Court of Claims: Contractor Can’t Collect $136,000 for Disputed Work at Ashtabula County School
Grand Valley Local School District Board of Education, et al. v. Buehrer Group Architecture & Engineering, Inc., et al. and Jack Gibson Construction Co. V.J. William Pustelak, et al. and Boak & Sons, Inc. v. Hirschmann Construction Services, Inc., et al., Case No. 2014-00469
Grand Valley Local School District never agreed to pay more than $20,000 for the needed repairs to its 10-year-old school and the contractor doing the work is not entitled to the $156,000 it claimed it expended, the Ohio Court of Claims ruled.
Grand Valley secured funding from the Ohio School Facilities Commission to construct a new preschool-through-12th-grade school building in Orwell. It hired Buehrer Architecture and Engineering Inc. to design and construct the school and contracted with Jack Gibson Construction Co. to be the general contractor overseeing the building’s construction.
The building was completed in August 2005, but after construction, Grand Valley noticed problems with the parking lot and road design, as well as deficiencies in the building’s exterior. In 2011, consultants for the district discovered design deficiencies.
In July 2013, Gibson argued it entered into a Memorandum of Understanding with the Schools Facilities Commission on behalf of Grand Valley where it agreed to perform roofing, masonry, and asphalt repairs. Gibson argued it was not responsible for any issues the school building was experiencing, claiming it was the result of work or design by Buehrer or other contractors that Gibson was not responsible for hiring.
In February 2014, Grand Valley filed suit against Gibson, Buehrer, and another contractor, McMillan Construction Co., in Ashtabula County Common Pleas Court. McMillan Construction settled its claims with Grand Valley and Gibson moved to have the case transferred to the Ohio Court of Claims.
Gibson estimated the work to repair problems caused by others to be $102,000 and the work Grand Valley wanted, including $54,000 in improvements, totaled $156,000. Gibson indicated the district paid $17,500 for the work, but refused to pay the remainder; Gibson proposes the Memorandum of Understanding is a contract and that the state and school district are in breach of contract and should pay the balance of the company’s costs.
Judge McGrath noted the agreement requires “reasonable compensation will be due Gibson for such items and will need to be evaluated prior to and/or as work progresses, with payment after satisfactory completion of said work.”
The school district argued it didn’t have an enforceable contract with Gibson because it didn’t have any price terms for the work. Lisa Moodt, district treasurer, testified that payments for construction services can only be paid by meeting certain requirements in Ohio law. She presented one purchase order approved by her and the school superintendent to pay Gibson up to $20,000 for remediating the defective work. The district presented its original contract with Gibson that includes state law for using funds from the School Facilities Commission. The contract states any contract documents are not enforceable until the school treasurer first certifies there is a balance in the school construction fund sufficient to pay the contractor’s costs.
Judge McGrath found that Gibson failed to provide evidence that the school district evaluated Gibson’s work before or as the work progressed and there never was an agreement that $156,000 was reasonable compensation. “Gibson has not produced any evidence upon which a reasonable inference could be drawn that (Grand Valley) approved or authorized work for Gibson to perform in excess of the $20,000 purchase order but then failed to pay,” he wrote.
In addition, Judge McGrath noted that R.C. 3313.46 requires any school district seeking construction or repairs in excess of $25,000 to put the project out for competitive bid or declare an “urgent necessity.” He ruled that Gibson has not presented any evidence that either of the scenarios occurred, which would rule out allowing a payment of $156,000 through the agreement it made with the School Facilities Commission. “Contracts entered into by public authorities in disregard of statutes are void and no recovery can be had for the value of any work performed,” Judge McGrath ruled, citing Buchanan Bridge Co. v Campbell, an 1899 Ohio Supreme Court decision.
The Court of Claims is given original jurisdiction to hear and determine all civil actions filed against the state of Ohio and its agencies.
To access information on other cases visit the Court of Claims website.
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