Court Opinion

ID: 9349458
Source: CourtListenerOpinion
Date Created: 2022-12-21 22:07:36.438362+00
Date Added: 2024-06-11T16:46:14.898427
License: Public Domain

[Cite as Breazeale v. Infrastructure & Dev. Eng., Inc., 2022-Ohio-4601.]

                            IN THE COURT OF APPEALS
                   FIRST APPELLATE DISTRICT OF OHIO
                             HAMILTON COUNTY, OHIO

 GRANT BREAZEALE,                                   :          APPEAL NO. C-220206
                                                               TRIAL NO. A-2102849
    and                                             :

 DANA BREAZEALE,                                    :
                                                                     O P I N I O N.
          Plaintiffs-Appellants,                    :

    vs.                                             :

 INFRASTRUCTURE &                                   :
 DEVELOPMENT ENGINEERING,
 INC.,                                              :

          Defendant-Appellee.                       :

Civil Appeal From: Hamilton County Court of Common Pleas

Judgment Appealed From Is: Reversed and Cause Remanded

Date of Judgment Entry on Appeal: December 21, 2022

Ulmer & Berne LLP, Jason P. Conte and Jason A. Snyder, for Plaintiffs-Appellants,

Reminger Co., L.P.A., and B. Scott Jones, for Defendant-Appellee.
                        OHIO FIRST DISTRICT COURT OF APPEALS

WINKLER, Judge.

          {¶1}     Plaintiffs Grant and Dana Breazeale purchased a new home built on a

hillside, and a few years later, a landslide occurred. The home builder had gone out of

business, so the Breazeales sued defendant-appellee Infrastructure & Development

Engineering, Inc., (“IDE”) for negligence in performing a geotechnical investigation

on the property for the home builder. IDE moved for summary judgment, arguing that

because the Breazeales lacked privity of contract with IDE, the economic-loss rule

barred the Breazeales’ claims. The trial court granted summary judgment, and the

Breazeales appealed. For the reasons set forth below, we reverse the judgment of the

trial court, and remand for further proceedings.

                                           Background

          {¶2}     In 2015, IDE performed a geotechnical investigation in connection with

a proposed home development. IDE provided the home builder with an “Earthwork”

certification for the property, which certified that a registered professional engineer

oversaw all earthwork at the property, and that all earthworks were constructed in

accordance with the approved plans and recommendations in IDE’s geotechnical

report.

          {¶3}     The Breazeales purchased the property in March 2017, and shortly

thereafter, the home builder who sold the property to the Breazeales went out of

business.        The Breazeales used another contractor to install an inground pool,

additional retaining walls, and other landscaping.         In March 2021, a landslide

developed on the northwest side of the property, which required emergency

stabilization of the home’s foundation. In addition to the damage to the foundation,

                                              2
                     OHIO FIRST DISTRICT COURT OF APPEALS

the landslide also damaged the interior of the home, the yard, the landscaping,

utilities, the retaining walls, and the pool.

       {¶4}    The Breazeales filed a complaint against IDE for professional negligence

and gross negligence, alleging that IDE had permitted the home builder to install

defective fill soil on the property, which caused the landslide. IDE moved for summary

judgment, arguing that the economic-loss rule barred the Breazeales’ claims. In the

alternative, IDE argued that the four-year statute of limitations in R.C. 2305.09 barred

the Breazeales’ claims. The trial court granted summary judgment in favor of IDE on

the ground that the Breazeales’ claims were barred by the economic-loss rule. The

Breazeales appeal.

                                  The Economic-Loss Rule

       {¶5}    In their sole assignment of error, the Breazeales argue that the trial

court erred in granting summary judgment in favor of IDE based on the economic-loss

rule. The Breazeales argue that the economic-loss rule does not bar their claims,

because they are seeking damages to tangible property, and not purely economic loss.

The Breazeales argue that IDE’s alleged negligence caused damage to the foundation

of their home, landscaping, the utilities lines, trees, the retaining wall, the pool, and to

the land itself.

