Garber v. STS Concrete Co., L.L.C. , 2013 Ohio 2700 ( 2013 )

[Cite as Garber v. STS Concrete Co., L.L.C., 2013-Ohio-2700.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 99139
PATRICK GARBER
PLAINTIFF-APPELLEE
vs.
STS CONCRETE CO., L.L.C., ET AL.
DEFENDANTS-APPELLANTS
JUDGMENT:
AFFIRMED IN PART,
REVERSED IN PART
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-694321
BEFORE: Celebrezze, P.J., Keough, J., and E.A. Gallagher, J.
RELEASED AND JOURNALIZED: June 27, 2013
ATTORNEY FOR APPELLANTS
Brian M. Fallon
P.O. Box 26267
Fairview Park, Ohio 44126
ATTORNEY FOR APPELLEE
Anthony J. Amato
6325 York Road
Suite 305
York Executive II Building
Parma Heights, Ohio 44130
FRANK D. CELEBREZZE, JR., P.J.:
{¶1} Appellants, STS Concrete Co., L.L.C. (“STS”) and Frank Suglio, appeal a
judgment in favor of appellee, Patrick Garber, for $18,600 and $5,524.24 in attorney fees.
Appellants claim the trial court erred in awarding Garber treble damages, attorney fees,
and holding Suglio individually liable. After a thorough review of the record and law, we
affirm in part and reverse in part.
I. Factual and Procedural History
{¶2} STS is a contracting company owned by Suglio that does concrete and
masonry work. On June 8, 2008, STS was renovating a driveway in Garber’s
neighborhood. Garber’s neighbor had recommended STS to Garber, and he stopped by
the job site and spoke to Suglio about possibly redoing a driveway, sidewalk, and steps.
Suglio met with Garber at Garber’s home and provided a quote of $6,200. Garber
entered into a contract with STS for those repairs on June 21, 2008. The contract did not
provide Garber with a notice of his right to cancel within three days. STS began work on
Garber’s home several days later. It removed the concrete drive and sidewalk and poured
a new driveway, sidewalk, and steps. The work was approved by the city inspector, and
STS was paid in full on July 9, 2008.
{¶3} Garber asserts that the day after the work was complete, the driveway cracked
in several places. He further alleged that he contacted Suglio and complained.
According to Garber, Suglio agreed to fix the cracked sections of the driveway, but never
did. Approximately ten months after the work was completed, Garber sent STS notice
that he was rescinding the contract and requested the return of $6,500 paid by him. 1
Suglio refused to return the money, and Garber then filed suit.
{¶4} Garber’s suit against STS and Suglio individually included claims for breach
of contract, negligence, and violations of the Ohio Consumer Sales Practices Act
(“CSPA”) and the Ohio Home Solicitation Sales Act (“HSSA”). STS and Suglio
answered and discovery was conducted. On December 2, 2009, at the close of discovery
and depositions, Garber moved for partial summary judgment on the CSPA and HSSA
claims. Garber’s motion asked for judgment on the CSPA/HSSA violations and to hold
Suglio individually liable for those violations. After extensive briefing, the trial court
granted Garber’s motion for partial summary judgment on March 12, 2010. The trial
court set forth damages in the amount of $18,600, “($6,200 x 3).”
{¶5} Following the trial court’s grant of partial summary judgment, Garber moved
the trial court to allow him to file an amended complaint to dismiss the remaining claims.
The court granted Garber leave, but an amended complaint was not filed at that time.
Appellants filed a motion for relief from judgment and appealed to this court after their
motion was denied. We dismissed the appeal for lack of a final, appealable order.
Garber then filed an amended complaint dismissing the remaining claims for relief, and
appellants filed the instant appeal raising three assignments of error for review:
The cancellation letter and complaint allege that the contract price was $6,500, but the
1
contract evidences a price of $6,200.
I. The trial court erred by granting the plaintiff’s motion for summary
judgment and awarding rescission damages and treble damages and by
overruling the motion for relief from judgment.
II. The trial court erred by holding Frank Suglio personally liable for
damages.
