Cantleberry v. Holbrook

2013 Ohio 2675

• Court: Ohio Court of Appeals
• Decided: June 25, 2013
• Docket: 12CA75
• Status: Published

Opinion

[Cite as Cantleberry v. Holbrook, 2013-Ohio-2675.]

COURT OF APPEALS RICHLAND COUNTY, OHIO FIFTH APPELLATE DISTRICT

JUDGES: MARY CANTLEBERRY : Hon. W. Scott Gwin, P.J. : Hon. Sheila G. Farmer, J. Plaintiff-Appellant : Hon. Patricia A. Delaney, J. : -vs- : : Case No. 12CA75 RUSSELL HOLBROOK : : Defendant-Appellee : OPINION

CHARACTER OF PROCEEDING: Civil appeal from the Richland County Court of Common Pleas, Case No. 2009-CV-1763

JUDGMENT: Reversed and Remanded

DATE OF JUDGMENT ENTRY: June 25, 2013

APPEARANCES:

For Plaintiff-Appellant For Defendant-Appellee

BRIAN CHISNELL ANDREW KVOCHICK UAW-GM Legal Services Plan Weldon, Huston & Keyser 1075 National Parkway 76 N. Mulberry Street P.O. Box 2668 Mansfield, OH 44902 Mansfield, OH 44906 [Cite as Cantleberry v. Holbrook, 2013-Ohio-2675.]

Gwin, P.J.

{¶1} Appellant Mary Cantleberry appeals the March 29, 2012 judgment entry of

the Richland County Court of Common Pleas granting appellee’s motion to amend

pleadings and the July 18, 2012 judgment entry overruling her objections to the

Magistrate’s decision and adopting the Magistrate’s Decision of July 13, 2011.

Facts & Procedural History

{¶2} Appellant owns the residence at 892 Expressview Drive in Mansfield and

the Lincoln Inn, a bar in Mansfield. Appellee, Russell Holbrook, is a customer of

appellant’s bar and is employed as a union millwright who primarily works in steel mills

and auto plants. Appellant approached appellee at the Lincoln Inn about hiring him to

tear off the existing roof and install a new roof on her residence. The parties agreed

appellee would tear off two layers of shingles and install a new roof for the total price of

$6,000, including materials and labor. Appellant had the funds to pay appellee because

she received $8,000 from her insurance company after making an insurance claim for

storm damage to the roof. Appellant purchased the roofing materials for approximately

$3,200 and agreed to pay appellee the balance of the $6,000 for his labor. Appellee

finished the roof in July of 2009. Appellant paid appellee $2,000, but failed to pay him

the $800 balance because appellant stated the job was not completed properly. After

appellee installed the roof, water began running behind the gutters and down the side of

the house into the foundation.

{¶3} Appellant filed a complaint on December 4, 2009, claiming she was

entitled to damages from appellee for the improper installation of a metal roof on her

home as well as damage to a rubber roof over a porch. She asserted claims for breach Richland County, Case No. 12CA75 3

of contract, breach of express warranty, breach of implied warranty, negligence,

violation of the Ohio Home Solicitation Sales Act, and violation of the Ohio Consumer

Sales Practices Act. Appellee filed an answer to the complaint on December 12, 2009,

asserting the affirmative defenses of statute of limitations, laches, estoppel, and the

refusal of a reasonable opportunity to cure. Appellee reserved the right to assert further

affirmative defenses after reasonable discovery was completed.

{¶4} Prior to the commencement of the trial, the parties stipulated to the

following facts: appellant and appellee entered into an oral contract in May of 2009 for

the removal of a shingle roof from appellant’s house and shed and the installation of a

metal roof on both structures; appellant paid $3,200 for the materials and agreed to pay

appellee $2,800 for his labor; appellee negligently installed the metal roof; and appellee

made one attempt to fix the roof, but did not fix the roof. Appellant dismissed her claims

for violations of the Ohio Home Solicitations Sales Act and Ohio Consumer Sales

Practices Act. Accordingly, the sole issue at trial was the measure of appellant’s

damages for the negligent installation of the roof.

{¶5} A bench trial began on December 3, 2010, and Al Gusan, a roofing expert,

stated the roof was not properly installed and testified about the cost to replace the roof.

The trial continued on May 13, 2011. Troy Cramer, an expert in environmental

management, and Joe Zara, a general contractor, testified about the cost for removing

and installing a new roof and mold remediation. Appellant testified as to the damage

caused from the faulty roof. Appellee argued the roof was already in poor condition and

that a minimal repair would have remedied the situation. Appellee testified after his Richland County, Case No. 12CA75 4

discussions with the roof manufacturer, he would be able to fix the roof by unfastening

the roof materials, sliding them down slightly, and reattaching them.

