Minaya v. NVR, Inc. , 103 N.E.3d 160 ( 2017 )

[Cite as Minaya v. NVR, Inc., 2017-Ohio-9019.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 105445
NADIA MINAYA, ET AL.
PLAINTIFFS-APPELLANTS
vs.
NVR, INC., D.B.A. RYAN HOMES, INC., ET AL.
DEFENDANTS-APPELLEES
JUDGMENT:
AFFIRMED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-15-855517
BEFORE: Stewart, J., McCormack, P.J., and Blackmon, J.
RELEASED AND JOURNALIZED: December 14, 2017
ATTORNEY FOR APPELLANTS
John F. Burke
Burkes Law, L.L.C.
614 West Superior Avenue, Suite 1500
Cleveland, OH 44113
ATTORNEYS FOR APPELLEES
For NVR, Inc., d.b.a. Ryan Homes, Inc.
Leo M. Spellacy
Thrasher Dinsmore & Dolan
1111 Superior Avenue, Suite 412
Cleveland, OH 44114
Ryan P. Sherman
Porter Wright Morris & Arthur
41 S. High Street, Suite 2900
Columbus, OH 43215
For City of Strongsville
James A. Climer
Frank H. Scialdone
Mazanec Raskin, Ryder Co., L.P.A.
100 Franklin’s Row
34305 Solon Road
Solon, OH 44139
Kenneth A. Kraus
Law Director
City of Strongsville Law Department
16099 Foltz Industrial Parkway
Strongsville, OH 44149
MELODY J. STEWART, J.:
{¶1} Shortly after moving into a house they purchased, plaintiff-appellants Nadia
and Misael Minaya and their five children suffered unexplained health issues. They later
discovered black mold in various locations in their house. Subsequent home inspections
uncovered what they described as “numerous problems with the home” that caused water
penetration. They brought suit against the builder of the house, defendant-appellee
NVR, Inc., d.b.a. Ryan Homes, Inc. They alleged Ryan Homes fraudulently designed the
house, was grossly negligent in building the house, and concealed these facts, with the
result being water infiltration and the formation of black mold that proximately caused
their health issues. The Minayas also brought claims against defendant-appellee city of
Strongsville (the “city”) alleging that it did not inspect the house before issuing a
certificate of occupancy and was otherwise negligent in failing to inspect the house. The
counts against both defendants sought an award of punitive damages.1
The Minayas named a third defendant, High Pointe Construction and Development, L.L.C.
1
After the summary judgments in the lower court were granted, they obtained a default judgment
against High Pointe. High Pointe is not a party to this appeal.
{¶2} Ryan Homes filed a motion to dismiss the complaint on grounds that the
house was built in 1988 and the Minayas’ claims, filed in 2015, were barred by the
ten-year statute of repose. The city filed a motion for judgment on the pleadings
claiming that it was immune from suit, owed no duty of care to the Minayas, and that it
could not be liable for punitive damages. The court granted both motions and this appeal
followed. The two assignments of error challenge both the dismissal in favor of Ryan
Homes and judgment on the pleadings in favor of the city.
I. Motion to Dismiss
{¶3} The basis for Ryan Homes’ motion to dismiss was that the Minayas’ claims
were barred by the ten-year statute of repose in R.C. 2305.131 because the company built
the home in 1988 and that the Minayas did not bring their claims until 2015. Ryan
Homes acknowledged that the Minayas pleaded fraud, a cause of action that is outside the
statute of repose, but maintained that the Minayas did not plead their fraud claim with the
requisite particularity and, in any event, that Ryan Homes made no representations of any
kind to the Minayas, who it claimed were at least the third owners of the house.
{¶4} Civ.R. 12(B)(6) states that a complaint is not subject to dismissal for failure
to state a claim upon which relief may be granted unless it appears beyond doubt that the
plaintiff can prove no set of facts in support of his or her claim that would entitle the
plaintiff to relief. Doe v. Archdiocese of Cincinnati, 109 Ohio St. 3d 491,
2006-Ohio-2625, 849 N.E.2d 268, ¶ 11, citing O’Brien v. Univ. Community Tenants
Union, Inc., 42 Ohio St. 2d 242, 327 N.E.2d 753 (1975). Therefore, “[a]s long as there is a
set of facts, consistent with the plaintiff’s complaint, which would allow the plaintiff to
recover, the court may not grant a defendant’s motion to dismiss.” York v. Ohio State
Hwy. Patrol, 60 Ohio St. 3d 143, 145, 573 N.E.2d 1063 (1991).
