Mike McGarry & Sons, Inc. v. Constr. Res. One, LLC, S–17–005

• Decision Date: 09 February 2018
• Docket Number: No. S–17–005,S–17–005
• Parties: MIKE MCGARRY & SONS, INC., Appellant v. CONSTRUCTION RESOURCES ONE, LLC, et al., Appellees
• Court: Ohio Court of Appeals

107 N.E.3d 91

2018 Ohio 528

MIKE MCGARRY & SONS, INC., Appellant

v.CONSTRUCTION RESOURCES ONE, LLC, et al., Appellees

No. S–17–005

Court of Appeals of Ohio, Sixth District, Sandusky County.

Decided: February 9, 2018

Timothy L. McGarry, Cleveland, and Brendan M. Mewhinney, Highland Heights, for appellant.

Robert T. Glickman, Cleveland, and John E. Moran, for appellees.

DECISION AND JUDGMENT

OSOWIK, J.

Introduction

{¶ 1} This case concerns a contractual dispute between a painting subcontractor, Mike McGarry & Sons, Inc., a general contractor, Construction Resources One, Inc., and the owner of the facility where the work was performed, Cuyahoga Heights Commerce One, LLC.

{¶ 2} In 2013, Construction Resources One, Inc. ("CR–One") engaged Mike McGarry & Sons, Inc. ("MMS") to clean, prime and paint part of an unoccupied manufacturing facility. The property owner, Cuyahoga Heights Commerce One, LLC. ("Cuyahoga Heights"), was negotiating with a tenant, and CR–One's job was to prepare part of the building for occupancy.

{¶ 3} The painting aspect of the project was beset by cost-overruns and delays. MMS alleges that Cr–One breached an agreement to pay it for those extra costs. When CR–One did not pay, MMS filed a mechanic's lien against the property owner, asserting more than twice the value of the original contract.

{¶ 4} On October 24, 2014, MMS filed a four count complaint in the Sandusky County Court of Common Pleas against CR–One and Cuyahoga Heights (referred jointly as "appellees") for breach of contract, violation of Ohio's Prompt Payment Act, unjust enrichment, and foreclosure of a mechanic's lien. Cuyahoga Heights counterclaimed, asserting fraud and tortious interference with business relations based upon the filing of the lien.

{¶ 5} Acting on the parties' cross motions for summary judgment, the trial court dismissed all of MMS' claims, except the breach of contract claim. After a bench trial, the trial court found that MMS failed to show that appellees breached an agreement to compensate it for any amount over the original contract. The court found in favor of Cuyahoga Heights as to both of its counterclaims. The court also sanctioned MMS for maintaining the mechanic's lien and for unnecessary motion practice. MMS appealed.

{¶ 6} The facts giving rise to the claims asserted in this case, unless noted, are not disputed and are set forth below.

Facts and Procedural History

{¶ 7} Cuyahoga Heights owns commercial properties throughout northern Ohio, including property located at 4600 Oak Harbor Road, in Fremont, Ohio. In 2013, it hired CR–One to act as general contractor and to prepare the vacant facility for occupancy. At the time, Cuyahoga Heights was negotiating with "Unican" to lease the facility. Among other items, Unican manufactures paint cans. It was to occupy part of the property and operate a single manufacturing line, with the hope that it would add lines, and with them, the need for more space in the future. Accordingly, Cuyahoga Heights hired CR–One to refurbish the facility in four phases. Phases two, three and four would be added when and if the need arose.

{¶ 8} CR–One's President, Matt Ambrose ("Ambrose"), invited MMS to submit a quote to clean, prime, and paint the walls and ceiling of phase I, which consisted of 105,717 square feet.

{¶ 9} Cuyahoga Heights and CR–One share common owners. Real estate developers Christopher Semarjian and Stuart Lichter are the majority owners of Cuyahoga Heights and the co-owners of CR–One. Semarjian testified that CR–One is Cuyahoga Heights' exclusive general contractor, although CR–One occasionally performs contracting service for other clients.

{¶ 10} MMS is in the commercial painting business. Sean McGarry ("Sean") is MMS' estimator and project manager. Sean has been in the painting industry for 26 years and has estimated thousands of projects. In preparation for quoting this job, Sean was given complete access to the property. After visiting the property, Sean provided CR–One with a quote of $118,340, which amounted to $1.12 per square foot. Sean estimated that the project would require six weeks, three to prime and clean and three weeks to paint. The evidence shows that CR–One had no input on the methods or products used by MMS.

{¶ 11} On February 13, 2013, prior to executing a written contract, MMS set up at the property. As it did so, MMS asked CR–One for access to water so that it could power wash the surfaces, to turn off the electricity, and to increase the temperature to at least 50 degrees so that paint could adhere.

