John DeFoe, et al., Appellants v. Schoen Builders, LLC, et al., Appellees
Court of Appeals No. WD-18-031
IN THE COURT OF APPEALS OF OHIO SIXTH APPELLATE DISTRICT WOOD COUNTY
June 7, 2019
[Cite as DeFoe v. Schoen Builders, L.L.C., 2019-Ohio-2255.]
SINGER, J.
Trial Court No. 2015CV0475
Shannon J. George and John J. McHugh, for appellees.
*****
SINGER, J.
{¶ 1} This case is before the court on the appeal of appellants, John DeFoe and Jodie DeFoe, from the February 20, 2018 judgment of the Wood County Court of Common Pleas granting summary judgment to appellees, Schoen Builders, LLC (“SB“) and Aaron Schoen (“Schoen“), on most of appellants’ claims. For the reasons that follow, we reverse, in part, and affirm, in part, the trial court‘s judgment.
The Trial Court erred in denying Appellants/Plaintiffs’ Motion for Reconsideration and affirming its decision granting summary judgment to Defendants/Appellees because there was no genuine issue of material fact as to Counts I-V and Counts VII-VIII.
Relevant Background Facts and Procedural History
{¶ 2} This case involves a dispute between appellants, who are husband and wife, and appellees, Schoen and SB.
{¶ 3} On January 18, 2013, appellants entered into a Standard Building Contract (“the contract“) with SB, for the construction of a custom home (“the home“) for appellants by SB. The contract provided the home would be completed no later than October 24, 2013, for an all-in price of $623,317. Appellants moved into the home in April 2014, and paid over $1.3 million for the home.
{¶ 4} On September 1, 2015, appellants filed their complaint. On October 9, 2015, appellants filed a nine-count amended complaint against appellees.1 In the amended complaint, appellants alleged: (Count 1) breach of contract against SB; (Count 2) the contract should be rescinded; (Count 3) negligence by SB; (Count 4) breach of warranty by SB; (Count 5) breach of warranties/breach of duty to perform in a workmanlike manner by SB; (Count 6) violations of the Consumer Sales Practices Act
{¶ 5} Appellees filed an answer to the amended complaint as well as counterclaims against appellants. Appellees also filed third-party complaints against numerous parties.2
{¶ 6} On June 1, 2017, appellees moved for summary judgment on all counts of the amended complaint. Appellants filed a response on June 27, 2017. On February 20, 2018, the trial court granted summary judgment to appellees on all of the counts except Count 6, CSPA, and Count 9, NIED.
{¶ 7} On February 22, 2018, Schoen filed a motion to dismiss, with prejudice, the CSPA count for lack of standing. Schoen claimed the contract involved a home construction service contract, as defined under
{¶ 8} On March 6, 2018, appellants filed a reply to the motion to dismiss, which included a motion to amend the complaint to allow appellants to bring actions under
{¶ 10} On March 16, 2018, appellants filed a “Notice of Voluntary Dismissal of Remaining Claims in Amended Complaint,” dismissing, without prejudice, Count 9 (NIED) of the amended complaint, and moving the court for an order, pursuant to Civ.R. 54(B), to enter a final judgment on all issues.
{¶ 11} Also on March 16, 2018, appellees filed a notice of voluntary dismissal, without prejudice, of their counterclaims against appellants.
{¶ 12} On April 4, 2018, the court entered a final judgment finding no just reason for delay, as all claims and issues were dismissed or adjudicated. Appellants appealed the February 20, 2018 judgment granting summary judgment to appellees on Counts 1 through 5, 7 and 8 of the amended complaint.3
Final Appealable Order
{¶ 13} Appellees contend appellants did not appeal from a final, appealable order, despite the Civ.R. 54(B) language in the April 4, 2018 final judgment. In support, appellees cite to Pattison v. W.W. Grainger, Inc., 120 Ohio St.3d 142, 2008-Ohio-5276, 897 N.E.2d 126, ¶ 1, where the Supreme Court of Ohio held:
when a plaintiff has asserted multiple claims against one defendant, and some of those claims have been ruled upon but not converted into a final order through Civ.R. 54(B), the plaintiff may not create a final order by voluntarily dismissing pursuant to Civ.R. 41(A) the remaining claims against the same defendant.
