Court of Claims Clarifies When Claim Against State Accrues
A recent decision by the Ohio Court of Claims clarifies when a claim against the State of Ohio "accrues" and the statute of limitations begins to run.
The Case:
A contractor, R.E. Schweitzer, sued the University of Cincinnati for additional compensation on a demolition project. Schweitzer submitted a claim to the project engineer on December 3, 2004 as required by the contract’s “Article 8” dispute resolution provisions. On January 5, 2005 Schweitzer provided a certified claim. The engineer notified the contractor on May 5, 2005 that the University would not pay any additional costs.
On February 6, 2007 the contractor filed suit in the Ohio Court of Claims. The Court of Claims statute provides that claims must be filed against the State within two years after the "accrual of the cause of action." The University moved to dismiss the lawsuit claiming that the two year statute began to run on January 5, 2005 - i.e. when the certified claim was submitted. The contractor argued that it was contractually obligated to complete the Article 8 process before it could file suit. Accordingly, the statute could not have started at the time the claim was submitted.
The Court’s Holding:
The Court refused to dismiss the lawsuit, holding that the contractor was correct that a claim could not accrue until the Article 8 Process is completed. The Court noted that Ohio Revised Code § 153.16(B) obligates the State to provide a decision on an Article 8 claim within 120 days of its submission. If the State fails to do so the claim is deemed denied and the contractor is deemed to have exhausted all administrative remedies under the Article 8 process. The Court held, therefore, that a contractor's claim "accrues" only when the Article 8 process is completed.
In this case, the Court ruled the Article 8 process started when the contractor submitted its initial letter on December 3, 2004. Accordingly, the Article 8 process was deemed completed 120 days later, on April 12, 2005. The contractor, therefore, was required to file suit before April 12, 2007. The contractor’s February 2007 complaint was timely.
Key Points:
- Pay attention to timeframes as to when claims will "accrue” and start the running of the statute of limitations. Article 8 claims against the State of Ohio will be deemed denied 120 days from the date the process commenced unless there is an agreement to extend the time. Contractors should be aware that the statute of limitations begins to run on this date so that they do not inadvertently miss the deadline for filing a lawsuit in court.
- Here, the Court held that the Article 8 process commenced when the initial claim letter was submitted, not when the certified claim was submitted several weeks later.
