Battle Axe Constr., L.L.C. v. H. Hafner & Sons, Inc.

2019 Ohio 4191

• Court: Ohio Court of Appeals
• Decided: October 11, 2019
• Docket: C-180640
• Status: Published

Opinion

[Cite as Battle Axe Constr., L.L.C. v. H. Hafner & Sons, Inc., 2019-Ohio-4191.]

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

BATTLE AXE CONSTRUCTION L.L.C., : APPEAL NO. C-180640 TRIAL NO. 17CV-03439 Plaintiff-Appellee, : O P I N I O N. vs.

H. HAFNER & SONS, INC., : Defendant-Appellant.

Civil Appeal From: Hamilton County Municipal Court

Judgment Appealed From Is: Affirmed

Date of Judgment Entry on Appeal: October 11, 2019

Yocum & Neuroth, L.L.C., and Thomas R. Yocum, for Plaintiff-Appellee,

William Flax, for Defendant-Appellant. OHIO FIRST DISTRICT COURT OF APPEALS

CROUSE, Judge.

{¶1} Defendant-appellant H. Hafner & Sons, Inc., (“Hafner”) failed to fulfill

its contractual obligation to furnish compactible soil to plaintiff-appellee Battle Axe

Construction L.L.C. (“Battle Axe”), and then ignored repeated requests from Battle

Axe to remedy the situation. Hafner now appeals the trial court’s award of $15,000

in damages to Battle Axe for breach of contract and breach of implied warranty for a

particular purpose.

{¶2} In two assignments of error, Hafner argues that the trial court erred in

its statute-of-frauds analysis, and in failing to consider Battle Axe’s conduct in

frustrating Hafner’s ability to perform and failure to mitigate damages. Finding both

assignments of error to be without merit, we affirm the judgment of the trial court.

Factual Background

{¶3} On April 18, 2016, Joseph Jackson, Battle Axe’s CEO, called Justin

Cooper, vice president of Hafner, about ordering compactible soil from Hafner.

Battle Axe and Hafner had a three-year history of doing business together, and Battle

Axe had ordered soil from Hafner before. Jackson testified that “compactible soil”

has a standard meaning in the construction industry—that it meets a minimum

compaction percentage of 95 percent. Jackson stated that when he called Cooper,

Cooper told him that Hafner could supply compactible soil. Per the parties’ usual

course of doing business, Jackson told Cooper over the phone what he needed, rather

than providing him with any sort of specifications sheet. The same day Jackson

ordered the soil, he sent trucks to pick it up.

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{¶4} Over the course of the entire day, the trucks picked up 23 loads of soil

from Hafner and took them to two separate construction projects. Each time a truck

took a load, Hafner charged Battle Axe’s credit card. Once Battle Axe offloaded and

leveled the dirt at the project site, it was tested in multiple areas for compaction. The

tests failed at both project sites.

{¶5} Upon discovering that the soil was unfit, Jackson called Cooper and

informed him of the problem. Cooper told Jackson that they would “come up with a

solution,” but then failed to respond to follow-up communications from Jackson.

Jackson sent Cooper an email detailing the problem, and requesting that Hafner

refund $3,200 for the soil and $2,880 for the trucking costs. Cooper emailed

Jackson back and told him that a proctor test had not yet been performed to

determine if the soil was compactible. Jackson testified that a proctor test is a

method that can be used to determine the compaction of soil. Jackson stated that

the email was the first time Cooper mentioned anything about Hafner’s need to test

the soil. Jackson emailed Cooper back, but did not receive any further responses

from Cooper.

{¶6} On April 20, Cooper would not answer the phone or any emails.

Jackson did not have time to wait to figure out what to do with the unfit soil. Rather

than attempting to haul it back to Hafner, Jackson testified that the most efficient

way to dispose of the soil was to transport it to a farm only 15 minutes from the

project site. Returning the soil to Hafner would have required Battle Axe’s trucks to

drive roughly an hour from the project site. Therefore, Battle Axe began to offload

the unfit soil at the farm.