{¶5} A “statute of repose extinguishes a cause of action after a fixed period of
time, regardless of when the cause of action accrued.” Jones v. Walker Mfg. Co., 8th
Dist. Cuyahoga No. 97301, 2012-Ohio-1546, ¶ 3, citing Sedar v. Knowlton Const. Co., 49
Ohio St. 3d 193, 195, 551 N.E.2d 938 (1990). With respect to damages for bodily injury
arising out of defective and unsafe conditions of an improvement to real property, no
cause of action shall accrue “later than ten years from the date of substantial completion
or improvement.” R.C. 2305.131(A)(1). The intent behind R.C. 2305.131 is, among
other things, to recognize that after the completion of the construction of an improvement
to real property, builders lack control over the improvement and have no ability to
maintain the premises, lack control over the effects that weather might have to the
improvement, and that it would place an unacceptable burden on builders to maintain
records and other documentation pertaining to design and construction for a period in
excess of ten years. See Section 3(B) of S.B. 80.
{¶6} There is an exception to the affirmative defense of the statute of repose that
exists “if the defendant engages in fraud in regard to furnishing the design, planning,
supervision of construction, or construction of an improvement to real property * * *.”
R.C. 2305.131(C).
{¶7} The Minayas brought two causes of against Ryan Homes: Count 1 alleged
fraudulent concealment; Count 2 alleged “gross negligence and negligence.”
{¶8} With respect to Count 2, we agree that this claim is barred by the statute of
repose because it does not make any allegation of fraud that would take it outside the
statute of repose. Count 2 alleges that “Defendant Ryan Homes owed plaintiffs a duty to
exercise due care and caution and to build and develop the subject property in a prudent
and workmanlike manner.” Complaint at ¶ 84. The Minayas alleged that Ryan Homes
breached this duty by building the house in a “negligent and unworkmanlike manner” that
allowed the house to become environmentally contaminated. Complaint at ¶ 86-87.
{¶9} The allegations in Count 2 are simple negligence claims of a kind that are
specifically encompassed by the statute of repose. In fact, the Minayas appear to
concede implicitly that Count 2 is subject to the statute of repose because their brief in
opposition to Ryan Homes’ motion to dismiss does not address this count at all. Given
the plain reading of the complaint and the Minayas’ failure to make any argument against
dismissal, we concluded that the court did not err by dismissing Count 2 as being subject
to the statute of repose.
{¶10} With respect to Count 1 and the fraudulent concealment cause of action, the
Minayas concede that Ryan Homes finished building the house in 1988 and their claims
relating to the construction of the house would ordinarily be barred by the statute of
repose. Complaint at ¶ 64. However, they assert that they pleaded a claim of fraudulent
concealment to which the statute of repose does not apply.
{¶11} We agree with Ryan Homes, however, that the Minayas failed to plead their
fraudulent concealment claim with the kind of particularity required by Civ.R. 9(B).
That rules states that “[i]n all averments of fraud or mistake, the circumstances
constituting fraud or mistake shall be stated with particularity.” In the context of pleading
fraud, the word “particularity” means that the pleading must contain allegations of fact
which tend to show each and every element of a cause of action for fraud. CitiMortgage,
Inc. v. Hoge, 196 Ohio App. 3d 40, 2011-Ohio-3839, 962 N.E.2d 327, ¶ 23 (8th Dist.).
{¶12} The elements of a fraudulent concealment are: (1) a concealment of a fact
when there is a duty to disclose (2) that is material to the transaction at hand, (3) made
falsely, with knowledge of its falsity or with such utter disregard and recklessness as to
whether it is true or false that knowledge may be inferred, and (4) with intent to mislead
another into relying upon it, (5) justifiable reliance, and (6) resulting injury proximately
caused by the reliance. Groob v. KeyBank, 108 Ohio St. 3d 348, 2006-Ohio-1189, 843
N.E.2d 1170, ¶ 47; Northpoint Properties v. Charter One Bank, 8th Dist. Cuyahoga No.
94020, 2011-Ohio-2512, ¶ 60. All these elements must be present, and the absence of
any element precludes recovery. Westfield Ins. Co. v. HULS Am., Inc., 128 Ohio App. 3d
270, 296, 714 N.E.2d 934 (10th Dist.1998).
