Ohio Court of Appeals reverses summary judgment; question of material fact existed as to whether Owner could enforce no-damage-for delay clause against Contractor.

Cleveland Constr., Inc. v. Reynoldsburg City Schools,
1996 Ohio App. LEXIS 2751 (June 28, 1996)

No-damage-for-delay clause in contract is not enforceable if the extent and magnitude of the delay was unforeseeable at the time the contract was executed and, therefore, summary judgment was improperly granted where question of material fact existed concerning the foreseeability of the delay.

Cleveland Construction, Inc. (“Contractor”) entered into a contract with the Reynoldsburg City Schools (“Owner”) for the construction of several projects. The contract provided that the Contractor would begin its work in May 1993 and complete its work ten months later, by February 1994. The Contractor, however, was delayed for two months in beginning the project, was further delayed as a result of difficulties experienced by another of the Owner’s contractors, and was at one point required to temporarily abandon its work and return to the project at a later time. In the end, the originally contemplated ten-month project became an eighteen-month project.

The Contractor sued the Owner alleging damages as a result of the delays caused by the Owner and the Owner’s other contractor. The Owner moved for summary judgment arguing that the Contractor’s claims were barred by the “no-damage-for-delay” clause in the contract. The no-damage-for-delay clause read as follows:

Regardless of other provisions in the Contract Documents to the contrary, Contractor will not be entitled to damages or additional compensation from the Owner or Architect or CM on account of delays caused by persons.

The trial court granted the Owner’s motion for summary judgment and the Contractor appealed.

On appeal, the Contractor argued that the no-damage-for-delay clause should not be enforced because certain conditions arose during performance of the contract which were not within the contemplation of the parties at the time the contract was made. The court recognized that a no-damage-for-delay clause, while generally enforceable, will not be enforced if the delay was not foreseeable by the parties. Quoting from its opinion in Royal Electric Constr. Corp. v. Ohio State Univ., 1993 Ohio App. LEXIS 6181 (Dec. 21, 1993), the court noted that “while a certain amount of delay in a construction project may be foreseeable, the accumulation of delays can be of such a magnitude that, taken together, the extent of delay becomes unforeseeable.” Relying on that language from Royal Electric, the court found that a material question of fact existed as to whether the extent and magnitude of the accumulation of delay was foreseeable and reversed the grant of summary judgment.

The Contractor also appealed from the trial court’s grant of summary judgment on its claim for quantum meruit. The appellate court reversed the trial court’s decision and held that “if the trial court finds that the extent and magnitude of the delays were within the contemplation of the parties to the contract, then the appellant would not prevail on its claim of quantum meruit as it would have received no benefit which was not contemplated; however, if the trial court finds that the extent and magnitude of the delays were not within the contemplation of the parties to the contract, then the court may decide whether appellant’s claim of quantum meruit will prevail.”

In sum, the factual issue whether the extent and magnitude of the delay was foreseeable precluded summary judgment.

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