Neth. Ins. Co. v. BSHM Architects, Inc.
Neth. Ins. Co. v. BSHM Architects, Inc.
Opinion of the Court
{¶ 1} Plaintiff-Appellant The Netherlands Insurance Company, as subrogee of Switzerland of Ohio Local School District appeals, the decision of Monroe County Common Pleas Court granting Defendant-Appellee W.G. Tomko Incorporated's motion for directed verdict after the jury was sworn in but prior to opening statements. Appellant also appeals the trial court's decision denying its motion to amend the complaint. Three issues are raised in this appeal. The first is whether the motion for directed verdict was premature. The second issue is, if it was not premature, did the trial court err in granting the motion. Specifically, was there an independent common law tort cause of action to perform in a workmanlike manner even though there was a contract between the parties. The third issue is whether the trial court abused its discretion in denying the motion to amend the complaint to include a contract cause of action.
{¶ 2} For the reasons expressed below, the motion for directed verdict was premature. However, case law indicates if there was no prejudice, the trial court did not commit error in granting a premature motion for directed verdict. In this instance, there was no prejudice. Case law provides that when the tort and contract are intertwined and there is no independent tort that exists absent the contract, the claim is in contract, not in tort. As explained below, given the facts and the contract, there was no separate independent tort. As to the motion to amend, the trial court did not abused its discretion in denying the motion. The motion was made after the jury was sworn in, tort claims and contract claims require different elements, and more discovery would most likely be needed if the amendment was allowed.
Statement of the Case and Facts
{¶ 3} Switzerland of Ohio Local School District is located in Monroe County, Ohio and is insured by Appellant. The School District operates River High School, also located in Monroe County, Ohio. In 2014, the School District was making improvements to the high school, which included an addition and a roof drain system on the existing building. The School District retained BSHM Architects, Inc., to design the addition, Karpinski Engineering Inc. to provide engineering services, and Appellee to install the roof drain system. The roof drain system was installed on the property and as a result of it being allegedly installed incorrectly water infiltrated the existing gymnasium on July 27, 2014 and caused damage to the gymnasium floor requiring it to be replaced. Appellant made payments in the amount of $135,735.50 for *1233damages sustained to the School District's property.
{¶ 4} On July 27, 2016, Appellant filed a complaint against BSHM Architects, Karpinski Engineering, and Appellee. Negligence was asserted against all defendants. As to Appellee, Appellant specifically claimed Appellee: 1) "Carelessly, negligently, and improperly installed the roof drain system at the Subject Property;" 2) "Carelessly, negligently, and improperly failed to caulk the roof drain and spigot penetrations so as not to cause harm to the Subject Property;" 3) "Failed to perform the roofing services in a workmanlike manner;" and 4) "Otherwise failed to exercise due care under the circumstances." 7/27/16 Complaint.
{¶ 5} All defendants filed answers. 9/13/16 Karpinski and BSHM Answer; 9/21/16 Appellee Answer. Appellee asserted as an affirmative defense that Appellant failed to state a claim upon which relief could be granted. 9/21/16 Appellant Answer.
{¶ 6} After some discovery occurred, Appellant dismissed with prejudice BSHM and Karpinski from the lawsuit. 3/30/17 Stipulation for Dismissal with Prejudice. Appellant's expert concluded the water intrusion was caused by Appellee's failure to properly install the roof drain system. 3/10/17 Plaintiff's Expert Disclosures. The case proceeded against Appellee, and further discovery occurred.
{¶ 7} Trial began on September 25, 2017. After the jury was chosen and sworn in, Appellee moved for a directed verdict claiming Appellant failed to state a claim upon which relief could be granted. Tr. 162. The only claim raised in the complaint was negligence. Appellee asserted it entered into a contract with the School District; it was a contract for Appellee to install the roof drain system. Appellee contends the conduct Appellant uses to form the basis of the negligence claim arose solely out of and under the contract. 9/25/17 Directed Verdict Motion; Tr. 162-164. It asserted when a contract action exists against a defendant, the plaintiff cannot maintain a tort claim based upon the same underlying actions as the breach of contract claim unless the defendant also breached a duty owed independent of the contract. 9/25/17 Directed Verdict Motion; Tr. 164.
{¶ 8} Appellant countered arguing their case is not limited to what was said during voir dire and in the alternative moved to amend the complaint:
Second of all, what our case that's put on is not limited to what Mr. Melko [other attorney for Appellant] said in Voir Dire. So the fact that he was alluding to negligence, in and of itself, doesn't preclude us moving forward.
