Cincinnati v. Triton Servs., Inc.

[Cite as Cincinnati v. Triton Servs., Inc., 2019-Ohio-3108.]
IN THE COURT OF APPEALS
FIRST APPELLATE DISTRICT OF OHIO
HAMILTON COUNTY, OHIO
CITY OF CINCINNATI, : APPEAL NO. C-170705
TRIAL NO. A-1405757
Plaintiff-Appellee/Counterclaim- :
Defendant, OPINION.
:
vs.
:
TRITON SERVICES, INC.,
:
Defendant-Appellant/
Counterclaim-Plaintiff, :
OHIO FARMERS INSURANCE :
COMPANY,
:
and
:
MAJID H. SAMARGHANDI,
:
Defendants/Counterclaim-
Plaintiffs, :
and :
TRITON PROPERTIES, LLC, :
Defendant. :
TRITON SERVICES, INC., : APPEAL NO. C-170705
TRIAL NO. A-1500905
Plaintiff-Appellant/Counterclaim- :
Defendant,
:
vs.
:
CITY OF CINCINNATI, A MUNICIPAL :
CORPORATION,
:
Defendant-Appellee/
Counterclaim-Plaintiff. :
OHIO FIRST DISTRICT COURT OF APPEALS
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: August 2, 2019
Paula Boggs Muething, City Solicitor, Joseph C. Neff, Assistant City Solicitor, and
Taft Stettinius & Hollister, LLP, Earl K. Messer and Nicolas J. Pieczonka, for the
City of Cincinnati,
Stites & Harbison, PLLC, William G. Geisen and Andrew J. Poltorak, for Triton
Services, Inc., Ohio Farmers Insurance Company, and Majid H. Samarghandi.
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WINKLER, Judge.
{¶1} Appellant Triton Services, Inc., (“Triton”) appeals several orders
entered against it in favor of appellee city of Cincinnati (“the city”) in two
consolidated cases. We find merit in four of Triton’s eight assignments of error. We
therefore affirm the trial court’s judgment in part and reverse it in part.
The Wesselman/Carroll Projects
{¶2} The record shows that in April 2008, Triton entered into a contract
with the city, acting on behalf of the Metropolitan Sewer District (“MSD”). Under
the contract, Triton was the general contractor performing sewer work for the
Wesselman Road Interceptor Sewer Phase 1A-3 and 1B project (“Wesselman
Project”). Subsequently, Triton entered into another contract with the city to
perform the Carroll Avenue Sewer Replacement Project (“Carroll Project”). Ohio
Farmers Insurance Company provided surety bonds for both projects.
{¶3} In June 2011, the city issued three checks totaling $496,256.09 to
Triton for the work it had performed on the Wesselman and Carroll Projects. Triton
deposited the checks into its bank account. Several months later, the city discovered
that Pavement Management, one of Triton’s subcontractors, had not been paid. The
city took steps to stop payment on the checks it had issued to Triton. The city was
erroneously informed by its bank that the payment had been stopped.
{¶4} Subsequently, Pavement Management filed suit against Triton and the
city, seeking the money that it was owed for its work on the projects. To resolve that
lawsuit, the city paid $396,756.09 to Triton and $99,500 to Pavement Management.
{¶5} In January 2014, the city discovered that the checks for the original
payments of $496,256.09 had not been stopped because the stop-payment orders
had been issued too late. After the city discovered the accidental double payment, it
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sent numerous letters to Triton requesting the return of the original payment of
$496,256.09. Triton never returned the payment.
{¶6} Subsequently, in the case numbered A-1405757, the city filed a
complaint against Triton alleging unjust enrichment and breach of contract. The city
also named Ohio Farmers Insurance Company (“Farmers”) as a defendant and made
a claim under the surety bonds on the projects. In conducting discovery, it learned
that Triton knew that the city’s checks were fully deposited into Triton’s checking
accounts and that the relevant funds were never returned to the city. In fact, the
overpayment was transferred between numerous bank accounts.
{¶7} Consequently, the city amended its complaint to add claims for fraud
and punitive damages against Triton and Majid H. Samarghandi, Triton’s CEO. In
response, Triton and Samarghandi asserted counterclaims for abuse of process and
frivolous conduct, in which they alleged that the city had filed the fraud claim to
harass them and force them to surrender the payment.
{¶8} Eventually, the city withdrew its fraud and punitive-damages claims.
The trial court granted summary judgment in favor of the city on its unjust-
enrichment claim and awarded the city $496,256.09. The court also granted
summary judgment in favor of the city on Triton’s claim for abuse of process. As to
the claim for attorney fees for frivolous conduct, the court found that the issue
should have been raised by motion rather than in Triton’s counterclaim. The court
stated that the evidence related to frivolous conduct should not be presented to the
jury, but that it would allow Triton to raise the issue by motion after the trial of the
other issues raised in a consolidated case.
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The Sagebrush Project
{¶9} In July 2011, Triton entered into a contract with the city to perform
work on the Sagebrush Lane, Susanna Drive, and Yellowstone Drive sewer project
(“Sagebrush Project”). The original contract amount was $2,698,440. The contract
incorporated the bid booklet, the State of Ohio Department of Transportation
Construction and Material Specifications (“ODOT CMS”), and the city of Cincinnati’s
supplement to the ODOT CMS.
