OHIO CONSTRUCTION LAW
Table of Contents
PREFACE
ix
ABOUT THE
AUTHORS xi
CHAPTER ONE
1
TRADITIONAL PROJECT DELIVERY METHODS 1
I.
Generally 1
II. Design-Bid-Build 2
A. Advantages of Design-Bid-Build 3
B. Disadvantages of Design-Bid-Build 4
III.
The Design-Build Alternative 5
A. Advantages of Design-Build 7
B. Drawbacks of Design-Build 9
C. Practical Considerations 10
CHAPTER TWO
ALTERNATIVE PROJECT DELIVERY METHODS 12
I. Generally 12
II. Multiple-Prime Contracting 13
A. Advantages of MP Contracting 13
B. Disadvantages of MP Contracting 14
C. Ohio’s MP Contracting Statute 17
III. Construction Management Contracts 17
A. Typical CM Duties 18
B. Main CM Roles 20
1. Agency Construction Management 20
2. Construction Management At-Risk 21
3. The GMP Option 23
4. Construction Management Litigation 23
IV. Public-Private Partnerships (“PPPs”) 26
V. Integrated Project Delivery (“IPD”) 28
CHAPTER THREE
CONSTRUCTION FINANCING 32
I. Generally 32
II. The Loan Commitment 33
III. Loan Documentation 35
IV. Due Diligence 37
V. Advancing Construction Loan Proceeds 39
VI. Default and Default Remedies 39
VII. Recap of Loan Process 40
CHAPTER FOUR
CONSTRUCTION INSURANCE ISSUES –
PART ONE: THE COMMERCIAL GENERAL LIABILITY POLICY
41
I. Generally 41
II. Ohio’s Limitations on CGL Coverage 41
A. The Ohio Supreme Court’s Westfield Opinion 42
B. CGL Opinions Before Westfield 45
C. Opinions Contrary to Westfield 46
III. Insurance for Completed Operations 47
A. Importance of PCOH Coverage 48
B. The PCOH Coverage Endorsement 49
C. Potential PCOH Concerns 51
IV. The Occurrence-Based CGL Policy 51
A. Delayed Damages Coverage 52
B. Standard CGL Policy Provisions 53
C. The CGL Policy Known Risk Exclusion 55
D. Timing of the Occurrence 56
V. The Claims Made CGL Policy 57
A. Timing Requirements 59
B. Retroactive Date of Claims Made Policy 60
C. Basic Extended Reporting Periods 61
D. Failure to Report Prior to Renewal of Policy 62
E. Claims Made Tail Coverage 63
VI. Claims Made v. Occurrence-Based CGL Policies 64
CHAPTER FIVE
CONSTRUCTION INSURANCE ISSUES –
PART TWO: MISCELLANEOUS INSURANCE ISSUES
69
I. Generally 69
II. Interpreting Insurance Policies 70
A. Illustrative Cases: Coverage Denied 71
B. Illustrative Cases: Coverage Found 71
III. Insurer’s Duty to Defend Insured 73
IV. Builder’s Risk Insurance 74
V. Additional Insured Coverage 77
VI. Wrap-Up Insurance Policies 79
A. Advantages of OCIPs and CCIPs 79
B. Precautions in Using OCIPs and CCIPs 80
C. The CIP Exclusion 82
CHAPTER SIX
LICENSING, REGISTRATION, AND CODE REQUIREMENTS
85
I. Generally 85
II. Ohio Board of Building Standards 85
III. Licenses Required 87
CHAPTER SEVEN
PUBLIC PROJECTS
91
I. Generally 91
II. Methods of Delivery 91
A. Construction Management 92
B. Design-Build Methodology 94
III. Selection of Architects and Engineers 95
IV. Awarding Public Project Construction Contracts 97
A. Lowest Responsive and Responsible Bid 97
B. Claims by Unsuccessful Bidders 98
C. Withdrawing a Bid 99
D. Separate Bid Requirement 100
E. Reciprocal Bid Preference 100
V. Financial Assurance Requirements 102
A. Bid Bonds 102
B. Performance Bonds 103
C. Payment Bonds 104
D. Liability Insurance Requirements 105
VI. Additional Bid Requirements 105
A. Authority of Surety 105
B. Affirmative Action Plans 106
C. Prevailing Wage 108
VII. Contractual Liquidated Damages 109
VIII. Limitations on Retainage 110
A. Escrow Requirements 110
B. Arbitration/Court of Claims 111
IX. Claims Involving Public Works 112