{¶6} Under direct examination as to his conversation with appellant prior to

agreeing to tear off the old roof and install the new roof, appellee testified as follows:

“A: She [appellant] said that some of her shingles had blown off,

her insurance company had come out, and they would only pay to replace

the front part of her roof.”

Q: Okay.

A: So she asked me after the next wind storm if I would go put

a tarp up there and make it look like it had come off the back so she could

get the insurance company to finish paying for the replacement of her

roof.”

{¶7} After counsel for appellant objected to the testimony, appellee’s counsel

stated the testimony was relevant as to the mitigation of damages and appellee’s lack of

ability to fix the roof. The magistrate allowed the testimony. Appellee testified he did

place the tarp over the roof after the next storm. Under cross-examination, appellee

testified he knew the portion of the roof he covered with the tarp was not damaged.

{¶8} On July 13, 2011, the magistrate issued his decision, finding the contract

between appellant and appellee had been entered into for the purpose of defrauding

appellant’s insurance company and denied appellant contract damages based on

illegality of contract. In lieu of contract damages, the magistrate awarded appellant

$2,000 in damages under a quasi-contract theory. Richland County, Case No. 12CA75 5

{¶9} Appellant filed objections to the magistrate’s decision on January 17,

2012, arguing the issue of illegality of contract was not properly before the trial court

and was deemed waived. On January 19, 2012, appellee filed a motion to amend

pleadings to conform to evidence, requesting the trial court permit him to add the

affirmative defense of illegality of contract. The trial court granted appellee’s motion to

amend pleadings on March 29, 2012, amending appellee’s answer to include the

affirmative defense of illegality of contract. On July 18, 2012, the trial court overruled

appellant’s objections to the magistrate’s decision and adopted the magistrate’s

decision.

{¶10} Appellant now raises the following assignments of error on appeal:

{¶11} “I. THE TRIAL COURT ABUSED ITS DISCRETION IN GRANTING

APPELLEE’S MOTION TO AMEND PLEADINGS TO CONFORM TO THE EVIDENCE

UNDER CIVIL RULE 15(B).

{¶12} “II. THE TRIAL COURT ABUSED ITS DISCRETION IN OVERRULING

APPELLANT’S OBJECTIONS TO MAGISTRATE’S DECISION OF JULY 13, 2011.

{¶13} “III. THE TRIAL COURT ERRED AS A MATTER OF LAW IN

DETERMINING THAT APPELLEE MET HIS BURDEN OF PROOF ON THE ISSUE OF

ILLEGALITY OF CONTRACT.”

I. & II.

{¶14} Appellant argues the trial court abused its discretion in granting appellee’s

motion to amend pleadings to conform to the evidence and abused its discretion in

overruling appellant’s objections to the magistrate’s decision because the magistrate

decided the case on the basis of illegality of contract. We agree. Richland County, Case No. 12CA75 6

{¶15} An appellate court will not reverse a trial court’s decision on a motion to

amend absent an abuse of discretion. CommunicCare, Inc. v. Wood Cty. Bd. Of

Commr.’s, 161 Ohio App.3d 84, 90, 2005-Ohio-2348, 829 N.E.2d 706 (6th Dist.), citing

Wilmington Steel Products, Inc. v. Cleveland Elec. Illuminating Co., 60 Ohio St.3d 120,

122, 573 N.E.2d 622 (1991). In order to find an abuse of that discretion, we must

determine the trial court’s decision was unreasonable, arbitrary, or unconscionable and

not merely an error of law or judgment. Blakemore v. Blakemore, 5 Ohio St.3d 217, 450

N.E.2d 1140 (1983).

{¶16} Appellee filed his motion to amend the pleadings to conform to the

evidence both after the magistrate issued his opinion and after appellant filed her

objections to the magistrate’s decision, arguing illegality of contract was not raised as

an affirmative defense by appellee. The Ohio Supreme Court stated a Civil Rule 15(B)

amendment is impermissible when it would result in substantial prejudice to a party.

State ex rel. Evans v. Bainbridge Twp. Trustees, 5 Ohio St.3d 41 (1983). We have

reservations about the timing of the motion to amend and the granting of the motion

after the magistrate’s decision was rendered and appellant’s objections were filed.

However, even if the motion to amend was timely filed and not prejudicial to appellant,

we find the trial court erred in granting appellee’s motion to amend pursuant to Civil

Rule 15(B).