{¶10} A geotechnical report was incorporated into the bid booklet. It
provided that “excavations for the sewer are anticipated to primarily encounter
cohesive soils interbedded occasionally with cohesionless soils.” The report stated
that no water was found at a majority of the test borings, which led to the
recommendation that trench excavations be performed in 50-foot sections with each
section being backfilled before proceeding to the next trench excavation. The bid
booklet stated that the geotechnical report was for informational purposes only and
that the report was not a substitute for actual site inspection.
{¶11} Triton began work on the Sagebrush Project in September 2011. Soon
after, it discovered differing soil conditions than it had expected. Triton claimed that
it had encountered sloughing soils, trench cave-ins, excessive groundwater, and
extremely wet conditions, which caused it to incur substantial increased expenses.
{¶12} The contract spelled out what should occur if Triton encountered
differing site conditions. ODOT CMS ¶ 104.02(B) provided:
During the progress of the Work, if subsurface or latent
physical conditions are encountered at the site differing materially
from those indicated in the Contract Documents or if unknown
physical conditions of an unusual nature, differing materially from
those ordinarily encountered and generally recognized as inherent in
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the Work provided for in the Contract Documents, are encountered at
the site, notify the Engineer as specified in 104.05 of the specific
differing conditions before they are disturbed or the affected Work is
performed.
Upon notification, the Engineer will investigate the conditions
and if it is determined that the conditions materially differ and cause
an increase or decrease in the cost or time required for the
performance of any Work under the Contract, the Department will
make an adjustment and modify the Contract as specified in 108.06
and 109.05. The Engineer will notify the Contractor of the
determination whether or not an adjustment of the Contract is
warranted.
The “Engineer” was defined as a “[d]uly authorized agent of the Department acting
within the scope of its authority for purposes of engineering and administration of
the Contract.” ODOT CMS ¶ 101.03.
{¶13} ODOT CMS 104.05(D), as amended by the city supplement, required
the contractor to:
Give written notice of any circumstance or dispute on the project that
may result in a claim. Give early notice by the end of the second
working day following the discovery of the occurrence of the
circumstance or dispute. Maintain records on the Superintendent’s
daily report of the additional labor, equipment, and materials used on
the disputed work or made necessary by the circumstance. Begin
record keeping when the project personnel are aware of the
circumstance of dispute. Submit these records on a weekly basis.
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This section further states that “[f]ailure to give early notice or keep and submit cost
records will be a sufficient reason for the City to deny the claim.”
{¶14} According to Triton, Brian Gessner, Triton’s director of site
development, discussed the differing site conditions frequently with city
representatives throughout the project, including Steve Jones, the supervising
engineer for the Sagebrush Project. Triton also contended that it sent numerous
written notices to the city relating to the differing site conditions.
{¶15} On February 1, 2012, Gessner sent an email to Sara Cramer, MSD’s
construction manager for the Sagebrush Project. Gessner advised Cramer of the
poor condition of the water mains at the site and that there had been three water
main breaks at the site, causing “undue saturation” of the “surrounding subsurface.”
He also expressed concern about the future impact of the water mains on Triton’s
work.
{¶16} On March 7, 2012, Gessner sent a letter to Cramer stating,
As I am sure you have witnessed by your numerous site visits, review
of the inspector’s daily notes as well as Tritons [sic] notifications both
verbally and as was addressed in last week’s meeting, the bore and
trench excavations have exposed poor ground conditions at every
excavation completed on the upper subdivision part of the project and
are currently experiencing [m]ajor delays. The soil strata have
consisted of large seams of sand as well as groundwater that are
inconsistent with the bore reports.
He stated that the field operations should be delayed and asked for a meeting to
discuss the problems.
{¶17} On March 15, 2012, Gessner sent another email to Cramer discussing
the wet site conditions. At that time, the differing site conditions had brought
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Triton’s work on the project to a standstill, and it was waiting on a proposal from
MSD so that it could continue with its work on the project. Gessner also stated that
he had been in “continuous communication” with Jones on those issues.
{¶18} On March 16, 2012, Gessner sent Cramer documentation regarding
additional trench protection that Triton’s crews would need to use due to the site
conditions. He advised her that the additional trench protection would cause Triton
to incur additional costs. As of March 19, 2012, work remained at a standstill.
Gessner sent an email to Cramer and Jones requesting that they approve the extra
costs associated with more substantial trench boxes, the use of which was
necessitated by the sloughing and saturated soils. MSD agreed to pay those costs,
and Triton was able to continue work on the project.
{¶19} On May 21, 2012, Gessner sent an email to Cramer advising her that
soil conditions on the west end of Susanna Drive were unsuitable due to saturated
and sloughing soils and approximately four inches of water, which would cause
Triton additional costs. He asked Cramer to confirm conditions with MSD’s field
staff and to confirm that MSD would pay for Triton’s additional costs.
{¶20} In early June 2012, Gessner and Cramer exchanged emails regarding
the deteriorated and unsuitable subbase on the project. Gessner advised Cramer that
the unforeseen conditions had caused compromised trench walls during the mainline
pipe operations, causing Triton to incur costs for additional materials and labor.
{¶21} Gessner also indicated that work on the project had been delayed.
Triton contended that while work was stopped, Jones had directed Gessner to wait
and submit all costs incurred due to differing site conditions at the end of the project.
The city contends that Jones only told him to submit costs for certain discrete parts
of the project.
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{¶22} On June 26, Gessner sent an email in which he requested that Cramer
visit the job site. He attached a photograph showing sloughing soils, trench cave-ins
and deteriorated subbase. In July, he sent Cramer a series of photographs showing
the deteriorated subbase on Susanna Drive, east of Flattop Drive.
