Tiff J. Cook et al., Plaintiffs-Appellants, v. ProBuild Holdings, Inc. et al., Defendants-Appellees.
No. 13AP-430 (C.P.C. No. 12CVH-2943)
IN THE COURT OF APPEALS OF OHIO TENTH APPELLATE DISTRICT
August 14, 2014
2014-Ohio-3518
BROWN, J.
(ACCELERATED CALENDAR)
D E C I S I O N
Rendered on August 14, 2014
Onda, LaBuhn, Rankin & Boggs Co., LPA, and Patrick H. Boggs, for appellants Tiff and Lesa Cook.
Mollica Gall Sloan & Sillery Co., LPA, and Andrew J. Mollica, for appellee Pomar, L.P.
Finney, Stagnaro, Saba & Patterson Co., L.P.A., Jeffrey M. Nye, and Paul T. Saba, for appellee Builder Services Group Inc. dba Gale Insulation.
Weston Hurd LLP, Kevin R. Bush, Steven G. Carlino, and Nathaniel W. Jackson, for appellee Remedics, Inc. dba Remedics Restoration & Remedics Restoration Carolinas, LLC.
Weston Hurd LLP, and W. Charles Curley, for appellee Colonial Heating & Cooling Co., Inc.
APPEAL from the Franklin County Court of Common Pleas.
BROWN, J.
{¶
{¶ 2} On March 7, 2012, appellants filed a complaint, naming as defendants ProBuild Holdings, Inc. (“ProBuild“), aka Khempco Building Supply Limited Partnership (“Khempco Building“), Blaine Ruble, Colonial Heating, Ratcliff-Midkiff, Builders Flooring, Remedics, Builder Services Group, Inc. (“Builder Services“), aka Masco Contractor Services, Inc. (“Masco“), aka, Gale Insulation, and Interior Surfaces.1 The complaint alleged causes of action against the named defendants for breach of contract, breach of warranty, promissory estoppel, failure to perform in a workmanlike manner/negligence, negligence per se, and negligent hiring, retention and supervision.
{¶ 3} Appellants’ complaint sets forth the following factual allegations. On December 1, 2004, appellants and DiYanni Brothers (“DiYanni“), a general contractor, entered into an agreement whereby
{¶ 4} As the project neared completion, a third-party investor “refused to close on the transaction due to the ongoing construction occurrences, problems and deficiencies.” (Complaint, ¶ 27.) As a result, appellants were “left to find a new lender and finance the purchase of the Premises themselves.” (Complaint, ¶ 28.) On August 4, 2005, appellants and DiYanni entered into a new real estate purchase agreement for the construction, purchase, and sale of a home, which included a one-year limited warranty and a ten-year structural warranty. Closing occurred on August 12, 2005, but “the construction defects and deficiencies were never resolved.” (Complaint, ¶ 31.)
{¶ 5} After failing to resolve the construction issues, appellants filed a complaint against DiYanni on October 8, 2008, asserting claims for “failure to perform in a workmanlike manner/negligence, breach of contract, breach of express warranty, negligent misrepresentation, violation of Ohio‘s Consumer Sales Practices Act, and intentional misrepresentation/concealment.” (Complaint, ¶ 32.) DiYanni, in turn, filed a third-party complaint for indemnity, contribution, set-off, and subrogation against some of the contractors, including Khempco Building, Ratcliff-Midkiff, Gale Insulation, Colonial Heating, Lloyd Shaffer Stucco & Stone (“Lloyd Shaffer“), and Zarley, Inc.
{¶ 6} Appellants subsequently settled their claims against DiYanni. As part of the settlement, DiYanni paid appellants the sum of $20,000 and assigned to appellants “all rights, claims, and causes of action it had, or may have in the future, against contractors and/or suppliers that were involved in the Project regarding the Premises, the Project, the Franklin County Litigation and/or the AAA Arbitration proceedings, including any and all rights, claims, and causes of action arising under the Contractor Agreements at issue in this litigation.” (Complaint, ¶ 37.)
{¶ 7} On July 25, 2011, the parties filed a stipulated notice of settlement and dismissal, whereby appellants dismissed their claims against DiYanni with prejudice, and DiYanni dismissed its third-party claims against Zarley and Lloyd Shafer with prejudice. DiYanni further dismissed its third-party claims against Ratcliff-Midkiff, Khempco Building and Gale Insulation without prejudice.
