GUY G. CLINE, Judge.
The plaintiff, Ernest J. Waits, alleges that the plaintiff and defendant entered into a contract dated July 29, 1982, to provide certain consulting services for the purpose of aiding minority business enterprises ("MBEs").
Plaintiff further alleges that he completed his part of the contract but defendant wrongfully refuses to pay plaintiff in accordance with the contract.
Plaintiff alleges defendant wrongfully refused to permit plaintiff to complete the contract and thereby breached the contract.
Defendant admits the contract but denies that plaintiff carried out the terms of the contract and says that defendant rightfully terminated the contract by letter dated April 21, 1983.
The defendant alleges the following defenses: general denial; that the claim fails to state a cause of action; that claims for services rendered prior to March 12, 1983, are barred by statute of limitations; that plaintiff is estopped from asserting that defendant breached the contract, because plaintiff failed to perform the contract; failure of consideration; that plaintiff's hands were unclean; and that plaintiff waived the breach by failing to perform the contract services.
The defendant says that it paid $104,231.04 to plaintiff and fifty percent of that sum or $52,115.52 was lost by defendant because upon that audit, the federal government refused to reimburse that amount to the defendant. The defendant therefore counterclaims for that amount against plaintiff. Plaintiff denied the breach.
The contract executed by plaintiff and defendant is No. 3592 executed July 29, 1982, and provides, in part, as follows:
"WORK PLAN
"* * * to provide the proposed services when directed by ODOT or requested by an MBE prime or sub-contractor owned and controlled by minorities or women.
"b. survey of construction in progress by MBE contractors and subcontractors
"1. Review * * * existing projects;
"2. Make comment of project
"3. Circulate survey forms and procedures
"4. Circulate list of professional and technical services * * * including (but not limited to) the following:
"a. (assist) MBE in understanding specifications
"b. cost estimating
"c. material sources and quotation process
"d. bidding process
"e. job planning
"f. scheduling
"g. equipment needs
"h. labor needs
"i. field production
"j. field records and cost systems
"k. field controls
"l. security
"Consultant will assign and dispatch key personnel to provide professional assistance to minority firms on a one-on-one basis. Civil Engineers, technicians and accountants will be made available to MBEs as the consultant deems necessary. Consultant will prepare and present small work shops statewide as directed by ODOT. Daily project field reports — transmitted to ODOT will summarize these reports for submission to the Federal Highway Administration (FHA).
"Estimated Cost $300,000 "Consultant-224 days 71,680 "Chief Field Director-224 days 57,344 "Engineer-224 days 57,344 "Estimate Accountant-156 days 29,952 "Technician-156 days 26,208 "Travel Expenses 47,970 "Telephone 9,502 "TOTAL $300,000
" Plan
"c. minimum staffing will include a professional engineer, technical advisor and other professional personnel as required who have knowledge of the construction industry.
"d. the department will have the right to review the resumes of personnel being considered for use on the program and reject any that are not deemed to be acceptable. Personnel may be utilized on a part-time basis as required.
" Reporting
"The following hourly `rates of pay' (which includes [ sic] salaries, overhead and net fee) are hereby established for this agreement (No. 3592).
"Consultant $40.00 per hour "Field Director $32.00 per hour "Engineer $32.00 per hour "Estimator/Accountant $24.00 per hour "Technician $21.00 per hour
"The Consultant may submit, on a biweekly basis, a billing which includes an invoice for the total of all compensations earned. All billing preparations shall be in compliance with Section 3 of the `Specifications for Consulting Services.'
"Monthly Report, a daily log of all contracts with MBE firms. The report shall include but not be limited to the following:
"1. MBE firm and individual contacted
"2. Address and telephone number of firm
"3. Type of contract
"4. Location of contract
"5. Project number
"6. Problem discussed
"7. Results of decision
"The line item values may be modified by a mutual agreement between the department and the consultant. [There was no modification.]
"
Salaries: "Consultant $ 71,680.00 "Associates 170,848.00 "Total Salaries $242,528.00 "Travel $ 29,250.00 "Meals and Lodging 18,720.00 "Total Travel $ 47,970.00 "Special Telephone (Watts-800 line) 9,502.00 "Estimated Cost (Five Professionals) $300,000.00"
Plaintiff claims a letter dated June 18, 1982, from plaintiff to defendant to be part of the contract. The letter states:
"Croft Merritt and I both agree that flexible utilization on an `as needed' basis of the service of the professional engineers and architects residing in and around problem areas, would best serve the needs of the MBE contractor during these rather uncertain days."
