861 N.E.2d 612 (Ohio Comm. 2006), 06CVH03-3751, Wagner-Smith Co. v. Ruscilli Constr. Co., Inc.
| Citation | 861 N.E.2d 612, 139 Ohio Misc.2d 101, 2006-Ohio-5463 |
| Opinion Judge | FRYE, Judge. |
| Party Name | WAGNER-SMITH COMPANY, Plaintiff, v. RUSCILLI CONSTRUCTION COMPANY, INC., Defendant. |
| Attorney | Cooper & Elliott, L.L.C., Rex H. Elliott, Charles H. Cooper Jr., and John C. Camillus, Columbus; Miller Law Firm, P.C., Richard W. Miller, and Scott H. Murphy, Kansas City, MO, for plaintiff., Thompson Hine L.L.P., Michael W. Currie, O. Judson Scheaf III, and Gabe J. Roehrenbeck, Columbus, for de... |
| Case Date | September 25, 2006 |
| Court | Ohio Court of Common Pleas |
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1. Introduction
{¶ 1} This dispute arose from a multimillion-dollar construction project at The Ohio State University ("the University"). The prime electrical contractor, Wagner-Smith Company, brought suit against the University's construction manager, Ruscilli Construction Company, Inc. for (1) tortious interference with its contract with the University and (2) tortious interference with its business relationship [139 Ohio Misc.2d 104] with the University. Ruscilli seeks dismissal pursuant to Civ. R. 12(B)(6), arguing the complaint fails to state a claim upon which relief can be granted.
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2. The factual record as pleaded
{¶ 2} The complaint, more extensive than most, appropriately focuses this dispute. Exhibit "A" to the complaint is a four-page excerpt from Section 4.2 of the General Conditions in the Project Manual, entitled "Responsibility and Authority of the Construction Manager." Pursuant to Civ.R. 10(C), this excerpt is incorporated into the complaint. The court is entitled to consider it in determining whether Wagner-Smith has stated a claim. Keenan v. Adecco Emp. Servs., Inc., 3d Dist. No. 1-06-10, 2006-Ohio-3633, 2006 WL 1975871, at ¶ 8-9; Park v. Acierno, 160 Ohio App.3d 117, 2005-Ohio-1332, 826 N.E.2d 324, at ¶ 29.
{¶ 3} The University retained Ruscilli to act as its construction manager in connection with a Mechanical Engineering Building Replacement Project ("the Project"). In June 2004, following competitive bidding based in part on a bid package containing the Project Manual, Wagner-Smith entered into a $5.2 million contract with the University to perform the electrical work on the Project.
{¶ 4} The bid documents and resulting contract contemplated completion of work by Wagner-Smith in 707 days following issuance of a notice to proceed. That notice was given in July 2004. A "Construction Schedule" for the Project was to be prepared and kept current by Ruscilli in accordance with its independent obligations to the University. Ruscilli allegedly failed to prepare an accurate and reliable construction schedule that Wagner-Smith could use to plan its own work and coordinate it with other contractors. In addition, Ruscilli allegedly failed to monitor the progress of the Project for conformity to the schedule and, when difficulties arose, failed to initiate reasonable revisions to address them. To top it off, Ruscilli would not "acknowledge that it had failed to fulfill its contractual duties and that it was responsible for delaying the work on the Project," thereby preventing Wagner-Smith from doing what it independently agreed to do for the University. Indeed, it is said, Ruscilli "continued to bully Wagner-Smith and disrupt the work of Wagner-Smith under the threat of terminating Wagner-Smith from the Project."
{¶ 5} Lacking privity with Ruscilli, Wagner-Smith seeks to pursue tort claims. In response, Ruscilli primarily argues that (1) this action is not yet ripe because Wagner-Smith must first pursue a breach of contract action against the University, and (2) as the University's agent, Ruscilli could not, as a matter of law, interfere with the contract between Wagner-Smith and the University.
[139 Ohio Misc.2d 105] 3. Analysis
{¶ 6} Two independent reasons justify granting Ruscilli's motion to dismiss. First, the economic-loss doctrine in Ohio blocks Wagner-Smith's tort claims. Second, even though Wagner-Smith was not obligated to sue the University before suing its construction manager, Ruscilli was privileged to act as it did under the rules governing tortious-interference claims. That privilege has not been overcome by superficial allegations of actual malice.
A. Ruscilli owed no duty to Wagner-Smith
{¶ 7} Wagner-Smith has identified several instances in which courts elsewhere have entertained tortious-interference claims against construction managers: Green Plumbing & Heating Co., Inc. v. Turner Constr. Co. (C.A.6, 1984), 742 F.2d 965; New York v. Aetna Cas. & Sur. Co. (S.D.N.Y.1997), 96 Civ. 6890, 1997 WL 379704. Those decisions recognize such claims under Michigan and New York law,
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respectively. They are inapposite. Ohio law differs.
