M & T Elec. Co., Inc. v. LLLJ, Ltd.

[Cite as M & T Elec. Co., Inc. v. LLLJ, Ltd., 2014-Ohio-5678.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 99479
M & T ELECTRIC CO., INC., ET AL.
PLAINTIFFS-APPELLANTS
vs.
LLLJ, LTD., ET AL.
DEFENDANTS-APPELLEES
JUDGMENT:
AFFIRMED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-08-673-237
BEFORE: Kilbane, J., E.A. Gallagher, P.J., and Blackmon, J.
RELEASED AND JOURNALIZED: December 24, 2014
ATTORNEY FOR APPELLANT
Brent L. English
Law Offices of Brent L. English
The 820 Building, 9th Floor
820 Superior Avenue, West
Cleveland, Ohio 44113
ATTORNEYS FOR APPELLEES
For LLLJ, LTD., ET AL.
William T. Schill
William T. Schill, Esq. L.L.C.
P.O. Box 16156
Rocky River, Ohio 44116
Robert J. Fedor
Robert J. Fedor, Esq., L.L.C.
23550 Center Ridge Road
Suite 107
Westlake, Ohio 44145
For Cuyahoga County Treasurer
Timothy J. McGinty
Cuyahoga County Prosecutor
Adam D. Jutte
Assistant County Prosecutor
The Justice Center - 9th Floor
1200 Ontario Street
Cleveland, Ohio 44113
For Home Savings Loan of Youngstown
Thomas M. Gacse
275 Federal Plaza, West
Youngstown, Ohio 44053
Also Listed:
Bowman Products Co.
A Division of Assoc. Spring Group
C/O Barnes Group, Inc.
850 East 72nd Street
Cleveland, Ohio 44103
Clorox Chemical Company, Clorox
1221 Broadway
Oakland, California 94612-1888
Jane and Arthur Ellison, Ltd.
850 East 72nd Street
Cleveland, Ohio 44103-1007
Kromex Corporation
C/O James Fraser, Statutory Agent
13345 Foxmoor Trail
Chesterland, Ohio 44026-3458
MARY EILEEN KILBANE, J.:
{¶1} Plaintiff-appellant, M & T Electric Co., Inc., d.b.a. Harstone Electrical Services
(“Harstone”), appeals from the decision of the trial court granting judgment awarded in favor of
defendants-appellees LLLJ, Ltd. (“LLLJ”) and Libby Construction Co. (“Libby”), on Harstone’s
claims for breach of contract, foreclosure on a mechanic’s lien, and unjust enrichment. For the
reasons set forth below, we affirm.
{¶2} On December 21, 2006, property owner, LLLJ, recorded a notice of
commencement of improvement, pursuant to R.C. 1311.04, 1 prior to accepting proposals for
work on a single-story commercial warehouse it owns on property located at 940 East 72nd
Street, in Cleveland. On October 23, 2007, Harstone submitted a proposal to perform electrical
work for the project, including labor and materials, totaling $30,575. In relevant part,
Harstone’s proposal indicated that the bills would be sent to Libby, the general contractor for the
project, stating:
Any alteration or deviation from the above specifications involving extra cost of
material or labor will only be executed upon written orders for same, and will
become an extra charge over the sum mentioned in this contract. All agreements
must be made in writing.
{¶3} Libby accepted Harstone’s proposal on October 24, 2007.
{¶4} On November 20, 2007, Harstone submitted an invoice to Libby in the amount of
$28,129.
1
R.C. 1311.04 provides, in relevant part, that prior to the performance of any labor or work or the furnishing
of any materials for an improvement on real property that may give rise to a mechanic’s lien, the owner, part owner,
or lessee who contracts for the labor, work, or materials shall record with the county recorder a notice, in affidavit
form, the name, address, and capacity of the owner, part owner, or lessee of the real property contracting for the
improvement, and other information.
{¶5} Thereafter, Harstone completed additional electrical work on the building. On
December 26, 2007, Harstone tendered an invoice to Libby in the amount of $51,513. This total
included the original invoice amount of $28,129, plus $23,384 for the extra labor and materials.
