Filo v. Liberato

• Citation: 987 N.E.2d 707
• Decision Date: 15 March 2013
• Docket Number: No. 11 MA 18.,11 MA 18.
• Parties: Anthony FILO dba Filo Construction, Inc., Plaintiff–Appellant v. Michael LIBERATO, Defendant–Appellee.
• Court: United States Court of Appeals (Ohio)

987 N.E.2d 707

Anthony FILO dba Filo Construction, Inc., Plaintiff–Appellant

v.Michael LIBERATO, Defendant–Appellee.

No. 11 MA 18.

Court of Appeals of Ohio,

Seventh District, Mahoning County.

March 15, 2013.

Tim Tusek, Boardman, OH, for Plaintiff–Appellant.

Alfred J. Fleming, Alfred J. Fleming Co., L.P.A., Youngstown, OH, for Defendant–Appellee.

Before: MARY DeGENARO, P.J., CHERYL L. WAITE and JOSEPH J. VUKOVICH, JJ.

WAITE, J.

{¶ 1} Appellant, Anthony Filo, was a subcontractor on a commercial construction project owned by Appellee, Michael Liberato. Appellant approached Appellee during August of 2006 because the general contractor was behind in making payments to Appellant. According to Appellant, Appellee promised him that he would be fully paid. Appellant subsequently received $7,000.00 of the alleged $33,600.00 owed. Appellee also released payment in full to another subcontractor. Appellant was never paid the remainder of the amount owed.

{¶ 2} In March of 2010, Appellant filed suit against Appellee for payment. The trial court granted a Civ.R. 12(B)(6) motion and dismissed all of Appellant's claims. The judgment of the trial court dismissing Appellant's conversion claim is affirmed. The trial court's dismissal of Appellant's promissory estoppel, unjust enrichment and fraud claims is reversed, as these claims are supported by the pleadings.

Factual and Procedural History

{¶ 3} Appellant, Anthony Filo, provided materials and services to build curbing, sidewalks, footers, floors and a trash enclosure as well as other excavation and concrete work on a commercial construction project at 789 Wick Avenue. Appellant performed the work under contract to D & R Construction and Maintenance, the general contractor in charge of the Belleria Pizza commercial building project. Appellee, Michael Liberato, is the owner of the property at 789 Wick Ave., where Appellant worked as a subcontractor pursuant to the contract with D & R Construction. According to Appellant, at some point during August of 2006 he was owed $33,600.00. Appellant was not receiving payment from D & R Construction and approached Appellee directly about the amount due. According to Appellant, Appellee promised him full payment. Appellant later received $7,000.00, but never received the balance. Appellant alleges that Appellee controlled the draws on the financial institution financing the project and Appellee released payment to at least one other subcontractor, who performed work after Appellant, without paying Appellant as promised. As a result, on March 31, 2010, Appellant filed a complaint against Appellee, alleging promissory estoppel, unjust enrichment, conversion and fraud.

{¶ 4} On May 19, 2010, Appellee responded to the complaint with a motion to dismiss under Civ.R. 12(B)(6). According to Appellee, the suit was barred by the statute of frauds, which requires that any contract primarily for the provision of goods exceeding $500.00 in value, in addition to services, be made in writing. The statute also requires that a promise to pay the debt of another must be in writing. Appellee emphasized that the allegations in the complaint clearly identify Appellant as a subcontractor and that the only contract referred to in the complaint is that involving Appellant and D & R Construction, not Appellee.

{¶ 5} On August 16, 2010, Appellee filed a motion to dismiss an amended complaint, citing the same grounds as in the original Civ.R. 12(B)(6) motion. On August 30, 2010, Appellant filed in opposition to Appellee's motion to dismiss. Appellant argued that the allegations in the amended complaint are sufficient to establish a “leading object” exception or excuse to the statute of frauds, and are sufficient to establish the elements of promissory estoppel. According to Appellant, Appellee is not protected by the statute of frauds because not only has he retained the benefit of Appellant's work, the underlying purpose for his verbal promise that the subcontractor would be paid was to preserve Appellee's own pecuniary interest in the completion of the construction project. On January 7, 2011, the trial court dismissed the amended complaint. The matter is now before us on Appellant's timely appeal.