       {¶6}    The economic-loss rule “prevents recovery in tort of damages for purely

economic loss.” Corporex Dev. & Constr. Mgt. v. Shook, Inc., 106 Ohio St.3d 412,

2005-Ohio-5409, 835 N.E.2d 701, ¶ 6. The rationale behind the rule is that “[i]n the

absence of privity of contract between two disputing parties the general rule is ‘there

is no * * * duty to exercise reasonable care to avoid intangible economic loss or losses

to others that do not arise from tangible physical harm to persons and tangible things.’

                                                3
                    OHIO FIRST DISTRICT COURT OF APPEALS

” Floor Craft Floor Covering v. Parma Community Gen. Hosp. Assn., 54 Ohio St.3d

1, 3, 560 N.E.2d 206 (1990), quoting Prosser & Keeton, Law of Torts, 657, Section 92

(5 Ed.1984).

       {¶7}    The issue in this case is whether the Breazeales suffered economic loss,

and thus their negligence claims against IDE would be barred under the economic-

loss rule, or whether they suffered property loss, to which the economic-loss rule

would not apply. The Ohio Supreme Court explained that, in general, three types of

damages exist: (1) personal injury, (2) property damage, and (3) economic loss, which

includes direct and indirect economic damages. Chemtrol Adhesives v. Am. Mfrs.

Mut. Ins. Co., 42 Ohio St.3d 40, 43-44, 537 N.E.2d 624 (1989). Following Chemtrol,

the Ohio Supreme Court considered whether an injured party suffered property

damage or purely economic loss in Queen City Terminals v. Gen. Am. Transp. Corp.,

73 Ohio St.3d 609, 614-615, 653 N.E.2d 661 (1995).

       {¶8}    In Queen City Terminals, the plaintiff, QCT, contracted with British

Petroleum (“BP”) to receive, store, and distribute 100 million gallons of benzene per

year at QCT’s facility in Cincinnati. BP then contracted with another company,

General American Transportation Corporation (“GATX”) to lease a 60-car

“TankTrain” to transport the benzene to QCT. GATX in turn contracted with Trinity

Industries, Inc., (“Trinity”) to manufacture the TankTrain.

       {¶9}    On the day of the first delivery of benzene to QCT, QCT discovered that

benzene had leaked through the bottom of several of the TankTrain cars, and it was

later determined that 40 gallons had contaminated the soil in the immediate vicinity

of the QCT facilities and also contaminated the ground water. Trinity admitted to

negligently designing and manufacturing the fittings and bottom washout openings

                                           4
                   OHIO FIRST DISTRICT COURT OF APPEALS

that caused the leaks. As a result, the city of Cincinnati revoked QCT’s street permit

to transport benzene via pipeline, effectively terminating the contract between QCT

and BP.

       {¶10} QCT and BP sued GATX and Trinity. After a jury returned a verdict in

favor of QCT and BP, GATX settled, and Trinity appealed to the Ohio Supreme Court.

Trinity argued that the indirect economic damages sustained by QCT and BP did not

arise out of any personal injury or tangible property damage, and thus were

unrecoverable under Chemtrol, 42 Ohio St.3d 40, 537 N.E.2d 624. The Ohio Supreme

Court disagreed with Trinity and held that both BP and QCT had sustained some

property damage—BP lost benzene, and QCT’s property had been damaged by the

benzene spill—and thus Chemtrol did not preclude recovery of indirect economic

damages.

       {¶11} Here, like in Queen City Terminals, the Breazeales are seeking damage

to the real property itself resulting from IDE’s alleged negligence. The Breazeales

assert damage to the foundation of their home, landscaping, the utilities lines, trees,

the retaining wall, the pool, and to the land itself. Therefore, the economic-loss rule

does not apply.

       {¶12} In urging this court to apply the economic-loss rule, IDE argues that we

should apply the “integrated-system rule” to the Breazeales’ claims. See Motorists

Mut. Ins. Co. v. Ironics, Inc., Slip Opinion No. 2022-Ohio-841, ¶ 30, citing HDM

Flugservice GmbH v. Parker Hannifin Corp., 332 F.3d 1025, 1031 (6th Cir.2003).

