Ohio State’s Board of Trustees and a committee it created repeatedly met in secret in the summer and fall and decided to terminate a $32 million contract with an architecture firm working on plans to build a new cancer center, according to a lawsuit the firm filed Nov. 13.

Karlsberger Architecture contends that the university breached its contract and that many of the discussions that led OSU to terminate its contract occurred “in nonpublic secretly scheduled meetings in undisclosed locations in direct violation of Ohio’s Open Meetings Acts,” according to the lawsuit (www.cco.state.oh.us/scripts/ccoc.wsc/ws_civilcasesearch_2007.r).

The suit says “undisclosed persons” killed the contract in “an arbitrary and capricious manner.”

OSU is in the early stages of a $405 million project to create a cancer and critical care facility. The design has been altered several times since OSU retained another firm, Hellmuth, Obata and Kassabaum, Inc., in 2005 to draft the master plan and schematic
designs.

The Lantern attempted to contact several media relations officials starting Friday. On Saturday, Tai Shamsher, an OSU Medical Center administrator, said the university would comment today at the earliest.

Karlsberger included the Board of Trustees in the suit because it contends that the “trustees have failed in their oversight and management of the project,” according to a press release distributed Friday by Capelin Communications.

Specifically mentioned in the lawsuit was the chairman of the board, Leslie Wexner, who Karlsberger contends misled the firm. According to the suit, Wexner “privately expressed the position to OSU officials responsible to the project that the design was unacceptable.”

However, Wexner later sent a public report to the trustees saying the design “is looking good.”

In a September board meeting, trustee Algenon L. Marbley commended Wexner for his role in re-evaluating the multi-million dollar project.

Jamie Frankel, a senior partner at Arent Fox LLP, and Cary Purcell, president of Purcell Law Offices LLP, spoke to The Lantern Saturday on behalf of Karlsberger.

The firm HOK was responsible for drafting schematic designs. Karlsberger’s job, as the architect of record, was to head the design development, contract drawings and contract administration. The only work performed by Karlsberger was verifications of the first three designs. OSU did not approve any of them.

On June 12, Karlsberger was notified that a “blue ribbon committee” had been formed by OSU to examine the project.

“Our understanding is that the committee was put together to review all aspects of the project” while work on the expansion was put on hold, Purcell said. “We do not know who appointed that committee, nor could we locate minutes of the Board appointing that committee.”

On Sept. 30, OSU informed Karlsberger it would not be working on the fourth set of designs and asked it to voluntarily terminate its contract. OSU refused to give any reason for the request and refused to describe how the decision had been made, according to the suit.

At its Oct. 29 meeting, the Board of Trustees adopted a resolution (see above PDF) that gives the chair of the Fiscal Affairs Committee authority to make decisions about the project without the board’s approval. Trustee Jo Ann Davidson is the chair of that committee, according to the Board’s Web site. Wexner is also a member. The resolution says the committee chair must update the board at its February meeting.

“Basically it puts the plans in the hands of a single party,” Purcell said. The policy allows OSU to move forward with designs without board approval.”

On Oct. 30, OSU notified Karlsberger that it was rejecting two bills the firm submitted in September and October for more than $1.2 million.

On Nov. 4, OSU told the firm that its contract would be terminated “without cause” on Nov. 19.

A clause in the contract allows OSU to terminate the contract without cause. Karlsberger claims that OSU voided that clause because it failed to exercise good faith.

“In the absence of good faith, provisions such as this one are unenforceable,” said Frankel. “With all contracts in Ohio, there is an implied duty of good faith.”

OSU has requested four sets of schematic designs over the course of the project, the suit says.

“We think that four designs, and the cost related to those four designs, is unusual,” Frankel said. The first three designs drafted by HOK, which were all rejected, cost a combined $9.4 million, according to the suit.

“We would like to stress that we had nothing to do with creating those schematic designs,” Purcell said.

Karlsberger’s lawsuit seeks the full $32 million agreed upon in the original contract, plus interest.