Jindal Builders & Restoration Corp. v. Cincinnati Metro. Hous. Auth. , 2020 Ohio 4043 ( 2020 )

[Cite as Jindal Builders & Restoration Corp. v. Cincinnati Metro. Hous. Auth., 2020-Ohio-4043.]
IN THE COURT OF APPEALS
FIRST APPELLATE DISTRICT OF OHIO
HAMILTON COUNTY, OHIO
JINDAL BUILDERS & RESTORATION : APPEAL NO. C-190217
CORP., TRIAL NO. A-1704087
:
Plaintiff-Appellant,
: O P I N I O N.
vs.
:
CINCINNATI METROPOLITAN :
HOUSING AUTHORITY,
Defendant-Appellee. :
Appeal From: Hamilton County Court of Common Pleas
Judgment Appealed From Is: Affirmed in Part, Reversed in Part, and Cause Remanded
Date of Judgment Entry on Appeal: August 12, 2020
Lindhorst & Dreidame Co., LPA, Barry F. Fagel and Elizabeth M. Mahon, for Plaintiff-
Appellant,
Adams, Stepner, Woltermann & Dusing, PLLC, and Jeffrey C. Mando, for Defendant-
Appellee.
OHIO FIRST DISTRICT COURT OF APPEALS
BERGERON, Judge.
{¶1} Delays in construction projects are one of the banes of existence. In this case,
a contractor and owner fence over who bears the risk of loss for delay, and whether
overhead costs are recoverable as damages under the contract at hand. Although the trial
court denied the contractor any relief, we conclude that it erred by prohibiting overhead
damages, but that only part of the time period sought by the contractor is ultimately
recoverable. We therefore reverse in part and remand for further proceedings.
I.
{¶2} To fully appreciate the dispute in this case, we begin with an overview of the
Millvale North Development Project in Cincinnati. Originally, in 2014, defendant-appellee
Cincinnati Metropolitan Housing Authority (“CMHA”) undertook a rehabilitation project
for several public housing buildings in its Millvale North development, awarding the
entirety of this project to a third-party contractor. However, the original contractor proved
not up to the task and could not finish the entire project, prompting CMHA to divide the
contract into two phases—leaving the original contractor on Phase I, but searching for
another contractor to complete Phase II. According to CMHA, it planned to transfer Phase
II residents into the Phase I units upon its completion, thereby vacating the Phase II units
for rehabilitation. But, unfortunately for CMHA, even after the division, the original
contractor continued to struggle, leading CMHA to conclude that if you want something
done right, do it yourself, and thus it terminated that contractor and deemed itself the
general contractor of Phase I. In the meantime, CMHA hunted for a contractor for Phase II,
ultimately landing on plaintiff-appellant Jindal Builders & Restoration, Corp., (“Jindal”) in
December 2015.
{¶3} Two months later, in February 2016, Jindal and CMHA entered into a
contract for “construction and comprehensive modernization services at CMHA’s Millvale
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OHIO FIRST DISTRICT COURT OF APPEALS
North Development – Phase II, Buildings[.]” Within this contract, CMHA delineated the
various aspects of Jindal’s obligations, including job responsibilities, payment, and the
period of performance, requiring Jindal to complete the project within 365 days from the
date established in the notice to proceed. Notably, nowhere within the contract did CMHA
condition Jindal’s start date on Phase II to the completion of Phase I units or mandate
Phase II residents relocate to Phase I units.
{¶4} The contract also incorporated several of the federal trappings ordinary to a
government construction contract, including the Housing and Urban Development (“HUD”)
general conditions for construction contracts awarded by public housing agencies. Relevant
to this appeal, section 30 of the general conditions allows a contractor to recover damages
for delays caused solely by the government-contracting officer—this section punctuated with
caveats addressed in more depth below. As will become apparent, this section assumes
significance since, after the parties signed the contract, a series of delays occurred resulting
in Jindal not starting work until months after the anticipated start date.
{¶5} In April 2016, just two months after signing the contract, CMHA issued a
notice to proceed, advising Jindal to begin work on April 18, 2016, and fixing the completion
date as July 26, 2017. But Jindal did not arrive at the Phase II work site, equipment in
hand, on April 18, and CMHA contends that both parties understood July 26 to be the true
start date. Consequently, April 18 came and went, with CMHA continuing to labor away on
Phase I until July 9 when CMHA discovered significant vandalism at those units. According
to CMHA, this threw a wrench in its plan, leaving the residents in Phase II unable to
decamp to Phase I until CMHA repaired and completed the Phase I units.
{¶6} As July 26 approached, Jindal’s project manager, Jeff Reams, reached out to
CMHA’s construction contract supervisor, Ronald Veley, on July 20 inquiring about the
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OHIO FIRST DISTRICT COURT OF APPEALS
relocation of the Phase II residents. Mr. Veley optimistically, yet vaguely, responded that he
hoped to complete the other two buildings in Phase I by the next week, but failed to provide
an anticipated start date for Phase II. A few weeks elapsed, with Jindal still awaiting the
relocation of the Phase II residents and unable to begin its work. Growing ever more
concerned, Mr. Reams reached out again to CMHA, underscoring the urgency: “We bid this
project in early December 2015 with an anticipated spring 2016 start time and based our bid
numbers on that time frame. As of today August 16, 2016 we are still waiting on a start date
* * * causing time delays and extra cost to complete this project * * *. Please give us an
update on when we can expect to start this project so we can plan accordingly.” Reinforcing
this concern, Mr. Reams followed up on August 17 and 18, pleading with CMHA to provide a
start date, but to no avail—CMHA ignored these outreaches.
