Menard, Inc. v. DiPaolo Indus. Dev., L.L.C.

[Cite as Menard, Inc. v. DiPaolo Indus. Dev., L.L.C., 2023-Ohio-1188.]
IN THE COURT OF APPEALS OF OHIO
ELEVENTH APPELLATE DISTRICT
TRUMBULL COUNTY
MENARD, INC., CASE NO. 2022-T-0032
Plaintiff-Appellee,
Civil Appeal from the
- vs - Court of Common Pleas
DIPAOLO INDUSTRIAL
DEVELOPMENT, LLC, Trial Court No. 2015 CV 00169
Defendant-Appellant.
OPINION
Decided: April 10, 2023
Judgment: Affirmed in part, reversed in part, and remanded
Julian T. Emerson, Reminger Co., LPA, 101 West Prospect Avenue, Suite 1400,
Cleveland, OH 44115 (For Plaintiff-Appellee).
Michael A. Partlow, 112 South Water Street, Suite C, Kent, OH 44240 (For Defendant-
Appellant).
MATT LYNCH, J.
{¶1} Defendant-appellant, DiPaolo Industrial Development, LLC, appeals the
judgment of the Trumbull County Court of Common Pleas in favor of plaintiff-appellee,
Menard, Inc. For the following reasons, we affirm in part and reverse in part the judgment
of the lower court and remand for further proceedings consistent with this opinion.
{¶2} On January 29, 2015, Menard filed a Complaint against DiPaolo Industrial
raising claims of Breach of Contract (Count I), Breach of Express Warranty (Count II),
Indemnification (Count III), and Conversion (Count IV). The Complaint was based on the
following allegations: “Menard and Defendant entered into a written agreement * * * for
work to be performed by DiPaolo at a new Menard’s location in Warren, Ohio * * *, the
scope of which included demolition, concrete-crushing, salvage, storage, and milling of
asphalt services. * * * As a result of DiPaolo’s failure to timely complete its work despite
Menard’s requests, Menard was compelled to hire another contractor to complete
DiPaolo’s work and correct defective and non-conforming work.”
{¶3} On December 16, 2015, DiPaolo Industrial filed an Answer and
Counterclaim raising claims for Breach of Contract (Count One), Unjust Enrichment
(Count Two), Foreclosure of Mechanic’s Lien (Count Three), and Defamation of
Character (Count Four). DiPaolo asserted that it performed its obligations under the
contract and Menard had failed to remit payment pursuant to its terms. Furthermore, it
was alleged that “DiPaolo and Menard agreed [per change orders] to DiPaolo performing
additional work on the project related to the original demolition scope of the work” and
“Menard failed to timely approve and remit payment for the Change Orders.”
{¶4} On October 17, 2017, the trial court granted partial summary judgment in
favor of Menard on DiPaolo’s claims for Breach of Contract and Unjust Enrichment with
respect to the change orders only.
{¶5} On July 26 and 27, and on October 11, 2018, trial was held before a
magistrate.
{¶6} On May 13, 2019, the Magistrate’s Decision was issued. The magistrate
found in favor of Menard with respect to both the claims of the Complaint and
Counterclaim based on the following Findings of Fact:
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1. James Carlson is the Assistant General Manager of Store
Planning and Construction for Plaintiff.1
2. Sergio DiPaolo is the Managing Member of Defendant.
3. Plaintiff issued an October 1, 2013 “Invitation to Bid” packet of
documents for potential bidders, which comprised of demolition
plans, site plans, environmental report, soils report, specifications,
and a sample contract.
***
5. Defendant received and reviewed the Invitation to Bid documents
before entering into contract with Plaintiff.
***
11. The Invitation to Bid stated, “The work to be performed hereunder
should be commenced and completed on or before the dates as
shown in the contract. The general contractor agrees that time is of
the essence and that the times stated shall only be modified by
written agreement of the parties. Completion means all work
including punch list item complete and all inspections complete. The
contractor agrees that the owner will suffer financial loss if the project
is not completed on the completion date.”
***
16. Sergio DiPaolo reviewed the contract and signed the contract on
behalf of Defendant.
***
18. The contract entered into was to be enforced in conjunction with
the Invitation to Bid documents.
19. The contract was for the sum of $286,000.
***
22. Per the contract, “Contractor shall not perform any extra or
additional work or changes from the contract documents unless
previously authorized in writing by an AIA change order signed by
1. References to the trial transcript and exhibits included in the Magistrate’s Decision are omitted
throughout the Findings of Fact.
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Troy Anderson, the General Manager Store
Planning/Design/Construction. Portions of change order work are
subject to merchandise credit check. Owner’s project managers are
not authorized to approve changes in the work.”
23. Defendant admitted that nowhere in the contract does it state
Defendant could perform additional work simply off a verbal
communication go ahead.
24. Per the contract, “The work to be performed hereunder shall be
commenced by November 11, 2013, and have demolition completed
on or before December 27, 2013, and complete crushing by January
31, 2014 (“Agreement Period”). CONTRACTOR agrees that TIME
IS OF THE ESSENCE and that the above stated dates shall not be
modified unless the modification is in writing and signed by the
OWNER and CONTRACTOR. Inclement weather shall not be
considered as a cause for an extension of time or completion of the
work.”
25. Plaintiff contends that time was of the essence for completion of
the work because Plaintiff intended on constructing a new Menard
store once demolition was completed.
26. When Defendant returned the signed contract, he also included
an “addendum” dated November 11, 2013 which purported to extend
the time period for crushing the asphalt due to adverse weather
conditions. The addendum was not signed by Defendant or any
representative of Plaintiff. Defendant contends that because Plaintiff
never informed him that the addendum was rejected that it is binding
on the parties. However, Jim Carlson specifically testified that the
proper protocol to change or add terms to the contract would be for
Troy Anderson to agree to it and sign off on any change.
27. Per the contract, “Contractor shall indemnify and hold harmless
owner, its agents and its employees from any and all liability,
damages, expenses, claims, demands, actions, or cause of action,
including attorney fees, arising out of the performance of the Contract
Documents, Agreement and/or work hereunder, whether such
liability, damages, expenses, claims, demands, actions or causes of
action are caused by contractor, its subcontractors, or lower tiered
contractors, or their agents or employees, owner, its agents and its
employees, or any persons acting on their behalf of owner and/or
contractor.”
