SRS Distrib., Inc. v. Axis Alliance, L.L.C.

[Cite as SRS Distrib., Inc. v. Axis Alliance, L.L.C., 2020-Ohio-1529.]
IN THE COURT OF APPEALS OF OHIO
SECOND APPELLATE DISTRICT
MONTGOMERY COUNTY
SRS DISTRIBUTION, INC. :
:
Plaintiff-Appellant : Appellate Case No. 28607
:
v. : Trial Court Case No. 2018-CV-4170
:
AXIS ALLIANCE, LLC c/o MATTHEW : (Civil Appeal from
COFFMAN REG. AGENT, et al. : Common Pleas Court)
:
Defendants-Appellees :
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OPINION
Rendered on the 17th day of April, 2020.
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PATRICK M. SNEED, Atty. Reg. No. 0002309, 2300 Marquis Two Tower, 285 Peachtree
Center Avenue N.E., Atlanta, Georgia 30303
and
MICHAEL A. SNYDER, Atty. Reg. No. 0069425 and MARCUS A. MILLER, Atty. Reg. No.
0096597, 41 South High Street, Suite 2400, Columbus, Ohio 43215
Attorneys for Plaintiff-Appellant
ROBERT C. WOOD, Atty. Reg. No. 0071861, 68 North High Street, Building B, Suite 202,
New Albany, Ohio 43054
Attorney for Defendants-Appellees, Axis Alliance, LLC c/o Matthew Coffman Reg.
Agent, et al.
JOSHUA A. KOLTAK, Atty. Reg. No. 0078164, 100 South Main Avenue, Suite 300,
Sidney, Ohio 45365
Attorney for Defendant-Appellee, Ohio Farmers Insurance Company
.............
DONOVAN, J.
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{¶ 1} SRS Distribution Inc. dba Midwest Roofing Supply (“SRS”) appeals from the
trial court’s October 17, 2019 judgment sustaining Ohio Farmers Insurance Company’s
(“OFIC”) motion for summary judgment on SRS’s claim on a bond and overruling SRS’s
motion for summary judgment. We hereby affirm the judgment of the trial court.
{¶ 2} On September 7, 2018, SRS filed a complaint against Axis Alliance, LLC,
(“Axis”), Matthew Coffman, who is the registered agent of Axis, and OFIC, the surety on
the bond. The complaint alleged that on or about September 15, 2015, Axis executed a
credit application and agreement to open a business charge account with SRS. The
same day, Coffman executed a personal guarantee. Copies of the agreement and the
personal guarantee were attached to the complaint. SRS alleged that, pursuant to the
agreement, it sold and delivered materials to Axis through distribution centers up to and
through April 5, 2018. SRS also alleged that, as of September 6, 2018, a balance of
$156,961.57 was due from Axis, which included a principal amount of $140,595.39 and
interest of $16,366.18, plus interest that continued to accrue. An account statement was
attached to the complaint, as well as a written demand for payment from Axis and
Coffman.
{¶ 3} Related to the claim on bond against OFIC, the complaint alleged that SRS
provided roofing material for improvements made to property located on David Road (the
“School of Advertising” property) and owned by Advertising Art Educational Services, Inc.
According to the complaint, SRS first furnished materials for the School of Advertising
Property on September 21, 2017, and last furnished materials on November 3, 2017.
The complaint alleged that Ferguson Construction Company (“Ferguson”) was the prime
contractor with respect to the improvements, and Axis was a subcontractor. Pursuant
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to R.C. 1311.06, on or about January 18, 2018, SRS recorded an affidavit of mechanic’s
lien with the Montgomery County Recorder. On February 27, 2018, Ferguson filed an
Application for Approval of Bond Discharging Mechanic’s Lien in the Montgomery County
Common Pleas Court (Montgomery C.P. No. 2018-CV-921). On March 14, 2018, the
Court entered its Order of Approval of Bond, which substituted the bond for the
mechanic’s lien. A copy of the mechanic’s lien and the order substituting the bond were
attached to the complaint. According to the complaint, OFIC was the surety on the bond.
{¶ 4} On October 4, 2018, OFIC filed a motion to dismiss SRS’s complaint for
failure to state a claim upon which relief could be granted, asserting that SRS failed to
comply with R.C. 1311.06(B)(3) with respect to the filing of the lien. SRS responded to
the motion on October 18, 2018.
{¶ 5} On October 22, 2018, SRS, with leave of court, filed an amended complaint,
in which it alleged that the last day materials were furnished to Axis was November 7,
2017. It attached Exhibit H, a Midwest Roofing Supply “Delivery Ticket” for “galvanized
Roof Hatch,” with a handwritten delivery date of “11-7.”