{¶23} On July 24, 2012, Jones sent an email to Patrick Arnette, MSD’s
principal engineer. He stated,
This is likely the most difficult project I have seen since I have been in
the construction section. Fill soils in excavation, angry and resistant
residents towards the project, rain in Fall and Winter working near the
creeks, 105 degree heat and no rain in the summer working in the
streets, an unqualified contract duration, communication on the
project from numerous entities, a design that does not allow traffic,
mismarked and failing utilities, unrealistic expectations from
residents, confrontational and deceitful residents, a contractor without
a full crew at the beginning of the project[.] * * * I have said since the
beginning of the project that we may all do great work but we will all
receive black eyes at the end of this project. Where others see failure, I
see success by MSD and Triton. The contractor went from a half crew
to 4 crews on the job, save 3 to 4 months on the contract time using a
new more costly boring method, has done a remarkable job
communicating and trying to get traffic through the work areas.
Jones would later state that the project was difficult primarily due to the residents
and secondarily due to all of the entities involved.
{¶24} James Wilmes was MSD’s on-site inspector for the project. Typically,
he was at the site for ten hours per day. As part of his duties, he would prepare an
“Inspector Daily Report” (“IDR”), in which he would document his observations. He
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OHIO FIRST DISTRICT COURT OF APPEALS
also took photographs of the site conditions. According to Triton, the IDRs
supported its claims of differing site conditions. The city contended that Wilmes’s
job was not to inspect subsurface conditions at site, and he did not have the training
and experience to make those kinds of determinations. Wilmes stated that he had no
reason to conduct any further inspections into ground-water conditions and that he
would have referred any issues with subsurface conditions to the engineer.
{¶25} Triton completed the trench excavations by August 28, 2o12. Though
the contract had an expiration date of September 21, 2012, the job continued after
that date. Part of the reason was that Triton had to temporarily stop work on the
project for Colerain Township to install new curbs. Triton finished the final work,
mostly involving the final grinding and paving of the roads, on December 12, 2012.
{¶26} On November 19, 2012, Triton submitted change order request
(“COR”) #5 relating to unforeseen ground conditions at manholes three through six
in the mainline pipe installation. The associated work occurred between February
27, 2012, and April 9, 2012. It stated “[a]s per the notification via the attached letter
dated 6/4/12 and the Time Impact Analysis dated 6/26/2012, Triton has incurred
the additional costs as listed below as a result of the differing site conditions.” MSD
approved that change order request through Construction Change Order (“CCO”) #7
on October 3, 2014.
{¶27} On November 19, 2012, Triton also submitted COR #3 related to
unforeseen ground conditions during the bore at manhole number three. The work
associated with that bore occurred between November 1 and 11, 2011. MSD approved
that change order request through CCO #6 on September 2, 2013.
{¶28} On March 15, 2013, eight months after it had finished trench
excavations, Triton submitted COR #6 for unforeseen ground conditions at
manholes three through six. The work associated with that request occurred
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between February 27, 2012, and April 9, 2012. Triton again referenced its letter of
June 12, 2012, and the Time Impact Analysis dated June 26, 2012. Triton contended
that it had submitted this request at that time because Jones had requested that
Triton gather all costs associated with the differing site conditions and submit those
requests after the conclusion of the project. MSD approved this change order
request through CCO #6 on September 2, 2013.
{¶29} On March 15, 2013, Triton also submitted COR #7 for additional
concrete roadway restoration due to the deteriorated road base. It stated that it had
submitted the request after the conclusion of the project, per Jones’s request. MSD
approved COR #7 through CCO #7.
{¶30} Finally, on March 19, 2013, Triton submitted COR #14 for expenses
incurred due to undocumented, unsuitable ground conditions throughout the
project. Again, it claimed that it had submitted this request at that time because
Jones had requested that it submit all change order requests after work on the
project was finished. Triton requested additional compensation of $534,321.65.
Gessner calculated that amount by using what Triton contends was a total-cost
method. It supported that request with a binder full of information that contained
numerous photographs and copies of numerous IDRs, which it contended
documented its claim for differing site conditions.
{¶31} After the city refused to approve COR #14, Triton filed a complaint in
the case numbered A-1500905 alleging breach of contract. It sought damages for the
unpaid contract balance, costs related to the differing site conditions, extended and
unabsorbed home office overhead, interest, and attorney fees. The city filed a
counterclaim for breach of contract and indemnification. At Triton’s request, the
trial court consolidated that case with the case numbered A-1405757.
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{¶32} Subsequently, the city filed two motions in limine. In its first motion,
the city asked the court to exclude the testimony of Brian Gessner, Triton’s director
of site development, relating to Triton’s damages for the differing-site-conditions
claim because he did not use a proper method to calculate those damages, and the
damages were purely speculative. In its second motion, the city asked the court to
exclude evidence related to Triton’s claim for differing site conditions due to
spoliation of the evidence. It argued that Triton had failed to preserve evidence
necessary for it to rebut Triton’s claims that the soil conditions it encountered on the
Sagebrush Project were different than those stated in the contract. The trial court
granted both motions in limine.
{¶33} The court granted summary judgment in favor of Triton and Farmers
on the city’s claims against the performance and payment bonds. The trial court also
granted summary judgment in favor of the city on Triton’s claims for its home office
overhead and for attorney fees.
{¶34} But the court denied the city’s motion for summary judgment on
Triton’s differing-site-conditions claim. The court stated that a genuine issue of
material fact existed “as to whether the subsurface conditions at the site materially
differed from those indicated in the geotechnical engineering report that the city
issued with the bid documents.”