28. Defendant admitted that similar to the Invitation to Bid
documents, the contract once again laid out the payment procedure,
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which was the usual AIA payment procedure that Defendant was
accustomed to from other projects.
29. Defendant received a December 17, 2013 correspondence from
Plaintiff returning Defendant’s first payment application because it
did not properly follow the payment procedure in the contract.
30. Defendant understood Plaintiff’s rationale for rejecting the first
payment application and had no issues.
31. Upon remedying the issues with payment application one,
Defendant resubmitted and was paid $143,590.50.
32. Defendant received a January 31, 2014 correspondence from
Plaintiff that expressed concerns Plaintiff was having with
Defendant’s work as it pertained to the project. [Similar
correspondence was received by the Defendant on April 3, April 25,
May 6, and May 16.]
33. Defendant received a March 12, 2014 seven-day notice letter
from Plaintiff that expressed concerns Plaintiff was having with
Defendant’s work as it pertained to the project, along with a list of
items that still needed to be completed. [A similar seven-day notice
was received by the defendant on April 8.]
34. Defendant received a March 17, 2014 correspondence from
Plaintiff regarding the rejection of pay application 2.
35. Upon remedying pay application 2 in accordance with the
contract, Defendant resubmitted pay application 2 and was paid
$70,902.
***
41. Defendant admitted that it was possible the list of contractual
items in the May 16, 2014 correspondence still had not been
completed by Defendant.
42. Defendant received a May 22, 2014 correspondence from
Plaintiff regarding back charges for the contractual work Defendant
did not perform which Plaintiff paid McConnell Excavating to
complete.
43. Defendant received a May 29, 2014 correspondence from
Plaintiff titled “Final Notice Breach of Contract/ Abandonment of
Property/ Trespass to Chattels”, which stated “This serves as your
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final notice that DiPaolo Industrial Development has failed to fulfill its
obligations under the contract and impaired Menard, Inc. in its use of
its property including the certain premises located at 2057 Elm Road,
Cortland, Ohio, and implements that belong to that property…
Please remove construction equipment and other property left
behind at the above site within five days of the date of this letter and
remit the property of Menard, Inc., including the fencing that you
possess. The failure to timely make these actions will result in a
lawsuit against you where Menard, Inc., will seek judgment against
you and avail itself of all potential remedies and recover for all
available costs.”
44. Defendant received a July 8, 2014 correspondence from Plaintiff
rejecting pay applications 3, 4, and 5 because they did not comply
with the contract.
45. Defendant attempted to bill Plaintiff for final payment despite
admittedly not completing all of its contractual work. [In total, Plaintiff
paid Defendant two payments under the contract in the amount of
$143,590.50 and $70,902, totaling $214,492.50.]
***
51. According to Plaintiff, Plaintiff withheld payment from Defendant
because of defective work not remedied and a reasonable indication
that the work would not be completed within the agreement period.
***
54. Plaintiff terminated the contract with Defendant because it
determined that Defendant did not complete its contractual work and
would not be able to complete its contractual work on time.
***
65. Plaintiff hired McConnell Excavating to complete Defendant’s
contractual work. [Plaintiff made three payments to McConnell
Excavating in the amounts of $16,245, $117,944.50, and $3,215.34
for completing Defendant’s contractual work.]
***
74. Plaintiff back charged Defendant total amounts of $17,869.50,
$129,738.95, and $3,536.87, which included the three payments
made to McConnell Excavating and the contractual 10%
administrative fee.
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***
75. Defendant admitted that it did not leave the site and remove all
of its machinery until mid-May to early June 2014.
76. Defendant admitted that it did not complete all its contractual
work and went through various items that were not completed.
77. Defendant removed fencing from the demolition project without
permission.
78. Plaintiff made repeated requests that Defendant return the
fencing.
79. Defendant admitted that it never returned the fencing or
reimbursed Plaintiff for the fencing it took.
80. Defendant admitted that it never informed Plaintiff of the location
of the fence to enable Plaintiff to retrieve the fence.
81. Defendant admitted that it no longer has control of the facility
where the fencing is currently stored.
82. The replacement value of the fencing is approximately $25,000.
***
85. No evidence was presented that Plaintiff published a false
statement about Defendant.
{¶7} On October 7, 2019, a second Magistrate’s Decision was issued awarding
damages. Menard was awarded a total of $274,379.88, representing $69,357.82 for
contractual or construction damages2, $25,000 for conversion, and $180,022.06 for
attorney fees.
2. This figure was based on the original contractual price of $286,000 plus $8,000 for additional work
performed by DiPaolo for a total contract price of $294,000. From this figure was subtracted the
$214,492.50 Menard paid to DiPaolo and $148,865.32 in back charges as a result of hiring McConnell
Excavating to complete the contractual work.
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{¶8} On March 21, 2022, after hearing DiPaolo Industrial’s objections to the
Magistrate’s Decisions, the trial court adopted both Decisions.
{¶9} On April 19, 2022, DiPaolo Industrial filed a Notice of Appeal. On appeal,
DiPaolo Industrial raises the following assignments of error:
[1.] The trial court [erred] by granting partial summary judgment to
plaintiff on defendant’s counterclaims.
[2.] The trial court’s decision that defendant breached its contract
with plaintiff is not supported by the weight of the evidence and is
contrary to Ohio law.
[3.] The trial court’s findings that defendant removed salvaged
fencing from the jobsite without permission to do so and that plaintiff
was damaged in the sum of $25,000 are not supported by [the]
manifest weight of the evidence.
[4.] The trial court erred as a matter of law by awarding counsel fees
to plaintiff.
[5.] The trial court’s determination that defendant had produced no
evidence indicating that plaintiff published a false and defamatory
statement regarding defendant is not supported by the manifest
weight of the evidence.
{¶10} In the first assignment of error, DiPaolo argues the trial court erred by
granting partial summary judgment with respect to its counterclaims for Breach of
Contract and Unjust Enrichment.
{¶11} Summary judgment is appropriate when “there is no genuine issue as to
any material fact and * * * the moving party is entitled to judgment as a matter of law,” i.e.,
when “reasonable minds can come to but one conclusion and that conclusion is adverse
to the party against whom the motion for summary judgment is made, that party being
entitled to have the evidence or stipulation construed most strongly in the party’s favor.”
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Civ.R. 56(C). An appellate court’s “review of a summary-judgment ruling is de novo.”
