Murphy Elevator Co., Inc. v. 11320 Chester L.L.C. , 110 N.E.3d 787 ( 2018 )

[Cite as Murphy Elevator Co., Inc. v. 11320 Chester L.L.C., 2018-Ohio-1362.]
IN THE COURT OF APPEALS
FIRST APPELLATE DISTRICT OF OHIO
HAMILTON COUNTY, OHIO
THE MURPHY ELEVATOR : APPEAL NO. C-170251
COMPANY, INC., TRIAL NO. A-1603623
Plaintiff-Appellee, : O P I N I O N.
vs.
:
11320 CHESTER LLC, d.b.a. SPLASH
CINCINNATI WATERPARK, f.k.a.
COCO KEY HOTEL AND WATER :
RESORT,
Defendant-Appellant. :
Civil Appeal From: Hamilton County Court of Common Pleas
Judgment Appealed From Is: Affirmed in Part, Reversed in Part, and Cause
Remanded
Date of Judgment Entry on Appeal: April 11, 2018
Christopher R. Heekin Co. LLC and Christopher R. Heekin, for Plaintiff-Appellee,
Repper-Pagan Law, Ltd., and Christopher J. Pagan, for Defendant-Appellant.
OHIO FIRST DISTRICT COURT OF APPEALS
MYERS, Presiding Judge.
{¶1} Defendant-appellant 11320 Chester LLC (“Chester”) has appealed
from the trial court’s entry granting judgment in the amount of $13,626.14 to
plaintiff-appellee The Murphy Elevator Company (“Murphy”) on Murphy’s claim for
breach of contract.
{¶2} Because the trial court used the wrong measure of damages when
calculating the damages owed to Murphy for the remaining months under the second
year of the parties’ three-year contract, we reverse that portion of the trial court’s
judgment. The judgment of the trial court is otherwise affirmed.
Factual and Procedural Background
{¶3} Chester and Murphy entered into a contract for Murphy to perform
maintenance services on certain elevators located in a hotel and waterpark owned by
Chester. The contract commenced on August 1, 2014, and provided that it would
continue for a period of three years.
{¶4} Chester was required to pay Murphy $4,000 per quarter for the first
year of the contract. However, if Chester paid for an entire contract year up front, it
was only required to pay $15,000 for the year. With respect to the price owed by
Chester for the second and third years of the contract, the contract provided that the
price “is subject to adjustment at the end of each year in which this agreement is in
force. The following formula for adjustment will be used: not more than 3% of the
current price.”
{¶5} The contract specified the exact services covered and stated that “[n]o
work, service or liability, on the part of The Murphy Elevator Company other than
that specifically mentioned herein is included or intended as a part of the contract.”
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The contract further listed the hours and days during which services would be
performed, and it provided that Chester would incur an additional charge for covered
work performed outside of the specified days and times.
{¶6} Chester paid $15,000 up front for the first year of the contract. On
July 1, 2015, Murphy submitted an invoice for the second year of the contract in the
amount of $16,371. This amount was a three-percent increase to the price paid
during the first year of the contract, plus sales tax. During the first and second years
of the contract, Murphy submitted additional invoices to Chester for work performed
that was outside the scope of the contract and for work covered under the contract
that was performed outside of the contractually provided days and times.
{¶7} After paying for the first year of the contract up front, Chester made
only two additional payments to Murphy. It made a payment of $168.13, which
corresponded to an invoice for work that had been performed on a day or time not
covered under the contract. And it made an additional payment of $8,500 on
September 17, 2015.
{¶8} In June of 2016, Murphy sued Chester for breach of contract for
Chester’s failure to pay the submitted invoices. Murphy sought approximately
$22,126 in damages.
{¶9} During a bench trial, Murphy’s Vice President of Administration Travis
Carlisle testified regarding the unpaid invoices that Murphy had submitted to
Chester. He explained that with respect to work that Murphy had performed that
was not covered under the contract, Murphy billed Chester the rate it would charge
for a technician’s regular time, holiday time, or overtime, depending on when the
work was performed. And for work covered under the contract but performed
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outside of the contractually provided days and times, Carlisle stated that Murphy
billed Chester the difference between a technician’s regular and overtime rates, as
was provided for in the parties’ contract.