{¶ 14} Courts of appeals have jurisdiction to “affirm, modify, or reverse judgments or final orders of the courts of record inferior to the court of appeals within the district.” Ohio Constitution, Article IV, Section 3(B)(2). Therefore, “an order must be final before it can be reviewed by an appellate court. If an order is not final, then an appellate court has no jurisdiction.” Gen. Acc. Ins. Co. v. Ins. Co. of N. Am., 44 Ohio St.3d 17, 20, 540 N.E.2d 266 (1989).
{¶ 15} “An order of a court is a final, appealable order only if the requirements of both Civ.R. 54(B), if applicable, and
{¶ 16}
{¶ 17} Civ.R. 54(B) states “[w]hen more than one claim for relief is presented in an action * * * or when multiple parties are involved, the court may enter final judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay.”
Analysis
{¶ 18} The trial court granted summary judgment to appellees on Counts 1 through 5, 7 and 8 of the amended complaint, then granted appellees’ motion to dismiss Count 6. Thereafter, appellants filed a notice of voluntary dismissal of their remaining claim, Count 9, and appellees voluntarily dismissed their counterclaims. The court then issued a final judgment finding no just reason for delay. Appellants appealed.
{¶ 19} At the outset, we find appellants’ notice of voluntary dismissal of Count 9 of the amended complaint was improper in light of the ruling in Pattison, 120 Ohio St.3d 142, 2008-Ohio-5276, 897 N.E.2d 126. Thus, Count 9 remains pending before the trial court. See Ningard v. Shin Etsu Silicones, 9th Dist. Summit No. 24524, 2009-Ohio-3171, ¶ 6-7.
{¶ 21} Next, we must determine if Civ.R. 54(B) applies, and if so, if its requirements were met. In the trial court‘s April 4, 2018 judgment, the court found “the multiple claims and issues set forth by the parties have been dismissed and/or adjudicated. The Court further finds that there is no just reason for delay.” We note Civ.R. 54(B) language is not necessary in a judgment entry to make that order final and appealable when no claims remain pending before the trial court. However, since we determined appellants’ dismissal of Count 9 of the amended complaint was improper and that claim remains pending before the trial court, we find Civ.R. 54(B) applies. We further find the trial court‘s determination that there was no just reason for delay was correct, albeit for the wrong reason. See Reynolds v. Budzik, 134 Ohio App.3d 844, 846, 732 N.E.2d 485 (6th Dist.1999), fn. 3, citing Agricultural Ins. Co. v. Constantine, 144 Ohio St. 275, 284, 58 N.E.2d 658 (1944) (a decision which achieves the correct result must be followed, even if the wrong reasoning or basis is used to justify the decision). We therefore find the trial court complied with Civ.R. 54(B).
{¶ 22} Accordingly, we conclude there is a final judgment and we have jurisdiction to hear this appeal. See Foley v. Empire Die Casting Co., 9th Dist. Summit
Appellants’ Assignment of Error
{¶ 23} We will first address appellants’ assignment of error with respect to the trial court‘s decision to grant summary judgment to appellees on Counts 1 through 5, 7 and 8 of the amended complaint. Some counts will be analyzed together, and some counts will be reviewed out of order.
Standard
{¶ 24} We review a summary judgment decision on a de novo basis. Grafton v. Ohio Edison Co., 77 Ohio St.3d 102, 105, 671 N.E.2d 241 (1996). Thus, we undertake our own independent examination of the record and make our own decision as to whether the moving party is entitled to summary judgment. Dupler v. Mansfield Journal, 64 Ohio St.2d 116, 119-120, 413 N.E.2d 1187 (1980).
{¶ 25} Summary judgment is appropriate when (1) no genuine issue as to any material fact exists, (2) the party moving for summary judgment is entitled to judgment as a matter of law, and (3) viewing the evidence most strongly in favor of the nonmoving
{¶ 26} “The moving party bears the initial responsibility of informing the trial court of the basis for the motion, and identifying those portions of the record before the trial court which demonstrate the absence of a genuine issue of fact on a material element of the nonmoving party‘s claim.” Dresher v. Burt, 75 Ohio St.3d 280, 292, 662 N.E.2d 264, (1996). In addition, “summary judgment may be rendered where the pleadings and the arguments of the party seeking summary judgment clearly establish that the nonmoving party has no legally cognizable cause of action.” Id. at 297-298. “When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of the party‘s pleadings.” Civ.R. 56(E).