{¶13} The basis for the fraudulent concealment claim is that “Ryan Homes built
the subject property in an unworkmanlike manner” by committing numerous building
code violations, Complaint at ¶ 70, 73. The Minayas further alleged that Ryan Homes
purposely hid these housing code violations “in places in which others could not readily
investigate or inspect, such as behind drywall, or in the underground piping.” Id. at ¶ 73.
{¶14} Missing from Count 1 is an allegation that Ryan Homes made any false
statements or failed to disclose any material fact. What the Minayas did claim was that
Ryan Homes “acted with the intent to mislead the purchasers of the home, in that these
defects were so egregious logic deems they could not possibly all be honest mistakes, and
that said defects were items that would not expose themselves or their consequences until
a quantity of time passed.” Id. at ¶ 74. The Minayas reassert the same logical
proposition with respect to the location of the negligence: “Logic dictates since the
defects concealed were located in areas not readily available to inspect or investigate,
Ryan Homes intended for all purchasers of the home to rely on the fraudulent
concealment when purchasing the home, not just the original purchaser.” Complaint at ¶
78.
{¶15} Allegations in a complaint must be supported by facts. Mitchell v. Lawson
Milk Co., 40 Ohio St. 3d 190, 193, 532 N.E.2d 753 (1988). The Minayas did not rely on
specific facts to support their cause of action for fraudulent concealment, but invoked
logic to allege that Ryan Homes’ negligence in designing and building the house was so
pervasive that it must have intended to make the mistakes it did and then must have
intentionally covered up those mistakes. This is a form of causal reductionism: the
Minayas conclusion that Ryan Homes acted intentionally because there were so many
defects in the house fails to account for other possibilities that did not require intentional
action. The many defects alleged in the house may have been mere coincidence or gross
ineptitude. One cannot infer intent to commit fraud based solely on the assertion that the
errors allegedly committed were so numerous as to be intentional.
{¶16} The same rationale applies to the Minayas’ argument that Ryan Homes
purposely hid its negligence in order to avoid detection. Notably, the alleged building
code violations consisted of improperly installed insulation, piping, or electrical systems.
We agree with Ryan Homes that “[i]t would be an odd home indeed if the piping,
electrical systems, insulation and related elements about which Plaintiffs complain were
open to view.” Motion to dismiss at 8. That the alleged defects were located in places
concealed from direct examination does not permit the inference that Ryan Homes
fraudulently concealed them.
{¶17} A party cannot avoid the statute of repose by “clever pleading” that attempts
to transform a negligence claim into a fraud claim. Mardis v. Meadow Wood Nursing
Home, 12th Dist. Brown No. CA2010-04-007, 2010-Ohio-4800, ¶ 12; see also York v.
Hutchins, 12th Dist. Butler No. CA2013-09-173, 2014-Ohio-988, ¶ 15. In addition, the
trial court need not accept unsupported conclusions in a complaint for purposes of Civ.R.
12(B)(6). State ex rel. Ohio Civ. Serv. Emps. Assn. v. State, 146 Ohio St. 3d 315,
2016-Ohio-478, 56 N.E.3d 913, ¶ 21. The complaint states a case of negligence and the
Minayas’ pleading fraudulent concealment without the requisite particularity cannot
defeat the application of the statute of repose.
{¶18} We also find dismissal to be warranted because the fraudulent concealment
claim depended on representations made to third parties. The Minayas claim that Ryan
Homes made representations concerning a concealed, material fact. It is undisputed that
the Minayas, being at least the third owners of the house, had no actual contact with Ryan
Homes that induced them to purchase the house. “A plaintiff fails to state a valid cause
of action for fraud when he alleges that a third-party relied on misrepresentations made by
a defendant and that he suffered injury from that third-party’s reliance.” Moses v.
Sterling Commerce Am., Inc., 10th Dist. Franklin No. 02AP-161, 2002-Ohio-4327, ¶ 21.
See also Baddour v. Fox, 5th Dist. Licking No. 03CA-77, 2004-Ohio-3059, ¶ 41 (“A
party is unable to maintain an action for fraud where the fraudulent representations were
not made directly to him to induce him to act on them in matters affecting his own
interests.”); Lisboa v. Tramer, 8th Dist. Cuyahoga No. 97526, 2012-Ohio-1549, ¶ 32 (no
valid cause of action for fraud based on statements defendants made to Internal Revenue
Service).
