SCHNIPPEL CONSTRUCTION, INC., PLAINTIFF-APPELLANT, v. JIM PROFITT, ET AL., DEFENDANTS-APPELLEES.
CASE NO. 17-09-12
IN THE COURT OF APPEALS OF OHIO THIRD APPELLATE DISTRICT SHELBY COUNTY
November 9, 2009
2009-Ohio-5905
Trial Court No. 07CV000437
Judgment Affirmed
APPEARANCES:
Timothy G. Pepper for Appellant
Roger L. Sabo for Appellee
I. Facts & Procedural History
{1} Plaintiff-appellant, Schnippel Construction, Inc. (“Schnippel“), appeals the Shelby County Court of Common Pleas’ grant of summary judgment in favor of defendant-appellees Jim Profitt (“Profitt“) and Service Contract Administrators, Inc. (“SCA“). For the reasons that follow, we affirm.
{2} Schnippel is an Ohio corporation and non-union contractor for private and public commercial construction projects in the State of Ohio. (Complaint, Doc. No. 2, 1, 5). On or about October 4, 1996, Schnippel executed and adopted a welfare benefit plan sold by SCA through its trustee or fiduciary, Profitt, and administered by Prevailing Wage Contractors Association, Inc. (“PWCA“). (Id. at ¶10). Schnippel executed and adopted this benefit plan based upon Profitt‘s representation that PWCA‘s benefit plan complied with federal and state prevailing wage laws. (Id. at ¶7). The PWCA benefit plan was subsequently amended, and Schnippel adopted the amended plan in 2001. (May 5, 2009 JE, Doc. No. 127); (Profitt Aff. 8, Ex. B).
{3} In 2005, Schnippel entered into a contract with Montgomery County for construction on a solid waste treatment plant. On June 20, 2006, the International Association of Bridge, Structural, Ornamental, and Reinforcing Iron Workers, Local Union 209 filed suit against Schnippel alleging violations of
{4} On December 19, 2007, Schnippel filed a complaint against SCA, Profitt, and PWCA, alleging negligent misrepresentation and fraud against defendants SCA and Profitt and breach of contract and tortious breach of duty arising via contract against defendant PWCA. (Doc. No. 2).
{5} On February 9, 2009, SCA and Profitt filed motions for summary judgment. (Doc. Nos. 85-86). On March 18, 2009, Schnippel voluntarily dismissed defendant PWCA pursuant to
{6} On May 5, 2009, the trial court granted SCA and Profitt summary judgment on Schnippel‘s remaining claim of negligent misrepresentation, finding that it was barred by the applicable statute of limitations. (Id.).
{7} On June 2, 2009, Schnippel filed a notice of appeal. (Doc. No. 135). Schnippel now appeals raising two assignments of error for our review.
II. Standard of Review
{8} Before addressing the merits of Schnippel‘s assignments of error, we must set forth the applicable standard of review. An appellate court reviews a grant or denial of summary judgment pursuant to
{9} Material facts have been identified as those facts “that might affect the outcome of the suit under the governing law.” Turner v. Turner (1993), 67 Ohio St.3d 337, 340, 617 N.E.2d 1123, citing Anderson v. Liberty Lobby, Inc. (1986), 477 U.S. 242, 248 91 L.Ed.2d 202, 106 S.Ct. 2505. “Whether a genuine issue exists is answered by the following inquiry: [d]oes the evidence present “a
{10} Summary judgment should be granted with caution, resolving all doubts in favor of the nonmoving party. Osborne v. Lyles (1992), 63 Ohio St.3d 326, 333, 587 N.E.2d 825. “The purpose of summary judgment is not to try issues of fact, but is rather to determine whether triable issues of fact exist.” Lakota Loc. Schools Dist. Bd. of Edn. v. Brickner (1996), 108 Ohio App.3d 637, 643, 671 N.E.2d 578.
III. Analysis
ASSIGNMENT OF ERROR NO. I
THE TRIAL COURT ERRED IN DETERMINING WHEN APPELLANT‘S NEGLIGENT MISREPRESENTATION CLAIMS ACCRUED, BECAUSE THE TRIAL COURT FAILED TO FOLLOW THE OHIO SUPREME COURT‘S PRECEDENT OF UTILIZING THE ACTUAL INJURY RULE FOR NEGLIGENCE CLAIMS.
ASSIGNMENT OF ERROR NO. II
THE TRIAL COURT ERRED IN DETERMINING WHEN APPELLANT‘S NEGLIGENT MISREPRESENTATION CLAIMS ACCRUED, BECAUSE THE TRIAL COURT FAILED TO DISTINGUISH THE DISCOVERY RULE FROM THE ACTUAL INJURY RULE.
