[Cite as Davis v. Hawley Gen. Contracting, Inc., 2015-Ohio-3798.]




                            IN THE COURT OF APPEALS OF OHIO
                                SIXTH APPELLATE DISTRICT
                                     HURON COUNTY


J. Thomas Davis & Judy Davis,                              Court of Appeals No. H-14-018
Trustees of the Davis Family
Holiday Lake Trust                                         Trial Court No. CVH 2013 0947

        Appellants

v.

Hawley General Contracting, Inc., et al.                   DECISION AND JUDGMENT

        Appellees                                          Decided: September 18, 2015

                                                 *****

        Joel R. Campbell, for appellants.

        Michael J. Warrell, for appellees.

                                                 *****

        JENSEN, J.

        {¶ 1} Following a bench trial, plaintiffs-appellants, J. Thomas Davis and Judy

Davis, individually and as Trustees of the Davis Family Holiday Lake Trust

(“appellants”), appeal the November 25, 2014 judgment of the Huron County Court of
Common Pleas, which awarded damages to appellants on their breach of contract claim

against defendant-appellee, Hawley General Contracting, Inc. (“HGC”), but awarded

nothing against defendant-appellee, Joel Hawley, personally, or on appellants’ remaining

claims. For the reasons that follow, we reverse the trial court’s judgment.

                                     I. Background

       {¶ 2} Tom and Judy Davis purchased an approximately 1000-square-foot lakefront

vacation home on Holiday Lake in Willard, Ohio in 2005. They transferred ownership of

the home to The Davis Family Holiday Lake Trust, of which they are trustees, intending

that the vacation home would pass from generation to generation. Their son, Michael,

and his wife, Debbie are successor trustees.

       {¶ 3} The house was built on a crawl space. After purchasing the property,

appellants discovered that the crawl space was wet and the floor joists had dry-rotted.

They consulted with several contractors, including Hawley, who was a friend of

Michael’s. Hawley suggested not only repairing the problems with the crawl space, but

also creating a walk-out basement. Interested in creating additional space in the home,

appellants hired Hawley to perform the work. They signed a contract for construction

with HGC on March 11, 2010. Hawley signed his name to the contract above the words

“BUILDER, Hawley General Contracting.”

       {¶ 4} The parties’ contract provided that HGC would excavate the foundation,

pour footing for a new foundation, lay eight-inch block walls, and create a walk-out

basement with two patio doors or windows. To do this required that the house be braced




2.
and supported above the foundation and then essentially placed on top of the basement

walls. HGC agreed to obtain all necessary permits, licenses, and inspections for the

work. Hawley obtained a building permit in March of 2010 from Holiday Lakes Property

Owners Association, Inc. (“POA”). That permit required compliance with the POA

ordinances, the Building Officials and Code Administrators (“BOCA”) code, and state

laws.

         {¶ 5} The basement work was completed in late June of 2010. Appellants paid a

total of $60,000 for the work. Within a couple of weeks, a horizontal crack appeared in

the walls. Appellants notified Hawley. Hawley, who had subcontracted the work, had it

regrouted, but the crack reappeared within a couple of weeks. Again he had it regrouted

and again it failed. The parties disagreed about the extent to which the crack was

problematic and HGC never effectively repaired it.

         {¶ 6} Appellants hired GPRS, Inc. to determine whether the walls had been

adequately reinforced.1 Nick Janney, a GPRS employee, x-rayed the walls using

technology that can identify where there are reinforcements in concrete and where there

are voids. He discovered that along the north and south walls of the basement, HGC

installed rebar no higher than the third concrete block from the top. There were also

various areas where grouting did not extend all the way up. In other words, the walls

were not vertically reinforced from bottom to top.



1
    “GPRS” is short for Ground Penetrating Radar Systems.




3.
       {¶ 7} On December 2, 2013, appellants filed a seven-count complaint against

Hawley and HGC alleging: (1) breach of written contract; (2) breach of warranty;

(3) violation of the consumer sales practices act (“CSPA”); (4) negligent or reckless

damage to real property; (5) breach of oral contract; (6) unjust enrichment; and

(7) violation of the home construction service suppliers act. The case was tried to the

bench on October 23 and 24, 2014. Appellants testified, as did their son, Michael;

Janney; Michael McCurdy, the building inspector for the city of Westerville; Barry

Neumann, a structural engineer with Richland Engineering; Ken Oswald, owner of

Carpentry By Kenny, Incorporated; Hawley; and Travis Mayer, an architect.

