Allied Erecting & Dismantling v. Youngstown

• Decision Date: 26 September 2002
• Docket Number: No. 00 CA 225.,00 CA 225.
• Citation: 2002 Ohio 5179,151 Ohio App.3d 16,783 N.E.2d 523
• Parties: ALLIED ERECTING AND DISMANTLING COMPANY, INC., Appellant, v. CITY OF YOUNGSTOWN, Appellee.<SMALL><SUP>*</SUP></SMALL>
• Court: Ohio Court of Appeals

Page 523

783 N.E.2d 523

151 Ohio App.3d 16

2002 Ohio 5179

ALLIED ERECTING AND DISMANTLING COMPANY, INC., Appellant, v. CITY OF YOUNGSTOWN, Appellee.^*

No. 00 CA 225.

Court of Appeals of Ohio, Seventh District, Mahoning County.

Decided September 26, 2002.

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Nadler, Nadler & Burdman and Jay M. Skolnick, Youngstown; Eckert, Seamans, Cherrin & Mellott, L.L.C., Christopher Opalinski and Jarrell D. Wright, Pittsburgh, PA, for appellant.

Manchester, Bennett, Powers & Ullman and Joseph R. Young, Youngstown, for appellee.

DeGENARO, Judge.

{¶ 1} This timely appeal comes for consideration upon the record in the trial court, the parties' briefs, and their oral arguments to this court. Plaintiff-appellant, Allied Erecting & Dismantling Co., Inc., appeals from the trial court's judgment granting defendant-appellee Youngstown's motion for judgment notwithstanding the verdict. The city has filed conditional assignments of error in support of the trial court's judgment. The issues before us are whether (1) the city is protected by governmental immunity, and, if so, was the defense waived; (2) the jury's damage award was speculative, thereby warranting a new trial; and (3) granting plaintiff leave to amend its complaint at the close of defendant's case, thereby resulting in charging the jury on a claim for conversion, was an abuse of discretion. Because we conclude that the city was engaged in a proprietary function and therefore not immune from suit pursuant to R.C. Chapter 2744, and that the jury's award of damages was based upon competent, credible evidence, we reverse the trial court's judgment and reinstate the jury's verdict in favor of Allied.

{¶ 2} The Pittsburgh & Lake Erie Railroad Company owned a main rail line, which ran along the Mahoning River from Lowellville to the Mahoning County-Trumbull County border. P&LE decided to sell the property comprising that line. Allied, as an enterprise engaged in the business of industry dismantling and scrap salvaging, was interested in portions of the rail line and, on February 19, 1992, entered into an Agreement of Sale with P&LE. This agreement sold four parcels of land to Allied along with a right of first refusal to purchase the remaining land and track materials adjacent to the four parcels.

{¶ 3} On May 17, 1993, P&LE and Allied entered into an Amendment To Agreement of Sale and Reciprocal Easement Agreement. This document amended Allied's right of first refusal. Allied now had the right of first refusal to purchase "that portion of P&LE's main line including land, rail and materials thereon, located between * * * Survey Station 45 + 00 + * * * and 153 + 00 + * * *, said portion of main line being partially adjacent to [the parcels of land purchased in the original agreement], in the event the main line is relocated or abandoned, or the balance of the main line west and north of Survey Station 153 + 00 + is sold to the City of Youngstown, Ohio." Exhibit 6, Amendment to Agreement of Sale and Reciprocal Easement Agreement, at 1.

{¶ 4} The amendment went on to define precisely how Allied would exercise that right of first refusal. However, that amendment also granted Allied a further right of first refusal "to purchase the Track Materials only consisting of all rail, O.T.M., R.R. ties, and salvageable ballast (slag) thereon located between Survey Station 153 ± 00 ± and Survey Station 424 ± 00 ± (Trumbull County/Mahoning County line) * * *. P&LE and its successors grant to Allied Erecting and its successors two years from the date of payment to remove the Track Material from the site."¹ Id. at 2.

{¶ 5} A few days later, on May 20, 1993, P&LE entered into a purchase agreement with the city, selling "the real property including fixtures and appurtenant structures thereon, but excluding all rail track materials and ties" located between Survey Stations 153 + 00 + and 209 + 17.54 + . ("Parcel A") The agreement provided that P&LE or its contractor "shall, at its own expense, remove all railroad ties and rail and track materials" from Parcel A within 90 days. On the same day P&LE and the city entered into a contemporaneous purchase agreement for "the real property including fixtures and appurtenant structures thereon, but excluding all rail track materials and ties" located between Survey Station 209 + 17.54 + and 423 + 52.4 + ("Parcel B"). This agreement provided that P&LE had 24 months to "remove all railroad ties and rail and other track materials" from Parcel B.