III. The trial court erred in awarding attorney’s fees.
II. Law and Analysis
A. Final, Appealable Order
{¶6} This court feels compelled to address jurisdictional grounds necessary to hear
this appeal. The trial court granted partial summary judgment to Garber, setting forth an
order that found appellants liable and determined an appropriate amount of damages.
This order for partial summary judgment is generally not a final, appealable order because
it does not dispose of all the pending claims for relief. “According to Civ.R. 54(B), an
action is not terminated unless the court has resolved all of the claims or the rights and
liabilities of all of the parties, or the court has specified that there is no just reason for
delay.” Brigadier Constr. Servs. v. JLP Glass Prods., 8th Dist. No. 97624,
2012-Ohio-2314, ¶ 8. Further, “‘An order which adjudicates one or more but fewer than
all the claims or the rights and liabilities of fewer than all the parties must meet the
requirements of [both] R.C. 2505.02 and Civ.R. 54(B) in order to be final and
appealable.’” Reagan v. Ranger Transp., 104 Ohio App. 3d 15, 17, 660 N.E.2d 1234
(11th Dist.1995), quoting Noble v. Colwell, 44 Ohio St. 3d 92, 96, 540 N.E.2d 1381
(1989). Where partial summary judgment has been granted, Civ.R. 41(A)(1) cannot be
used to dismiss the remaining claims against a party to create a final, appealable order
because “‘[t]o do so would permit piecemeal litigation and piecemeal appeals, which are
disfavored in the law.’” Reagan at 18, quoting Borchers v. Winzeler Excavating Co., 2d
Dist. No. 13297, 1992 Ohio App. LEXIS 2091 (Apr. 10, 1992). Also, Civ.R.
41(A)(1)(a) states that a plaintiff “may dismiss all claims asserted by that plaintiff * * *.”
Dismissing some, but not all claims is not contemplated by the rule.
{¶7} Here, Garber did not attempt to utilize Civ.R. 41 to create a final, appealable
order. Garber was granted leave to file an amended complaint pursuant to Civ.R. 15(A).
This amended pleading narrowed his claims for relief to only those that had been
addressed in his favor in the trial court’s journal entry granting summary judgment. This
transformative act disposed of the pending claims and left nothing further for the trial
court to determine. These claims cannot be refiled, 2 as those dismissed without
prejudice under Civ.R. 41(A) may be. Rush v. Maple Hts., 167 Ohio St. 221, 147 N.E.2d
599 (1958). This practice has been recognized by the Ohio Supreme Court as
appropriate to create a final, appealable order when it held that “the proper procedure for
a plaintiff to dismiss fewer than all claims against a single defendant is to amend the
complaint pursuant to Civ.R. 15(A).” Pattison v. W.W. Grainger, Inc., 120 Ohio St. 3d
142, 2008-Ohio-5276, 897 N.E.2d 126, ¶ 19, citing Reagan at 18; Kildow v. Home Town
Improvements, 5th Dist. No. CT2001-0057, 2002-Ohio-3824, ¶ 11; Lewis v. J.E.
“‘A final judgment * * * upon the merits * * * by a court of competent jurisdiction * * * is a
2
complete bar to any subsequent action on the same claim or cause of action between the parties * *
*.’” Grava v. Parkman Twp., 73 Ohio St. 3d 379, 381, 1995-Ohio-331, 653 N.E.2d 226.
Wiggins & Co., 10th Dist. Nos. 04AP-469, 04AP-544, and 04AP-668, 2004-Ohio-6724, ¶
17.
{¶8} Liability and appropriate relief have been determined and set forth in a
journal entry that completely set forth the rights and responsibilities of the parties in this
action. Therefore, the amendment of the complaint caused the journal entry granting
summary judgment to be a final, appealable order at the time the amended complaint was
filed and accepted by the trial court.
B. Standard of Review
{¶9} Garber was granted summary judgment on the issues of liability and damages.
This court reviews that judgment de novo. Brown v. Scioto Cty. Commrs., 87 Ohio
App.3d 704, 622 N.E.2d 1153 (4th Dist.1993). Civ.R. 56 provides that summary
judgment should be granted if “the pleadings, depositions, answers to interrogatories,
written admissions, affidavits, transcripts of evidence, and written stipulations of fact, if
any, timely filed in the action, show that there is no genuine issue as to any material fact
and that the moving party is entitled to judgment as a matter of law.”