{¶7} Nearly a month passed before Mr. Reams and Anil Jindal, president of Jindal,
both simultaneously reached out to CMHA on September 12, begging for direction on when
the Phase II units would be vacated so Jindal could begin its work and emphasizing the
ramifications of this delay on Jindal’s billings and bond program. Again, based on the
record before us, CMHA offered nothing but silence as to the project’s status. Finally, on
October 17, CMHA informed Jindal that it vacated all Phase II units and Jindal therefore
could commence work. However, because Jindal had yet to acquire necessary permits for
the work, Jindal did not begin its work until November 10 (or November 17, a date later
claimed by Jindal).
{¶8} With the Phase II project finally underway, Jindal submitted various change
orders. The first of these arrived on December 2, 2016, with Jindal seeking an adjustment
for additional costs for the upcoming winter months (i.e., December, January, and
February) incurred because of the delay to the start of the project, which CMHA in turn
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OHIO FIRST DISTRICT COURT OF APPEALS
denied. Jindal accordingly revised and resubmitted another change order on April 11, 2017,
this time pursuing, under section 30 of the contract, overhead damages suffered during the
delay between April and November 2016. A few weeks later, on April 29, Jindal revised the
change order one last time, seeking damages for the same time period in different amounts,
but this achieved the same result—CMHA denied both requests. In the wake of CMHA’s
denials, Jindal filed suit against CMHA, alleging breach of contract and seeking recovery for
overhead damages incurred for the delay between April and November 2016. Despite the
pending lawsuit, Jindal ultimately completed the rehabilitation of the Phase II units and
performed the contract in full.
{¶9} At the two-day bench trial, Jindal’s breach-of-contract claim against CMHA
centered upon section 30 of the contract, i.e., the suspension of work clause:
(b) If the performance of all or any part of the work is, for an unreasonable
period of time * * * delayed * * * (1) by an act of the Contracting Officer in the
administration of this contract, or (2) by the Contracting Officer’s failure to
act within the time specified (or within a reasonable time if not specified) in
this contract an adjustment shall be made for any increase in the cost of
performance of the contract (excluding profit) necessarily caused by such
unreasonable * * * delay * * * and the contract modified in writing
accordingly. However, no adjustment shall be made under this clause for any
* * * delay * * * to the extent that performance would have been so * * *
delayed * * * by any other cause[.]
(c) A claim under this clause shall not be allowed (1) for any costs incurred
more than 20 days before the Contractor shall have notified the Contracting
Officer in writing of the act or failure to act involved * * * and (2) unless the
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OHIO FIRST DISTRICT COURT OF APPEALS
claim, in an amount stated, is asserted in writing as soon as practicable after
the termination of the * * * delay * * * but not later than the date of final
payment under the contract.
No one really disputes that a delay occurred here—the question more is who bears
responsibility. According to Jindal, CMHA solely caused the delay between April and
November 2016, and thus, because Jindal provided CMHA with the requisite notice,
CMHA’s unreasonable delay entitled Jindal to overhead damages incurred while it awaited
the start of work on Phase II.
{¶10} To support its case, Jindal presented testimony from Mr. Reams and Mr.
Jindal, detailing the reasons for and consequences of the delay. This permitted, according
to Jindal, recovery of overhead damages nearing $300,000, with a CPA testifying to the
appropriateness of this amount. To rebut this evidence, CMHA’s construction contract
supervisor, Mr. Veley, and director of real estate and construction, Joseph Norton, insisted
that CMHA notified Jindal at the signing of the notice to proceed that, contrary to the date
on the notice, the start date would actually be July 26. Further, CMHA shifted blame,
asserting Jindal’s failure to obtain the necessary permits, the vandalism to Phase I, and the
delay in completion of Phase I instead occasioned the seven-month delay.
{¶11} Upon considering both parties’ evidence, the trial court ultimately sided with
CMHA, finding in favor of CMHA and entering judgment for it. Specifically, the court found
that Jindal could not recover because (1) section 30(b) does not permit recovery of general
overhead damages, (2) the cause of delay was not CMHA, but instead relocation issues and
vandalism, as well as Jindal’s failure to obtain the necessary permits—the court deeming all
this events outside of CMHA’s control—and (3) Jindal failed to deliver the appropriate
notice in compliance with section 30(c). Jindal now appeals, challenging in a single
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OHIO FIRST DISTRICT COURT OF APPEALS
assignment of error all these findings and conclusions. Accordingly, we address each of
these challenges in turn.
II.
{¶12} On appeal, Jindal challenges the trial court’s interpretation of the contract
and its findings of fact, each necessitating its own standard of review. See MRI Software,
L.L.C. v. West Oaks Mall FL, L.L.C., 2018-Ohio-2190, 116 N.E.3d 694, ¶ 10 (8th Dist.)
