Court Opinion

ID: 3166873
Source: CourtListenerOpinion
Date Created: 2015-12-31 21:07:34.052701+00
Date Added: 2024-06-11T15:29:05.019346
License: Public Domain

[Cite as IPS Elec. Servs., L.L.C. v. Univ. of Toledo, 2015-Ohio-5556.]

                                                          Court of Claims of Ohio
                                                                                  The Ohio Judicial Center
                                                                          65 South Front Street, Third Floor
                                                                                     Columbus, OH 43215
                                                                           614.387.9800 or 1.800.824.8263
                                                                                      www.cco.state.oh.us

IPS ELECTRIC SERVICES, LLC

            Plaintiff

            v.

UNIVERSITY OF TOLEDO

            Defendant

Case No. 2013-00528

Judge Dale A. Crawford

DECISION

        {¶1} Plaintiff, IPS Electric Services, LLC (IPS), brought this action against
Defendant, University of Toledo (UT or the Owner), alleging breach of contract and
unjust enrichment. The issues of liability and damages were not bifurcated and the
case proceeded to trial on both issues.1
        {¶2} On September 19, 2012, UT contracted with Henning Electrical Services,
LLC (Henning), for the electrical trades work on a public improvement project known as
the Medical Mall Phase II Project (project).                  The project consisted of an addition
connecting two existing portions of UT hospital and a remodel of existing hospital
space. At some point after the contract was signed, Henning changed its corporate
name to IPS. On September 19, 2012, UT issued a Notice to Proceed providing that
IPS had 148 consecutive calendar days, or until February 15, 2013, to fully complete its
work on the project. However, when the Notice to Proceed was issued, UT, the project
architect The Collaborative, Inc. (The Collaborative), and lead contractor A.Z. Schmina,
Inc., (AZ) were proceeding on the project with a completion date of December 31, 2012.
 As a result, as soon as IPS began work on the project, IPS and the other contractors
were operating under an informal project schedule with a projected completion date of
December 31, 2012.
       {¶3} A number of delays impacted the project ultimately affecting the
coordination of the work and the completion date of the project.                Throughout the
duration of the project, IPS corresponded with Christopher Levicki, project manager for
UT, regarding its issues on the project.2 On October 24, 2012, by way of a letter, IPS
complained to UT regarding several issues that IPS claims were impacting its work on
the project. In the letter, IPS claims that its work on the project has been accelerated
by a schedule dated August 31, 2012, with a completion date of January 11, 2013,
issued by AZ, and that it “will not be able to meet this accelerated schedule for the price
quoted on bid day.” Additionally, IPS states that air handling units ordered by UT are
expected to arrive three or four weeks late; that there is a four week impact to IPS for
AZ’s failure to meet its October 18, 2012 date for having the Mall weather tight; that
predecessor work such as stud walls that should have been completed by September
5, 2012, are not yet complete; that the ceiling grid in Area A should have been
completed by September 12, 2012, but did not start until October 23, 2012; and, that
Areas B and C are not available for work as a result of “late demolition and patient
traffic.” IPS states that as a result, it will not be able to complete work on the project
until March 12, 2013.
       {¶4} On December 24, 2012, IPS corresponded with Levicki at UT and Brandon
Andrzejczak at The Collaborative regarding issues it was having on the project. In the
letter, IPS states that on August 27, 2012, AZ issued a project schedule with a
completion date of January 2, 2013.          IPS states that it “committed manpower and
resources to meet the revised January completion date, which included additional costs
to account for the recognized acceleration.” IPS states that in early September 2012,
AZ issued a “new” schedule with a completion date of January 2, 2013 representing 43
days of “schedule compression” to IPS.           Additionally, IPS identifies several delays
affecting its work on the project. Those delays include late delivery of air handling
units; late dry-in for the Mall; and slow responses to requests for information delaying
overhead duct work and installation of wall studs. IPS states that wall stud delays and
late ceiling grid installation have impacted its work on the project causing delays of six

