R & K. Contractors, Inc. v. Lone Star Construction Co.

• Court: Ohio Court of Appeals
• Writing for the Court: FORD, P.J.
• Decision Date: 08 April 1994
• Docket Number: 94-LW-5395,92-T-4809
• Citation: R & K. Contractors, Inc. v. Lone Star Construction Co., 92-T-4809, 94-LW-5395 (Ohio App. Apr 08, 1994)
• Parties: R & K CONTRACTORS, INC., et al., Plaintiff-Appellant v. LONE STAR CONSTRUCTION COMPANY, Defendant-Appellant GIORDANO CONSTRUCTION COMPANY, et al., Defendants THE CITY OF WARREN, OHIO, Defendant-Appellee CASE

R & K CONTRACTORS, INC., et al Plaintiff-Appellant v. LONE STAR CONSTRUCTION COMPANY Defendant-AppellantGIORDANO CONSTRUCTION COMPANY, et al Defendants

No. 92-T-4809.

94-LW-5395 (11th)

Court of Appeals of Ohio, Eleventh District, Trumbull County.

April 8, 1994

Civil Appeal from the Court of Common Pleas Case No. 89 CV 1906.

ATTY DEAN E. NIELSEN, 500 Second National Tower, Warren, OH 44481 (For Plaintiff-Appellant).

ATTY. JOHN P. LUTSECK, 231 West Main Street, Cortland, OH 44410 (For Defendant-Appellant).

ATTY. GREGORY HICKS, LAW DIRECTOR, ATTY. JAMES E. SANDERS, Assistant Law Director, 391 Mahoning Avenue, Warren, OH 44483 (For Defendant-Appellee).

HON. DONALD R. FORD, P.J., HON. JUDITH A. CHRISTLEY, J., HON. JOSEPH E. MAHONEY, J.

OPINION

FORD P.J.

This is an appeal from an order of the Trumbull County Court of Common Pleas which granted summary judgment in favor of appellee, the City of Warren ("City") as against appellants, R & K Contractors, Inc. ("R & K"), and Lone Star Construction Company ("Lone Star"). Appellants separately filed timely notices of appeal from the trial court's judgment.^[1]

On June 7, 1978, The City of Warren entered into a contract with Lone Star for construction of a federally funded public works facility called Red Run Combined Sewer Separation Project. R & K was engaged by Lone Star as a subcontractor under a separate contract. During the construction of the project, various differences arose between the parties regarding claims for extra costs.

In March 1986, Lone Star and the City of Warren resolved their differences via a settlement and indemnification agreement. This agreement contained a provision under which both parties released the other from any future claims resulting from the project. Also, Lone Star agreed to hold the City of Warren harmless for any claims against it by third parties in exchange for the City's agreement to file and pursue in good faith a grant application for federal funds with the Ohio Environmental Protection Agency ("EPA") to cover Lone Star's costs for changed site conditions and a subcontract claim by R & K.

Shortly thereafter, R & K filed a complaint against Lone Star and the City of Warren in Case No. 86 CV 439 in Trumbull County for monies owed on the project. In December 1986, all three parties signed an "Agreed Judgment Entry of Settlement and Dismissal" which was predicated on the settlement and indemnification agreement between Lone Star and the City of Warren. Each of the three parties agreed that the action would be dismissed with prejudice, and each had full knowledge of the settlement and indemnification agreement between Lone Star and the City of Warren.

Pursuant to the settlement agreement between Lone Star and the City, the grant application was processed through the appropriate channels. However, the City's request was denied by the EPA because the City improperly framed its request. Apparently, the settlement agreement between Lone Star and the City did not indicate that the City had already approved payment to Lone Star for the amount owed ($1,473,353.81). Therefore, the EPA did not have jurisdiction to rule on the request since this omission effectively placed the burden on the EPA to decide the amount owed. The City of Warren initiated two unsuccessful appeals, with the result that the City received no federal grant funds for disbursement to Lone Star.

Consequently, in December 1989, after the EPA's denial of the City's application, Lone Star filed a complaint against the City of Warren in Cuyahoga County, Case No. 181712 to rescind the 1986 settlement and indemnification agreement between them. In August 1991, Lone Star filed a motion for summary judgment. The City of Warren countered in September 1991 with a memorandum in opposition and a motion for summary judgment.

