revised Code.”  R.C. 153.08; see also R.C. 
9.312(A).  That is, the term “bid” for purposes of R.C. Chapter 153 refers to a 
selection process for the lowest responsive and responsible bidder. 
{¶ 40} In fact, although SFAA attempts to argue otherwise in its reply 
brief, in its initial merit brief, SFAA conceded that H.B. 318 mandated a “non-bid 
method of selecting entities principally responsible for alternative methods of 
construction delivery.”  (Emphasis added.)  That is, in essence, SFAA admitted 
that the qualifications-based selection process set forth in H.B. 318 is inapplicable 
to the bidding requirements of the low-cost selection process of R.C. Chapter 153, 
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including bonding.  Its new argument in its reply brief is forbidden.  See Am. 
Fiber Sys., Inc. v. Levin, 125 Ohio St.3d 374, 2010-Ohio-1468, 928 N.E.2d 695, ¶ 
21. 
{¶ 41} Conversely, because there is no bidding as that term is used in R.C. 
Chapter 153 for the qualifications-based selection of a construction manager at 
risk under Section 8(C)(1)(a) of H.B. 318, Ohio State was under no duty to 
require that Turner furnish a bond under R.C. 153.54 because that section is 
manifestly inapplicable.  SFAA’s claim that the solitary reference to “bidding” in 
the construction-manager-at-risk section of H.B. 318 establishes the legislative 
intent that R.C. 153.54 apply to this alternate construction-delivery method lacks 
merit.  H.B. 318 merely requires “an open book pricing method, wherein the 
construction manager at risk provides the state institution of higher education all 
books, records, documents, and other data in its possession related to itself, its 
subcontractors, and material suppliers pertaining to the bidding, pricing, or 
performance of a construction management contract.”  (Emphasis added.)  Section 
8(C)(1)(a) of H.B. 318.  Under the language of this section, bidding—at least in 
the meaning of the low-cost bidding specified in R.C. Chapter 153—is not 
required. 
{¶ 42} In effect, SFAA’s arguments contravene the plain text of the H.B. 
318 and R.C. Chapter 153.  And regardless of whether R.C. 9.333 is applicable to 
additionally authorize Ohio State’s contractual provision that Turner furnish a 
letter of credit instead of a bond, neither H.B. 318 nor R.C. 153.54 required that 
Turner provide a surety bond for its construction-manager-at-risk agreement.  We 
cannot read into this legislation a nonexistent bonding requirement.  State ex rel. 
Columbia Res. Ltd. v. Lorain Cty. Bd. of Elections, 111 Ohio St.3d 167, 2006-
Ohio-5019, 855 N.E.2d 815, ¶ 32 (court cannot “add a requirement that does not 
exist in the statute”).  In fact, if the purpose of the temporary law was to afford 
greater flexibility and lower the costs associated with the multiple-prime- 
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contractor method, that purpose is not advanced by adding to that law a 
requirement that would have increased the cost of ProjectOne by as much as 
$11.9 million. 
{¶ 43} Therefore, SFAA is not entitled to the requested extraordinary 
relief in mandamus. 
Conclusion 
{¶ 44} Based on the foregoing, we dismiss the claims of ASA and ASA-
Ohio because they lack standing, and we deny SFAA’s mandamus claim. 
Judgment accordingly. 
 
O’CONNOR, C.J., and PFEIFER, LUNDBERG STRATTON, O’DONNELL, 
LANZINGER, and CUPP, JJ., concur. 
 
MCGEE BROWN, J., not participating. 
__________________ 
 
Williams & Petro Co., L.L.C., John J. Petro, Richard A. Williams, and 
Susan S.R. Petro, for relators. 
 
Michael DeWine, Attorney General, Alexandra T. Schimmer, Solicitor 
General, and Jon C. Walden and Jerry K. Kasai, Assistant Attorneys General; and 
Porter, Wright, Morris & Arthur, L.L.P., Kathleen M. Trafford, and Ryan P. 
Sherman, for respondent. 
______________________