The University of Toledo undertook a construction project consisting of an addition connecting two existing portions of the University’s hospital and a remodel of existing hospital space. The University hired an electrical contractor for the electrical trades work on the project. There were a number of delays on the project including material deliveries and progress of the work itself. There were additional issues with the project schedule that caused the electrical contractor to have to accelerate its work at additional expense.

The contractor, from time to time, issued letters to the University outlining various issues on the project and their impacts on the contractor’s work. Ultimately, about a month after the contractor’s work was substantially complete, the contractor provided the University with a “certified claim” in the amount of $450,898.29 representing additional compensation the contractor was due from the University due to the various delays and issues on the project that were not the fault of the contractor. The dispute was not resolved informally and a suit was filed by the contractor in the amount of $473,455.00.

In its defense, the University asserted that the contractor failed to comply with the procedures for submitting a claim to the University as required by the construction contract. The contract provided that any claims must be asserted within ten days of the time the event which gave rise to the claim occurred. According to the contract, failure to do so would result in a waiver of the contractor’s claim. Additionally, once the claim was submitted, there were additional steps required of the contractor to substantiate the claim. These too were not fully complied with by the contractor.

The Court of Claims sided with the University finding that the contractor did indeed fail to comply with the contractor claims requirements of the contract. Hence, even if the contractor was correct in its claim and was entitled to additional compensation, its failure to comply with the contractual procedures for submitting claims to the project owner had the effect of waiving such claims.

Districts should be aware that the burden is on them to prove a defense of non-compliance with contractual requirements. The District’s construction managers, architects, and owner representatives should take care to fully document the chain of events regarding any contractor claims in the event it becomes necessary to assert a defense such as this.

IPS Elec. Servs., L.L.C. v. Univ. of Toledo