{¶35} Thus, the only issue remaining for trial was Triton’s differing-site-
conditions claim. On October 23, 2017, a jury trial commenced. Triton and the city
entered into an agreement resolving some of the claims, which included dismissing
the jury and proceeding to a bench trial. Triton proffered the evidence that it would
have presented had that evidence not been excluded. The trial court then granted
the city’s motion for a “directed verdict” on the differing-site-conditions claim. On
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OHIO FIRST DISTRICT COURT OF APPEALS
November 28, 2017, the court journalized a judgment entry incorporating all of its
previous rulings. This appeal followed.
{¶36} Triton presents eight assignments of error for review, which we
address out of order. We will discuss the assignments of error related to the
Sagebrush Project first and then the assignments of error related to the
Wesselman/Carroll projects.
Spoliation of Evidence
{¶37} In its first assignment of error, Triton contends that the trial court
erred in granting the city’s motion in limine precluding Triton from presenting
evidence concerning differing site conditions due to spoliation of evidence. The basis
of the city’s spoliation argument was that Triton had failed to collect and preserve
soil samples at the job site to support its differing-site-conditions claim. Triton
argues that the court abused its discretion, because the threshold showing of
spoliation had not been met. In its second assignment of error, Triton contends that
the trial court erred in precluding Triton from presenting evidence regarding soil
conditions at the site and any difference between the soil conditions it had
encountered and the soil conditions it expected at the Sagebrush Project site as a
sanction for spoliation of evidence. We sustain these assignments of error.
{¶38} The doctrine of spoliation of the evidence may be raised in a number of
ways including as an affirmative defense or by motion. The effect of the doctrine,
when applied in a defensive manner, is to allow the defendant to exculpate itself
from liability because the plaintiff has barred it from obtaining evidence necessary to
prove the existence or absence of the essential elements of the claim. Loukinas v.
Roto-Rooter Servs. Co., 167 Ohio App. 3d 559, 2006-Ohio-3172, 855 N.E.2d 1272, ¶
12 (1st Dist.). A trial court may exclude expert testimony as a sanction for spoliation
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OHIO FIRST DISTRICT COURT OF APPEALS
of the evidence if it determines that evidence has been intentionally altered or
destroyed by a party or its expert before the defense has had an opportunity to
examine the evidence. Id. at ¶ 13; Hetzer-Young v. Elano Corp., 2d Dist. Greene No.
2013-CA-32, 2014-Ohio-1104, ¶ 29; Cincinnati Ins. Co. v. Gen. Motors Corp., 6th
Dist. Ottawa No. 94OT017, 1994 WL 590566, *3 (Oct. 28, 1994).
{¶39} The city does not contend that Triton destroyed soil samples. Instead,
it argues that Triton failed to collect and preserve them. Nothing in the record shows
that Triton had a duty to collect soil samples, and the city never asked Triton to
provide soil samples. The contract for the Sagebrush Project did not require Triton
to do so. Further, the contract gave the city the right to inspect job-site conditions at
any time so it could have collected its own soil samples, if needed.
{¶40} The city contends that Triton failed to give it proper notice of the
condition of the soil as provided for in the contract. That is a separate contractual
issue, which is irrelevant to the doctrine of spoliation of the evidence. That issue was
never fully addressed because of the trial court’s decisions granting the two motions
in limine, an issue we discuss more fully under Triton’s eighth assignment of error.
{¶41} Thus, the doctrine of spoliation of evidence is not implicated in this
case because no evidence existed to be destroyed. Sanctions and causes of action for
spoliation of evidence are designed to place responsibility and accountability on
parties who were actually in possession of evidence that existed at one time but who
later failed to provide the evidence without adequate explanation. Wheatley v.
Marietta College, 2016-Ohio-949, 48 N.E.3d 587, ¶ 105 (4th Dist.); Keen v Hardin
Mem. Hosp., 3d Dist. Hardin No. 6-03-08, 2003-Ohio-6707, ¶ 16. “Non-existent
evidence, by its very nature, cannot be spoiled.” Keen at ¶ 16.
{¶42} Consequently, we hold that the trial court erred in granting the city’s
motion in limine and in precluding Triton from presenting evidence regarding soil
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conditions at the Sagebush Project site based on spoliation of evidence. We sustain
Triton’s first and second assignments of error.
Testimony on Damages for Differing-Site-Conditions Claim
{¶43} In its third assignment of error, Triton contends that the trial court
erred in precluding Gessner from testifying in support of its claim for damages
relating to differing site conditions. It argues that the evidence was probative and
was calculated with a reasonable degree of certainty, and therefore, should not have
been excluded. We find this assignment of error to be well taken, although not
precisely for the reasons Triton states.
{¶44} We note that the city argues in its brief that Gessner was not qualified
as an expert witness under Evid.R. 702, which was not the basis of its motion to
exclude his testimony about damages in the trial court. In its motion, the city had
argued that the probative value of the testimony on damages was substantially
outweighed by the danger of unfair prejudice under Evid.R. 403(A). Its argument
was threefold: (1) that Gessner’s damage calculation was based on documents that
Triton had lost, disposed of, or intentionally withheld; (2) that Gessner could not
explain the basis of his damage calculation; and (3) that Gessner’s calculation did not
conform to the requirements of a total-cost claim.
{¶45} The trial court has broad discretion in determining whether evidence
should be excluded under Evid.R. 403(A). A reviewing court will not reverse that
decision absent an abuse of discretion. State v. Simms, 1st Dist. Hamilton Nos. C-
030138 and C-030211, 2004-Ohio-652, ¶ 4; Cincinnati v. Banks, 143 Ohio App. 3d
272, 287, 757 N.E.2d 1205 (1st Dist.2001).
