Laurent v. Flood Data Serv., Inc.

• Decision Date: 31 October 2001
• Docket Number: No. 01CA007842.,01CA007842.
• Citation: 766 NE 2d 221,146 Ohio App.3d 392
• Parties: LAURENT et al., Appellants, v. FLOOD DATA SERVICES, INC. et al., Appellees.
• Court: Ohio Court of Appeals

146 Ohio App.3d 392

766 NE 2d 221

LAURENT et al., Appellants, v. FLOOD DATA SERVICES, INC. et al., Appellees.

No. 01CA007842.

Court of Appeals of Ohio, Ninth District, Lorain County.

Decided October 31, 2001.

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Thomas Cabral and Michael A. Ross, for appellants.

Clair E. Dickinson, for appellee Flood Data Services, Inc.

Robert A. Wood and Maria Boccardi, for appellee Midland First National Lender Service.

SLABY, Judge.

Appellants, Neil and Donna Laurent, appeal from the judgment of the Lorain County Court of Common Pleas granting the motions for summary judgment of appellees, Midland First American National Lender Service ("Midland") and First American Real Estate Solutions ("First American"). We affirm.

On February 22, 2000, appellants filed an amended complaint against appellees asserting negligence, negligent misrepresentation, negligent hiring, intended third-party beneficiary status, breach of contract, unjust enrichment, breach of the duty of care, and breach of the covenant of good faith and fair dealing. Thereafter, each appellee filed a motion for summary judgment. The trial court granted both motions for summary judgment. Appellants timely appealed raising six assignments of error, which have been rearranged for ease of review.

ASSIGNMENT OF ERROR II

"In the * * * journal entry, the trial court erred in granting summary judgment in favor of appellees on the issue of whether appellants were a thirdparty beneficiary of an oral contract between appellees."

ASSIGNMENT OF ERROR III

"In the * * * journal entry, the trial court erred in granting summary judgment in favor of appellees on the issue of whether appellees breached a contract with appellants."

ASSIGNMENT OF ERROR IV

"In the * * * journal entry, the trial court erred in granting summary judgment in favor of appellees on the issue of whether appellees were unjustly enriched."

ASSIGNMENT OF ERROR V

"In the * * * journal entry, the trial court erred in granting summary judgment in favor of appellees on the issue of whether appellees breached a covenant of good faith and fair dealing."

ASSIGNMENT OF ERROR I

"In the * * * journal entry, the trial court erred in granting summary judgment in favor of appellees on the issue of whether appellees were negligent."

ASSIGNMENT OF ERROR VI

"In the * * * journal entry, the trial court erred in granting summary judgment in favor of appellee on the issue of whether First American negligently misrepresented that appellants' home was not located within a special flood hazard area."

In these assignments of error, appellants aver that genuine issues of material fact exist to substantiate their claims of intended third-party beneficiary status, breach of contract, unjust enrichment, breach of the covenant of good faith and fair dealing, negligence, and negligent misrepresentation, and, consequently, the trial court erred in granting appellees' motions for summary judgment. We disagree.

Pursuant to Civ.R. 56(C), summary judgment is appropriate when (1) no genuine issue as to any material fact remains to be litigated; (2) the moving party is entitled to judgment as a matter of law; and (3) it appears from the evidence that reasonable minds can come to but one conclusion, and viewing such evidence most strongly in favor of the party against whom the motion for summary judgment is made, that conclusion is adverse to that party. Temple v. Wean United, Inc. (1977), 50 Ohio St.2d 317, 327, 4 O.O.3d 466, 364 N.E.2d 267. To succeed on a summary judgment motion, the movant "bears the initial burden of demonstrating that there are no genuine issues of material fact concerning an essential element of the opponent's case." Dresher v. Burt (1996), 75 Ohio St.3d 280, 292, 662 N.E.2d 264. If the movant satisfies this burden, the nonmoving party "must set forth specific facts showing that there is a genuine issue for trial." Id. at 293, 662 N.E.2d 264, quoting Civ.R. 56(E). An appellate court reviews a lower court's entry of summary judgment applying the de novo standard, thereby employing the same standard used by the trial court. See Klingshirn v. Westview Concrete Corp. (1996), 113 Ohio App.3d 178, 180, 680 N.E.2d 691. We will address, in turn, each of appellants' claims.

