Case Overview: Orion Mgt., Inc. v. Kaeka, 2025-Ohio-1047 (9th Dist. 2025)

In a recent Ohio Ninth District Court of Appeals decision, homeowners who experienced significant property damage from both a fallen tree and inadequate contractor work were left without the protection of Ohio’s Consumer Sales Practices Act (CSPA). In Orion Management, Inc. v. Kaeka, the court clarified how the enactment of Ohio’s Home Construction Service Suppliers Act (HCSSA) carved out a significant exception to consumer protections.

The Facts

After a tree crashed through homeowners’ newly purchased home, they hired a contractor to repair the damage. The project was delayed for over two months, during which the tarps covering the exposed roof shifted and tore, causing further water damage to the home. Frustrated by the lack of progress and worsening conditions, the homeowners instructed the contractor to halt work and provide a bill for services rendered. When the homeowners failed to pay the bill, the contractor filed a mechanic’s lien and sued for breach of contract. In response, the homeowners counterclaimed, alleging, among other things, violations of the CSPA and HCSSA.

The trial court found the CSPA did not apply because the contract involved construction services rather than a consumer transaction. At trial, the homeowners prevailed on their HCSSA counterclaim, with the jury awarding them $118,848.37 in damages.

The Ninth District Holding

On appeal, the Ninth District Court of Appeals held that the CSPA does not apply to home construction service contracts, even when the work involves rebuilding after property damage rather than new construction, and that the HCSSA exclusively applies to those contracts.[1] The court noted that the Ohio legislature enacted the HCSSA to address residential construction specifically and to provide a tailored framework for governing home construction suppliers.[2]

The Consumer Sales Practices Act

Ohio’s Consumer Sales Practices Act (CSPA), enacted in 1972, prohibits suppliers from committing unfair, deceptive, or unconscionable acts or practices in connection with consumer transactions.[3]A “consumer transaction” is broadly defined but specifically excludes “transactions involving a home construction service contract as defined in section 4722.01 of the Revised Code.”[4]

The CSPA prohibits deceptive practices such as misrepresenting goods or services[5] and unconscionable practices that take advantage of consumers’ vulnerabilities or involve excessive pricing.[6] When violations occur, consumers may recover actual economic damages plus up to $5,000 in noneconomic damages, or—if the violation was previously declared deceptive or unconscionable—rescission or treble (triple) damages (or at least $200), plus up to $5,000 in noneconomic damages, or appropriate relief through a class action.[7] Courts may also award attorney fees against suppliers who knowingly violate the CSPA.[8]

Prior to 2012, the CSPA governed residential construction contracts. However, the Ohio legislature enacted the Home Construction Service Suppliers Act (HCSSA) to establish specialized laws for construction services, removing these transactions from CSPA coverage.

The Home Construction Service Suppliers Act

Ohio’s Home Construction Service Suppliers Act (HCSSA), enacted in 2012, specifically governs contracts for home construction services equal to or exceeding $25,000.[9] It defines “home construction service” as “the construction of a residential building, including the creation of a new structure and the repair, improvement, remodel, or renovation of an existing structure.”[10]

The HCSSA generally prohibits suppliers from engaging in a wide range of deceptive, unfair, or substandard business practices.[11] It also requires that most home construction service contracts be in writing and include specific information such as the parties’ contact details, address where service is to be performed, description of the work and goods to be furnished, anticipated start and end dates, estimated costs, copy of the supplier’s certificated of insurance, and dated signatures of the parties.[12] Cost-plus contracts are exempt from many of these writing requirements.[13]

Like the CSPA, when a violation of the HCSSA occurs, the homeowner may seek recission of the contract, or actual economic damages with up to $5,000 in noneconomic damages.[14] Courts may also award attorney fees against suppliers who knowingly violate the HCSSA.[15] Importantly, homeowners suing under the HCSSA are not entitled to recover treble damages, a remedy that is available under the CSPA.

The Construction Exception’s Broad Reach

The Ninth District’s interpretation of “home construction services” was notably broad, rejecting arguments that the HCSSA should only apply to new construction.[16] The court held that restoration work after property damage constitutes “construction” within the meaning of the statute, even when rebuilding existing structures.[17] This interpretation means that homeowners dealing with a broad range of renovations and repairs may find themselves outside CSPA protection, even when contractors engage in practices that would clearly violate the CSPA in other contexts.