Harstone left the jobsite on January 29, 2008.
{¶6} On February 25, 2008, Thomas Johnstone (“Johnstone”), one of Harstone’s two
principals, attended a meeting at the project site with Liberatore Noce (“Noce”), managing
member of LLLJ. Johnstone received a LLLJ check in the amount of $28,129 with “paid in
full” written in the memo line of the check. At this same meeting, Johnstone executed a
“Waiver of Lien” before a notary, which states:
In consideration of the sum of $1.00 or the sum of 28129 DOLS 00CTS, and other
valuable consideration in hand paid, the receipt whereof is hereby acknowledged,
the undersigned does hereby waive, release and relinquish any and all liens or
claims, or right to lien or claim, for labor or materials, or both, furnished to date
hereof, for the premises known and described as Street and Number 940-E 72nd
St. City CLEVELAND County CUYAHOGA State OHIO.
{¶7} On March 28, 2008, Harstone filed an affidavit for a Mechanic’s Lien for the
unpaid portion of the second invoice, $23,384 plus interest against the East 72nd Street property.
{¶8} On October 14, 2008, Harstone filed a complaint against LLLJ, Libby, the Home
Savings and Loan Co. (“Home Savings”) and various other defendants, to foreclose upon the
mechanic’s lien, alleging breach of contract and unjust enrichment. LLLJ denied liability, and
set forth counterclaims for declaratory judgment (to declare the lien invalid) and slander of title.
In its answer denying liability, LLLJ maintained that the claim for additional work was without
merit because the parties’ contract expressly requires that any change orders be made in writing
and that Harstone’s mechanic’s lien was defective.
{¶9} On February 9, 2010, LLLJ moved for summary judgment. As a key basis for
this motion, LLLJ asserted that the waiver of lien barred Harstone’s recovery. In opposition,
Harstone argued that LLLJ failed to provide the trial court with evidentiary materials to support
the motion for summary judgment, and that there had been no meeting of the minds to establish
an accord and satisfaction. The trial court denied the motion for summary judgment, and the
matter proceeded to trial before a magistrate on April 4, 2011.
{¶10} At trial, Noce testified on cross-examination that the building was constructed in an
area consisting of two parcels of property. He testified that Harstone worked on the project and
submitted an invoice on November 20, 2007 in the amount of $28,129. He later received an
invoice dated December 26, 2007, for an additional $23,384.
{¶11} With regard to the issue of whether the second invoice was received after the first
invoice had already been paid, Noce first testified both that “[h]e give me the — he give me the
second invoice after I pay this,” then stated, “I never paid the first one until I see what’s going
on.”
{¶12} Noce acknowledged that the initial invoice for $28,129 was less than the sum
quoted in the proposal ($30,575), and he also acknowledged that he had given his oral approval
for Harstone to complete some additional work that was completed when he received the first
invoice. According to Noce, Johnstone informed him that the additional work would “cost me 3
to $4,000[.]” Noce stated that no other employee had authority to approve additional changes,
and no written change orders were ever presented to him.
{¶13} Noce stated that when he received the December 26, 2007 invoice, no labor records
or material receipts were provided in support of the claim for payment. At the February 25,
2008 meeting, Noce became angry over the invoices, Johnstone asked Noce to “give me an offer”
for the cost of the additional work. Noce then gave Johnstone a check for $28,129, and wrote in
the memo line of the check “paid in full.”
{¶14} Johnstone testified that the November 20, 2007 invoice was a progress payment
and not a final bill. He acknowledged that it did not contain an itemization for labor and
materials. After submitting the initial invoice, Harstone continued to work on the project.
Thereafter, on December 26, 2007, and before the February 25, 2008 payment, Johnstone
submitted the second invoice for the additional work. This included additional emergency
lights, installing additional power to the building, installing baseboard heating, and garage
openers. Harstone maintained that he spoke to Troy Satterfield (“Satterfield”) from Libby about
each change, and Satterfield in turn spoke with Noce who approved the additional work. The
last day of work on the project was January 29, 2008, following an inspection from the city of
Cleveland. Johnstone also admitted that several of the construction sheets for the hours worked
by his employees identify a date worked in November 2007, and then a strike out and
handwritten notation changing the date to a date in December 2007.
