Bakhshi v. Baarlaer
| Decision Date | 08 January 2021 |
| Docket Number | Appellate Case No. 28767,Appellate Case No. 28768 |
| Citation | 2021 Ohio 13 |
| Parties | JAY BAKHSHI Plaintiff-Appellant/Cross-Appellee v. RICHARD BAARLAER, et al. Defendants-Appellees/Cross-Appellants |
| Court | Ohio Court of Appeals |
(Civil Appeal from Common Pleas Court)
OPINIONMICHAEL T. COLUMBUS, Atty. Reg. No. 0076799, 130 West Second Street, Suite 2103, Dayton, Ohio 45402 Attorney for Plaintiff-Appellant/Cross-Appellee
SCOTT G. OXLEY, Atty. Reg. No. 0039285, 325 North Main Street, Suite 204, Springboro, Ohio 45066 Attorney for Defendants-Appellees/Cross-Appellants
{¶ 1} This case involves separate appeals filed by Plaintiff-Appellant/Cross-Appellee Jay Bakhshi and Third-Party Defendant-Appellant/Cross-Appellee Miami Valley Construction Group, LLC, from a trial court judgment filed on February 25, 2020. Defendants-Appellees/Cross-Appellants, Rick Baarlaer and Marick, LLC, also cross-appealed in both appeals.1 We consolidated the appeals in April 2020.
{¶ 2} Jay has submitted one assignment of error directed to the trial court's rejection of his claims based on a promissory note and mortgage that Rick signed. In addition, MVCG has asserted four assignments of error relating to the trial court's findings concerning the construction contract, a quantum meruit claim, and a damages award. Rick and Marick, while filing notices of cross-appeal, have not presented any specific assignments of error; instead, they ask that the trial court judgment be affirmed.
{¶ 3} After considering the assignments of error and the record, we find the assignments of error without merit, except for a minor matter regarding computation of damages. Accordingly, the judgment of the trial court will be affirmed in part and reversed in part, and the matter will be remanded for correction of the judgment entry.
{¶ 4} This case arose from a remodeling project for a bar named Mr. Boro's Tavern, which is located in Springboro, Ohio. After selling a taxi-cab business, Rick and his live-in girlfriend, Marci, began looking for property to lease for a bar. Rick had always dreamed of owning a bar, and Marci had been involved in bartending and in owning andoperating bars for many years. Transcript of Proceedings ("Tr.") p. 435 and 494.
{¶ 5} To this end, Rick formed Marick in December 2015, and he and Marci then found a property for the bar in Springboro, Ohio, that was the perfect location and size, but would have to be gutted and remodeled. Tr. 443 and 495. The concept they were pursuing was that of a friendly neighborhood tavern, which was Marci's area of expertise. Tr. 442. Marci had also lived in Springboro for ten years and knew it as a tight, close-knit community. She had also researched Springboro's demographics, which revealed that the city had around 18,000 residents, a higher median income, and no neighborhood tavern. Id.
{¶ 6} After signing a lease in late December 2015, Rick hired an architect, Rob Fields, to provide an expert opinion on the remodeling needed to fit the theme and to make preliminary drawings to be used for bidding with general contractors. Tr. 495-496. Fields prepared drawings in about two weeks and then contracted some general contractors to provide bids. One backed out because the scope was too big, one was unreasonably priced, and another wanted the job but could not start until May or June 2016 due to the timing of other jobs. Tr. 496.
{¶ 7} Someone in the neighborhood was a former employee or salesman for Jay and suggested that Rick contact him. Tr. 497. At the time, Jay was the sole owner of MVCG. The first meeting occurred around March 25, 2016, at the proposed location of Mr. Boro's. Jay brought Mike Kennedy (the eventual project foreman), Mitch Perry (an interior designer), and Demetrice Minnifield (an electrician) to the meeting. Tr. 27, 106, 229, and 498. According to Jay, Rick was in a hurry to start right away. Tr. 27.
{¶ 8} Rick showed Jay the preliminary drawings and the concept for the bar. Tr. 499. Based on the preliminary drawings, Jay gave Rick an estimated price from MVCG of about $156,995 on April 7, 2016. Tr. 500-501. After Jay gave the drawings to his architect, Jeanne Cabral, she said they were insufficient for a permit and would have to be redone. Tr. 503. Consequently, on May 11, 2016, Rick gave MVCG a $6,000 check for payment of Cabral's architect fees and Perry's design fees. Tr. p, 504. At that time, Jay promised that Cabral would provide a workable set of plans within three to four weeks. Tr. 504 and 511.
