Hanuman Chalisa, LLC v. BoMar Contracting, Inc.
| Decision Date | 31 March 2022 |
| Docket Number | 20AP-406 |
| Parties | HANUMAN CHALISA, LLC, Plaintiff-Appellant, v. BOMAR CONTRACTING, INC. et al., Defendants-Appellees. |
| Court | Ohio Court of Appeals |
On brief: Sanjay K. Bhatt, Columbus, for appellant. Argued: Sanjay K. Bhatt.
On brief: Billmaier & Cuneo, LLC, and Jacob M. Lowenstein, Perrysburg, for appellees. Argued: Jacob M. Lowenstein.
DECISION
{¶ 1} Plaintiff-appellant, Hanuman Chalisa, LLC appeals from a judgment of the Franklin County Court of Common Pleas, in favor of defendants-appellees, BoMar Contracting, Inc. et al. ("BoMar"). For the reasons that follow, we reverse.
{¶ 2} On November 25, 2015, the parties executed a written agreement for the construction of a hotel in Columbus, Ohio. Appellant, Hanuman Chalisa, LLC, is identified as "Owner" in the contract documents and BoMar is identified as "Contractor." Robert L. Myers and Mary K. Grant, as guarantors of BoMar, executed personal guarantees respecting BoMar's work on the construction project.
{¶ 3} The contract, drafted by Myers, incorporated an American Institute of Architects ("AIA"), form A101-2007, signed and initial by all parties, and an unsigned AIA form A201-2007, setting forth "General Conditions of Contract for Construction." The contract included a guaranteed maximum price of $5,172,701 and a "Cost Breakdown Worksheet."1 The Date of Commencement was to "be determined after a full set of documents have been received by owner's architect and when contractor records the notice of commencement * * *." According to the contract, the work was to be "[s]ubstantially complet[ed]" within 310 days of the "date of commencement." (Sept. 22, 2021 Pls. Ex. A at 2-3.)
{¶ 4} BoMar did not receive the final complete plans stamped by the City of Columbus until June 7, 2016. Accordingly, June 7, 2016, became the official date of commencement.
{¶ 5} The contract required BoMar to submit payment applications on the prescribed AIA form. There is no dispute that the first ten pay applications were submitted and paid in a timely fashion. BoMar's eleventh pay application, submitted on or about October 10, 2016, identified work completed through September 25, 2016. The eleventh pay application was not approved or paid. Appellant, however, subsequently paid BoMar $150,000, and paid an additional sum of $386,461.73 directly to BoMar's subcontractors and materialmen. (Mar. 8, 2019 Stipulations at 2.)
{¶ 6} By letter dated December 19, 2016, appellant terminated the contract effective December 27, 2016. The stated reason for the termination was alleged deficiencies and delays in BoMar's work. As of the date of termination, BoMar had been paid $2,370,677.55, for work completed on the project.
{¶ 7} On June 14, 2017, appellant filed a complaint against BoMar alleging breach of a construction contract and personal guarantee. According to appellant's complaint, BoMar breached the agreement by falling behind schedule, billing for work either not performed at all or not completed in accordance with BoMar's pay applications, permitting substandard work that was inconsistent with contract plans and specifications, requesting change orders for work within the original scope of work, and not engaging sufficient numbers of skilled workers to perform work in a proper manner. It is further alleged by appellant that BoMar failed to pay subcontractors and material suppliers, which resulted in the filing of mechanic's liens against the property.
{¶ 8} On August 17, 2017, BoMar filed an answer to the complaint and a counterclaim alleging breach of contract, unjust enrichment, and quantum meruit.
{¶ 9} The parties waived jury trial and on January 28, 2019, a magistrate conducted a two-day bench trial. One of the threshold issues at trial was whether appellant terminated the contract "for cause" or "for convenience," as those terms are used in the contract.
{¶ 10} On January 8, 2020, the magistrate issued a decision in favor of BoMar on the complaint and the counterclaim. The magistrate found that appellant terminated the contract for convenience rather than for cause. The magistrate then recommended judgment for BoMar in the total amount of $390,167.57.
