In Boone Coleman Construction, Inc. v. The Village of Piketon, the defendant contracted for a roadway and improvements project and agreed to pay Boone $683,300 to complete the work. 50 N.E.3d 502 (Ohio 2016). The contract required substantial completion within 120 days and contained a liquidated damages provision that provided for the payment of $700 for each day beyond the substantial completion date. Boone did not complete the project until well over a year after a previously extended substantial completion date. Boone brought suit against Piketon alleging that it failed to pay money due under the contract, and Piketon counterclaimed for liquidated damages.The trial court granted summary judgment in favor of Piketon, awarding $277,900 in liquidated damages. Boone appealed, however, asserting that the trial court erred in awarding Piketon liquidated damages. Upon review, the appellate court agreed, reversing the trial court’s liquidated damages award and remanding the case for further proceedings. Relying on Samson Sales, Inc. v. Honeywell, Inc., 465 N.E.2d 392 (Ohio 1984), the appellate court held that upon reviewing the contract as a whole in its application, it was clear that “the amount of damages [was] so manifestly unreasonable and disproportionate that it [was] plainly unrealistic and inequitable.” Boone Coleman Constr., 50 N.E.3d at 507. The court concluded that the liquidated damages provision constituted “an unenforceable penalty.” Id., citing Samson Sales, 465 N.E.2d at 392.Excerpt from Article written by Construction Law Attorney, Matthew Moeller, Esq for the American Bar Association.
View an excerpt below or click here to view the full article.