{¶46} Evid.R. 403(A) provides that “[a]lthough relevant, evidence is not
admissible if its probative value is substantially outweighed by the danger of unfair
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prejudice, of confusion of the issues, or of misleading the jury.” Exclusion of
evidence under Evid.R. 403(A) requires more than mere prejudice, it requires unfair
prejudice. Oberlin v. Akron Gen. Med. Ctr., 91 Ohio St. 3d 169, 172, 743 N.E.2d 890
(2001); Conway v. Dravenstott, 3d Dist. Crawford No. 3-06-05, 2006-Ohio-4840, ¶
11. “Unfair prejudice is that quality of evidence which might result in an improper
basis for a jury decision.” Oberlin at 172. If evidence “arouses the jury’s emotional
sympathies, evokes a sense of horror, or appeals to an instinct to punish,” it may be
unfairly prejudicial. Id.; Conway at ¶ 11. “Usually, although not always, unfairly
prejudicial evidence appeals to the jury’s emotions rather than intellect.” Oberlin at
174.
{¶47} The contract required the use of a measured-mile analysis to quantify
labor inefficiencies. Triton originally stated that its damages were based on a
measured-mile analysis. Using that analysis, it presented a much lower figure for
damages than it claimed later in the proceedings. Gessner testified that due to the
nature of the work it was impossible to do a measured-mile analysis.
{¶48} Later, Triton claimed to be using the total-cost method, which Gessner
acknowledged he had no experience calculating. He stated that he had never used
the calculation he had relied upon in determining Triton’s damages for the alleged
differing-site-conditions claim. He stated he did his “best effort at a total costs
method,” and that his opinion was not based on any construction journal or industry
standard.
{¶49} We cannot hold that any of the alleged defects in Gessner’s testimony
would have caused the city unfair prejudice. Gessner’s testimony would not appeal
to a jury’s emotions rather than its intellect. It also would not arouse a jury’s
emotional sympathies, evoke a sense of horror, or appeal to an instinct to punish.
The city contends that Gessner’s estimate of damages was speculative and based on
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conjecture. See Kahn v. CVS Pharmacy, Inc., 165 Ohio App. 3d 420, 2006-Ohio-
Ohio-112, 846 N.E.2d 904, ¶ 25 (1st Dist.); Hollobaugh v. D & V Trucking, 7th Dist.
Mahoning No. 99 CA 303, 2001 WL 537058, *5 (May 8, 2001). But any defects in
Gessner’s testimony go to its weight, not its admissibility.
{¶50} Under the circumstances, we hold that the trial court’s decision to
grant the motion in limine excluding Gessner’s testimony on damages was an abuse
of discretion. We make no decision as to whether Gessner’s testimony was proper
expert testimony under Evid.R. 702 since the trial court did not decide the motion in
limine on that basis. We, therefore, sustain Triton’s third assignment of error.
Home-Office-Overhead Damages
{¶51} In its fourth assignment of error, Triton contends that the trial court
erred in granting partial summary judgment in favor of the city on Triton’s claim for
home-office-overhead damages related to the city’s unilateral extension of the project
from September 2012 to June 2013. It argues that issues of fact exist as to whether it
was entitled to those damages. This assignment of error is not well taken.
{¶52} An appellate court reviews a trial court’s ruling on a motion for
summary judgment de novo. Grafton v. Ohio Edison Co., 77 Ohio St. 3d 102, 105, 671
N.E.2d 241 (1996); Wal-Mart Realty Co. v. Tri-County Commons Assoc., Ltd., 1st
Dist. Hamilton No. C-160747, 2017-Ohio-9280, ¶ 8. Summary judgment is
appropriate if (1) no genuine issue of material fact exists for trial, (2) the moving
party is entitled to judgment as a matter of law, and (3) reasonable minds can come
to but one conclusion and that conclusion is adverse to the nonmoving party, who is
entitled to have the evidence construed most strongly in his or her favor. Temple v.
Wean United, Inc., 50 Ohio St. 2d 317, 327, 364 N.E.2d 267 (1977); Wal-Mart Realty
Co. at ¶ 8.
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{¶53} Home office overhead is the cost of running a contractor’s home office
during a government-caused delay. Complete Gen. Constr. Co. v. Ohio Dept. of
Transp., 94 Ohio St. 3d 54, 55, 760 N.E.2d 364 (2002). Contractors cover overhead
costs by spreading the costs proportionally across ongoing projects. When an owner-
caused delay substantially diminishes a project’s cash flow, the contractor’s fixed
overhead costs are not absorbed by the delayed project and must be absorbed by
other projects. If a contractor is unable to take on other construction projects during
the period of the delay, the contractor’s overhead costs are not absorbed by the
project to which they were apportioned. Id. at 57; Royal Elec. Constr. Co. v. Ohio
State Univ., 10th Dist. Franklin Nos. 93AP-399 and 93AP-424, 1993 WL 532013 *6
(Dec. 21, 1993).
{¶54} In Complete Gen. Constr. Co., the Ohio Supreme Court adopted what
is known as the Eichleay formula “an equation employed by federal courts for
determining such costs.” Complete Gen. Constr. Co. at 55. It is “the most well-
known formula for calculating unabsorbed overhead” costs arising out of
government-caused delay. Id., quoting Shapiro & Washington, Use of the Eichleay
Formula to Calculate Unabsorbed Overhead for Government Caused Delay Under
Manufacturing Contracts, 25 Pub.Contr.L.J. 513, 514 (1996). The Supreme Court
did note, however, that the Eichleay formula is not the only way to determine
unabsorbed home-office-overhead damages. Complete Gen. Constr. Co. at 61.
