Court Opinion

ID: 4425997
Source: CourtListenerOpinion
Date Created: 2019-08-15 19:50:37.191078+00
Date Added: 2024-06-11T13:32:39.911540
License: Public Domain

[Cite as Velocity Constr. Servs., L.L.C. v. Ohio State Univ., 2019-Ohio-3267.]

VELOCITY CONSTRUCTION                                    Case No. 2018-01500JD
SERVICES, LLC.
                                                         Referee Dale A. Crawford
        Plaintiff/Counter Defendant

                                                         DECISION OF THE REFEREE
        v.

THE OHIO STATE UNIVERSITY

        Defendant/Counter Plaintiff

        {¶1} This case is before the Court on a complaint brought by Plaintiff/Counter
Defendant Velocity Construction Services (Velocity) for breach of contract and unjust
enrichment.         Defendant/Counter Plaintiff Ohio State University (OSU) filed a
counterclaim alleging breach of contract, breach of express warranties, and fraud. On
June 12, 2019, OSU moved for summary judgment on the liability portion of its
counterclaim for fraud. Velocity did not file a response, and the Referee considers the
motion unopposed. For the reasons set forth below, the Referee recommends the court
grant OSU’s motion.
Standard of Review
        {¶2} Motions for summary judgment are reviewed under the standard set forth in
Civ.R. 56(C), which states, in part:
        Summary judgment shall be rendered forthwith if the pleadings,
        depositions, answers to interrogatories, written admissions, affidavits,
        transcripts of evidence, and written stipulations of fact, if any, timely filed
        in the action, show that there is no genuine issue as to any material fact
        and that the moving party is entitled to summary judgment as a matter of
        law. No evidence or stipulation may be considered except as stated in this
        rule. A summary judgment shall not be rendered unless it appears from
        the evidence or stipulation, and only from the evidence or stipulation, that
Case No. 2018-01500JD                        -2-                                  DECISION

       reasonable minds can come to but one conclusion and that conclusion is
       adverse to the party against whom the motion for summary judgment is
       made, that party being entitled to have the evidence or stipulation
       construed most strongly in the party’s favor.
“[T]he moving party bears the initial responsibility of informing the trial court of the basis
for the motion, and identifying those portions of the record before the trial court which
demonstrate the absence of a genuine issue of material fact on a material element of
the nonmoving party’s claim.” Dresher v. Burt, 75 Ohio St. 3d 280, 292, 662 N.E.2d 264
(1996). To meet this initial burden, the moving party must be able to point to evidentiary
materials of the type listed in Civ.R. 56(C). Id. at 292-293.
       {¶3} If the moving party meets its initial burden, the nonmoving party bears a
reciprocal burden outlined in Civ.R. 56(E), which states, in part:
       When a motion for summary judgment is made and supported as provided
       in this rule, an adverse party may not rest upon the mere allegations or
       denials of the party’s pleadings, but the party’s response, by affidavit or as
       otherwise provided in this rule, must set forth specific facts showing that
       there is a genuine issue for trial. If the party does not so respond,
       summary judgment, if appropriate, shall be entered against the party.
Factual Background
       {¶4} This case involves three separate contracts between Velocity and OSU for
construction projects on buildings owned by OSU. (Velocity Complaint at ¶ 2-4; OSU
Counterclaim at ¶ 3, 5.) The parties entered into the contracts through purchase order
agreements. (Velocity Complaint at ¶ 1-4; OSU Counterclaim at ¶ 5.) The first contract
was for the renovation of the ballroom in Lawrence Tower, which primarily involved the
design and installation of a new ceiling grid and ceiling tiles along with new lighting and
controls (Lawrence Tower Project). (Velocity Complaint at ¶ 10; OSU Counterclaim at
¶ 8.) The second contract was for the installation of replacement windows in Fechko
Case No. 2018-01500JD                       -3-                                DECISION

House, including the installation of new window frames and trim. (Fechko Window
Project). (Velocity Complaint at ¶ 11; OSU Counterclaim at ¶ 23, Ex. B.) The third
contract was for renovation of the heating, ventilating, and air conditioning (HVAC)
system in Fechko House (Fechko HVAC Project). (Velocity Complaint at ¶ 12; OSU
Counterclaim at ¶ 43, Ex. C.) All three contracts were terminated before any of the
projects were completed. (Velocity Complaint at ¶ 26, 32, 41; OSU Counterclaim at
¶ 18, 39, 66.) The parties’ respective pleadings offer competing accounts of the events
leading up to the terminations.
       {¶5} On February 15, 2019, OSU served Velocity with a set of discovery
requests, including a request for admissions. Velocity failed to respond to the request
for admissions, despite the fact that OSU agreed to multiple extensions of Velocity’s
response deadline. Consequently, the Referee deemed the matters set forth in the
requests for admissions to be admitted pursuant to Civ.R. 36(A)(1).          (Order of the
Referee, July 12, 2019.) As a result, the following facts are in evidence:
       (1) Velocity was required to use new material on the Lawrence Tower
          Project.
       (2) Velocity, and/or its subcontractors, installed work on the Lawrence
          Tower Project which did not use new material, specifically the ceiling
          grid.
       (3) Velocity knew that it was installing used materials, specifically the
          ceiling grid, on the Lawrence Tower Project and billed for new material.
       (4) Velocity installed incorrectly sized ceiling tiles on the Lawrence Tower
          Project.
       (5) Velocity never returned to the Lawrence Tower Project to re-install the
          correctly sized ceiling tiles on the Lawrence Tower Project.
Case No. 2018-01500JD                       -4-                               DECISION