{¶15} With regard to the check he received on February 25, 2008, and the waiver of lien
that he signed, Johnstone testified that his understanding was that these documents signified only
that there had been progress payments, and that he could still receive additional money on the
project.
{¶16} Harstone electrician Mark Montali (“Montali”) testified that he was one of three
electricians who worked on the project. Change orders were cleared through Satterfield and
Johnstone. Montali testified that he added two emergency exit lights on January 29, 2008, his
last date of working on that job.
{¶17} Satterfield testified that he made Noce aware of the proposed changes, and that
Noce approved them. According to Satterfield, Noce never disputed the additional work.
Satterfield acknowledged that he and Noce subsequently had a disagreement concerning his
purchase of tools.
{¶18} Attorney James Shorey, counsel for Harstone, testified that he researched the
permanent parcel number and legal description before he prepared the mechanic’s lien. He
acknowledged that he listed one permanent parcel number, and he did not indicate that the
property consists of two consolidated parcels.
{¶19} The magistrate issued a nine-page decision that provided in relevant part as
follows:
The Magistrate finds that the evidence is undisputed that Plaintiff Harstone
submitted two invoices, on November 20, 2007 and the other on December 26,
2007. Subsequently, after all electrical work had been completed, on February
25, 2008, Thomas Johnstone of Harstone accepted check no. 1124 in the amount
of $28,129.00 with the written notation in the memo section “940-72 PAID IN
FULL.” Again, this check was accepted after all work had been completed on the
original project and after all of the unwritten change order work had been
completed. Moreover, both invoices had been submitted to Defendant LLLJ at
the time of the acceptance of check no. 1124. There is no question that all of the
electrical work was performed prior to the acceptance of check no. 1124.
The law in Ohio is clear. If a defendant proves that a person in good faith
tendered an instrument to the claimant as full satisfaction of the claim, that the
amount of the claim was unliquidated or subject to a bona fide dispute, and that
the claimant obtained payment of the instrument, the claim is discharged if the
defendant proves that the instrument or an accompanying written communication
contained a conspicuous statement to the effect that the instrument was tendered
as full satisfaction of the claim. O.R.C. 1303.[40]; BNI Telecommunications,
Inc. v. Cybetrnet Communications, Inc., (1997), 118 Ohio App.3d 851 (Ohio App.
8th Dist.).
The undisputed facts of this case indicate that defendant LLLJ tendered check no.
1124 to Harstone, that the claim was subject to dispute based on the fact that there
was a second invoice for additional charges outstanding at the time of the
acceptance of the check. Additionally, the check was cashed with the
conspicuous statement of the partial address and paid in full written on the front
of the check in the memo section. It is abundantly clear that the check was
intended to be payment in full satisfaction of the disputed debt. Moreover,
Harstone negotiated the check without a reservation of rights and without
complying with the protections afforded a creditor by O.R.C. 1303.[40]. The
Magistrate finds that, as a matter of law, the claim was wholly discharged.
Moreover, Harstone signed a Waiver of Lien at the time of the acceptance of the
check. The Waiver of Lien clearly stated that Harstone waived, released and
relinquished any and all liens or claims, or the right to the lien or claim, for labor
or materials, or both, furnished to date hereof. The “date hereof” was February
25, 2008. According to Plaintiff’s employee’s testimony, the last work
performed was prior to February 25, 2008[.] A mechanic’s lien holder is
estopped from asserting his rights under the lien by signing a waiver of lien and
obtaining consideration in the form of a partial payment. Brown Graves-Vincent
Co. v. Deutchman, (1924) 1924 WL 2798 (Ohio App. 9th Dist.).
Harstone cannot prevail on its unjust enrichment claim as an express contract
existed with LLLJ. * * * Univ. Hosp. of Cleveland, Inc. v. Lynch,
2002-Ohio-3748, 96 Ohio St.3d 118, 130; F & L Center Co., Ltd. v. H. Goodman,
Inc. 2004-Ohio-5856.
