DOES YOUR JURISDICTION RECOGNIZE THE CARDINAL CHANGE DOCTRINE?

The contract was cardinally changed.  Have you heard that before?  It is a “sexy” doctrine, but, in actuality, cardinal change is hard to demonstrate.  Under certain factual scenarios, it could have traction, but whether it will be recognized in the jurisdiction is typically a question of law.

An unreported 2002 case out of Northern District of Ohio, Ebenisterie Beaubois Ltee v. Marous Brothers Construction, Inc., 2002 WL 32818011 (N.D. Ohio 2022), contains a short discussion on cardinal change.  I know what you are thinking – 2002 that was 20+ years ago.  True.  But the short discussion is interesting because the issue was whether Ohio would recognize the cardinal change doctrine.

A cardinal change breach of contract occurs when one party “effects an alteration in the work so drastic” that the contractor is forced to perform duties materially different in scope from those originally contemplated by the parties. “The doctrine is couched in terms which apply generally to modifications which are so fundamental that they cannot be redressed within the contract by an equitable adjustment to the contract price….”  Thus, the doctrine of cardinal change provides an extracontractual remedy to a contractor where changes ordered by the owner are so significant that they cannot be said to fall within the “changes clause” contained in the contract.

Ebenisterie Beaubois Ltee, supra, at *3 (internal citations omitted).

Ultimately, by arguing cardinal change, the party is seeking damages OUTSIDE of the contract, essentially arguing that the contract itself should not apply to govern recourse and damages.   I’ve argued this doctrine before and I’ll argue this doctrine again.  However, this cardinal change doctrine cannot be the only doctrine alleged meaning you can’t solely assert this doctrine while ignoring any breach of contract action.

As the Court’s discussion began in this 2002 case, it recognized the doctrine of cardinal change started under federal contract law in a dispute between a government contractor and the government. Contracts with the federal government contain a changes clause that allows the government to modify the contractor’s scope of work.  Such contracts also contain equitable adjustment provisions to address a contractor’s rights in the event of such changes. These provisions are not limited to government contracts but are also included in private construction contracts.  The question, as this Court delved into, was whether this doctrine that began in the federal contract arena could be extended as a matter of law to private construction contracts in Ohio.

At this time, the Court held Ohio would not recognize the cardinal change doctrine:

This Court finds that the Ohio Supreme Court would decline to adopt the cardinal change doctrine as a rule of law in Ohio. The cardinal change doctrine is based on the notion that even though an express contractual provision exists governing changes to the contract, as well as the contractor’s compensation for the changes made, some changes are nonetheless “so severe” that extracontractual relief is appropriate. Ohio courts, however, consistently refuse to allow recovery in quasi-contract where an express contract governs the subject matter of the dispute.

Ebenisterie Beaubois Ltee, supra, at *4

The Court’s rationale is why cardinal change is challenging to prove.  The circumvention of a contract is NOT an easy feat and certain jurisdictions are going to put their foot down regarding such arguments.  Other jurisdictions will let facts play out in determining whether the facts fit the doctrine.  But this Court (in the 2002 unreported decision) maintained that as a matter of law this doctrine would not exist under the current state of Ohio’s law.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

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