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Franklin County Ohio Clerk of Courts of the Common Pleas- 2023 Oct 26 2:59 PM-23CV001299
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IN THE COURT OF COMMON PLEAS
FRANKLIN COUNTY, OHIO
THE CINCINNATI INSURANCE CO. ) CASE NO. 23CV001299
)
Plaintiff, ) JUDGE: MARK A. SERROTT
)
v DECISION AND ORDER
J.H.P. CONSTRUCTION, INC., ET AL )
Defendants.
This matter comes before the Court on several motions by Defendant Gerardo Hernandez
Valenzuela (“Defendant Valenzuela”). On April 26, 2023, Defendant Valenzuela filed a
motion for judgment on the pleadings. Plaintiff opposed Defendant Valenzuela’s Motion on
May 10, 2023. On May 11, 2023, Plaintiff moved for leave to amend its complaint. On May
16, Defendant Valenzuela filed their reply to Plaintiff's Opposition. On May 24, 2023, The
Court granted Plaintiff s Motion for leave to amend. On May 25, 2023, Defendant Valenzuela
filed their opposition to Plaintiff's Motion to amend and on May 26, 2023, Defendant
Valenzuela moved this Court to reconsider its decision in granting Plaintiff's Motion for leave
to amend. On May 25, 2023, Defendant J.H.P. Construction (“Defendant J.H.P.”) filed a
Notice of Filing in support of its crossclaim against Defendant Valenzuela. On June 1, 2023,
Defendant Valenzuela filed a motion to strike Defendant J.H.P.’s filing. On June 1, 2023,
Plaintiff filed its first amended Complaint. On June 19, 2023, Defendant Valenzuela filed a
Motion for Judgment on the Pleadings as to the first amended complaint. On June 21, Plaintiff
filed Opposition, and on June 28, Defendant Valenzuela filed their reply. Having been fully
briefed, the Court will now issue decisions on the motions.
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I Defendant Valenzuela’s Motion to Reconsider
First, this Court will address Defendant Valenzuela’s motion to reconsider this Court’s
decision granting Plaintiff leave to file an amended complaint. The Court has reviewed Defendant
Valenzuela’s opposition that was filed on May 25, as well as the arguments contained in the
Motion to Reconsider. After review, Defendant does not put forth any compelling reasons that
would persuade the Court to modify its prior decision granting leave to file an amended complaint
Civil Rule 15 is clear that granting leave to file an amended pleading is within the discretion of
this Court. The Ohio Supreme Court explained that “the language Civil Rule 15(A) favors a liberal
amendment policy and a motion for leave to amend should be granted absent a finding of bad faith,
undue delay or undue prejudice to the opposing party.” Hoover v. Sumlin, 12 Ohio St.3d 1, 6, 465
N.E.2d 377 (1984). Despite Defendant Valenzuela’s arguments to the contrary, the Court finds
Plaintiff's motion for leave to file an amended complaint well taken and hereby DENIES
Defendant Valenzuela’s Motion to Reconsider.
IL. Defendant Valenzuela’s Motion to Strike
Next, the Court will address Defendant Valenzuela’s Motion to Strike Defendant J.H.P.’s
May 25, 2023 Notice ofFiling. As discussed above, the Court has significant discretion in allowing
amendments to pleadings. Defendant Valenzuela argues that the filing should be struck because of
procedural missteps by Defendant J.H.P. While the Court agrees with Defendant Valenzuela that
the best method in amending Defendant J.H.P’s crossclaims would have been via motion to amend,
in the Court’s analysis, Defendant J.H.P.’s notice of filing is not the result of bad faith and has not
caused undue delay or prejudice to Defendant Valenzuela. The Notice of Filing purports to provide
the complete subcontractor agreement that was originally attached in partial form to Defendant
J.H.P’s crossclaim. Defendant J.H.P. did not attempt to add any further causes of action in their
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crossclaim, or otherwise alter the substance of their crossclaim. Cases will be heard and decided
on their merits not based upon insignificant procedural qualms. Thus, this Court accepts Defendant
JH.P.’s Notice of Filing and allows the attachment of the alleged complete subcontractor
agreement to Defendant J.H.P’s crossclaims. Defendant Valenzuela’s Motion to Strike is hereby
DENIED
Til. Defendant Valenzuela’s Motions for Judgment on the Pleadings
Finally, this Court will turn to Defendant’s Motions for Judgment on the Pleadings
pursuant to Civil Rule 12(C). When considering a motion pursuant to 12(C), this Court is required
to “accept as true all the material allegations of the complaint of [plaintiff], with all the inferences
to be drawn therefrom to be construed in [plaintiff's] favor.” Corporex Dev. & Constr. Mgt. v.