      (6) Velocity failed to install new wiring as required for the plans and
          specifications, for the new lighting system in the Lawrence Tower
          Project.
      (7) The specifications on the Fechko Window Project required that the
          wood trim be pre-stained prior to installation.
      (8) Velocity did not pre-stain the wood trim on the Fechko Window
          Replacement Project prior to installation.
      (9) Velocity did not install new electrical service from the panel to the air
          conditioning units on the Fechko HVAC Project.
      (10)   Velocity specifically represented to OSU personnel that it had
          installed new electrical service from the panel to the air conditioning
          units on the Fechko HVAC Project.
      (11)   Velocity abandoned its work on the Fechko HVAC Project.
      (12)   Velocity abandoned its work on the Fechko Window Project.
(Motion for Summary Judgment, Ex. A-1 at 4-6.) On the basis of these admissions,
OSU now moves for summary judgment on its claim for fraud. (Motion for Summary
Judgment at 4-5.)
Law and Analysis
      {¶6} At the outset, the Referee notes that OSU’s motion for summary judgment is
unopposed. “The failure to respond to a motion for summary judgment does not in and
of itself mandate the granting of summary judgment in favor of the moving party.”
Thompson v. Pingue Properties, 10th Dist. No. 9APE07-881, 1996 Ohio App.LEXIS
1346, 6 (March 29, 1996). However, by failing to respond, the nonmoving loses the
ability to contest the truth of the matters asserted in the moving party’s Civ.R. 56
evidence. Id. Furthermore, “[a] litigant who fails to respond to a motion for summary
judgment ordinarily may not later litigate the issues that could have been raised in the
motion. If allowed, such practice would undermine the purposes of Civ.R. 56 and 60(B)
Case No. 2018-01500JD                       -5-                                    DECISION

and create a ready avenue for delay.” Tankersely v. Scales, 2d Dist. Montgomery No.
26299, 2004-Ohio-4964, ¶ 19.
      To prevail on a claim for fraud, a plaintiff must establish the following:
      (a) a representation or, where there is a duty to disclose, concealment of a
      fact, (b) which is material to the transaction at hand, (c) made falsely, with
      knowledge of its falsity, or with such utter disregard and recklessness as
      to whether it is true or false that knowledge may be inferred, (d) with the
      intent of misleading another into relying upon it, (e) justifiable reliance
      upon the representation or concealment, and (f) a resulting injury
      proximately caused by the reliance.
Burr v. Stark Cty. Bd. of Commrs., 23 Ohio St. 3d 69, 73, 491 N.E.2d 1101 (1986)
(internal citation omitted); Morrow v. Reminger & Reminger Co., LPA, 183 Ohio App. 3d
40, 2009-Ohio-2665, 915 N.E.2d 696, ¶ 20 (10th Dist.).
      {¶7} Generally, the misrepresentation underlying a fraud claim must relate to “a
past or existing fact, and not on promises or representations relating to future action or
conduct.” Krukrubo v. Fifth Third Bank, 10th Dist. Franklin No. 09AP-933, 2010-Ohio-
1691, ¶ 9. Reliance on a representation is justifiable “if the representation does not
appear unreasonable on its face, and if there is no apparent reason to doubt the
veracity of the representation under the circumstances.” 50 Ohio Jurisprudence 3d,
Fraud and Deceit, Section 99. “The question of justifiable reliance is one, and the court
must inquire into the nature of the transaction, the representation, and the relationship
of the parties.” Berger v. Wade, 1st Dist. Hamilton No. C-120863, 2014-Ohio-1262,
¶ 20; see also Crown Property Dev. v. Omega Oil Co., 113 Ohio App. 3d 647, 657, 681
N.E.2d 1343 (12th Dist.1996); Jack Turturici Family Trust v. Carey, 2nd Dist. Miami No.
2012 CA 8, 2012-Ohio-6191, ¶ 25; Bender v. Logan, 4th Dist. Scioto No. 14CA3677,
2016-Ohio-5317, ¶ 53.     If justifiable reliance is established, a plaintiff must present
Case No. 2018-01500JD                       -6-                                 DECISION