{¶20} Harstone filed objections to the magistrate’s decision and maintained that since the
second invoice was not discussed when the first invoice was paid on February 25, 2008, there
was simply a partial payment and not an accord and satisfaction of a disputed debt. Harstone
also argued that Johnstone did not know when he executed the waiver of lien on February 25,
2008, that he was waiving his right to payment on the second invoice.
{¶21} The trial court overruled the objections and adopted the magistrate’s decision.
Harstone now appeals, assigning two errors for our review:
Assignment of Error One
The trial court erred in overruling Harstone’s objections to the Magistrate’s
Decision and in concluding that LLLJ proved accord and satisfaction.
Assignment of Error Two
Both the trial court and magistrate erred in concluding that Harstone waived its
mechanic’s lien claim against LLLJ.
{¶22} In the first assignment of error, Harstone asserts that the requirements of an accord
and satisfaction have not been met because there was no bona fide dispute about the debt at the
time of the receipt of the February 25, 2008 payment. According to Harstone, the testimony of
Noce indicated that the payment of $28,129 was simply a “partial payment” made before the
additional $23,384 in new charges. Similarly, in the second assignment of error, Harstone
asserts that Johnstone executed the lien waiver only in connection with the payment from the first
invoice, and he did not release all claims and did not release claims related to the second invoice.
{¶23} In a civil case, “[j]udgments supported by some competent, credible evidence
going to all the essential elements of the case will not be reversed by a reviewing court as being
against the manifest weight of the evidence” and must be affirmed by a reviewing court. C.E.
Morris Co. v. Foley Constr. Co., 54 Ohio St.2d 279, 376 N.E.2d 578 (1978), syllabus.
A reviewing court should not reverse a decision simply because it holds a
different opinion concerning the credibility of the witnesses and evidence
submitted before the trial court. A finding of an error in law is a legitimate
ground for reversal, but a difference of opinion on credibility of witnesses and
evidence is not.
Seasons Coal Co., Inc. v. Cleveland, 10 Ohio St.3d 77, 81, 461 N.E.2d 1273 (1984).
Accord and Satisfaction
{¶24} If a party against whom a claim for money damages is made can prove the
affirmative defense of accord and satisfaction, that party’s debt is discharged as a matter of law.
Allen v. R.G. Indus. Supply, 66 Ohio St.3d 229, 231, 1993-Ohio-43, 611 N.E.2d 794. “An
accord is a contract between a debtor and a creditor in which the creditor’s claim is settled in
exchange for a sum of money other than that which is allegedly due. Satisfaction is the
performance of that contract.” Id. at 231.
{¶25} R.C. 1303.40, Accord and Satisfaction by Use of Instrument
provides:
If a person against whom a claim is asserted proves that person in good faith
tendered an instrument to the claimant as full satisfaction of the claim, that the
amount of the claim was unliquidated or subject to a bona fide dispute, and that
the claimant obtained payment of the instrument, all of the following apply:
(A) Unless division (B) of this section applies, the claim is discharged if the
person against whom the claim is asserted proves that the instrument or an
accompanying written communication contained a conspicuous statement to the
effect that the instrument was tendered as full satisfaction of the claim.
{¶26} There are two safeguards built into the doctrine to protect creditors. First, there
must exist a good-faith dispute about the debt. Second, the creditor must be reasonably notified
that the debtor intends the check to be in full satisfaction of the debt. Lightbody v. Rust, 8th
Dist. Cuyahoga No. 80927, 2003-Ohio-3937, ¶ 13. The issue of whether there is a bona fide
dispute about the debt is ordinarily a question of fact to be resolved by the trier of fact. Id. at
¶10. See also Parma v. Wielicki, 8th Dist. Cuyahoga No. 96869, 2011-Ohio-6291, ¶ 11.
{¶27} In this matter, Harstone insists that there is no accord and satisfaction because
Noce testified that he did not know about the second invoice at the time he paid the first invoice.
