Lin v. Gatehouse Constr. Co.

• Decision Date: 30 November 1992
• Docket Number: No. 61275,61275
• Citation: 84 Ohio App.3d 96,616 N.E.2d 519
• Parties: LIN et al., Appellants, v. GATEHOUSE CONSTRUCTION COMPANY et al., Appellees.
• Court: Ohio Court of Appeals

Page 96

84 Ohio App.3d 96

616 N.E.2d 519

LIN et al., Appellants, v. GATEHOUSE CONSTRUCTION COMPANY et al., Appellees.

No. 61275.

Court of Appeals of Ohio, Eighth District, Cuyahoga County.

Decided Nov. 30, 1992.

Charles Gruenspan, Shaker Heights, for appellants

John E. Shepherd; Bertsch, Millican, Winslow & Pilawa Co., L.P.A., Rocky River, and Robert J. Koeth; and William R. Giesser, North Olmsted, for appellees.

McMANAMON, Judge.

Shortly after purchasing a house in 1989, plaintiffs Thomas and Judy Lin ("the owners") discovered that the in-ground ductwork throughout the building had collapsed, causing dust to spew into the house when the furnace and air conditioning were operated. The owners sued Gatehouse Construction Company, the builder and original vendor. They also joined Airtron, Inc., the subcontractor who installed the ductwork, and Boss Concrete, the subcontractor who installed the floor, as party defendants.

This appeal challenges the dismissal of the claims against Airtron and Boss as well as certain purported procedural irregularities in regard to motions filed by the defendants. ¹

Upon review of the complaint and other pleadings, we are compelled to reverse the judgment of the trial court as to the owners' third-party beneficiary claim against the subcontractors; to reverse the grant of the builder's motion in limine; and to affirm in all other respects.

As a preliminary matter, although the trial court ostensibly granted summary judgment to the subcontractors, those matters should have been treated as motions for judgment on the pleadings pursuant to Civ.R. 12(C). We note that the court decided the matter on legal, not factual issues. When a dismissal is warranted because the complaint does not state a cause of action, and the court decides the matter on legal issues, Civ.R. 56 is inapplicable and the Moreover, a motion to dismiss filed after the pleadings have closed, as in this case, is appropriately considered a motion for judgment on the pleadings pursuant to Civ.R. 12(C). Harris v. WGN Continental Broadcasting Co. (N.D.Ill.1986), 650 F.Supp. 568.

court must rule within the framework of Civ.R. 12. Cf. Pond v. Carey Corp. (1986), 34 Ohio App.3d 109, 110-111, 517 N.E.2d 928, 929-930.

In their first assignment of error, the owners argue the court erred in granting judgment for the subcontractors. In their third assignment of error, the owners aver the court erred in requiring privity of contract between them and the subcontractors. We will address these assignments concurrently.

In considering a motion for judgment on the pleadings, the party against whom the motion is made is entitled to have all the material allegations in his complaint, with all reasonable inferences drawn, construed in his favor as true. Fischer v. Morales (1987), 38 Ohio App.3d 110, 112, 526 N.E.2d 1098, 1101. A Civ.R. 12(C) motion presents only questions of law and a determination of such is restricted to the allegations in the pleadings. Id., citing Peterson v. Teodosio (1976), 34 Ohio St.2d 161, 165-166, 63 O.O.2d 262, 264-265, 297 N.E.2d 113, 116-117.

To uphold a dismissal on the pleadings pursuant to Civ.R. 12(C), the court must find, beyond a doubt, that the plaintiff could prove no set of facts in support of his claim which would entitle him to relief. Bruce v. Riddle (C.A. 4, 1980), 631 F.2d 272; Ashland Oil, Inc. v. Arnett (N.D.Ind.1987), 656 F.Supp. 950.

The trial court dismissed the owners' claims against Airtron and Boss on three grounds: (1) the owners were incidental third-party beneficiaries and therefore had no enforceable rights under the contract; (2) there was no privity of contract with the subcontractors; and, (3) absent privity of contract, the owners could not maintain a cause of action for fraud against Airtron. We will address each argument respectively.

Count Five of the complaint alleges that the builder contracted with Airtron to supply and install a heating and air conditioning system in the house. The owners further aver that they are intended beneficiaries under this contract. Count Eight of the complaint alleges that the builder contracted with Boss to supply and install concrete in the house. It further states:

"Boss breached such contract by failing to properly provide sufficient backfill under the in-ground ductwork, and by pouring and setting the concrete slab when it knew, or should have known, that the in-ground ductwork was incomplete and non-conforming to the City Building Code."

The owners posit they are also intended beneficiaries of this contract.

