Zara Constr., Inc. v. Belcastro

[Cite as Zara Constr., Inc. v. Belcastro, 2022-Ohio-788.]
COURT OF APPEALS
RICHLAND COUNTY, OHIO
FIFTH APPELLATE DISTRICT
ZARA CONSTRUCTION, INC., : JUDGES:
: Hon. W. Scott Gwin, P.J.
Plaintiff - Appellant : Hon. Patricia A. Delaney, J.
: Hon. Craig R. Baldwin, J.
-vs- :
:
SCOTT BELCASTRO, et al., : Case No. 2021 CA 0039
:
Defendants - Appellees : OPINION
CHARACTER OF PROCEEDING: Appeal from the Richland County
Court of Common Pleas, Case No.
2019 CV 0537 R
JUDGMENT: Reversed and Remanded
DATE OF JUDGMENT: March 16, 2022
APPEARANCES:
For Plaintiff-Appellant For Defendants-Appellees
THOMAS L. ROSENDBERG J. THOMAS NOCAR
Roetzel & Andress LPA JAMES A. KING
41 S. High Street, 21st Floore Porter, Wright, Morris & Arthur LLP
Columbus, Ohio 43215 41 S. High Street, 29th Floor
Columbus, Ohio 43215
BRIAN D. BREMER
Roetzel & Andress LPA
222 S. Main Street, Ste. 400
Akron, Ohio 44308
Richland County, Case No. 2021 CA 0039 2
Baldwin, J.
{¶1} Zara Construction, Inc. is appealing the Richland County Court of Common
Pleas decision granting appellees’ motion for directed verdict regarding Zara’s complaint
to foreclose a mechanic’s lien and its claim for relief in quantum meruit or unjust
enrichment. Appellees are Scott and Christine Belcastro.
STATEMENT OF FACTS AND THE CASE
{¶2} Zara Construction, Inc. was started by Joseph Zara in 1992 as a general
contracting business, primarily focusing on home construction, but also performing some
light commercial work. Zara agreed to build a home designed by Scott and Christine
Belcastro. The Belcastros provided plans for the home and, after multiple discussions the
Belcastros agreed to have Zara complete some of the work. The Belcastros chose to
serve as their own general contractor for several steps of the construction to reduce their
costs. Parts of the project, including labor and materials for the footers and foundation,
interior post and beam features and the spiral stair case, were completed by persons
working under the supervision of the Belcastros.
{¶3} Zara drafted the contract and delivered it to the Belcastros for review on or
before December 29, 2017. The Belcastros reviewed the contract and requested
changes before it was signed on February 15, 2018.
{¶4} Zara hired Stephen Marek to supervise a portion of the Belcastro project
Zara was to complete and, at some point, the Belcastros hired Marek to perform work
outside the parameters of the Zara Contract.
{¶5} Zara met with the Belcastros on several occasions to discuss the progress
of the construction, work completed by the other contractors and change orders. The
Richland County, Case No. 2021 CA 0039 3
meetings became contentious and the relationship between the parties deteriorated. Zara
and the Belcastros held each other responsible for delays and increased costs. Zara
claimed that the project was delayed as a result of the use of multiple contractors and the
Belcastros practice of reconsidering the plans in the midst of construction. The Belcastros
delayed the installation of roofing while they considered a solar power system, but
decided against that option due to the expense. Belcastros requested installation of floor
drains in the garage, but Zara argued that they were not in the original plans and that a
change order must be approved prior to their installation. Zara claimed that timbers
installed by a third-party were not properly dried and caused delay in installation of
drywall.
{¶6} The Belcastros were frustrated by their perception that they were misled
about the cost of the home. They also considered Zara unresponsive to requests for
information regarding change orders. Discussions regarding the direction of the project,
arguments regarding what was required by the contract and the need for change orders
grew heated during construction. The disagreements grew strident, and, in April 2019 the
Belcastros issued a notice of termination.
{¶7} On April 2, 2019 the Belcastros delivered a letter to Zara claiming that Zara
had defaulted and that the default must be cured within seven days. Zara did not respond
and, on April 9, 2019 the Belcastros sent notice that the contract was terminated. Zara
did no further work on the Belcastro home and the Belcastros completed the home with
the help of other contractors.
{¶8} On May 6, 2019 Zara recorded an Affidavit of Lien stating that it had
provided labor and materials for construction of the Belcastros’ home, that the last date
Richland County, Case No. 2021 CA 0039 4
of work was April 9, 2019 and that Zara was owed $147,405.58 over and above all credits
and set-offs. (Plaintiff’s Exhibit 4.) On June 20, 2019, Zara filed a second lien, identical
to the first except for the following: “Zara Construction is currently owed the sum of
$114,632.30 over and above all credits and set-offs for the work or materials described
in Paragraph 2 above. This Amended Affidavit of Lien replaces the Affidavit of Lien filed
with the County Recorder on May 6, 2019 for a different amount.” (Plaintiff’s Exhibit 5.)
{¶9} On July 23, 2019 Zara filed a complaint to foreclose the mechanic’s lien and
included counts seeking compensation based upon theories of quantum meruit and unjust
enrichment. On August 28, 2019, the Belcastros filed an answer and counterclaim
containing allegations of breach of contract, slander of title, breach of
bailment/conversion, unjust enrichment, negligence and a request for declaratory
judgment. Zara filed its Reply to the counterclaim on September 12, 2019 and the matter
was set for a jury trial.
