Jutte Elec., Ltd. v. Ohio Facilities Constr. Comm. , 2017 Ohio 2697 ( 2017 )


Menu:
  • [Cite as Jutte Elec., Ltd. v. Ohio Facilities Constr. Comm., 
    2017-Ohio-2697
    .]
    JUTTE ELECTRIC, LTD., et al.                            Case No. 2014-00318
    Plaintiffs/Counter Defendants                   Judge Patrick M. McGrath
    Referee Dale A. Crawford
    v.
    JUDGMENT ENTRY
    OHIO FACILITIES CONSTRUCTION
    COMMISSION
    Defendant/Counter
    Plaintiff/Third-Party Plaintiff
    v.
    STEED HAMMOND PAUL, INC., etc.
    Third-Party Defendant/Fourth Party
    Plaintiff
    v.
    BERARDI PARTNERS, INC.
    Fourth-Party Defendant
    {¶1} On December 13, 2016, the referee issued a decision recommending
    judgment in favor of defendant, Ohio School Facilities Commission (OSFC).
    Additionally, as the third-party claims and counterclaims were based solely on
    indemnity, the other claims, damages, and costs were denied as not supported by the
    greater weight of the evidence. Civ.R. 53(D)(3)(b)(i) states, in part: “A party may file
    written objections to a magistrate’s decision within fourteen days of the filing of the
    decision, whether or not the court has adopted the decision during that fourteen-day
    period as permitted by Civ.R. 53(D)(4)(e)(i).” After receiving two extensions of time,
    plaintiffs, Jutte Electric, LTD. (Jutte) and Southwest Marine and General Insurance
    Case No. 2014-00318                          -2-                     JUDGMENT ENTRY
    Company (Surety), filed their objections on January 17, 2017.         All defendants filed
    responses or memorandum contra in opposition to plaintiffs’ objections on February 2,
    2017. Plaintiffs raise the following five objections:
    a. Objection 1: The referee’s determination that plaintiffs failed to
    prove that their damages resulted from the acts and omissions of
    the OSFC is erroneous.
    {¶2} Plaintiffs assert that the referee misapplied the concept of “reasonable
    certainty” as it applies to damages. The referee determined that plaintiffs “failed to
    prove by a preponderance of the evidence within a reasonable degree of certainty that
    their damages were proximately caused by the OSFC.” (Objections, p. 2). Plaintiffs
    argue that pursuant to the holding in Tri-State Asphalt Corp. v. Ohio Dept. of Transp.,
    10th Dist. Franklin No. 94API07-987, 
    1995 Ohio App. LEXIS 1554
     (April 11, 1995), it is
    the amount of damages that needs to be proved within a reasonable degree of
    certainty. Therefore, according to plaintiffs, under Ohio law a plaintiff need not prove
    within a reasonable degree of certainty that its damages were proximately caused by
    defendant.
    {¶3} Plaintiffs also contend that their expert, Timothy Calvey, testified that
    plaintiffs’ damages were caused by OSFC. Specifically, plaintiffs state that Mr. Calvey
    testified that plaintiffs’ damages resulted from: 1) design delays, late drawings, and an
    incomplete and erroneous design; 2) delayed and incomplete responses to Requests
    for Information (RFI); 3) dimensional issues; 4) design changes; 5) issues with
    schedules; and 6) late award of campus-wide bid packages for casework, technology,
    security, and fire alarm systems.
    {¶4} The court finds that the referee accurately applied the law as it pertains to
    plaintiffs’ burden of proof and the court does not agree with plaintiffs’ interpretation of
    the law. Assuming plaintiffs’ representation of the law is true, it does not change the
    Case No. 2014-00318                           -3-                       JUDGMENT ENTRY
    referee’s decision since he clearly held that plaintiffs failed to meet their burden of
    proving that OSFC proximately caused plaintiffs’ damages.
    {¶5} In determining the proximate cause of alleged damages to a prime
    contractor on a multi-million dollar construction project that spans a substantial amount
    of time, a trial court must rely heavily on expert testimony. The types of claims alleged
    by plaintiffs involve complex scheduling issues, and is therefore outside the purview of a
    lay person’s knowledge. Therefore, the testimony of an expert is particularly crucial in
    determining proximate causation.