{¶10} Carlisle explained the circumstances surrounding each invoice that
had been submitted, including whether the work had been covered under the
contract. He conceded on cross-examination that Chester’s payment of $8,500
should be applied to the amount invoiced for the second year of the contract.
{¶11} Carlisle testified that Murphy had stopped performing under the
contract in March of 2016 because of Chester’s nonpayment. He additionally
explained that Murphy generally receives a 33 percent profit margin on this type of
service contract.
{¶12} Vijaya Kumar Vemulapalli testified on behalf of Chester that neither he
nor anyone else had requested that Murphy perform any services on weekends or
during premium, noncovered time. He explained that prior to signing the contract
with Murphy, he informed the company that he did not want to pay for services
performed on the weekend. Vemulapalli testified that Murphy had told him that
despite their standard contract language excluding weekends from coverage, it would
not charge him for weekend service calls.
{¶13} The trial court found that the parties’ contract covered only the days
and times specified in the contract and that Murphy’s submitted invoices were valid.
It voided the third year of the contract as a matter of equity, and it awarded Murphy
$22,126.14 in damages.
{¶14} Chester filed a motion for reconsideration. It argued that the trial
court should have credited its payment of $8,500 towards the amount billed for the
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second year of the parties’ contract, that the trial court should not have charged
Chester premium rates for services performed outside the contract, and that Chester
should not have been required to pay for the second half of the second year of the
contract.
{¶15} The trial court issued a modified judgment crediting Chester for the
$8,500 payment and awarding Murphy $13,626.14 in damages.
Billing Rates
{¶16} In its first assignment of error, Chester argues that the trial court erred
in failing to enforce the clear and unambiguous terms of the contract to services
performed outside the scope of the contract.
{¶17} Where a contract’s terms are clear and unambiguous, interpretation of
the contract is a matter of law. Ruehl v. Air/Pro, Inc., 1st Dist. Hamilton Nos. C-
040339 and C-040350, 2005-Ohio-1184, ¶ 4. In such instances, this court conducts
a de novo review. Id. But where the terms of a contract are ambiguous, “the
meaning of the words in the contract becomes a question of fact, and the trial court’s
interpretation will not be overturned on appeal absent a showing that the court
abused its discretion.” Kelly Dewatering and Constr. Co. v. R.E. Holland
Excavating, Inc., 1st Dist. Hamilton No. C-030019, 2003-Ohio-5670, ¶ 21. A
contract will be considered ambiguous where “its terms cannot be clearly determined
from a reading of the entire contract or if its terms are susceptible to more than one
reasonable interpretation.” Id.{¶18} Chester first argues that a rate of $90 per hour should govern all
charges for work performed outside of the contractually specified dates and times
and for work that was not covered under the contract. It relies on the following
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provision in the parties’ contract: “If you request that the normal and regular
examination, adjustments, and/or repairs be made at times other than the regular
working hours as set forth above, then you agree to pay the difference between our
regular and overtime billing rates.” With respect to the difference in rates, the
contract contained the following clause: “Rates for the year 2014: The difference
between Straight and Overtime will be $90.00 per man hour.”
{¶19} For covered services performed outside of the contractually specified
dates and times, Murphy initially invoiced Chester at a rate of $90 per hour. But in
two invoices in the year 2016, Murphy invoiced Chester at a rate 0f $126 per hour for
such services. Carlisle addressed this discrepancy and explained that in 2016, the
difference between regular and overtime rates had increased from $90 to $126 per
hour.
{¶20} Chester contends that the trial court erred in awarding Murphy
judgment calculated at a rate of $126 per hour on these two invoices. But the
contract language providing that Chester would owe the difference between a
technician’s regular and overtime billing rates for this type of work was clear and
unambiguous. The contract was equally clear that $90 was the difference between
such rates in the year 2014. The trial court did not err in relying on Carlisle’s
testimony and determining both that the difference in rates was $126 per hour in the
year 2016 and that Chester was required to pay these two invoices as charged.
