Jurgensen Co. v. Fairborn

2015 Ohio 5478

• Court: Ohio Court of Appeals
• Decided: December 30, 2015
• Docket: C-140556
• Status: Published

Opinion

[Cite as Jurgensen Co. v. Fairborn, 2015-Ohio-5478.] IN THE COURT OF APPEALS FIRST APPELLATE DISTRICT OF OHIO HAMILTON COUNTY, OHIO

JOHN R. JURGENSEN COMPANY, : APPEAL NO. C-140556 TRIAL NO. A-0800003 Plaintiff-Appellant, :

vs. : O P I N I O N.

CITY OF FAIRBORN, OHIO, :

Defendant-Appellee. :

Civil Appeal From: Hamilton County Court of Common Pleas

Judgment Appealed From Is: Affirmed

Date of Judgment Entry on Appeal: December 30, 2015

Frantz Ward LLP, Andrew J. Natale and Nora E. Loftus, for Plaintiff-Appellant,

Williams & Petro Co. LLC, John P. Petro and Susan S. R. Petro, for Defendant- Appellee.

Please note: this case has been removed from the accelerated calendar. OHIO FIRST DISTRICT COURT OF APPEALS

C UNNINGHAM , Presiding Judge.

{¶1} Plaintiff-appellant, the John R. Jurgensen Company, appeals from the

trial court’s entry denying it summary judgment on its claims that defendant-

appellee, the City of Fairborn, Ohio, had breached its road-improvement contract

when it refused to pay Jurgensen an asphalt-binder price adjustment found in an

Ohio Department of Transportation (“ODOT”) construction and material

specification. Because the parties’ agreement did not incorporate the asphalt-binder

price adjustment and did not modify the express pricing and payment terms found

elsewhere in the contract documents, we affirm the trial court’s judgment.

{¶2} In 2006, Fairborn sought bids for improvements to a number of its

streets. It issued a proposal including 65 tasks for completion in what became

known as the 2006 Street Program, Project Nos. 2502, 2601, 5104, and 5109. In

April 2006, Jurgensen became the successful bidder. Its $1,106,881.80 bid was

based in part on the general and project specifications and the bid and contract

forms (“the contract documents”) that Fairborn had made available to each bidder.

The contract documents included Fairborn Construction and Material Specification

Item 400 which provided specific guidance on how some of the project tasks were to be

performed. Because of the highly detailed nature of many construction specifications,

the contract documents, including Fairborn Item 400, incorporated by reference the

construction and material specifications promulgated by ODOT and required bidding

contractors like Jurgensen to comply with them. The 2005 ODOT Construction and

Material Specifications were in effect at the time of bidding.

{¶3} The price of asphalt is based largely on the price of oil, which can

fluctuate widely. Many road contracts include an “asphalt binder price adjustment”

to address this issue. Although the contract documents for Fairborn’s road-

improvement project did not include any specific reference to it, Jurgensen believed

that the parties’ agreement included an asphalt-binder price adjustment as found in

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ODOT Item 401.20. That provision required a project owner to equably adjust the

contract price and pay the contractor for any increase in the price of asphalt between

the time of its successful bid and the time that the asphalt is purchased and the work

is performed. ODOT Item 401.20 provided detailed instructions for measuring and

calculating any price adjustment.

{¶4} Jurgensen performed the asphalt work from August through

November 2006. During the time between bidding and completion of the work, the

price of asphalt increased significantly. At the completion of the project, Jurgensen

submitted claims to Fairborn for additional compensation to reflect an asphalt-

binder price adjustment of $92,395.66.

{¶5} Fairborn refused to pay the adjustment. Fairborn also refused to

release interest earned on the amounts retained from progress payments made to

Jurgensen. See R.C. Chapter 153. Jurgensen brought suit seeking money damages

and a declaration that Fairborn’s refusal to pay the asphalt-binder price adjustment

and to pay interest had breached its duties under the contract documents.

{¶6} Fairborn answered and raised a counterclaim seeking $2,000 due for

damage to a catch basin, along with a declaration that the price described in the

winning bid—$1,106,881.80—was all the compensation due to Jurgensen.

{¶7} In December 2008, Jurgensen moved for summary judgment on its

claims based on the affidavits of Peter W. Flora, its Dayton Division manager, and

the contract documents. Fairborn also moved for summary judgment on all of

Jurgensen’s claims. Fairborn’s motion was supported by the affidavits of Michael A.

Mayer, Fairborn’s city solicitor, and the attached documents.