CHAPTER EIGHT
OHIO’S PROMPT PAYMENT ACT
115
I. Ten-Day Requirement 115
II. Penalties for Noncompliance 116
III. Good Faith Dispute 116
IV. Proof of Nonpayment 119
CHAPTER NINE
CONTRACT CHANGES
120
I. Generally 120
II. Offer and Acceptance of Contract Terms 121
III. Types of Changes 122
A. Minor Changes 122
B. Formal Changes 123
C. Construction Change Directive (“CCD”) 125
D. Cardinal Changes 126
E. Constructive Changes 128
IV. Recovery for Unjust Enrichment 129
V. The Claims Process 131
VI. Practice Pointers 135
CHAPTER TEN
DIFFERING SITE CONDITIONS
137
I. Generally 137
II. Types of Differing Site Conditions 141
A. Recovery for Type I Differing Site Conditions 142
1. Affirmative Indications of Physical Condition 142
2. Materially Different Conditions 145
B. Recovery for Type II Differing Site Conditions 146
III. Site Investigation 147
IV. The Spearin Doctrine 148
CHAPTER ELEVEN
INDEMNITY AGREEMENTS
152
I. Ohio’s Anti-Indemnity Statute 152
A. Applicability of Statute 152
B. Void Indemnity Clauses 154
C. When Statute is Not Applicable 155
II. Effect of Statute on Insurance 156
III. Reimbursement of Attorney Fees 157
IV. Hold Harmless Agreements 158
V. Indemnifying Work Injury Claims 159
A. Express Waiver of Immunity 160
B. Separate Indemnification Clauses for Costs and Expenses 161
C. Indemnification Clauses Not Limited to Costs and Expenses 162
CHAPTER TWELVE
RED FLAG CONTRACT PROVISIONS
165
I. Flow-Down Clauses 165
A. Generally 165
B. Scope of Flow-Down Clauses 166
II. Time is of the Essence 169
A. Timely Performance Implied 169
B. Reasonable Time for Performance 170
C. Waiver and Modification 170
D. Consequences of Untimely Performance 171
III. Provisions for Liquidated Damages 171
CHAPTER THIRTEEN
VOID CONTRACT PROVISIONS
176
I. Generally 176
II. Waiver of Bond Rights 176
III. Waiver of Pending Claims Upon Final Payment 176
IV. No Damages for Delay 177
V. Foreign Law/Foreign Venue Selection Clause 178
VI. Contingent Payment Provisions 179
A. “Pay-If-Paid” Clauses 179
B. Allowance of Lien Claims 180
C. “Pay-When-Paid” Clauses 181
CHAPTER FOURTEEN
CLAUSES LIMITING LIABILITY/DAMAGES
182
I. Generally 182
II. Exculpatory Clauses 182
A. Vagueness/Ambiguity 183
B. Unconscionability 185
C. Public Policy 187
III. Limitation of Liability Clauses 187
A. Limited to a Specific Sum 188
B. Limited to Amount of Fees 189
IV. Waiver of Other Types of Damages 191
CHAPTER FIFTEEN
IMPLIED WARRANTIES
195
I. Type of Claim 195
II. Sufficiency of Plans and Specifications 196
III. Worksite Conditions 198
A. Type I Claims 198
B. Type II Claims 199
IV. Workmanlike Construction 200
V. Fitness or Suitability for Particular Purpose 202
VI. Good Faith and Fair Dealing 202
VII. Statutory Minimum Warranties for Condominium Projects 203
CHAPTER SIXTEEN
MECHANIC’S LIENS
207
I. Generally 207
II. Waiver of Lien Rights 207
III. Private Improvements 207
IV. Requirements for Valid Lien 209
A. Notice of Furnishing 209
B. Sufficiency of Affidavit 209
C. The Timing Requirement 210
D. Effective Date of Mechanic’s Lien 211
V. Strict v. Substantial Compliance 211
VI. Public Improvements 212
VII. Timing 213
VIII. Liens Against Homeowners 213
CHAPTER SEVENTEEN
CLAIMS AGAINST ARCHITECTS AND ENGINEERS
215
I. Professional Malpractice 215
A. Expert Testimony Requirement 215
B. Disallowance of Contractor Claims 216
C. Architect’s and Engineer’s Excessive Control 217
II. Breach of Contract 217
A. Professional Negligence v. Breach of Contract 217