In December 1989, R & K filed a complaint against Lone Star and the City of Warren in Trumbull County Case No. 89 CV 1906, which was eventually voluntarily dismissed. In 1991, R & K refiled the case in Cuyahoga County, where it was renumbered as Case No. 215919 and consolidated with Case No. 181712 (Lone Star v. Warren) in February 1992 based on the mutual identity of the parties and facts.

Subsequently, in July 1992, the entire case was transferred from Cuyahoga County to Trumbull County on the grounds of improper venue where it proceeded under the Case No. 89 CV 1906. R & K's complaint consisted of a contract claim against Lone Star and a claim for unjust enrichment against the City.

On February 6, 1992, Lone Star filed a supplemental motion for summary judgment against the City of Warren. On February 27, 1992, R & K joined Lone Star in this motion. August 10, 1992, R & K and Lone Star jointly filed memoranda in support of their motion. However, on August 12, 1992, shortly after the case was transferred from Cuyahoga County, Judge Mitchell Shaker of the Trumbull County Court of Common Pleas overruled all pending motions.^[2] On October 21, 1992, the City of Warren filed its motion for summary judgment. On October 26, 1992, Lone Star filed a supplemental motion for summary judgment, presumably because its previous motions had been overruled.

On November 12, 1993, the court granted summary judgment in favor of the City of Warren as against Lone Star on the basis of accord and satisfaction. As against both R & K and Lone Star, the court also granted summary judgment in favor of the City of Warren on the basis of res judicata, concluding that the parties and claims were identical to those which were before the court in Case No. 86CV439 where the parties signed an agreed judgment entry of settlement and dismissal. R & K assigns the following as error:

"The trial court erred in finding the doctrine of res judicata applicable.

Lone Star assigns as error that:

"1. The trial court erred in granting the City of Warren's motion for summary judgment.

"2. The trial court erred in failing to grant LSG's motion for summary judgment."

Summary judgment may be properly granted where (1) no genuine issue as to any material fact exists; (2) it appears from the evidence that reasonable minds can come to but one conclusion; and (3) viewing such evidence most strongly in favor of the party against whom the motion is made, that conclusion is adverse to that party. Civ.R. 56(C). Further, a motion for summary judgment forces the nonmoving party to produce evidence on any issue for which the party bears the burden of production at trial. Wing v. Anchor Media, Ltd. of Texas (1991), 59 Ohio St.3d 108, 111.

We turn first to the court's granting of summary judgment as against Lone Star on the grounds of accord and satisfaction based upon the March 1986 settlement agreement executed between Lone Star and the City. Lone Star's appellate brief merely sets forth a lengthy recitation of the law of summary judgment and indicates that because it was not paid subsequent to the EPA's denial of the grant amendment, that summary judgment should not have been granted. However, its claim for rescission appears to be based upon both mutual mistake and misrepresentation: that either (1) both parties made a mutual mistake of fact in believing that the language of the grant amendment was sufficient to indicate that the City had approved payment of $1,474,353.81 to Lone Star; or, (2) that it relied to its detriment upon the oral representations of the City that the settlement agreement was valid and that its form had been approved by the EPA.

Generally, agreements of compromise and settlement are highly favored in law. State ex. rel. Wright v. Weyandt (1977), 50 Ohio St.2d 194, syllabus. Also, courts will not interfere with such agreements in the absence of fraud or mutual mistake even though the agreement may entail some consequences which were not contemplated or desired. White v. Brocaw (1863), 14 Ohio St. 339, paragraph four of the syllabus. One seeking relief from an agreement of compromise and settlement on the ground of false representations must show that there were false representations of material fact upon which he had a right to and did rely, and, in doing so, was misled to his detriment. Aetna Ins. Co. v. Reed (1877), 33 Ohio St. 283, paragraph one of the syllabus.

Here, the record reflects that the parties specifically contemplated the undesirable possibility that the grant amendment request would be denied. The settlement agreement expressly provides in paragraph ten that:

"*** the parties recognize the possibility that: a) the Application may not be approved; or b) even with such approval, additional federal funding from or through the USEPA may not be forthcoming; or c) federal funding, if approved and received from or through the USEPA, may be less than the amount requested ***. *** The parties further agree that the absence, for any reason, of

...