{¶10} The reviewing court then evaluates the record in a light most favorable to
the non-moving party and determines if “reasonable minds could find for the party
opposing the motion.” Saunders v. McFaul, 71 Ohio App. 3d 46, 50, 593 N.E.2d 24 (8th
Dist.1990).
C. Home Solicitation Sales Act Applicability
{¶11} The gravamen of appellants’ arguments are that damages were improperly
calculated, but within that argument they assert that the HSSA does not apply to this
transaction.
{¶12} The HSSA seeks to decrease high-pressure sales tactics that are sometimes
employed during in-home solicitations by providing consumers with a cooling-off period
within which the transaction may be cancelled. R.C. 1345.21(A) applies to
a sale of consumer goods or services in which the seller or a person acting
for the seller engages in a personal solicitation of the sale at a residence of
the buyer, including solicitations in response to or following an invitation
by the buyer, and the buyer’s agreement or offer to purchase is there given
to the seller or a person acting for the seller, or in which the buyer’s
agreement or offer to purchase is made at a place other than the seller’s
place of business.
{¶13} The HSSA provides exceptions in a number of circumstances that do not
apply to the present situation. See R.C. 1345.21(A)(1)-(7). The act further defines
“consumer goods or services” to mean “goods or services purchased, leased, or rented
primarily for personal, family, or household purposes, including courses or instruction or
training regardless of the purpose for which they are taken.” R.C. 1345.21(E).
{¶14} Citing the “household purposes” language in the definition above, there has
been a long history of applying this statute to home remodeling contracts. Camardo v.
Reeder, 8th Dist. No. 80443, 2002-Ohio-3099, ¶ 19 (“The HSSA applies to home
improvement contracts involving ‘consumer goods or services’”), citing R. Bauer & Sons
Roofing & Siding, Inc. v. Kinderman, 83 Ohio App. 3d 53, 613 N.E.2d 1083 (2d
Dist.1992) (installation of a new roof, windows, and door at a private home); Knight v.
Colazzo, 9th Dist. No. 24110, 2008-Ohio-6613, ¶ 14; Collins v. Kingsmen Ents., Inc., 8th
Dist. No. 66433, 1995 Ohio App. LEXIS 123 (Jan. 19, 1995) (remodeling of a kitchen).
But see Tambur’s, Inc. v. Hiltner, 55 Ohio App. 2d 90, 379 N.E.2d 231 (6th Dist.1977);
Collins Home Improvement Inc. v. Goodwin, 5th Dist. No. 98-CA-26-2, 1998 Ohio App.
LEXIS 6572 (Dec. 31, 1998). This furthers the remedial purpose of the HSSA and the
CSPA, to “compensate for incomplete consumer remedies available at common law.”
Anderson v. Barclay’s Capital Real Estate, Inc., Slip Opinion No. 2013-Ohio-1933, ¶ 9.
{¶15} Therefore, the law is settled in this district that the HSSA applies to home
remodeling contracts, including the one at issue in the present case.
{¶16} Appellants argue that R.C. 1345.23 requires that a consumer return any
goods to the seller in a similar condition as delivered. Because that cannot be done after
concrete is poured, it deprives appellants of the ability to retrieve goods after a buyer
cancels a contract once performance is undertaken. That may seem like an inequitable
result, but for service contracts involving home remodeling, like the one at issue here, the
statute “‘clearly [places] the risk on the home improvement contractor who begins
performance before giving the consumer proper notice of the right to cancel.’” McGill v.
Image Scapes, 9th Dist. No. 10CA0043-M, 2010-Ohio-6246, ¶ 8, quoting Clemens v.
Duwel, 100 Ohio App. 3d 423, 431, 654 N.E.2d 171 (2d Dist.1995).
D. Election of Remedies
{¶17} Turning now to damages, appellants argue that the trial court erred in
cumulatively awarding damages based on three times the contract price and allowing
cancellation of the contract as well. We agree.