{¶ 8} The Ohio Supreme Court has examined tort claims in the context of construction contracting on several occasions. See, e.g., Visintine & Co. v. New York, Chicago, & St. Louis RR. Co. (1959), 169 Ohio St. 505, 9 O.O.2d 4, 160 N.E.2d 311; Corporex Dev. & Constr. Mgt., Inc. v. Shook, Inc., 106 Ohio St.3d 412, 2005-Ohio-5409, 835 N.E.2d 701. Visintine addressed both contract and tort claims. The state undertook to eliminate a railroad crossing through the combined work of several railroads and a highway contractor, Visintine & Company. When the railroads did not meet their schedule, the schedule for Visintine & Company's work was disrupted. In addition to asserting rights as a third-party beneficiary under the railroads' separate contracts with the state, Visintine & Company asserted a tort claim against the railroads sounding in negligence. The Supreme Court upheld dismissal of Visintine & Company's tort claim, reasoning: "Tort is based on a duty owed by one party to another. The duty owed here by the defendants was to the state of Ohio, not to the plaintiff. The duty arising out of contract upon which plaintiff may rely in its first cause of action was that owed to it by the state. If defendants are liable to plaintiff it is due to a breach of the contracts they made with the state of Ohio and not to the violation of any duty owed directly to the plaintiff upon which a tort action may be based." Visintine, 169 Ohio St. at 510, 9 O.O.2d 4, 160 N.E.2d 311.
{¶ 9} The court most recently addressed the existence of a tort duty in a setting like this one in Shook, supra. Dublin Suites, Inc. ("DSI") was a building project owner that sought to recover purely economic damages in tort against a subcontractor, but premised the claim upon breach of contractually created duties. Id. at ¶ 1. The court rejected the tort claim because the only "duty" [139 Ohio Misc.2d 106] argued to exist was grounded in a contract to which plaintiff was not a party. Id. at ¶ 12.
{¶ 10} Shook emphasized that prior decisions barred recovery in tort for purely economic loss. Id. at ¶ 6, citing Chemtrol Adhesives, Inc. v. Am. Mfrs. Mut. Ins. Co. (1989), 42 Ohio St.3d 40, 45, 537 N.E.2d 624, and Floor Craft Floor Covering, Inc. v. Parma Community Gen. Hosp. Assn. (1990), 54 Ohio St.3d 1, 3, 560 N.E.2d 206. The rule distilled from that line of cases "stems from the recognition of a balance between tort law, designed to redress losses suffered by breach of a duty imposed by law to protect societal interests, and contract law, which holds that 'parties to a commercial transaction should remain free to govern their own affairs.' " Id., quoting Chemtrol, 42 Ohio St.3d at 42, 537 N.E.2d 624. " 'Tort law is not designed * * * to compensate parties for losses suffered as a result of a breach of duties assumed only by agreement.' " Id., quoting Floor Craft, 54 Ohio St.3d at 7, 560 N.E.2d 206. Accordingly, the court held that "[b]ecause the underlying duties are created by a contract to which DSI is not a party, no tort action lies in DSI's favor. Instead, DSI, the project owner, retains its right to file a breach-of-contract claim against Corporex, the contractor, for damages permitted under its contract, and Corporex may, in turn, recover any damages against Shook, the subcontractor, permitted by the subcontract. DSI may not, however, recover in tort when Shook has no duty in tort to protect DSI from purely economic damages. We will not adopt a rule that ignores basic tort law and thwarts the intentions of parties to a contract, who must be allowed to bargain freely to allocate the risks attendant to their undertaking, including the possibility of
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purely economic damages." (Citations omitted.) Id. at ¶ 11.
{¶ 11} Contractual duties running from Ruscilli to the University did not give rise to any legal duty owed Wagner-Smith. Accordingly, Wagner-Smith cannot seek economic damages in this case. Instead, if Ruscilli mismanaged the Project, Wagner-Smith may seek relief directly from the University for breach of contract premised upon obligations owed plaintiff by the University. The University's obligations can then be examined using the "four corners" of the promises made to Wagner-Smith. Practically speaking, the University may, in that event, elect to implead Ruscilli--but the University makes that choice, not Wagner-Smith.
B. Ripeness
{¶ 12} Contrary to Ruscilli's argument, plaintiff was not required to pursue a cause of action for breach of contract against the University as a preferred or primary cause of action before seeking relief for tortious interference. "[A]n action in tort based upon malicious interference with a plaintiff's [139 Ohio Misc.2d 107] contractual rights * * * poses a viable alternative to an action on the contract itself, and the mere existence of a plaintiff's inchoate cause of action against one party for breach of contract does not foreclose an action in tort against another party for all damages suffered by reason of the latter's inducement of such a breach." Davison Fuel & Dock Co. v. Pickands Mather & Co. (1977), 54 Ohio App.2d 177, 181-182, 8 O.O.3d 324, 376 N.E.2d...
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