{¶8} The trial court heard the arguments of counsel. On June 18, 2013, it

journalized an entry denying Jurgensen’s motion for summary judgment on its

breach-of-contract claims relating to the asphalt-binder price adjustment and

granted Fairborn’s summary-judgment motion on those claims. The trial court

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denied Fairborn’s summary-judgment motion on Jurgensen’s retained-interest

claim.

{¶9} The trial court then scheduled a trial date to resolve the remaining

issues. Prior to trial, Jurgensen and Fairborn reached an agreement to dismiss

Jurgensen’s interest claim and Fairborn’s property-damage counterclaim, and the

parties submitted a proposed consent entry to the court. The trial court approved

the entry. It journalized the entry on September 10, 2014, rendering its earlier

summary-judgment ruling final and appealable. Jurgensen appealed.

{¶10} In two interrelated assignments of error, Jurgensen now asserts that

the trial court erred in denying its motion for summary judgment and in granting, in

part, Fairborn’s motion for summary judgment. Civ.R. 56(A) makes summary

judgment available to a party like Jurgensen, seeking to recover upon its own claim.

See Capital Fin. Credit, LLC v. Mays, 191 Ohio App.3d 56, 2010-Ohio-4423, 944

N.E.2d 1184, ¶ 4 (1st Dist.). A party moving for summary judgment bears the burden

of establishing that (1) no genuine issue of material fact remains to be litigated, (2)

the moving party is entitled to summary judgment as a matter of law, and (3) it

appears from the evidence, when viewed in a light most favorable to the nonmoving

party, that reasonable minds can only come to a conclusion adverse to that party.

See Civ.R. 56.

{¶11} The interpretation of clear, unambiguous contract terms is a question

of law particularly appropriate for resolution by summary judgment. See Costanzo v.

Nationwide Mut. Ins. Co., 161 Ohio App.3d 759, 2005-Ohio-3170, 832 N.E.2d 71, ¶

19 (1st Dist.). If the language in a contract is clear and unambiguous, there is no

issue of fact to be determined. See Physicians Anesthesia Serv. v. Burt, 1st Dist.

Hamilton No. C-060761, 2007-Ohio-6871, ¶ 10. An appellate court reviews the trial

court’s summary-judgment rulings de novo. See Comer v. Risko, 106 Ohio St.3d 185,

2005-Ohio-4559, 833 N.E.2d 712, ¶ 8.

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{¶12} Here, neither Jurgensen nor Fairborn has asserted that genuine

issues of material fact remained for resolution. Both moved for summary judgment

as a matter of law on Jurgensen’s claims. We have previously questioned the wisdom

of resolving declaratory-judgment actions by summary judgment. But the parties’

election to address the issues by cross-motions for summary judgment demonstrates

that both sides believed that there was no genuine issue of material fact in dispute,

and that the court was free to render a decision as a matter of law. E.g., Cincinnati

v. Ohio Council 8, Am. Fedn. of State, Cty. & Mun. Emps., AFL-CIO, 93 Ohio App.3d

162, 164, 638 N.E.2d 94 (1st Dist.1994).

{¶13} To prevail on its claims, Jurgensen would have to establish the

existence of a contract, performance on its part, breach of a duty by Fairborn, and its

own damage or loss. See Brunsman v. W. Hills Country Club, 151 Ohio App.3d 718,

2003-Ohio-891, 785 N.E.2d 794, ¶ 11 (1st Dist.).

{¶14} The touchstone of contract interpretation is to give effect to the intent

of the parties as evidenced by the actual language of the contract. See Transtar Elec.

v. A.E.M. Elec. Servs. Corp., 140 Ohio St.3d 193, 2014-Ohio-3095, 16 N.E.3d 645, ¶

9, citing Skivolocki v. E. Ohio Gas Co., 38 Ohio St.2d 244, 313 N.E.2d 374 (1974),

paragraph one of the syllabus. We must apply clear and unambiguous contract

provisions without regard to the relative advantages gained or hardships suffered by

the parties. See Hope Academy. Broadway Campus v. White Hat Mgmt., L.L.C.,

Slip Op. No. 2015-Ohio-3716, ¶ 36, citing Dugan & Meyers Constr. Co., Inc. v. Ohio

Dept. of Adm. Servs., 113 Ohio St.3d 226, 2007-Ohio-1687, 864 N.E.2d 68, ¶ 29.

{¶15} Both parties maintain that the contract documents are clear and

unambiguous. See Burt, 1st Dist. Hamilton No. C-060761, 2007-Ohio-6871, at ¶ 10.