(“Appellate review of a mixed question of fact and law requires an appellate court to give
deference to a trial court’s factual findings if they are supported by competent, credible
evidence, and to independently review whether the trial court properly applied the law to
the facts.”). As to Jindal’s assertions that the court erred in its interpretation of section 30,
this constitutes a matter of law, which we review de novo. See Ignazio v. Clear Channel
Broadcasting, Inc., 113 Ohio St. 3d 276, 2007-Ohio-1947, 865 N.E.2d 18, ¶ 19 (“But the
interpretation of a contract is a matter of law that we review de novo.”); Western and
Southern Life Ins. Co. v. Bank of New York Mellon, 2019-Ohio-388, 129 N.E.3d 1085, ¶ 6
(1st Dist.) (“This court reviews the interpretation of a contract de novo.”).
{¶13} But as to Jindal’s challenges to the court’s factual findings, we instead
“presume that the findings of the trier of fact are correct,” given the court’s opportunity to
view the witnesses and observe their demeanor. Lehigh Gas-Ohio L.L.C. v. Cincy Oil Queen
City, L.L.C., 1st Dist. Hamilton No. C-130127, 2014-Ohio-2799, ¶ 44; see Tidewater Fin. Co.
v. Cowns, 197 Ohio App. 3d 548, 2011-Ohio-6720, 968 N.E.2d 59, ¶ 11 (1st Dist.), quoting
Lucero v. Ohio Dept. of Rehab. & Corr., 10th Dist. Franklin No. 11AP-288, 2011-Ohio-6388,
¶ 16, quoting Seasons Coal Co., Inc. v. City of Cleveland, 10 Ohio St. 3d 77, 80, 461 N.E.2d
1273 (1984) (“ ‘In an appeal from a bench trial, a reviewing court must presume that the
factual findings of the trial judge are correct because the trial judge had an opportunity “to
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OHIO FIRST DISTRICT COURT OF APPEALS
view the witnesses and observe their demeanor, gestures and voice inflections, and use
these observations in weighing the credibility of the proffered testimony.” ’ ”). Accordingly,
we afford due deference to the court as the finder of fact, evaluating whether “some
competent and credible evidence” supports the court’s findings. MRI Software at ¶ 12 (“A
reviewing court must, therefore, accord due deference to the credibility determinations
made by the fact finder.”); see Roark v. Rydell, 174 Ohio App. 3d 186, 2007-Ohio-6873, 881
N.E.2d 333, ¶ 54 (1st Dist.) (“Our review of the trial court’s factual determinations is highly
deferential.”).
III.
A.
{¶14} We begin with Jindal’s assertion that the court improperly interpreted section
30 to prohibit recovery of general overhead costs, which we review de novo. See Ignazio at
¶ 19. Jindal contends that section 30(b) entitles it to recover damages in the form of
overhead costs arising out of the delay that increased the overall cost of performance, not
just actual work done, as the trial court found.
{¶15} As in any contractual dispute, our “primary objective is to ascertain and give
effect to the parties’ intent,” searching the language the parties selected for clues. Wal-Mart
Realty Co. v. Tri-County Commons Assocs., LLC, 1st Dist. Hamilton No. C-160747, 2017-
Ohio-9280, ¶ 10. And the parties here elected to incorporate HUD’s general conditions for
construction contracts, i.e., form HUD-5370, section 30 that we quoted above.
{¶16} Specifically, section 30(b) permits a contractor to recover for “any increase in
the cost of performance of the contract (excluding profit),” if the contractor’s performance
of all or any part of the work is, for an unreasonable period of time, delayed by the
contracting officer’s act or failure to act. Stated differently, if a contractor incurs increased
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OHIO FIRST DISTRICT COURT OF APPEALS
costs by virtue of an act or failure to act by the contracting officer that effectively delays the
contractor’s ability to perform the contract, then section 30 permits recovery of those
additional costs. See George Sollitt Const. Co. v. United States, 64 Fed. Cl. 229, 236-237
(2005) (finding that “[i]f the contractor suffers increased costs because of government
action or inaction which effectively suspends the contractor’s progress on contract work,
[the suspension of work] clause may provide a remedy.”). Notably, section 30(b) explicitly
excludes “profit” from its scope, barring a contractor from recuperating lost profit arising
out of the contracting-officer-caused delay. See Maki v. United States, 13 Cl.Ct. 779, 783
(1987) (interpreting an identical suspension of work clause to “expressly exclude[] claims
for lost ‘profit.’ ”). Consequently, under section 30, a contractor may seek recovery for
additional costs to its performance directly stemming from the contracting-officer-caused
delay, as long as that additional cost is not profit.
{¶17} And this makes sense, as it is well-established that when performing a
contract, a contractor incurs not only direct costs, but also indirect costs. See Complete
Gen. Constr. Co. v. Ohio Dept. of Transp., 94 Ohio St. 3d 54, 57, 760 N.E.2d 364 (2002)
(explaining “construction projects incorporate two different kinds of costs,” specifically
direct and indirect costs). As to the former, direct costs include expenses “directly
attributable to the performance of a specific contract”—i.e., equipment expenses,
construction wages, etc. Nicon, Inc. v. United States, 331 F.3d 878, 882 (Fed.Cir.2003); see
Complete Gen. at 57. By contrast, indirect costs consist of expenses generally involved in
running a business, and thereby not attributable to any one project—overhead expenses the
most significant indirect cost among them. See J & H Reinforcing & Structural Erectors,
Inc. v. Ohio School Facilities Comm., 10th Dist. Franklin No. 12AP-588, 2013-Ohio-3827, ¶
100, citing Complete Gen. at 57; Altmayer v. Johnson, 79 F.3d 1129, 1132 (Fed.Cir.1996)
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OHIO FIRST DISTRICT COURT OF APPEALS
(“Home office overhead costs are those that are expended for the benefit of the whole
business, which by their nature cannot be attributed or charged to any particular contract.”).