Lastly, in the event that the Court permits to, we would move to amend our Complaint instanter to include a breach of contract claim.
Tr. 165.
{¶ 9} In response to the request for leave to amend, Appellee argued it would be unfair to grant it because the jury was already sworn in and the trial commenced. Tr. 166. Appellee also asserted it would also have the right to conduct discovery on breach of warranty if the motion to amend was granted. Tr. 166.
{¶ 10} Following a recess, the trial court granted the directed verdict motion. It explained there is no dispute the complaint only asserted a negligence claim and there was a contract between Appellee and the School District. It reasoned:
The basis of Plaintiff's tort claim in that this Defendant failed to adequately perform its services that were controlled under the contract.
The Seventh District has issued more than one ruling that has found that in *1234the State of Ohio, a breach of contract does not create a separate tort claim, including a claim for negligence.
There is no other claim that the Plaintiff had made, setting forth their purported damages that they have incurred as a result of any type of other independent tortious conduct.
Of course, as we all know, the Plaintiff herein is a subrogee of the school district and they stand in the shoes of the school district.
The Court finds that a tort claim would be barred with respect to the school district based on the contract between the school district and Tomko. Therefore, the Plaintiff's negligence claim or tort claim against Tomko is likewise barred.
Tr. 168-169. See also 9/25/17 J.E.
{¶ 11} The trial court also denied the motion to amend the complaint noting the ruling does not "make the case go away because they can re-file." Tr. 169.
{¶ 12} Appellant then filed a motion for new trial. 10/23/17 Motion for New Trial. Appellant argued a new trial should be granted for four reasons. 10/23/17 Motion for New Trial. First, Appellee's directed verdict motion was premature because it was made before opening statements. 10/23/17 Motion for New Trial. Second, Appellee failed to plead the economic loss doctrine as an affirmative defense. 10/23/17 Motion for New Trial. Third, the economic loss doctrine does not bar the negligence claim against Appellee. 10/23/17 Motion for New Trial. Lastly, a tort claim can be maintained despite the existence of contract. 10/23/17 Motion for New Trial.
{¶ 13} Appellee filed a response in opposition asserting the motion for new trial should be denied. 11/2/17 Response in Opposition. It argued the motion was not procedurally made at the wrong time and even if it was, there was no prejudice to Appellant. 11/2/17 Response in Opposition. It further contended the timing argument is waived because it was not raised in response to the directed verdict motion. 11/2/17 Response in Opposition. Appellee further asserted the directed verdict was warranted on its merits. 11/2/17 Response in Opposition. It argued the economic loss rule argument is a red herring; the motion was not brought under the economic loss rule, but rather because the claim was based purely on contractual obligations. 11/2/17 Response in Opposition.
{¶ 14} Further responses were filed by each party. 11/14/17 Appellant's Reply; 11/15/17 Appellee's Sur-Reply.
{¶ 15} The trial court denied the motion for new trial; it agreed with Appellee's arguments. 12/11/17 J.E.
{¶ 16} Appellant timely appealed the trial court's decision granting the directed verdict and denying the motion to amend the pleadings.
First and Second Assignments of Error
"The court of common pleas erred in granting a directed verdict for the defendant because the economic loss doctrine does not bar the plaintiff's negligence claim against the defendant."
"The court of common pleas erred in granting a directed verdict for the defendant because the defendant owed an independent common-law duty to the plaintiff."
{¶ 17} The first and second assignments of error are addressed together due to the commonality of the issues; both address the merits of the directed verdict ruling.
{¶ 18} The rule governing directed verdicts, Civ.R. 50, states:
When a motion for a directed verdict has been properly made, and the trial court, after construing the evidence most strongly in favor of the party against whom the motion is directed, finds that upon any determinative issue reasonable *1235minds could come to but one conclusion upon the evidence submitted and that conclusion is adverse to such party, the court shall sustain the motion and direct a verdict for the moving party as to that issue.
Civ.R. 50(A)(4).
{¶ 19} "The 'reasonable minds' test mandated by Civ.R. 50(A)(4) requires the court to discern only whether there exists any evidence of substantive probative value that favors the position of the nonmoving party." White v. Leimbach ,
{¶ 20} The motion for directed verdict was made and granted after voir dire, but prior to opening statements. As will be explained in the third assignment of error, the motion was premature, but any error associated with the timing of the motion was waived and was harmless error.