Fradette v. Gold, 157 Ohio St.3d 13, 2019-Ohio-1959, 131 N.E.3d 12, ¶ 6.
{¶12} In the course of the parties’ dealings with each other, DiPaolo Industrial
submitted eight Change Orders to Menard for additional work not contemplated by the
original Construction Contract. This Contract provided as follows with respect to
additional work:
ARTICLE 2: CHANGES IN THE WORK –
OWNER [Menard], without invalidating this contract, may, at
any time, order changes in the work within the general scope of this
contract. CONTRACTOR [DiPaolo] shall not perform any extra or
additional work or changes from the Contract Documents
unless previously authorized in writing by an AIA change order
signed by Troy Anderson, the General Manager Store
Planning/Design /Construction. Portions of change order work
are subject to merchandise credit check. OWNER’s project
managers are not authorized to approve changes in the work.
{¶13} With respect to such contractual provisions, the Ohio Supreme Court has
held: “It is universally recognized that where a building or construction contract, public or
private, stipulates that additional, altered, or extra work must be ordered in writing, the
stipulation is valid and binding upon the parties, and no recovery can be had for such
work without a written directive therefore in compliance with the terms of the contract,
unless waived by the owner or employer.” Foster Wheeler Enviresponse, Inc. v. Franklin
Cty. Convention Facilities Auth., 78 Ohio St.3d 353, 360, 678 N.E.2d 519 (1997). Under
the first assignment of error, DiPaolo asserts “the question presented is whether or not
material questions of fact exist as to Menard’s waiver of the change order procedures
contained in the original contract between the parties.” Assignments of Error and Brief of
Appellant, at 17.
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{¶14} With respect to waiver of such contractual provisions, the Ohio Supreme
Court has held: “It is familiar law that stipulations in written contracts may be waived by
the parties, and that a construction placed by the parties upon a written contract in the
progress of its performance, with full knowledge of all the circumstances, will be binding.
* * * This rule is peculiarly just when applied to building contracts, when changes are
made, the necessity for which develops as the work progresses, and while the parties are
intent on the accomplishment of the undertaking, no fraud or undue advantage being
shown.” Expanded Metal Fireproofing Co. v. Noel Constr. Co., 87 Ohio St. 428, 440, 101
N.E. 348 (1913).
{¶15} This court has similarly held: “‘A provision in a construction contract that
change orders be reduced to writing and signed by the parties may be waived. The
requirement will be considered to have been waived by the parties when there is clear
and convincing evidence showing that the alterations were made with the knowledge and
participation of all concerned, no fraud having been shown.’” (Emphasis added.) Wells
Fargo Bank, N.A. v. Smith, 11th Dist. Trumbull No. 2010-T-0051, 2012-Ohio-1672, ¶ 42,
citing Frantz v. Van Gunten, 36 Ohio App.3d 96, 521 N.E.2d 506, syllabus (3d Dist.1987).
This court explained, “[b]y requiring evidence as to subsequent acts of the ‘opposing’
party, a proper balance is reached between the enforcement of the basic purpose of the
clause and the concern that a party could agree to both the oral waiver and modification,
and then ‘hide’ behind the ‘no oral modification’ clause in order to avoid enforcement.” Id.
at ¶ 46; Foster at 364 (“mere knowledge, and even acquiescence, is not enough for
recovery”). Compare 2A Bruner & O’Connor on Construction Law, Waiver of written
change order requirements, Section 7:250 (“Many construction contracts require that in
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order for a contractor to be entitled to compensation for performing extra work, the work
must first be authorized by a written change order. The intent behind these provisions is
to protect the owner from surprise claims for extra work. To this extent, these provisions
fulfill a legitimate and useful purpose. Nevertheless, these provisions have been
employed to shield an owner from having to pay a contractor for work that was clearly
beyond the scope of the contract. This is an area where the courts often employ equity
in the form of finding that the written authorization requirement was waived by the party
seeking to enforce its terms.”).
{¶16} DiPaolo Industrial’s managing member, Sergio DiPaolo, testified by
deposition that change orders were approved verbally by either Menard’s project
manager, Brad Wondra, or assistant general manager, Jim Carlson. DiPaolo testified
that generally the terms for the additional work were negotiated with either Wondra or
Carlson and then a written change order would be submitted by DiPaolo Industrial for
signature by general manager, Troy Anderson. However, only one of the eight change
orders was ever signed.
{¶17} The first change order involved additional grading or clearing an area on the
south side of the construction site for the installation of a gas line. A November 18, 2013
email from Wondra to DiPaolo stated: “Can you get me a price on that grading * * * by
Friday? I need to get this work done so utilities can come in to relocate the gas line toward
the property line.” DiPaolo testified regarding the negotiations with Wondra: “We spoke
about it. He asked me about it, it had to be done, give me a price. I gave him a price.
And then he responded back, sounds good, okay, we’re good to go on that.” A December
9, 2013 email from Wondra to DiPaolo stated: “Jim [Carlson] gave me the go ahead on
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the extra work on the south side of the property ($6,000). Go ahead and start mobilizing.”
Carlson, in his deposition, affirmed that he spoke with Anderson about the additional work
and that DiPaolo Industrial was authorized to do the work. DiPaolo Industrial did not
submit a written change order until March 25, 2014, and Anderson did not sign the order
until April 18, 2014. According to the terms of the Construction Contract, DiPaolo
Industrial should not have been authorized to commence the work until Anderson had
signed the change order.
{¶18} The second change order involved the removal of a pylon sign. DiPaolo
testified that Wondra verbally approved this change order. Carlson testified that “the cost
[to remove the sign] was approved by Troy Anderson to go ahead with that.” DiPaolo
claimed a change order was submitted but never returned.
{¶19} On April 10, 2014, Wondra emailed DiPaolo and copied both Carlson and
Anderson: “On December 9th, we approved change order #1 for the regrading over on the
south side of the property. I will submit to Troy to sign. On the AIA change order form
#2, I do not know what this all entails. Why is it going to cost me [an] additional $6,000
to remove[] the other pylon sign. Please advise. Work Order-Excavation [third change
order]- We will not sign. Per the contract plans, you were supposed to remove the utilities
and backfill your trenches properly. Work Order-Asphalt [fourth change order]- We are
not opposed to this as an extra for the asphalt. In the existing parking lot, there is a total
of 7ʺ of asphalt that needs to be milled. However, we will not agree to a change order on
a per day basis. We will only agree on a fixed cost.”