{¶7} Jackson stated that he would have waited to load his trucks if he knew

Hafner needed to perform a proctor test on the soil prior to pick-up. There was an

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inspector (hired by the property owner) on site as they unloaded the soil at the

project site, but absent obvious contamination, compaction problems cannot be

determined by simple observation of the soil. Jackson testified that the soil must be

a certain height before it can be tested with a proctor. The soil wasn’t tested until

Battle Axe spread the soil out and “lifted” it, which was a day or two after the soil was

offloaded.

{¶8} Cooper testified that he never represented to Jackson that the soil was

compactible. Cooper stated that he told Jackson in their initial phone call that the

soil would require a proctor test before Battle Axe could pick it up. He stated that

after his phone call with Jackson, he directed that soil samples be sent to Terracon,

an engineering company, for testing to determine if the soil was compactible. Cooper

was notified by Jackson that the soil was not compactible before Terracon could

perform the tests.

{¶9} Cooper testified that the transaction tickets, which the truck drivers

signed for each of the 23 loads, merely described the soil as “fill soil.” However,

when Battle Axe’s trucks showed up to pick up the soil, Hafner did not contact

anyone at Battle Axe to tell them the test had not yet been performed, nor did it stop

the trucks from loading and hauling the soil away.

{¶10} Hafner advances three main arguments with regard to the first

assignment of error: (1) the transaction was actually 23 different sales, none of

which were over $500, and so the statute of frauds does not apply, and even if the

statute of frauds did apply, the email communications referenced as satisfying the

statute of frauds were sent three days after the sales were completed, and so do not

satisfy the statute of frauds; (2) there was no meeting of the minds so as to create an

implied warranty of fitness for a particular purpose; and (3) Hafner was prevented

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from satisfying its obligations under the duty of implied warranty due to Battle Axe’s

actions in removing the soil and transporting it away.

Standard of Review

{¶11} When reviewing a trial court’s judgment to determine if it is against

the manifest weight of the evidence, an appellate court

weighs the evidence and all reasonable inferences, considers the

credibility of witnesses and determines whether in resolving conflicts in

the evidence, the finder of fact clearly lost its way and created such a

manifest miscarriage of justice that the judgment must be reversed.

Eastley v. Volkman, 132 Ohio St.3d 328, 2012-Ohio-2179, 972 N.E.2d 517, ¶ 20.

{¶12} Under a manifest-weight-of-the-evidence review, “every reasonable

intendment and every reasonable presumption must be made in favor of the

judgment and the finding of facts.” Id. at ¶ 21. “If the evidence is susceptible of more

than one construction, we must give it that interpretation which is consistent with

the verdict and judgment, most favorable to sustaining the trial court’s verdict and

judgment.” Karches v. City of Cincinnati, 38 Ohio St.3d 12, 19, 526 N.E.2d 1350

(1988).

Contract Formation

{¶13} In order for a contract to exist, there must be a meeting of the minds as

to the essential terms of the contract. Kostelnik v. Helper, 96 Ohio St.3d 1, 2002-

Ohio-2985, 770 N.E.2d 58, ¶ 16.

{¶14} Hafner claims that there was no meeting of the minds as to what the

parties meant when they contracted for compactible soil. It argues that Jackson

understood the soil as already compactible and ready for pick-up, while Cooper

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meant that Hafner would perform a proctor test to determine if the soil was

compactible. Hafner argues that this disconnect means the trial court erred when it

found the existence of a contract and an implied warranty of fitness for a particular

purpose.

{¶15} The court was presented with conflicting testimony, and did not err in

relying on Jackson’s testimony, the phone calls, and the emails in finding that there

was a meeting of the minds, and thus, a contract formed. The evidence showed that

Cooper told Jackson that Hafner could provide compactible soil. Therefore, he must

be held to his promise to perform.

Statute of Frauds

{¶16} R.C. 1302.04(A) bars the enforcement of contracts for the sale of goods

over $500 unless there is a writing indicating a contract between the parties and

signed by the party against whom enforcement is sought.