Shook, Inc., 106 Ohio St.3d 412, 2005-Ohio-5409, 835 N.E.2d 701, {| 2. “Civ. R. 12(C) permits
consideration of the complaint and answer ” State ex rel. Midwest Pride IV v. Pontious, 75 Ohio
St.3d 565, 569, 664 N.E.2d 931 (1996). “A motion for judgment on the pleadings tests the
allegations of the complaint and presents questions of law.” Franks v. Ohio Dept. of Rehab. &
Correction, 195 Ohio App.3d 114, 2011-Ohio-2048, 958 N.E.2d 1253, J 5 (10th Dist.). “Dismissal
is appropriate under Civ.R. 12(C) when (1) the court construes as true, and in favor of the
nonmoving party, the material allegations in the complaint and all reasonable inferences to be
drawn from those allegations and (2) it appears beyond doubt that the plaintiff can prove no set of
facts that would entitle him or her to relief.” Reister v. Gardner, 164 Ohio St.3d 546, 2020-Ohio-
5484, 174 N.E.3d 713, § 17. As such, judgment is “improper if the non-moving party pleads any
facts or raises any reasonable inferences of fact that could entitle them to relief.” Upperman v.
Grange Indem. Ins. Co., 2005-Ohio-6227.
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Presently, Defendant Valenzuela has moved this Court to dismiss Plaintiff's claims against
him as set forth in the Plaintiffs First Amended Complaint because 1) the economic loss rule bars
Plaintiffs claims for negligence as contained in Plaintiff’s first claim for relief and 2) Plaintiff is
not an identified and intended third-party beneficiary as alleged in Plaintiff's second claim for
relief. The Court will address these arguments below.
a. The economic loss doctrine does not apply as the alleged damages could be construed
as property damage.
The purpose of the economic loss doctrine is “to maintain the line of demarcation between
tort law and contract law in situations in which both tort and contract theories could apply.”
Motorists Mut. Ins. Co. v. Ironics, Inc., 168 Ohio St.3d 467, 2022-Ohio-841, 200 N.E.3d 149, 428
(Internal citations omitted). “Generally, the economic loss rule prevents recovery in tort of
damages for purely economic loss.” Santagate v. Pa. Higher Educ. Assistance Agency (PHEAA),
10th Dist. Franklin No. 19AP-705, 2020-Ohio-3 153, § 38. This rule comes from the principle that,
in the absence of privity of contract between parties, there is no duty to exercise reasonable care
to avoid intangible economic loss or losses to others that do not arise from tangible physical harm
to persons and tangible things. Jd. However, economic damages may be recovered when a plaintiff
can establish that indirect economic loss has arisen from tangible property damage. Ohio Edison
Co. v. Soule, 6th Dist. Sandusky No. S-17-052, 2018-Ohio-4624, | 25, citing Queen City Terminals
y. General Am. Transp. Corp., 73 Ohio St. 3d 609, 653 N.E.2d 661, paragraph one of the syllabus
(1995). The Ohio Revised Code defines economic foss as the following
(a) All wages, salaries, or other compensation lost as a result of an injury
or loss to person or property that is a subject of a tort action;
({b) All expenditures for medical care or treatment, rehabilitation services, or other
care, treatment, services, products, or accommodations as a result of an injury
or loss to person or property that is a subject of a tort action;
{e) Any other expenditures incurred as a result of an injury or loss to person or
property that is a subject of a tort action, other than attorney’s fees incurred in
connection with that action
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RC. 2315.18. The Ohio Supreme Court considers “losses to others that do not arise from tangible
physical harm to persons and tangible things” to be economic loss. Floor Craft Floor Covering v.