{¶20} The foregoing evidence is sufficient to raise a genuine issue of material fact
as to whether Menard waived the contractual provision that additional work had to be
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approved by Anderson in writing prior to the commencement of the work. Such was not
the procedure followed by either of the parties in the course of performance of the
contract. It is noted that the contract specifically stated that project managers could not
approve changes in the work. See Foster, 78 Ohio St.3d at 364, 678 N.E.2d 519 (“[i]t is
generally recognized that, in the absence of an express authority, an engineer, architect,
superintendent or inspector in charge of or assigned to public building or construction
work has no power to waive or modify a stipulation requiring a written order for alterations,
even where that person may authorize alterations in writing”). However, the evidence in
the present case is that Wondra would consult with Carlson, an assistant general
manager, before conveying approval to DiPaolo Industrial. Moreover, Carlson would
consult with Anderson regarding the change orders, and Anderson was the Menard
representative with authority to approve change orders. The significant point is that all
levels of Menard’s management were actively aware of and/or participating in the
authorization of additional work contrary to the terms of Article 2. In these circumstances,
summary judgment on the issue of waiver was not appropriate as to any of the purported
change orders to which DiPaolo claims Menard agreed.3
{¶21} We emphasize that there is evidence from which it could be reasonably
inferred that Anderson was being consulted about change orders and giving his approval
without regard for the contractual procedure. Giving DiPaolo the benefit of such
inferences, Anderson approved the first two change orders through Carlson without
3. We are aware that, in the final judgment after trial, the contract price was adjusted to incorporate the
cost of some of the additional work performed by DiPaolo Industrial. We are also aware that whether
Menard ever agreed to the terms of the change orders and whether DiPaolo Industrial completed the work
proposed in the change orders are also in dispute. Our ruling here is limited to whether the issue of waiver
could be decided as a matter of law.
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requiring a written AIA change order. Nor does the evidence substantiate the claim that
Menard merely “acquiesce[d]” to DiPaolo’s performance of additional work. In the case
of the first change order, Menard approached DiPaolo and requested “a price” for
additional grading. The price for the second change order was approved by Anderson
and accepted by DiPaolo, although Wondra appears to have been unaware of the
agreement. In almost every case, Menard was active in negotiating the terms and
compensation for the performance of additional work. If Anderson was approving the
additional work without requiring written change orders (at least until DiPaolo requested
payment), a genuine issue of material fact exists on the waiver issue and summary
judgment should have been denied.
{¶22} DiPaolo Industrial also argues the lower court erred by granting summary
judgment on its unjust enrichment claims on the grounds that “each change work order is
a contract in and of itself.” Assignments of Error and Brief of Appellant, at 20-21. We
disagree. Regardless of whether a change order contains the elements of a separate
contract, the subject of additional work is one that is encompassed by the original
contract. See Conditions of the Contract / Instructions to Bidders, Change Order
Procedure 5.A (“[t]he change order shall clearly state the original contract amount, revised
contract amount and any extension or reduction in the schedule”).
{¶23} “Generally, Ohio law does not permit recovery under the theory of unjust
enrichment when an express contract covers the same subject matter.” Bunta v. Superior
VacuPress, L.L.C., __ Ohio St.3d __, 2022-Ohio-4363, __ N.E.3d __, ¶ 36; Jochum v.
Howard Hanna Co., 11th Dist. Lake No. 2020-L-077, 2020-Ohio-6676, ¶ 45. “The
doctrine of unjust enrichment is limited when an express contract exists that concerns the
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same subject because ‘“the parties have fixed their contractual relationship in an express
contract,”’ and thus, ‘“there is no reason or necessity for the law to supply an implied
contractual relationship between them.’” (Citation omitted.) Bunta at ¶ 39.
{¶24} To the extent indicated above, the first assignment of error is with merit.
{¶25} DiPaolo Industrial’s second, third and fifth assignments of error challenge
various aspects of the lower court’s judgment as being contrary to the weight of the
evidence.
{¶26} “Weight of the evidence concerns ‘the inclination of the greater amount of
credible evidence, offered in a trial, to support one side of the issue rather than the other.
It indicates clearly to the jury that the party having the burden of proof will be entitled to
their verdict, if, on weighing the evidence in their minds, they shall find the greater amount
of credible evidence sustains the issue which is to be established before them. Weight
is not a question of mathematics, but depends on its effect in inducing belief.’” State v.
Thompkins, 78 Ohio St.3d 380, 387, 678 N.E.2d 541 (1997), quoting Black’s Law
Dictionary 1594 (6th Ed.1990).
{¶27} “[I]n determining whether the judgment below is manifestly against the
weight of the evidence, every reasonable intendment and every reasonable presumption
must be made in favor of the judgment and the finding of facts. * * * If the evidence is
susceptible of more than one construction, the reviewing court is bound to give it that
interpretation which is consistent with the verdict and judgment, most favorable to
sustaining the verdict and judgment.” Seasons Coal Co., Inc. v. Cleveland, 10 Ohio St.3d
77, 80, 461 N.E.2d 1273 (1984), fn.3, quoting 5 Ohio Jurisprudence 3d, Appellate Review,
Section 603, at 191-192 (1978); Eastley v. Volkman, 132 Ohio St.3d 328, 2012-Ohio-
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2179, 972 N.E.2d 517, ¶ 21.
{¶28} In the second assignment of error, DiPaolo Industrial disputes the finding
that it was in breach of the Construction Contract for defective work and for not completing
its work within the agreed period. Underlying DiPaolo Industrial’s claims is the further
alleged error that the trial court failed to give effect to the addendum submitted by DiPaolo
Industrial with the signed Contract. The Contract itself provided that the Agreement
Period for completing the work was between November 11, 2013, and January 31, 2014,
and that time was of the essence. The addendum provided that “we [the parties] had
both agreed to leave the Asphalt in place until the weather breaks in late February or
early March,” and “[c]rushing of concrete will commence during January, although if the
temperature falls below 20 degrees Fahrenheit the process will stop.” According to
DiPaolo Industrial, “[w]ith the Addendum in effect, there was simply no firm date by which
the crushing part of the operation had to be completed. * * * While Plaintiff may have
alleged that the opening of its store was delayed, * * * Plaintiff’s own witness testified that
the store opened on time and other evidence indicated that, if any undue delay did occur,
it was the fault of Plaintiff’s general contractor [McConnell Excavating] rather than
Defendant. Consequently, Plaintiff had absolutely no right to discontinue payments to
Defendant and Defendant had every right to stop working.” Assignments of Error and
Brief of Appellant, at 23-24.
