2022 Ohio 19
Ohio Ct. App.2022Background
- Pompili (Broadway Concrete Investments, L.L.C.) supplied precast concrete under a $366,830.75 purchase order from Masonry Contracting Corp. (MCC); Pompili’s prior written quotation was attached to the purchase order but marked "INFORMATION ONLY."
- Platform Contracting was MCC’s upstream subcontractor to the prime contractor (Gilbane); Platform paid MCC a $50,000 upfront draw before MCC and Pompili executed their subcontract and before Pompili submitted any invoices.
- Pompili submitted a series of invoices beginning January 31, 2017; MCC included those invoices on later pay applications to Platform, received intermittent payments from Platform, and paid Pompili at various times; disputes arose over alleged overbilling and the scope/quality of delivered material.
- Pompili filed a mechanic’s lien (and later substituted a surety bond from Western Surety), then sued MCC and Western Surety for breach of contract and violation of Ohio’s Prompt Payment Act (R.C. 4113.61), seeking damages, statutory interest, and attorney fees.
- The trial court found for Pompili on breach and Prompt Payment Act claims, awarding $82,388.51 in damages, $21,230.86 in interest, and $101,945.05 in attorney fees; on appeal this court affirmed in part, reversed in part, and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether MCC violated Ohio's Prompt Payment Act (R.C. 4113.61) by failing to pay Pompili within ten days | Pompili: MCC had been "prepaid" from early pay applications and thus was required to pay Pompili within ten days of receiving Pompili's invoices; late payments trigger statutory interest and fees | MCC: Prompt Payment Act's ten-day clock runs only from the date MCC received payment on a pay application that actually included the supplier's invoice; prepayments on unrelated earlier applications do not start the clock | Reversed: Court holds the ten-day period begins when the subcontractor receives payment on the pay application that contained the supplier's invoice; trial court erred by treating earlier prepayments as starting the clock; interest and attorney-fee awards under the Act reversed |
| Whether MCC breached the subcontract by failing to pay amounts due | Pompili: It fully performed per contract terms (as reflected in its attached quotation) and is owed unpaid contract balance | MCC: Contract terms are limited to the signed purchase order; attached quotation was "information only" and not incorporated; any alleged breaches depend on the actual contract language | Reversed and remanded: Appellate court finds trial court erred by importing terms from Pompili's attached quotation (marked "information only") into the purchase order; trial court applied incorrect contract terms, so breach finding cannot stand without re-evaluating performance under the actual contract |
| Whether Western Surety is liable on the substituted mechanic's lien bond because Pompili's lien was valid | Pompili: Properly recorded and served the lien affidavit; bond substituted for lien makes surety liable up to bond amount | Western Surety: Challenges validity of the lien (e.g., notice of furnishing) and thus argues no liability on the bond | Affirmed in part: Court rejects Western Surety's late-raised challenges as waived (defense not pled or asserted at trial) and upholds the court's prior order substituting the bond for the lien; Western Surety remains liable up to bond limits |
Key Cases Cited
- Worldwide Asset Purchasing L.L.C. v. Easterly, 928 N.E.2d 1148 (Ohio App.) (de novo review applies to statutory interpretation)
- Seasons Coal Co. v. Cleveland, 461 N.E.2d 1273 (Ohio 1984) (bench-trier factual findings entitled to deference; every reasonable presumption in favor of trial court findings)
- Commercial Credit Co. v. Schreyer, 166 N.E. 808 (Ohio 1929) (penal statutes must be strictly construed)
- Intercargo Ins. Co. v. Mun. Pipe Contrs., Inc., 805 N.E.2d 606 (Ohio Ct. of Cl.) (describing Prompt Payment Act as penal and subject to strict construction)