       1 The   parties’ February 3, 2015 and February 4, 2015 motions for leave to exceed the page
limitation are GRANTED.
or seven weeks. Additionally, IPS complains of delays as a result of patient traffic
corridors through the project site. As a result, IPS states that it will need additional
funding to meet the completion date of February 14, 2013.
       {¶5} On January 22, 2013, IPS sent correspondence to both Levicki and
Andrzejczak regarding “impacts and claims” affecting the project. IPS estimates that
labor costs “associated with schedule compression from 8/12/12 to 10/28/12 is
$50,000” due to an accelerated project completion date of January 2, 2013. IPS states
that the “cost associated with disruptions to our performance as we described in our
earlier correspondence is $110,000, presuming a project completion date of March 15,
2013.” Additionally, IPS states that the missed dry-in date and delays in moving the
temporary patient corridors have impacted IPS in the amount of $20,000 in General
Conditions.
       {¶6} On February 21, 2013, IPS again sent correspondence to both Levicki and
Andrzejczak containing “back-up information as a detailed justification to that January
22, 2013 letter.” In the letter, IPS states that “there is an additional $20,000 of general
conditions cost due to the extended duration of this project * * * as well as $23,340 in
net margin and $30,443 in overhead * * *.” Attached to the letter is a document entitled
Addendum A which identifies five categories of delays that affected IPS’s work on the
project:
            (1) Acceleration Area “A”--$50,000 for 778 man-hours for two
       additional people from September 9, 2012 to November 11, 2012, to meet
       the accelerated project completion date of December 31, 2012;

             (2) Delays Area “B”--$46,296 for 720 man-hours for two additional
       people from November 4, 2012 to January 6, 2013, as a result of delayed
       access to the north portion of Area B, a two month delay in the demolition
       of existing corridors, a week-long project shut down for a healthcare
       related inspection (CMS inspection), and AZ’s alleged failure to schedule
       two week look-ahead meetings from the beginning of the project;
             (3) Delays Area “A”--$20,576 for 320 man-hours for two additional
       people from February 10, 2013 to March 10, 2013, as a result of schedule
       changes regarding patient corridor from stair #1, slab removal west end of
       mall, and removal of the temporary walkway on January 18th;

            (4) Delay Area, Mall--$20,576 for 320 man-hours for one additional
       person from January 13, 2013 to March 10, 2013, as a result of missed
       milestone dates for overhead steel completion, slab removal throughout

       2Each   of the letters identified in the decision was admitted as Plaintiff’s Exhibit D.
       mall area, building enclosure, and removal of existing temporary
       enclosure;

              (5) Pharmacy Delay, Area “C”--$22,569 for 351 man-hours for
       three additional people from February 17, 2013 through March 10, 2013
       as a result of mall delays, delayed start date for stud framing, delayed
       MEP finishes start date, and delayed removal/relocation of the patient
       traffic corridors.

       {¶7} IPS substantially completed its work on the project by April 1, 2013. On
April 25, 2013, IPS submitted its “Certified Claim” to Levicki for the “cumulative impact
of the University of Toledo and its agents for the work that IPS performed” on the
project. In the letter, IPS states that the Lead Contractor failed to engage a Schedule
Manager pursuant to Article 4.2.3 of the contract documents.              IPS notes that a
schedule was not agreed upon until January 2013, and that as a result of the problems
with the project schedule, IPS incurred delays and extra costs.            Additionally, IPS
identified three areas of cost impact as a result of the delays on the project:
           (1) $50,000 claim for schedule compression as “documented in our
       February 21, 2013 letter, the areas where work was affected occurred in
       Area A between September 9, 2012 and November 11, 2012”;

            (2) $210,000 for disruptions of performance as “documented in our
       February 21, 2013 letter, the areas where work was affected occurred in
       Areas A, B, C, (Pharmacy) and the Mall for the periods of time noted in
       the Addendum to that letter. Since the date of the letter, there has been
       an additional identifiable damage totally an approximate $100,000”;

             (3) $20,000 for additional General Conditions as documented in
       “letters of notice to the University of Toledo as Project Owner on October
       24, 2012, December 24, 2012, January 22, 2013 and February 21, 2013
       and in this certified claims letter. There is an additional claim for General
       Conditions because we are now substantially complete and can now fully
       quantify the GCs. The total amount of General Conditions owed is
       $70,898.29.”