{¶10} The Belcastros moved for summary judgment on their claim that they were
entitled to a declaratory judgment that Zara had violated the Home Construction Service
Suppliers Act. (Counterclaim, Count II). The trial court granted that motion, found that
Zara had committed several violations of the Act and ordered that damages would be
determined at a hearing. Zara also moved for summary judgment regarding the
Belcastros’ claims for negligence and unjust enrichment, but that motion was denied.
{¶11} The parties presented volumes of testimony and exhibits during a seven
day jury trial, but Zara’s appeal involves a limited amount of the evidence that addressed
the validity of the mechanic’s lien and whether the facts support a claim for quantum
meruit or unjust enrichment.
Richland County, Case No. 2021 CA 0039 5
MECHANIC’S LIEN
{¶12} The dispute regarding the mechanic’s lien arose from Zara’s admission that
the amount listed in the lien filed on May 6, 2019 was incorrect. Joseph Zara confirmed
that “we put numbers from different things into that lien that shouldn't have been on there
by accident.” (Trial Transcript, p. 72, lines 19-20). He confirmed that the correct amount
of the lien was described in Exhibit 5, the amended lien, filed on June 20, 2019.
{¶13} The parties also disputed the date of the last date of work toward completion
of the Belcastro home. Joseph Zara’s affidavit listed the last day of work as April 9, 2019,
though during the trial he could not recall “what is the last day we were on the job” in
response to questions about working on the site. (Trial Transcript, p. 311, line 15). Zara
did confirm that he was still working toward fulfilling the contract and finishing the home
until termination on April 9, 2019. (Trial Transcript, p. 348, line 16 to p. 349, line 2).
Stephen Marek, the project manager, confirmed that Zara was still soliciting contractor
bids in furtherance of the project until April 9, 2019. (Trial Transcript, p. 479, lines 2-8).
QUANTUM MERUIT/UNJUST ENRICHMENT
{¶14} Zara claimed that it completed work prior to termination but had not received
payment for those efforts. The Belcastros contended that no payment was due.
{¶15} Payment for work completed was divided into four stages by the contract:
“1/4 at Contract Initiation, 1/4 at Framing Dry In, 1/4 at Finished Drywall, 1/4 at Finish
Final with Final Approved Inspection Occupancy Permit Issuance.” (Defendant’s Exhibit
A, p. 1, paragraph two). The first two payments had been made and Zara was prepared
to install the drywall when the Belcastros issued the notice of termination. Zara was
Richland County, Case No. 2021 CA 0039 6
prevented from completing the drywall, but had completed “things behind the walls” that
must be finished before drywall is installed such as “electrical rough-in, plumbing rough-
in, heating rough-in.” (Trial Transcript, p. 67, lines 1-9). An invoice for progress payment
would have presumably included the charges for this work, but, because the Belcastros
terminated the contract, the drywall was not installed and no invoice was issued. Zara
was not paid for any of the work or materials completed after the second progress
payment.
{¶16} The Belcastros contended that because the contract was terminated prior
to Zara completing the third benchmark for payment and issuing an invoice, they had no
obligation to make payment to Zara pending completion of the home pursuant to
paragraph 14(b) of the contract. The Belcastros did send the notices described in
paragraph 14(b), first giving Zara notice that the Belcastros believed that Zara had
defaulted and that they had seven days to cure the default and, when Zara did not
respond to the letter, the Belcastros sent a second letter notifying them that the contract
was terminated. Relying on paragraph 14(b), the Belcastros then hired others to
complete the home and, because they contend they paid out more than the unpaid
balance owed to Zara under the written contract, they claimed that they were entitled to
compensation.
DIRECTED VERDICT
{¶17} The Belcastros moved for a directed verdict regarding Zara’s claims at the
close of Zara’s case, claiming that the lien was invalid as the amount was incorrect and
no payment was due. They also claimed that Zara’s claim for quantum meruit or unjust
enrichment must fail because paragraph 14(b) of the contract applied, and that recovery
Richland County, Case No. 2021 CA 0039 7
under the theories of quantum meruit or unjust enrichment is not available if an express
contract provision applies.
{¶18} The trial court granted the request for directed verdict. With regard to the
mechanic’s lien, the trial court found that “the attestation that Plaintiff’s claims in the
original affidavit were being brought "Pursuant to the contract" with the Defendant
homeowners to be false, and the affidavit to be defective for that reason.” The trial court
also found that “[p]laintiff’s attempt to amend its affidavit to state a revised amount due of
$114,632.30 is prima facie evidence that affiant knowingly attested to an incorrect amount
in its original affidavit, thus rendering it invalid,” and that Zara had failed to prove, by a
preponderance of the evidence, that the last day of work was April 9, 2019. (Judgment
Entry, p. 5, 6). With regard to the claim for unjust enrichment or quantum meruit, trial court
found that paragraph 14(b) applied and that any amount due Zara would be calculated
pursuant to that provision of the contract. The trial court concluded that because this
express provision of the contract applied, Zara was prevented from pursuing a claim for
unjust enrichment or quantum meruit.
{¶19} The directed verdict disposed of Zara’s claims, but Belcastros counterclaim
remained for the consideration of the jury. The Belcastros presented their case and, at
the conclusion of the evidence, dismissed all but the slander of title and breach of contract
claim. The jury was also asked to assess what damages, if any, the Belcastros suffered
as a result of the violations of the HCSSA established prior to trial as a result of summary
judgment.
