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S.E. Johnson Companies, Inc. v. Chas F. Mann Painting Co.

December 5, 2008

S.E. JOHNSON COMPANIES, INC., ET AL. APPELLEES
v.
CHAS F. MANN PAINTING CO. APPELLANT



Trial Court No. 05CV192H.

The opinion of the court was delivered by: Pietrykowski, P.J.

DECISION AND JUDGMENT

{¶1} Defendant-appellant, Chas. F. Mann Painting Co. ("Mann"), appeals the August 31, 2007 judgment of the Ottawa County Court of Common Pleas which granted summary judgment to plaintiffs-appellees, S.E. Johnson Cos., Inc. and The Shelly Company (collectively referred to as "SEJ".) Because we find that material issues of fact remain, we reverse the trial court's judgment.

{¶2} The facts of this case are as follows. In December 2001, the Ohio Department of Transportation ("ODOT") awarded a contract to SEJ for improvements to the Port Clinton, Ottawa County, Ohio, S.R. 163 bridge. The contract bid price was $1,823,276.70. Thereafter, on April 16, 2002, SEJ subcontracted with Mann to clean, paint, and seal portions of the bridge pursuant to bid line items: 0024, 0025, 0026, 0027, and 0033.*fn1 The subcontract price was $94,074 and incorporated the terms of the SEJ/ODOT contract.

{¶3} In June 2002, prior to the start of the work, SEJ contacted Mann and requested that Mann blast the bridge handrail for inspection and coat the good steel with zinc primer. On June 18, 2002, Mann, through its project manager Michael O'Hearn, contacted SEJ via email about the request. O'Hearn stated:

{¶4} "Doug, as we discussed, we did not figure or intend to blast the rails twice. Clean for inspection was not under the painting scope. We could minimize additional cost by blasting and priming replacement steel prior to its installation. What about lane closure??"

{¶5} The next day, SEJ's project manager, Doug Stanton, replied:

{¶6} "Mr. Thierry wants it blasted we need you to blast it we will claim [the] clean for inspection at the end of the contract keep those cost[s] separate we should be able to blast prime the replacement steel to keep costs down. sej will do traffic closure"

{¶7} In October 2002, Mann began the blast for inspection work which included mobilization and demobilization to permit traffic flow; it was completed in December 2002. The entire painting project was completed on October 22, 2003. On December 2, 2003, Mann faxed SEJ a note regarding its intent to file a claim for "additional costs incurred by the inspection blast."

{¶8} After discussion between the parties, on April 15, 2004, SEJ submitted Mann's claim to ODOT. On June 25, 2004, ODOT denied the claim "at Step 1 of the Dispute Resolution Process" stating:

{¶9} "In accordance with the Dispute Resolution Process on page 18 of the proposal, the contractor is required to give the project engineer written notice within two working days of the occurrence of the circumstance of dispute. The written notice in this instance was not given for approximately 18 months after the occurrence. Additional information was also requested upon receipt of the written notice; however, only a portion of the information has been provided. In a phone conversation last week, you stated that the sub-contractor was not going to provide any more information regarding the claim."

{¶10} In the interim, Mann, on February 17, 2004, filed an attested account lien against the project in the sum of $198,823.68. On February 19, 2004, SEJ was sent notice of the claim and, pursuant to R.C. 1311.31, was given 20 days to contest the claim. ODOT stated that "[i]f such notice is not received in writing to the above address, it is accepted that you have assented to its correctness. Therefore, consideration will be given to release the detained lien funds directly to the claimant." SEJ, though contending that it "misplaced" the claim, does not dispute that it never responded to the letter. Thereafter, on March 18, 2004, ODOT notified SEJ as follows:

{¶11} "Due to the fact that you have failed to notify ODOT of a dispute on Lien #2943 within the allotted time period (20 days), we are obligated by the Ohio Revised Code to release any future payments on the Project directly to the claimant up to the amount of the lien."

{¶12} Subsequently, Mann was paid the full amount of the attested account lien. SEJ requested that Mann return the $198,823.68 alleged "overpayment" arguing that the subcontract prohibited Mann from filing the lien and that Mann was entitled to payment only if SEJ recovered the sum. Mann refused to return the funds and SEJ commenced the instant action.

{¶13} SEJ's June 8, 2005 complaint alleged that Mann breached the subcontract by accepting payments that exceeded the amount due and owing and by filing an attested account claim despite the contractual prohibition against such claims. Based on these averments, SEJ also asserted claims for promissory estoppel, conversion of funds, recoupment of funds, unjust enrichment, and requested declaratory relief. SEJ included a claim for attorney fees.

{¶14} On July 29, 2005, Mann filed its answer, counterclaim and third-party complaint. Mann joined The Shelly Company as a party alleging that in May 2003, S.E. Johnson and its subsidiaries were sold and merged with The Shelly Company. Mann alleged that SEJ violated Ohio's Prompt Pay Act, R.C. 4113.61, by failing to pay Mann for the additional work within ten days of SEJ receiving payment. Mann further alleged fraud, breach of an express or implied contract, and unjust enrichment. Mann requested that the court award punitive damages and attorney fees.

{¶15} On February 15, 2007, SEJ and Mann both filed motions for summary judgment. On August 31, 2007, the trial court granted SEJ's motion for summary judgment. The court held that Mann breached the subcontract because it agreed to seek payment through the ODOT claims process and it agreed to allow SEJ to act on its behalf. The court found that the "pay-if-paid" provision did not violate R.C. 4113.62(C). The court further concluded that the payment on the attested account claim had not been earned because the extra work was included in the base price of the contract between ODOT and SEJ. Finally, the court found that because Mann breached the subcontract, its claims for fraud, punitive damages, and unjust enrichment were without merit. This appeal followed.

{¶16} Appellant now raises the following four assignments of error:

{ΒΆ17} "I. FIRST ASSIGNMENT OF ERROR: The trial court erred in finding that the abrasive blasting for steel inspection and rehabilitation work Appellant Chas. F. Mann Painting Co., performed was within the scope of the work of ...


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