This letter from plaintiff does not, however, modify the contractual duty for minimum staffing but permits the hiring of specialist in the locality of MBE and is unilateral.
The contract further provided that the consultant shall cooperate with the representative of ODOT in the performance of their field evaluations to determine the effectiveness of the program.
The contract was to commence August 1, 1982, and to be completed January 31, 1984. The contract payments were based upon the "Sum of Minimum Prime Compensation" prescribed on a monthly basis and in accordance with Title 49, Part 23, Code of Federal Regulations. The contract incorporated by reference several other documents including the plaintiff's proposal. (See Exhibit 1 — contract No. 3592, p. 3.) The maximum plaintiff could withdraw was to be in accordance with the schedule found at page 2 of the contract.
The plaintiff and his son performed practically all services for which the state was billed, although neither plaintiff Waits nor his son has attended college or a technical school. The contract provided for services as requested by ODOT or the MBE but there was no evidence of any request made or recorded for any specific type of service. The contract was apparently an executory one providing neither a minimum nor maximum assortment of service but only a stated amount available for different professions and technical services. The contract provides for contractors' monthly status reports C-92 and C-104, Contractor Progress Schedule, and Daily Project Field Reports to be furnished ODOT by the tenth of each month along with representative daily logs. The logs submitted contained little information and several were inaccurate. The logs were submitted to Mr. Merritt (ODOT) for approval and he approved them, although they failed to report the necessary information.
When Mr. Cooper took over the office and the monitoring of plaintiff's contract, he found a letter from an FHA auditor. He thereafter set up a meeting between plaintiff, Director of Ohio Department of Transportation, Warren Smith, and himself. After the meeting Cooper held a separate meeting with plaintiff which formed the basis of Cooper's letter of April 7, 1983.
Waits submitted the names and resumes of an engineer, an accountant, and two construction superintendents whom he expected to use in helping MBEs and those persons were approved by ODOT. Contacts between plaintiff and MBEs continued to be made by telephone and no contacts between the above professional persons and MBEs were reported. During December 1982, January and February 1983, daily reports show that more than fifty MBEs were contacted by plaintiff by phone.
On April 14, 1983, a letter was sent to plaintiff requesting an explanation of charges on invoices for the period of February 4, 1983 through March 26, 1983, and further requesting a reply within ten days. When no answer was forthcoming, Smith, the Director of ODOT, notified plaintiff that the contract was terminated effective April 21, 1983.
Findings of Fact
1. Plaintiff and defendant entered into a personal services contract (Joint Exhibit 1) that was to run from August 1, 1982 through January 31, 1984.
2. The contract required the plaintiff to provide professional and technical assistance to MBEs to help those enterprises become more productive and competitive in the highway construction industry.
3. This contract was to be financed with federal funds and all reports prepared pursuant to this contract were to be submitted to FHA for review.
4. The FHA was involved in the pre-award meetings and in outlining the requirements of the contract as well as the monitoring of the services by the plaintiff. (Joint Exhibit 1, attachment F.)
5. Plaintiff was to hire or subcontract with professionals to accomplish the objectives and plan of the contract. (Joint Exhibit 1.)
6. Minimum staffing under the contract was to include a professional engineer, technical advisors, as well as other professionals that might be required and who have knowledge of the construction industry. (Joint Exhibit 1.) By letter, plaintiff proposed a policy of hiring professionals in the same locations as the MBEs.
7. The only staff plaintiff hired, during the first half of the contract (nine months), aside from himself, was his son, an engineer for eighteen hours in early fall of 1982 and an accountant through December 1, 1982. Hiring of the engineer was not proven by a preponderance of the evidence.
8. A contract cost estimation of $300,000 (Joint Exhibit 1) was based upon $113,504 of billable services attributable to the services of individuals (professionals and technicians) other than the plaintiff and his son.
9. The contract required that each representative hired by plaintiff was to maintain a daily log and that a consolidated monthly report would be sent to the defendant and then forwarded to FHA.