{¶17} Civil Rule 15(B) provides, in pertinent part:

“When issues not raised by the pleadings are tried by express or

implied consent of the parties, they shall be treated in all respects as if

they had been raised in the pleadings. Such amendment of the pleadings Richland County, Case No. 12CA75 7

as may be necessary to cause them to conform to the evidence and to

raise these issues may be made upon motion of any party at any time,

even after judgment. * * * If evidence is objected to at the trial on the

ground that it is not within the issues made by the pleadings, the court

may allow the pleadings to be amended and shall do so freely when the

presentation of the merits of the action will be subserved thereby and the

objecting party fails to satisfy the court that the admission of such

evidence would prejudice him in maintaining his action or defense upon

the merits. * * *”

{¶18} As noted by Civ.R. 15(B), amendments to the pleadings may be

necessary to conform to the evidence and leave should be freely given to amend

pleadings to conform to the evidence. However, there must be at least a prima facie

showing by the party filing the motion to amend that the movant can “marshal support

for the new matters sought to be pleaded * * *”. Wilmington Steel Products, Inc. v.

Cleveland Elec. Illuminating Co., 60 Ohio St.3d 120, 122 (1991).

{¶19} In this case, we find the trial court erred in granting appellee’s motion to

conform to the evidence when there was a lack of prima facie evidence presented by

appellee of illegality of contract. The only testimony presented by appellee was his

own, stating appellant told him the insurance company would only pay to replace the

front part of her roof and she asked him to place a tarp on the back part of the roof so

she could get the insurance company to finish paying for the replacement roof. While

this testimony may raise concerns about appellant’s transactions with her insurance

company, it does not demonstrate any illegality of the contract between appellant and Richland County, Case No. 12CA75 8

appellee to tear off and replace the roof. Appellee stipulated to the fact that he

negligently installed a metal roof at appellant’s residence. The contract between

appellant and appellee was separate from any dealings appellant had with her

insurance company. As indicated by the attorney for appellee during the trial, the

testimony at issue by appellee was introduced in an effort to show appellee was denied

by appellant the reasonable opportunity to correct his work and mitigate damages.

{¶20} Accordingly, we conclude the trial court erred in granting appellee’s motion

to conform to the evidence when appellee did not present prima facie evidence of the

defense of illegality and abused its discretion in overruling appellant’s objections to the

magistrate’s decision because the magistrate decided the case on the basis of illegality

of contract. Appellant’s first and second assignments of error are sustained.

III.

{¶21} Appellant argues the trial court erred as a matter of law in determining

appellee met his burden of proof on the issue of illegality of contract. We agree. A

defense alleging illegality of contract is an affirmative defense. McCabe/Marra Co. v.

Dover, 100 Ohio App.3d 139, 652 N.E.2d 236 (8th Dist. 1995); Arthur Young & Co. v.

Kelly, 88 Ohio App.3d 343, 623 N.E.2d 1303 (10th Dist. 1993). When challenging a

contract's enforceability based on illegality, one does not challenge the terms to the

agreement; “[i]n short, asserting that defense does not contest the existence of an offer,

acceptance, consideration, and/or a material breach of the terms of the contract.”

McCabe/Marra Co., 100 Ohio App.3d at 148, 652 N.E.2d at 241. The burden of proving

the contract's illegality is upon the party seeking to avoid the obligation Charles Richland County, Case No. 12CA75 9

Melbourne & Sons, Inc. v. Jesset, 110 Ohio App. 502, 505, 163 N.E.2d 773, 775 (8th

Dist. 1960).

{¶22} In this case, the trial court found the parties entered into a civil conspiracy

to defraud the insurance company. The elements of a civil conspiracy are: (1) a

malicious combination, (2) involving two or more persons, (3) causing injury to person or

property, and (4) the existence of an unlawful act independent from the conspiracy

itself. Ogle v. Hocking Cty., 4th Dist. No. 11CA31, 2013-Ohio-597, ¶ 14, citing Cook v.

Kudlacz, 974 N.E.2d 706, 2012-Ohio-2999 (7th Dist.), quoting State ex rel. Fatur v.

Eastlake, 11th Dist. No.2009-L-037, 2010-Ohio-1448, ¶ 45. “A civil conspiracy claim is

derivative and cannot be maintained absent an underlying tort that is actionable without

the conspiracy.” Morrow v. Reminger & Reminger Co., L.P.A., 183 Ohio App.3d 40,

2009-Ohio-2665, 915 N.E.2d 696, ¶ 40 (10th Dist.).

{¶23} Here, the trial court found the unlawful underlying tort to be fraud against

the insurance company. A claim for fraud requires proof of the following elements: (1) a

representation or, where there is a duty to disclose, concealment of a fact; (2) which is

material to the transaction at hand; (3) 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; (4) with the intent of misleading another into relying upon it; (5)

justifiable reliance upon the representation or concealment; and (6) a resulting injury

proximately caused by the reliance. Cohen v. Lamko, Inc., 10 Ohio St.3d 167, 169, 462

N.E.2d 407.