{11} In its first assignment of error, Schnippel argues that the tort of negligent misrepresentation accrued in September 2007 when it settled the lawsuit
{12} Profitt and SCA, on the other hand, argue that the alleged negligent misrepresentations occurred in 1996 or 2001, at the latest, and, as such, are barred by
{13} We will examine the trial court‘s judgment entry, the relevant statute of limitations, and case law cited by the trial court in support of its decision. Ultimately, we conclude that the delayed damages rule is inapplicable herein since
Schnippel was damaged when Profitt and SCA allegedly made the negligent misrepresentation.
{14} The trial court sub judice found that the parties agreed that the applicable statute of limitations for negligent misrepresentation is four years. (May 5, 2009 JE, Doc. No. 127). The sole issue presented to the trial court was “* * * when did the cause of action accrue. Did the cause of action accrue in 1996 when the alleged negligent misrepresentation took place or did it accrue in 2006 or 2007 when Schnippel was sued or settled that lawsuit?” (Id.). The trial court acknowledged the Fifth District‘s decision in J.P. Morgan Chase Bank v. Lanning—which found that a mortgagor‘s cause of action against a title company for negligently altering his mortgage accrued when his property was wrongfully foreclosed upon, not when the negligent alteration occurred—but found the Ohio Supreme Court‘s decision in Investors REIT One v. Jacobs and our decision in Reidel v. Houser controlling. (Id., citing (1989), 46 Ohio St.3d 176, 546 N.E.2d 206; (1992), 79 Ohio App.3d 546, 607 N.E.2d 894). The trial court also found persuasive that the Court of Appeals in other districts have rejected the delayed damages rule as a way to circumvent the unavailability of the discovery rule in negligence actions. (Id., citing Chandler v. Schriml (May 25, 2000), 10th Dist. No. 99AP-1006. See, also, Dancar Properties, Ltd. v. O‘Leary-Kientz, 1st Dist. No. C-030936, 2004-Ohio-6998, ¶14; James v. Partin, 12th Dist. No. CA2001-11-086,
{15} As the trial court found, the parties do not dispute that
{16} In Investors REIT One, the Ohio Supreme Court specifically determined that: (1) claims of professional accountant negligence are governed by
{17} With respect to Schnippel‘s argument that the delayed damages rule is applicable and distinguishable from the discovery rule, this Court rejected that argument, at least implicitly, in Riedel v. Houser, 79 Ohio App.3d at 549-50. In
{18} Several appellate districts have agreed with our statement in Riedel v. Houser—that the distinction between the delayed damages rule and the discovery rule for accountant negligence claims was a distinction without a
{19} Despite the overwhelming authority rejecting the delayed damages rule, the Fifth and Sixth Districts have extended it in a few cases. In Gray v. Estate of Barry, the Sixth District held that
{20} On appeal, Gary argued that the discovery rule should apply and, alternatively, that the cause of action did not accrue until the I.R.S. assessed the
We agree with the dissent in Philpott and the court of appeals opinion in Sladky. Philpott, Sladky and the present case are not discovery cases. The issue in each is the time at which the cause of action accrued. In any negligence action, a claim for which relief may be granted cannot be maintained absent the presence of all essential elements. “To establish actionable negligence, one must show * * * the existence of a duty, a breach of that duty and injury resulting proximately therefrom.” Mussivand v. David (1989), 45 Ohio St.3d 314, 318, 544 N.E.2d 265, 270. Since there can be no negligence without injury, there can be no negligent conduct by which a cause accrues, pursuant to Holsman, until there is an injury to a legally protected interest. Kunz v. Buckeye Union Ins. Co., supra. In the case of a negligently prepared tax return or a tax form negligently omitted from a return, there is no injury until the I.R.S. determines to levy a penalty assessment. Until that time, no claim upon which relief can be granted exists. Similarly, it is not until such a claim may be maintained that the time for any statute of limitation begins to run.
{21} The Fifth District subsequently adopted Gray v. Estate of Barry‘s delayed damages rule with respect to actions against accountants for negligent preparation of tax returns. Fritz v. Brunner Cox, L.L.P. (2001), 142 Ohio App.3d 664, 756 N.E.2d 740. In doing so, however, the Fifth District acknowledged:
* * *that other courts, in interpreting and applying Investors REIT One, would find that appellants’ complaint against appellees for accountant negligence was time-barred, since it was not filed within four years after the alleged negligent act was committed, which, in this case, was the filing of appellants’ 1994 federal income tax return on September 14, 1995. However, that interpretation of Investors REIT One would lead to an illogical and inequitable result, namely, that appellants’ claims against appellees would be time-barred before appellants’ damages even manifested themselves.
