Another busy construction season is coming to a close. Invariably, there are case law developments and statutory changes to reflect upon each year. 2023 is no exception.
1. Old Defect Claim Crumbles Under Statute of Repose
Ohio has adopted a statute of repose found at Ohio Revised Code §2305.131, which basically provides that all claims are cut off ten years after substantial completion of the improvement. In other words, to avoid the pitfalls of stale litigation, the legislature has determined that old claims are barred, even if they have not yet accrued. The courts in recent years have stated that this statute of repose applies to both contract and tort claims.
In the case of Martins Ferry School District v. Colaianni, 2023-Ohio-2285, the Seventh District Court of Appeals on June 28, 2023, ruled in favor of Kegler Brown’s own Mike Madigan, who had argued that the statute of repose barred old multi-million-dollar construction defect claims. The court of appeals found that exceptions argued by the school district – fraud and extended warranties – did not prevent the Court from granting our client’s motion to dismiss under Ohio’s statute of repose. This case means that stale claims are less likely to be prosecuted by public owners against contractors, designers, and others.
2. Re-Bidding Threshold Raised for Many Public Entities
Ohio Revised Code §153.12 has traditionally required the State of Ohio and other public owners on “vertical construction” to rebid if the bids come in at more than 10% over the bid estimate published by the public owner and its designer. This often led to rebidding of competitive numbers in the current bidding environment. Effective in October 2023, that 10% rebid threshold was raised to 20% for political subdivisions other than the State of Ohio, like a county, school district, or other Ohio public authorities. The 10% rebidding threshold remains in place for the State of Ohio and the 5% threshold for ODOT on “horizontal construction” remains unchanged, as well. This statutory change will lead to fewer unnecessary rebids when the public entity concludes that the price is appropriate and wants to proceed without further delay, which can often raise costs in an inflationary environment.
3. Competitive Bidding Threshold Raised
Ohio law in recent years had required certain Ohio political subdivisions to bid work when the cost of the work would exceed $50,000. However, Ohio Revised Code §9.17 was recently revised to increase that minimum amount from $50,000 to $75,000 beginning in 2024, and that figure will automatically increase by 3% annually. This means that there will be less need to competitively bid small projects. However, the law also prohibits political subdivisions from dividing projects into smaller portions for the purpose of avoiding competitive bidding.
