Four Elyria Co. v. Brexton Constr., LLC
| Decision Date | 29 August 2022 |
| Docket Number | s. 20CA011694,20CA011695 |
| Parties | FOUR ELYRIA COMPANY, LLC, Appellants/Cross-Appellees v. BREXTON CONSTRUCTION, LLC, et al., Appellees/Cross-Appellants |
| Court | Ohio Court of Appeals |
195 N.E.3d 1083
FOUR ELYRIA COMPANY, LLC, Appellants/Cross-Appellees
v.
BREXTON CONSTRUCTION, LLC, et al., Appellees/Cross-Appellants
Nos. 20CA011694
20CA011695
Court of Appeals of Ohio, Ninth District, Lorain County.
August 29, 2022
JOHN A. MURPHY, JR., TODD A. HARPST, and JACQUELYN COLES-JONES, Warren, Attorneys at Law, for Appellants/Cross-Appellees.
PETER D. WELIN and JOHN A. GAMBILL, Columbus, Attorneys at Law, for Appellees/Cross-Appellants.
NATHALIE A. DIBO, Cleveland and CLAIRE L. O'CONNOR, Attorneys at Law, for Mobile Center.
RONALD M. MCMILLAN, Cleveland and XIN WEN, Attorneys at Law, for Appellee.
ANECA E. LASLEY and ANDREW H. KING, Columbus, Attorneys at Law, for Appellee.
DAN A. RICHARDS, Attorney at Law, for Dollar Tree Stores, Inc.
KATHERINE L. KEEFER, Attorney at Law, for Lorain County Treasurer.
PHILIP R. BAUTISTA and WILLIAM A. DOYLE, Cleveland, Attorneys at Law, for Petco Animal Supplies.
DECISION AND JOURNAL ENTRY
HENSAL, Judge.
{¶1} Four Elyria Company, LLC ("Four Elyria") and David Thomas appeal from the judgments of the Lorain County Court of Common Pleas. Brexton Construction, LLC ("Brexton"), cross-appeals. This Court affirms in part, reverses in part, and remands the matter for further proceedings.
I.
{¶2} This case primarily involves a contract dispute between the owner of a shopping plaza and the construction manager the owner hired to oversee construction of the plaza. More specifically, it involves a dispute as to whether certain work the construction manager performed was within the scope of the contract between the construction manager and the owner, or whether the construction manager was entitled to compensation for that work outside of the contract.
{¶3} The underlying record is voluminous, involving multiple parties, claims, counterclaims, cross-claims, a third-party complaint, and several motions for summary judgment. This Court will limit its discussion of the facts and procedural history to those relevant to the disposition of this appeal.
{¶4} We begin our discussion with a review of the parties followed by a timeline of the relevant events. Four Elyria is the owner of a shopping plaza called Chestnut Commons, a shopping center located in Elyria, Ohio that contains four retail stores. David Thomas and Grant Giltz, among others, are members of Four Elyria. Mr. Thomas, an attorney, handled some of the legal issues for Four Elyria, and Mr. Giltz was responsible for managing the construction on Chestnut Commons. At his deposition, Mr. Giltz testified as the Civil Rule 30(B)(5) witness on behalf of Four Elyria. David Pontia is the architect Four Elyria hired for the Chestnut Commons project. Mr. Pontia is not a party to the underlying lawsuits.
{¶5} Brexton is the construction manager Four Elyria hired to oversee the construction
of Chestnut Commons. Timothy Galvin is the founder, past president, and current CEO of Brexton. At his deposition, Mr. Galvin testified as the Rule 30(B)(5) witness on behalf of Brexton. At all relevant times, Mary Beatty was the CFO, then executive vice president, then president of Brexton.1
{¶6} Protective Life Insurance Company ("Protective") is the lender that refinanced Chestnut Commons. Mr. Thomas is the member of Four Elyria who signed the loan documents on behalf of Four Elyria, as well as a personal guaranty and a borrower's affidavit, in connection with the refinancing.
{¶7} In November 2015, Four Elyria and Brexton engaged in discussions regarding the construction of Chestnut Commons, which included the construction of a Petco. As part of those discussions, Four Elyria's architect, Mr. Pontia, provided Brexton with Petco's prototype tenant improvement plans ("Prototype Plans"), among other documents, which were not site-specific. The Prototype Plans contained a disclaimer stating: "For Design Intent Only and Shall Not be Used for Construction Purposes." According to Mr. Pontia's deposition testimony, the Prototype Plans were sent to Brexton for pricing purposes because Petco had not issued the final, site-specific tenant improvement plans yet. Mr. Pontia was not involved in preparing the Prototype Plans, nor the final, site-specific tenant improvement plans, both of which were provided by Petco.