{¶18} Under the HSSA, a home solicitation sale must include a written agreement
that contains a statement of the buyer’s right to cancel the contract until midnight of the
third business day after the day on which the buyer signs the contract. R.C. 1345.22 and
1345.23. Where no such provision is contained in the agreement, the buyer’s right to
cancel the contract does not expire. R.C. 1345.23(C). If the buyer decides to cancel the
sale, the seller must refund all payments made under the contract to the buyer. R.C.
1345.23(D)(4)(a). This provision effectively allows the buyer to cancel the contract at
any time, but the buyer may be susceptible to an unjust enrichment claim by the seller.
R.C. 1345.23(C) makes clear that where a notice of right of cancellation is not included,
the three-day cancellation period does not begin until the seller furnishes the buyer with
the appropriate cancellation notice.
{¶19} A failure to provide a cancellation notice in a transaction covered by the
HSSA constitutes a violation of the CSPA under R.C. 1345.02. Kamposek v. Johnson,
11th Dist. No. 2003-L-124, 2005-Ohio-344, ¶ 27. Garber sought to cancel the contract
utilizing the HSSA provisions, but he also sought damages under the CSPA per R.C.
1345.09(B), which provides,
[w]here the violation was an act or practice declared to be deceptive or
unconscionable by rule adopted under division (B)(2) of section 1345.05 of
the Revised Code before the consumer transaction on which the action is
based, or an act or practice determined by a court of this state to violate
section 1345.02, 1345.03, or 1345.031 of the Revised Code and committed
after the decision containing the determination has been made available for
public inspection under division (A)(3) of section 1345.05 of the Revised
Code, the consumer may rescind the transaction or recover, but not in a
class action, three times the amount of the consumer’s actual economic
damages or two hundred dollars, whichever is greater, plus an amount not
exceeding five thousand dollars in noneconomic damages or recover
damages or other appropriate relief in a class action under Civil Rule 23, as
amended.
(Emphasis added.)
{¶20} Under this statute, an aggrieved consumer has a number of available
methods to calculate damages. First, the consumer may rescind the contract. If this
option is chosen, the consumer must do so within a reasonable time. R.C. 1345.09(C)(1).
However, rescission is not an appropriate remedy under the CSPA where “there has been
a substantial change in the subject of the consumer transaction.” Reichert v. Ingersoll,
18 Ohio St. 3d 220, 224, 480 N.E.2d 802 (1985).
{¶21} Alternatively, under R.C. 1345.09, the consumer may seek to recover three
times the actual amount of economic damages. “‘Actual economic damages’ means
damages for direct, incidental, or consequential pecuniary losses resulting from a
violation of Chapter 1345 of the Revised Code and does not include damages for
noneconomic loss as defined in section 2315.18 of the Revised Code.” R.C. 1345.09(G).
“‘“Actual damages” are defined as “real, substantial, and just damages, or the amount
awarded to a complainant in compensation for his actual and real loss or injury.”’”
Whitaker v. M.T. Auto., Inc., 111 Ohio St. 3d 177, 2006-Ohio-5481, 855 N.E.2d 825, ¶
18, quoting Crow v. Fred Martin Motor Co., 9th Dist. No. 21128, 2003-Ohio-1293, ¶ 32,
quoting Black’s Law Dictionary 390 (6th Ed.1990). Actual damages do not equate to the
contract price, especially where the seller has fully performed, albeit unsatisfactorily.
Therefore, the trial court erred in awarding three times the contract price as damages
under this provision.
{¶22} A separate remedy is available for violations of the HSSA distinct from
remedies available under R.C. 1345.09. The buyer may cancel the contract according to
R.C. 1345.23(D)(4)(a) and receive any payments made under the contract. McGill, 9th
Dist. No. 10CA0043-M, 2010-Ohio-6246, ¶ 11.
{¶23} It is clear from the record that the contract was cancelled in this case, as
evidenced by Garber’s notice of cancellation received by appellants on May 6, 2009. A
consumer must elect which remedy to base recovery on because the consumer cannot
recover under both R.C. 1345.23 and 1345.09. White v. Allstate Ins. Co., 8th Dist. No.
