Opinion
No. 87-12898.
Decided June 14, 1989.
Larry A. Zink, for plaintiff.
Anthony J. Celebrezze, Jr., Attorney General, and Susan M. Sullivan, Assistant Attorney General, for defendant.
On December 30, 1987, plaintiff, Spring Industries, Inc., filed this action against defendant, the Ohio Department of Transportation ("ODOT"). This action is one of three cases between said parties which were consolidated for trial.
Plaintiff alleges defendant failed to meet its obligations arising from a contractual relationship entered into by the parties on or before July 29, 1983, known as project 586-83 ("Project"). Plaintiff also alleges defendant has been unjustly enriched in view that plaintiff provided the labor and materials for the Project and defendant has benefited from said performance without payment thereof.
Defendant contends that plaintiff's claim is barred by the statute of limitations for actions brought against the state of Ohio. Also, defendant asserts that plaintiff failed to comply with its contractual obligation concerning the Project and hence defendant was justified in its reduction of the contract price.
This cause came on for trial on January 17, 1989. The court has considered the evidence and arguments presented and renders the following decision.
Findings of Fact
1. Plaintiff was a contractor in the business of construction, manufacturing, hauling and placing of highway materials at the time of the incident in question;
2. Defendant was responsible for maintenance and construction of the state highway transportation system at the time of the incident in question;
3. On or before July 29, 1983, plaintiff contracted with defendant for highway paving work to be done on State Route 11 in Columbiana County, Ohio. The project included the preparation and paving of certain roadway shoulder areas upon which guardrails were placed. The purpose of paving the roadway shoulders area is to impede the growth of vegetation under and around the guardrails and to facilitate drainage off the existing pavement and down the embankment alongside the guardrails;
4. The parties concur that the Agreement, Proposal and Contract Bond ("Agreement") (see Plaintiff's Exhibit 3), Plans and Specifications ("Plans") (see Plaintiff's Exhibit 2), and the Ohio Department of Transportation Construction and Material Specification Manual ("Manual") (see Plaintiff's Exhibit 10), dated January 1, 1983, are three essential components of the contract for the Project;
5. The dispute in the case at bar arose on or about May 17, 1984, while plaintiff was preparing and paving the roadway shoulder/guardrail area on State Route 11 which involved 5,058 linear feet of highway pavement;
6. On said date, Don Bennet, ODOT supervisor, informed plaintiff that its method of preparing the shoulder/guardrail area for pavement, preparation, or similarly termed linear grading, was unacceptable. Specifically, Bennet informed plaintiff's foreman on the project, Mr. Russell, and plaintiff's superintendent of the project, Mr. Shipe, that the particular areas were not suitably prepared for asphalt placement in that item 203 linear grading included excavation and embankment as per general notes. (See Defendant's Exhibit F.) Furthermore, defendant revealed to plaintiff that it would not pay plaintiff for any work done prior to this time;
7. Plaintiff firmly disagreed with defendant's position and stated in response that this was the procedure it had performed on this item before in other similar conditions. Plaintiff proceeded to place the asphalt over the alleged inadequately prepared shoulder area surface;
8. Inclement weather conditions caused a delay in the pavement operations until May 24, 1984. On said date the parties again disagreed over the correct procedure in preparing the guardrail area for asphalt surfacing. Defendant again informed plaintiff that its work was unacceptable because sod and roots were not being removed before paving and that it wanted the work done per general notes of the contract. Plaintiff responded by stating that it only had to remove excess vegetation and thus the general notes of the contract were being followed. Further discussion between the parties did not result in agreement. Bennet then telephoned Robert Giauque, ODOT District Construction Field Engineer, and informed him of the problem. Giauque stated to Bennet that he would visit the project to observe the allegedly improperly prepared shoulder/guardrail areas. Giauque visited the job site on or about May 25, 1984;