Jurgensen, however, argues that Fairborn breached the agreement when it refused to

pay the asphalt-binder price adjustment. Jurgensen maintains that the contract

documents’ reference to ODOT Item 401 incorporated the asphalt-binder price

5 OHIO FIRST DISTRICT COURT OF APPEALS

adjustment described in ODOT Item 401.20, that Fairborn’s own provisions did not

modify the asphalt-binder price adjustment, and that Jurgensen reasonably

understood that, as was the custom in its trade, the contract included an implied

term for price adjustment when it submitted its bid and signed the contract.

{¶16} In response, Fairborn argues that the parties’ contract documents did

not incorporate the asphalt-binder price adjustment. Fairborn argues that those

ODOT items referred to by the contract documents merely established specifications

for the work to be performed and did not modify the express pricing and payment

terms found elsewhere in the contract documents.

{¶17} ODOT Item 401.20—the asphalt-binder price adjustment—is not

referenced in any of the contract documents. The first page of Fairborn’s General

Provisions states that the “specifications for this project shall conform to the City of

Fairborn Construction and Material Specifications and Standard Drawings * * *.”

But if the Fairborn specifications “do not cover a particular item, the latest edition of

the Construction and Material Specifications as published by the Ohio Department of

Transportation shall have precedence.” Jurgensen argues that since Fairborn’s

construction and material specifications did not provide for an asphalt-binder price

adjustment, every provision in ODOT Item 401, including the asphalt-binder price

adjustment, “shall have precedence” and thus apply to the project.

{¶18} More specifically, in Fairborn’s proposal seeking bidders, seven of the

65 project tasks identified specifications for the work by reference to ODOT Item 448

and to Fairborn Item 400. Jurgensen’s approved bid schedule quoted prices

pursuant to these tasks. Jurgensen contends that because Fairborn’s own

construction specifications referenced ODOT Item 401, each provision of that item

was incorporated into the parties’ agreement, including the asphalt-binder price

adjustment.

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{¶19} But closer scrutiny of those portions of Fairborn Item 400 referencing

ODOT Item 401 reveals that they provide only a description of the manner in which

the project items are to be performed. See S. A. Ruebel & Co. v. Morr, 95 Ohio App.

433, 439, 120 N.E.2d 605 (1st Dist.1953) (defining the term “specification,” as used

in road-improvement contracts, as a specific and detailed description of the thing to

be furnished or the work to be done); see also Danis Clarkco Landfill Co. v. Clark

Cty. Solid Waste Mgt. Dist., 73 Ohio St.3d 590, 600, 653 N.E.2d 646 (1995).

{¶20} Fairborn Item 400 references ODOT specifications for the

construction of “asphalt concrete surface course[s] placed on an asphalt concrete

leveling course and/or intermediate course[s] as specified herein.” The item

identifies which ODOT specifications apply to the construction and provides as

follows:

Plant mix bituminous pavements shall meet the requirements of

ODOT Item 401, Asphalt Concrete Pavements – General; Asphalt

Concrete Mixing Plants shall meet the requirements of ODOT Item

401 and the asphalt concrete surface and [I]ntermediate courses shall

meet the requirements of ODOT Item 448, Type 1 or 2, PG 64-22, of

the latest edition of the Ohio Department of Transportation

‘Construction and Material Specifications.’

(Emphasis added.)

{¶21} Other sections of Fairborn Item 400 direct that “bituminous plant

mixtures” should only be placed under dry and temperate conditions. The references

to ODOT Item 401 are made solely in the context of how bituminous mix and asphalt

concrete pavements are to be prepared and used. These provisions describe how the

work is to be performed and make no mention of payment adjustments. The

language of Fairborn Item 400 clearly references Jurgensen’s contractual obligation

7 OHIO FIRST DISTRICT COURT OF APPEALS

to satisfactorily complete asphalt concrete paving in accordance with ODOT material

specifications. It does not establish a right of Jurgensen to receive escalating prices

for materials.

{¶22} Moreover, there are no references at all to ODOT Item 401 in the

payment terms separately identified in Fairborn Item 400. Section 4(A), titled

“PAYMENT,” provides,

The quantities, measured as provided above, will be paid for at the

contract price for each of the particular pay items listed below that are

shown in the bid schedule, which price and payment shall be full

compensation for furnishing all material and for all labor, equipment,

tools and incidentals necessary to complete the item.