{¶ 21} Although the motion was premature, the Ohio Supreme Court's instructions on granting a directed verdict following opening statements is instructive in this scenario. The Ohio Supreme Court has cautioned, "A trial court should exercise great caution in sustaining a motion for a directed verdict on the opening statement of counsel." Brinkmoeller v. Wilson ,
{¶ 22} Appellant spends a great deal of time focused on the economic loss doctrine, even though it was not argued to the trial court in response to the directed verdict motion. It also argues there is an independent tort claim. Appellee counters arguing the directed verdict was properly granted because the conduct Appellant uses to form the basis of the negligence claim arose solely out of and under the contract, and thus, an independent tort claim does not exist. Appellee is essentially claiming Appellant failed to state a claim upon which relief could be granted. It further asserts the economic loss doctrine was not raised to the trial court, was not relied on by the trial court in making its decision, and is a red herring.
{¶ 23} These arguments raise two issues. First, whether the claimed inadequate performance is a contract or tort claim. Second, whether the economic loss doctrine is applicable in this situation.
A. Tort v. Contract
{¶ 24} In the complaint the Appellant clearly asserted a negligence claim against Appellee. The complaint contends Appellee: 1) "Carelessly, negligently, and improperly installed the roof drain system at the Subject Property;" 2) "Carelessly, negligently, and improperly failed to caulk the roof drain and spigot penetrations so as not to cause harm to the Subject Property;"
*12363) "Failed to perform the roofing services in a workmanlike manner;" and 4) "Otherwise failed to exercise due care under the circumstances." 9/27/16 Complaint.
{¶ 25} This claim is premised on one incident, installing the roof drain system. The discovery filings indicate it was Appellant's expert's opinion that Appellee failed to properly install the roof drain system and this is what caused the water to back up in the roof drain system and ultimately caused water to infiltrate the gymnasium and damage the floor.
{¶ 26} Given the claims and Seventh Appellate District case law, the trial court found the claim could only be a breach of contract and not a separate tort claim. Since a breach of contract claim was not pled, the trial court granted the directed verdict for Appellee:
In this case, the Plaintiff claims to have been damaged as a result of Defendant Tomko's actions under the terms of a contract between Tomko and the School District. The work Tomko was to perform for the School District was governed by the contract between the School District and Tomko. The basis of Plaintiff's tort claim is that Defendant Tomko failed to adequately perform its services under the contract. Plaintiff claims that it suffered damages as a direct and proximate result of Tomko's failure to properly install a roof drainage system. This falls under Tomko's obligations under the contract.
There is no claim that Plaintiff's purported damages occurred as a result of some other independent tortious conduct of Defendant Tomko. Thus, Plaintiff's purported damages are only recoverable under a breach of contract claim, which was not plead by Plaintiff in this case.
9/25/17 J.E.
{¶ 27} "In Ohio, a breach of contract does not create a tort claim." Textron Fin. Corp. v. Nationwide Mut. Ins. Co. ,
{¶ 28} Here, the claims are factually intertwined. However, the complaint alleged the installation of the roof drain system was not performed in a workmanlike manner. Appellant asserts the failure to perform in a workmanlike manner is the independent tort.
{¶ 29} Absent from the contract between the School District and Appellee was an express warranty to perform the work in a workmanlike manner. Exhibit H to the Appellant's Motion for New Trial.
*1237Where there is no express warranty in the contract to perform in a workmanlike manner, there may be an implied warranty to do so. Implied warranties are typically governed by contract law. Yet, there is case law indicating the failure to perform in a workmanlike manner can be a tort claim even though the duty to perform in a workmanlike manner arose from the contract.
{¶ 30} In addressing whether the 4-year tort statute of limitation or the 15-year contract statute of limitation applied to a claim of whether a contractor failed to perform in workmanlike manner, the Tenth Appellate explained the instances when contract law applied and when tort law applied. Cook v. ProBuild Holdings, Inc. , 10th Dist.,
{¶ 31} In Velotta , the Ohio Supreme Court held, "An action by a vendee against the builder-vendor of a completed residence for damages proximately caused by failure to construct in a workmanlike manner using ordinary care-a duty imposed by law-is an action in tort * * *." Velotta v. Leo Petronzio Landscaping, Inc. ,
{¶ 32} Years later in Kishmarton , the Ohio Supreme Court was asked to determine whether an alleged violation of a duty to construct a residence in a workmanlike manner arises in contract or tort when the agreement is for the future construction of a residence, not an already constructed residence. The specific issue was whether, when a vendee and vendor-builder enter into an agreement for the future construction of a residence, the vendee's cause of action against the builder for breach of the duty to construct the residence in a workmanlike manner arises in contract or tort. Kishmarton v. William Bailey Constr., Inc. ,
{¶ 33} In reaching this conclusion, the Kishmarton Court considered the nature of the particular agreements in Velotta and in Kishmarton :
In Velotta , the consideration for the purchase price was the structure, a finished product. In this case, "the consideration is the services * * * [to] be performed by the contractor. * * * While the contractor is still required to perform the services in a workmanlike manner, the quality of the product will be governed by the language of the contract itself."