{¶ 6} Axis and Coffman filed an answer on October 29, 2018, and an amended
answer on October 31, 2018. On March 28, 2019, a consent judgment was filed which
stated that SRS, Axis, and Coffman had agreed that judgment should be rendered for
SRS on Counts One, Two, Three, and Five of the complaint.
{¶ 7} OFIC filed a motion for summary judgment with respect to Count Four on
August 22, 2019. OFIC asserted that, “according to the averments in the affidavit for
mechanic’s lien, SRS recorded the lien at least 76 days after the last day materials were
furnished for the project. According to OFIC, “Ohio law requires strict interpretation of
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mechanic’s lien statutes until a lien is created, but a liberal interpretation and remedial
interpretations after the lien had been created.” OFIC cited Hoppes Builders and Dev.
Co. v. Huron Builders, Inc., 118 Ohio App. 3d 210, 211, 692 N.E.2d 622 (2d Dist.1996).
OFIC further asserted that “a plaintiff cannot prevail on its claim against the bond if the
underlying mechanic’s lien is defective,” and pursuant to R.C. 1311.06(B)(3), “an Affidavit
of Mechanic’s Lien on a non-residential, non-gas or oil well construction project ‘shall’ be
recorded within seventy-five * * * days from the date on which the last of the labor or work
was performed or material furnished by the person claiming the lien.” OFIC asserted
that SRS had failed to record its mechanic’s lien within the time limit of 75 days. OFIC
contended that, even if the last day of furnishing materials was in fact November 7, 2017,
“Ohio courts examine the face of mechanic’s lien affidavits to determine their legality”
pursuant to R.C. 1311.06, without resorting to parol evidence, and SRS’s “claim against
OFIC’s bond” failed as a matter of law.
{¶ 8} SRS filed its motion for summary judgment on September 3, 2019. It
claimed that it filed its Affidavit of Mechanic’s Lien within 75 days of “its date of last
furnishing” and SRS was entitled to judgment as a matter of law on its claim on the bond.
SRS asserted that its “last furnishing” on this project actually occurred on November 7,
2017, and the lien affidavit “inadvertently misidentified [SRS’s] date of last furnishing as
November 3, 2017.” SRS asserted that, in recent years, Ohio courts have recognized
that “by its own terms Ohio lien law is remedial and should be applied so as to ensure
that the purpose and intention of lien statutes are recognized and enforced.” According
to SRS, the “long-recognized purpose behind lien law is to protect the wage earner, the
furnisher of materials, and contractors whose work, goods, and skill created the structures
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to which lien[s] attach.” Citing Burroughs Framing Specialists, Inc. v. 505 W. Main St.,
LLC, 2014-Ohio-3961, 18 N.E.3d 1253 (6th Dist.), SRS asserted that Ohio courts have
upheld lien claims by claimants who substantially complied with lien law requirements or
who could show by a greater weight of the evidence that their lien was valid, despite
inadvertent errors on the face of their lien.”
{¶ 9} SRS directs our attention to the affidavit of Michael McSparron, which stated:
Plaintiff’s Affidavit for Mechanic’s Lien, executed by its then-Regional
Financial Services Manager Michael McSparron, contains an inadvertent
error in the identification of the last date on which [SRS] furnished materials
for improvements to the School of [Advertising] Property that was a clerical
oversight resulting from the change in furnishing of the final material, the
roof hatch, from a will-call pick up on November 3, 2017 to a delivery at the
job site on November 7, 2017. * * * As the party requesting this change,
[Axis] was certainly aware of the same.
{¶ 10} In its motion for summary judgment, SRS asserted that it had presented
evidence sufficient to establish that its last date of furnishing on this project was
November 7, 2017, and OFIC had failed to rebut that evidence. Thus, SRS asserted
that, despite the inadvertent error, its lien was valid and its claim against the bond posted
by OFIC should be granted as a matter of law.
{¶ 11} Each party responded to the other’s motion for summary judgment.