       {¶8} At trial, IPS asserted claims of breach of contract and unjust enrichment.
IPS argues that it is entitled to $473,455 in addition to prejudgment interest as a result
of schedule acceleration, delay, and disruption throughout the project. UT argues that
IPS failed to timely notify, substantiate, and certify its claims, thus waiving its claims and
failing to exhaust its administrative remedies.          Waiver and failure to exhaust
administrative remedies are affirmative defenses, upon which UT bears the burden of
proof. Cleveland Constr., Inc. v. Kent State Univ., 10th Dist. Franklin No. 09AP-822,
2010-Ohio-2906, ¶ 48.
       {¶9} There is no dispute that a written contract governs the relationship between
the parties. Accordingly, IPS’s claim for unjust enrichment is dismissed. Cent. Allied
Ents., Inc., v. Adjutant General’s Dept., 10th Dist. Franklin No. 10AP-701,
2011-Ohio-4920, ¶ 39.
       {¶10} Contract interpretation is a matter of law for the court. City of St. Marys v.
Auglaize Cty. Bd. of Commrs., 115 Ohio St. 3d 387, 2007-Ohio-5026, ¶ 38. When
interpreting a contract, a court’s principal objective is to ascertain and give effect to the
intent of the parties. Hamilton Ins. Servs., Inc. v. Nationwide Ins. Cos., 86 Ohio St. 3d
270, 273 (1999). “The intent of the parties to a contract is presumed to reside in the
language they chose to employ in the agreement.” Kelly v. Med. Life Ins. Co., 31 Ohio
St.3d 130 (1987), paragraph one of the syllabus. In determining the parties’ intent, a
court must read the contract as a whole and give effect, if possible, to every part of the
contract.   Foster Wheeler Enviresponse, Inc. v. Franklin Cty. Convention Facilities
Auth., 78 Ohio St. 3d 353, 361-362 (1997). “[W]here the terms in an existing contract
are clear and unambiguous, this court cannot in effect create a new contract by finding
an intent not expressed in the clear language employed by the parties.” Alexander v.
Buckeye Pipe Line Co., 53 Ohio St. 2d 241, 246 (1978).
       {¶11} “[W]hen a contract has an express provision governing a dispute, that
provision will be applied; the court will not rewrite the contract to achieve a more
equitable result.” Dugan & Meyers Constr. Co. v. Ohio Dept. of Admin. Servs., 113
Ohio St. 3d 226, 2007-Ohio-1687, ¶ 39; see also Cleveland Constr., Inc., supra.
       {¶12} Article 8 of the General Conditions entitled Dispute Resolution details the
procedure for submitting a claim, in part as follows:
       {¶13} “8.1 Initiation of a Claim
       {¶14} “8.1.1 Every claim shall accrue upon the date of occurrence of the event
giving rise to the claim.
       {¶15} “8.1.2 Except as provided under paragraph 2.15, the Contractor shall
initiate every claim by giving written notice of the claim to the A/E and the Contracting
Authority within 10 days after occurrence of the event giving rise to the claim[.]
       {¶16} “ * * *.
         {¶17} “8.1.4 The Contractor’s failure to initiate a claim as and when required
under this paragraph 8.1 shall constitute the Contractor’s irrevocable waiver of the
claim.
         {¶18} “8.2 Substantiation of Claims
         {¶19} “8.2.1 Within 30 days after the initiation of a Claim, the Contractor shall
submit 4 copies of all information and statements required to substantiate a claim as
provided in this Article 8 and all other information which the Contractor believes
substantiates the claim. * * *.
         {¶20} “* * *.
         {¶21} “8.2.4 The Contractor’s failure to comply with the requirements of this
paragraph 8.2 shall constitute an irrevocable waiver of any related claim.
         {¶22} “* * *.
         {¶23} “8.5 Certification of the Claim
         {¶24} “8.5.1 The Contractor shall certify each claim within 30 days after initiating
the claim under paragraph 8.1 or before Contract Completion, whichever is earlier, by
providing the notarized certification specified in subparagraph 8.5.1.1, signed and dated
by the Contractor:
         {¶25} “8.5.1.1 ‘The undersigned Contractor certifies that the claim is made in
good faith; that the supporting data is accurate and complete to the best of the
Contractor’s knowledge and belief; that the amount requested is fair, reasonable, and
necessary adjustment for which the Contractor believes the State is liable; and that the
undersigned is duly authorized to certify the claim on behalf of the Contractor.’
         {¶26} “ * * *.
         {¶27} “8.5.3 The Contractor’s failure to comply with the requirements of this
paragraph 8.5 shall constitute an irrevocable waiver of any related claim.”
         {¶28} IPS argues that “[o]nly after final completion might IPS know the true
nature of damages, whether its earlier notices resulted in the University mitigating or
exacerbating damages, or whether individual delays or impacts compounded with
others. Only at the end of the Project, after the University executed its bulletins in May
and June, could IPS know that the University failed to take remedial measures, and
then calculate IPS’s total impact damages[.]”           IPS’s post-trial brief, pgs. 13-14.
However, Article 8.1.1 and 8.1.2 clearly and unambiguously provide that IPS shall
initiate a claim by providing written notice of a claim within 10 days after the occurrence
of the event giving rise to the claim, rather than when a contractor is able to precisely
calculate its damages at the conclusion of the project. See Cleveland Constr., Inc.,
supra; Stanley Miller Constr. Co. v. Ohio Sch. Facilities Commission, 10th Dist. Franklin
Nos. 10AP-298, 10AP-299, 10AP-432, 10AP-433, 2010-Ohio-6397. Additionally, after
initiation of a claim, pursuant to Article 8.2 and 8.5, a contractor shall substantiate and
certify its claim within 30 days after initiation of a claim.
       {¶29} Upon review of the evidence, the Court finds that IPS failed to timely
initiate its claims within 10 days after the occurrence of the events giving rise to the
claims. IPS’s April 25, 2013 Certified Claim sets forth three separate claims for which
it seeks to recover damages for breach of contract.             First, IPS claims $50,000 in
schedule compression that affected its work in Area A between September 9, 2012 and
November 11, 2012. Second, IPS claims $210,000 for disruptions of performance that
affected its work in Areas A, B, C (Pharmacy) and the Mall for the time periods outlined
in Addendum A to its February 21, 2013 letter.            The time periods identified in the
Addendum are as follows: Area A – February 10, 2013 to March 10, 2013; Area B –
November 4, 2012 to January 6, 2013; Area C – February 17, 2013 to March 10, 2013;
and the Mall – January 13, 2013 through March 10, 2013. Third, IPS claims $20,000
for additional General Conditions as documented in the letters dated October 24, 2012,
December 24, 2012, January 22, 2013, and February 21, 2013, and April 25, 2013.
       {¶30} There is no doubt that the April 25, 2013 Certified Claim letter cannot form
the basis upon which IPS initiated its claims inasmuch as such a letter was not
submitted within 10 days after the occurrence of the events giving rise to the claims as
outlined in IPS’s own Certified Claim letter. All of the events that give rise to the claims
identified in the Certified Claim letter occurred at the latest on or before March 10,
2013. IPS substantially completed its work on the project by April 1, 2013 but did not
submit written notice of a claim until April 25, 2013 when it submitted its Certified Claim.
 Accordingly, the Court finds that IPS did not timely initiate its claims pursuant to Article
8.1.1 and 8.1.2.
       {¶31} Even if the Court determined that IPS timely initiated its claims as outlined
in the October 24, 2012, December 24, 2012, January 22, 2013, and February 21, 2013
letters, IPS did not substantiate or certify its claims within 30 days after initiation of a
claim as required by Article 8.2. and 8.5. Regardless of which letter forms the basis for
initiation of a claim, the Court can only conclude that the April 25, 2013 Certified Claim
letter was submitted more than 30 days after initiation of a claim. Additionally, the
October 24, 2012, December 24, 2012, January 22, 2013, and February 21, 2013
letters do not meet the requirements outlined in Article 8.2.2 for substantiation of a
claim or the requirements of Article 8.5.1 for certification of a claim.3 As stated in the
General Conditions, failure to comply with the requirements of Article 8 shall constitute
an irrevocable waiver of any related claim.
        {¶32} IPS argues that UT repeatedly communicated that it would not entertain
IPS’s claims and that IPS is therefore excused from pursuing administrative remedies
inasmuch as doing so would be futile or a vain act. R.C. 153.12(B) provides in relevant
part: “If a dispute arises between the state and a contractor concerning the terms of a
public improvement contract let by the state or concerning a breach of the contract, and
after the administrative remedies provided for in such a contract * * * are exhausted, the
contractor may bring an action to the court of claims in accordance with Chapter 2743
of the Revised Code.”           “R.C. 153.12(B) presents a rare instance where a statute
requires a plaintiff to exhaust its administrative remedies before bringing suit. Unlike
the judicially-created exhaustion of administrative remedies doctrine, R.C. 153.12(B)
does not include any exceptions.”                  Cleveland Constr., Inc., supra, at ¶ 37.
Consequently, IPS cannot avoid the procedures identified in Article 8 “due to a high
likelihood of an adverse outcome.” Id. at ¶ 42.
        {¶33} Finally, IPS argues that UT waived strict compliance with the dispute
resolution procedure outlined in Article 8. However, the evidence establishes that UT
insisted on strict compliance with the notice and substantiation provisions identified in
Article 8. Defendant’s Exhibit 24.