1. Third-party beneficiary

Only a party to a contract and a third-party beneficiary may assert a claim on a contract. Grant Thornton v. Windsor House, Inc. (1991), 57 Ohio St.3d 158, 161, 566 N.E.2d 1220. Ohio has adopted Section 302 of the Restatement of the Law 2d, Contracts (1981) 439-440. Hill v. Sonitrol of Southwestern Ohio, Inc. (1988), 36 Ohio St.3d 36, 40, 521 N.E.2d 780. The Restatement states:

"`(1) Unless otherwise agreed between promisor and promisee, a beneficiary of a promise is an intended beneficiary if recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties and * * *

"`* * *

"`(b) the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance.'" Hill, 36 Ohio St.3d at 40, 521 N.E.2d 780, quoting Restatement of the Law 2d, Contracts (1981) 439-440, Section 302.

There must be evidence to prove that the promisee intended to directly benefit the third party, which results in the promisee's assuming a duty toward the third party. Stoll v. Hostetler (Jan. 18, 1995), Wayne App. No. 2891, unreported, at 4, 1995 WL 19163, citing TRINOVA Corp. v. Pilkington Bros., P.L.C. (1994), 70 Ohio St.3d 271, 278, 638 N.E.2d 572. We note that "performance of a contract will often benefit a third person, but unless the third person is an intended beneficiary * * * no duty to him is created." Hill, 36 Ohio St.3d at 40, 521 N.E.2d 780. Accordingly, a third party who merely receives a benefit from a contract, without more, is only an incidental beneficiary and may not sue under the contract. Visintine & Co. v. New York, Chicago & St. Louis Rd. Co. (1959), 169 Ohio St. 505, 507, 9 O.O.2d 4, 160 N.E.2d 311; Commonwealth Propane Co. v. Petrosol Internatl., Inc. (C.A.6, 1987), 818 F.2d 522, 531-532.

In the present case, appellants contend that they are third-party beneficiaries on two contracts: the contract between Republic Savings Bank ("Republic") and Midland, and the contract between Midland and First American. The record indicates that Republic ordered a flood determination from Midland as required by the Federal Emergency Management Agency. Republic did not order this flood determination on behalf of appellants or for their benefit; rather, Republic ordered it to comply with various federal Acts. Also, George Goley, Vice President and Manager of Midland, stated that "there was no intent on the part of Midland to provide appellants with any benefit by ordering a flood determination for Republic." There is no evidence to support appellants' contention that they were third-party beneficiaries to the aforementioned contracts as seen through the alleged promisees' lack of intent to benefit appellants. Accordingly, appellants' second assignment of error is overruled.

2. Breach of contract

"A breach of contract occurs when a party demonstrates the existence of a binding contract or agreement; the non-breaching party performed its contractual obligations; the other party failed to fulfill its contractual obligations without legal excuse; and the non-breaching party suffered damages as a result of the breach." Garofalo v. Chicago Title Ins. Co. (1995), 104 Ohio App.3d 95, 108, 661 N.E.2d 218.

Appellants' argue that they entered into a contract with Republic and pursuant to that contract, Republic was required to obtain a flood determination. Furthermore, appellants argue that Republic delegated its duty to obtain a flood determination to Midland, who subsequently delegated this duty to First American. First American originally determined that appellants' home did not lie in a special flood hazard zone; however, their determination was faulty. As a result of the incorrect flood determination, appellants contend that Midland and First American, as delegatees, breached the contract.

Despite appellants' argument, the record indicates that appellants did not request Republic to obtain a flood determination. Specifically, Mrs. Laurent was deposed on this issue:

"Q: Did you instruct Republic to get you a flood determination?

"A: Not that I'm aware of I didn't."

Additionally, appellants did not even consider the existence of the flood zone.

"Q: In fact, when you made the offer on the house, there wasn't any discussion of flood zone, was there?

"A: No.

"Q: Because you just hadn't thought about it, right?

"A: I had no conversation about it."

Last, Timothy Atkinson, Senior Vice President/Loan Officer with Republic, stated, "Republic * * * ordered a flood determination because it was required to do so by the Federal Emergency Management Agency pursuant to federal Acts." Moreover, Atkinson maintained that at no point did Republic ever agree to act as appellants' agent when obtaining the flood determination, nor did it hold itself out as appellants' agent.

Since appellants did not request Republic to obtain a flood determination on their behalf, a contractual relationship regarding a flood determination between appellants and Republic did not exist; therefore, Republic did not have a duty to delegate to Midland. It follows that Midland also did not have a duty to delegate to First American. Appellants did not have a contractual relationship with appellees relating to the flood determination and, thus, no breach of contract claim. Appellants' third assignment of error is overruled.

3. Unjust enrichment

To support a claim of unjust enrichment, a plaintiff must demonstrate that (1) he conferred a benefit upon the defendant, (2) the defendant had knowledge of the benefit, and (3) circumstances render it unjust or inequitable to permit the defendant to retain the benefit without...