{¶29} The evidence is equivocal as to whether the addendum became part of the
parties’ Contract. When the Contract was submitted to DiPaolo Industrial, it had already
been signed by Menard. DiPaolo signed and returned the Contract but included the
unsigned addendum with the Contract. The signed Contract does not indicate the
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existence of any amendments or addendum. Carlson denies that Menard agreed to the
terms of the addendum. DiPaolo contends that the terms of the addendum were agreed
to prior to the signing of the Contract. Given these circumstances, the addendum could
be construed either as a conditional acceptance of the Contract or as a proposed
amendment thereto. As a conditional acceptance, it could be argued that Menard
implicitly accepted the terms of the addendum by proceeding to have DiPaolo Industrial
commence demolition. As a proposed amendment, the addendum failed to adhere to the
procedures set forth in the Contract for amendment or to receive any recognition by
Menard.
{¶30} It is generally recognized that, “[i]n accordance with general contract
principles, if the acceptance modifies or alters the terms set forth in the application, then
the acceptance is deemed a rejection and counteroffer, which must be accepted by the
applicant in order to be effective as a contract.” (Citation omitted.) Livi Steel, Inc. v. Bank
One, Youngstown, N.A., 65 Ohio App.3d 581, 588, 584 N.E.2d 1267 (11th Dist.1989);
Mentor Exempted Village School Dist. Bd. of Edn. v. Lake Cty. Edn. Serv. Ctr. Governing
Bd., 2016-Ohio-7649, 74 N.E.3d 706, ¶ 78 (11th Dist.). Conversely, under the parol
evidence rule, “a party who has entered into a written contract [is prohibited] from
contradicting the terms of the contract with evidence of alleged or actual agreements.”
(Citation omitted.) Williams v. Spitzer Autoworld Canton, L.L.C., 122 Ohio St.3d 546,
2009-Ohio-3554, 913 N.E.2d 410, ¶ 14. Moreover, it is not entirely certain if the
addendum was understood in the technical sense of “a thing that is added or to be added,”
i.e., additional terms added to the original contract, or as an amendment of the original
contract. Gutierrez-Gordillo v. Tomo Hibachi Restaurant and Lounge, L.L.C., 2018-Ohio-
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2941, 118 N.E.3d 301, ¶ 11 (8th Dist.) (“[a]lthough ‘addendum’ and ‘amendment’ are legal
terms of art, the parties did not give any indication that they intended that an ‘addendum’
to the operating agreement would not be the same as an ‘amendment’”).
{¶31} This issue, however, need not be determined by this Court. The evidence
of record supports the finding that DiPaolo Industrial failed to complete its work under the
Contract before quitting the worksite in early May, and thus substantiates the breach by
DiPaolo Industrial regardless of whether the addendum is given effect.
{¶32} On the date that work was to be completed under the terms of the Contract,
January 31, Menard sent a letter to DiPaolo Industrial stating the following: “This letter is
to inform DiPaolo Industrial Development of the concerns Menard, Inc. has with the
demolition of the old Wal-Mart building at 2057 Elm Road. * * * You are understaffed on
this demolition project. I understand that we have been shut down for a week due to the
extreme cold weather but there was no ambition to get caught up once the weather broke.
When I was onsite on January 30th, it was 30 degrees out and only 2 people were working
on pulverizing the concrete slabs. No one was working on disassembling the Garden
Center, removing the parking lot light fixtures, or removing underground utilities. Please
forward me an updated schedule and how you are going to get caught back up, to be
finished no later than March 1st.” At trial, DiPaolo testified that he had no issues with the
content of this letter.
{¶33} On March 12, 2014, Menard sent a “7-day notice” to DiPaolo Industrial
detailing items which have been completed and advising that “[t]hese items must be 100%
completed otherwise Menard, Inc. will be forced to bring in another contractor at your
expense.”
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{¶34} On April 3, 2014, Menard advised DiPaolo Industrial that the general
contractor “will start mobilizing for the new store starting Monday, April 7 th,” and “[y]ou
must have all work completed and your material and equipment out next week.” Corey
Frasier, the general superintendent for McConnell Excavating, testified at trial that
McConnell Excavating began work on site in the first week of April 2014. Frasier also
testified to work completed by McConnell Excavating that was left undone by DiPaolo
Industrial. DiPaolo complained that the presence of McConnell Excavating on site, in
addition to the way in which McConnell Excavating performed demolition work, delayed
and hindered DiPaolo Industrial from completing its own contract work. However, under
the terms of the addendum, at this point DiPaolo had had a full month to complete its
work which should have consisted of removing asphalt and crushing concrete.
{¶35} DiPaolo testified at trial that DiPaolo Industrial quit the worksite in the first
week of May because he did not believe Menard would pay him anything further and
returned during the next two to three weeks to remove equipment. At the time DiPaolo
Industrial quit the work site, DiPaolo acknowledged that there was work under the
Contract that had not been completed, although the extent of that work was disputed.
{¶36} Given the foregoing record, we conclude that the finding that DiPaolo
Industrial was in breach is supported by the weight of the evidence regardless of whether
the addendum was in effect. Two months from early March, when according to the
addendum any work that was suspended on account of cold weather should have
recommenced, was a reasonable period of time for DiPaolo Industrial to complete its
work. Whether the new store opened on schedule is not material to the issue of breach,
as the record demonstrates DiPaolo Industrial needed to complete its work so that the
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general contractor could begin its work.
{¶37} The second assignment of error is without merit.
{¶38} In the third assignment of error, DiPaolo Industrial argues that the finding of
conversion with respect to the fencing was against the weight of the evidence.
{¶39} According to the terms of the Contract, certain items from the demolition
project, including wrought-iron fencing at issue herein, were reserved by Menard as
salvage. DiPaolo Industrial stored the fencing offsite until a time at which it was agreed
that Menard would collect the fencing and other salvaged material. DiPaolo Industrial
returned the items to the work site, but Menard did not provide enough transportation to
remove it. Therefore, DiPaolo Industrial returned it to storage at 408 Dana Street.