{¶21} As to services performed that were not covered under the parties’
contract, Murphy invoiced Chester at either a technician’s regular rate, holiday rate,
or overtime rate, depending on when the services were performed. These rates
ranged from $196 per hour to $362 per hour. Chester contends that Murphy could
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OHIO FIRST DISTRICT COURT OF APPEALS
only have charged a rate of $90 per hour (described as the difference between
regular and overtime rates) for services not covered under the contract.
{¶22} The contract clearly and unambiguously provided that only certain
services were covered. And while the contract did not specify the exact hourly rate
that Chester would be required to pay for services not covered, the only reasonable
interpretation of the contract is that Chester would be charged Murphy’s standard
rate for such services. Chester’s argument that Murphy was limited to charging a
rate of $90 is meritless. The $90 amount specified in the contract was not an hourly
rate otherwise charged by Murphy. Rather, it was the difference between the rates
charged for a technician’s regular time and overtime. The trial court did not err in
relying on Carlisle’s undisputed testimony and the submitted invoices to determine
the rates that Murphy charged for a technician’s regular time, holiday time, and
overtime, and in awarding Murphy judgment for services not contractually covered
based on those rates.
{¶23} Chester last argues under this assignment of error that the trial court
erred in awarding judgment to Murphy on the invoice numbered 101382 because
Murphy had failed to establish that Chester had requested the services charged in
that invoice during a time not covered under the contract. The record belies this
argument. With respect to the invoice numbered 101382, Carlisle testified that the
service call had come in at night. He specifically stated, “[i]t certainly came in, in the
evening at some point.” The trial court did not err in relying on Carlisle’s testimony
and awarding Murphy the amount sought for overtime work in this invoice.
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{¶24} Because the trial court did not err in awarding judgment on services
that were performed outside the scope of the contract, we overrule Chester’s first
assignment of error.
Damages for Year Two of the Contract
{¶25} In its second assignment of error, Chester argues that the trial court
erred in awarding a judgment encompassing full payment under the second year of
the contract.
{¶26} Murphy invoiced Chester $16,371 for the second year of the contract.
The trial court awarded Murphy judgment for this full amount, less Chester’s $8,500
payment that Carlisle had conceded should be applied towards payment of the
second year contract price.
{¶27} Chester argues that because Murphy had stopped performing on the
contract in March of 2016, the trial court erred in awarding Murphy the full amount
invoiced for year two of the contract. It contends that Murphy is only entitled to
damages on the months that it performed services during that contractual year.
While we agree with Chester’s argument that the trial court erred in calculating the
damages owed to Murphy for its services under year two of the contract, we disagree
with Chester’s suggested measure of determining the correct amount of damages.
{¶28} An award of damages should put the injured party in the same position
it would have been in if there had been no breach. Evans Landscaping, Inc. v.
Grubb, 1st Dist. Hamilton No. C-090139, 2009-Ohio-6645, ¶ 12. Here, had there
been no breach, Murphy would have received the remainder of the amount invoiced
on year two of the contract, less its expenses. Murphy therefore was entitled to
damages in the amount of the lost profits that it would have received for the
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remainder of year two of the contract. See Andrew v. Power Marketing Direct, Inc.,
2012-Ohio-4371, 978 N.E.2d 974, ¶ 66 (10th Dist.) (lost profits may be recovered in
an action for breach of contract where “(1) profits were within the contemplation of
the parties at the time the contract was made; (2) the loss of profits was the probable
result of the breach of contract; and (3) the profits are not too remote or
speculative.”).
{¶29} Carlisle testified that Murphy generally receives a 33 percent profit
margin on a service contract. But rather than award Murphy its lost profits
encompassing 33 percent of the amount owed by Chester for the remaining months
of year two of the contract, the trial court awarded Murphy the gross revenue it
would have received for the services covered under year two of the contract. This
was in error.
{¶30} We sustain Chester’s second assignment of error, and we vacate the
portion of the trial court’s judgment awarding Murphy full payment on the amount
invoiced for year two of the contract. This cause is remanded for the trial court to
calculate the lost profits on the remaining months of the second year of the contract
and to award Murphy damages in that amount. The judgment of the trial court is
otherwise affirmed.
Judgment affirmed in part, reversed in part, and cause remanded.
MILLER and DETERS, JJ., concur.
Please note:
The court has recorded its own entry on the date of the release of this opinion.
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