{¶19} The Minayas do not dispute that Ryan Homes did not make any statements
to them, Complaint at ¶ 66, but argue that policy considerations support a fraud exception
in cases where a builder engages in fraudulent concealment. We have implicitly rejected
this proposition. In Temple v. Fence One, Inc., 8th Dist. Cuyahoga No. 85703,
2005-Ohio-6628, ¶ 52, Temple claimed to have suffered injuries from chemicals used to
treat wood in a fence installed in a neighbor’s yard, alleging that the company that treated
the wood fraudulently misrepresented that the fence was “safe.” We held that “[a] party
is unable to maintain an action for fraud, however, where the fraudulent representations
were not made directly to him to induce him to act on them in matters affecting his own
interest.” Id. at ¶ 52. Because Temple did not rely on any representations made by the
company, we held that her fraud claim failed as a matter of law. Id. The facts in
Temple are not so dissimilar to those alleged in this case that we have reason to depart
from established precedent.
{¶20} The first assignment of error is overruled.
II. Motion for Judgment on the Pleadings
{¶21} The Minayas brought two causes of action against the city: Count 3 alleged
that the city acted in a wanton and reckless manner by failing to inspect the house and
then falsifying documents to show that the house had passed inspection; Count 4 alleged
that the city fraudulently falsified and altered its inspection records in order to issue an
occupancy permit for the premises. The city filed a motion for judgment on the
pleadings in which it argued that building inspections were a governmental function to
which there were no exceptions to political subdivision immunity, that it owned no duty
of care to the Minayas, and that it was immune from intentional tort claims. The court
agreed with the city and granted the city’s motion.
{¶22} A Civ.R. 12(C) motion for judgment on the pleadings presents questions of
law, the determination of which is restricted solely to the allegations in the pleadings and
any writings attached to the pleadings. Peterson v. Teodosio, 34 Ohio St. 2d 161, 297
N.E.2d 113 (1973). A motion for judgment on the pleadings is limited to the pleadings
and can be granted when the court, after construing the pleadings most favorably to the
nonmoving party, finds beyond doubt that the nonmoving party could prove no set of
facts in support of a claim for relief. State ex rel. Midwest Pride IV, Inc. v. Pontious, 75
Ohio St. 3d 565, 570, 664 N.E.2d 931 (1996).
{¶23} A political subdivision is immune from damages in a civil action for “loss to
person or property allegedly caused by any act or omission of the political subdivision or
an employee of the political subdivision in connection with a governmental * * *
function.” R.C. 2744.02(A)(1). Building inspections are a governmental function.
See R.C. 2744.01(C)(2)(p) (“inspections in connection with building, zoning, sanitation,
fire, plumbing, and electrical codes” are governmental functions); Stanton v. Cleveland,
8th Dist. Cuyahoga No. 82614, 2003-Ohio-6618, ¶ 28; Ryan v. Columbus, 10th Dist.
Franklin No. 00AP-910, 2001 Ohio App. LEXIS 798, 7 (Mar. 6, 2001). With the city’s
immunity presumptively established, we next determine whether there are any exceptions
to immunity listed in R.C. 2744.02(B). None of the exceptions to immunity apply: the
Minayas’ claims against the city did not involve the operation of a motor vehicle; were
not caused by a city employee’s negligent performance with respect to a proprietary
function; did not involve injury caused by the negligent failure to keep roads in repair; did
not occur on the grounds of buildings used in connection with a governmental function;
and liability was not expressly imposed on the city under another section of the Revised
Code. See R.C. 2744.02(B)(1)-(6).
{¶24} The Minayas argue that the employee who conducted the housing inspection
acted in bad faith or in a wanton or reckless manner, so the city is not immune under R.C.
2744.03(A)(6)(b). That section states that “an employee” is immune from liability unless
“[t]he employee’s acts or omissions were with malicious purpose, in bad faith, or in a
wanton or reckless manner[.]” This section, “by its very terms applies only to individual
employees and not to political subdivisions.” Fabrey v. McDonald Village Police Dept.,
70 Ohio St. 3d 351, 356, 639 N.E.2d 31 (1994); Sudnik v. Crimi, 117 Ohio App. 3d 394,
398, 690 N.E.2d 925 (8th Dist.1996) (R.C. 2744.03(A)(6) “applies only to individual
employees and not to political subdivisions and, therefore, has no effect on the alleged
liability of the city.”). The Minayas brought suit against the city: they did not name any
employees of the city. Having failed to name any employees as defendants, R.C.