Carlson testified that Menard repeatedly asked for the fencing to be returned and was
willing to pick up the fencing but did not know where it was being stored. Carlson
estimated the value of the fencing at $25,000. DiPaolo testified that he would not return
the fencing unless Menard agreed to pay for the cost of transportation. DiPaolo admitted
that he did not inform Menard of where the fencing was located and that the building
where it is located is no longer under DiPaolo Industrial’s control.
{¶40} Conversion is defined as “the wrongful exercise of dominion over property
to the exclusion of the rights of the owner, or withholding it from his possession under a
claim inconsistent with his rights.” Joyce v. Gen. Motors Corp., 49 Ohio St.3d 93, 96, 551
N.E.2d 172 (1990).
Conversion * * * requires nothing more than the defendant
possessing a plaintiff’s chattel and being unwilling to give it back.
See Keeton, Prosser & Keeton on Torts (1984), 88 et seq. Sec. 15-
Conversion. There is no requirement that the personal property be
wrongfully obtained. Although a demand and refusal to return the
personal property is ordinarily necessary to prove conversion, acts
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by a defendant which are inconsistent with the right of a plaintiff’s
ownership are sufficient to satisfy this requirement.
Kiss v. Dick Baker Dodge, 6th Dist. Erie No. E-98-027, 1998 WL 904920, *3; Baltimore &
Ohio RR. Co. v. O’Donnell, 49 Ohio St. 489, 32 N.E. 476 (1892), paragraph two of the
syllabus (“[a]ny wrongful exercise of dominion over chattels in exclusion of the rights of
the owner, or withholding of them from his possession under a claim inconsistent with his
rights, constitutes a conversion”).
{¶41} We find that the evidence of record supports a finding of conversion. There
was evidence that DiPaolo wrongfully refused to return the fencing to Menard and/or
enable Menard to reclaim it when asked by Menard. Moreover, Carlson, as assistant
general manager of the project, was competent to provide an estimate of the value of the
fencing (of course, not being able to access the fencing, its value could not be properly
appraised). Compare Tokles & Son, Inc. v. Midwestern Indemn. Co., 65 Ohio St.3d 621,
627, 605 N.E.2d 936 (1992) (“[w]e know of no reason for withholding information from a
jury’s consideration or for requiring a corporate officer to qualify as an expert in all cases
before testifying as to the value of corporate property”).
{¶42} The third assignment of error is without merit.
{¶43} In the fifth assignment of error, DiPaolo Industrial argues that the judgment
in favor of Menard as to its counterclaim for defamation is against the weight of the
evidence.
{¶44} At trial, DiPaolo testified that he viewed a news segment on 27 WKBN in
which a spokesperson for Menard was “talking about this lawsuit * * * and that Mr. DiPaolo
had stolen fencing and other items from the property.” After contacting the news station,
it was learned that the video of the segment was no longer available. DiPaolo Industrial
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introduced a couple of print articles regarding the lawsuit which included the allegation
that DiPaolo Industrial had unlawfully removed $25,000 in fencing belonging to Menard.
Additionally, DiPaolo testified that Wondra filed a complaint with law enforcement
regarding the fencing and that he was questioned by the police about the fencing.
DiPaolo Industrial contends the foregoing “supports the proposition that Plaintiff was
alleging that Defendant had actually stolen materials.” Assignments of Error and Brief of
Appellant, at 29.
{¶45} “In Ohio, defamation occurs when a publication contains a false statement
‘made with some degree of fault, reflecting injuriously on a person’s reputation, or
exposing a person to public hatred, contempt, ridicule, shame or disgrace, or affecting a
person adversely in his or her trade, business or profession.’” (Citation omitted.) Am.
Chem. Soc. v. Leadscope, Inc., 133 Ohio St.3d 366, 2012-Ohio-4193, 978 N.E.2d 832, ¶
77. “To establish defamation, the plaintiff must show (1) that a false statement of fact
was made, (2) that the statement was defamatory, (3) that the statement was published,
(4) that the plaintiff suffered injury as a proximate result of the publication, and (5) that the
defendant acted with the requisite degree of fault in publishing the statement.” (Citation
omitted.) Id.{¶46} Menard counters, and we agree, that the allegedly defamatory statements
fall under the scope of absolute privilege which provides that “a claim alleging that a
defamatory statement was made in a written pleading does not state a cause of action
where the allegedly defamatory statement bears some reasonable relation to the judicial
proceeding in which it appears.” Surace v. Wuliger, 25 Ohio St.3d 229, 233, 495 N.E.2d
939 (1986). The allegedly defamatory statement published in the news articles related to
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the pending litigation and so falls within the scope of the privilege. Am. Chem. Soc. at ¶
86 (“[c]onsidering the article as a whole and the fact that the article contained a true and
accurate summary of the legal proceedings at the time, we hold that the statements in the
article are, as a matter of law, not defamatory”). Whatever statements Wondra may have
made to law enforcement would be similarly protected. Fisher v. Ahmed, 2020-Ohio-
1196, 153 N.E.3d 612, ¶ 40 (9th Dist.) (“[a]s a matter of public policy, an absolute privilege
protects statements that report a possible crime, because a privilege under such
circumstances encourages ‘“the reporting of criminal activity by removing any threat of
reprisal in the form of civil liability”’) (citation omitted).
{¶47} The fifth assignment of error is without merit.
{¶48} In the fourth assignment of error, DiPaolo Industrial asserts that the award
of attorney fees is in error as “Plaintiff has provided insufficient proof of these damages
and, further, an award of such would be against Ohio public policy.” Assignments of Error
and Brief of Appellant, at 25.
{¶49} “Ohio has long adhered to the ‘American rule’ with respect to recovery of
attorney fees: a prevailing party in a civil action may not recover attorney fees as a part
of the costs of litigation.” Wilborn v. Bank One Corp., 121 Ohio St.3d 546, 2009-Ohio-
306, 906 N.E.2d 396, ¶ 7. “However, there are exceptions to this rule.” Id. “Exceptions
to the rule allow fee-shifting and taxing attorney fees as costs (1) if there has been a
finding of bad faith; (2) if a statute expressly provides that the prevailing party may recover
attorney fees; and (3) if the parties’ contract provides for fee-shifting.” (Emphasis added.)
