On July 17, 2014, the Ohio Supreme Court continued its literal interpretation and application of construction contracts. In the case, Transtar Elec., Inc. v. A.E.M. Elec. Servs. Corp., Slip Opinion No. 2014-Ohio-3095, a general contractor hired a sub-contractor to provide electrical services for the installation of a pool at a hotel. The sub filed suit seeking payment of $44,000 that was never paid by the GC or project owner. The subcontract included the following language:
"(c) The Contractor shall pay to the Subcontractor the amount due under subparagraph (a) above only upon the satisfaction of all four of the following conditions: * * * (iv) the Contractor has received payment from the Owner for the Work performed by the Subcontractor. RECEIPT OF PAYMENT BY CONTRACTOR FROM THE OWNER FOR WORK PERFORMED BY SUBCONTRACTOR IS A CONDITION PRECEDENT TO PAYMENT BY CONTRACTOR TO SUBCONTRACTOR FOR THAT WORK." Read More ›
It is sometimes difficult to tell whose insurer will be liable for certain occurrences on a construction project. The whole purpose of contracting is to allocate risk—hopefully to the party that is better situated to deal with that risk. In allocating that risk, all parties need to know which party is ultimately responsible for insuring against certain risks. While some court opinions can leave a reader unsure of the ultimate holding and its application, the Indiana Court of Appeals recently issued a clear and concise opinion regarding issues of insurer liability in the context of interpreting an American Institute of Architects (AIA) standard form agreement. Read More ›
With its unanimous decision in Atlantic Marine Construction Co., Inc. v. U.S. District Court for the Western District of Texas the United States Supreme Court stated its strong support for the enforcement of contractual forum-selection clauses. Specifically, the Court outlined how federal courts should determine whether to transfer a case filed in a federal district court different than the contractually selected forum. In describing this process the Court recognized that it would be rare for a court to not follow the forum-selection clause. While this decision is good news for contractors attempting to enforce their contracts the Court’s decision leaves open some important questions which may lead to future uncertainty related to these clauses. Read More ›
Can design-builders rely on owner supplied specifications if the design-builder also has the requirement to conduct its own independent investigation on those same specified conditions; NOPE, says the Court of Federal Claims. Read More ›
Unique financing arrangement causes trouble for Indiana school; others be wary of any efforts which might be construed as avoiding applicable regulations. Read More ›
Lenders' Mortgages Found to have Priority Over Subcontractors' Liens due to Flow Down Clause in Subcontracts
Ohio’s Tenth Appellate District very recently decided a matter which continued Ohio’s history of broadly construing and freely enforcing flow down clauses. A “flow down clause” is a provision in a subcontract which incorporates duties and responsibilities of other contract documents and is often used to create obligations between a subcontractor and prime contractor which mirror the obligations already in existence between the prime contractor and the project owner. A common example would be an arbitration provision in a prime contract which is enforced against a subcontractor due to terms which merely acknowledges the other construction documents and affirms consent to be bound by them. Read More ›
The Ohio Court of Appeals issued a decision in 2012 that serves as a reminder to participants in the construction process and their counsel that the old adage of "location, location, location" can become very important in a lien foreclosure action. In U.S. Bank N.A. v. Mobile Associates National Network Systems, Inc., 195 Ohio App. 3d 699 (10th Dist. 2011) the court addressed the issue of whether a party could pursue an appeal of a trial court’s decision ordering the foreclosure on a parcel of property when, at the time of the appeal, the foreclosure sale had already occurred. While the decision was favorable for the property owner in Mobile, it may have faced a different outcome had the property been located in a different appellate district. Read More ›
Indiana Court of Appeals Rules Against Contractor and Performance Bond Surety on Contractor's Differing Site Conditions Claim
Earlier this year, the Indiana Court of Appeals issued an important opinion that impacts contractors and sureties alike. The decision should give contractors in Indiana pause before ceasing work while a dispute with the owner is pending. Sureties also have been placed on notice that strict compliance with the terms of their bonds is amongst their best defenses to claims made by owners and bond claimants. Read More ›
Is a private construction company a “public agency”? Most people would respond in the negative. However, until April 2012, under Kentucky law, virtually all highway contractors and many vertical builders would be considered “public agencies” under Kentucky’s Open Records law. Read More ›
On September 28, 2012, the Ohio Revised Code 2305.06 was amended to reduce the statute of limitations from 15 years to 8 years. In the past, a contracting party had 15 years to file suit for breach of a written contract. Read More ›
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C. Michael Shull, III focuses his practice on construction law and litigation. Michael's client representations range from casinos and ENR Top 400 contractors to design firms and subcontractors.