Construction Claims Based on Contract

Claims against contracting party

A subcontractor or materialman may bring a claim against the party it contracted with for breach of contract, including claims based on refusal to pay the contract price, refusal to pay for extra or changed work or materials, delay, or violation of the prompt payment laws.

To prevail, the subcontractor or materialman must establish the existence of a contract, performance of the contract by the subcontractor or materialman, and breach of the contract by the contracting party. Damages for breach of contract are normally limited to the amount of money withheld. For extra or changed work, the damages are the reasonable value of the work performed. Damages under the prompt payment law would also include interest and attorneys fees.

Claims against owner

Claims against the owner by a lower tier contractor may be for foreclosure of mechanic's lien and for unjust enrichment.

Ohio courts have held that a claim for unjust enrichment will be upheld where a benefit has been conferred by a plaintiff on a defendant, the defendant has knowledge of the benefit and the circumstances are such that it would be unjust for the defendant to retain the benefit without compensation. Hambleton v. R.G. Barry Corp. (1984), 12 Ohio St. 3d 179, 183, 465 N.E.2d 1298. Liability under unjust enrichment "arises out of the obligation cast by law upon a person in receipt of benefits which he is not justly entitled to retain *** ." Hummel v. Hummel (1938), 133 Ohio St. 520, 525.

Unjust enrichment claims against an owner usually will not be upheld if the owner can demonstrate that it paid for the work done or materials supplied, even if the payment was not eventually made to the subcontractor or materialman.

Damages available

• Value of changed or additional work
• Money withheld
• Delay damages

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Fortney & Klingshirn
4040 Embassy Parkway, Suite 280
Akron, Ohio 44333
telephone 330-665-5445 - fax 665-5446