{¶ 8} On July 24, 2012, the parties filed a stipulation of substitution/amendment of party, stipulating that defendant ProBuild, aka Khempco Building, was improperly identified as a defendant and that a successor entity, Pomar, was the appropriate defendant. On October 2, 2012, Remedics filed a motion for partial judgment on the pleadings, asserting in part that any potential recovery by appellants was limited to the $20,000 right DiYanni assigned to appellants. On October 4, 2012, Ratcliff-Midkiff filed a motion to join in Remedics’ motion for partial judgment on the pleadings. Appellants filed a memorandum contra
{¶ 9} On October 16, 2012, Pomar filed a motion for judgment on the pleadings, pursuant to
{¶ 10} On March 13, 2013, the trial court filed an entry granting the motions for summary judgment filed by Remedics and Colonial Heating, as well as the motions for judgment on the pleadings filed by Gale Insulation and Pomar. In its decision, the court determined in part that the four-year statute of limitations under
{¶ 11} Following that entry, the trial court held a status conference with the remaining parties, who agreed that the court‘s March 13, 2013 order would be dispositive of all remaining claims held by appellants. The court subsequently granted Ratcliff-Midkiff‘s leave to file motions for summary judgment and judgment on the pleadings, and also granted Builders Flooring‘s leave to file a motion for judgment on the pleadings. On May 1, 2013, the trial court granted the motions for judgment on the pleadings filed by Builders Flooring and Ratcliff-Midkiff.
{¶ 12} On appeal, appellants set forth the following three assignments of error for this court‘s review:
I. THE TRIAL COURT ERRED IN RULING THAT APPELLANTS’ CLAIMS FOR BREACH OF CONTRACT AND FAILURE TO PERFORM IN A WORKMANLIKE MANNER ARE SUBJECT TO A FOUR-YEAR STATUTE OF LIMITATIONS.
II. THE TRIAL COURT ERRED IN HOLDING THAT NONE OF THE CLAIMS WERE TOLLED BY OHIO REVISED CODE SECTION 1312.08.
III. THE TRIAL COURT ERRED IN HOLDING THAT NONE OF THE CLAIMS WERE SAVED BY THE SAVINGS STATUTE, OHIO REVISED CODE SECTION 2305.19.
{¶ 13} Colonial Heating presents the following two “cross-assignments of error” for this court‘s review:
1. Because DiYanni had no rights against Colonial which it could assign to Appellants, the trial court erred by not entering summary judgment in favor of Colonial Heating & Cooling on that basis.
2. Because DiYanni did not provide notice of its intent to settle with Appellants to Colonial, the trial court erred by not applying the notice requirement of Globe Indemnity Co. v. Schmitt, 142 Ohio St. 595 (1944) and by not entering summary judgment in favor of Colonial Heating & Cooling on that basis.
{¶ 14} At issue on appeal are rulings by the trial court granting motions for judgment on the pleadings and summary judgment
{¶ 15} Under the first assignment of error, appellants assert the trial court erred in ruling that their claims for breach of contract and failure to perform in a workmanlike manner are subject to Ohio‘s four-year statute of limitations for a tort action. Appellants argue that the court should have instead applied the 15-year statute of limitations for a claim based on breach of a written contract.
{¶ 16}
{¶ 17} Appellants asserted before the trial court that their claims for breach of contract and failure to perform in a workmanlike manner arose ex contractu, and, therefore, the 15-year statute of limitations applied. In support, appellants argued that a line of Ohio cases recognized a distinction between an action by a vendee against a vendor-builder of an already constructed residence and an action involving an agreement to construct a home in the future.
{¶ 18} The trial court rejected appellants’ argument, holding that the four-year statute of limitations under
{¶ 19} In general, “[t]he duty to perform in a workmanlike manner is imposed by common law upon builders and contractors.” Zanesville Glass Supply, Inc. v. Goff, 5th Dist. No. CT2007-0026, 2008-Ohio-1243, ¶ 40, citing Mitchem v. Johnson, 7 Ohio St.2d 66 (1966). In Velotta v. Leo Petronzio Landscaping, Inc., 69 Ohio St.2d 376 (1982), paragraph one of the syllabus, the Supreme Court of Ohio held: “An action by a vendee against the builder-vendor of a completed residence for damages proximately
{¶ 20} In Barton v. Ellis, 34 Ohio App.3d 251, 253 (10th Dist.1986), this court had occasion to consider the holding in Velotta, noting that application of the duty to perform in a workmanlike manner “has resulted in a distinction between the sale of a completed residence on the one hand, and the contracting for future construction services on the other.” In discussing this distinction, we held:
Absent express or implied warranties as to the quality or fitness of work performed, the liability of a builder-vendor of a completed structure for failure to exercise reasonable care to perform in a workmanlike manner sounds in tort, and arises ex delicto. The essential allegation is that the builder-vendor‘s negligence proximately causes the vendee‘s damages. Velotta * * *. By contrast, in the provision of future services, liability arises ex contractu as an implied bargain, * * * provision, condition, or term of sale.
(Emphasis sic.) Id.