{¶17} The trial court found that the emails exchanged between Hafner and

Battle Axe on April 21, 2016, were sufficient to satisfy the statute of frauds. The

finding is supported by the record. The emails show an agreement between Battle

Axe and Hafner in which Battle Axe agreed to pay Hafner $3,200 for engineered soil.

{¶18} Even if the emails were not sufficient, the statute of frauds is satisfied

as a matter of law by payment and acceptance. R.C. 1302.04(C)(3) provides that

even when a contract fails to satisfy the writing requirement of the statute of frauds,

it is still enforceable where the goods have been accepted and paid for. See Royal

Doors, Inc. v. Hamilton-Parker Co., 10th Dist. Franklin No. 92AP-938, 1993 WL

141233, *6 (Apr. 29, 1993); see also Frank Adams & Co. v. Baker, 1 Ohio App.3d 137,

138, 439 N.E.2d 953 (1st Dist.1981).

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{¶19} It is undisputed that Battle Axe accepted the soil and paid Hafner.

Therefore, the statute of frauds is satisfied by payment and acceptance, and the

contract is enforceable.

{¶20} The trial court’s holding that the statue of frauds was satisfied by the

writings was not against the manifest weight of the evidence. Also, the statute of

frauds was satisfied by the acceptance of the soil by Battle Axe and payment to

Hafner.

Implied Warranty of Fitness for a Particular Purpose

{¶21} The elements of an implied warranty of fitness for a particular purpose

are (1) the seller knows of the buyer’s particular purpose, (2) the seller knows that

the buyer is relying on the seller’s skill or judgment to furnish suitable goods, and (3)

the buyer actually relies on the seller’s skill or judgment. R.C. 1302.28;

Hollingsworth v. The Software House, Inc., 32 Ohio App.3d 61, 65, 513 N.E.2d 1372

(2d Dist.1986). As Official Comment One to R.C. 1302.28 notes,

whether or not this warranty arises in any individual case is basically a

question of fact to be determined by the circumstances of the contracting.

Under this section the buyer need not bring home to the seller actual

knowledge of the particular purpose for which the goods are intended or

of his reliance on the seller’s skill and judgment, if the circumstances are

such that the seller has reason to realize the purpose intended or that the

reliance exists.

{¶22} The trial court found that there was an implied warranty of fitness for

a particular purpose because the elements of R.C. 1302.28 were met. The trial court

found that (1) Cooper knew Jackson requested and purchased compactible soil, (2)

Cooper knew Jackson was relying on his skill and judgment to provide the requested

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compactible soil, and (3) Jackson relied on Cooper’s skill and judgment when he

purchased the soil.

{¶23} Battle Axe was not required to tell Hafner exactly what functions the

soil was being used for, rather the circumstances of the sale indicate that Battle Axe

was relying on Hafner’s expertise to provide it with compactible soil.

{¶24} Hafner claims that even if there was an implied warranty of fitness for

a particular purpose, Battle Axe’s actions in removing the truckloads of soil before

any testing could be done made it impossible for Hafner to satisfy its obligations to

deliver the soil “fit” for its particular purpose. Hafner appears to confuse an implied

warranty of fitness for a particular purpose with a condition precedent. Its argument

that it was Battle Axe’s actions which prevented it from fulfilling its obligations under

the contract might be persuasive if the proctor test was a condition precedent to the

formation of a contract. But, that is not the case.

{¶25} A condition precedent must occur before obligations in a contract

become effective. Transtar Elec., Inc. v. A.E.M. Elec. Servs. Corp., 140 Ohio St.3d

193, 2014-Ohio-3095, 16 N.E.3d 645, ¶ 22. If the condition is not fulfilled, the

parties are excused from performance. Id. Whether a provision of a contract is a

condition precedent is a question of the parties’ intent, which is determined by the

language of the provision, the language of the entire agreement, and the subject

matter of the contract. M3 Producing, Inc. v. Tuggle, 2017-Ohio-9123, 91 N.E.3d

805, ¶ 14 (5th Dist.).