       {¶ 8} Mr. Davis testified about his dealings with Hawley leading up to and after

hiring him for the basement project. He indicated that he believed that the work would

be performed in accordance with the applicable building codes. Davis described that the

horizontal crack appeared shortly after the basement was completed and that Hawley told

him that it was a stress crack from placing the house back down onto the walls. He had

the masons come back to regrout it. When the walls cracked again, Hawley told Davis

that the masons had not used non-shrinking grout and he had them come back again.

Two weeks later, it cracked again, and Davis said that it became obvious that the crack

was going to continue to reappear. He produced photos showing that the crack was large

enough for a quarter and a nickel to fit within the width of it. He said that water leaked

into the basement and he described that air flowed through the crack to the point that if he

held a piece of paper in front of the crack, the wind would blow the paper. Although




4.
Hawley initially indicated that he would take care of it, he never did. In the meantime,

Davis testified, the wall continued to move and the crack grew.

       {¶ 9} McCurdy summarized the state’s residential building code requirements for

vertical reinforcement of basement walls. He testified that rebar must be installed from

the top of the footer to the top of the wall, the sill plates have to be anchored to the top of

the foundation walls, and the floor joists have to be anchored to the sill plates. McCurdy

observed that HGC had not installed any of these reinforcements.

       {¶ 10} Neumann testified that he inspected the property and observed there was

water in the basement, leakage on the walls, the walls were bowed in, and the backfill

was “extremely settled.” He saw water flowing out of an outlet behind the wall.

Neumann concurred that the code required the vertical reinforcements described by

McCurdy and testified that his inspection of the property revealed that the walls hinged at

the point where the rebar stopped. He observed no anchors where the wall meets the sill

plate. He concluded that HGC’s work did not meet minimum code requirements, and

that the walls were not structurally sound. He explained that there was a long-term

progression towards failure and the question was when, not if, the walls would fail.

Neumann’s opinion was that the proper remedy was to rebuild the walls.

       {¶ 11} Oswald described the necessary steps to reinforce the walls. He concurred

with Neumann that replacement of the walls would be the most effective solution, and he

estimated, conservatively, that the cost of doing so would be just over $30,000.




5.
       {¶ 12} Architect Travis Mayer, who sometimes works on projects with Hawley,

testified in Hawley’s case-in-chief. Mayer viewed the basement and described that it was

dry. While he conceded that the code required rebar from the footers to the sill plates, he

explained that with an existing house on top of the foundation, rebar could not be

installed all the way to the sill plates without compromising the integrity of the concrete

blocks into which they are inserted. He said that to compensate for this, it is common to

“slop” the unreinforced blocks with grout. Mayer also believed that the wall was

purposely flared out and while not ideal, the crack in the wall was not problematic

because it followed the coursing as opposed to having occurred in the middle of a block.

Mayer agreed that the standard practice was to use anchor bolts to anchor the basement

walls to the sill plate. He did not look to see if this had been done. He also agreed that

there was substantial settling which meant that the backfill was insufficient. Mayer

concluded that while not built to code, the work was “clean” and of good quality.

       {¶ 13} Ultimately, Hawley admitted that the code required rebar from the footers

to the sill plates and that this was not done. Like Mayer, he explained that it was not

feasible under the circumstances to install rebar in this manner. His view was that the

walls were not moving and that they were intentionally built to flare at the point of the

crack. He maintained that the crack was merely at a seam and was not a crack in the

blocks, thus there was no structural problem, he was not concerned, and there was no

need to fix it. Hawley, on cross-examination admitted, however, that what he described

as a “built-in flare” had actually tripled in size from one-half of an inch to an inch and




6.
three-eighths. But Hawley emphasized that the work had passed inspection. He also

boasted that he had done 40 basements using the same procedure and his customers were

happy.

         {¶ 14} The trial court issued a written decision, journalized November 25, 2014,

finding for appellants on their breach of contract claim. The court determined that the

Holiday Lake trust and HGC were the real parties in interest to the contract. It was

persuaded by Neumann’s testimony that HGC’s work was not completed in a

workmanlike manner in accordance with the applicable building code in that HGC failed

to install rebar from the footer to the sill plate, failed to provide appropriate anchoring at

the sill plates, and performed “questionable backfilling” along the walls. It concluded

that the absence of rebar caused the horizontal cracking in the walls. The court awarded

$30,400 to compensate appellants for the replacement of the walls.