Because overhead costs include expenses such as salaries of executive or administrative
personnel, general insurance, rent, interest on loans, etc., contractors generally spread
overhead costs “proportionally across ongoing projects.” City of Cincinnati v. Triton Servs.,
Inc., 2019-Ohio-3108, 140 N.E.3d 1249, ¶ 53 (1st Dist.); see Charles G. Williams Const., Inc.
v. White, 271 F.3d 1055, 1058 (Fed.Cir.2001), quoting West v. All State Boiler, Inc., 146 F.3d
1368, 1372 (Fed.Cir.1998) (“ ‘A contractor recovers its indirect costs by allocating them on a
proportionate basis among all of its contracts.”). Consequently, “[w]hen a delay occurs on a
particular construction project, that particular project ceases to carry its weight in regard to
running the business, which can result in damages to the contractor.” Complete Gen. at 57.
In other words, a delay can render the contractor’s overhead costs unabsorbed, with the
billings for that project failing to cover its apportioned amount. See Triton Servs. at ¶ 53
(“When an owner-caused delay substantially diminishes a project’s cash flow, the
contractor’s fixed overhead costs are not absorbed by the delayed project[.]”); Nicon at 882,
quoting C.B.C. Ents., Inc. v. United States, 978 F.2d 669, 671 (Fed.Cir.1992) (“[W]hen the
government causes a delay or suspension of performance, this ‘decreases the stream of
direct costs against which to assess a percentage rate for reimbursement.’ ”).
{¶18} Contemplating this problem, both Ohio and federal courts generally permit
contractors to recover general overhead costs arising out of a government-caused delay. See
All State Boiler at 1370 (interpreting an identical suspension of work clause to allow the
contractor to recover unabsorbed overhead costs resulting from the government-caused
delay); Complete Gen. at 57 (discerning the appropriate formula to apply when calculating
damages for overhead costs incurred but unabsorbed due to the government-caused delay);
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OHIO FIRST DISTRICT COURT OF APPEALS
Wood Elec., Inc. v. Ohio Facilities Constr. Comm., 2017-Ohio-2743, 90 N.E.3d 371, ¶ 36
(10th Dist.) (affirming the court’s application of the HOOP formula to calculate the
contractor’s home office overhead damages arising out of the government-caused delay);
Stockton E. Water Dist. v. United States, 109 Fed. Cl. 760, 799 (2013) (“Courts also have
awarded damages for overhead expenses when the Government imposed a delay or
suspension of the contract work and thereby interrupted or reduced the contractor’s stream
of income.”).
{¶19} With this backdrop in mind, we turn to the contract at hand, observing no
prohibition in section 30 for recovery of overhead damages. In fact, the plain language bars
only one type of damages from its purview, specifically “profit.” Given the ubiquity of
overhead costs in the construction industry and the well-chronicled case law on this point, it
seems more than reasonable to conclude that if the parties intended to limit recovery of
overhead costs, the language would reflect as much. See Dellagnese Const. Co. v. Nicholas,
9th Dist. Summit No. 22951, 2006-Ohio-4350, ¶ 12 (“By expressing these specific
limitations on appellee’s recovery, the parties impliedly excluded other limitations.”).
{¶20} Bolstering this point, other provisions within the contract contemplate such
distinctions between direct costs, indirect costs, and profit. For instance, section 29,
governing change orders, similarly permits equitable adjustments to the contract,
delineating the expenses within its purview: “The Contractor’s written proposal for
equitable adjustment shall be submitted in the form of a lump sum proposal supported with
an itemized breakdown of all increases and decreases in the contract in at least the following
details: (1) Direct Costs * * * (2) Indirect Costs * * * (3) Profit[.]” In light of section 29, we
conclude that the parties certainly appreciated the distinctions between recoverable
expenses, and therefore intended to exclude only “profit,” not indirect costs (such as
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OHIO FIRST DISTRICT COURT OF APPEALS
overhead), from section 30’s scope. Accordingly, we read section 30 to allow recovery of
overhead damages, as long as the contractor meets the additional requirements nestled in
the suspension of work clause (i.e., causation and timely notice). We thus find that the trial
court erred in interpreting section 30 to the contrary.
B.
