Portage Exteriors v. Hein Constr., Inc., 2014 Ohio 2930

Background

Portage Exteriors subcontracted with Hein Construction to perform EIFS (synthetic stucco) replacement and caulking on a public school; subcontract price with a change order totaled $109,480.62.
Portage performed mock-ups per the project Specifications (which required silicone sealant and a 20-year warranty) but used a urethane sealant on the job and delayed joint cleaning/installation.
A pull test failed; manufacturer refused to issue the 20-year warranty and Hein hired Buckeye to redo the caulking and obtain the warranty. Hein withheld further payments to Portage after an initial payment of $19,800.
Portage sued Hein for breach of contract and under Ohio's Prompt Pay Act; Hein counterclaimed. At bench trial the court found Portage’s work noncompliant with the Plans/Specifications, awarded Portage $18,350.43 (including a $2,475 prior summary-judgment award), and denied attorney fees based on a finding of a good-faith dispute.
On appeal the court (this opinion) addressed four assignments of error and reversed and remanded with instructions: include Plans/Specifications in the subcontract interpretation, remove a duplicative $20,000 warranty charge (increasing Portage’s award to $38,350.43), remand for an attorney-fee hearing on the Prompt Pay Act claim, and include statutorily required interest on the Prompt Pay portion.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether subcontract incorporates separate Plans and Specifications	Subcontract (one-page PO + change order) is the full, final agreement; Specs not incorporated	Hein: parties reviewed and intended compliance with Plans/Specs; ambiguous subcontract language references "per plans" and "addendums"	Court: Ambiguous phrases allowed extrinsic evidence; Plans/Specs were incorporated by parties' course of dealings and intent
Whether Portage should be charged $20,000 for absence of warranty (and whether that was double-charged)	No competent evidence warranty cost $20,000; court double-counted same cost	Hein: ULSD withheld $20,000 retention due to missing warranty; Hein paid Buckeye to replace work and obtain warranty	Held: Court erred to include $20,000 separately because Buckeye’s replacement (paid $56,996) included the warranty; trial award increased by $20,000 (to $38,350.43)
Whether Portage is entitled to attorney fees for Prompt Pay Act recovery of $2,475	R.C. 4113.61 requires prevailing party fees; trial court never held required hearing	Hein argued good-faith dispute justified denial	Held: Portage entitled to a hearing on fees; remand for attorney-fee determination under the Prompt Pay Act
Whether judgment entry omitted required interest/costs and was otherwise deficient	Judgment failed to award post-judgment interest at statutory 18% on Prompt Pay portion and omitted costs; court said it would hold further proceedings on fees but did not	Hein relied on court's good-faith-dispute finding to avoid fees/costs	Held: Court must include statutorily-required 18% interest on the $2,475 Prompt Pay award and address fees/costs on remand; judgment reversed and remanded for entry of corrected judgment and fee hearing

Key Cases Cited

Alexander v. Buckeye Pipe Line Co., 53 Ohio St.2d 241 (Ohio 1978) (contract construction is a question of law)
Aultman Hosp. Assn. v. Community Mut. Ins. Co., 46 Ohio St.3d 51 (Ohio 1989) (when contract terms are clear, court may not look beyond the writing)
Bellman v. Am. Internatl. Group, 113 Ohio St.3d 323 (Ohio 2007) (parol-evidence rule and final written agreements)
C.E. Morris Co. v. Foley Constr. Co., 54 Ohio St.2d 279 (Ohio 1978) (bench-trial judgments must be supported by some competent, credible evidence)
Gerijo, Inc. v. Fairfield, 70 Ohio St.3d 223 (Ohio 1994) (appellate deference to trial court factfindings when evidence allows multiple interpretations)
Kalain v. Smith, 25 Ohio St.3d 157 (Ohio 1986) (weight and credibility of evidence are for the trier of fact)
Seasons Coal Co. v. Cleveland, 10 Ohio St.3d 77 (Ohio 1984) (same)