Ohio’s Prompt Payment Act Strengthened by Ninth District Court of Appeals

Ohio’s Prompt Payment Act Strengthened by Ninth District Court of Appeals

A recent case from Summit County further strengthened the attorney’s fees provision of Ohio’s Prompt Payment Act (R.C. 4113.61). The case involved a dispute surrounding the installation of helical piers for the foundation of a construction project for an Akron Metropolitan Housing Authority project. The dispute centered around what design was to be used, which determined how many and what safety factor was to be used for the installed piers.

The pier contractor obtained the required approvals for installation, and after installing it only charged the general contractor for the piers installed. After the approved piers were installed, concerns arose related to the load on the piers, a factor that the pier contractor was not responsible for. Despite the engineer, not the pier contractor, being responsible to determine the load structure, the general contractor withheld approximately $20,000 from the pier contractor.

The pier contractor ultimately filed suit, alleging breach of contract claims related to delay, additional work, the non-payment, and damages for violations of R.C. 4113.61. The trial court found that the pier contractor was rightfully due ~$20,000, that the pier contractor was entitled to 18% interest on that amount (pursuant to R.C. 4113.61), and that the pier contractor was entitled to its attorney fees. Subsequently, a fee hearing was held where the court found that the pier contractor was entitled to ~$60,000 in attorney fees. The general contractor objected to the fees, and the trial court awarded the pier contractor an additional ~$4,000 in fees for time spent arguing the initial decision.

On appeal, the general contractor argued that the attorney fees spent litigating the case should have been apportioned by claim, and the trial court should have conducted an analysis to only award fees related to violations of the Prompt Payment Act. The Ninth District held that since the case centered on a complex construction dispute, and since the majority of the litigation concerned claims and defenses related to the alleged breach of contract by the general contractor (which also relate to the general contractor’s defenses to the Prompt Payment Act claim), the pier contractor was not required to separate out fees related to the Prompt Payment Act from its other attorney fees.

This case is further evidence that Ohio courts take violations of R.C. 4113.61 seriously, and that general contractors can suffer serious consequences for failure to promptly pay subcontractors and suppliers. If you believe that you are owed money on a project, and that the general contractor has been paid but has not paid you, then you may have a claim under the Prompt Payment Act. Please call or email me to set up a time to discuss your potential case.

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