{¶20} The jury returned verdicts in favor of Zara on all counts, specifically finding
in response to jury interrogatories that Zara did not breach the contract, that Zara did not
Richland County, Case No. 2021 CA 0039 8
commit slander of title and that the Belcastros were not entitled to damages for violation
of the HCSSA.
{¶21} Zara appealed and submitted two assignments of error:
{¶22} “I. THE TRIAL COURT IMPROPERLY ENTERED A DIRECTED VERDICT
IN FAVOR OF DEFENDANTS-APPELLEES SCOTT AND CHRISTINE BELCASTRO ON
ZARA CONSTRUCTION'S FORECLOSURE ON A MECHANIC'S LIEN CLAIM.”
{¶23} “II. THE TRIAL COURT IMPROPERLY GRANTED A DIRECTED VERDICT
TO DEFENDANTS-APPELLEES SCOTT AND CHRISTINE BELCASTRO ON THE
CLAIMS OF UNJUST ENRICHMENT AND QUANTUM MERUIT IN THE COMPLAINT
OF PLAINTIFF-APPELLANT ZARA CONSTRUCTION INC.”
STANDARD OF REVIEW
{¶24} “A motion for directed verdict raises a question of law because it examines
the materiality of the evidence, as opposed to the conclusions to be drawn from the
evidence.” Ruta v. Breckenridge-Remy Co., 69 Ohio St.2d 66, 69, 430 N.E.2d 935 (1982).
Thus, we review a trial court's ruling on a motion for directed verdict de novo. Goodyear
Tire & Rubber Co. v. Aetna Cas. & Sur. Co., 95 Ohio St.3d 512, 2002-Ohio-2842, 769
N.E.2d 835, ¶ 4.
{¶25} Under Civ.R. 50(A)(4), a motion for directed verdict can only be granted
when, having construed the evidence most strongly in favor of the nonmoving party, the
court concludes that reasonable minds could only reach one conclusion upon the
evidence submitted and that conclusion is adverse to the nonmoving party. Conversely,
the motion must be denied when there is substantial competent evidence supporting the
position of the nonmoving party and reasonable minds might reach different conclusions.
Richland County, Case No. 2021 CA 0039 9
Hawkins v. Ivy, 50 Ohio St.2d 114, 115, 363 N.E.2d 367 (1977). “The ‘reasonable minds’
test mandated by Civ.R. 50(A)(4) requires the court to discern only whether there exists
evidence of substantive probative value that favors the position of the nonmoving party.”
Goodyear Tire & Rubber Co. v. Aetna Cas. & Sur. Co., 95 Ohio St.3d 512, 2002-Ohio-
2842, 769 N.E.2d 835, ¶ 3. The nonmoving party “is entitled to have the trial court
construe the evidence in support of its claim as truthful, giving it its most favorable
interpretation, as well as having the benefit of all reasonable inferences drawn from that
evidence.” Gibson v. Drainage Prods., Inc., 95 Ohio St.3d 171, 2002-Ohio-2008, 766
N.E.2d 982, ¶ 21, quoting Ruta v. Breckenridge-Remy Co., 69 Ohio St.2d 66, 68, 430
N.E.2d 935 (1982). Accord Hargrove v. Tanner, 66 Ohio App.3d 693, 695, 586 N.E.2d
141 (9th Dist. 1990). However, neither the weight of the evidence or the credibility of the
witnesses are matters for the court's consideration under Civ.R. 50(A). Wagner v. Roche
Laboratories, 77 Ohio St.3d 116, 119, 671 N.E.2d 252 (1996), quoting Ruta at 68-69, 430
N.E.2d 935.
MECHANIC’S LIEN
{¶26} In its first assignment of error, Zara contends that the trial court improperly
entered a directed verdict in favor of the Belcastros on Zara’s claim for foreclosure on its
mechanic's lien. The trial court granted the motion for directed verdict after finding that
the mechanic’s lien was invalid for three reasons: Zara’s reference to the contract as the
source of the lien was false; Zara’s attempt “to amend its affidavit to state a revised
amount due of $114,632.30 is prima facie evidence that affiant knowingly attested to an
incorrect amount in its original affidavit;” and Zara “failed to meet its burden of proof by
Richland County, Case No. 2021 CA 0039 10
a preponderance of the evidence that the last day of work performed on the Belcastro
home was April 9, 2019.” (Judgment Entry, pp. 5-6).
1311.06 INTERPRETATION
{¶27} Our analysis of this assignment of error begins with a review of the
requirements of R.C. 1311.06. The relevant language of that section describes the
required content of a mechanic’s lien and the deadline for filing it with the county recorder
in the county in which the improved property is located:
Any person, or the person's agent, who wishes to avail self (sic) 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.
***
The affidavit shall be filed within one of the following periods:
If the lien arises in connection with a one- or two-family dwelling or
in connection with a residential unit of condominium property as defined in
Chapter 5311. of the Revised Code, within sixty days from the date on which
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the last labor or work was performed or material was furnished by the
person claiming the lien * * *
{¶28} The matter before us involves a single family dwelling, so Zara was
obligated to file an affidavit within sixty days from the last date on which it performed labor
or work or furnished material.
{¶29} Revised Code 1311.06, on its face, provides direct instruction regarding the
content and filing of a valid mechanic’s lien. The relevant caselaw and Revised Code
regarding whether strict or substantial compliance with R.C. 1311.06 is required to create
a valid mechanic’s lien that attaches to the subject property is far less clear.