         {¶ 15} The court rejected appellants’ claim that HGC acted recklessly, that it

misrepresented the quality of its work, or that it acted in an unfair or deceptive manner in

its dealings with appellants. The court determined that it was not reasonable for

appellants not to realize that the work was being undertaken by the construction company

and not by Hawley as an individual, and, therefore, declined to find Hawley personally

liable. It concluded that the evidence failed to establish a CSPA violation and that there

was no basis for punitive damages, treble damages, or attorneys fees. Appellants

appealed the trial court’s decision and assign the following errors for our review:




7.
          FIRST ASSIGNMENT OF ERROR

          IT IS AN ABUSE OF DISCRETION AND, THEREFORE, ERROR

     FOR THE TRIAL COURT TO FAIL TO MAKE A FINDING THAT

     DEFENDANTS-APPELLEES AND EACH OF THEM [sic] VIOLATED

     THE CONSUMER SALES PRACTICES ACT FOR THEIR FAILURE TO

     PERFORM THEIR CONSTRUCTION OBLIGATIONS IN A

     WORKMANLIKE MANNER.

          SECOND ASSIGNMENT OF ERROR

          IT IS AN ABUSE OF DISCRETION AND, THEREFORE, ERROR

     FOR THE TRIAL COURT TO FAIL TO MAKE A FINDING OF

     PERSONAL LIABILITY FOR DEFENDANT-APPELLEE INDIVIDUAL

     WHEN HE FAILED TO DISCLOSE THE AGENCY STATUS FOR A

     LIMITED LIABILITY ENTITY.

          THIRD ASSIGNMENT OF ERROR

          IT IS AN ABUSE OF DISCRETION AND, THEREFORE, ERROR

     FOR THE TRIAL COURT TO FAIL TO MAKE A FINDING THAT

     DEFENDANTS-APPELLEES WERE RECKLESS AND EACH OF

     THEM ARE OBLIGATED FOR THE PAYMENT OF THE ATTORNEY

     FEES OF PLAINTIFFS.




8.
                                  II. Standard of Review

       {¶ 16} This is an appeal from the trial court’s judgment following a bench trial.

“In a bench trial, the trial court assumes the fact-finding function of the jury.” Cleveland

v. Welms, 169 Ohio App.3d 600, 2006-Ohio-6441, 863 N.E.2d 1125, ¶ 16 (8th Dist.).

Although appellants couch their assignments of error in terms of an abuse of discretion,

we review the trial court’s findings under a manifest weight standard. Id. In doing so,

we “review the entire record, weigh the evidence and all reasonable inferences, consider

the credibility of witnesses and determine whether in resolving conflicts in evidence, the

trial court clearly lost its way and created such a manifest miscarriage of justice that the

judgment must be reversed and a new trial ordered.” (Internal citations omitted.) Id.

                                        III. Analysis

                              A. First Assignment of Error

       {¶ 17} In their first assignment of error, appellants claim that the trial court erred

in concluding that appellees did not violate the CSPA by breaching their obligation to

construct the basement in a workmanlike manner meeting building code requirements.

They claim that appellees acted deceptively in concealing their failure to install rebar

reinforcement and anchors. They contend that although the CSPA has a two-year statute

of limitations, appellees made repeated misrepresentations and assurances that they

would make necessary repairs, thereby engaging in unfair and deceptive acts or practices

after the original transaction. They urge that their CSPA action was filed within two

years of appellees’ last misrepresentations and was, therefore, timely filed.




9.
       {¶ 18} Appellees respond simply that a number of Ohio cases have found that less-

than-satisfactory workmanship does not necessarily rise to the level of unconscionability

and they point out that there were differing opinions offered as to the quality of the work

performed. Appellees do not address appellants’ remaining arguments.