10. The reports to the defendant were to include at a minimum the following information: each firm and individual contacted; address and telephone number of the firm; type of contact, location of contact; project number (if any); problem discussed and results of discussion.
11. The plaintiff stipulated that Joint Combined Exhibit 3 contains no reports for Ernest J. Waits, Sr. (plaintiff) for the period of September 26, 1982 through February 18, 1983, and none at all for Semue Chapman (accountant) or Eluster Fields (engineer). No reports for any representative were ever received after March 25, 1983.
12. The contract required that a survey be conducted to determine the various needs of the MBEs.
13. No results from that survey were ever forwarded to the defendant, despite the fact that half of the total contract time had run by April 1983.
14. Plaintiff has been paid for services allegedly rendered through February 27, 1983, in the amount of $104,231.04 (Joint Exhibit 5).
15. As the consulting services were not in accordance with contract provisions, specifically, because "professional" services were rendered by non-approved/qualified persons, the FHA determined that the defendant would only be reimbursed for fifty percent of the $104,231.04 paid on this agreement through February 27, 1983, instead of the one hundred percent originally promised by the FHA.
Conclusions of Law
Plaintiff instituted this lawsuit on March 12, 1985. The action is based upon an alleged breach of contract. Under this contract, plaintiff was to perform certain supportive services when requested by defendant or a MBE, then bill the defendant for those services. (See Contract Exhibit 1.) Pursuant to R.C. 2743.16, any claims arising prior to March 12, 1983, are barred by the statute of limitations.
Plaintiff seeks to recover $6,336 for a period of time from Monday, February 28, 1983 through Friday, March 11, 1983 (the last date any services were performed pursuant to invoice No. 16, Joint Combined Exhibit 6). As this is a claim for services allegedly performed which accrued prior to March 12, 1983, and plaintiff did not file his complaint until more than two years thereafter, that portion of his claim is barred by the statute of limitations.
Plaintiff was to provide professional and technical assistance to MBEs and to help those enterprises become more productive and competitive in the highway construction industry. Plaintiff was to hire or subcontract with professionals to accomplish the objectives of the contract. At a minimum, a professional engineer, accountant and technicians were to be hired by the plaintiff. (Joint Exhibit 1, p. 19 of Work Plan.)
Neither the plaintiff nor his son (classified as consultant and field director, respectively, under Joint Exhibit 1) was an engineer, an accountant, or a technician. In fact, neither had any formal educational training in civil or highway engineering. Admittedly, plaintiff had attended several seminars.
The only two professionals hired by the plaintiff through the first half of the contract time were Semue Chapman, an accountant and, plaintiff claims without proof, Eluster Fields, an engineer. Chapman did not work for the plaintiff after December 1982 (Joint Combined Exhibits 5 and 6). Fields testified that he never did any work for the plaintiff, and received no pay although plaintiff billed the defendant for eighteen hours' worth of work attributable to Fields (Joint Combined Exhibit 5).
Plaintiff admitted that the need for services of an accountant would not be seasonal.
John Foster and Eluster Fields are both professional engineers. Both men testified that engineering activities would go on year-round. Project bidding was one example of a service/activity that an engineer would assist/participate in year-round, as project bidding occurs year-round. Plaintiff's contract listed the bidding process as one service that was to be provided to the MBE (Joint Exhibit 1, p. 2 of Work Plan). In fact, on March 8, 1983, plaintiff acknowledged in a daily report that there was a definite need for counsel by an engineer on the bidding process regarding plan interpretation and material specifications (Joint Combined Exhibit 3).
Plaintiff never hired any technician of any type, although he billed the defendant for "technical" services performed by him and his son. These technical services include cost estimation, planning, and scheduling. Those daily logs and reports that were supplied by the plaintiff show that "technical" services were purportedly provided to MBEs (Joint Combined Exhibits 3 and 4: 9/18/82, 9/27/82, 9/30/82, 10/1/82, 10/7/82, 10/9/82, 10/21/82, 10/22/82, 10/26/82, 10/27/82, 10/28/82, 10/30/82, 11/4/82, 11/6/82, 11/8/82, 11/11/82, 12/2/82, 12/8/82, 1/19/83, 1/21/82, 1/27/83, 1/28/83, 2/4/83, 2/5/83, 2/14/83). Prior to this contract neither the plaintiff nor his son had ever drawn up a schedule for a highway construction project (scheduling/planning), nor had they maintained an accounting system for a highway construction project (cost estimation/accounting), nor had they managed a highway construction project.