{¶30} Revised Code 1311.22, captioned “Liberal Construction” states that
substantial compliance with the elements of 1311.06 is sufficient for the validity of the
lien:
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
the validity of the liens under those sections, provided for and to give
jurisdiction to the court to enforce the same.
{¶31} A version of this statute has been in effect since 1917 as noted by Park v.
Williamson Heater Co., 28 Ohio Dec. 141, 149 (Ohio Com.Pl.1917), aff'd, (1st Dist.
Hamilton May 20, 1918):
Section 8323-8 G. C. provides as follows:
“This act is hereby declared to be a remedial statute and to be construed
liberally to secure the beneficial result, intent, and purposes thereof; and a
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substantial compliance with its several provisions shall be sufficient for the
validity of the lien or liens hereinbefore provided for and to give jurisdiction
to the court to enforce the same.”
{¶32} Further suggesting a liberal application of R.C. 1311.06, Chapter 1311 has
been deemed remedial: “The mechanics' lien statutes are remedial legislation, designed
to protect the wage earner, furnisher of materials, and contractor whose work, goods, and
skill create the structures to which the lien in part attaches.” Wayne Bldg. & Loan Co. of
Wooster v. Yarborough, 11 Ohio St.2d 195, 217–18, 228 N.E.2d 841 (1967). The
legislature has acted to insure that remedial statutes are construed liberally:
Remedial laws and all proceedings under them shall be liberally
construed in order to promote their object and assist the parties in obtaining
justice. The rule of the common law that statutes in derogation of the
common law must be strictly construed has no application to remedial laws;
but this section does not require a liberal construction of laws affecting
personal liberty, relating to amercement, or of a penal nature.
R.C. 1.11.
{¶33} While this caselaw and Revised Code language suggests a liberal
interpretation of R.C. 1311.06 where substantial compliance with the Code is sufficient to
establish the validity of a mechanic’s lien, the Supreme Court of Ohio’s decisions mandate
a different conclusion:
Notwithstanding the statutory provision for liberal construction of the
mechanics lien law the Supreme Court of Ohio held that these statutes were
in derogation of common law and must be strictly construed with respect to
Richland County, Case No. 2021 CA 0039 13
compliance with the statutory steps to obtain the lien and liberally construed
after the lien attached. Robert V. Clapp Co. v. Fox, 124 Ohio St. 331, 178
N.E. 586; C. C. Constance & Sons v. Lay, 122 Ohio St. 468, 172 N.E. 283.
In Miller v. Kyle, 85 Ohio St. 186, 193, 97 N.E. 372, the Supreme Court, in
construing the Negotiable Instruments Act, said ‘That statutes in derogation
of the common law shall not by construction receive a meaning beyond that
of the terms which they employ.’ Id. 195, 97 N.E. 373.”
In re Summit Hardware, Inc., 302 F.2d 397, 401 (6th Cir.1962).
{¶34} The strict construction requirement was reaffirmed the Supreme Court of
Ohio in C.C. Constance & Sons v. Lay, 122 Ohio St. 468, 469, 172 N.E. 283, 283–84
(1930) and Robert V. Clapp Co. v. Fox, 124 Ohio St. 331, 333–35, 178 N.E. 586, 587–
88, 10 Ohio Law Abs. 701 (1931) and it is regularly revisited, but still creates confusion:
This issue has been repeatedly addressed by the Ohio Courts,
however, the law is still a bit vague. The principal question that has plagued
the courts is whether the mechanics lien statutes are to be treated as
remedial and therefore are to be construed liberally, or whether they are to
be strictly construed as being in derogation of the common law. (See
discussion 36 Ohio Jurisprudence 2d Mechanics' Liens s 14.) The Supreme
Court of Ohio indicates that neither of these broad rules is satisfactory, for
the statutes must be strictly construed in some respects and liberally
construed in others. Furthermore, this Court must follow the construction
given by the Supreme Court of Ohio in determining the validity of the
mechanic's lien in question.
Richland County, Case No. 2021 CA 0039 14
In re Johnson, Inc., 19 B.R. 706, 707 (Bankr. N.D. Ohio 1982) on reconsideration,
21 B.R. 90 (Bankr. N.D. Ohio 1982).
{¶35} Justice Herbert questioned the accuracy and applicability of the strict/liberal
interpretation dichotomy in Gebhart v. United States, 172 Ohio St. 200, 212–15, 174
N.E.2d 615, 623–24 (1961):
Although we agree with the decision in the Clapp case, we question
the necessity of paragraph one of the syllabus in that case, which states:
‘Mechanics' lien statutes create rights in derogation of the *213
common law and should therefore be strictly construed as to question (sic)
whether a lien attaches, but their procedural and remedial provisions should
be liberally construed, after the lien has been created.’
The rule stated in 36 Ohio Jurisprudence (2d), 445 and 512, Sections
14 and 68, seems to be taken from this paragraph of the syllabus in the
Clapp case and yet it seems by its very statement to raise other questions.
When does a lien attach and what remains to be construed liberally after
the lien has been created? Although this distinction between strict and
liberal construction seems to have come down over the years, the writer
questions its accuracy and applicability today. It is never contended that
Section 1311.14, Revised Code, the last sentence of which provides, ‘this
section shall, as to mortgages contemplated by this section, control over all
other sections of the Revised Code relating to said mechanic's,
materialmen's, contractor's, subcontractor's, laborer's, and all liens that can
be had under sections 1311.01 to 1311.68, inclusive, of the Revised Code,
Richland County, Case No. 2021 CA 0039 15
and shall be liberally construed in favor of such mortgagees, a substantial
compliance by such mortgagees being sufficient,’ is in derogation of the
common law.