Argument and Law

Standard of Review

{¶ 6} A trial court's decision granting a Civ.R. 12(B)(6) motion to dismiss is reviewed de novo. Perrysburg Twp. v. Rossford, 103 Ohio St.3d 79, 2004-Ohio-4362, 814 N.E.2d 44. “In order for a complaint to be dismissed under Civ.R. 12(B)(6) for failure to state a claim, it must appear beyond doubt from the complaint that the plaintiff can prove no set of facts entitling him to relief.” Cincinnati v. Beretta U.S.A. Corp., 95 Ohio St.3d 416, 418, 2002-Ohio-2480, 768 N.E.2d 1136, ¶ 5, citing O'Brien v. Univ. Community Tenants Union, Inc., 42 Ohio St.2d 242, 327 N.E.2d 753 (1975), syllabus. When reviewing whether a motion to dismiss should be granted, “we must presume that all factual allegations of the complaint are true and make all reasonable inferences in favor of the non-moving party” Mitchell v. Lawson Milk Co., 40 Ohio St.3d 190, 192, 532 N.E.2d 753 (1988). “[A]s long as there is a set of facts, consistent with the plaintiff's complaint, which would allow the plaintiff to recover, the court may not grant a defendant's motion to dismiss.” York v. Ohio State Hwy. Patrol, 60 Ohio St.3d 143, 145, 573 N.E.2d 1063 (1991).

{¶ 7} The trial court's decision relies on the statute of frauds, R.C. 1335.05; Civ.R. 10(D)(1); and R.C. 4113.61(A)(1) to dismiss Appellant's complaint. Appellee's original motions to dismiss and appellate brief are based on the same laws. Appellant's first and second assignments of error address the trial court's reliance on the statute of frauds to dismiss his promissory estoppel claim and will be discussed together for this reason. Appellant's third assignment of error also concerns the statute of frauds, but will be considered separately because it does not deal with promissory estoppel, but instead, raises the “leading object” rule to overcome application of the statute of frauds. As Appellant's fourth and fifth assignments of error both address the Prompt Payment Act, R.C. 4113.61, they will also be considered together.

Assignment of Error No. 1

The Trial Court erred by determining that the statute of frauds requirements regarding “promises to pay the debts of another” bar Filo's promissory estoppel claim since, as alleged in Filo's Amended Complaint, the leading object of Liberato's promise was to benefit himself.

Assignment of Error No. 2

The Trial Court erred by determining that the statute of frauds requirements regarding “interests in land” bar Filo's Complaint since the agreements involved only “affected land.”

{¶ 8} The statute of frauds, R.C. 1335.05, was last amended in 1976 and provides:

Certain agreements to be in writing. No action shall be brought whereby to charge the defendant, upon a special promise, to answer for the debt, default, or miscarriage of another person; * * * or upon a contract or sale of lands, tenements, or hereditaments, or interest in or concerning them * * * unless the agreement upon which such action is brought, or some memorandum or note thereof, is in writing and signed by the party to be charged therewith or some other person thereunto by him or her lawfully authorized.

Civ.R. 10(D)(1) also requires that claims based on contract include the written instrument, and states that:

When any claim or defense is founded on an account or other written instrument, a copy of the account or written instrument must be attached to the pleading. If the account or written instrument is not attached, the reason for the omission must be stated in the pleading.

{¶ 9} The thrust of Appellant's argument in his first assignment of error is that he is entitled to compensation for the work benefitting and retained by Appellee that was completed in reliance on Appellee's oral promise that he would be paid. Appellant contends that the doctrine of promissory estoppel should be applied in this instance to prevent Appellee from retaining the benefit of Appellant's work without compensating Appellant. The trial court held that because promises to pay the debt of another are subject to the statute of frauds and Appellant failed to allege that a written promise existed, his claim for promissory estoppel “cannot be proven and must be dismissed.” (1/7/11 J.E., p. 4.) The trial court was mistaken in this conclusion.

{¶ 10} Promissory estoppel, itself, does not operate as an exception to the statute of frauds. Instead, where an agreement is required by the statute to be in writing and no writing exists, promissory estoppel specifically exists to provide an action for damages to compensate a party injured due to his reliance on an unenforceable promise. Olympic Holding Co., L.L.C. v. ACE Ltd., 122 Ohio St.3d 89, 2009-Ohio-2057, 909 N.E.2d 93, ¶ 38. “An action for damages under promissory estoppel provides an adequate remedy for an unfulfilled or fraudulent promise” because it allows compensation “where the requisites of contract are not met, yet the promise should be enforced to avoid injustice.” Id. at ¶ 39, citing Doe v. Univision Television Group, Inc., 717 So.2d 63, 65 (Fla.App.1998). “ ‘To be successful on a claim of promissory estoppel “[t]he party claimingthe estoppel must have relied on conduct of an adversary in such a manner as to change his position for the worse and that reliance must have been reasonable in that the party claiming estoppel did not know and could not have known that its adversary's conduct was misleading.” ’ ” Olympic Holding at ¶ 39, quoting Shampton v. Springboro, 98 Ohio St.3d 457, 2003-Ohio-1913, 786 N.E.2d 883 ¶ 34. “Thus, promissory estoppel is an adequate remedy for a fraudulent oral promise or breach of an oral promise, absent a signed agreement.” Olympic Holding at ¶ 40.

{¶ 11} In Olympic Holding, the Supreme Court held that the plaintiff had a valid claim...