{¶23} The bid-schedule price was $1,106,881.80. Thus, by its express

terms, Fairborn’s Item 400 mandates only that asphalt plants, bituminous mixes,

and intermediate courses employed in the project comply with the material

specifications of ODOT Items 401, 402, and 448. It imposed no duty on Fairborn,

and no part of Item 400 subjected Fairborn to any obligation to pay a price

{¶24} Nowhere else in the contract documents is there any express

incorporation of any ODOT item establishing Fairborn’s obligation to pay the

asphalt-binder price adjustment. For example, Jurgensen’s bid proposal, signed by

its vice president, does not state that its proposed prices relied upon the existence of

the price adjustment. Instead, its bid states that Jurgensen would “accept from

[Fairborn] as full payment for the completion of each specified item and any

required maintenance thereof as hereinafter provided, the price quoted for each item

of work completed.”

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{¶25} Payment terms identified in express contract provisions prevail over

general statements regarding the use of gap-filling specifications found elsewhere in

the document terms. See Marusa v. Erie Ins. Co., 136 Ohio St.3d 118, 2013-Ohio-

1957, 991 N.E.2d 232, ¶ 14; see also Gibbons-Grable Co. v. Gilbane Bldg. Co., 34

Ohio App.3d 170, 175, 517 N.E.2d 559 (8th Dist.1986). The fact that the referenced

ODOT items were “important to the proper construction of asphalt pavements” in no

way subjected Fairborn to cost-allocation terms where the contract documents

elsewhere made express provision for prices and payment.

{¶26} But even if we were to agree that ODOT Item 401.20 had been

incorporated into the parties’ contract, Jurgensen could not prevail. The clear and

unambiguous text of Item 401.20 does not impose any duty upon Fairborn to pay a

price adjustment. Item 401.20 provides simply that “[a]ny contract item specifying

asphalt concrete is eligible for a price adjustment, if the Department’s asphalt binder

index shows the price for asphalt binders has increased or decreased in excess of 5

percent and the adjustment is more than $100 for any individual item.” (Emphasis

added.)

{¶27} Each of the seven remaining paragraphs of the item describes the

manner in which the adjustment is to be computed. The item imposes obligations

only on “the [Ohio] Department [of Transportation].” The term “Contractor”

appears only once in the remaining text. Nowhere in the item is any obligation

imposed on an “Owner,” in general, or Fairborn, in particular.

{¶28} Where contract language states simply that a “contract item * * * is

eligible” for a price adjustment, additional language imposing an obligation on the

contracting authority to pay the adjustment is required to modify otherwise express

and unambiguous payment terms and to make the item enforceable. See Morr, 95

Ohio App. at 440, 120 N.E.2d 605. In the absence of an express modification of the

9 OHIO FIRST DISTRICT COURT OF APPEALS

payment terms of the contract, Fairborn was obligated to pay only the full amount of

Jurgensen’s accepted bid price.

{¶29} Finally, Jurgensen maintains that under the “usage of trade” doctrine,

the asphalt-binder price adjustment was effectively made part of the contract terms.

Through its Dayton Division managers’ affidavits, Jurgensen argues that it

understood the asphalt-binder price adjustment to be part of the contract because, in

its prior work, when a public entity employed ODOT specifications for asphalt items,

the public entity had honored requests for price adjustments. The express terms of a

contract generally prevail over custom or “usage of trade,” a practice or method of

dealing so regularly observed as to justify an expectation that it will be observed in

the transaction in question. See Camargo Cadillac Co. v. Garfield Ent., Inc., 3 Ohio

App.3d 435, 445 N.E.2d 1141 (1st Dist.1982). But evidence of a usage of trade

existing at the time of contract may be employed to clarify disputed contract

language only if each party knows or has reason to know of the usage. E.g., Dana

Partners, LLC v. Koivisto Constructors & Erectors, Inc., 11th Dist. Trumbull No.

2011-T-0029, 2012-Ohio-6294, ¶ 27. The existence and scope of a usage of trade

generally presents a factual issue. See, e.g., R.C. 1301.303. Jurgensen acknowledges

that it did not, by the means identified in Civ.R. 56, introduce evidence of the terms

of its other contracts, or of Fairborn’s knowledge of these dealings with other

entities.

{¶30} Here, from the evidence before the trial court, when construed most

strongly in favor of Jurgensen, we conclude from the clear and unambiguous

language of the contract documents that Fairborn had no duty to pay the asphalt-

binder price adjustment, and therefore, it did not breach a contracted-for duty when

it refused to pay the adjustment. The first and second assignments of error are

overruled.

{¶31} The trial court’s judgment is affirmed.

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Judgment affirmed.

FISCHER and STAUTBERG, JJ., concur.

Please note:

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