{¶ 12} The trial court ruled in favor of OFIC and against SRS. It held
Pursuant to R.C. 1311.06, the Mechanic’s Lien affidavit at issue in
this case was required to be filed within seventy-five days from the date on
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which the last of the labor or work was performed or material was furnished
by Plaintiff. As OFIC correctly states, the Second District Court of Appeals
recognized that “the Ohio Supreme Court’s reaffirmation of its holding in
Robert v. Clapp Co. confirmed its acceptance of the proposition that all
mechanics liens statutes should be strictly construed concerning whether,
and up to the point that, a lien is created, but should be liberally construed
concerning procedural and remedial provisions after the lien has been
created.[”] Hoppes Builders & Dev. Co. v. Hurren Builders, 118 Ohio
App.3d 210, 213-14 (2d Dist. 1996) (emphasis added). The Second
District reiterated this position in Carey Elec. Co. v. [ABF] Freight Sys., [2d
Dist.] Montgomery No. 17335, 1999 Ohio App. Lexis 3704 (Aug. 13, 1999),
holding that a lien was invalid due to failure to comply with R.C. 1311.05
and R.C. 1311.19.
Here, the Affidavit for Mechanics’ Lien states that “[t]he last of the
labor or work was performed or material was furnished on 11/03/2017.”
See Ex. A to OFIC’s Motion for Summary Judgment. As the parties each
seem to acknowledge, and as evidenced by the affidavit, the lien was
recorded on January 18, 2018 – seventy-six days following the last day
Plaintiff represented that materials were furnished. Further, although
Plaintiff claims that the use of November 3, 2017, rather than November 7,
2017, was an inadvertent mistake, it was required to strictly comply with the
statutory requirements for mechanics’ liens, which includ[e] the time period
set forth for filing such liens. Notably, the Second District has made it clear
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that strict compliance is required before the lien is created. Hoppes, supra,
(holding that R.C. 1311.06(A) addresses the procedure for creating a valid
mechanics’ lien and failure to comply with that procedure precludes the
creation of a valid lien.) It is only after the valid creation of the lien that
substantial compliance with the statutes is acceptable. Id. In the present
case, Plaintiff failed to comply with R.C. 1311.06(A) because it did not
establish in its affidavit that the last day of furnishing material to the Property
was within the statutorily proscribed [sic] time limit. Accordingly, a valid
lien was never created, and substantial compliance is insufficient.
{¶ 13} SRS appeals, raising two assignments of error which we will consider
together:
THE TRIAL COURT ERRED BY FINDING THAT SUBSTANTIAL
COMPLIANCE WITH OHIO’S LIEN STATUTE IS INSUFFICIENT FOR
THE CREATION OF A MECHANIC’S LIEN,
THE TRIAL COURT ERRED BY FINDING THAT A VALID
MECHANIC’S LIEN WAS NEVER CREATED.
{¶ 14} As this Court has noted:
Pursuant to Civ.R. 56(C), summary judgment is proper when (1)
there is no genuine issue as to any material fact, (2) the moving party is
entitled to judgment as a matter of law, and (3) reasonable minds, after
construing the evidence most strongly in favor of the nonmoving party, can
only conclude adversely to that party. Zivich v. Mentor Soccer Club, Inc.,
82 Ohio St. 3d 367, 369-370, 696 N.E.2d 201 (1998). The moving party
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carries the initial burden of affirmatively demonstrating that no genuine
issue of material fact remains to be litigated. Mitseff v. Wheeler, 38 Ohio
St.3d 112, 115, 526 N.E.2d 798 (1988). To this end, the movant must be
able to point to evidentiary materials of the type listed in Civ.R. 56(C) that a
court is to consider in rendering summary judgment. Dresher v. Burt, 75
Ohio St. 3d 280, 292-293, 662 N.E.2d 264 (1996).
Once the moving party satisfies its burden, the nonmoving party may
not rest upon the mere allegations or denials of the party's pleadings.
Dresher at 293, 662 N.E.2d 264; Civ.R. 56(E). Rather, the burden then
shifts to the nonmoving party to respond, with affidavits or as otherwise
permitted by Civ.R. 56, setting forth specific facts that show that there is a
genuine issue of material fact for trial. Id. “ ‘[A] non-movant's own self-
serving assertions, whether made in an affidavit, deposition or interrogatory
responses, cannot defeat a well-supported summary judgment [motion]
when not corroborated by any outside evidence.’ ” Schlaegel v. Howell,
2015-Ohio-4296, 42 N.E.3d 771, ¶ 23 (2d Dist.), quoting White v. Sears,
Roebuck & Co., 10th Dist. Franklin No. 10AP-294, 2011-Ohio-204, ¶ 9.
Throughout, the evidence must be construed in favor of the nonmoving
party. Id.