{¶ 6} After notification of P&LE's sale to the city, Allied exercised its right of first refusal and purchased "all rail, other track material, salvageable ballast and ties (whether attached to track or not)" between Survey Station 153 + 00 + and 424 + 00 + on June 22, 1993. In the agreement, Allied agreed to remove the material from Parcel A within 90 days of the date the city acquired title to Parcel A and to remove the materials from Parcel B within 24 months of the date the city acquired title to Parcel B. At this time, Allied received notification from P&LE only that it could begin working on Parcel A. Allied removed the materials, including the slag and ballast, within the 90-day period. At no time did Allied learn that the city had ever obtained title to Parcel B. However, the city obtained title to that parcel on September 6, 1994.

{¶ 7} In late 1994, Allied's president realized that someone had started to take the rail and track material from Parcel B. In an effort to save its investment, Allied proceeded to remove the rail, ties, and other materials. As Allied began to remove the slag and ballast, the city notified Allied that "the slag and ballast located on the property belongs [sic] to the City of Youngstown and is not to be removed by your company" and if Allied attempted to remove the slag, "the City will consider filing criminal charges for the unauthorized taking of City property." Although Allied thought that it owned the ballast, it stopped removing it due to the threat of criminal charges. The city later sold the property to a third party who, more than two years after the city obtained title to Parcel B, removed the ballast.

{¶ 8} On June 29, 1995, Allied filed a complaint naming the city as the sole defendant. The complaint specifically stated two counts: declaratory judgment and breach of contract. The matter proceeded to trial on April 17, 2000. At the close of Allied's case, the city orally moved for directed verdict on Allied's claims for declaratory judgment and breach of contract. The trial court granted the city's motion as to the claim of declaratory judgment without objection but deferred ruling on the motion as to the claim for breach of contract. At the close of the city's case, it renewed its motion for directed verdict. The trial court granted the motion as to the declaratory judgment and breach-of-contract claims. However, the trial court agreed to instruct the jury on tortious interference with a contract and conversion, finding that the complaint set forth the elements of those torts. The jury returned with a $2 million verdict in Allied's favor on April 24, 2000.

{¶ 9} On May 8, 2000, the city filed a motion for JNOV, in which it asserted for the first time the defense of sovereign immunity and in the alternative moved for a new trial challenging the amount of the jury's verdict. After a hearing on these motions and one filed by Allied, the trial court entered its judgment on October 5, 2000, finding that the city had not waived its defense of political subdivision immunity and granted the city's motion for JNOV. The trial court also stated that if it had reached the merits of the city's motion for a new trial, that motion would have been granted because the jury award was not supported by the manifest weight of the evidence because it was too speculative. This appeal ensued.

{¶ 10} Allied presents three assignments of error:

{¶ 11} "The trial court's entry of judgment notwithstanding the verdict ("JNOV") against Allied in favor of the City on the grounds of governmental immunity was error because the trial court's predicate finding — that the City was engaged in the governmental function of protecting its own property — was based on its failure to construe the evidence most strongly in Allied's favor, and because a proper view of the evidence would have shown that Allied, not the City, owned the property at issue and that the City was therefore engaged in a proprietary function not subject to governmental immunity."

{¶ 12} "The trial court's entry of JNOV against Allied and in favor of the City on the grounds of governmental immunity was error because this defense had no application to Allied's breach of contract claim and because the City waived the defense by failing to raise it at any time during the five years before trial, despite the fact that the City knew or should have known that Allied had also pleaded a conversion claim sounding in tort."

{¶ 13} "The trial court's alternative holding — that it could direct a new trial on the grounds that the jury's verdict of two million dollars was not supported by the manifest weight of the evidence and that Allied's evidence of damages was too speculative to warrant a verdict of that size — was error because the record is replete with sound evidence regarding the quantity of the material at issue and the unit value of that material."

{¶ 14} The city has submitted two conditional assignments of error should this court reverse the trial court:

{¶ 15} "The trial court abused its discretion in granting Allied leave to amend its complaint after Allied rested."

{¶ 16} "The trial court erred to the prejudice of the City in the court's instruction of law on conversion."

{¶ 17} We conclude that the trial court erred when it granted JNOV to the city because the city was engaged in a proprietary function and was, therefore, not immune from suit pursuant to R.C....