Count 1—Breach of Contract, Count 4—Breach of Warranty
{¶ 27} In Count 1 of the amended complaint, appellants alleged they had a binding agreement with SB which required SB to “perform the work according to the specifications identified” by appellants, and SB failed to meet its contractual obligations.
{¶ 28} In Count 4, appellants alleged they “notified Schoen of the multiple problems with the Construction * * * and indicated that much of the repairs would fall under the warranty issued to them by Schoen Builders.” Appellants alleged SB refused
Law
{¶ 29} To constitute a valid contract, there must be a meeting of the minds of the parties, there must be an offer by one party and an acceptance by the other party, and the contract must be supported by consideration. Mike McGarry & Sons, Inc. v. Constr. Resources One, LLC, 2018-Ohio-528, 107 N.E.3d 91, ¶ 90 (6th Dist.), citing Noroski v. Fallet, 2 Ohio St.3d 77, 442 N.E.2d 1302 (1982). Whether a contract exists is a question of law. Motorists Mut. Ins. Co. v. Columbus Fin., Inc., 168 Ohio App.3d 691, 2006-Ohio-5090, 861 N.E.2d 605, ¶ 7 (10th Dist.).
{¶ 30} It is an elementary principle that any law relating to a contract which is in existence at the time of the execution of the contract becomes a part of the contract. Eastern Mach. Co. v. Peck, 161 Ohio St. 1, 6-7, 117 N.E.2d 593 (1954). It is also “elementary that no valid contract may be made contrary to statute, and that valid, applicable statutory provisions are parts of every contract.” Bell v. N. Ohio Tel. Co., 149 Ohio St. 157, 158, 78 N.E.2d 42 (1948).
{¶ 31} “In construing a written instrument, the primary and paramount objective is to ascertain the intent of the parties so as to give effect to that intent.” Aultman Hosp. Assn. v. Community Mut. Ins. Co., 46 Ohio St.3d 51, 53, 544 N.E.2d 920 (1989). The contract must be reviewed as a whole, and it is presumed that the intent of the parties is reflected in the language of the contract. Id. Common words appearing in a contract will
{¶ 32} The elements of a breach of contract action are “the existence of a contract, performance by the plaintiff, breach by the defendant, and damage or loss to the plaintiff.” (Citations omitted.) Firelands Regional Med. Ctr. v. Jeavons, 6th Dist. Erie No. E-07-068, 2008-Ohio-5031, ¶ 19.
Arguments
{¶ 33} In their motion for summary judgment, appellees argued the contract entered into between appellants and SB included paragraph 5, which is unambiguous, and states:
5. Possession. Both Contractor and Owner agree that occupancy shall be given Owner only upon, and not until payment of the total contract price, plus all amounts due Contractor for all changes or additions, have been paid to Contractor as provided for in paragraph 3.
{¶ 35} In response, appellants countered the contract language is not clear and unambiguous and the allegation that appellants “obtained ‘occupancy’ of the residence subject to para. 5 of the contract belies the very facts of this case.” Appellants suggested there exists a question of fact as to whether they “at this very moment – maintain legal occupancy of the residence” because appellees failed to obtain anything other than a temporary occupancy permit. Appellants contended any arguments by appellees as to paragraph 5 “are null and void” as the contract terms “have yet to be fulfilled.” Appellants further argued they “have provided evidence of a myriad of breaches” by
{¶ 36} Appellants further asserted Kott is distinguishable and should not be followed. Appellants argued that at the time they entered into the contract with SB, “the interpretation set forth in Kott [was] no longer valid as the requirements of
{¶ 37} In addition, appellants submitted the contract is unconscionable, and “[a]s it relates to the ‘effect’ that this Court should give [appellants‘] moving into the home and then paying the final amount to [appellees],” it is procedurally unconscionable to construe the contract terms to prohibit appellants from bringing a cause of action for latent defects and other issues prior to making final payment. Appellants argued their “situation represents a situation of procedural impossibility on behalf of [appellants]. In April 2014, their home has taken almost six (6) months longer than contracted for and they * * * literally have no place to go.” Appellants also maintained the contract terms are not commercially reasonable.