{¶36} In 1993, the Supreme Court of Ohio reaffirmed the strict construction
requirement without addressing Justice Herbert’s concerns:
In Robert V. Clapp Co. v. Fox (1931), 124 Ohio St. 331, 178 N.E.
586, paragraph one of the syllabus, this court held: “Mechanics' lien statutes
create rights in derogation of the common law and should therefore be
strictly construed as to question whether a lien attaches, **1031 but their
procedural and remedial provisions should be liberally construed, after the
lien has been created.” See, also, C.C. Constance & Sons v. Lay (1930),
122 Ohio St. 468, 469, 172 N.E. 283, 283 (The statutory steps to establish
a mechanic's lien must be followed, “and in that respect the law is strictly
construed and applied.”).
Crock Constr. Co. v. Stanley Miller Const. Co., 66 Ohio St.3d 588, 592, 613 N.E.2d
1027, 1030–31 (1993).
{¶37} The language compelling strict construction is clear, but the decision of the
Sixth District Court of Appeals preserves uncertainty regarding application of the rule.
The Sixth District reviewed several cases it characterized as applying a strict construction
and others applying a liberal construction and held that an obvious error regarding the
year the work was performed did not invalidate the affidavit:
Here, 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
Richland County, Case No. 2021 CA 0039 16
was performed. 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 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.
Burroughs Framing Specialists, Inc. v. 505 W. Main St., L.L.C., 6th Dist. No. OT-14-001,
2014-Ohio-3961, 18 N.E.3d 1253, ¶ 31.
{¶38} The Second District Court of Appeals found that Burroughs “directly
conflicts with the decisions of this Court” and concluded that an error in the date that the
last work was completed could not be corrected by a later affidavit. SRS Distrib., Inc. v.
Axis All., LLC, 2nd Dist. No. 28607, 2020-Ohio-1529, 153 N.E.3d 953, appeal not allowed
sub nom. SRS Distrib., Inc. v. Axis All., L.L.C., 159 Ohio St.3d 1476, 2020-Ohio-4045,
150 N.E.3d 967, ¶ 21-24.
{¶39} The cases cited by Burroughs highlight confusion or recalcitrance regarding
the application of a strict construction analysis of compliance with R.C. 1311.06 in the
context of the precedent and Revised Code Sections that permit substantial compliance.
Nevertheless, we are unable to ignore the mandate issued by the Supreme Court of Ohio
Richland County, Case No. 2021 CA 0039 17
regarding strict construction of the requirements and will endeavor to restrict our analysis
to the plain language of R.C. 1311.06 to determine the validity of Zara’s mechanic’s lien.
AMOUNT OF LIEN
{¶40} Zara Construction filed a lien with a specific amount and later filed what it
described as an amended lien with a different, lower amount. The trial court found that
“Plaintiffs attempt to amend its affidavit to state a revised amount due of $114,632.30 is
prima facie evidence that affiant knowingly attested to an incorrect amount in its original
affidavit, thus rendering it invalid.” In support of the trial court, the Belcastros cite to Busy
Bee Restoration, Inc. v. A-A Blue Print Co. Summit C.P. No. CV 2013063056, 2014 Ohio
Misc. LEXIS 24449 but that case is factually distinguishable and the holding insufficiently
broad to apply to this case. In Busy Bee, the lienholder attempted to file a lien “to secure
payment for services that have not been rendered.” Busy Bee at *33. Because R.C.
1311.06 permits liens only for “labor or work or furnished any material to the improvement
giving rise to the claimant's lien” the lien in Busy Bee was invalid regardless of the amount,
so that holding is not instructive.
{¶41} Revised Code 1311.06 requires that a potential lien claimant make and file
“an affidavit showing the amount due over and above all legal setoffs.” The statute
contains no requirement that the amount be agreed upon by the parties, nor does it
contain any instruction or limitations regarding how the amount may be calculated. A
dispute over the amount due is not unexpected and may be a part of every case involving
a mechanic’s lien, but we do not agree that dispute serves to invalidate the lien.
{¶42} In Warne v. Bamfield, 5th Dist. Guernsey No. 2005-CA-33, 2006-Ohio-850,
¶ 19, we found that a lien was still valid and sufficiently explicit when the lienholder “did
Richland County, Case No. 2021 CA 0039 18
not estimate the value of the credits and setoffs”. In that case, as in the case now before
us, “[t]he value of the [appellant’s] work and [appellee’s] credits and setoffs” were in
dispute. The amount described in the lien in Warne was higher than the amount admitted
as due during trial. We acknowledge that the amounts involved in the case before us
differs significantly from the amounts in Warne, but as the principals are the same, we
find that we must reach the same conclusion in this case. Accord In re Qualstan Corp.,
303 B.R. 149, 156–57 (“NCB cites to no authority which would invalidate a lien of
asserting a smaller amount than what is actually owed. * * * This Court will not invalidate
the lien of Conie or question its veracity because it stated a smaller amount.”); Regency
Centre Dev. Co. v. Constr. Dimensions, Inc., 8th Dist. Cuyahoga No. 81171, 2003-Ohio-
5067, ¶ 64 ( “That the amount of a lien is undetermined does not mean the lien is invalid,
no more than the fact that the amount stated in an affidavit is in excess of the correct
amount would render an affidavit invalid.”); Tucker Construction, Inc. v. Kitchen (March
1, 1995), Summit App. No. 16636, *3 (“On the contrary, the Ohio Supreme Court has held
that a mechanic's lien in an amount in excess of the actual amount due is not, for that
reason, rendered invalid.”) Thompson Thrift Construction v. Lynn, 5th Dist. No. 16 CAE
10 0044, 2017-Ohio-1530, 89 N.E.3d 249, ¶¶ 78-79 (“Courts have held that a lien is not
invalidated if the stated amount is incorrect when the lienholder testifies to the amount of
the lien.”); Thomas v. Huesman, 10 Ohio St. 152, 158–59 (1859) (“The fact of the amount
claimed to remain due upon the account being stated at $951.05, when in fact there
appears to have been only $891.53, very obviously can be no objection to the goodness
of the account to secure a lien for the amount actually due. That the greater includes the
less is a conclusive answer to this objection.”)