92648, 2009-Ohio-5829. The remedies are mutually exclusive. White v. Allstate Ins. Co.,
8th Dist. No. 89316, 2008-Ohio-140, ¶ 37, citing Kamposek, 11th Dist. No. 2003-L-124,
2005-Ohio-344, ¶ 27 (“[w]here the buyer exercises the right to cancel [under the
HSSA], there is ‘no reason to turn to the rescission provision of R.C. 1345.09’”).
{¶24} Here, Garber sought cancellation under the HSSA as well as three times an
amount of actual damages under the CSPA for a failure to return the payments made
under the cancelled contract. Garber is entitled to one of these remedies, but not both.
As other courts have noted, the HSSA is a tool for consumers; a shield to ward against
oppressive, high-pressure sales tactics that are sometimes employed in home solicitations.
Allowing multiple recoveries from a seller transmutes the tool to a sword. It also
transforms a statute from remedial to punitive. That is not its intent.
{¶25} In this case, Garber elected to cancel the contract under R.C. 1345.22 and is
entitled to the refund of payments made pursuant to R.C. 1345.23. This election of
remedies precludes Garber from arguing for damages under R.C. 1345.09 in addition to
the contract price. The trial court erred in awarding damages above the price paid under
the contract.
E. Personal Liability
{¶26} Suglio argues in his second assignment of error that individual liability is
not appropriate in this case. He asserts that Garber knew at all times that he was dealing
with a limited liability company and has presented nothing that would mandate a
disregard of this business form. He further argues that any violation of the HSSA was
not knowing, and therefore he cannot be held liable.
{¶27} Generally, employees and proprietors of corporations and limited liability
companies are not answerable for the debts or responsibilities of the company. In certain
contexts, however, individuals can be held to answer for the actions of the company.
Violations of the CSPA offer such a context. Where officers or shareholders of a
company take part in or direct the actions of others that constitute a violation of the
CSPA, that person may be held individually liable.
{¶28} This court recently reiterated that
an officer of a corporation is individually liable for each violation of the
CSPA in which he personally participates. Stultz v. Artistic Pools, Inc.,
Summit App. No. C.A. 20189, 2001-Ohio-1420, ¶ 4. Liability also exists
for actions where “the officer took part in the commission of the act,
specifically directed the particular act to be done, or participated or
cooperated therein.” Grayson v. Cadillac Builders, Inc. (Sept. 14, 1995),
Cuyahoga App. No. 68551, 1995 Ohio App. LEXIS 3954, citing State ex
rel. Fisher v. Am. Courts, Inc. (1994), 96 Ohio App. 3d 297, 644 N.E.2d
1112. The officer’s “liability flows not from his status as * * * an officer *
* *, but from his personal actions in violating CSPA.” Inserra v. J.E.M.
Bldg. Corp. (Nov. 22, 2000), Medina App. No. 2973-M, 2000 Ohio App.
LEXIS 5447 at *17, citing Sovel v. Richardson (Nov. 15, 1995), Summit
App. No. 17150, 1995 Ohio App. LEXIS 5076. This court noted that the
CSPA “does not change the existing common law of tort, nor does it change
the common law rule with respect to piercing the corporate veil. A
corporate officer may not be held liable merely by virtue of his status as a
corporate officer. It does, however, create a tort which imposes personal
liability upon corporate officers for violations of the act performed by them
in their corporate capacities.” Grayson, 1995 Ohio App. LEXIS 3954 at *9,
fn. 1.
Burns v. Spitzer Mgmt., 190 Ohio App. 3d 365, 2010-Ohio-5369, 941 N.E.2d 1256, ¶ 32
(8th Dist.).
{¶29} In a similar case, the Ninth District determined that violations of the HSSA
personally committed by individuals acting in a corporate capacity exposed them to
individual liability. McGill, 9th Dist. No. 10CA0043-M, 2010-Ohio-6246, ¶ 13-14.
McGill also indicates that a violation under R.C. 1345.02 does not have to be knowing in
order to subject an individual to liability.
{¶30} Appellants’ failure to provide a cancellation notice constituted a violation of
the HSSA and consequently a violation of the CSPA under R.C. 1345.02. A requirement
for knowingly committing a violation of the CSPA in order to subject one to individual
liability is not found in R.C. 1345.02. As the court explained in Grayson, 8th Dist. No.