Analysis
{¶ 39} We must first determine whether a valid, binding contract existed between appellants and SB.
{¶ 40} The record shows appellants alleged, in their amended complaint, they had a binding agreement with SB, and appellants attached a copy of the contract to the amended complaint. Appellees, in their answer to the amended complaint, admitted appellants “entered into a contract for construction of a new residence by [SB], but state that the contract speaks for itself.” However, in their response to the motion for summary judgment, appellants asserted, for the first time, that the contract was unconscionable. Unconscionability of a contract is an affirmative defense. Busch, Inc. v. Bailey Dev. Corp., 6th Dist. Lucas No. L-83-297, 1984 Ohio App. LEXIS 9011, at *11 (Feb. 3,
{¶ 41} Next, we will address appellees’ argument that paragraph 5 of the contract is unambiguous and appellants took possession of the home before making final payment. Appellants countered that a question of fact exists as to whether they obtained occupancy and “maintain legal occupancy of the residence.”
{¶ 42} Paragraph 5 provides in relevant part “[b]oth Contractor and Owner agree that occupancy shall be given Owner only upon, and not until payment of the total contract price.” And, “[t]aking possession of the above-described property by the Owner prior to payment in full to the Contractor as aforesaid shall be complete acceptance by the Owner without any further obligation * * * of the Contractor to give the warranty provided for in paragraph 12.”
{¶ 44} Last, we will consider appellees’ argument that appellants’ possession of the home before final payment triggered paragraph 5 of the contract, which entitled appellees to summary judgment on the breach of contract and warranty claims on the authority of Kott, 197 Ohio App.3d 699, 2012-Ohio-287, 968 N.E.2d 593. Appellants countered Kott was no longer valid because
{¶ 45} In Kott, the relevant clause of the contracts stated “[o]ccupancy of the dwelling by the Owners prior to payment in full to the Contractor aforesaid shall constitute complete acceptance by the Owners without any further obligation on the part of the Contractor, except that the Owner and Contractor may agree to earlier occupancy.” Id. at ¶ 12. The owner moved into the home in October 2007, but did not make the final payment until February 2008. Id. at ¶ 13. The court held “[p]ursuant to the plain terms of the parties’ contracts, the act of occupancy prior to full payment constitutes acceptance of the property and relieves [the Contractor] of further obligation.” Id. The court found the contractor was entitled to judgment on the owner‘s “breach of contract claim as concerns any purported substandard material or workmanship.” Id.
{¶ 46}
{¶ 47} Upon review, Kott was decided in January 2012,
{¶ 48} In Kott, the scope of the relevant clause is very broad (“occupancy * * * prior to payment in full * * * shall constitute complete acceptance by the Owners without any further obligation on the part of the Contractor“), whereas the scope of paragraph 5 of the contract is much more limited (“possession * * * prior to the payment in full * * * shall be complete acceptance by the Owner without any further obligation on the part of the Contractor to give the warranty provided for in paragraph 12.“). The warranty in paragraph 12 states in relevant part: “[t]he Contractor shall repair or replace any defective materials in accordance with the procedures outlined in the Toledo Home Builders Standard Warranty.” Therefore, we find paragraph 5 of the contract precludes any claim by appellants based on the warranty contained in paragraph 12 of the contract. We note this interpretation of paragraph 5 is much narrower than that advanced by appellees.
{¶ 49} With respect to appellants’ contention that
{¶ 50} Accordingly, we find appellees are entitled to summary judgment on appellants’ breach of contract claim (Count 1) and breach of warranty claim (Count 4) only to the extent those counts seek the remedies provided for in the warranty in paragraph 12 of the contract, for appellees to repair or replace any defective materials.
Count 3—Negligence, Count 5—Breach of Warranties
{¶ 51} In Count 3, appellants alleged SB owed them a duty “to perform the Construction with reasonable care and in accordance with generally acceptable construction industry standards.” In Count 5, appellants alleged SB owed them a duty “to construct their home in a workmanlike manner.”