Practical Considerations for Homeowners

The decision highlights the importance of:

• Careful contract drafting when working with construction contractors
• Understanding which legal protections apply to specific transactions
• Seeking legal counsel early when construction problems arise

While Ohio consumers retain broad CSPA protections for most transactions, home construction services costing $25,000 or more fall under the HCSSA, which offers more limited remedies. The HCSSA does not provide for treble damages, a key remedy available under the CSPA. Understanding which consumer protection laws apply to your specific situation is crucial for protecting your rights and obtaining appropriate remedies when things go wrong. Hahn Loeser’s Construction Team is well-equipped to assist contractors. For CSPA or HCSSA questions or concerns, please contact Construction Partner Aaron S. Evenchik.

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[1] Orion Mgmt., Inc. v. Kaeka, 2025-Ohio-1047, ¶ 33 (9th Dist. 2025).

[2] Orion Mgmt., Inc. v. Kaeka, 2025-Ohio-1047, ¶ 32 (9th Dist. 2025).

[3] R.C. 1345.02(A), 1345.03(A).

[4] R.C. 1345.01(A).

[5] R.C. 1345.02(B).

[6] R.C. 1345.03(B).

[7] R.C. 1345.09.

[8] R.C. 1345.09(F).

[9] R.C. 4722.01(C).

[10] R.C. 4722.01(B).

[11] See R.C. 4722.03.

[12] R.C. 4722.02(A)(1-9).

[13] R.C. 4722.02(C), 4722.03(B).

[14] R.C. 4722.08.

[15] Id.

[16] See, Orion Mgt., Inc. v. Kaeka, 2025-Ohio-1047, ¶ 25-32 (9th Dist. 2025).

[17] Id. at ¶ 33.

The U.S. Department of Justice (DOJ) launched the Civil Rights Fraud Initiative (the “Initiative”), which was announced on May 19, 2025 via Memorandum from Deputy Attorney General, Todd Blanche, and a related press release (the “Memorandum”). The Initiative is a coordinated enforcement effort by various DOJ components and other federal agencies to investigate and prosecute alleged civil rights violations committed by recipients of federal funds.

The Memorandum announces that DOJ intends to treat civil rights noncompliance as a form of fraud giving rise to DOJ’s right to investigate and pursue claims under the False Claims Act (“FCA”). As stated in the Memorandum, the FCA is implicated when federal funding recipients or contractors knowingly violate civil rights law and falsely certify compliance with such laws. The FCA is also implicated when a federal grantee knowingly engages in racist preferences, mandates, policies, programs, and activities, including through diversity, equity, and inclusion (“DEI”) programs that assign benefits or burdens on race, ethnicity, or national origin, even if such programs are “camouflaged with cosmetic changes that disguise their discriminatory nature.” 

Executive Order 14173 (“EO 14173”), which we have previously reported on, is specifically mentioned in the Memorandum. The Certification Provision of EO 14173 requires contractors and grantees to certify that they are in compliance with all federal anti-discrimination laws and to affirm that they do not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws. It is readily apparent from the Memorandum that DOJ intends to treat violations of EO 14173’s certification requirements as the basis for fraud investigations and claims brought under the FCA.  Exposure to FCA claims raises the stakes for recipients of federal funds because, among other things, violations of civil rights laws and EO 14173’s certification requirements may subject the recipient to treble damages and significant penalties.   

Notably, the Memorandum “strongly encourages” private enforcement of civil rights fraud through whistleblower complaints from members of the public. Whistleblower lawsuits, also known as qui tam lawsuits, allow whistleblowers to sue on behalf of the government for fraud and receive a share of any monetary recovery as an award for coming forward.

The implications of the Civil Rights Fraud Initiative are that contractors and grantees are now subject to increased risk for fraud investigations for alleged civil rights violations and for falsely certifying compliance with civil rights laws. It remains unclear how DOJ will interpret alleged violations of civil rights laws and how forcefully DOJ will enforce these laws. Hahn Loeser will continue to monitor this issue closely and provide updates as they become available.

On April 23, 2025, the United States Department of Justice announced that it is rescinding the January 31, 2022 Notice of Report on Lawful Uses of Race or Sex in Federal Contracting Programs (the “2022 Report”). The April 23 announcement (the “Announcement”) does not clarify what practices or activities constitute inappropriate DEI programs.  Rather, the Announcement functions to remove the 2022 Report as a citable resource that litigants and federal agencies can rely upon in support of sex- and race-based considerations.