J.B.H. Properties, Inc. v. N.E.S. Corp., 11th Dist. Lake No. 2007-L-024, 2007-Ohio-7116,
¶ 8.
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{¶50} The parties’ Contract herein provides:
ARTICLE 5: INDEMNIFICATION
[1] CONTRACTOR [DiPaolo Industrial] shall indemnify and
hold harmless OWNER [Menard], its agents and its employees from
any and all liability, damages, expenses, claims, demands, actions
or causes of action, including attorney fees, arising out of the
performance of the Contract Documents, Agreement and/or Work
hereunder, whether such liability, damages, expenses, claims,
demands, actions or causes of action are caused by
CONTRACTOR, its subcontractors, or lower tiered contractors, or
their agents or employees, OWNER, its agents and its employees,
or any persons acting on behalf of OWNER and/or CONTRACTOR.
[2] In the event of failure by CONTRACTOR to defend OWNER
against any such claim upon ten (10) days written notification of
OWNER requesting that CONTRACTOR do so, OWNER shall be
entitled to directly settle any such claim. [3] CONTRACTOR waives
any right to dispute the amount of any settlements made by OWNER
under this provision and acknowledges that OWNER is entitled to
deduct the full amount of any such settlements from the Contract
Sum as defined below. [4] If Final Payment, as defined herein, has
already been made by OWNER to CONTRACTOR, CONTRACTOR
agrees to reimburse OWNER the full amount of any settlement within
ten (10) days after receipt of invoice from OWNER.
(Emphasis added.)
{¶51} The issue is whether Article 5 is a fee shifting provision and, if so, under
what circumstances.
{¶52} In contract cases in which the parties intend a fee-shift when they are
involved in litigation over contract performance, we typically see the following type of
language: “indemnification from and against claims, damages, losses and expenses,
including but not limited to its actual attorney fees incurred, arising out of or resulting from
performance of the contract or out of the actual or alleged failure of the contractor or
subcontractor to perform any obligations under the contract or subcontract documents.”
{¶53} By contrast, “[i]ndemnity arises from contract, either express or implied, and
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is the right of a person who has been compelled to pay what another should have paid,
to require complete reimbursement.” Worth v. Aetna Cas. & Sur. Co., 32 Ohio St.3d 238,
240, 513 N.E.2d 253 (1987). “Indemnity agreements are interpreted in the same manner
as other contracts.” Ferguson v. Boron, 2018-Ohio-69, 105 N.E.3d 424, ¶ 47 (7th Dist.).
“The true nature of an indemnity relationship is determined by the intent of the parties
expressed within the language of the agreement.” Id. “[A]ll the words used [must] be
taken in their ordinary and popular sense,” Glaspell v. Ohio Edison Co., 29 Ohio St.3d 44,
47, 505 N.E.2d 264 (1987), and “[w]hen a [writing] is worded in clear and precise terms;
when its meaning is evident, and tends to no absurd conclusion, there can be no reason
for refusing to admit the meaning which such [writing] naturally presents.” Lawler v. Burt,
7 Ohio St. 340, 350 (1857).
{¶54} Further, “parties ‘have a fundamental right to contract freely with the
expectation that the terms of the contract will be enforced.’ Nottingdale Homeowners’
Assn., Inc. v. Darby, 33 Ohio St.3d 32, 36, 514 N.E.2d 702 (1987)[.] * * * To that end,
parties to a contract may include contractual terms that abrogate the common law. Paul
Cheatham I.R.A. v. Huntington Natl. Bank, 157 Ohio St.3d 358, 2019-Ohio-3342, 137
N.E.3d 45, ¶ 30. ‘[B]ut the intent to do so must be clearly indicated.’ Id. This principle
applies to contractual indemnification agreements. * * * [T]he ‘nature of an indemnity
relationship is determined by the intent of the parties as expressed by the language used’
in the agreement. Worth[, supra, at] 240 * * *. [A court] cannot ascertain the parties’
intent without looking at the words that they used to express their intent. Kelly v. Med.
Life Ins. Co., 31 Ohio St.3d 130, 132, 509 N.E.2d 411 (1987) (‘The intent of the parties to
a contract is presumed to reside in the language they chose to employ in the agreement’).”
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Wildcat Drilling, L.L.C. v. Discovery Oil & Gas, L.L.C., 164 Ohio St.3d 480, 2020-Ohio-
6821, 173 N.E.3d 1156, ¶ 14.
{¶55} When read as a whole and in context, Article 5 provides for third-party
indemnification only. It is not an indemnification clause for attorney fees incurred in
enforcing the contract between the two contracting parties. The first sentence is
unambiguously written to require DiPaolo to indemnify and hold Menard harmless from
“liability, damages, expenses, claims, demands, actions or causes of action, including
attorney fees, arising out of the performance of the Contract Documents, Agreement
and/or Work” regardless of who caused the claim to arise, even including Menard. The
first sentence must be read in context with the balance of the article. For instance, the
second sentence describes what Menard may do in the event DiPaolo fails to “defend”
Menard against “any such claim”—the list stated in sentence one—Menard may directly
settle the claim. The third sentence provides that DiPaolo waives the right to contest the
amount of the settlement and that Menard may deduct the amount from the total contract
sum. The fourth sentence allows a claw-back of the settlement amount in the event final
payment has been made to DiPaolo.
{¶56} Ohio case law does not provide an interpretation of the precise language
drafted by Menard; however, cases in other states do. The critical term in Article 5 is
“defend,” which indicates the clause’s application to third party claims. This term would
have no effect in a direct action between the parties. “Obviously, in a direct action
between the parties, neither party would be interested in tendering its defense or being
defended by the other party.” Canopy Corp. v. Symantec Corp., 395 F.Supp.2d 1103,
1115 (D.Utah 2005).
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{¶57} Further, “[c]onstruing the indemnification clause ‘as pertaining only to third-
party suits affords a fair meaning to all of the language employed by the parties in the
contract and leaves no provision without force and effect.’” Id. at 1116, quoting Oscar
Gruss & Son, Inc. v. Hollander, 337 F.3d 186, 200 (2d Cir.2003) (holding that an
indemnification clause was confined to third-party claims and did not permit an attorney
fee award in a first-party lawsuit); accord Hooper Assocs., Ltd. v. AGS Computers, Inc.,
74 N.Y.2d 487, 548 N.E.2d 903 (1989) (“To extend the indemnification clause to require
defendant to reimburse plaintiff for attorney’s fees in the breach of contract action against
defendant would render these provisions meaningless because the requirement of notice
and assumption of the defense has no logical application to a suit between the parties.”).