    {¶6} The referee found that plaintiffs’ expert testimony lacked credibility. The
    credibility of witnesses and the weight attributable to their testimony are primarily
    matters for the trier of fact. State v. DeHass, 
    10 Ohio St. 2d 230
    , 
    227 N.E. 2d 212
    (1967), paragraph one of the syllabus. The court is free to believe or disbelieve, all or
    any part of each witness’s testimony. State v. Antill, 
    176 Ohio St. 61
    , 
    197 N.E. 2d 548
    (1964). While the court’s review of the referee’s decision is de novo, it gives great
    deference to the referee’s opinion regarding the credibility of trial testimony.
    {¶7} Accordingly, plaintiffs’ first objection is OVERRULED.
    b. Objection 2: The referee erred in determining that “all claims before
    August 31, 2011 were settled and should not have been included
    as damages.”
    {¶8} Plaintiffs contend that the referee erred in concluding that issues arising
    prior to the execution of the Memorandum of Understanding (MOU) were settled and
    should not have been included as damages. They argue that the August 31, 2011 MOU
    does not reference a settlement of any or all claims existing as of the date of its
    execution. In fact, plaintiffs assert that the MOU contains specific language expressly
    reserving their rights with respect to any and all claims. Paragraph six of the MOU
    states:
    Case No. 2014-00318                         -4-                      JUDGMENT ENTRY
    In the event that the Obligee [the OFSC] fails to perform the obligation set
    out in this agreement or in the Contract, the Principal [Jutte] and the
    Surety [Southwest] by execution of this Agreement do not waive or in any
    way forfeit or relinquish any legal rights they may have to assert claims
    against the Obligee under the Contract or Bond or waive any defenses
    which may have which are inconsistent with the terms of this Agreement.
    {¶9} Upon review, the court finds the referee’s analysis of the effect of the MOU
    on plaintiffs’ claims to be an accurate interpretation. By executing the MOU, plaintiffs
    agreed to remedy several workmanship and scheduling issues. By agreeing to resolve
    these issues, thereby admitting that there were issues that needed to be addressed and
    remedied by plaintiffs, and not by OSFC or a supplementary contractor, plaintiffs
    effectively waived the right for claims related to that unresolved work. The referee did
    not state that plaintiffs agreed to waive their rights to pursue claims. If he had done so,
    the claims would not have survived summary judgment and proceed to a full trial on the
    merits. Specifically, the referee stated that all of the claims before August 31, 2011
    should not have been included in plaintiffs’ damages. Plaintiffs had every right to bring
    a claim for something that occurred before August 31, 2011, but not as it pertains to the
    specific enumerated items in the MOU.             Considering this was very early in the
    construction of the project and buildings were not yet out of the ground, the court is
    dealing with a relatively small amount of plaintiffs’ alleged damages; damages which
    were not proved to be caused by OSFC.
    {¶10} Accordingly, plaintiffs’ second objection is OVERRULED.
    c. Objection 3: The referee incorrectly analyzed the bases for
    Southwest’s rights to assert claims against the OSFC.
    {¶11} Upon thorough review, the court finds that the referee’s analysis of the
    Surety’s rights is consistent with the law. Even if the referee was mistaken, his opinion
    on pages 18-22 regarding the relationship between the Surety, OSFC, and Jutte is
    Case No. 2014-00318                         -5-                       JUDGMENT ENTRY
    essentially dicta. In no way does the referee’s analysis of the Surety’s rights affect the
    outcome of this case.
    {¶12} Accordingly, plaintiffs’ third objection is OVERRULED.
    d. Objection 4: The referee incorrectly analyzed the sufficiency and
    legal ramifications of Southwest’s investigation and decision
    regarding how to complete Jutte’s work on the project.
    {¶13} Plaintiffs contend that the referee was highly critical of the investigation
    conducted by the Surety, through Ray Zetts and Anne Meyers, without any reference to