9. Giauque testified that, when he viewed the site, he observed various improprieties with plaintiff's work, such as asphalt which was laid in low areas, asphalt which was lying on top of grass or sod and grading which appeared choppy and roughly performed. Giauque further stated that there were two problems with placing asphalt over grass, to wit: that grass grows through asphalt and by laying asphalt on grass the pavement will be unable to be rolled as there will be an insufficient foundation for the rolling procedure. He also stated that this type of performance would damage the long-term effects and purpose of the job;
10. Discussion then took place between Giauque and Shipe, plaintiff's vice-president for construction, concerning this problem. As a result of said discussion, plaintiff proceeded to change its grading procedure to conform to defendant's request. Plaintiff also proceeded to roll the paved areas to the satisfaction of the defendant. At this time Shipe orally requested defendant for compensation for the linear grading performed by plaintiff. Defendant denied the request. Bennet was also advised that day by Giauque not to pay for work previously done to the shoulder/guardrail area. The remainder of the shoulder/guardrail work was performed to the satisfaction of the defendant;
11. On or about January 29, 1985, defendant issued a change order to plaintiff, to reflect the nonpayment for the allegedly unsatisfactory work performed by plaintiff pertaining to the shoulder/guardrail area which project equalled 5,058 linear feet. (See Defendant's Exhibit B.) The change order prescribed a reduction in the contract price, as follows: $1,150.20 for improper grading, $9,713.65 for the asphalt concrete placed on the surface and $1,723.75 for the bituminous prime coat placed on the roadway surface;
12. Plaintiff did not agree with defendant's reduction in the contract price and asked defendant to review its decision. Subsequently, the parties exchanged letter correspondence concerning defendant's unwillingness to pay for the plaintiff's pavement work. Negotiations between the parties terminated on May 12, 1987 when Giauque informed plaintiff, by letter, that "paving on grass may be considered paving on a properly prepared surface on [ sic] some places but not in the State of Ohio." (See Defendant's Exhibit C.)
Conclusions of Law
Defendant initially contends that plaintiff's claim is barred by the statute of limitations. Defendant states that plaintiff's cause of action accrued no later than January 29, 1985, when defendant notified plaintiff by a change order that it intended to reduce the contract price because of the improper grading of the shoulder/guardrail area. (See Defendant's Exhibits A and B.) Plaintiff claims that its cause of action did not accrue until July 1986 because defendant was continuing to issue plaintiff change orders concerning the project. (See Plaintiff's Exhibit 4.)
In Children's Hosp. v. Dept. of Public Welfare (1982), 69 Ohio St.2d 523, 23 O.O.3d 452, 433 N.E.2d 187, paragraph two of the syllabus, the Ohio Supreme Court held that "[a] cause of action to recover money wrongfully withheld from payments due accrues when the money is actually withheld, not when an entry on an account is made in anticipation of the withholding." In this regard, and upon review of the record and applicable law, the court finds that the cause of action herein occurred on the date the money was actually withheld, to wit: May 12, 1987. On said date defendant presented its final response to plaintiff's request to review its decision not to pay for the guardrail/shoulder area and as such plaintiff was informed that there was a clear and present contractual dispute. Therefore, the court further finds that plaintiff's contention is well-taken and thus is not time barred from bringing this action.
As aforementioned, plaintiff contends that it should be paid for the 5,058 feet of shoulder/guardrail work because it adhered to the procedures set forth by said contract and the asphalt has performed to the satisfaction of the defendant. Specifically, plaintiff states that the Plans required the contractor only to remove "excess turf" — not all the sod and vegetation in preparing the roadway surface for paving. Defendant opposes plaintiff's argument and avers that plaintiff did not follow the prescribed procedure as set forth by the contract. Further, defendant argues that plaintiff did not remove the vegetation properly, did not grade and fill in the low areas properly and did not roll or compact the prepared surface.