{¶21} Although overhead damages are indeed recoverable under section 30, Jindal’s
journey is not yet complete, with section 30 necessitating that it clear two more hurdles
before recovering—causation and timely notice. Regarding causation, section 30 does not
permit a contractor to obtain overhead damages for just any delay, but specifically one that
the contracting officer solely caused. Consequently, because Jindal seeks overhead damages
stemming from a series of delays between April and November 2016, each delay must
necessarily arise out of the action or inaction of CMHA. Underscoring that point, section
30(b) explains, “[h]owever, no adjustment shall be made under this clause for any
suspension, delay, or interruption to the extent that performance would have been so
suspended, delayed, or interrupted by any other cause, including the fault or negligence of
the Contractor[.]” Based on the plain language of section 30(b), a contractor may only
recover for costs under this provision if the contracting officer is the sole cause of the
delay—with concurrent delay occasioned by the negligence or fault of the contractor or
another barring relief. See MW Builders, Inc. v. United States, 134 Fed. Cl. 469, 508 (2017),
quoting (Emphasis sic.) Triax-Pacific v. Stone, 958 F.2d 351, 354 (Fed.Cir.1992) (reasoning
an identical suspension of work clause requires the contracting officer be “ ‘the sole
proximate cause of the contractor’s additional loss, and the contractor would not have been
delayed for any other reason during that period.’ ”). Consequently, “even if the government
has caused an unreasonable delay to contract work, that delay will not be compensable if the
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OHIO FIRST DISTRICT COURT OF APPEALS
contractor, or some other factor not chargeable to the government, has caused a delay
concurrent with the government-caused delay.” George Sollitt Const. Co., 64 Fed. Cl. at 238;
see MW Builders at 508 (“[T]he contractor may not recover, if there is a concurrent delay
caused by the contractor or some other third party.”).
{¶22} Here, the trial court concluded that section 30 “only allows for recovery of
delay damages which are directly caused by CMHA[.]” Applying this provision of the
contract, the court then attributed the delay to “vandalism and relocation issues and Jindal’s
failure to serve permits, all of which were outside of CMHA’s control,” which thus excused
CMHA of responsibility. On appeal, Jindal challenges several of the trial court’s findings
concerning causation. Specifically, Jindal contends the trial court erred when it found that
(1) July 26, 2016, not April 18, was the actual start date, (2) Jindal was unprepared to begin
work on April 18, (3) the contract conditioned the commencement of Phase II on the
completion of Phase I, and (4) the delay between April and November was not caused by
CMHA. For ease in addressing these challenges, we divide the delay into three separate
periods: (1) April 18 to July 26, (2) July 27 to October 17, and (3) October 18 to November
10, and consider each accordingly.
1.
{¶23} We turn first to the period between April 18 and July 26. According to Jindal,
the triggering event for the seven-month delay occurred in April 2016, when CMHA issued
its notice to proceed, advising Jindal to commence work on April 18, but CMHA failed to
relocate the residents from the Phase II units. Disagreeing, the trial court identified July 26
as the start date, meaning that no delay existed between April and July that would enable
Jindal to recover. In light of the competent, credible evidence supporting this finding, we
agree. See MRI Software, 2018-Ohio-2190, 116 N.E.3d 694, at ¶ 10.
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OHIO FIRST DISTRICT COURT OF APPEALS
{¶24} At trial, CMHA’s director of real estate and construction, Mr. Norton,
maintained Jindal understood that the start date was July 26, testifying CMHA “told [Mr.]
Jindal at that signing of the Notice to Proceed that he would not be starting until July.”
Following suit, CMHA’s construction contract supervisor, Mr. Veley, testified that, not only
did CMHA inform Jindal of the July start date, but the notice to proceed reflected as much.
Specifically, Mr. Veley clarified that, although the notice declared April 18 as the start date,
the notice also established July 26, 2017, (i.e., 465 days after April 18) as the completion
date. Accordingly, because the contract contemplated completion within 365 days from the
date advised in the notice to proceed, Mr. Veley explained, CMHA added a hundred days to
the April 18 date (i.e., July 26) to allow 365 days for Jindal to complete the project—
otherwise April 18, 2017, would have been the completion date reflected in the notice to
proceed (instead of July 26, 2017). The parties thus understood this delay and agreed to it
contractually.
{¶25} While Jindal counters with protestations that its officers lacked any memory
of CMHA informing it of the July start date, Mr. Reams conceded that not only did Jindal
fail to show up on April 18 with equipment ready to break ground, but between April and
May it also never mustered any complaints about this “delay.” Mr. Jindal echoed the point,
acknowledging that Jindal issued no complaints the first few months (i.e., April, May, and
June) regarding its inability to begin work on April 18 or shortly thereafter. This
nonchalance about the delay in April, May, and June reinforces the conclusion that Jindal
did not truly believe April 18 was the start date for its work on the Phase II units, all of
which comports with the contractual time period contained in the agreement. Bolstering
this point, Jindal also failed to tender the requisite notice as to this April to July period
pursuant to section 30(c)(1). In fact, as discussed in more depth below, Jindal’s first written
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OHIO FIRST DISTRICT COURT OF APPEALS
notification did not arrive until mid-August, well beyond the 20-day period beginning on
April 18 when Jindal would have first discovered its inability to commence work.
{¶26} In light of the above, competent, credible evidence supported the trial court’s
finding that July 26 was the actual start date, not April 18. We accordingly conclude Jindal
cannot recover any overhead damages for the period between April 18 and July 26.
2.
{¶27} As to the second interval, July 27 to October 17, we reach a different
conclusion. Premised on a July 26 start date (as explained above), Jindal’s work on Phase II
nevertheless did not commence on this date. Siding with CMHA, the trial court blamed
vandalism and relocation issues, as well as Jindal’s failure to obtain permits, for this delay,
deeming these issues “outside of CMHA’s control.” In doing so, the trial court found that
the “[r]enovation and rehabilitation of the Phase I units needed to be completed first so that
tenants in the Phase II units could be moved into them while the Phase II units were being
renovated,” and that the “vandalism of the Phase I units prevented CMHA from releasing
Jindal to start work on the Phase II units[.]”