       {¶ 19} The CSPA “prohibits unfair or deceptive acts and unconscionable acts or

practices by suppliers in consumer transactions.” Estate of Cattano v. High Touch

Homes, Inc., 6th Dist. Erie No. E-01-022, 2002-Ohio-2631, ¶ 42, citing Einhorn v. Ford

Motor Co., 48 Ohio St.3d 27, 29, 548 N.E.2d 933 (1990); R.C. 1345.02(A). “In general,

the CSPA defines ‘unfair or deceptive consumer sales practices’ as those that mislead

consumers about the nature of the product they are receiving, while ‘unconscionable acts

or practices’ relate to a supplier manipulating a consumer’s understanding of the nature

of the transaction at issue.” Hanna v. Groom, 10th Dist. No. Franklin No. 07AP-502,

2008-Ohio-765, ¶ 33, quoting Johnson v. Microsoft Corp., 106 Ohio St.3d 278, 2005-

Ohio-4985, 834 N.E.2d 791, ¶ 24. A failure to perform services in a workmanlike

manner by itself does not constitute a CSPA violation. Warren v. Denes Concrete, Inc.,

9th Dist. Lorain Nos. 08CA009414, 08CA009422, 2009-Ohio-2784, ¶ 25. To be

actionable under the CSPA, the performance also must amount to an unfair, deceptive, or

unconscionable act. Id. Similarly, not every breach of contract constitutes a CSPA

violation, however “when a supplier knowingly commits a breach, the breach is likely

also an unfair or deceptive act.” Cartwright v. Beverly Hills Floors, 7th Dist. Mahoning

No. 11 MA 109, 2013-Ohio-2266, ¶ 17.




10.
       {¶ 20} Among the documents admitted as exhibits at trial were Hawley’s

application for a building permit where he agreed to perform work in compliance with the

POA’s ordinances, the BOCA code, and the laws of the state of Ohio, and excerpts from

the Ohio residential code setting forth the requirements for reinforcement of foundation

walls. Hawley, on cross-examination, was unable to articulate what the codes and

ordinances required with respect to vertical reinforcements, but McCurdy recited that

“[u]nder the strongest of soil conditions, you would have to have Grade 60 Number 5,

which is a five-eighths inch diameter rebar, spaced at 40 inches on center plus 12 inches

either side of any fenestration in that wall.” He also testified that “there’s a sill plate that

has to be anchored to the top of [the] foundation wall * * * every six feet on center with

half-inch diameter anchor bolts. It also has to be anchored at 12 inches from each corner

of each side of each corner and within 12 inches of each splice of each sill plate.” Each

sill plate requires a minimum of two anchor bolts. McCurdy described the implications

of the absence of vertical reinforcements:

              First of all, the lack of vertical reinforcement will allow the wall to

       hinge. And by that I mean as the vertical * * * rebar goes up the vertical

       wall, where the rebar stops, the wall will start to pull away from itself one

       way or the other. Normally in this situation, the bottom of the wall will

       stay stationary. The top part of the wall that’s unreinforced will move away

       from the bottom part of the wall, causing a stress crack in the wall itself.




11.
       * * *. That in turn, as you go up the wall, that distance grows, okay. And,

       in fact, will cause the structure to pull away from itself.

       {¶ 21} Neumann testified that here, number six rebar—which is .44 square

inches—needed to be installed from the floor to the sill plate every 40 inches in order to

be code-compliant. Hawley installed number four rebar—.2 square inches—every 48

inches and it did not extend from floor to sill plate. McCurdy, Neumann, and Mayer all

agreed that this fell below the minimum standard required by the code. Mayer also

agreed that anchor bolts must be used to anchor the basement walls to the sill plates, yet

he did not look closely enough to see whether this had been done.

       {¶ 22} The trial court found that the evidence failed to establish that appellees

misrepresented the quality of the work or acted in an unfair or deceptive manner in their

dealing with appellants. But Mr. Davis testified that he specifically asked Hawley how

far the rebar went, and Hawley responded that it went all the way to the top; Hawley

testified that he did not become aware that the rebar did not extend all the way up to the

sill plate like it was supposed to until he received a copy of appellants’ lawsuit. It was

not until appellants hired GPRS to x-ray the walls that they learned that rebar was not

installed from footer to sill plate and that there was an absence of grout in other places as

well. Moreover, after two failed attempts to repair the crack, Hawley repeatedly assured

appellants that he would make necessary repairs, but he never examined the root of the

problem and he never made the necessary repairs, thus forcing appellants to pursue

litigation.




12.
       {¶ 23} In Estate of Cattano, 6th Dist. Erie No. E-01-022, 2002-Ohio-2631, ¶ 52,

we upheld a jury verdict finding a CSPA violation against the seller of a modular home

where the work did not meet the standards of the model shown to the buyer and the

repairs the seller intended to make were insufficient to remedy the problems. Similarly,

in Erie Shores Builders, Inc. v. Leimbach, 6th Dist. Huron No. H-99-034, 2001 WL

803952, *1, 3, we upheld the trial court’s decision finding a CSPA violation where a

contractor hired to construct a second-floor addition cut down a tree, damaged shrubs,

removed existing electrical service and improperly installed new service, improperly

reconstructed a chimney, and negligently installed a bathroom drain, resulting in water

damage.