{¶26} Cooper testified that during his initial phone conversation with

Jackson, they agreed on what was essentially a condition precedent—that the soil be

tested for compaction prior to either party performing. He also testified that he sent

the soil to Terracon to be tested, but cancelled the test once Battle Axe discovered the

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problem. Jackson testified that Cooper told him the soil was compactible. Then,

when Battle Axe’s trucks picked up the soil, no one from Hafner told them the soil

still needed to be tested.

{¶27} The trial court was presented with conflicting testimony, and chose to

believe Battle Axe’s witnesses and evidence, which showed that Jackson requested

compactible soil, Cooper knew Jackson was relying on his knowledge and judgment

to provide the requested compactible soil, and Jackson actually relied on Cooper’s

knowledge and judgment when he purchased the soil. Its decision is supported by

evidence of prior dealings between the parties, Jackson’s testimony, Cooper’s

testimony that Hafner released the soil to the trucks despite claiming to have sent the

soil off to be tested, and the emails between Jackson and Cooper.

{¶28} Hafner’s argument also fails under an impossibility-of-performance

theory. Impossibility of performance is a defense to a claim for breach of contract,

but the act which renders performance impossible must be unforeseeable. Lehigh

Gas-Ohio, L.L.C. v. Cincy Oil Queen City, L.L.C., 2016-Ohio-4611, 66 N.E.3d 1226, ¶

16 (1st Dist.). Hafner could have prevented or halted pick-up of the soil at any time,

but it did not do so. Battle Axe’s removal of the soil was not only foreseeable by

Hafner, it was authorized by Hafner. Hafner’s first assignment of error is overruled.

Mitigation

{¶29} In Hafner’s second assignment of error, it advances two arguments.

First, it once again raises Battle Axe’s conduct as an excuse for its own

nonperformance. As discussed above, Battle Axe’s conduct did not frustrate Hafner’s

ability to perform. Second, Hafner argues that Battle Axe failed to properly mitigate

damages.

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{¶30} The injured party in a breach-of-contract action cannot recover

damages that it could have prevented by “reasonable affirmative action.” First Fin.

Bank, N.A. v. Cooper, 2016-Ohio-3523, 67 N.E.3d 140, ¶ 23 (1st Dist.). The injured

party need only use “reasonable, practical care and diligence, not extraordinary

measures.” Id. Whether a party uses reasonable care to avoid damages is a question

of fact. Id.

{¶31} Battle Axe took reasonable steps to mitigate its damages. Upon

discovering that the soil was unfit on April 18, Jackson called Cooper and told him

that there was a problem with the soil. Cooper told Jackson that they would “come

up with a solution.” When Jackson tried to follow up with Cooper, he did not receive

any response. So, he emailed Cooper. Cooper initially responded, but again failed to

respond to follow-up communications.

{¶32} On April 20, Battle Axe began to transport the unfit soil to a farm near

the project site and offload it there. Jackson stated that this was the most efficient

way to dispose of the unfit soil because the farm was only 15 minutes from the job

site, whereas Hafner was roughly an hour from the job site. Although Battle Axe was

not paid by the farm for the soil, Battle Axe purchased “good” soil from the farm to

use on its projects, and then left the “bad” soil at the farm. Jackson testified that

Hafner could not have resold the soil to someone else because it was “bad dirt,” and

would not achieve compaction.

{¶33} Hafner claims that Battle Axe did not mitigate damages according to

“standard procedures,” but fails to articulate what those standard procedures are.

Battle Axe’s decision to mitigate damages by hauling the soil to the farm was

reasonable, and the trial court’s award of damages was not against the manifest

weight of the evidence.

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Conclusion

{¶34} The trial court did not err in finding a contract between Hafner and

Battle Axe and an implied warranty of fitness for a particular purpose for Hafner to

deliver compactible soil to Battle Axe. Battle Axe’s conduct did not frustrate Hafner’s

ability to perform under the contract. Battle Axe used reasonable care in

transporting the unfit soil to a local farm in order to mitigate its damages. Therefore,

Hafner’s assignments of error are overruled, and the judgment of the trial court is

affirmed.

Judgment affirmed.

ZAYAS, P.J., and WINKLER, J., concur.

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