        3 “8.2.2  The Contractor shall substantiate all of its claims by providing the following minimum
information:
         “8.2.2.1 A narrative of the circumstances, which gave rise to the claim, including, without
limitation, the start date of the event or events and the actual, or anticipated finish date;
         “8.2.2.2 Detailed identification of the Work (e.g., activity codes from the Construction Progress
Schedule) affected by the event giving rise to the claim;
         “8.2.2.3 Copies of the Lead Contractor’s daily log (subparagraph 4.2.9) for each day of impact;
         “8.2.2.4 Copies of relevant correspondence and other information regarding or supporting
Contractor entitlement.
         “8.2.2.5 Copies of the Contractor’s most recent income statement, including segregated general
and administrative expenses for the most recent reporting period, and for the period of the Contact, if
available, and similar information for any Subcontractor claim included;
         “8.2.2.6 The notarized certification described under subparagraph 8.5.1.1;
         “8.2.3 The Contractor shall submit a fully executed Contractor Claim Submission Checklist,
signifying compliance with all of the requirements listed in subparagraph 8.2.2 with each copy of the claim.
         “8.2.4 The Contractor’s failure to comply with the requirements of this paragraph 8.2 shall
        {¶34} While IPS has proved that some of UT’s actions, as outlined in its April 25,
2013 Certified Claim letter constituted a breach of its contract with UT, UT has proved
by a preponderance of the evidence that IPS failed to comply with the dispute
resolution procedure set forth in the contract. IPS’s January 16, 2015 motion for leave
to amend the pleadings to conform to the evidence is DENIED as moot.4 Accordingly,
the Court shall render judgment in favor of UT.