{¶28} Jindal mounts two challenges to the court’s conclusions concerning this
second period—the first contesting the court’s determination that the commencement of
Phase II was contingent upon the completion of Phase I, and the second, challenging the
court’s finding that the vandalism and relocation issues were out of CMHA’s control.
Turning to the former, Jindal asserts that nowhere in the contract does a provision exist
conditioning the start of Phase II on the completion of Phase I. And we agree. One can
search the contract in vain for any language conditioning Jindal’s work on the Phase II units
on Phase I’s completion or on CMHA relocating the Phase II residents specifically to the
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OHIO FIRST DISTRICT COURT OF APPEALS
Phase I units. CMHA certainly could have baked this condition into the contract, but it did
not—and its efforts to reallocate the risk of loss at this juncture fall short.
{¶29} Reinforcing the point, other than some testimony from CMHA regarding an
obscure “plan,” the record is devoid of any evidence that Phase II’s commencement was
contingent on Phase I’s competition (reflecting the contractual absence as well). Nor was
this something of which CMHA should have been unaware—it served as the general
contractor for Phase I. Absent a carve-out in the contract, no reason exists why Jindal
should have understood that Phase I served as a type of prerequisite to launch Phase II. To
the extent that the trial court interpreted the contract to require that renovation of “the
Phase I units needed to be completed first so that tenants in the Phase II units could be
moved into them,” we find that it erred.
{¶30} This brings us to Jindal’s second challenge in regard to the July to October
delay period—the court’s conclusion that CMHA was not the sole cause of the delay.
Ordinarily, vandalism would seem to fall into the “any other cause” category under section
30, and therefore absolve CMHA of responsibility for the delay. See Section 30(b) of the
contract (“However, no adjustment shall be made under this clause for any * * * delay * * *
to the extent that performance would have been so * * * delayed * * * by any other
cause[.]”); MW Builders, 134 Fed. Cl. at 508, quoting (Emphasis sic.) Triax-Pacific, 958 F.2d
at 354 (“[A] contractor may recover for an unreasonable delay, if the Government is ‘the sole
proximate cause of the contractor’s additional loss, and the contractor would not have been
delayed for any other reason during that period.’ ”). But here, the vandalism did not occur
to Jindal’s contractually designated project, the Phase II units, but instead to a wholly
separate project, the Phase I units. We would likely reach a different result if vandalism
damaged Phase II and prevented construction there from going forward. Nevertheless, the
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OHIO FIRST DISTRICT COURT OF APPEALS
damage to the Phase I units cannot shield CMHA from fault in failing to relocate the Phase
II residents here when, as discussed above, Phase I’s completion held no bearing on Jindal’s
work on Phase II.
{¶31} Nor may CMHA seek to shift any blame for this delay to Jindal’s failure to
obtain permits. At trial, both of CMHA’s employees conceded that relocation and vandalism
caused the delay between July and October, with Mr. Norton admitting that the relocation
of the Phase II residents and the vandalism to Phase I were “the only cause of delay,” at least
until CMHA released the Phase II units to Jindal on October 17. Further, both Mr. Norton
and Mr. Veley agreed that Jindal’s failure to obtain the necessary permits did not cause this
period of delay. And Mr. Norton conceded that “CMHA [was] in control of the relocation,”
thereby recognizing CMHA’s responsibility in relocating the Phase II residents. Needless to
say, even if Jindal had the permits in hand, CMHA would not have allowed it to commence
work prior to October 17.
{¶32} Therefore, we conclude that the court below erred when it determined that
the vandalism to the Phase I units and the relocation of the Phase II residents fell “outside
of CMHA’s control” and that Jindal’s failure to obtain permits caused the delay—at least
with respect to this July to October period. Based on an application of the contract at hand
to the facts of this case, we see no other cause “concurrent with the government-caused
delay.” See George Sollitt Const. Co., 64 Fed. Cl. at 238 (“[E]ven if the government has
caused an unreasonable delay to contract work, that delay will not be compensable if the
contractor, or some other factor not chargeable to the government, has caused a delay
concurrent with the government-caused delay.”). We accordingly find that CMHA’s failure
to relocate the Phase II residents in order to enable Jindal to commence work solely caused
the delay between July 27 and October 17. Therefore, Jindal may recover for overhead
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OHIO FIRST DISTRICT COURT OF APPEALS
damages incurred for this period pursuant to section 30 of the contract if it provided
suitable notice (which we will address below).
3.
{¶33} As to the third temporal period (between October 18 and November 10), we
find that Jindal bears at least some responsibility for this delay. As noted above, on October
17, CMHA released the Phase II units to Jindal to begin construction. But Jindal had yet to
acquire the necessary permits for it to commence work. It did not acquire these permits
until November 2, which prevented it from commencing work before November 10.
Obtaining the permits fell on Jindal’s shoulders, with the specifications in the contract
designating this duty to the contractor. Further, at trial, Mr. Jindal admitted as much,
conceding that the contract directed Jindal to acquire the permits and that CMHA would
then reimburse Jindal for these costs. The delay between October and November was
accordingly “the fault or negligence of” Jindal, not some act or failure to act by CMHA, thus
barring Jindal from recovering overhead damages during this period under section 30 of the
contract. See Section 30 of the contract (“However, no adjustment shall be made under this
clause for any * * * delay * * * to the extent that performance would have been so * * *
delayed * * * by any other cause, including the fault or negligence of the Contractor[.]”).