{¶ 12} CR–One delivered heaters to the property and hung tarps to enclose phase I so as to prevent heat from escaping. The temperature improved when the heaters were delivered. MMS did not raise any concerns about temperature after the delivery of the heaters. At MMS' request, CR–One also delivered water trucks to allow MMS to power wash. To maintain safety while power washing, Ambrose proposed that CR–One would shut off the electricity in segments (so MMS would have access to lighting and power), and he asked MMS to cover the electrical bus ducts to avoid electrocution. MMS did not object to this proposal or state that it would result in extra cost.

{¶ 13} Despite asking for access for water, MMS decided to "blow down" the surfaces of the property, rather than to power wash. This change was not done at CR–One's request. On February 28, 2013, after MMS had decided to change its cleaning method, Ambrose asked Sean for a breakdown of the costs for the project, including the "blow down." On March 6, 2013, Sean responded that the cost would remain $118,340.

{¶ 14} MMS' paint supplier on the project was Glidden. On February 20, 2013, Glidden agent, Brian Conroy, recommended that MMS should prime "all surface areas (100%)" with a primer called "Devguard 436." At trial, Sean testified that he viewed the recommendation to prime the entire project as "overkill."

{¶ 15} MMS began working on the property on or about February 21, 2013, still without a contract.

{¶ 16} On March 7, 2013, MMS, through its president, Brendan McGarry, signed a "SUBCONTRACT AGREEMENT BETWEEN GENERAL CONTRACTOR AND SUBCONTRACTOR." Before sending it to Ambrose for CR–One's signature, Brendan unilaterally made some handwritten changes to a few provisions, but he left undisturbed the originally quoted price, notwithstanding that, by then, (1) MMS had decided to change its cleaning methods and (2) it was aware of its paint supplier's recommendation that MMS prime the whole structure, not just to "spot prime." The quoted price included "spot priming," which means only priming certain areas, not the entire structure. Sean reviewed the contract and advised Brendan that it was acceptable.

{¶ 17} Paragraph 2 of the contract provides, "[f]or performing the scope of work, The Subcontractor will be paid in monthly payments, based on completion percentages, the following not-to-exceed amount: $118,340.00." The term "scope of work" is used throughout the contract, but is not defined. CR–One's president, Ambrose, told Sean that he wanted phase I properly cleaned, primed, and painted to an industry standard. Sean testified that MMS's promise to CR–One was more than just that MMS "would clean and paint," but instead that phase I would be cleaned, primed, and painted "appropriately" so that "[t]he paint would stay on the wall" and the "paint would stay on the ceiling," or else MMS would fix the problems at MMS's cost.

{¶ 18} On or about March 15, 2013, CR–One asked MMS to vacate the property and to stop working, due to Cuyahoga Heights' uncertainty over lease negotiations with Unican.

{¶ 19} On March 25, 2013, during the shutdown, Sean sent Ambrose an email (the "March 2013 Email"). In it, Sean stated that he had "anticipated maybe 20–30% of the [old] paint would come off but it is more like 70–80%." Sean then relayed MMS' decision to prime "the entire structure to prevent further rusting." The email then lists four costs after the word "Add": $55,000 for primer; $23,400 for labor; $4,000 for overtime; and $3,000 for equipment rental delays, for a total of $85,400.

{¶ 20} Paragraph 13 of the contract provides for a process whereby "change orders" can be added to the contract.¹ Sean testified that the March 2013 email, quoted above, amounts to a change order request because he used the word "Add" at the bottom of it. Ambrose testified that neither party ever discussed the change order provision and that MMS never requested a change order for changed specifications.

{¶ 21} On April 2, 2013, Sean added a chain to the March 2013 email asking, "let me know if you [h]ave had a chance to review our costs due to changing the Spec and Overtime and Rental delays."

{¶ 22} On CR–One's behalf, Ambrose signed the contract on April 5, 2013 and returned it to Sean. He left undisturbed those handwritten changes made by Brandon, except to initialize them. Ambrose did not address Sean's recent email regarding the increased costs. Likewise, upon receipt of the fully executed contact, Sean did not object to its price or terms.

{¶ 23} On or about May 15, 2013, MMS returned to the property to resume working. Ambrose told Sean that he would discuss "with ownership" MMS' delay costs caused by the shutdown.

{¶ 24} When MMS returned to the property, there were "obvious defects," according to the trial court's findings of fact. MMS did not dispute this during trial, and the email correspondence bear this out. Specifically, there were spots of rust "bleeding through" newly painted surfaces and new paint was peeling and chipping off the surface. Ambrose testified that falling paint chips posed safety and quality control problems for its tenant. Ambrose and Sean had many conversations about MMS's defective work, and MMS never objected or claimed that its work was not defective.

{¶ 25} In compliance with Paragraph 15, CR–One advised MMS in writing that its defective work was jeopardizing completion of the project. CR–One did not, however, instruct...