68551, 1995 Ohio App. LEXIS 3954, *10-11 (Sept. 14, 1995):
“In order to recover under R.C. 1345.03, a consumer must show that a
supplier acted unconscionably and knowingly.” Karst v. Goldberg (1993),
88 Ohio App. 3d 413, 418, 623 N.E.2d 1348. While proof of intent is not
required to prove deception under R.C. 1345.02, proof of knowledge is a
requirement to prove an unconscionable act under R.C. 1345.03.
{¶31} Even if a knowing act is required, Suglio claims he relied on three cases for
the proposition that the transaction did not fall under the HSSA. Tambur’s, 55 Ohio
App.2d 90, 379 N.E.2d 231 (6th Dist.1977); Collins, 5th Dist. No. 98-CA-26-2, 1998
Ohio App. LEXIS 6572 (Dec. 31, 1998); and BPI Indus. v. DeVaney, 5th Dist. No.
CA-415, 1992 Ohio App. LEXIS 2938 (June 3, 1992). This claim is dubious given the
long-standing case law from this district cited in part C of this opinion, which holds the
opposite. Suglio admitted in his deposition that he made the decision not to return any
money to Garber and that he provided a contract to Garber that did not include a notice of
cancellation. Suglio was also correctly notified of the statutory provisions he was
accused of violating by the cancellation letter. It stated,
Pursuant to Ohio Revised Code Section 1345.22, this letter is my written
notice of cancellation of the contract I signed on June 21, 2008.
Pursuant to Ohio Revised Code Section 1345.23(D)(4) and 16 C.F.R. 429.1,
within (10) days from the delivery of this letter, you must refund the Six
Thousand Five Hundred Dollars ($6,500) I paid you.
{¶32} The letter provides specific references to the HSSA, which put Suglio on
notice to investigate its applicability. Further, Suglio provided Garber with a contract
that failed to include a cancellation notice. Both of these acts are violations of the HSSA
and subject Suglio to individual liability.
F. Attorney Fees
{¶33} Finally, appellants claim in their third assignment of error that the trial court
erred in awarding attorney fees to Garber. Appellants’ arguments go mainly to the
amount of fees awarded and the evidence proffered by Garber at a hearing on his motion
for attorney fees, but we find the award of fees was not appropriate in this case.
{¶34} A prevailing party in an action for a knowing violation of the CSPA may be
awarded attorney fees expended in pursuing vindication. R.C. 1345.09(F)(1). But, as
recognized by this court, when a plaintiff elects a remedy under the HSSA to cancel a
contract and receive a refund of payments made, he is bound by that choice. White, 8th
Dist. No. 92648, 2009-Ohio-5829; Clemens, 100 Ohio App. 3d 423, 433, 654 N.E.2d 171
(2d Dist.1995). In White, this court recognized that the HSSA does not contain a
provision for the award of attorney fees. Therefore, where one elects to cancel the
contract pursuant to R.C. 1345.23, attorney fees are not available under R.C. 1345.09.
Id. at ¶ 22.
III. Conclusion
{¶35} The trial court’s grant of summary judgment as to liability was appropriate
in this case. The HSSA applied to this home improvement contract, and the contract at
issue failed to provide a notice of cancellation. This constituted a violation of the HSSA
and the CSPA, for which appellants are jointly and severally liable. However, the court
erred in awarding damages far in excess of those contemplated by these statutes. An
election of remedies must be made, and a plaintiff may only recover damages once.
Here, Garber cancelled the contract, as evidenced by the May 5, 2009 cancellation letter.
Damages based on R.C. 1345.09 are therefore not appropriate in this case. Accordingly,
appellants are jointly and severally liable to Garber in the amount of $6,200.
{¶36} This cause is affirmed in part and reversed in part.
It is ordered that appellants and appellee share the costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this court directing 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.
FRANK D. CELEBREZZE, JR., PRESIDING JUDGE
KATHLEEN ANN KEOUGH, J., and
EILEEN A. GALLAGHER, J., CONCUR