Background: the 2022 report

On January 31, 2022, the Justice Department issued a report of its review of substantial evidence – including research studies and evidence given at Congressional hearings – that demonstrated pervasive discriminatory barriers that “impede the full and fair participation of businesses owned by women and people of color in government contracting.” Of special significance to federal contractors, the 2022 Report found that a “substantial body of statistical evidence … [demonstrated] significant disparities in the amount of public contracting dollars going to businesses owned by women or people of color as compared to their availability for such contracts.” The 2022 Report (which is available here) found that the evidence supported the “compelling interest in the continued use of federal programs that contain remedial measures to eliminate discriminatory barriers to contracting opportunities for businesses owned by women and people of color.”

The April 23, 2025 Announcement

Effective as of April 23, 2025, the Justice Department has rescinded the 2022 Report.  According to the Announcement, which was issued on April 10 but not published until April 23, 2025, the 2022 Report “is no longer considered an accurate reflection of the current laws, executive orders, and federal court jurisprudence concerning the constitutionality of using race or sex in federal government programs.”  The Announcement also states that the rescission is consistent with Executive Order 14151 (“Ending Radical and Wasteful Government DEI Programs and Preferencing”) and Executive Order 14173 (“Ending Illegal Discrimination and Restoring Merit-Based Opportunity”), which directed the immediate termination of unlawful “DEI” programs throughout the federal government, including in contracts with the federal government and contracts supported by federal grants.

The Announcement does not make any changes to existing federal law or regulations. However, the effect of the Announcement is to eliminate the 2022 Report as evidence that courts and governmental agencies can rely on to support eliminating discriminatory barriers in federal contracting. 

Hahn Loeser will continue to monitor this issue closely and provide updates as they become known. 

he year 2025 is shaping up to be quite the challenging year for the construction industry.  From the President’s executive order nos. 14151 and 14174 (signed January 20 and 21, 2025, respectively) seeking to end DEI-related programs in federal contracts (including construction), to the tariffs that have been instituted on construction materials such as steel, aluminum, and lumber, uncertainty abounds for 2025. 

This article will discuss how project participants can better understand, account for, and allocate the risks associated with delays or cost increases that may result from these types of government actions.

The Three Most Common Types of Delay Provisions Found in Construction Contracts

Delays or price escalations are nothing new to the construction industry.  Indeed, it is commonplace for construction contracts to address how the risk of delays and added costs are to be allocated among the parties, and how any claims stemming therefrom are to be raised and resolved among the contracting parties.  Generally speaking, there are three types of contractual provisions that address delays.  They are:  (1) excusable, compensable delays; (2) excusable, non-compensable delays; and (3) non-excusable delays.

Excusable, compensable delays are delays that are not caused by the contractor, entitling them to both an adjustment of the contract’s time to perform and price.  A classic example of an excusable, compensable delay is an owner-directed design change.  Excusable, non-compensable delays are delays that entitle the contractor to an extension of the contract’s time to perform, but no corresponding adjustment to the contract price.  These types of delays are often addressed in the contract’s force majeure clause and are often caused by factors outside the control of any of the contracting parties.  Oftentimes (but not always), government actions that disrupt or delay construction projects are categorized as an excusable, non-compensable delay.  Finally, non-excusable delays are delays caused by or within the control of the contractor.  Because such delays are within the contractor’s control, the contractor is not entitled to an adjustment of the time to perform or the contract price.

Strategies for Dealing with the Current Governmental and Economic Climate

One need only watch the news for a few minutes to understand the constant state of flux concerning enforcement of executive orders and tariffs.  Indeed, as recently as March 14, 2025, a federal appellate court granted the government’s request to stay a nationwide preliminary injunction that blocked enforcement of certain parts of executive order nos. 14151 and 14173 – representing yet another twist in the battle to enforce (or render void) these orders.  It is expected that this landscape will continue to change over the next several months, and that additional tariffs may be imposed (whether on additional materials or in differing amounts; as of the writing of this article, imported steel and aluminum are subject to a 25 percent tariff, with no exceptions for large trading partners like Mexico or Canada).