{¶55} Before that formula may be applied, the contractor must demonstrate
two important elements to establish a prima facie case. First, the contractor must
show that it was on “standby.” A contractor is on standby “when work on a project is
suspended for a period of uncertain duration and the contractor can at any time be
required to return to work immediately.” Complete Gen. Constr. Co. at 58, quoting
West v. All State Boiler, Inc., 146 F.3d 1368, 1373 (Fed.Cir.1998). In effect, the
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contractor is not working on the project, yet remains bound to the project. The
contractor must be ready to immediately resume performance at any time. Second,
the contractor must show that it was unable to take on any other work while on
standby. That is, it must show that the uncertainty of the duration of the delay made
it unable to commit to replacement work on another project. Complete Gen. Constr.
Co. at 58-59.
{¶56} The government can rebut the contractor’s prima facie case by
demonstrating either (1) that it was not impractical for the contractor to obtain
replacement work during the delay, or (2) that the contractor's inability to obtain or
perform work was not caused by the government’s suspension. Complete Gen.
Constr. Co., 94 Ohio St. 3d at 59, 760 N.E.2d 364. “The Eichleay formula goes
nowhere without causation.” Id. at 60. A contractor may recover only if there is an
owner-caused delay. Id.
{¶57} The contract language in the present case is similar to the contract
language in Complete Gen. Constr. Co. It provides that “[t]he City will only pay for
the Contractor’s home office overhead if all work on the project is suspended at no
fault of the Contractor, the length of the suspension is unknown, the Contractor’s
crews are put on standby, and the Contractor cannot get replacement work for the
time period of the suspension.”
{¶58} First, the record shows that some of the delay was not caused by the
city. The delay from September 2012 to December 2012 was caused by the
installation of curbs by Colerain Township, which is not a party to either suit.
Gessner acknowledged that he knew Triton would return to work on the project
when the curbs were installed.
{¶59} Triton contends that the city caused a nine-month suspension from
September 2012 until June 2013. The record shows that the city had a policy in
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OHIO FIRST DISTRICT COURT OF APPEALS
which it extends a contract for at least nine months past its final completion date to
negotiate change orders and close out the contract. Since Triton finished its work in
December 2012, it is difficult to say that the city’s extension for closing out the
project caused Triton to incur additional home-office-overhead costs. But, even if we
attribute all the delay to the city, nothing in the record shows that the city put Triton
on “standby” status during that time.
{¶60} Further, Triton was not prevented from accepting other work from
September 2012 through June 2013. In granting summary judgment to the city on
Triton’s claim for unabsorbed home office overhead, the trial court stated,
Triton’s own employee time records show that its employees were
working on various replacement projects from September 2012
(contract completion date) and December 2012 (the date Triton admits
its work on the project was completed). Mr. Gessner’s inability to
recall whether Triton passed up other opportunities is not sufficient to
create an issue of fact concerning whether Triton was prevented from
obtaining replacement work as a result of the Sagebrush Project.
Triton failed to locate or produce any admissible record or evidence
that shows that Triton was unable to undertake replacement work as a
result of the Sagebrush Project. The burden is on Triton to set forth
specific facts showing there is a genuine issue for trial.
The record supports the trial court’s assessment.
{¶61} We find no issue of material fact. Construing the evidence most
strongly in Triton’s favor, reasonable minds can come to but one conclusion—that
Triton did not suffer home-office-overhead damages. The city was entitled to
judgment as a matter of law, and the trial court did not err in granting summary
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OHIO FIRST DISTRICT COURT OF APPEALS
judgment to the city on that issue. Consequently, we overrule Triton’s fourth
assignment of error.
Directed Verdict/Motion to Dismiss
{¶62} Finally, in its eighth assignment of error, Triton contends that the trial
court erred in granting the city’s motion for a directed verdict. It contends that the
court’s prior rulings erroneously prevented it from pursuing its claims in the action.
This assignment of error is well taken, although not precisely for the reasons Triton
argues.
{¶63} When the case proceeded to trial, it was heard by a visiting judge. The
visiting judge advised the parties that he would not change any of the assigned
judge’s evidentiary rulings. Triton and the city entered into an agreement resolving
some of the claims, which included dismissing the jury and proceeding to a bench
trial. The court permitted Triton to proffer the evidence it would have presented if
that evidence had not been excluded by the motions in limine before granting the
motion for a directed verdict.
{¶64} Civ.R. 50(A)(4) governs motions for a directed verdict. A ruling on a
motion for a directed verdict determines whether the evidence was sufficient to
proceed to a jury. Osler v. Lorain, 28 Ohio St. 3d 345, 347, 504 N.E.2d 19 (1986);
Williams v. Sharon Woods Collision Ctr. Inc., 2018-Ohio-2733, 117 N.E.3d 57, ¶ 14
(1st Dist.). Therefore, directed verdicts are inapplicable in bench trials where no jury
exists. Hayes v. Carrigan, 2017-Ohio-5867, 94 N.E.3d 1091, ¶ 21 (1st Dist.).
{¶65} Instead, a defendant in a nonjury action must move for an involuntary
dismissal under Civ.R. 41(B)(2) at the close of the plaintiff’s evidence. Id. Therefore,
we will treat Triton’s assignment of error as one challenging the trial court’s decision
to grant a dismissal under Civ.R. 41(B)(2). See id.