{¶ 21} In Kishmarton v. William Bailey Constr., Inc., 93 Ohio St.3d 226 (2001), the issue before the Supreme Court was whether, when a vendee and vendor-builder enter into an agreement for the future construction of a residence, the vendee‘s cause of action against the builder for breach of the duty to construct the residence in a workmanlike manner arises in contract or tort. The Supreme Court specifically noted that its earlier decision in Velotta “did not address the nature of an action by a vendee against the builder-vendor for breach of a contract to build a residence in the future.” Id. at 228. The Court thus sought to “close the loop” generated by Velotta. Id. In resolving this issue, the Supreme Court held: “Where the vendee and builder-vendor enter into an agreement for the future construction of a residence, the vendee‘s claim for breach of an implied duty to construct the house in a workmanlike manner arises ex contractu.” Id. at paragraph one of the syllabus.
{¶ 22} In recognizing this distinction, the Court in Kishmarton discussed the nature of the consideration supporting the particular agreements. Specifically, the Court noted that in situations such as Velotta (i.e., involving the sale of an already completed residence), “the consideration for the purchase price was the structure, a finished product.” Kishmarton at 228. By contrast, where the parties enter into an agreement for work to be performed in the future, ” ‘the consideration is the services * * * [to] be performed by the contractor. * * * While the contractor is still required to perform the services in a workmanlike manner, the quality of the product will be governed by the language of the contract itself.’ ” Id.,
{¶ 23} In a recent decision, Jones v. Centex Homes, 132 Ohio St.3d 1, 2012-Ohio-1001, syllabus, the Supreme Court held that “[a] home builder‘s duty to construct a house in a workmanlike manner using ordinary care is a duty imposed by law, and a home buyer‘s right to enforce that duty cannot be waived.” In its decision, the Court reiterated language in Velotta that, “although the obligation to construct in a workmanlike manner may arise from a contract, the cause of action is not based on contract but on a duty imposed by law.” Id. at ¶ 9, citing Velotta at 378-79.
{¶ 24} Appellees cite to the above language in Centex, i.e., that the cause of action is based on a duty imposed by law, as supporting their contention that the four-year statute of limitations should apply to appellants’ claims for breach of contract and failure to perform in a workmanlike manner. As previously noted, however, the Velotta Court‘s recognition of a “duty imposed by law” was in the context of “[a]n action by a vendee against the builder-vendor of a completed residence.” Velotta at paragraph one of the syllabus. Similarly, the facts of Centex involved an action by a homeowner for the sale of an already constructed home, and the Court did not have occasion to address a contract for future services; nor did the Court in Centex discuss or purport to overrule its earlier holding in Kishmarton (i.e., that the liability of a home builder under a contract for the future construction of a residence arises ex contractu, and that such claim is governed by the language of the parties’ agreement). Upon consideration, we do not construe Centex as negating the distinction recognized in Kishmarton, as well as by other Ohio courts, between the nature of an action by a vendee against the builder-vendor of a completed residence and an action by a vendee against the builder-vendor for breach of a contract to build a residence in the future.4
{¶ 25} Under Ohio law, in order to ascertain the applicable statute of limitations, “it is necessary to determine the true nature or subject matter of the acts giving rise to the complaint.” Doe v. First United Methodist Church, 68 Ohio St.3d 531, 536 (1994). While “[t]orts arise from the breach of certain duties of conduct that are imposed by law for the protection of all persons within range of the harm * * * [c]ontractual duties, on the other hand, arise from the
{¶ 26} Here, appellants’ claims for breach of contract and failure to perform in a workmanlike manner arise out of the contractor agreements entered between the general contractor (DiYanni) and its subcontractors (appellees) for future construction services, and we conclude that the nature of the liability is ex contractu, governed by the statute of limitations for contracts. We therefore conclude that the trial court erred in applying the four-year statute of limitations to appellants’ claims for breach of contract and failure to perform in a workmanlike manner. Accordingly, we reverse the trial court‘s grant of judgment on the pleadings and summary judgment in favor of appellees with respect to those claims, and remand for further proceedings.
{¶ 27} Based upon the foregoing, we sustain appellants’ first assignment of error.
{¶ 28} Under the second assignment of error, appellants contend the trial court erred in failing to find that
{¶ 29}
{¶ 30}
{¶ 32} While acknowledging they have no contractual privity with appellees, appellants seek to avail themselves of the tolling provision based upon the assignment from DiYanni. Under Ohio law, however, an assignee “stands in the shoes of the assignor and can obtain no greater rights against another than the assignor had.” W. Broad Chiropractic v. Am. Family Ins., 10th Dist. No. 07AP-721, 2008-Ohio-2647, ¶ 15, citing Citizens Fed. Bank, F.S.B. v. Brickler, 114 Ohio App.3d 401 (2d Dist.1996). Here, while DiYanni assigned to appellants all the rights, claims, and causes of action it had against its subcontractors, DiYanni itself is not an “owner” under the statutory definition, i.e., it could not have asserted tolling rights against appellees under
{¶ 33} Appellants’ second assignment of error is without merit and is overruled.