{¶ 9} About a week after Rick gave Jay the $6,000 check, Rick and Jay met with Rick's landlord, Scott Duro. Duro was concerned that nothing had been happening and wanted to meet with Rick's contractor. Tr. 511. Jay told Duro and Rick that the drawings would be done in three to four weeks, and that he would then need 11 to 12 weeks to complete the project. Under this projection, the project would have been done by September 2016. Tr. 512. Based on Jay's comments, Duro gave Rick a rent reprieve for June, July, and August, with rent to resume in September. Tr. 513.
{¶ 10} During the summer of 2016, Marci and Rick met with Jay a number of times. Among other things, they discussed the timeframe, which was "huge" for them because there was a small window before fall and the holidays. Tr. 445. They thought a September opening was perfect, because that would give them October, November, and December, during the football season and the holidays, when a lot of restaurants and bars, especially neighborhood bars like theirs, really got business going. Tr. 445-446. Jay's response to opening in early September was that he could get it done. Tr. 446. During the meetings, Rick conveyed a sense of urgency to get the project moving. Tr. 511.
{¶ 11} Cabral did not provide plans until late July 2016, and the plans then were taken to the authorities for approval. Tr. 504 and 513. On July 30, 2016, Rick gave Jay a check for $36,000, before a written contract had been signed. However, Rick did this to facilitate the project while the plans were being approved, as demolition did not need approval and could be started. Jay was also going on vacation and wanted money to pay his demolition people. Tr. 514. On August 2, 2016, Rick wrote another check for $22,000 to MVCG, for supplies and to hire subcontractors and get them ready to move after permit approval. Tr. 514-515. Thus, even before the contract was signed, Rick had given Jay $58,000.
{¶ 12} By the end of August, the ceiling grids were demolished, a humidor was removed, and walls were torn down. Tr. 506. To save money, Rick performed some tasks himself and paid directly for other tasks and supplies. While Jay was on vacation, Rick demolished the tile floor, which had to be removed to proceed with demolition and construction. He finished that by the Friday before Labor Day, except for a few piles of tiles that could not fit in the dumpster Jay had provided. Tr. 506.
{¶ 13} By the time Jay returned from vacation, the health department had approved the plan with one minor change and had sent the plans to the plumbing department, which was in the same building. Rick kept asking Jay if he had heard anything and Jay kept saying no. Eventually, Rick learned that the flow of the hot water heater needed to improve and that the plans would not be released until a licensed plumber came to pick up the plans. However, Jay did not have a licensed plumber, although he had earlier said he had one. Tr. 515-516.
{¶ 14} No work was done between September 2 and September 9, 2016. On September 9, 2016, Rick entered into a contract with MVCG, for a price of $193,805.41 and an estimated completion date of October 17, 2016. Tr. 509-510 and Joint Ex. III, p. 1. The contract was signed by Rick as owner of Marick and by Jay as President of MVCG. Joint Ex. III at p. 5. At the same time, Rick signed a cognovit promissory note and security agreement, agreeing to pay Jay $40,000 for "value received." Joint Ex. 1, p. 1. Monthly payments of $1,809.09 were to be made on the note beginning January 1, 2017, and continuing for 23 more months. Id. The note also had a provision allowing Rick to defer the initial payment for up to four months by paying $350 per month. Id. In addition, Rick executed a mortgage, giving Jay a mortgage on Rick's personal residence in Centerville, Ohio, as security for payment of the note. Tr. 42 and Joint Ex. II.
{¶ 15} Jay never paid Rick or Marick $40,000, nor was their contractual liability with MVCG ever decreased by $40,000. According to Jay, his intent in obtaining the note was to protect himself "personally," and it was not a construction loan. Tr. 37. Jay testified that Rick's understanding was that Jay was giving money to MVCG so it would have "working capital" to get the job done. Tr. 343-344.
{¶ 16} As to where this was stated in the document, Jay stated: Tr. 344. At trial, Jay defined "working capital" as "money that's needed to do the work and finance the actual work that's being done." Tr. 344.
{¶ 17} Rick's testimony concerning the note differed. He stated that the $40,000 represented the final payment on the contract, which was basically overhead and profit. Rick was to provide money up front and also on 75% completion of the project, in order to provide Jay's working capital, or what Jay was going to use to pay subcontractors. There would be a final payment though the promissory note, such that Jay would get his profit; Rick would then make payment on the note for the...
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