*1238Vistein v. Keeney (1990),71 Ohio App.3d 92 , 105,593 N.E.2d 52 , 61.
The contract governs the warranty of good workmanship; therefore, the warranty of good workmanship arises from the contract. It can hardly be otherwise.
Id. at 228-229,
{¶ 34} Here, the failure to perform in a workmanlike manner arises out of the contract between the School District and Appellee for the future construction of the roof drain system. Although the drain system was completed before discovery of Appellee's alleged improper installation of the drain system, the cost of the project was for the services to be performed. See Hanna v. Groom , 10th Dist. No. 07AP-502,
B. Economic loss doctrine
{¶ 35} The economic-loss doctrine generally prevents recovery in tort damages of purely economic loss. Chemtrol Adhesives, Inc. v. American Manufacturers Mut. Ins. Co. ,
" '[T]he well-established general rule is that a plaintiff who has suffered only economic loss due to another's negligence has not been injured in a manner which is legally cognizable or compensable.' " This rule stems from the recognition of a balance between tort law, designed to redress losses suffered by breach of a duty imposed by law to protect societal interests, and contract law, which holds that "parties to a commercial transaction should remain free to govern their own affairs." " 'Tort law is not designed * * * to compensate parties for losses suffered as a result of a breach of duties assumed only by agreement. That type of compensation necessitates an analysis of the damages which were within the contemplation of the parties when framing their agreement. It remains the particular province of the law of contracts.' "
(Internal citations omitted.). Id. at ¶ 6.
{¶ 36} The economic loss doctrine applies to tort claims and presupposes that a tort cause of action exists. The economic loss doctrine is not a means to create an independent tort when there was not one.
{¶ 37} The Eighth Appellate District essentially reached that same conclusion in Stancik .
{¶ 38} That reasoning equally applies here. The duty owed to the School District arose from the contract; the School District and Appellee's relationship was contractual. Thus, any duty to perform the work correctly are related to the contract. The tort claimed is intertwined in the contract and was not independent.
{¶ 39} For those reasons, Appellant's assertion of the economic loss doctrine is a red herring; the trial court found that the contract and the tort claim are intertwined and an independent tort does not survive. The negligence claim fails as a matter of law.
{¶ 40} For the above stated reasons, the first two assignments of error are meritless.
Third Assignment of Error
"The court of common pleas erred in granting a directed verdict for the defendant prior to the plaintiff's opening statement."
{¶ 41} The argument asserted in this assignment of error is the trial court erred in granting the motion for directed verdict prior to opening statements. This is a timing argument; Appellant appears to be arguing a procedural defect in granting the motion at a time not allowed by the rule. Appellee counters, arguing Appellant waived this argument when it did not object to the timing of the motion in its response to the motion for directed verdict. In the alternative, Appellee argues the granting of the motion was premature, but since there was no prejudice to Appellant any error was harmless. It contends there was nothing Appellant could have stated in its opening statement that would have changed the fact that it failed to state a claim upon which relief could be granted.
{¶ 42} Civ.R. 50(A)(1) states:
(1) When Made. A motion for a directed verdict may be made on the opening statement of the opponent, at the close of the opponent's evidence or at the close of all the evidence.
Civ.R. 50(A)(1).
{¶ 43} The language of the rule lists three times when a directed verdict motion may be made - one of which is after the opponent's opening statement. The motion at hand was made prior to the opponent's opening statement.