{¶ 11} On April 20, 2020, appellant timely filed objections to the magistrate's decision. On July 29, 2020, the trial court issued a decision and judgment entry overruling appellant's objections to the magistrate's decision and entering judgment for BoMar on the counterclaim in the total amount of $390,167.57.
{¶ 12} Appellant timely appealed to this court from the July 29, 2020 judgment.
{¶ 13} Appellant assigns the following as trial court error:
{¶ 14} The interpretation and construction of a written contract are questions of law. Alexander v. Buckeye Pipe Line Co. , 53 Ohio St.2d 241, 374 N.E.2d 146 (1978), paragraph one of the syllabus. Accordingly, "a de novo standard of review applies to matters of law, including the interpretation and construction of written contracts."
Gatling Ohio, LLC v. Allegheny Energy Supply Co., LLC , 10th Dist., 2018-Ohio-3636, 120 N.E.3d 392, ¶ 12, citing Long Beach Assn., Inc. v. Jones , 82 Ohio St. 3d 574, 697 N.E.2d 208 (1998). "Under the de novo standard, the court of appeals gives no deference to a trial court's interpretation of legal issues." Id. , citing Holt v. State , 10th Dist. No. 10AP-214, 2010-Ohio-6529, 2010 WL 5550693, ¶ 9.
A. Assignments of Error
{¶ 15} In appellant's first assignment of error, appellant argues that the trial court erred, as a matter of law, when it found that the parties’ agreement contained a typographical error. We disagree.
{¶ 16} Pursuant to the parties’ agreement, there are two methods the owner may employ to terminate the construction contract, termination for cause, pursuant to section 14.1, and termination for convenience, pursuant to section 14.4.1 As previously noted, the trial court determined that appellant terminated the contract "for convenience" and that determination has not been challenged in this appeal. Section 14.1 provides as follows:
(Emphasis added.) (Appellant's Brief at 16-17.)
{¶ 17} Section 13.1 of the contract does not speak to damages in the event of a termination for convenience. In fact, section 13.1 does not speak directly to the issue of damages at all. Rather, section 13.1 merely provides that "[t]he Contract shall be governed by the law of the place where the Project is located." (Sept. 22, 2021 Pls. Ex. at 50.)
{¶ 18} In BoMar's proposed findings of fact and conclusions of law, BoMar argued that the parties’ agreement contained a typographical error and that the reference to section 13.1 in section 14.4.1 was mistaken. BoMar claimed that the parties intended section 14.4.1 to read as follows: "The Owner shall pay the Contractor according to the terms of Section 14.1.3." Section 14.1 reads in relevant part as follows:
(Emphasis added.) (Appellant's Brief at 16.)
{¶ 19} The magistrate agreed with BoMar and found as follows:
The Magistrate agrees with Defendants that reference to section 13.1 is a clear typographical error, as that section is inapplicable. Instead, Section 14.1 addresses how the contractor should be compensated when the contractor terminates the agreement for cause. Section 14.1.3 states, that the contractor shall be paid, "for Work executed, including reasonable overhead and profit, and direct costs incurred by reason of such termination."
(Jan. 8, 2020 Mag. Decision at 27.)
{¶ 20} The trial court agreed with the magistrate and adopted the magistrate's decision as its own. In so doing, the trial court offered the following analysis:
Admittingly, as Plaintiff describes in this objection, this is initially confusing because the corrected typographical error results in being forced to analyze relief for Defendants under a section that is entitled "Termination by the Contractor" when the Agreement was technically terminated by the Owner. But, the Court must effect the logical meaning from the Agreement, and that meaning cannot be that Defendants would not be paid for the...
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Ohio Court Reforms Construction Contract to Correct “Manifest Absurdity” in Termination for Convenience Term
...LLC v. BoMar Contr., Inc., 2022-Ohio-1111, 187 N.E.3d 1108 (Ct. App.) Hanuman Chalisa LLC (owner) contracted BoMar Contracting, Inc. (BoMar) to construct a hotel in Columbus, OH. The contract consisted of the AIA A101-2007 and AIA A201-2007. The owner later terminated BoMar, alleging defici......