In interpreting the meaning of the pertinent terms in the contract, a reasonable explanation should be ascertained:
"Contracts are to be construed according to the sense and meaning of the terms which the parties have used. Words in a written contract are to be interpreted according to their common, ordinary, and usual meaning. It has been said the grammatical and ordinary sense of words and phrases used in a contract must be followed unless it would lead to manifest absurdity, repugnance, or inconsistency." (Citations omitted.) 18 Ohio Jurisprudence 3d (1980) 24-25, Contracts, Section 141.
After a review of the evidence presented at trial the court finds a reasonable interpretation of the contract to involve five steps which plaintiff had to adhere to in performance of the guardrail/shoulder job. The steps are as follows: (1) plaintiff was required to grade the existing soil which included filling in low spots and cutting down high spots on the existing shoulder area; (2) plaintiff was required to remove existing vegetation on the shoulder area; (3) plaintiff was required to prime the graded area to impede further vegetation growth; (4) plaintiff was required to roll the shoulder area; (5) plaintiff was required to lay the asphalt and compact the area.
The evidence indicates that plaintiff failed to comply with proper grading and rolling of the shoulder area prior to May 25, 1989; however, plaintiff changed its grading and rolling procedures subsequent to discussions between the parties which occurred on said date. It is also apparent that plaintiff did comply with the remaining procedures, i.e., priming the shoulder area and the placement of the asphalt on the prepared area. It appears unclear to the court whether plaintiff removed enough vegetation to satisfy its contractual obligation, but it is evident that removal of all the vegetation could not be a reasonable expectation of defendant. The court is of the opinion that plaintiff's noncompliance in this regard was not a willful omission.
"[I]t is * * * well settled that substantial performance of the promise made by one party is sufficient to warrant recovery by him of damages for the breach of the promise made by the other party. * * * Merely nominal, trifling, or technical departures are not sufficient to break the contract, and slight omissions and inadvertences should be disregarded.
"* * *
"The rule allowing recovery for substantial performance extends only to cases where there has been an honest effort to perform; or, stated otherwise, where there has been an honest effort by the contractor to perform and not a willful omission, substantial performance is all that is required." (Citations omitted.) 18 Ohio Jurisprudence 3d (1980) 143-144, Contracts, Sections 228-229.
In this framework, plaintiff alleges that due to its substantial performance defendant has been unjustly enriched because it provided material and labor for the project, but full payment was not received. Unjust enrichment occurs when a party has and retains money or benefits which in justice and equity belong to another. Hummel v. Hummel (1938), 133 Ohio St. 520, 11 O.O. 221, 14 N.E.2d 923; McClanahan v. McClanahan (1946), 79 Ohio App. 231, 34 O.O. 549, 72 N.E.2d 798.
Upon review, the court finds that plaintiff did breach the contract in that it failed to properly grade and roll the area in dispute. Therefore, the defendant's reduction in the contract price was warranted. However, the court also finds that plaintiff did substantially perform portions of its contractual obligation, particularly the priming and placement of the asphalt. Thus, the court finds that defendant's reduction in price for all materials and work performed to be unjust.
Defendant's change order reveals that the reduction in the contract price was in excess of $12,300 plus interest and costs. Specifically, $1,150.20 was deducted for improper grading; $9,713.65 was deducted for the asphalt concrete; and $1,723.75 was deducted for bituminous prime coat.
The court finds that the deduction for the linear grading was justified under the circumstances, but the plaintiff has shown by a preponderance of the evidence that the deduction for the asphalt concrete and bituminous prime coat was unjustified. The evidence presented demonstrated that neither the prime coat nor the asphalt material has failed to perform to the expectation of the defendant and as such the plaintiff has shown that it substantially performed its obligations under the contract. As aforementioned, defendant deducted $9,713.65 for the asphalt material and $1,723.75 for the prime coating placed on the shoulder/guardrail area. Therefore, defendant is ordered to pay plaintiff the sum of $11,437.40 plus interest.
Judgment accordingly.
FRED J. SHOEMAKER, J., retired, of the Franklin County Court of Common Pleas, sitting by assignment.