Illum. Co. v. Burns , 2014 Ohio 502 ( 2014 )

[Cite as Illum. Co. v. Burns, 2014-Ohio-502.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 100235
ILLUMINATING COMPANY
PLAINTIFF-APPELLEE
vs.
CLIFFORD BURNS
DEFENDANT-APPELLANT
JUDGMENT:
AFFIRMED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-778416
BEFORE: E.T. Gallagher, J., Celebrezze, P.J., and Rocco, J.
RELEASED AND JOURNALIZED: February 13, 2014
ATTORNEY FOR APPELLANT
Mary Malone Rayer
Law Office of William T. Neubert
1422 Euclid Avenue
Hanna Building, Suite 1504
Cleveland, Ohio 44115
ATTORNEY FOR APPELLEE
Amanda Rasbach Yurechko
Weltman, Weinberg & Reis Co.
323 West Lakeside Avenue
Suite 200
Cleveland, Ohio 44113
EILEEN T. GALLAGHER, J.:
{¶1} This cause came to be heard on the accelerated calendar pursuant to App.R.
11.1 and Loc.R. 11.1.
{¶2} Defendant-appellant, Clifford Burns (“Burns”), appeals a judgment rendered
in favor of plaintiff-appellee, the Illuminating Company, in the amount of $13,584.73, plus
statutory interest. We find no merit to the appeal and affirm.
{¶3} In January 2011, Burns was involved in a single car accident and hit a utility
pole. The Illuminating Company filed suit against Burns to recover the cost of repairing
the pole. Burns admitted that he hit the pole and damaged it but asserted that the damages
alleged in the complaint were excessive. The Illuminating Company filed a motion for
summary judgment, which was supported by an affidavit and two deposition transcripts.
The court granted the motion for summary judgment and stated, in relevant part:
Defendant admits liability, and the only issue raised was the calculation of
damages. While plaintiff attached evidence supporting the amount
demanded, defendant provided no evidence creating an issue of material fact
as to the accuracy and reasonability of the amount invoiced by plaintiff.
Burns now appeals the order granting summary judgment.
{¶4} We review an appeal from summary judgment de novo. Grafton v. Ohio
Edison Co., 77 Ohio St.3d 102, 105, 671 N.E.2d 241 (1996). The party moving for
summary judgment bears the burden of demonstrating the absence of a genuine issue of
material fact as to the essential element of the case with evidence of the type listed in
Civ.R. 56(C). Dresher v. Burt, 75 Ohio St.3d 280, 292, 662 N.E.2d 264 (1996). Once
the moving party demonstrates entitlement to summary judgment, the burden shifts to the
nonmoving party to produce evidence related to any issue on which the party bears the
burden of production at trial. Civ.R. 56(E). Summary judgment is appropriate when,
after construing the evidence in a light most favorable to the party against whom the
motion is made, reasonable minds can only reach a conclusion that is adverse to the
nonmoving party. Zivich v. Mentor Soccer Club, 82 Ohio St.3d 367, 369-370, 696 N.E.2d
201 (1998).
{¶5} In his sole assignment of error, Burns argues the Illuminating Company failed
to prove damages to a reasonable degree of certainty. He contends the sworn testimony
provided in support of summary judgment was insufficient because it failed to provide a
detailed breakdown of each and every cost added to the calculation.
{¶6} The purpose of a damage award is to make the injured party whole.
Columbus Finance, Inc. v. Howard, 42 Ohio St.2d 178, 184, 327 N.E.2d 654 (1975).
Damages include both direct and indirect costs. Direct costs are the expenses incurred as
a result of the actual project and include materials, labor, mileage, and equipment costs.
Ohio Edison Co. v. Peebles, 7th Dist. Mahoning No. 93 C.A. 92, 1994 Ohio App. LEXIS
3478 (Aug. 1, 1994). Indirect costs are the expenses involved in running a business and
are not attributable to any one project. Complete Gen. Constr. Co. v. Ohio DOT, 94 Ohio
St.3d 54, 57, 2002-Ohio-59, 760 N.E.2d 364. Indirect costs may include salaries of
executive or administrative personnel, general insurance, rent, utilities, telephone,
depreciation, professional fees, legal and accounting expenses, advertising, and interest on
loans. Id. Indirect costs of repairs “are a proper element of damage for which recovery
may be had, where such costs can be proved with reasonable certainty and have been
correctly made in accordance with sound accounting principles.” Warren Tel. Co. v.
Hakala, 105 Ohio App. 459, 460, 152 N.E.2d 718 (11th Dist.1957), syllabus. See also
Ohio Bell Tel. Co v. Vaughn Bldg. Co., 10th Dist. Franklin No. 83 AP-1093, 1984 Ohio
App. LEXIS 11645 (Nov. 20, 1984).