We review the trial court's ruling on a motion for summary judgment
de novo. Schroeder v. Henness, 2d Dist. Miami No. 2012 CA 18, 2013-
Ohio-2767, ¶ 42. De novo review means that this court uses the same
standard that the trial court should have used, and we examine the
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evidence, without deference to the trial court, to determine whether, as a
matter of law, no genuine issues exist for trial. Ward v. Bond, 2d Dist.
Champaign No. 2015-CA-2, 2015-Ohio-4297, ¶ 8, citing Brewer v.
Cleveland City Schools Bd. of Edn., 122 Ohio App. 3d 378, 383, 701 N.E.2d
1023 (8th Dist.1997).
Nicoll v. Centerville City Schools, 2018-Ohio-36, 102 N.E.3d 1212, ¶ 10-12 (2d Dist.).
{¶ 15} Ohio’s mechanic’s lien law is set forth in R.C. Chapter 1311. R.C. 1311.06
provides in relevant part:
(A) Any person, or the person's agent, who wishes to avail self of
sections 1311.01 to 1311.22 of the Revised Code, shall make and file for
record in the office of the county recorder in the counties in which the
improved property is located, an affidavit showing the amount due over and
above all legal setoffs, a description of the property to be charged with the
lien, the name and address of the person to or for whom the labor or work
was performed or material was furnished, the name of the owner, part
owner, or lessee, if known, the name and address of the lien claimant, and
the first and last dates that the lien claimant performed any labor or work or
furnished any material to the improvement giving rise to the claimant's lien.
If the affidavit is recorded, the omission or inaccuracy of any address in the
affidavit does not affect its validity. The affidavit may be verified before any
person authorized to administer oaths, whether agent for the owner, part
owner, lessee, lien claimant, or an interested or other party.
(B) The affidavit shall be filed within one of the following periods:
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***
(3) If the lien is one not described in division (B)(1) or (2) of this
section, within seventy-five days from the date on which the last of the labor
or work was performed or material was furnished by the person claiming the
lien.
{¶ 16} We conclude that the trial court correctly found in this case that a valid lien
was never created, and substantial compliance was insufficient. “Mechanics’ lien
statutes create rights in derogation of the common law and should therefore be strictly
construed as to the question whether a lien attaches, but their procedural and remedial
provisions should be liberally construed, after the lien has been created.” (Emphasis
added.) Robert V. Clapp Co. v. Fox, 124 Ohio St. 331, 178 N.E. 586 (1931), paragraph
one of syllabus. As this Court has noted, the proposition of law set forth in Clapp was
reaffirmed by the Supreme Court of Ohio in Crock Constr. Co. v. Stanley Miller Constr.
Co., 66 Ohio St. 3d 588, 592, 613 N.E.2d 1027 (1993). Hoppes, 118 Ohio App. 3d 210,
213, 692 N.E.2d 622 (1996)
{¶ 17} At issue in Crock was whether the plaintiff had complied with former R.C.
1311.26, which required the filing of “a sworn and itemized statement of value of labor
performed or material furnished in connection with a mechanic’s lien on a public works
project.” Id. at 213. In Crock, “the court of appeals determined that R.C. 1311.26
should be liberally construed in light of the former R.C. 1311.24 (now R.C. 1311.22).”
(Parenthetical sic.) Id. at *214. R.C. 1311.22 provides: “Sections 1311.01 to 1311.22
of the Revised Code are to be construed liberally to secure the beneficial results, intents,
and purposes thereof; and a substantial compliance with those sections is sufficient for
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the validity of the liens under those sections, provided for and to give jurisdiction to the
court to enforce the same.”
{¶ 18} We also noted in Hoppes that the Supreme Court of Ohio found that the
court of appeals’ interpretation of the provisions of R.C. 1311.26 in Crock was “not
consistent with prior case law established by this court,” namely with its holding in Clapp.
Id. We further concluded that R.C. 1311.22 was not contrary to the holding of Clapp.
Id. Pursuant to Crock, we concluded that “the mechanic’s lien statutes should be strictly
construed with respect to the creation of a lien.” Id.
{¶ 19} As this Court has further noted:
Hoppes * * * thoroughly considered the issue of whether the
mechanics' lien statutes should be strictly construed. Notably, the claim in
Hoppes was that a materialman should be allowed to recover a portion of
proceeds from a foreclosure sale because the materialman had
substantially complied with the requirements for a lien affidavit under R.C.
1311.06(a). [Hobbes] at 212, * * *. In this regard, the affidavit from the
materialman had incorrectly identified the president, owner, and statutory
agent of a company as the owner of the property to be improved. However,
the company, itself, was the property owner of record. [Id.] at 211 * * *.