    legal authority which supports the criticism. They also assert that the referee based his
    criticism on various factors that were unknown to the Surety at the time it made its
    decision and other factors that the Surety justifiably deemed insignificant or irrelevant to
    completing a thorough investigation.
    {¶14} The court thoroughly reviewed the evidence, trial testimony, and
    depositions and finds that the referee’s recommendation is strongly supported by the
    evidence. The Surety believed that it could “beat the spread,” a position it later learned
    was unrealistic. Even if the Surety completed the most thorough investigation possible,
    and made a sound business decision based on all of the information available to it at
    the time, the end result was a substantial loss to the Surety. The referee was not
    inclined to pass that loss along to OSFC, and the court agrees.
    {¶15} Accordingly, plaintiffs’ fourth objection is OVERRULED.
    e. Objection 5: The referee erred in determining that plaintiffs’ claims
    against the OSFC were barred by Article 8 of the General
    Conditions.
    {¶16} Plaintiffs assert that Article 8 does not apply to plaintiffs’ supplemental
    claim and delay/impact claims, and even if Article 8 does apply to plaintiffs’ claims, its
    application in this case is void and unenforceable as against public policy pursuant to
    R.C. 4113.62. If Article 8 is not void and unenforceable here, plaintiffs’ argue that
    Case No. 2014-00318                          -6-                       JUDGMENT ENTRY
    OSFC waived its right to insist upon strict compliance with Article 8 and OSFC cannot
    insist on strict compliance when it was the first to breach the contract. Finally, plaintiffs’
    claim that they satisfactorily and substantially complied with the provisions of Article 8.
    {¶17} The referee determined that on December 30, 2011, Anne Meyers sent
    what appeared to be a first certified Article 8 claim that took issue with the
    supplementation of Jutte’s work by Accurate Electric. The referee found that these
    issues relate to matters before the MOU, and, as discussed in Objection 2 above, were
    effectively settled.   Next, the referee determined that on December 12, 2012, the
    second Article 8 claim was filed on behalf of the Surety and Jutte, and it was clearly late
    as it was filed approximately four months after the project was substantially completed.
    {¶18} Upon review, the court finds that the issues discussed in the December 30,
    2011 letter related to matters before the MOU, and for reasons discussed in Objection 2
    above, the court agrees with the referee. The court also agrees that the December 12,
    2012 Article 8 claim was untimely.
    {¶19} Accordingly, plaintiffs’ fifth objection is OVERRULED.
    {¶20} Upon review of the record, the referee’s decision, plaintiffs’ objections, and
    defendants’ responses, the court finds that the referee properly determined the factual
    issues and appropriately applied the law.             Therefore, plaintiffs’ objections are
    OVERRULED and the court adopts the referee’s decision and recommendation as its
    own, including findings of fact and conclusions of law contained therein. Judgment is
    rendered in favor of defendant. Court costs are assessed against plaintiffs. The clerk
    shall serve upon all parties notice of this judgment and its date of entry upon the journal.
    PATRICK M. MCGRATH
    Judge
    Case No. 2014-00318                -7-                    JUDGMENT ENTRY
    cc:
    Bradley J. Barmen                   David M. Rickert
    1375 East 9th Street, 16th Floor    110 North Main Street, Suite 1000
    Cleveland, Ohio 44114               Dayton, Ohio 45402
    Craig D. Barclay                    Debra Jean Horn
    David A. Beals                      Ronald P. Friedberg
    William C. Becker                   28601 Chagrin Boulevard, Suite 500
    Assistant Attorneys General         Cleveland, Ohio 44122
    150 East Gay Street, 18th Floor
    Columbus, Ohio 43215-3130
    Filed April 3, 2017
    Sent to S.C. Reporter 5/5/17
    

Document Info

Docket Number: 2014-00318

Citation Numbers: 2017 Ohio 2697

Judges: McGrath

Filed Date: 4/3/2017

Precedential Status: Precedential

Modified Date: 5/5/2017