{¶7} Burns argues the Illuminating Company failed to establish proof of any
damages. In support of his argument, he cites three cases in which the courts found the
utilities failed to prove indirect costs with reasonable certainty. For example, in Toledo
Edison Co. v. Czajka, 6th Dist. Lucas No. L-02-1393, 2003-Ohio-3684, a “witness
testified that the annual study from which the indirect costs were calculated takes into
consideration other construction projects, not just pole repairs.” Id. at ¶ 7. The witness
testified that the amounts attributed to engineering and supervision salaries and expenses
assumed a direct relationship with labor costs but “the witness did not know whether any
study had been done to establish the truth of this assumption.” Thus, the evidence in
Czajka was not sufficient to prove damages with reasonable certainty.
{¶8} In Toledo Edison Co. v. Teply, 6th Dist. Lucas No. E-02-022,
2003-Ohio-1417, the court found insufficient evidence of indirect costs because the senior
accountant for First Energy testified that while some engineering is necessary on every
pole replacement, “he had no evidence concerning how much actual supervision or
engineering was required for this pole replacement.” Id. at ¶ 33. In Ohio Edison Co. v.
Beavers, 11th Dist. Trumbull No. 96-T-5568, 1997 Ohio App. LEXIS 2830 (June 27,
1997), the utility’s accountant “could not state what, if any, engineering had been involved
* * * or whether any supervisors had been on that particular job.” Id. at *15. Therefore,
the utilities in these cases failed to establish indirect costs with reasonable certainty.
Teply at ¶ 36; Beavers at *5.
{¶9} Here, the Illuminating Company submitted an affidavit of an authorized
representative who authenticated the business records relative to its claims. Of these
records, a claim invoice indicates the equipment cost to repair the pole totaled $1,457.03.
The materials cost $3,493.01. Labor costs totaled $8,634.69. A claims work summary,
known as a “Crews Report,” identifies the dates and hours of each employee who worked
on the repairs. It also identifies the dates and times certain equipment was used and the
cost per hour.
{¶10} Tim Wojtowicz (“Wojtowicz”), an accountant employed by the Illuminating
Company, and Phillip Smith (“Smith”), the supervisor who worked on the repairs at issue
in this case, substantiated the repair costs listed in the Illuminating Company’s invoice and
Crews Report. Smith testified about the repairs that were performed and explained how
the Crews Report accurately reflects the materials used, the hours employees worked, and
the hours equipment was used. He further testified that the salaries and wages are set by
union contract for each job type.
{¶11} Wojtowicz also verified that the claims invoice accurately reflects the labor
hours, vehicle hours, and materials expended on the job. He explained that each material
cost reflected in the invoice is the actual cost “out of the warehouse” as entered into the
computer system at that point in time, including depreciation. With respect to direct labor
costs, Wojtowicz explained that an “activity price” is determined for each employee based
on the employee’s classification, i.e. hourly wage, plus benefits (medical, vision, vacation)
per hour. Transportation charges are based on the type of vehicle and the number of
hours the vehicle used.
{¶12} With respect to indirect costs, Wojtowicz explained that there is a 14.98
percent charge added to all invoices, whether damage claims or construction programs.
The 14.98 percent represents the cost of “support functions,” which include human
resources, accounting, legal, and information technology. The accounting management
department determines what cost for these “support functions” should be added to the cost
of doing business, i.e., overhead costs. According to Wojtowicz, because Burns’s
accident occurred in 2011, the 14.98 percent is based on 2010 data. During his
deposition, Wojtowicz explained:
[I]t would be based upon historical information for 2010. And that
historical information is the books of First Energy and those books are
according to GAAP [generally accepted accounting principles], they are also
maintained according to the Federal Energy Regulatory Commission, the
Public Utility Commission of Ohio.
(Wojtowicz depo. at page 10.)
{¶13} Wojtowicz further explained that he uses actual numbers as opposed to
estimates and that they reflect actual costs; there are no profits built into the calculations.
Finally, Wotjowicz testified that the cost data used to determine repair costs “is audited by
* * * internal and external auditors,” and that the data is reviewed annually. (Wotjowicz
depo. at page 30.) We find this evidence is sufficient to demonstrate that the total repair
costs listed in the Illuminating Company’s invoice were determined to a reasonable degree
of certainty.
{¶14} Accordingly, the sole assignment of error is overruled.
{¶15} Judgment affirmed.
It is ordered that appellee recover from appellant costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to the common pleas court to carry this
judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the
Rules of Appellate Procedure.
EILEEN T. GALLAGHER, JUDGE
FRANK D. CELEBREZZE, JR., P.J., and
KENNETH A. ROCCO, J., CONCUR