{¶34} In sum, we conclude that Jindal cannot recover overhead damages for the
first period between April 18 and July 26, since no delay occurred during this time, nor can
it recover for the third interval between October 18 and November 10, as Jindal caused the
delay for this period. This leaves the delay between July 27 and October 17 the only
compensable period, as long as Jindal satisfied the notice requirements contained within
section 30(c).
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OHIO FIRST DISTRICT COURT OF APPEALS
C.
{¶35} This brings us to the last hurdle Jindal must clear in order to recover
overhead damages for the period of delay between July 27 and October 17—timely notice as
outlined in section 30(c). Pursuant to section 30(c), a claim is not allowed
(1) for any costs incurred more than 20 days before the Contractor shall
have notified the Contracting Officer in writing of the act or failure to act
involved (but this requirement shall not apply as to a claim resulting from
a suspension order); and, (2) unless the claim, in an amount stated, is
asserted in writing as soon as practicable after the termination of the * * *
delay * * * but not later than the date of final payment under the contract.
{¶36} Although the parties debate whether this clause imposes two conjunctive
requirements or disjunctive ones, the plain language settles this dispute, with section 30(c)
obligating the contractor to comply with two separate notice requirements for timely filing
its claim, as the case law confirms. See Hoel-Steffen Constr. Co. v. United States, 197 Ct. Cl.
561, 456 F.2d 760, 766 (1972) (holding that, because the board failed “to heed the different
nature of the two separate notice requirements in the suspension clause,” it ultimately erred
when it found the contractor failed to timely submit its claim for the government-caused
delay within the 20-day period). As to the first requirement, set forth in section 30(c)(1),
the contractor cannot recover for costs incurred more than 20 days before the contractor
should have notified the contracting officer in writing of the act or failure to act involved.
Stated differently, once the contractor knows of the contracting officer’s act or failure to act
causing delay, section 30(c)(1) demands written notification to the contracting officer within
20 days. Consequently, section 30(c)(1) aims to place the contracting officer on notice that
a condition exists that is delaying the contractor’s performance, which then enables it to
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OHIO FIRST DISTRICT COURT OF APPEALS
remedy the situation. See id. (interpreting a nearly identical suspension of work clause
mandating notice within 20 days to be directed “only at notification to the defendant ‘of the
act or failure to act involved.’ ”).
{¶37} On the other hand, section 30(c)(2) endeavors to quantify the contractor’s
claim, requiring the contractor to provide a “written monetary claim” detailing the costs
incurred. See id. (“The latter of the two is that there must be a written monetary claim ‘in an
amount stated * * * as soon as practicable after the termination of such suspension, delay, or
interruption[.]’ * * * The other notice specification * * * is not directed at the presentation of
a monetary claim in connection with the suspension clause, but only at notification to the
defendant ‘of the act or failure to act involved.’ ”). Notably, the contractor need not tender
this “written monetary claim” within 20 days of experiencing the increased costs, but
instead “as soon as practicable after the termination of” the delay.
{¶38} Interpreting section 30(c), the trial court here ultimately found that, because
Jindal did not provide a written request for delay damages until December 2, 2016, section
30(c) barred Jindal from recovering any reimbursement for delay damages incurred.
However, in doing so, the trial court conflated the two notice requirements, subjecting
Jindal’s “written monetary claim” to the 20-day requirement specified in section 30(c)(1).
See Hoel-Steffen at 766 (finding the board erroneously transformed the 20-day notice
requirement “into a provision for the filing by the contractor of a specific monetary claim
under the suspension clause within 20 days of experiencing the increased costs.”). But, as
discussed above, Jindal needed only to submit written notification (not a full claim
delineating costs incurred) within 20 days from when it should have notified CMHA of the
outset of the delay. And this makes sense—the purpose of the first provision is to place the
contracting officer on notice in order to ameliorate any damage, and it would be unrealistic
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OHIO FIRST DISTRICT COURT OF APPEALS
to expect the contractor to completely itemize all of its damages on such short notice
(particularly when the harm might be on-going).
{¶39} Upon review of the record, we find that Jindal satisfied the notice
requirements for the period between July 27 and October 17. As established above, July 26
represented the actual start date for Phase II. Jindal satisfied the 20-day notice
requirement by sending various emails in mid-August notifying CMHA of Jindal’s inability
to begin work on Phase II and warning of the increased costs that would be incurred from
this delay. Without receiving adequate responses from CMHA, Jindal continued to pepper
it with notices of Jindal’s objections to the delay and the specter of damages resulting from
the delay throughout September.
{¶40} This constitutes sufficient written notice to CMHA under section 30(c). Once
Jindal notified CMHA of this delay, CMHA had the ability to try to mitigate any damages
and to try to resolve the delay. See Hoel-Steffen, 456 F.2d at 766 (“[The] inquiry is simply
whether the contractor put the [g]overnment on notice of the government conduct
complained about, so that the procurement officials could begin to collect data on the
asserted increase in cost, and could also evaluate the desirability of continuing the delay-
causing conduct.”); K-Con Bldg. Systems, Inc. v. United States, 114 Fed. Cl. 595, 605 (2014),
quoting Calfon Constr., Inc. v. United States, 18 Cl.Ct. 426, 438 (1989) (discussing the
purpose of the written notification requirement is to inform the government contracting
officer “ ‘before such time that the Government would suffer if not apprised of the facts.’ ”).
