Ohio Supreme Court Holds Contractor Entitled to Prejudgment Interest on Damages for Delay and Disruption; Liquidated/Unliquidated Damages Dichotomy Rejected

Royal Electric Construction Corp. v. Ohio State University,
73 Ohio St. 3d 110, 652 N.W.2d. 687, 1995 Ohio LEXIS 18905 (Ohio Sup. Ct. Aug. 15, 1995)

Prejudgment Interest – Contractor that succeeded on delay and disruption claim was entitled to pre-judgment interest from the date of substantial completion; Ohio rejects rule that pre-judgement interest is only available when claim is “liquidated” or “capable of ascertainment.”

Ohio State University (“Owner”) hired Royal Electric Constr. Corp. (“Contractor”) to perform electrical renovations on two dormitories at the university. At the completion of the projects, the Contractor sued the Owner for damages resulting from Owner-caused delays and disruptions. After a lengthy trial, the trial court found in favor of the Contractor and awarded damages, including pre-judgment interest. In calculating the amount of pre-judgment interest, the trial court held that the interest should be calculated from the time the Contractor substantially completed the project.

On appeal, the Owner challenged only the award of pre-judgment interest, arguing that under Ohio law, pre-judgment interest is awarded only where the claim is “liquidated” or “capable of ascertainment by reasonably certain calculations.” The Ohio Supreme Court recognized that “courts in Ohio have attached great significance to the liquidated-unliquidated dichotomy, or have refined this rule and allowed pre-judgment interest in situations where the claim is unliquidated but ‘capable of ascertainment.'” The court noted that the judicially created rules have caused much confusion among the courts in determining when to award pre-judgment interest.

In affirming the trial court, e period of time between accrual of the claim and judgment, regardless of whether the judgment is based on a claim which was liquidated or unliquidated, and even if the sum was not capable of ascertainment until determined by the court.”

The supreme court also affirmed the trial court’s determination that the damages sustained by the contractor as a result of the delays and disruptions accrued — or became due and payable — at the time that the contractor had substantially completed the project. Therefore, the pre-judgment interest was properly calculated from the date of substantial completion.

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