B. Substantial Performance of Contract 219
III. Breach of Warranty 219
IV. Implied Indemnity 220
V. Fraud and Misrepresentation 220
VI. Negligent Misrepresentation 222
CHAPTER EIGHTEEN
THE ECONOMIC LOSS DOCTRINE
225
I. Prohibition Against Certain Lawsuits 225
II. The Supreme Court’s Corporex Development Opinion 226
III. The Reliance on Information Exception 227
IV. The Privity Substitute Exception 229
V. The Excessive Control Exception 230
VI. The Third-Party Beneficiary Exception 231
VII. The Indirect Damages Exception 233
CHAPTER NINETEEN
STATUTES OF LIMITATIONS
235
I. Generally 235
II. Agreed-Upon Limitations Period 237
III. Bodily Injury Claims 237
IV. Defective Construction Claims 239
A. Contracts for Construction Services 240
B. Supplier Contracts 241
C. Consumer Sales 242
V. Oral Contract for Construction Services 243
VI. Professional Negligence Claims 243
VII. Fraudulent Misrepresentation Claims 245
VIII. When Limitations Period Begins to Run 246
A. The Delayed-Damages Rule 246
B. The Discovery Rule 248
IX. Contractor’s Right to Cure 249
X. Statute of Repose 249
A. Validity of Ohio’s Statute of Repose 250
B. Applicability of Statute to Professional Negligence Claims 252
C. Practical Applications of Statute by Ohio Courts 253
CHAPTER TWENTY
MEDIATION/ARBITRATION CONTRACT PROVISIONS
257
I. Generally 257
II. The Mediation Process 258
A. Duties of a Mediator 259
B. Confidential Communications 260
C. Privileged Communications 261
III. Arbitration 263
A. Enforceability of Arbitration Clauses 264
1. Unconscionability 264
a. Procedural Unconscionability 264
b. Substantive Unconscionability 266
2. Waiver of Arbitration Clause 268
a. Waiver Found 268
b. Waiver Not Found 269
c. Summary of Factors 270
3. Binding Nonsignatories 271
B. Arbitrability of Claims 272
C. Vacating, Modifying, or Correcting Arbitration Awards 275
1. Motions to Vacate 275
2. Motions to Modify or Correct 277
IV. Forum Selection Provisions 278
TWENTY-ONE
EMPLOYMENT DISCRIMINATION CLAIMS
281
I. Overview of Prohibited Discrimination 281
A. Intentional and Unintentional Discrimination 282
B. Federal Anti-Discrimination Laws 283
II. Proof of Intentional Discrimination 283
III. Differences Between Ohio and Federal Law 284
IV. Damages Recoverable 285
V. Employer Defenses 286
VI. Age Discrimination 286
VII. Race, Religion, and National Origin Discrimination 286
VIII. Disability Discrimination 287
IX. Gender and Family Status Discrimination 288
X. Harassment 288
A. Harassment by Supervisor 289
B. Harassment by Coworker 289
TWENTY-TWO
LABOR AND EMPLOYMENT ISSUES
292
I. Immigration Issues 292
II. Employment Background Checks 292
A. Stand-Alone Requirement 293
B. Adverse Employment Decisions 294
III. Employee Safety and Health 296
A. Construction Industry Regulations 296
B. Safety Training Requirements 297
C. Workplace Inspections 297
IV. Wage and Hour Requirements 298
V. Family and Medical Leave Act 299
A. Federal Law 299
1. Overview 299
2. Employer Application 299
3. Employee Eligibility 299
4. Military Family Leave 299
5. Criteria for Eligibility 300
6. Notice Requirements 301
7. Certification of Serious Health Condition 301
8. Employer Responsibilities and Prohibitions 301
B. Ohio State Laws 302
VI. Union Activity 303
A. Coverage by the NLRA 303
B. Exemptions from NLRA for Construction Industry 304
C. Illegal Picketing and Work Stoppages 306
D. Right to Organize/Right to Work 307
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