evidence that an injury was suffered as a proximate result. Holt Co. v. Ohio Machinery
Co., 10th Dist. Franklin No. 06AP-911, 2007-Ohio-5557.
       {¶8} Based on the evidence before the Referee under Civ.R. 56, OSU met its
initial burden of establishing there is no genuine issue of material fact on any element of
its claim for fraud with respect to the Lawrence Tower Project and the Fechko HVAC
Project. Velocity’s admissions show that Velocity made affirmative representations to
OSU concerning those projects. By billing OSU for new materials on the Lawrence
Tower Project, Velocity effectively represented that it used new materials on that
project. Additionally, Velocity represented to OSU that it installed electrical service from
the panel to the air conditioning units on the Fechko HVAC Project.                    Both
representations were material to the transactions at hand. One representation directly
concerned the condition of the materials used on the Lawrence Tower Project, and the
other concerned the completeness of the Fechko HVAC Project. Both representations
were also false, and Velocity knew as much.          Velocity’s admissions establish that
Velocity knew the ceiling grid it installed for the Lawrence Tower Project was comprised
of used materials. The admissions also establish that Velocity did not, in fact, install
electrical service to the air conditioning units in the HVAC project.          These false
representations were intended to mislead OSU, as evidenced by Velocity’s admissions
that it billed OSU for new materials on the Lawrence Tower Project and specifically
represented to OSU personnel that electrical service was installed on the Fechko HVAC
Project.
       {¶9} Given the circumstances and the nature of the relationship between Velocity
and OSU, OSU’s reliance on Velocity’s misrepresentations was justifiable.           As the
construction contractor directly responsible for completing the projects, Velocity was in a
better position than OSU to know the condition of the materials used in the Lawrence
Tower Project and the level of progress—or lack thereof—on the Fechko HVAC Project.
Case No. 2018-01500JD                       -7-                                DECISION

There is no evidence to suggest that Velocity’s representations were unreasonable on
their face or that OSU had any reason to doubt the representations.
        {¶10} Finally, the admissions establish that OSU suffered injury because of its
justifiable reliance on material misrepresentations by Velocity. On the Lawrence Tower
Project, OSU was left with a used ceiling grid installed in its building, despite the fact
that the project required new material. On the Fechko HVAC project, OSU was stuck
with an incomplete HVAC system renovation that Velocity abandoned before installing
electrical service.   The extent of OSU’s injuries is not yet known.        OSU has not
presented evidence about the amount of its injuries or damages and concedes that this
remains to be established at trial. (Motion for Summary Judgment at 5.) Accordingly,
the Referee expresses no opinion at this time concerning the amount of OSU’s
damages.
        {¶11} Because OSU met its initial burden of presenting evidence showing that
there is no genuine issue of material fact regarding its claim for fraud, Velocity bore the
reciprocal burden of presenting specific facts showing that a genuine issue does remain
for trial.   By failing to oppose OSU’s motion, Velocity failed to carry this burden.
Construing all evidence in the light most favorable to Velocity, the Referee concludes
there is no genuine issue of material fact that Velocity knowingly made material
misrepresentations on which OSU justifiably relied and these misrepresentations
proximately caused injury to OSU. As a matter of law, Velocity is liable to OSU for fraud
with respect to the Lawrence Tower and Fechko HVAC projects.
Conclusion
        {¶12} Based upon the foregoing, the Referee finds that there are no genuine
issues of material fact concerning the liability portion of OSU’s claim for fraud and OSU
is entitled to judgment as a matter of law. Accordingly, the Referee recommends the
Court grant OSU’s motion for partial summary judgment, render judgment in favor of
Case No. 2018-01500JD                        -8-                               DECISION

OSU on the liability portion of it claim for fraud with respect to the Lawrence Tower
Project and Fechko HVAC Project, and defer the issue of OSU’s damages for trial.
         {¶13} A party may file written objections to the referee’s decision within 14 days
of the filing of the decision, whether or not the court has adopted the decision during
that 14-day period as permitted by Civ.R.53(D)(4)(e)(i).         If any party timely files
objections, any other party may file objections not later than ten days after the first
objections are filed. A party shall not assign as error on appeal the court’s adoption of
any factual finding or legal conclusion, whether or not specifically designated as finding
of fact or conclusion of law under Civ.R. 53(D)(3)(a)(ii), unless the party timely and
specifically objections to that factual finding or legal conclusion within 14 days of the
filing of the decision, as required by Civ.R. 53(D)(3)(b).

                                            DALE A. CRAWFORD
                                            Referee
Filed July 29, 2019
Sent to S.C. Reporter 8/15/19