Richland County, Case No. 2021 CA 0039 19
{¶43} We find that Zara included an amount due in compliance with R. C. 1311.06
and the fact that amount was later lowered by the sworn testimony of the lienholder does
not serve to invalidate Zara’s lien.
COMPUTATION OF AMOUNT DUE
{¶44} The trial court attacks the computation of the amount due as well,
contending that the statement in the affidavit that the amount was calculated per the
contract was not true and that falsehood invalidates the affidavit.
{¶45} As we have noted, the affidavit need only show the amount due over and
above all legal set offs. Revised Code 1311.06 contains no requirement that the affiant
describe how the amount was calculated and we find that the inclusion of such language
is surplusage and does not serve to invalidate the lien. We acknowledge that this issue
may have an impact on the calculation of the amount due, credits owed or other financial
issues, but we do not agree that it will serve to invalidate the lien. Zara’s lien must arise
from an express or implied contract, but R.C. 1311.06 does not require that Zara describe
the source of the lien within the affidavit creating the lien.
{¶46} The trial court limits its analysis of the source of the mechanic’s lien to the
written contract, but Zara has claimed compensation under implied contracts through the
theories of unjust enrichment and quantum meruit. We have held that “[a] subcontractor
can file a mechanic's lien to secure payment for work or labor or material in furtherance
of any improvement undertaken by virtue of a contract, express or implied. R.C. 1311.02.”
Thompson Thrift Construction v. Lynn, 5th Dist. No. 16 CAE 10 0044, 2017-Ohio-1530,
89 N.E.3d 249, ¶ 65.
Richland County, Case No. 2021 CA 0039 20
{¶47} Zara may rely on work performed pursuant to an express or implied contract
to calculate its lien, and Chapter 1311 does not impose a requirement upon a lienholder
to calculate a lien pursuant to the terms of a written contract to create a lien that satisfies
the elements of R.C. 1311.06.
{¶48} The trial court’s reliance upon the assertion that the claims were brought
pursuant to the contract with the homeowners and its implication that the lien must be
based upon labor and materials provided pursuant to a written, express contract is
erroneous as the Revised Code contains no such requirement.
LAST DAY OF WORK
{¶49} Zara was obligated to state in its affidavit “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” and that affidavit must be recorded within sixty days of
the last day the lien claimant performed work or furnished material to establish a valid
lien. (R.C. 1311.06) Zara’s first affidavit states that the last date of work was April 9, 2019.
The trial court found that “Plaintiff failed to meet its burden of proof by a preponderance
of the evidence that the last day of work performed on the Belcastro home was April 9,
2019.” (Judgment Entry, April 21, 2020, p. 6).
{¶50} The trial court’s reference to a preponderance of the evidence “was an
improper standard for the trial court to use because this requires a higher degree of proof
and consideration of the weight of the evidence which is improper in addressing a motion
for directed verdict.” (Citations omitted.) Lorenz v. Young, 5th Dist. Tuscarawas No. 2005
AP 06 0046, 2005-Ohio-6190, ¶ 28. Instead, the trial court was required to construe the
evidence most strongly in favor of Zara and, before granting a directed verdict, conclude
Richland County, Case No. 2021 CA 0039 21
that reasonable minds could only reach one conclusion upon the evidence submitted and
that conclusion was adverse to Zara.
{¶51} The trial court contends that the last day of work was revealed by Stephen
Marek who testified:
Q. In fact, after that framing inspection, no other work was performed by
Zara Construction. Correct?
A. I think that's true.
Q. Right. So Zara's last day of work was March 29th, 2019, when that
framing inspection was completed. Right?
A. That's probably true.
Transcript, p. 455, lines 6-11.
{¶52} However, Marek later testified on redirect that Zara was still working on the
project on April 9, 2019:
Q. So you indicated something about March 29th, 2019, the last day of work
on site. Up until April 9th, 2019, or between that time frame, March 29, 2019,
and April 9, 2019, do you have knowledge as to what Joe was doing in
furtherance of the project from his office?
A. Okay. Between -- I'm sorry. Give me the dates again.
Q. March 29, 2019, and April 9, 2019. April 9th was the date of the
termination letter.
Q. Do you know what Zara was doing from his office in furtherance of trying
to make progress on the project?
Richland County, Case No. 2021 CA 0039 22
A. I think he was still looking for -- yeah, to continue on soliciting
subcontractor bids, yeah.
