South Union, Ltd. v. George Parker & Associates, AIA, Inc.

504 N.E.2d 1131, 29 Ohio App. 3d 197, 29 Ohio B. 241, 1985 Ohio App. LEXIS 10403
CourtOhio Court of Appeals
DecidedNovember 14, 1985
Docket85AP-73
StatusPublished
Cited by15 cases

This text of 504 N.E.2d 1131 (South Union, Ltd. v. George Parker & Associates, AIA, Inc.) is published on Counsel Stack Legal Research, covering Ohio Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
South Union, Ltd. v. George Parker & Associates, AIA, Inc., 504 N.E.2d 1131, 29 Ohio App. 3d 197, 29 Ohio B. 241, 1985 Ohio App. LEXIS 10403 (Ohio Ct. App. 1985).

Opinion

Brogan, J.

This case arises out of a complaint in contract and negligence filed on April 8, 1983 in the Court of Common Pleas of Franklin County by South Union, Ltd. (“appellee” or “South Union”), a Pennsylvania limited partnership, against George Parker & Associates, AIA, Inc. (“appellant” or “Associates”), an Ohio professional architectural corporation. South Union subsequently amended its complaint to include the principal of Associates, George Parker (“Parker”), as a defendant. The basis of South Union’s complaint concerned the defective construction of a seventy-unit government-subsidized apartment complex in Uniontown, Pennsylvania, known as Surrey Hill. Specifically, the complaint charged appellants, as inspecting architects of Surrey Hill, with: (1) active misrepresentations and an unauthorized change in the electrical system combined with defective installation of that system, and (2) serious deficiencies in the paving specifications combined with a failure to inspect and test the paving at critical stages.

Appellants’ answer denied any liability and raised various defenses. Appellants also counterclaimed for money due on a contract entered into with South Union for professional architectural services rendered in connection with the Surrey Hill project.

The parties waived their right to a jury trial and the matter was heard before a referee beginning on September 4, 1984. On December 3, 1984, the referee filed extensive findings of fact and conclusions of law. The referee recommended a finding in favor of South Union in the sum of $207,416 for breach of contract and negligence. However, the referee determined that the latter sum should be set off by $57,100: $11,100 for appellants’ counterclaim and $46,000 for a settlement appellee received from a third party.

On December 17, 1984, appellants filed objections to the referee’s report. The objections were overruled by the trial court’s judgment entry of January 16, 1985, which adopted the referee’s report in its entirety. Appellants’ notice of appeal followed on January 30, 1985 and, on February 15,1985, South Union filed a cross-appeal. The cross-appeal by South Union concerned the $57,100 set-off.

As the facts of this case are largely undisputed, a brief summary of the events at Surrey Hill will suffice. We draw the following facts from the referee’s report.

*199 South Union was granted approval by the United States Department of Housing and Urban Development (“HUD”) in 1977 to build Surrey Hill. In August of the same year, South Union entered into a construction contract with Prime Builders of Pennsylvania, Inc. (“Prime Builders”) to build Surrey Hill. The principals of Prime Builders were Lawrence Maxwell ("Maxwell”) and Charles Erdman. Maxwell and Prime Builders were also the managing general partners of South Union. Prime Builders was therefore wearing two hats: it was managing general partner of South Union and South Union’s general contractor for Surrey Hill.

After one year as general contractor for Surrey Hill, Prime Builders encountered financial difficulties. As a result, Prime Builders'ceased construction at Surrey Hill in August 1978. Between August 1978 and August 1979, Index Developing Company (“Index”) became the unofficial general partner of South Union and was denominated “construction manager” for purposes of construction draws and liaison with subcontractors. Robert Hardy (“Hardy”) was the sole owner of Index. In March 1979, Hardy and Index became official general partners of South Union replacing Maxwell and Prime Builders.

On August 29, 1979, South Union entered into a second construction contract with Eller Enterprises, Inc. (“Eller”). Eller remained the general contractor at Surrey Hill until its completion in early 1980.

Extensive plans and specifications (“plans and specs”) were provided to the general contractors and incorporated into the construction contracts. The contractors were expected to adhere to the plans and specs. Any material deviation required a written change order. Change orders had to be submitted to and approved by South Union, HUD, the lender and the inspecting architect. A material deviation from the plans and specs was described as a significant change in the cost, time or design of the project. However, it was not unusual for such changes to occur when the principals agreed to a particular change.

Surrey Hill was designed by the architectural firm of Real Estate Planning Company, Inc. (“Real Estate”). Real Estate was a creation of Prime Builders, which in turn allowed Prime Builders to collect part of the design fee for projects it processed.

Associates, through its principal, George Parker, executed a series of contracts (owner-architect contracts) with South Union and became the inspecting architect for Surrey Hill. The referee summarized Associates’ responsibilities of inspecting, as follows:

“A. Review all of the Plans and Specs for completeness and accuracy;
“B. Provide all engineering, architectural and consulting services during construction;
“C. Inspect the Project and advise the owner and HUD of any omissions, substitutions, defects and deficiencies;
“D. Visit the Project as often as the nature and progress of the work and the interests of the owner and HUD require;
“E. Determine whether the work complied with the Plans and Specs; and
"F. Certify to the Owner, the lender and HUD upon completion of construction that the work had been completed according to the terms and conditions of the contract documents.”

As indicated in (F) above, upon completion of Surrey Hill, Associates was required to submit what is called a “Certificate of Substantial Completion” to South Union, HUD and the lender. Two additional inspections were to follow: one within twelve months to check for latent defects and a final inspection at the end of the twelve months to insure that any latent defects previously discovered had been cured.

Construction at Surrey Hill was completed by Eller in February 1980. On February 15, 1980, Associates submit *200 ted its Certificate of Substantial Completion. The second guarantee inspection was submitted on May 13, 1981. The latter inspection noted various deficiencies in the paving connected with Surrey Hill; however, the inspection did not mention any possible problems with the overall design or construction of the road, the subgrade or subbase. It was also reported for the first time that the electrical system did not conform to plans and specs. The deviation was not noted as a latent defect nor was there any indication that the general contractor had been notified.

The electrical work which was in controversy in this case was detailed by the referee in his findings of fact as follows:

“A. The ‘meter centers,’ which are installed on the outside end walls of each of the eight unit apartment buildings and on one end wall of the six unit apartment building; and
“B.

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Bluebook (online)
504 N.E.2d 1131, 29 Ohio App. 3d 197, 29 Ohio B. 241, 1985 Ohio App. LEXIS 10403, Counsel Stack Legal Research, https://law.counselstack.com/opinion/south-union-ltd-v-george-parker-associates-aia-inc-ohioctapp-1985.