{¶ 52} In their summary judgment motion, appellees argued paragraph 5 of the contract also warrants summary judgment for them on Counts 3 and 5 as paragraph 5 states appellants “occupying the property prior to final payment constitutes ‘complete acceptance’ and relieves [SB] of any further obligations to provide a warranty.” Appellees asserted the plain language of paragraph 5 releases SB “from any further obligations regarding its workmanship or the requirement to provide any warranty repairs” to appellants. Appellees further argued “any claims for negligent workmanship sound in negligence and must be treated as such. * * * Since [appellants] accepted the
{¶ 53} Appellants countered the professional engineering report of Larry Fast includes “innumerable examples of the failure of [appellees] to perform to the standards required – i.e., in a workmanlike manner * * * [and] reasonable minds could conclude the implied duty was breached.” Appellants cite to numerous cases including Kishmarton v. William Bailey Constr., Inc., 93 Ohio St.3d 226, 754 N.E.2d 785 (2001) and Seff v. Davis, 10th Dist. Franklin No. 03AP-159, 2003-Ohio-7029.
Law
{¶ 54} The Velotta case involved an action by an owner against a builder of an already constructed residence for damages caused by the builder‘s failure to construct the residence in a workmanlike manner using ordinary care. Velotta at paragraph one of the syllabus. By contrast, the court in Kishmarton held “[w]here the vendee [owner] 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 [out of the contract].” Id. at paragraph one of the syllabus. “Workmanlike manner is a standard that requires a construction professional to act reasonably and to exercise that degree of care which a member of the construction trade in good standing in that community would exercise under the same or similar circumstances.” Seff at ¶ 19.
{¶ 55} Upon review, appellees relied on the language of paragraph 5 of the contract and the holding in Kott, in support of their motion for summary judgment on appellants’ negligence and breach of warranties claims. We find this reliance inadequate to sustain their burden of establishing that appellants have no legally cognizable claims for negligence or breach of warranties to construct the home in a workmanlike manner. Since appellees failed to prove they were entitled to judgment as a matter of law on these counts, it was not necessary for appellants to offer evidence sufficient to present a genuine issue of material fact, yet appellants did so.
{¶ 56} Accordingly, the trial court erred in granting summary judgment to appellees on Counts 3 and 5 of the amended complaint.
Count 2—Rescission
{¶ 57} In Count 2, appellants alleged as a direct and proximate result of Schoen‘s poor workmanship and breach of contract, the home is not habitable and cannot be used for its intended purpose. Appellants alleged they are entitled to rescind the contract with Schoen.4
{¶ 58} In the motion for summary judgment, appellees argued appellants alleged “they are entitled to rescission of the Contract with Schoen Builders.” Appellees observed “[t]he sole basis identified by [appellants] for the right to rescind the contract
Law
{¶ 59} Rescission of a contract “‘amounts to the unmaking of a contract, an undoing of it from the beginning, and not merely a termination * * *.’ Black[‘]s Law Dictionary (5 Ed. Rev. 1979), 1174.” Admiral Holdings, LLC v. Adamany, 8th Dist. Cuyahoga No. 87870, 2006-Ohio-6945, ¶ 6. For a court to order the rescission of a contract, the court must conclude a breach exists which is so substantial and fundamental that it goes to the root of the contract. Id. “Generally, without fraud, duress, undue influence, or mistake, one party to a contract cannot rescind or cancel it without the consent of the other party.” Id.
Analysis
{¶ 60} Upon review, we find appellees’ argument, that they are entitled to summary judgment because appellants’ claims for breach of contract and negligence for the failure to perform in a workmanlike manner are not valid, is insufficient to sustain their burden of establishing that appellants have no legally cognizable claim for rescission. The argument presumes appellants’ breach of contract and negligence claims are “not valid,” which is not accurate.
{¶ 61} As set forth above, we found the breach of contract claim (Count 1) was “not valid” only to the extent that count seeks the remedies provided for in the warranty
{¶ 62} Since appellees did not meet their burden of demonstrating appellants have no legally cognizable claim for rescission, we find the trial court erred in granting summary judgment to appellees on Count 2 of the amended complaint.