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OHIO FIRST DISTRICT COURT OF APPEALS
{¶66} When ruling on a Civ.R. 41(B)(2) motion to dismiss, a trial court is
entitled to weigh the evidence presented. It is not required to view the evidence in
the light most favorable to the plaintiff. Goering v. Chriscon Builders Ltd., 1st Dist.
Hamilton No. C-100729, 2011-Ohio-5480, ¶ 16. A reviewing court may not set aside
the trial court’s judgment on such a motion unless the judgment was erroneous as a
matter of law or against the manifest weight of the evidence. Id.
{¶67} We have already held that the trial court erred in excluding Triton’s
evidence regarding differing site conditions and Gessner’s testimony regarding
damages. Because the court did not consider that evidence, its judgment on the
motion to dismiss was erroneous as a matter of law. Consequently, we sustain
Triton’s eighth assignment of error and reverse the trial court’s decision granting the
motion to dismiss. We remand the cause for a new trial on Triton’s differing-site-
conditions claim under the provisions of the contract.
Unjust Enrichment
{¶68} We now address Triton’s assignments of error related to the
Wesselman/Carroll Projects. In its fifth assignment of error, Triton contends that
the trial court erred in granting summary judgment in favor of the city on the city’s
claim for unjust enrichment. Triton argues that genuine issues of material fact exist
as to whether it would be inequitable for it to repay $496,256.09 to the city based on
the city’s mistaken payment of additional sums to Triton. This assignment of error is
not well taken.
{¶69} Unjust enrichment occurs when a party retains money or benefits that
in equity belong to another. Liberty Mut. Ins. Co. v. Indus. Comm., 40 Ohio St. 3d
109, 110-111, 532 N.E.2d 124 (1988); Alexander v. Motorists Mut. Ins. Co., 1st Dist.
Hamilton No. C-110836, 2012-Ohio-3911, ¶ 23. To establish unjust enrichment, the
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OHIO FIRST DISTRICT COURT OF APPEALS
plaintiff must demonstrate: (1) a benefit conferred by the plaintiff on the defendant;
(2) knowledge by the defendant of that benefit; and (3) retention of that benefit by
the defendant under circumstances where it would be unjust to do so without
payment. Hambleton v. R.G. Barry Corp., 12 Ohio St. 3d 179, 183, 465 N.E.2d 1298
(1984); Alexander at ¶ 23.
{¶70} Triton argues that it was entitled to the first payment of $496,256.09
at the conclusion of the Wesselman/Carroll Project. Pavement Management did not
assert claims against the city until six months after the project had been completed.
Triton denied that it had contracted with Pavement Management and that it was
liable to pay it any amount. Triton argues that it was entitled to receive, deposit and
retain the first payment that it had earned by its performance of the work on the
Wesselman/Carroll Project.
{¶71} As to the second, mistaken payment, Triton contends that genuine
issues of fact exist as to whether the city breached a duty imposed on it by law in
making the second payment. It argues that the city was obligated by law to account
for its own expenditures and reconcile its own accounts. Therefore, genuine issues of
material fact existed as to whether it would be unconscionable for Triton to retain the
benefits conferred on it, and whether the city is precluded from recovery by its own
failure to carry out its obligations.
{¶72} We find no merit in Triton’s arguments. The record shows that Triton
was paid twice for its work on the Wesselman/Carroll Projects. The trial court was
correct when it stated,
Since January 2014 the City’s position has not changed with regard to
the receipt or lack of receipt of the funds in question. Triton has not
located any bank documents which contradict the [bank’s] records.
Triton was aware that it still possessed the funds in 2011. Triton has
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OHIO FIRST DISTRICT COURT OF APPEALS
failed to present any evidence to show the return of the overpayment
to the City. Majid Samarghandi and Triton knew that the City’s checks
were deposited into Triton’s checking accounts and the relevant funds
were never returned to the City.
{¶73} Triton is essentially arguing that it should be able to take advantage of
a simple mistake by the city. We find no issue of material fact. Construing the
evidence most strongly in Triton’s favor, reasonable minds can come to but one
conclusion—that Triton was unjustly enriched when it failed to return the mistaken
payment. The city was entitled to judgment as a matter of law, and the trial court did
not err in granting summary judgment in its favor on its claim for unjust enrichment.
Consequently, we overrule Triton’s fifth assignment of error.
Abuse of Process
{¶74} In its seventh assignment of error, Triton contends that the trial court
erred in granting summary judgment in the city’s favor on Triton’s claim for abuse of
process. It argues that the trial court applied the wrong standard and improperly
concluded that Triton had failed to present “clear evidence” of the elements of abuse
of process. This assignment of error is not well taken.
{¶75} To establish a claim for abuse of process, a plaintiff must show (1) that
a legal proceeding has been set in motion in proper form and with probable cause;
(2) that the proceeding has been perverted to attempt to accomplish an ulterior
purpose for which it was not designed; and (3) that direct damage has resulted from
that wrongful use of process. Robb v. Chagrin Lagoons Yacht Club, 75 Ohio St. 3d
264, 270, 662 N.E.2d 9 (1996); Losch & Assoc., Inc., 1st Dist. Hamilton No. C-
150716, 2016-Ohio-4950, ¶ 22. “[A]buse of process occurs when someone attempts
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OHIO FIRST DISTRICT COURT OF APPEALS
to achieve through use of the court that which the court is itself powerless to order.”
Robb at 271.