                                                _____________________________________
                                                DALE A. CRAWFORD
                                                Judge

constitute an irrevocable waiver of any related claim.”
         4 The Court has difficulty with IPS stating that it can submit a Certified Claim specifying its

damages and then seek additional monetary compensation for the same claims in the Court of Claims.
                                             Court of Claims of Ohio
                                                                       The Ohio Judicial Center
                                                               65 South Front Street, Third Floor
                                                                          Columbus, OH 43215
                                                                614.387.9800 or 1.800.824.8263
                                                                           www.cco.state.oh.us

IPS ELECTRIC SERVICES, LLC

            Plaintiff

            v.

UNIVERSITY OF TOLEDO

            Defendant

Case No. 2013-00528

Judge Dale A. Crawford

JUDGMENT ENTRY

        {¶35} This case was tried to the Court on the issues of liability and damages.
The Court has considered the evidence and for the reasons set forth in the decision
filed concurrently herewith, judgment is rendered in favor of Defendant.            Plaintiff’s
claim of unjust enrichment is dismissed. Court costs are assessed against Plaintiff.
The clerk shall serve upon all parties notice of this judgment and its date of entry upon
the journal.

                                         _____________________________________
                                         DALE A. CRAWFORD
                                         Judge

cc:

David M. Scott                              James E. Rook
Luther L. Liggett Jr.                       Richard J. Silk Jr.
10 West Broad Street, #1320                 Assistant Attorneys General
Columbus, Ohio 43215                        150 East Gay Street, 18th Floor
                                            Columbus, Ohio 43215-3130
Filed March 9, 2015
Sent To S.C. Reporter 12/31/15