{¶8} Brexton also received Mr. Pontia's drawings for the project. On the cover page of the drawings, Mr. Pontia included a "Project Note[ ]" stating: "The Project Consists of Shell Building and Landlords T.I. Work. Tenants Interior T.I. Work to be Submitted under Separate Contract * * *." At his deposition, Mr. Pontia explained that this language meant that he expected there to be a separate set of construction documents for the Petco tenant improvement work. He also explained that the reference to the "Contract" in the "Project Note[ ]" referred to the contract between Pontia Architecture and Four Elyria, not a contract between Brexton and Four Elyria.
{¶9} In early January 2016, Brexton emailed Four Elyria its "all-in" price for the work Brexton was to perform at Chestnut Commons. Days later, Four Elyria and Brexton executed a construction manager at-risk guaranteed maximum price agreement (the "Contract"). The Contract and its attachments defined the scope of the work, listed the maximum guaranteed price as $2,475,508, and provided that Brexton would be "responsible for paying all costs of completing the Work which exceed the [guaranteed maximum price], as adjusted in accordance with this Agreement."
{¶10} The Contract provided that any changes in the work that impacted the guaranteed maximum price were to be formalized in a change order, and that Brexton was not obligated to perform such work until a change order had been executed. The Contract also provided that, if there was a dispute as to whether any work was within the scope of the Contract, Brexton was to furnish Four Elyria with an estimate of the costs to perform the disputed work. The Contract further provided that Brexton was to submit any claim for an increase in the guaranteed maximum price to Four Elyria in writing.
{¶11}The Contract contained an integration clause, stating that the Contract represented the entire agreement between the parties, and superseded all prior negotiations, representations, or agreements, either written or oral. "Contract Documents" was defined to include the "existing Contract Documents listed in section 15.1, drawings, specifications, [and] addenda issued and acknowledged prior to the execution of this Agreement[.]" Section 15.1 addressed the "Existing Contract Documents" and referenced five exhibits labeled A, B, C, D, and F.2 Exhibit A was the list of drawings. Exhibit A did not include the Protype Plans, nor did it include the final, site-specific drawings for the Petco tenant improvement work, which were not in existence at the time the parties executed the Contract. At his deposition, Mr. Galvin acknowledged that the drawings contained in Exhibit A did contain some Petco tenant improvement work, albeit limited. According to Four Elyria, the "Contract Documents" included the Prototype Plans because those drawings were "issued and acknowledged" by Brexton prior to the execution of the Contract. Brexton disputes this, claiming that the only drawings incorporated into the Contract are those contained in Exhibit A. Exhibit C to the Contract was captioned "Assumptions & Clarifications" and provided: "[c]ompletion date for Petco to be 08/27/16."
{¶12} Section 3.4.2 of the Contract addressed the "Basis of Guaranteed Maximum Price" and required Brexton to "include with the [guaranteed maximum price] proposal a written statement of its basis" for the price. Section 3.4.2.1 required that statement to include "a list of the drawings and specifications, including all addenda, which were used in preparation of the [guaranteed maximum price] Proposal." "SEE EXHIBIT A" was filled in next to that language. Section 3.4.2.3 also required that statement to include "a list of the assumptions and clarifications made by [Brexton] in the preparation of the [guaranteed maximum price] Proposal to supplement the information contained in the drawings and specifications[.]" "SEE EXHIBIT C" was filled in next to that language.
{¶13} In April 2016, Four Elyria sent Brexton the final, site-specific drawings for the Petco tenant improvement work ("Petco T.I. work"). Brexton used those drawings to complete its work on the Petco. According to Brexton, the Petco T.I. work was not part of the Contract, but it performed that work with the expectation that Four Elyria would pay for it separately, that is, in addition to what Four Elyria owed Brexton under the Contract.
{¶14} According to Mr. Galvin's deposition testimony, Brexton did not submit a written change order to Four Elyria for the Petco T.I. work because Four Elyria instructed Brexton not to do so. Ms. Beatty testified similarly and indicated that Brexton verbally told Four Elyria that a change order for approximately $500,000 was forthcoming for the Petco T.I. work, but that Four Elyria asked Brexton not to submit a change order because it did not want its lender to be aware of it.
{¶15} Mr. Giltz, however, disputed this during his deposition testimony. According to him, the Petco T.I. work was included in the Contract and, at the time Brexton received the final, site-specific Petco drawings, there was no discussion between Four Elyria and Brexton that the cost of
the Petco T.I. work would exceed the guaranteed maximum price under the Contract. While some testimony indicated that a change order was circulated internally within Brexton and that it was hand-delivered to Four Elyria, there is no dispute that a change order was never executed for the Petco T.I. work.
{¶16} Brexton substantially completed the entire project in November 2016. On November 28, 2016, Ms. Beatty submitted two pay applications to Four Elyria: one for the balance due under the Contract, and one for the retainage. Along with each pay...
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