Despite the fact that certain MBEs needed technical assistance from August 1982 through April 1983, plaintiff hired no technicians and instead relied upon the questionable abilities of himself and his son. Despite the fact that accounting services would be required by the MBEs year-round, no accountant's services were used after the first five months of the contract. Despite the fact that an engineer's services could be utilized by an MBE year-round, plaintiff hired no engineer. Plaintiff failed to meet the minimum staffing requirements outlined under the contract.
The contract required that a needs assessment be done by the plaintiff of the MBEs he was assisting. (Joint Exhibit 1, p. 1-5 of Work Plan.) While a survey of the MBEs was allegedly performed by the plaintiff, plaintiff failed to inform the defendant of the results of that survey. In a January 10, 1983 letter, plaintiff stated that the response to the survey was "fast and gratifying" (Plaintiff's Exhibit 16). In a February 18, 1983 letter, plaintiff stated that responses to the survey "continue to pour in by mail and telephone." Despite the obviously overwhelming response to the survey, plaintiff informed the defendant only orally (informally) of any results and produced no evidence of such a survey.
The contract required that each representative hired by the plaintiff was to maintain a daily log, and that monthly, these daily reports were to be sent to the defendant (Joint Exhibit 1, p. 20 of Work Plan). As a minimum, these daily reports were to include: MBE firm and individual contacted; address and telephone number of firm; type of contract; location of contract; project number (if any); problem discussed and results of discussion.
Plaintiff stipulated that the stack of daily reports (Joint Exhibit 3) contain no reports for the plaintiff from 9/26/82 through 2/18/83; no reports for plaintiff's son for 8/30/82, 8/31/82, 9/4/82, 9/7/82, 9/8/82, 9/14/82, 9/23/82, 9/25/82, 9/30/82, 10/2/82, 10/10/82, 10/16/82, 10/23/82, 10/30/82, 11/6/82, 11/13/82, 11/20/82, 11/30/82, 12/30/82, 1/4/83 and 1/20/83, although defendant was billed for his services for these dates; no reports at all for either Semue Chapman or Eluster Fields. Plaintiff supplied none of these "missing" reports. (Plaintiff's Exhibit 20.)
Upon the assumption of duties by Burton Cooper for the monitoring of the plaintiff's personal services contract (Joint Exhibit 1), attention was devoted to plaintiff's continuing failure to perform the requirements of that contract. In the conference with plaintiff and by letter dated April 7, 1983 (Plaintiff's Exhibit 22) and one dated April 14, 1983 (Plaintiff's Exhibit 23) from Burton Cooper to the plaintiff, Cooper pointed out problems with the reporting and with reports submitted between February 14, 1983 and February 26, 1983. While Cooper approved for payment the invoice (Joint Combined Exhibit 5) for that time period, plaintiff was put on notice of the defendant's refusal to accept reports that were less than what the contract required. Plaintiff failed, however, to perform as requested (Plaintiff's Exhibit 23) and required (Joint Exhibit 1).
To date, plaintiff has never submitted any reports of any type after March 25, 1983 (Joint Combined Exhibit 3, Defendant's Exhibit 7, Defendant's Exhibit 8). Plaintiff was given until September 10, 1983 (Defendant's Exhibit 7) to correct the reports submitted for the period of February 28, 1983 through March 25, 1983. Plaintiff never complied with this request (Defendant's Exhibit 8).
Pursuant to the request made by the FHA, a performance audit was done by the defendant. The audit occurred in March 1983, and was reduced to writing (report) dated March 28, 1983. (Defendant's Exhibit 1). The audit was conducted under the direction of and written by John P. Georgiton, a CPA, in the employ of the defendant.
The audit results reveal that most of the assistance that was provided the MBEs was of a non-technical nature and no request shown. Specifically, the audit found that no engineering services were provided; that any assistance in accounting was done by non-professionals (plaintiff and son) rather than hiring a reputable accountant and that most assistance provided by plaintiff was either not needed, not requested or non-technical. As the purpose for this contract was to provide professional and technical assistance for the MBEs and plaintiff failed to provide that assistance, there was less than full consideration to the defendant on the contract.