Accordingly, we find that Jindal sufficiently notified CMHA under section 30(c)(1) of the
contract.
{¶41} Turning to the latter requirement under section 30(c)(2), Jindal also needed
to provide CMHA with a written monetary claim “as soon as practicable” after the
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OHIO FIRST DISTRICT COURT OF APPEALS
termination of the delay, but “not later than the date of final payment under the contract.”
As noted by the trial court, on December 2, 2016, Jindal submitted its first written monetary
claim describing increased costs stemming from the delay. But this filing concerned
increased expenses for future months, rather than the unabsorbed overhead costs that form
the basis of this appeal. In fact, it was not until April 11, 2017, that Jindal provided a written
claim quantifying the unabsorbed overhead costs arising out of delay between April 18 and
November 10, 2016.
{¶42} Although this notice came five months after Jindal commenced work, based
on the facts of this case, we find that Jindal tendered CMHA its written claim for overhead
damages “as soon as practicable” after the termination of the delay pursuant to section
30(c)(2), especially in light of Jindal’s hiring a CPA to calculate the overhead damages for
the relevant period. See Hoel-Steffen, 456 F.2d at 766 (finding the contractor’s $150,000
claim submitted a little over eight months after the termination of the delay satisfied the “as
soon as practicable” requirement). Certainly, it tendered this claim well in advance of “final
payment.” Therefore, because Jindal satisfied the pair of notice requirements in regards to
the delay period between July 27 and October 17, we find the trial court erred in concluding
Jindal’s claim was untimely under section 30(c).
D.
{¶43} Based on the above, we hold that Jindal may recover for overhead damages
stemming from the CMHA-caused delay between July 27 and October 17, and accordingly
remand the cause for the trial court to determine the amount of Jindal’s overhead damages.
As to how to calculate these overhead damages, we leave that to the able discretion of the
trial court below, as Ohio courts do not compel any particular approach.
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OHIO FIRST DISTRICT COURT OF APPEALS
{¶44} On the one hand, Ohio courts, including the Ohio Supreme Court, have
gravitated towards the Eichleay formula to calculate unabsorbed overhead costs arising out
of government-caused delay. See Triton Servs., 2019-Ohio-3108, 140 N.E.3d 1249, at ¶ 54,
quoting Complete Gen., 94 Ohio St. 3d at 55, 760 N.E.2d 364 (“[Eichleay] is ‘the most well-
known formula for calculating unabsorbed overhead’ costs arising out of government-
caused delay.”). Originally established in the context of federal government construction
contracts, the Eichleay formula “creates a per diem rate for overhead costs attributable to a
single project, multiplying that rate by the number of days of delay to arrive at a total home
office overhead award.” (Emphasis sic.) Complete Gen. at 58, citing Wickham Contracting
Co., Inc. v. Fischer, 12 F.3d 1574, 1577 (Fed.Cir.1994), fn. 3. The Eichleay formula also
carries two substantive prerequisites: the contractor must demonstrate that (1) it was on
standby, and (2) it was unable to take on other work during this standby period. Id. at 58;
All State Boiler, 146 F.3d at 1373-1375.
{¶45} However, as this court emphasized in Triton Services, the Eichleay formula is
but one way to determine unabsorbed home-office-overhead damages. See Triton Servs. at
¶ 54; Complete Gen. at 61 (“We find today that the Eichleay formula is one way of
determining unabsorbed home office overhead damages in public construction delay
cases.”). Consequently, a trial court maintains discretion in calculating overhead damages
resulting from government-caused delay, with the Eichleay formula but one arrow in its
quiver. See J & H Reinforcing, 10th Dist. Franklin No. 12AP-588, 2013-Ohio-3827, at ¶ 106
(holding the “Eichleay formula is discretionary,” and thus “the referee acted within its
discretion in applying a formula other than the Eichleay formula in calculating home office
overhead damages.”); Wood Elec., 2017-Ohio-2743, 90 N.E.3d 371, at ¶ 36 (affirming the
trial court’s use of the HOOP formula when calculating overhead damages caused by delays
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OHIO FIRST DISTRICT COURT OF APPEALS
and finding no error in the trial court’s failure to require proof of the Complete Gen. factors
prior to considering the HOOP method). We leave it to the trial court below on remand to
calculate, within its discretion, Jindal’s overhead damages arising out of the period of delay
between July 27 and October 17 if the parties prove unable to stipulate to the amount.
IV.
{¶46} For the forgoing reasons, we affirm in part and reverse in part the judgment
rendered in favor of CMHA, and we remand the matter to the trial court. Specifically, we
affirm the portion of the trial court’s judgment that found Jindal could not recover for
overhead damages for the April 18 to July 26 and October 18 to November 10 periods, and
we accordingly overrule Jindal’s single assignment of error in this respect. However, we
reverse the court’s conclusion that Jindal could not recover overhead damages for the
period of delay between July 27 and October 17, and therefore, we sustain Jindal’s sole
assignment of error in part. Therefore, in light of our disposition, we remand the cause for
the trial court to calculate the overhead damages arising out of the CMHA-caused delay
between July 27 and October 17.
Judgment accordingly.
MYERS, P. J., and WINKLER, J., concur.
Please note:
The court has recorded its entry on the date of the release of this opinion
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