Count 7—Fraudulent Misrepresentation, Count 8—Fraud
{¶ 63} In Count 7, appellants alleged Schoen made certain representations to them which were material to the contract and the home‘s construction, were knowingly false or were reckless, were made with the intent to mislead, and were relied upon by appellants.
{¶ 64} In Count 8, appellants alleged Schoen “indicated to a third party contractor that he should charge [appellants] higher amounts on the Project because they had plenty of money and could pay it.” Appellants further alleged Schoen advised, promised and deceived them that the material and workmanship of the home “was being done in accordance within the standards of the building industry.” Appellants alleged Schoen‘s false statements and promises “were undertaken as a method to continue to fraudulently receive payment under the building contract.”
{¶ 65} A claim of fraud requires proof of the following elements: (1) a representation or, where there is a duty to disclose, concealment of a fact, (2) which is material to the transaction, (3) made falsely, with knowledge of its falsity, or with such utter disregard and recklessness as to its truth or falsity that knowledge may be inferred, (4) with the intent of misleading another to rely on it, (5) justifiable reliance upon the representation or concealment, and (6) a resulting injury proximately caused by the reliance. Russ v. TRW, Inc., 59 Ohio St.3d 42, 49, 570 N.E.2d 1076 (1991). Whether or not fraud exists is generally a question of fact. Interstate Gas Supply, Inc. v. Calex Corp., 10th Dist. No. 04AP-980, 2006-Ohio-638, ¶ 84.
Arguments and Analysis
{¶ 66} Schoen argued, in the motion for summary judgment, that appellants cannot show they relied on any statements he made for purposes of entering into the contract. Schoen contended appellants’ allegations of fraud are based on his representations that: he would have a project manager and a selections coordinator to assist appellants during construction; the home would be built according to appellants’ specifications; and, the construction would be of a higher quality than what was delivered. Schoen observed other allegations of fraud alleged by appellants included that: he suggested third-parties charge appellants more for their services; he continued to make false statements during construction to obtain payments from appellants; and his
{¶ 67} Schoen maintained appellants were unable to show his statements regarding a project manager or selections coordinator were false, and since there was no definition of the role of a project manager or selections coordinator on which appellants could have relied, there could be no fraud. Schoen also asserted appellants were unable to confirm any of the information in the marketing materials was false. In support, Schoen cited to appellants’ deposition testimony.
{¶ 68} In response, appellants mentioned four examples of fraud in appellees’ marketing materials and cited to Schoen‘s deposition testimony as well as their own testimony in support. Appellants contended they acted as the project manager, they never had a selections coordinator and Schoen told a painter to overcharge appellants. In support, appellants cited to their own deposition testimony.
{¶ 69} A review of the record, including all of the deposition transcripts and exhibits, shows questions of fact exist as to whether Schoen committed fraud or made fraudulent misrepresentations as alleged by appellants in Counts 7 and 8 of the amended complaint. We therefore find genuine issues of material fact remain.
{¶ 70} Accordingly, the trial court erred in granting summary judgment in favor of appellees on Counts 7 and 8 of the amended complaint.
{¶ 71} Appellants’ assignment of error, with respect to the trial court‘s decision to grant summary judgment to appellees, is well-taken as to Counts 2, 3, 5, 7 and 8, and well-taken, in part, as to Counts 1 and 4 of the amended complaint. This determination renders moot appellants’ assertion that the trial court erred in denying their motion for reconsideration. See
{¶ 72} The February 20, 2018 judgment of the Wood County Court of Common Pleas is affirmed, in part, and reversed, in part, and the case is remanded for further proceedings consistent with this decision. Appellants and appellees are ordered to split the costs of this appeal pursuant to
Judgment affirmed, in part, and reversed, in part.
A certified copy of this entry shall constitute the mandate pursuant to
Arlene Singer, J.
Thomas J. Osowik, J.
Gene A. Zmuda, J.
CONCUR.
JUDGE
JUDGE
JUDGE
This decision is subject to further editing by the Supreme Court of Ohio‘s Reporter of Decisions. Parties interested in viewing the final reported version are advised to visit the Ohio Supreme Court‘s web site at: http://www.supremecourt.ohio.gov/ROD/docs/.