Instead of letting “substantial compliance” suffice, we found the lien invalid
because the materialman had not strictly complied with the requirements of
the statute. Id. at 215-16 * * *.
As we stressed, our decision in Hoppes was based on established
principles for evaluating mechanics' liens. Further, the law in this area has
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remained essentially unchanged after Hoppes. Accordingly, we see no
reason to use a different standard to assess the validity of mechanics' liens.
For these reasons, as well as those outlined previously, we reject the
proposition that Ohio law uses or should use a standard of substantial
compliance in connection with service requirements.
Carey Elec. Co. v. ABF Freight System, Inc., 2d Dist. Montgomery No. 17335, 1999 WL
958476, *8 (Aug. 13, 1999).
{¶ 20} This issue was further addressed in Mark’s Trucking and Excavating, Inc.
v. Oxi Oil Corp., 9th Dist. Summit No. 13362, 1988 WL 38088, *1 (Apr. 13, 1988), as
follows:
This issue in this mechanic’s lien case is whether a claimholder may
be permitted to supply, by parol evidence, a different date of performance,
when the face of the affidavit for mechanic’s lien states a date of
performance which makes the lien untimely filed. Because we hold that
parol evidence may not be offered to cure the deficient affidavit, we affirm.
{¶ 21} We agree with OFIC that Burroughs, 2014-Ohio-3961, 18 N.E.3d 1253,
upon which SRS relies, “directly conflicts with the decisions of this Court.” Therein, the
“appellant’s affidavit set forth all of the information required by R.C. 1311.06, although
there was a clerical error with the year that the work was performed.” Id. at ¶ 31. The
Sixth District determined as follows:
* * * The affidavit was signed by appellant's president on February
10, 2012, and was filed on February 17, 2012, yet the dates when the work
was first and last performed were set forth as May 6, 2012 and December
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15, 2012. Clearly, the work could not have been performed and completed
after the affidavit was signed and filed. There was no dispute about when
the work was performed. Given that R.C. 1311.22 provides that substantial
compliance with the mechanic's lien statutes is sufficient for a valid lien and
it is evident that appellant's affidavit is in substantial compliance with the
requirements of R.C. 1311.06, we find that appellant's mechanic's lien is
valid.
Id. at ¶ 31.
{¶ 22} Michael McSparron’s Affidavit for Mechanic’s Lien provided in part: “The
first of the labor or work was performed or material was furnished on 09/21/2017. The
last of the labor or work was performed or material was furnished on 11/03/2017 * * *.”
{¶ 23} In his affidavit attached to the motion for summary judgment, Michael
McSparron averred in part as follows:
4. I make this Affidavit to clarify an inadvertent error contained in
Midwest Roofing’s Lien.
***
7. On or about January 15, 2018, I executed the Lien.
8. The Lien states that “The last of the labor or work was performed
or material was furnished on 11/03/17 . . .” which, at the time of my
execution of the Lien, I believed to be true.
9. The date of last furnishing identified in the Lien is based on the
date reflected on Midwest Roofing’s Invoice Number 10197039-001, which
was the Last Invoice for materials sold by Midwest Roofing to Defendant
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Axis Alliance, LLC (“Axis”) for use on the subject property located at 1725
E. David Road * * *.
10. Subsequent to the Lien being recorded, I learned that Midwest
Roofing’s last furnishing for improvements to the School of Advertising
Property did not occur until November 7, 2017, four days after the date of
last furnishing identified in the Lien.
11. It is my understanding that the later furnishing date of
November 7, 2017 occurred as a result of Axis’ request that the material be
changed from a will-call pick up by Axis to a Midwest Roofing delivery at the
jobsite, the School of Advertising Property.
***
13. The correct date of last furnishing of materials by Midwest
Roofing for improvements to the School of Advertising Property against
which Midwest Roofing’s Lien attached is November 7, 2017.
{¶ 24} It is clear from the record before us that the lien herein is invalid as a matter
of law because SRS failed to comply with R.C. 1311.06(A), as strictly construed, since
the January 18, 2018 mechanic’s lien was recorded 76 days after the last day that SRS
represented that materials were furnished. We decline SRS’s invitation to adopt the
Sixth District’s substantial compliance analysis.
{¶ 25} SRS’s assigned errors are overruled, and the judgment of the trial court is
affirmed.
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FROELICH, J. and HALL, J., concur.
Copies sent to:
Patrick M. Sneed
Michael A. Snyder
Marcus A. Miller
Robert C. Wood
Joshua A. Koltak
Hon. Dennis J. Adkins