Q. Okay. So he was still -- was he still working in furtherance of the project?
A. I believe so, yes.
Trial Transcript, p. 478, line 18 to p. 479, line 8.
{¶53} Joseph Zara also confirmed that he was working toward completion of the
home until April 9, 2019:
Q. That's all I wanted to ask you about that. Let's talk about these liens for
a minute. Up until the time of April 9th, 2019, when you received the notice
of termination, whether you were on site or off site, as a company, were you
still working on the project?
A. Yes. We worked on the site, but yes.
Q. Okay. So, like, what kind of activities would you be doing between, like,
the end of March and April 9th?
A. Retrieval and searching for documents, paperwork that was being
requested.
Q. Would you be working with your subs to get them going?
A. Yes.
Q. Before you got this notice of termination, are you trying to continue to
purchase material, serve the customer, coordinate with your subs?
A. Yes, absolutely. We did not stop working towards fulfilling the contract
and finishing that house until termination.
Trial Transcript, p. 348, line 10 to p. 349, line 2.
Richland County, Case No. 2021 CA 0039 23
{¶54} Revised Code 1311.06 contains no requirement that the labor or work in
furtherance of the project occur at the construction site, but only that the affidavit contain
the last date of work performed. We find that Zara satisfied that requirement and that the
record contains evidence that April 9th was the last date work was performed in
furtherance of the project sufficient to withstand the motion for directed verdict.
{¶55} Finally, we note that the trial court included a finding in its judgment entry
that creates confusion regarding its decision with regard to the last date of work
requirement of R.C. 1311.06. Though the trial court concluded that Zara failed to
establish that April 9th was the last date of work by a preponderance of the evidence,
earlier in the entry the trial court found that “the original mechanic's lien was timely filed,
but is otherwise invalid and did not attach to the property* * * .” (Judgment Entry, April 21,
2020, p. 4). The trial court’s conclusion that there was insufficient proof of the last date of
work suggests that it found that the lien was not timely filed, but that ruling would conflict
with its prior statement. Because we have found that the record contains sufficient
evidence to establish that April 9th was the last day of work, at least in the context of a
motion for directed verdict, this conflict is of no consequence to our decision but may play
a role in any future analysis.
{¶56} After a review of the record, we find sufficient evidence to support a
conclusion that Zara’s first affidavit satisfied the requirements of R.C. 1311.06. The
parties conceded that this affidavit was filed timely and the Belcastros do not contend that
it failed to contain 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; and the name and
Richland County, Case No. 2021 CA 0039 24
address of the lien claimant. We find that the affidavit contained a valid statement of the
amount due over and above all legal setoffs and that assertion was not invalidated by a
failure to describe the underlying calculations that produced that number. Further, we
find that the face of the affidavit does not show that it was filed outside the sixty-day
statutory time period allowed for perfecting a mechanics lien and that the filing of an
amended lien does not invalidate the initial lien as the first lien contains all of the required
information.
{¶57} We recognize that the material assertions of the affidavit are contested by
the parties, but we find that the information presented by Zara at trial regarding the lien
were sufficient to survive a motion for directed verdict attacking the validity of the lien.
We find that “there is substantial competent evidence supporting the position of the
nonmoving party and reasonable minds might reach different conclusions” so we find that
the trial court’s grant of a directed verdict on this issue was in error. Hawkins v. Ivy, 50
Ohio St.2d 114, 115, 363 N.E.2d 367 (1977).
{¶58} Zara’s first assignment of error is well taken and granted.
II.
QUANTUM MERUIT/UNJUST ENRICHMENT
{¶59} In its second assignment of error, Zara claims the trial court improperly
granted a directed verdict the Belcastro on the claims of unjust enrichment and quantum
meruit.
{¶60} Unjust enrichment and quantum meruit are doctrines “derived from the
natural law of equity” and share the same essential elements. Maghie & Savage, Inc. v.
P.J. Dick, Inc., 10th Dist. No. 08AP–487, 2009-Ohio-2164, 2009 WL 1263965, ¶ 33. A
Richland County, Case No. 2021 CA 0039 25
party seeking relief under either doctrine must show: (1) a benefit conferred by a plaintiff
upon a defendant; (2) knowledge by the defendant of the benefit; and (3) retention of the
benefit by the defendant under circumstances where it would be unjust to do so without
payment. A N Bros. Corp. v. Total Quality Logistics, L.L.C., 12th Dist. No. CA2015-02-
021, 2016-Ohio-549, 59 N.E.3d 758, ¶ 42.
{¶61} “The doctrines differ with respect to the calculation of damages—damages
for unjust enrichment are ‘the amount the defendant benefited,’ while damages for
quantum meruit are ‘the measure of the **1040 value of the plaintiff's services, less any
damages suffered by the other party.’ U.S. Health Practices, Inc. v. Byron Blake, M.D.,
Inc. (Mar. 22, 2001), 10th Dist. No. 00AP–1002, 2001 WL 277291.” Meyer v. Chieffo, 10th
Dist. No. 10AP-683, 193 Ohio App.3d 51, 2011-Ohio-1670, 950 N.E.2d 1027, ¶ 37.
{¶62} In the absence of fraud, illegality, or bad faith, however, a plaintiff may not
recover in quantum meruit when an express contract governs the parties' obligations.