Id. at 669. More recently, the Fifth District applied its reasoning in Fritz and held that a mortgagor‘s cause of action against a title company for negligently altering his mortgage accrued when the bank filed a foreclosure complaint against the wrong property in reliance upon the incorrect legal description of the property provided by the title company, not when the title company negligently altered the mortgage. J.P. Morgan Chase Bank v. Lanning, 5th Dist. No. 2007CA00223, 2008-Ohio-893.
{22} Schnippel asks this Court to adopt the reasoning of these cases applying the delayed damages rule. While we acknowledge Gray, Fritz, and Lanning, we are not persuaded by them for several reasons. To begin with, in Houser we rejected the delayed damages rule adopted by the Courts in Gray and Fritz. 79 Ohio App.3d 546. Additionally, the holding in Sladky v. Lomax (9th Dist., 1988), 43 Ohio App.3d 4, 538 N.E.2d 1089, upon which the dissent in Philpott and the Courts in Gray and Fritz relied, has been questioned following Investors REIT One. Lord v. Ernst & Whinny (June 3, 1992), 9th Dist. No. 15361, at *2; Jodway Heating, L.L.C. v. Stevens, 9th Dist. No. 08 CA0089-M, 2009-Ohio-5054, ¶10. Furthermore, a majority of Ohio‘s appellate districts have rejected the delayed damages rule in similar cases. For its part, Lanning, 2008-Ohio-893, is distinguishable since it did not involve negligent misrepresentation, and furthermore, we reject it since it relies upon Gray and Fritz, which cases are contrary to our decision in Houser.
{23} We also find the Tenth District‘s decision in Chandler persuasive. 10th Dist. No. 99AP-1006. In that case, the property owners and the real estate company represented to Chandler that the duplex he was purchasing was properly used as a two-family unit for zoning purposes. Id. at *1. Based upon that representation, Chandler closed on the duplex on April 26, 1994. Id. In April of 1998, Chandler decided to sell the duplex and discovered that it, in fact, was not
{24} On appeal, Chandler argued that his claim was not time-barred since it did not accrue until he suffered damages, which was when he discovered the zoning defect. Id. at *2. Chandler, like Schnippel herein, attempted to distinguish the discovery rule from the delayed damages rule to avoid the unavailability of the latter. Id. The Tenth District, however, found Chandler‘s argument irrelevant, because Chandler did not suffer delayed damages as he opined. Id. at *3. According to the Court, Chandler was injured at the time he purchased the duplex, and his cause of action accrued at the time of the negligent misrepresentation. Id. The Court reasoned as follows:
Chandler alleged in his complaint that he would not have purchased the duplex for the amount paid had he known that the duplex was zoned for single-family use. From the time he closed on the property, Chandler owned less than he believed. Thus, Chandler‘s injury occurred at the closing on April 26, 1994. The fact that Chandler did not realize his injury until much later does not change the fact that the financial injury occurred at the closing.
{25} As the Court found in Chandler, we find that Schnippel‘s argument in support of delayed damages is irrelevant, because Schnippel did not suffer delayed damages. Id. at *3. Schnippel, like Chandler, alleged that he purchased the PWCA benefit plan based upon the negligent misrepresentations of Profitt and SCA that the plan complied with federal and state prevailing wage laws. (Complaint, Doc. No. 2, at ¶¶6-10). Accordingly, like the Court in Chandler found, we find that Schnippel was damaged in 1996 when he purchased (or, at the latest, in 2001 when he renewed) the PWCA benefit plan. 10th Dist. No. 99AP-1006, at *4. Assuming its allegations are true, Schnippel, like Chandler, purchased less than it received based upon Profitt and SCA‘s misrepresentations. Chandler, 10th Dist. No. 99AP-1006, at *4. That Schnippel did not discover that he was damaged until 2006 when Local 290 filed suit does not change the fact that he suffered damages at the time he purchased (or renewed) the PWCA benefit plan. Id. Therefore, based upon Chandler, we reject Schnippel‘s argument that he suffered delayed damages.
IV. Conclusion
{26} Since Schnippel‘s negligent misrepresentation claim accrued, at the latest, in 2001 or 2002 when it renewed the PWCA benefit plan, and its complaint was filed in December 2007, Schnippel‘s claim is time-barred under
{27} Schnippel‘s first and second assignments of error are both overruled.
{28} Having found no error prejudicial to the appellant herein in the particulars assigned and argued, we affirm the judgment of the trial court.
Judgment Affirmed
WILLAMOWSKI and SHAW, J.J., concur.
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