A review of the testimony indicates that Noce testified as follows:
He give me the — he give me the second invoice after I pay this. This I know.
***
He was giving me the extra, I never paid the first one until I see what’s going on.
That’s correct for me.
{¶28} In addition, Johnstone testified that any claim that Noce “never saw that invoice
until after he paid the first progress payment” “is not true.” (Tr. 114.) The chronology of the
documents also indicates that the second invoice was issued before LLLJ made payment. The
evidence demonstrates that Harstone’s first invoice was submitted on November 20, 2007, and
the other on December 26, 2007. No work was performed after January 29, 2008. Thereafter,
on February 25, 2008, after all electrical work had been completed, Johnstone accepted check
No. 1124 in the amount of $28,129, with the written notation in the memo section “940-72 PAID
IN FULL.” Since this check was dated and issued after both invoices had been presented, and
all work had been completed on the original project, we find competent, credible evidence to
support the lower court’s finding of an accord and satisfaction.
{¶29} The first assignment of error lacks merit.
Waiver of Mechanic’s Lien
{¶30} In the second assignment of error, Harstone asserts that the check he received from
LLLJ was only for payment of the first invoice, and there was no consideration for the release of
future mechanic’s liens, including the lien that resulted from nonpayment of the second invoice.
{¶31} In general, common words appearing in a written instrument will be given their
ordinary meaning unless a manifest absurdity results, or unless some other meaning is clearly
evidenced from the face or overall contents of the instrument. Alexander v. Buckeye Pipe Line
Co., 53 Ohio St.2d 241, 374 N.E.2d 146 (1978), paragraph two of the syllabus; Progressive Bros.
Constr. Co. v. Cuyahoga Cty. Bd. of Commrs., 8th Dist. Cuyahoga No. 69315, 1996 Ohio App.
LEXIS 1418 (Apr. 4, 1996). Further, a clear and unambiguous provision in a contract whereby a
contractor waives his rights to a mechanic’s lien or agrees not to file a lien is valid and binding
and will preclude the contractor from asserting a right to a lien. Steveco, Inc. v. C & G Invest.
Assoc., 10th Dist. Franklin No. 77AP-101, 1977 Ohio App. LEXIS 7341 (Aug. 4, 1977) (a
mechanic’s lien, once waived, cannot be revived by the owner’s failure to abide by other
independent covenants in the contract.)
{¶32} In this case, although plaintiff insists that the check he received from LLLJ was
only for payment of the first invoice, and there was no consideration for the release of future
mechanic’s liens from the nonpayment of the second invoice, this argument fails for two reasons.
First, as discussed in the first assignment of error, the trial court did not err in finding that the
check covered payment for the entire debt, and not just for the first invoice. Accordingly, at the
time that the mechanic’s lien waiver was signed, there was consideration provided for the release
of the mechanic’s liens with respect to both the first invoice and the second invoice.
{¶33} Secondly, the plain language of the mechanic’s lien waiver contradicts the
plaintiff’s argument:
In consideration of the sum of $1.00 or the sum of 28129 DOLS 00CTS, and other
valuable consideration in hand paid, the receipt whereof is hereby acknowledged,
the undersigned does hereby waive, release and relinquish any and all liens or
claims, or right to lien or claim, for labor or materials, or both, furnished to date
hereof, for the premises known and described as Street and Number 940-E 72nd
St. City CLEVELAND County CUYAHOGA State OHIO. (Emphasis added.)
{¶34} The trial court found that the work was completed on January 29, 2008. The
mechanic’s lien waiver was signed on February 25, 2008. Because the work, labor, and
materials related to both invoices had been supplied by the time the mechanic’s lien waiver had
been signed, the plaintiff had waived any lien or claim for work performed prior to February 25,
2008.
{¶35} In accordance with the foregoing, the second assignment of error is without merit.
{¶36} Judgment is affirmed.
It is ordered that appellees 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 said 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.
MARY EILEEN KILBANE, JUDGE
EILEEN A. GALLAGHER, P.J., and
PATRICIA A. BLACKMON, J., CONCUR