"Intended" and "incidental third-party beneficiaries" have been defined as follows:

"(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 either:

"(a) the performance of the promise will satisfy an obligation of the promisee to pay money to the beneficiary; or

"(b) the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance.

"(2) An incidental beneficiary is a beneficiary who is not an intended beneficiary." Restatement of the Law 2d, Contracts (1981) 438-440, Section 302.

In Hill v. Sonitrol of Southwestern Ohio, Inc. (1988), 36 Ohio St.3d 36, 521 N.E.2d 780, the Supreme Court adopted the Sixth Circuit Court of Appeals' "intent to benefit" test in determining whether a third party is an intended or incidental beneficiary, observing:

" '* * * Under this analysis, if the promisee * * * intends that a third party should benefit from the contract, then that third party is an "intended beneficiary" who has enforceable rights under the contract. If the promisee has no intent to benefit a third party, then any third-party beneficiary to the contract is merely an "incidental beneficiary," who has no enforceable rights under the contract.

" '* * * [T]he mere conferring of some benefit on the supposed beneficiary by the performance of a particular promise in a contract [is] insufficient; rather, the performance of that promise must also satisfy a duty owed by the promisee to the beneficiary.' " Id. at 40, 521 N.E.2d at 784-785, quoting Norfolk & W. Co. v. United States (C.A. 6, 1980), 641 F.2d 1201, 1208.

Those cases which have construed whether a contract was made for the direct or incidental benefit of a third party have looked necessarily to the language of the contract to make this determination. Cf. Hill v. Sonitrol of Southwestern Ohio, Inc., supra; Laverick v. Children's Hosp. Med. Ctr. of Akron (1988), 43 Ohio App.3d 201, 540 N.E.2d 305; Hines v. Amole (1982), 4 Ohio App.3d 263, 4 OBR 480, 448 N.E.2d 473.

In the present case, we are unable to conduct such a review, since we are unable to look beyond the pleadings. Construing all allegations and reasonable inferences drawn from them in favor of the owners, we cannot conclude they are intended or incidental beneficiaries to the contracts entered into between Gatehouse and the subcontractors. Therefore, the court erred in granting the subcontractors's motions on the basis of the third-party beneficiary theory.

As to the owners' negligence claim, Count Six of the complaint avers that "the failure of Airtron to install the in-ground duct system in accordance with the City's Building Code constitutes negligence per se."

The liability of a builder-vendor of a completed structure for failure to exercise reasonable care to perform in a workmanlike manner sounds in tort, and arises ex delicto. Barton v. Ellis (1986), 34 Ohio App.3d 251, 253, 518 N.E.2d 18, 20. This common-law duty to perform in a workmanlike manner is also applicable to contractors. Id. at 252, 518 N.E.2d at 19, citing Mitchem v. Johnson (1966), 7 Ohio St.2d 66, 36 O.O.2d 52, 218 N.E.2d 594; Velotta v. Leo Petronzio Landscaping, Inc. (1982), 69 Ohio St.2d 376, 23 O.O.3d 346, 433 N.E.2d 147.

In McMillan v. Brune-Harpenau-Torbeck Builders, Inc. (1983), 8 Ohio St.3d 3, 8 OBR 73, 455 N.E.2d 1276, the Supreme Court held privity of contract not to be a necessary element of an action in negligence brought by a vendee of real property against the builder-vendor. Id. at syllabus.

In the case at bar, the owners not only made negligence claims against the builder but against the subcontractors as well. The McMillan court did not address whether privity of contract is necessary in suits against subcontractors. The owners seek to extend the McMillan holding to subcontractors, but cite no case law to support this proposition, nor do we find any.

In William H. Kelly Co. v. First Fed. S. & L. Co. (Apr. 7, 1989), Lucas App. No. L-88-102, unreported, 1989 WL 32577, the plaintiff/subcontractor sued the owner of the property, First Federal Savings & Loan, for breach of implied contract. The plaintiff/subcontractor entered into a contract with the general contractor to perform services on a building owned by First Federal. The only contracts executed were between the general contractor and First Federal and the general contractor and the subcontractor. The court adopted the opinion of the trial court, which held:

"The contract between plaintiff and the contractor, which makes reference to the property owned by defendant First Federal, does not afford plaintiff any contractual basis right vis-a-vis the defendant. Because of this lack of privity, plaintiff is precluded from obtaining declaratory relief from First Federal. While this Court has not been apprised of a contract between the contractor and defendant First Federal, such a contract would also preclude declaratory relief to anyone who does not have legal rights thereunder." Id. at 4 of the trial court's opinion, which was incorporated into the appellate opinion.

The courts of Ohio have maintained a distinction between a builder-vendor where privity of contract is not required, and a subcontractor, where privity of...