Aultman Hosp. Ass'n v. Community Mut. Ins. Co., 46 Ohio St.3d 51, 55, 544 N.E.2d 920(1989). Likewise, when competent parties contract, and no fraud or illegality is involved,
unjust enrichment cannot be claimed. Ullmann v. May, 147 Ohio St. 468, 476, 72 N.E.2d
63 (1947). “The law does not recognize the coexistence of a quasi contract and an
express contract covering the same subject.” Williams v. Goodyear Aircraft Corp., 84 Ohio
App. 113, 117, 85 N.E.2d 601, 604 (9th Dist.1948).
{¶63} The written contract between Zara and the Belcastros called for payments
to be made “on the basis of an application for payment submitted to the order by the
contractor as the work progresses.” (Defendants Exhibit A, contract, page 1, paragraph
three). The contract provided that those payments were to be made as follows “1/4 at
Richland County, Case No. 2021 CA 0039 26
Contract Initiation, 1/4 at Framing Dry In, 1/4 at Finished Drywall, ¼ at Finish Final with
Final Approved Inspection Occupancy Permit Issuance.” (Id. at page 1, paragraph two).
In the case before us, it is uncontested that the second progress payment had been made
in response to an application by Zara and that Zara had begun work for the next stage of
construction. Prior to completion the relationship between the parties degenerated to the
point that the Belcastros decided to terminate the contract pursuant to paragraph 14(b)
of the contract. The Belcastros delivered a notice of termination to Zara and, shortly
thereafter, Zara ceased all work on the project.
{¶64} Zara claims it provided materials and labor toward the completion of the
project after the second progress payment for which it has not been paid. Zara claims it
pursued an action under quantum meruit or unjust enrichment because the written
contract terms do not address how the contractor may recover payment for work done in
between progress payments when the owner terminates the contract. The Belcastros did
not contend the work was not completed, but only that no payment was owed as the
written contract provides a solution.
{¶65} The trial court granted a directed verdict to the Belcastros on this claim
based upon its reading of paragraph 14(b) of the contract. The trial court claimed that
provision was unambiguous and provided a solution to the current factual situation. That
section states:
Owner's Termination. The owner may, on one week's notice to the
contractor terminate this contract before the termination date hereof, and
without prejudice to any other remedy he may have, when the contractor
defaults in performance of any provision herein, or fails to carry out the
Richland County, Case No. 2021 CA 0039 27
construction in accordance with the provisions of the contract documents.
On such termination the owner may take possession of the worksite and all
materials, equipment, tools, and machinery thereon, and finish the work in
whatever way he deems expedient. lithe unpaid balance of the contract sum
at the time of such termination exceeds the expense of finishing the work,
the owner will pay such excess to the contractor. If the expenses of finishing
the work exceeds the unpaid balance at the time of termination the
contractor agrees to pay the difference to the owner. On such default by the
contractor, the owner may elect not to terminate the contract, and in such
event he may make good the deficiency in which the default consists, and
deduct the costs from the progress payment due to the contactor.
{¶66} The trial court’s analysis of the issue concludes with the following:
In order to avail itself of the quantum meruit and/or unjust enrichment
theories of recovery Plaintiff attempts to argue that the express contract that
Plaintiff drafted is silent on what should happen when the contract is
terminated by the owner between two payment milestones. The Court finds
this theory of relief disingenuous, as paragraph 14 of the contract expressly
provides the means to calculate a fair payment under just such a scenario.
Also important to the court's decision is the long accepted tenet in
contract interpretation that, if there are ambiguities in a contract, the
document will be strictly construed against the party who drafted it or
selected its language. Plaintiff Zara Construction, Inc. drafted the contract
in dispute in this matter. If Plaintiff finds the contract ambiguous as to the
Richland County, Case No. 2021 CA 0039 28
correct procedure for calculating damages where the owner terminated the
contract between payment milestones, it has no one but itself to blame. The
Court finds no such ambiguity.
{¶67} While the trial court does not specifically cite section (b) of paragraph
fourteen of the contract, that is the only section that describes the consequences of a
contract terminated by the owner.
{¶68} Paragraph 14(b) applies to circumstances where the “contractor defaults in
the performance of any provision herein, or fails to carry out construction in accordance
with the provisions of the contract documents.” The plain language of paragraph 14(b)
requires proof of the delivery of the requisite notice and a finding that Zara defaulted
before the Belcastros could successfully terminate the contract and complete
construction.
{¶69} The trial court did not find that Zara was in default or that it breached any
part of the contract before it issued a directed verdict. Instead, the Belcastros’ allegation
that Zara breached the contract was presented to the jury. The jury returned a verdict in
favor of Zara finding that it had not breached the contract. These facts lead us to the
conclusion that the trial court’s holding that paragraph 14(b) of the contract addressed the
circumstances presented to it was error, because the record contains no finding that Zara
defaulted, an unambiguous requirement of that section of the contract. Further, we hold
that the record contains sufficient evidence to present a question to the jury regarding
whether Zara was entitled to damages under a theory of either unjust enrichment or
quantum meruit as it is uncontested that Zara provided labor and materials after the third
Richland County, Case No. 2021 CA 0039 29
payment for which it has not received payment and the contract contains no express or
implied provision addressing compensation for those services or materials.
{¶70} Zara’s second assignment of error is well taken and granted.
{¶71} The decision of the Richland County Court of Common Pleas is reversed
and this matter is remanded to the trial court for further proceedings consistent with this
opinion.
By: Baldwin, J.
Gwin, P.J. and
Delaney, J. concur.