       {¶ 24} Upon our review of the record below, we find that the trial court erred

when it declined to conclude that appellees’ conduct in constructing the basement below

minimum code requirements, failing to determine and to disclose to appellants that rebar

was installed only to the point where the wall hinged, making inadequate attempts at

repairing the horizontal crack, and assuring appellants that they would remedy the

situation, but failing to do so, was sufficient to establish a CSPA violation. This is

particularly true given the latent nature of this structural defect which required x-ray

technology to discover.

       {¶ 25} We find appellants’ first assignment of error well-taken.




13.
                             B. Second Assignment of Error

       {¶ 26} In their second assignment of error, appellants claim that the trial court

erred in declining to find Hawley personally liable under the CSPA for failing to disclose

that he was acting as an agent of a limited liability company. They argue that Hawley’s

repeated signatures on documents never mentioned that he was signing on behalf of a

corporate entity and that appellants were unaware that Hawley was acting in his capacity

as an agent of a corporate entity.

       {¶ 27} “A corporate officer may be held individually liable for acts that violate the

CSPA” where “the officer participated in the commission of an act or specifically

directed the particular act to be done.” Yates v. Mason Master, Inc., 11th Dist. Lake No.

2002-L-001, 2002-Ohio-6697, ¶ 24. In Gayer v. Ohio Bus. Trading Assn., 8th Dist.

Cuyahoga No. 54892, 1988 WL 87629, *2 (July 7, 1988), the Eighth District Court of

Appeals held that the corporation’s president, who made the representations upon which

the CSPA claim was premised, was personally liable to the plaintiffs. We reach the same

conclusion here. While appellants perhaps should have been aware that Hawley was

acting on behalf of HGC, the fact remains that Hawley engaged in the conduct giving rise

to appellants’ claims and is personally liable for the CSPA violation at issue. We,

therefore, find appellants’ second assignment of error well-taken.




14.
                             C. Third Assignment of Error

       {¶ 28} In their third assignment of error, appellants contend that the trial court

erred in failing to find that HGC and Hawley were reckless and that each of them is

obligated to pay appellants’ attorney fees.

       {¶ 29} R.C. 1345.09(F)(2) permits the court to award reasonable attorney fees to a

prevailing plaintiff where the supplier has knowingly committed an act or practice that

violates the CSPA. To find that the supplier acted “knowingly,” requires only that he or

she intentionally engaged in the conduct giving rise to the CSPA violation—the supplier

need not have known that the conduct violated the law in order for the court to grant

attorney fees. Borror v. MarineMax of Ohio, Inc., 6th Dist. Ottawa No. OT-06-010,

2007-Ohio-562, ¶ 50.

       {¶ 30} Hawley testified that it was his practice to construct basement walls in this

manner despite the fact that the vertical reinforcement fell below the minimum standards

set forth for residential construction. He said that he had constructed 20-30 basements

using the same method. This testimony establishes that Hawley and HGC acted

knowingly for purposes of the CSPA. We, therefore, find appellants’ third assignment of

error well-taken.




15.
                                     IV. Conclusion

       {¶ 31} For the foregoing reasons, we reverse the November 25, 2014 judgment of

the Huron County Court of Common Pleas and remand the matter for further proceedings

consistent with this decision. The costs of this appeal are assessed to appellees under

App.R. 24.


                                                                       Judgment reversed.




       A certified copy of this entry shall constitute the mandate pursuant to App.R. 27.
See also 6th Dist.Loc.App.R. 4.




Mark L. Pietrykowski, J.                       _______________________________
                                                           JUDGE
Stephen A. Yarbrough, P.J.
                                               _______________________________
James D. Jensen, J.                                        JUDGE
CONCUR.
                                               _______________________________
                                                           JUDGE


           This decision is subject to further editing by the Supreme Court of
      Ohio’s Reporter of Decisions. Parties interested in viewing the final reported
           version are advised to visit the Ohio Supreme Court’s web site at:
                 http://www.sconet.state.oh.us/rod/newpdf/?source=6.




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