Plaintiff alleges that his personal services contract was breached by the defendant as a result of his discharge by Warren J. Smith, which was effective April 22, 1983. Plaintiff further alleges that his discharge was politically motivated and had nothing to do with his failure of performance. The facts do not support plaintiff's position.
Effective January 1983, a new administration, under the direction of Warren J. Smith, began at ODOT. Prior to this time, plaintiff's contract was monitored by Mr. Merritt under the direction of David Weir, with whom plaintiff also had contact.
On March 4, 1983, John McBee, Division Administrator of the FHA for the area, wrote to Director Smith with questions about the performance by plaintiff on the contract (Defendant's Exhibit 2). In that letter McBee requested that a performance audit of plaintiff be done. This request was made and eventually forwarded to John Georgiton. Plaintiff was then notified that a performance audit was to be done and arrangements were made for an on-site audit to be done at plaintiff's office (Joint Combined Exhibit 3, see March 14, 1983). On March 16, 1983, an on-site audit at plaintiff's office was performed by the defendant (Joint Exhibit 3, see March 16, 1983). Additional information was obtained directly from MBE with whom plaintiff and his employees had contact.
Cooper testified that when he began at ODOT on March 23, 1983, there were many documents already on his desk which related to plaintiff's non-performance on the contract. A meeting between Cooper, Smith, and the plaintiff was arranged for April 7, 1983.
As a result of the meeting held on April 7, 1983, a letter was sent to the plaintiff which outlined the subject matter of the meeting and contained specific demands of the plaintiff. (Plaintiff's Exhibit 22.) That letter contained a requirement that the plaintiff submit resumes for an engineer, accountant, and technician, that more detailed reports be submitted and that plaintiff affirm in writing the guidelines listed in the letter within ten days of its receipt. (This was not done.)
Two pieces of correspondence were forwarded to Burton Cooper by the plaintiff. The first letter dated April 14, 1983, submitted the resume of Howard Nolan, an employee of the prior administration (Plaintiff's Exhibit 24). The second letter dated April 20, 1983, enclosed reports for March 1 through March 26, 1983, and acknowledged receipts of Cooper's April 7, 1983 letter (Plaintiff's Exhibit 25). Plaintiff never confirmed in writing the guidelines regarding explicit services as requested, nor did he submit the resume of an accountant or technician. His failure resulted in the termination of plaintiff's contract (Plaintiff's Exhibits 22 and 30).
The loss on the contract suffered by defendant was due to indefiniteness in the contract and failure of ODOT in monitoring the contract as well as plaintiff's non-performance, thus the counterclaim of the defendant is denied and dismissed.
Defendant terminated the contract because plaintiff failed to perform, by failing to keep sufficient and adequate records, failing to maintain adequate and qualified staffing and failing to comply with defendant's lawful request for necessary information. The question before the court was the performance of the contract and its proper performance. It was not properly performed and the defendant lawfully exercised its authority to terminate it.
Plaintiff requests that the court approve invoices for services rendered between February 28, 1983 and May 6, 1983, in the amount of $33,545.83 (Invoices 16-20), together with $115,000 loss of profits for professional help that could have been supplied at a cheaper rate than shown on the hourly schedule.
The statute of limitations had run on much of the requested amounts, and plaintiff failed to prove that qualified personnel could be supplied at a cheaper rate, together with the fact that future profits are conjectural and the defendant properly terminated the contract April 21, 1983.
The plaintiff failed to prove by a preponderance of the evidence that he had performed services for which he had not been paid.
The defendant proved by a preponderance of the evidence that the plaintiff failed to perform the contract and failed to cooperate with ODOT officials and that the defendant suffered damages in the amount of $52,115.52. However, neither party is free of fault. The plaintiff failed to comply with the terms of the indefinite contract and the defendant drafted the instrument and failed to effectively monitor the contract until terminated. The court must therefore leave the parties where it finds them. The plaintiff must fail as to the complaint and the defendant must fail as to its counterclaim.
Judgment accordingly.
GUY G. CLINE, J., retired, of the Pickaway County Probate/Juvenile Court, sitting by assignment.