{¶ 34} Under the third assignment of error, appellants challenge the trial court‘s determination that Ohio‘s savings statute,
{¶ 35}
In any action that is commenced or attempted to be commenced, if in due time a judgment for the plaintiff is reversed or if the plaintiff fails otherwise than upon the merits, the plaintiff or, if the plaintiff dies and the cause of action survives, the plaintiff‘s representative may commence a new action within one year after the date of the reversal of the judgment or the plaintiff‘s failure otherwise than upon the merits or within the period of the original applicable statute of limitations, whichever occurs later.
{¶ 36} In general, the savings statute “operates in favor of a plaintiff who commenced an action within the proper time limits; who failed other than upon the merits; and who refiles within one year.” Wasserman, Wasserman, Bryan & Landry v. Midwestern Indemn. Ins. Co., 6th Dist. No. L-87-078 (Feb. 5, 1988). Under Ohio law, “[t]he savings statute applies when the original suit and the new action are substantially the same.” Children‘s Hosp. v. Ohio Dept. of Welfare, 69 Ohio St.2d 523, 525 (1982). However, the savings statute is not applicable when “the parties and relief sought in the new action are different from those in the original action.” Id. at paragraph one of the syllabus.
{¶ 37} In the instant case, in rejecting appellants’ contention that the savings statute was applicable, the trial court relied upon Children‘s Hosp. and Natl. Fire Ins. Co. v. Joslyn Mfg. Co., 25 Ohio App.2d 13 (9th Dist.1971). In Natl. Fire, the court determined that, for purposes of the savings statute, the assignee of a claim was not the same party as the original plaintiff. Specifically, the court held that “the phrase, ‘the plaintiff * * *
{¶ 38} According to the allegations in the complaint, appellants’ 2008 action named only DiYanni as a defendant, i.e., appellants brought no claims against appellees at that time. Further, while appellants seek to step into the shoes of DiYanni (based upon its third-party complaint in the 2008 case), we find no error with the trial court‘s reliance upon Natl. Fire in determining that appellants, as assignees of a claim, were not the same party to the original action for purposes of invoking the savings statute. We note that in Children‘s Hosp., the Supreme Court cited with approval Natl. Fire, and this court has similarly followed the holding in that case. See Snyder v. Lyons, 10th Dist. No. 92AP-790 (Dec. 17, 1992) (relying upon Natl. Fire in finding that insurer-subrogee was not same party as the insured for purposes of the savings statute). Other appellate courts have also adopted the reasoning in Natl. Fire. See, e.g., Wasserman (appellant law firm, having obtained interest in action as assignee of the original plaintiff, was “not the plaintiff as contemplated by
{¶ 39} Appellants’ third assignment of error is without merit and is overruled.
{¶ 40} Having addressed each of appellants’ assignments of error, we note that Colonial Heating did not file a cross-appeal, but has presented two “cross-assignments of error” for review. Under its “cross-assignments of error,” Colonial Heating contends that: (1) DiYanni had no legal ability to assign its right to indemnity against Colonial Heating, and that (2) even assuming a valid assignment by DiYanni to appellants, DiYanni failed to provide Colonial Heating with notice of its intent to settle. In a similar vein, other appellees raise alternative arguments in support of affirmance of the trial court‘s decision. Specifically, Remedics contends that: (1) there was no enforceable agreement between it and DiYanni, (2) appellants released all of their claims against the subcontractors, (3) appellants’ potential recovery is limited to $20,000, and (4) Remedics was never a proper party. Finally, Gale Insulation argues that the real estate purchase agreement was merged into the deed, thereby precluding any claims for breach of contract, and that, in the alternative, appellants’ aggregate damages are limited to $20,000.
{¶ 41} Based upon its determination that all of appellants’ causes of action were filed outside the applicable statute of limitations, the trial court did not address the above arguments raised by the various appellees. Because the trial court did not consider these arguments, we decline to address them at this time “in the first instance.” Benjamin v. Ernst & Young, L.L.P., 10th Dist. No. 06AP-1244, 2007-Ohio-4176, ¶ 18. See also Stratford Chase Apts. v. Columbus, 137 Ohio App.3d 29, 33 (10th Dist.2000), quoting Murphy v. Reynoldsburg, 65 Ohio St.3d 356, 360 (1992) (“Even though a reviewing court considers a summary judgment motion de novo,
{¶ 42} Based upon the foregoing, we sustain appellants’ first assignment of error, appellants’ second and third assignments of error are overruled, the judgment of the Franklin County Court of Common Pleas is affirmed in part and reversed in part, and this matter is remanded to that court for further proceedings in accordance with law, consistent with this decision.
Judgment affirmed in part and reversed in part; cause remanded.
KLATT and CONNOR, JJ., concur.