2744.03(A)(6) is inapplicable.
{¶25} The Minayas also argued that the city’s building inspector acted in a wanton
and reckless manner by failing to inspect the premises before issuing a certificate of
occupancy. R.C. 2744.03(A) sets forth several defenses or immunities that may be
asserted by a political subdivision or an employee to establish nonliability. Among those
defenses are that the political subdivision is immune from liability if the injury resulted
from the exercise of judgment or discretion in using personnel, unless the judgment or
discretion was exercised “with malicious purpose, in bad faith, or in a wanton or reckless
manner.” R.C. 2744.03(A)(5). Citing Cater v. Cleveland, 83 Ohio St. 3d 24, 697 N.E.2d
610 (1998), the Minayas argue that they adequately pleaded that the city housing
inspector acted in a wanton or reckless manner by failing to inspect the actual property
and falsifying the inspection report, and that the city failed to properly train and/or
monitor the inspector’s actions.
{¶26} Cater applies to this case, but not in the way that the Minayas assert. Cater
made it clear that “R.C. 2744.03(A)(5) is a defense to liability; it cannot be used to
establish liability.” Id. at 32. In other words, R.C. 2744.03(A)(5) applies only if one of
the exceptions to immunity set forth in R.C. 2744.02(B) exists. Caraballo v. Cleveland
Metro. School Dist., 8th Dist. Cuyahoga No. 99616, 2013-Ohio-4919, ¶ 32. As
previously noted, the city’s immunity has been established and none of the R.C.
2744.02(B) exceptions to immunity apply in this case, so R.C. 2744.03(A)(5) is
inapplicable.
{¶27} Finally, the Minayas claim that the city failed to properly train and/or
monitor the inspector’s actions in violation of Strongsville Ordinances 1242.09
(certificate of occupancy) and 1410.03 (duty of commissioner of buildings to inspect
buildings).
{¶28} To establish a negligence action, a plaintiff must establish the existence of a
duty, breach of that duty, and an injury proximately caused from the same. Menifee v.
Ohio Welding Prods., Inc., 15 Ohio St. 3d 75, 472 N.E.2d 707 (1984).
{¶29} The cause of action for failing to train or monitor employees wrongly
assumes that the city owed the Minayas a duty of care. Nothing in the applicable
building ordinances indicates that the city intended to grant individuals a private right of
action. Ordinances like these “do not create a duty owed to any specific or particular
person, but rather, create duties owed only to the general public and that noncompliance
with such [ordinances] can therefore not be the basis of a tort action.” Cain v. State,
Dept. of Hwy. Safety, 14 Ohio App. 3d 105, 106, 470 N.E.2d 208 (10th Dist.1984).
{¶30} We addressed a similar issue in Delman v. Cleveland Hts., 8th Dist.
Cuyahoga No. 52558, 1987 Ohio App. LEXIS 8720 (Sept. 17, 1987), where Delman
brought suit alleging that the city of Cleveland Heights was negligent in conducting point
of sale house inspections. Noting that the point of sale inspection indicated an intent to
“promote the welfare of the community, as opposed to providing a means of insuring the
interests of individual buyers,” id. at 4, we held that the ordinance did not create a right of
private action. Id. at 5. See also Sowell v. Trotter, 8th Dist. Cuyahoga No. 49681, 1986
Ohio App. LEXIS 7225 (June 19, 1986) (point of sale inspection ordinance “was enacted
solely to protect the health and safety of the residents of the city and to preserve the
housing stock in the community.”).
{¶31} Strongsville Ordinances 1220.02 expressly states that the purpose and intent
of its planning and zoning code (of which Strongsville Ordinances 1242.09 relating to
certificates of occupancy is a part) is to “promote and protect the public health, safety,
convenience, comfort, prosperity and general welfare of the City[.]” Although there is no
similar statement of purpose and intent for Strongsville Ordinances 1410.03, we conclude
that the city’s building department, being charged with conducting various inspections, is
also carrying out duties to promote and protect the public health, safety, convenience,
comfort, prosperity, and general welfare. The safety of buildings is a concern not only
for the owners, but for the occupants of those buildings and any neighboring structures.
With both ordinances being enacted to promote the general welfare, they do not create a
private right of action. The court did not err by granting judgment on the pleadings.
{¶32} Judgment affirmed.
It is ordered that appellees recover of appellants 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.
______________________________________________
MELODY J. STEWART, JUDGE