The best way to address this uncertainty is to make certain how such delays (and any corresponding cost increases)—should they occur—will be treated by the project participants.  In other words, the parties need to address these issues up front in their contract.  And above all else, one rule reigns supreme for crafting forward-looking contract clauses like delay and cost escalation provisions:  clarity is king.  If it is the project owner, and not the contractor, who will bear the increased costs of materials due to tariffs, then the contract needs to clearly place that risk on the owner (or vice versa).  The same is true for delays (recall that last time tariffs were implemented, supply chain issues ensued as well):  will the contract price be adjusted to account for the delays or just the time to perform?  Allocating these risks upfront, using clear and unambiguous language, will ensure that these issues are handled promptly and cost-effectively, which will in turn help to keep projects on schedule (or to minimize the impact of delays).  But the clarity does not begin and end with the contract – contractors and subcontractors should be clear in their bids and proposals what assumptions they rely upon (such as tariffs remaining constant at 25 percent) or what is excluded from their bid.  Again, doing this will ensure that all project participants are aware of and in agreement with how the risk of government-caused delays and cost increases are allocated.  In these uncertain times, clear risk allocation in contracts becomes that much more critical as it will help to reduce uncertainty.

The Federal Government’s recent imposition of tariffs appears designed largely to bring manufacturing back inside the United States. News reports indicate the Government understands that tariffs may initially cause pain but accepts that trade-off to press investment in future growth of U.S. manufacturing. As such, there may be increased opportunities for construction companies who build manufacturing facilities. Contracts for manufacturing require special planning and thinking. Key provisions needed to consider include:

• Confirming adequate funding exists to construct the facility. Often projects are started before all funding is in place. Funding for these projects is often a mix of manufacturer cash, lender funds, and government grants. In instances where projects are started before all funding is confirmed, projects can be broken into phases, with separate milestone dates triggered by funding confirmation on a phase-by-phase basis. This can reduce risk of non-payment to the contractor. However, for owners it risks new pricing with each phase, especially if there is a delay in obtaining financing.
  
• Construction projects involving federal grants are now subject to new requirements governing “DEI” programs under Executive Order 14173. Beginning on April 21, contractors on projects receiving federal funding must certify that they do not operate any programs “promoting DEI that violate any applicable Federal anti-discrimination laws.”  Failure to meet this certification requirement could result in liability under the False Claims Act. The Government has not yet published formal guidance on what constitutes unlawful “DEI” programs. However, informal guidance from the U.S. Equal Employment Opportunity Commission (EEOC) suggests that an employment action may be considered unlawful if it is “motivated—in whole or in part—by race, sex, or another protected characteristic.” Under this informal guidance, as an example, an apprentice or mentoring program that takes into account race or sex would be considered unlawful. Contractors are advised to consult with legal counsel to assist in evaluating whether any of their hiring practices might violate current laws prohibiting unlawful DEI programs. Moreover, contract provisions may require contractors to adhere to these strict limits.

• Late completion of a project can sometimes expose contractors to liquidated damages. The amount of liquidated damages can account for costs the manufacturer may incur on additional financing interest, taxes, or even rent at an existing facility. But these liquidated damages should be proportional to the damage that the manufacturer might actually suffer.  As such, contractors should consider watching for manufacturer overreach on pricing the liquidated damages. The liquidated damages should not attempt to compensate the manufacturer for lost costs related to late start of manufacturing, lost sales, lost profits and the like. Contractors can insist on a fair liquidated damage amount as well as a waiver of consequential damages. After all, contractors are in the business of constructing buildings, and not the business of insuring against manufacturing losses.

• When a contractor serves in the design-build capacity, the contractor may press the owner to provide a clear and well-defined program for the contractor to design around. Time spent up front defining and explicitly writing up the owner’s program will enable the contractor to achieve clear requirements and reduces disputes later on. Unclear goals are hard to achieve and lead to unnecessary claims and litigation.

• Contracts should specify who carries risks associated with an uncertain and quickly-changing economic environment driven in part by political forces. Tariffs are currently being imposed and then removed or revised quickly, and it may take time for the markets to pressure the Government to make final decisions that manufacturers can rely on to make investment decisions. Because changes in the government’s policies and in the economic landscape will affect the cost, need, or future of a project, construction contracts should strongly consider addressing who carries the risk of those changes and their effects on the cost of a project. Contractors need to know they will be paid for the work, even if the project is suspended or no longer needed. Contractors also should not bear the risk of increased tariffs. Owners, conversely, will want the right to stop a project quickly should policies change that reduce the viability or need for the project.

Contract Details

When it comes to any contract, parties should consider how to negotiate and detail who owns the various risks and benefits. Clear contracts significantly reduce later disputes. Time spent up front is well invested to reduce the risk of disputes, extra costs, or other business issues.