{¶ 44} Appellate courts have indicated a motion at times different from the ones expressed in Civ.R. 50(A)(1) are improper. The Eighth Appellate District has explained that Civ.R 50(A)(1) and (4) must be read in conjunction with each other and thus, in order for a direct motion to be granted it must be "properly made" and meet the prescriptions in subdivision (1). Sherwin v. Cabana Club Apartments ,
*1240Biddle v. Mayfield , 10th Dist. No. 85AP-751,
{¶ 45} Although premature motions should not be entertained, the Eighth and Tenth Appellate districts have indicated the granting of a premature directed verdict motion may result in harmless error. Langford v. Dean , 8th Dist. No. 74854,
{¶ 46} In this case, the motion was premature because it was made prior to the opening statements. Due to the timing of the motion the trial court should not have entertained the motion. Yet, there was no prejudice from the trial court's granting of the motion. This is not a case where the nonmovant was the defendant who had additionally filed a counterclaim and asserted affirmative defenses and had yet to present its evidence. This case deals with the claim raised in the complaint. Although we agree with Appellant that neither party was foreclosed to assertions made during voir dire, Appellant was limited to the claim pled in the complaint. As Appellee states, there was nothing Appellant could have stated in its opening statement that would have changed the fact that it failed to state a claim upon which relief could be granted. As explained in the first two assignments of error there was no independent tort claim and the only potential claim was a contract claim, which was not pled. Accordingly, the granting of the motion for directed verdict was correct and no prejudice resulted from prematurely granting the motion.
{¶ 47} Furthermore, the timing of the motion was waived. In addition to finding *1241that a premature motion did not result in prejudice, the Tenth Appellate District has stated that failing to object to the timing of the directed verdict motion waived the argument. Alhamarshah v. Salem , 10th Dist.,
{¶ 48} In conclusion, there was no objection and there is no showing of prejudice. This assignment of error lacks merit.
Fourth Assignment of Error
"The court of common pleas erred in denying the plaintiff's motion to amend its complaint."
{¶ 49} Appellant moved to amend the complaint to include a contract claim in response to the directed verdict motion. Appellee opposed the motion to amend. The trial court denied the motion to amend.
{¶ 50} Civ.R. 15(A) governs amendment of pleadings and provides when leave must be given to amend the pleadings. In this instance, the only manner in which Appellant could amend the pleadings is if it obtained leave from the court or if Appellee consented in writing to the amendment. Civ.R. 15(A). The rule indicates in granting leave, the trial court "shall freely give leave when justice so requires." Civ.R. 15(A).
{¶ 51} Factors for the trial court to consider include whether the movant makes a prima facie showing of support for the new matters sought to be plead, the timeliness of the motion, and whether the proposed amendment would prejudice the opposing party. Wilmington Steel Prods., Inc. v. Cleveland Elec. Illuminating ,
{¶ 52} The determination on whether to grant or deny a motion to amend lies well within the trial court's discretion; an appellate court's review is conducted pursuant to an abuse of discretion standard. Turner v. Cent. Local School Dist. ,
{¶ 53} Appellant asserts pleading a tort claim instead of a contract claim was "nothing more than a pleading technicality." Appellant's Brief. It argues the litigation focused on one set of facts - whether Appellee failed to adequately perform its work. It claims the contract was intended to be introduced at trial.
{¶ 54} Appellee counters asserting Appellant is oversimplifying the error. It asserts an entirely new cause of action with different elements would have resulted from the amendment. The request was made after the jury was empaneled despite being on notice of Appellee's affirmative defense - failure to state a claim upon which relief could be granted. The jury instructions filed with the trial court dealt solely with negligence.
{¶ 55} Given our standard of review, the trial court's decision did not amount to an abuse of discretion. The jury was already empaneled and the complaint clearly set forth only a negligence cause of action; the complaint alleged Appellee owed a duty to exercise reasonable care during the installation of the roof drain system, Appellee negligently performed that duty, and as a *1242direct and proximate result of breaching that duty the School District sustained injuries to its real property. 7/27/16 Complaint. The jury instructions filed with the court were for negligence. Even though the tort claim and contract claim were probably based on the same facts, there are different elements to the causes of action. Also, as the court noted it appears the contract claim could be refiled; it does not appear the statute of limitations on a contract claim has run. Thus, given the timing of the motion and the fact that more discovery may have to occur it was not an abuse of discretion to deny the motion.
{¶ 56} This assignment of error lacks merit.
Conclusion
{¶ 57} The first three assignments of error are without merit; a directed verdict on the negligence claim was warranted and the decision is affirmed. As to the fourth assignment of error, the trial court's denial of the motion to amend the complaint is affirmed; the trial court did not abuse its discretion in denying the motion to amend the complaint.
Donofrio, J., concurs.
Waite, J., concurs.
Case-law data current through December 31, 2025. Source: CourtListener bulk data.