IDE argues that the Breazeales’ claimed physical damages to the home’s foundation

and to the northwest slope of the residence are not separate property, but “property

components” in which IDE’s services have been integrated.

                                          5
                    OHIO FIRST DISTRICT COURT OF APPEALS

        {¶13} The integrated-system rule has no application in this case.         The

integrated-system rule applies in products-liability cases to prevent a purchaser of a

product from circumventing the economic-loss rule by claiming that a defective

component of a multicomponent product caused damage to the product itself. See

Motorists Mut. Ins. Co. at ¶ 29-30.             Under the integrated-system rule, “a

multicomponent product is viewed as an integrated system, so if a defective

component causes damage to the system, the other-property exception to the

economic-loss doctrine is not triggered.” Id. at ¶ 29. This case does not involve a

consumer-purchased product, and, even if it did, the Breazeales claim damage to

tangible property other than the hillside into which IDE’s “product” was “integrated.”

Therefore, we reject IDE’s assertion that the economic-loss rule applies. The trial

court erred in granting summary judgment to IDE on the basis of the economic-loss

rule.

                                   Statute of Limitations

        {¶14} Even if the economic-loss rule does not bar the Breazeales’ claims, IDE

argues that this court should affirm the trial court’s summary-judgment decision,

because the four-year statute of limitations in R.C. 2305.09(D) bars the Breazeales’

claims. The trial court never reached the statute-of-limitations issue in its decision

because that issue was effectively rendered moot by its decision to grant summary

judgment in favor of IDE based on the economic-loss rule. Nevertheless, IDE points

out that this court can affirm the trial court on an alternative basis.

        {¶15} The Ohio Supreme Court has “consistently held that a reviewing court

should not reverse a correct judgment merely because it is based on erroneous

reasons.” Stammco, L.L.C. v. United Tel. Co. of Ohio, 136 Ohio St.3d 231, 2013-Ohio-

                                            6
                    OHIO FIRST DISTRICT COURT OF APPEALS

3019, 994 N.E.2d 408, ¶ 51. In this case, however, the trial court did not address the

statute-of-limitations issue, and only addressed whether the economic-loss rule

applied. The trial court must at least consider the issue in the first instance before an

appellate court considers alternative arguments. See Yoskey v. Eric Petroleum, 7th

Dist. Columbiana No. 13CO42, 2014-Ohio-3790, ¶ 41 (“[I]f a party raises ten

arguments in a summary judgment motion, the trial court adopts the first one, and the

appellant assigns that position as error, the appellee cannot require this court to

address the nine other arguments by arguing that the judgment can be affirmed on

other grounds that the trial court never reached.”); Min You v. Northeast Ohio Med.

Univ., 10th Dist. Franklin No. 19AP-733, 2020-Ohio-4661, ¶ 31 (declining to rule on

appellee’s alternative arguments in support of summary judgment, because the trial

court did not address the remaining issues); Meekins v. City of Oberlin, 8th Dist.

Cuyahoga No. 106060, 2018-Ohio-1308, ¶ 25 (“Appellate de novo summary judgment

review does not mean that the trial court need not first rule on the issues presented in

a party’s motion for summary judgment.”).

       {¶16} We decline to reach the issue of whether the Breazeales’ claims are

barred by the statute of limitations in R.C. 2305.09(D), because that issue was never

considered by the trial court.

                                         Conclusion

       {¶17} The trial court erred in granting summary judgment in favor of IDE

based on the economic-loss rule. We sustain the Breazeales’ assignment of error, and

we reverse the trial court’s judgment, and remand this cause for further proceedings.

                                               Judgment reversed and cause remanded.

                                           7
                    OHIO FIRST DISTRICT COURT OF APPEALS

ZAYAS, P.J., and CROUSE, J., concur.

Please note:

      The court has recorded its own entry on the date of the release of this opinion.

                                            8