{¶58} Based on the express language of Article 5 and the inapplicability of any
other section of the contract that references attorney fees, there is no need to consider
DiPaolo’s public policy or evidentiary arguments.
{¶59} The fourth assignment of error is with merit.
{¶60} For the foregoing reasons, the judgment of the Trumbull County Court of
Common Pleas is affirmed in part and reversed in part. This matter is remanded for
further proceedings consistent with this opinion. Costs to be taxed between the parties
equally.
JOHN J. EKLUND, P.J., concurs,
MARY JANE TRAPP, J., concurs in part and dissents in part with a Concurring/Dissenting
Opinion.
____________________________________________
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MARY JANE TRAPP, J., concurs in part and dissents in part with a Concurring/Dissenting
Opinion.
{¶61} I concur with the majority’s analysis and disposition regarding DiPaolo’s
second through fifth assignments of error as well as the unjust enrichment portion of
DiPaolo’s first assignment of error. I depart ways with the majority on the breach of
contract portion of DiPaolo’s first assignment of error. Specifically, I disagree with the
majority’s determination that the record on summary judgment creates a genuine issue
of material fact as to whether Menard waived the written change order requirement in the
parties’ contract.
{¶62} The majority correctly begins its analysis with the Supreme Court of Ohio’s
decision in Foster Wheeler Enviresponse, Inc. v. Franklin Cty. Convention Facilities Auth.,
78 Ohio St.3d 353, 678 N.E.2d 519 (1997), which states:
{¶63} “It is universally recognized that where a building or construction contract,
public or private, stipulates that additional, altered, or extra work must be ordered in
writing, the stipulation is valid and binding upon the parties, and no recovery can be had
for such work without a written directive therefor in compliance with the terms of the
contract, unless waived by the owner or employer.” Id. at 360-361.
{¶64} The rationale for this principle is as true today as it was over 125 years ago
when the Supreme Court of Ohio decided Ashley v. Henahan, 56 Ohio St. 559, 47 N.E.
573 (1897):
{¶65} “The primary purpose of requiring written authorization for alterations in a
building or construction contract is to protect the owner against unjust and exorbitant
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claims for compensation for extra work. It is generally regarded as one of the most
effective methods of protection because such clauses limit the source and means of
introducing additional work into the project at hand. It allows the owner to investigate the
validity of a claim when evidence is still available and to consider early on alternative
methods of construction that may prove to be more economically viable. It protects
against runaway projects and is, in the final analysis, a necessary adjunct to fiscal
planning.” Foster Wheeler at 363-364, citing Ashley at 572-573.
{¶66} In this case, Article 2 of the parties’ contract, entitled “Changes in the Work,”
provides as follows:
{¶67} “[Menard], without invalidating this contract, may, at any time, order
changes in the work within the general scope of this contract. [DiPaolo] shall not
perform any extra or additional work or changes from the Contract Documents
unless previously authorized in writing by an AIA change order signed by Troy
Anderson, the General Manager Store Planning/Design/Construction. Portions of
change order work are subject to merchandise credit check. [Menard]’s project
managers are not authorized to approve changes in the work.” [Bolding sic.]
{¶68} Thus, pursuant to Article 2, Troy Anderson was the only person who could
authorize additional work on Menard’s behalf, and his authorization was required to be
set forth in a signed and written AIA change order.
{¶69} The majority also correctly notes that an owner may waive this type of
contractual provision. See Foster Wheeler at 360 (“unless waived by the owner”). In
those situations, “‘proof of a waiver must either be in writing, or by such clear and
convincing evidence as to leave no reasonable doubt about it.’” Id. at 364, quoting Ashley
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at paragraph five of the syllabus. “Mere knowledge, and even acquiescence, is not
enough for recovery.” Id. In addition, “‘“[e]quivocal conduct, or conduct of doubtful import,
is not sufficient.”’” Id., quoting Ashley at 574, quoting O’Keefe v. St. Francis’ Church, 59
Conn. 551, 561, 22 A. 325 (1890).
{¶70} In this case, there was no written waiver of Article 2. Instead, DiPaolo
contends that Menard waived the written change order procedure because Jim Carlson,
assistant general manager of store planning/construction, verbally approved change
order nos. 2, 5, 6, and 7, and Brad Wondra, project manager, verbally approved change
order nos. 3 and 4.
{¶71} Critically, the plain language of Article 2 explicitly notified DiPaolo that only
Mr. Anderson was authorized to approve changes in the work on Menard’s behalf and
that Menard’s project managers were not authorized to do so, making any approval from
Mr. Carlson and Mr. Wondra legally ineffective.
{¶72} DiPaolo also contends that “[a]t every juncture,” Mr. Carlson and Mr.
Wondra informed it “that Troy Anderson was both advised of the proposed change work
orders, had approved such change work orders and that copies of such would be
forthcoming.”
{¶73} The evidentiary quality material submitted on summary judgment does not
support this contention. Contrary to the majority’s determination, the most that can be
inferred from the record is that Mr. Anderson was copied on some of the email
correspondence among DiPaolo, Mr. Wondra, and Mr. Carlson regarding additional work.
{¶74} Further, the majority appears to presume that Mr. Anderson was authorized
to waive the written change order requirement. According to the Supreme Court of Ohio,
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however, “[i]t is generally recognized that, in the absence of express authority, an
engineer, architect, superintendent or inspector in charge of or assigned to * * *
construction work has no power to waive or modify a stipulation requiring a written order
for alterations, even where that person may authorize alterations in writing.” Foster
Wheeler at 364. Here, the contract identified Mr. Anderson as “the General Manager
Store Planning/Design/Construction,” which indicates he fit within the purview of this rule.
See id. There was no provision granting authority to Mr. Anderson to waive the
requirement for a written and signed change order. Rather, as stated, Mr. Anderson’s
express authority was limited to authorizing additional work set forth in a signed and
written AIA change order. See id.{¶75} For the foregoing reasons, the trial court’s granting of summary judgment
to Menard on the issue of change orders was correct as a matter of contractual
interpretation and, thus, as a matter of law. Accordingly, I would overrule DiPaolo’s first
assignment of error in its entirety.
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