Colaianni Constr., Inc. v. Indian Creek Local School Dist.
2016 Ohio 8156
| Ohio Ct. App. | 2016Background
- Colaianni Construction (contractor) was general contractor for an Indian Creek Local School District middle-school project co-funded by the Ohio School Facilities Commission; the construction contract was executed "State of Ohio by and through the [school district]" and approved by the commission.
- Retainage was placed (or promised to be placed) in an escrow account per the contract and a signed Consent to Deposit Retained Funds; contractor claimed the district refused to release escrowed retainage after occupancy in Jan. 2013.
- Contractor filed a Petition to Compel Arbitration under R.C. 153.63(B), seeking an arbitrator to decide the conditions for release of escrowed funds.
- School district moved to dismiss for lack of subject-matter jurisdiction, arguing the State (not the district) was the public owner under R.C. 3318.10 and thus R.C. 153.63(C) applied, requiring suit in the Court of Claims.
- Trial court compelled arbitration under R.C. 153.63(B); the district appealed. The Seventh District reversed, holding the State is the public owner and the contractor’s remedy lies in the Court of Claims under R.C. 153.63(C).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Which R.C. 153.63 remedy applies (B: arbitration v. C: Court of Claims)? | Contractor: dispute is with the school district as public owner; R.C.153.63(B) permits arbitration. | District: contract was made in the name of the State under R.C.3318.10; the State is the public owner so R.C.153.63(C) governs and suit must be in the Court of Claims. | Held for district: State is the public owner; R.C.153.63(C) applies; common pleas lacked jurisdiction and case must be dismissed for lack of jurisdiction. |
| Effect of contract language naming State "by and through" the district | Contractor: escrow obligations were created by district and district administered the escrow; district is the relevant public owner. | District: the plain statutory scheme and the contract show the district acted as the State's agent; parties agreed the contract was made in the name of the State. | Held district acted as State's agent under R.C.3318.10; that makes the State the public owner for R.C.153.63 purposes. |
| Applicability of precedent (Ultra Builders / arbitration) | Contractor: prior Seventh District decisions support arbitration under R.C.153.63 even with a school district owner. | District: Ultra Builders is distinguishable (different statutory context and contract type) and does not control. | Held Ultra Builders distinguishable and does not override statutory scheme favoring Court of Claims when State is owner. |
| Proper forum for monetary relief for escrow dispute | Contractor: arbitration is appropriate and binding under R.C.153.63(B). | District: monetary claims against the State belong in the Court of Claims per contract and R.C.153.12/153.63(C). | Held monetary/dispute over escrow conditions against the State must proceed in Court of Claims; common pleas cannot compel arbitration. |
Key Cases Cited
- Friedman v. Johnson, 18 Ohio St.3d 85, 480 N.E.2d 82 (Ohio 1985) (distinguishing jurisdictional allocation between common pleas and Court of Claims for contract actions seeking different forms of relief)
- Monarch Constr. Co. v. Ohio School Facilities Comm., 150 Ohio App.3d 134, 779 N.E.2d 844 (10th Dist. 2002) (treats the commission’s approval as ratification and recognizes the State/commission as the party with exposure on school construction contracts)
- Ingle-Barr, Inc. v. Scioto Valley Local School Dist. Bd., 193 Ohio App.3d 628, 953 N.E.2d 363 (4th Dist. 2011) (contractor cannot sue the school district for breach when the contract was made in the name of the State; the State is the real party in interest)