{¶24} The elements of fraud must be established by clear and convincing

evidence. Crawford v. Stan, 5th Dist. No. 2011CA00197, 2012-Ohio-3624. Clear and Richland County, Case No. 12CA75 10

convincing evidence is that measure or degree of proof that will produce in the mind of

the trier of facts a firm belief or conviction as to the allegations sought to be established.

Cross v. Ledford, 161 Ohio St. 469, 120 N.E.2d 118 (1954). “Where the degree of proof

required to sustain an issue must be clear and convincing, a reviewing court will

examine the record to determine whether the trier of facts had sufficient evidence before

it to satisfy the requisite degree of proof.” Id. at 477. If some competent, credible

evidence going to all the essential elements of the case supports the trial court’s

judgment, an appellate court must affirm the judgment and not substitute its judgment

for that of the trial court. C.E. Morris Co. v. Foley Constr. Co., 54 Ohio St.2d 279, 376

N.E.2d 578 (1978). The burden to prove fraud rests upon the party alleging the fraud.

First Discount Corp. v. Daken, 75 Ohio App. 33, 60 N.E. 2d 171 (1st Dist. 1944), ¶ 7 of

syllabus.

{¶25} Upon review, we find appellee failed to present clear and convincing

evidence of fraud, failed to meet his burden on the civil conspiracy action, and thus

failed to prove illegality of contract. Appellee testified appellant told him the front part of

her roof was damaged and that her insurance company would pay to replace that part

of the roof. Appellee then stated appellant asked him and he did, after a wind storm,

put a tarp on the back portion of the roof. Under cross-examination, appellee testified

the portion of the roof he covered with the tarp was not damaged. Appellee

subsequently testified about the separate contract between him and appellant for the

roof removal and installation and testified that after appellant concluded her dealings

with the insurance company, appellee took a check from appellant to tear off and

replace her roof. Richland County, Case No. 12CA75 11

{¶26} There is no evidence in the record demonstrating the parties constituted a

malicious combination or their conduct in negotiating between appellant and appellee to

replace the roof resulted in injury to the insurance company. There is no evidence

appellee had any dealings with the insurance company. Further, appellee presented no

evidence showing any fraudulent conduct or any fraudulent misrepresentation by

appellant in her dealings with the insurance company. Appellee was not a party to the

transactions between the insurance company and appellant. The contract at issue in

this case is the oral contract between appellant and appellee for the removal of an old

roof and the installation of a new roof on appellant’s residence and occurred

subsequent to the payment of the insurance claim. Appellee stipulated to the fact that

he negligently installed a metal roof at appellant’s residence. This oral contract

between appellant and appellee is separate and distinct from any contract that existed

between appellant and her insurance company and has no nexus to the claim

presented to the insurance company by appellant.

{¶27} The trial court erred in finding appellee proved there was some competent,

credible evidence going to all the essential elements of the existence of a civil

conspiracy with appellant to defraud to insurance company by means of appellee’s

contract for the installation of a replacement roof and thus erred in finding appellee

presented sufficient evidence to meet his burden of proof of the existence of the

affirmative defense of illegality. Appellant’s third error is sustained.

{¶28} Appellant’s Assignments of Error I, II, and III are sustained.

{¶29} The March 29, 2012 judgment entry of the Richland County Court of

Common Pleas granting appellee’s motion to amend pleadings and the July 18, 2012 Richland County, Case No. 12CA75 12

judgment entry overruling appellant’s objections to the Magistrate’s decision and

adopting the Magistrate’s Decision of July 13, 2011 are reversed. We vacate the award

of damages and remand the matter to the trial court for further proceedings in

accordance with the law and this opinion.

By Gwin, P.J.,

Farmer, J., and

Delaney, J., concur

_________________________________ HON. W. SCOTT GWIN

_________________________________ HON. SHEILA G. FARMER

_________________________________ HON. PATRICIA A. DELANEY

WSG:clw 0529 IN THE COURT OF APPEALS FOR RICHLAND COUNTY, OHIO

FIFTH APPELLATE DISTRICT

MARY CANTLEBERRY : : Plaintiff-Appellant : : : -vs- : JUDGMENT ENTRY : RUSSELL HOLBROOK : : : Defendant-Appellee : CASE NO. 12-CA-75

For the reasons stated in our accompanying Memorandum-Opinion, the March

29, 2012 judgment entry of the Richland County Court of Common Pleas granting

appellee’s motion to amend pleadings and the July 18, 2012 judgment entry overruling

appellant’s objections to the Magistrate’s decision and adopting the Magistrate’s

Decision of July 13, 2011 are reversed. We vacate the award of damages and remand

the matter to the trial court for further proceedings in accordance with the law and this

opinion. Costs to appellee.