{¶76} Triton takes the trial court’s statement that it failed to present “clear
evidence” out of context. The abuse-of-process claim was based on the allegation
that the city had brought its fraud claim for the improper purpose of forcing Triton to
pay the city $495,256.09, the amount of the mistaken payment to Triton, and
punitive damages. As the trial court pointed out, “The entire basis of the City’s
original complaint is to get Triton to repay the $496,265.09. But the court does have
the power to order the repayment of money.”
{¶77} Triton also claims that the city filed the fraud claim to punish it and to
pressure it into settling its claims against the city for a lower amount. Triton
presented no evidence to support these allegations, other than Samarghandi’s
deposition testimony in which he stated that he believed that the city had filed the
fraud claim to exert pressure on him. That belief is insufficient to create a genuine
issue of material fact. See Schlaegel v. Howell, 2015-Ohio-4296, 42 N.E.3d 771, ¶ 23
(2d Dist.); White v. Sears, Roebuck & Co., 10th Dist. Franklin No. 10AP-294, 2011-
Ohio-204, ¶ 8-9.
{¶78} Though the trial court’s use of the phrase “clear evidence” was
unfortunate, the record contains no evidence to support Triton’s contention that the
proceeding was perverted to attempt to accomplish an improper purpose for which it
was not designed. Therefore, the trial court did not err in granting summary
judgment in favor of the city on Triton's claim for abuse of process. We overrule its
seventh assignment of error.
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OHIO FIRST DISTRICT COURT OF APPEALS
Frivolous Conduct
{¶79} In its sixth assignment of error, Triton contends that the trial court
erred in granting the city's motion for summary judgment on its claim for frivolous
conduct under R.C. 2323.51, and in precluding it from raising the issue until after
trial. It argues that Ohio law allows a party to raise a frivolous-conduct claim either
by motion or counterclaim, and that the trial court erred in finding that it could only
be pursued by motion.
{¶80} The record shows that the trial court allowed the city to amend its
complaint to add a claim for fraud, based on Triton’s failure despite repeated
requests to return the mistaken payment. Triton then asserted counterclaims for
abuse of process and for frivolous conduct. In its counterclaim, Triton alleged that
the City’s fraud claims were initiated and other actions were taken
merely for the purpose of harassing or maliciously injuring Triton and
Mr. Samarghandi, or for another improper purpose; and/or, upon
information and belief, the City’s fraud claims consist of allegations or
other factual contentions that have no evidentiary support or are not
likely to have evidentiary support after a reasonable opportunity for
further investigation or discovery.
The city withdrew its fraud claim as part of a settlement of some issues immediately
before trial.
{¶81} R.C. 2323.51(B)(1) provides that “at any time not more than thirty days
after the entry of final judgment in a civil action or appeal, any party adversely
affected by frivolous conduct may file a motion for an award of attorney costs,
reasonable attorney’s fees, and other reasonable expenses incurred in connection
with the civil action or appeal.”
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OHIO FIRST DISTRICT COURT OF APPEALS
{¶82} A split of authority exists as to the proper procedure to raise a claim of
frivolous conduct. Some courts have held that a request for sanctions under R.C.
2323.51 must be made by motion after the trial and some have held that it may be
made by counterclaim as well as by motion. See Scheel v. Rock Ohio Caesars
Cleveland, LLC, 8th Dist. Cuyahoga No. 105037, 2017-Ohio-7174, ¶ 16; Craine v.
ABM Serv., Inc., 11th Dist. Portage No. 2011-P-0028, 2011-Ohio-5710, ¶ 10; Shaver
v. Wolske & Blue, 138 Ohio App. 3d 653, 673, 742 N.E.2d 164 (10th Dist.2000).
{¶83} The trial court held that a claim for frivolous conduct must be raised
by motion rather than in a counterclaim. Nevertheless, Triton was not foreclosed
from relief. The court stated:
However, until the Supreme Court resolves the conflicting case law the
Court finds that the claim is not entirely waived under Ohio law.
Therefore, to the extent that the City's motion wishes this Court to find
as matter of law that the claim is forever extinguished, the City’s
motion is denied. The Court does find that the claim is premature and
should be completely separated from the upcoming jury trial * * *. The
Court finds that if Triton would like to pursue this claim it should be
restyled as a motion and filed after trial.
{¶84} Triton never filed that motion. The final judgment entry stated that in
accordance with the court's previous entry, “judgment is entered in the City’s favor
and against Triton dismissing without prejudice Triton’s counterclaim of frivolous
conduct.” Since we have remanded the matter for a new trial, Triton is not
foreclosed from raising the issue again in the trial court. We need not issue an
advisory opinion on this issue. Therefore, we find the issue to be moot, and we
decline to address it. See Schwab v. Lattimore, 166 Ohio App. 3d 12, 2006-Ohio-
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OHIO FIRST DISTRICT COURT OF APPEALS
1372, 848 N.E.2d 912, ¶ 10 (1st Dist.); In re Bailey, 1st Dist. Hamilton Nos. C-040014
and C-040479, 2005-Ohio-3039, ¶ 9.
{¶85} In sum, we sustain Triton’s first, second, third and eighth assignments
of error and we remand the cause to the trial court for a new trial on Triton’s
differing-site-conditions claim. We find Triton’s sixth assignment of error to be
moot, and we decline to address it. Finally, we overrule Triton’s remaining
assignments of error, and we affirm the trial court’s judgment in all other respects.
Judgment affirmed in part, reversed in part, and cause remanded.
M YERS , P.J., and C ROUSE , J., concur.
Please note:
The court has recorded its own entry this date.
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