Parma Community Gen. Hosp. Assn., 54 Ohio St.3d 1, 3, 560 N.E.2d 206 (1990).
Here, Plaintiff alleges that Defendants were negligent in their construction of the building
and as a result, the building collapsed, causing $292,164.68 worth of damage. Defendant
Valenzuela argues in their motion that the costs to remediate the damage to the building are
economic damages. Plaintiff argues that Defendant Valenzuela’s negligence caused damage to
tangible property, including the lumber, beams, trusses and roof frames that were being used in
the construction of the building. This Court is not persuaded that the damages alleged by Plaintiff
are purely economic in nature at this juncture and finds it reasonable that the damages alleged
could be construed as property damage, which is not barred by the economic loss doctrine. Thus,
viewing the allegations in the light most favorable to the Plaintiff, that portion of Defendant
Valenzuela’s Motion seeking to dismiss the negligence claim is DENIED.
b. Questions of fact remain as to whether Plaintiff is a third-party beneficiary of the
subcontractor agreement.
Defendant Valenzuela alleges that there is no privity of contract with Plaintiff and thus the
Breach of contract claim must fail. “Only a party to a contract or an intended third-party
beneficiary of a contract may bring an action on a contract in Ohio.” Thornton v. Windsor House,
Inc., 57 Ohio St.3d 158, 161, 566 N.E.2d 1220 (1991). “A third party who simply receives a
benefit from an agreement, without more, is not an intended third-party beneficiary of that
contract.” State ex rel. Dellagnese v. Bath-Akron-Fairlawn Joint Economic Dey. Dist., 9th Dist.
No. 23196, 2006-Ohio-6904, 418.
Defendant Valenzuela’s argument is that as he did not enter into a contract with Plaintiffs,
Plaintiffs cannot pursue any contract-based claims. Plaintiffs argue, however, that there exists a
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sufficient nexus between the parties to serve as a substitute for privity of contract and that they are
intended third-party beneficiaries of the subcontract between Defendant J.H.P. and Defendant
Valenzuela.
The Amended Complaint and the attached subcontractor agreement, while disputed by
Defendant Valenzuela, indicate that Defendant Valenzuela agreed to indemnify both Defendant
J.H.P. and “the Owner” in the event of property damage, including “purely economic damages”,
caused by Defendant Valenzuela. The inference in this subcontractor agreement, construed in
Plaintiffs favor, is that Defendant Valenzuela knowingly intended to benefit Plaintiff, as owner
of the project. Under the Civ. R. 12(C) standard, the allegations must be construed in favor of
Plaintiffs. At this stage of the pleadings, the Court cannot say as a matter of law that Plaintiffs’
claims against Defendant Valenzuela fail to state claims for which relief may be granted. Whether
Plaintiffs will be able to prove that they were intended beneficiaries, as opposed to incidental
beneficiaries, may well be a matter for summary judgment. The issue, however, cannot be decided
on a motion to dismiss. Therefore, the Court finds Plaintiff's breach of contract claim survives the
motion to dismiss and that portion of Defendant Valenzuela’s motion is DENIED.
c. Alternative Pleading is Permitted
“Civ. R. 8(E)(2) permits alternative or hypothetical pleading, or even the use of
inconsistent claims.” Jacono v. Anderson Concrete Corp., 42 Ohio St. 2d 88, 92, 326 N.E.2d
267, 270. Civ. R. 8 (E)(2) states
A party may set forth two or more statements of a claim or defense alternately or
hypothetically, either in one count or defense or in separate counts or defenses
When two or more statements are made in the alternative and one of them if made
independently would be sufficient, the pleading is not made insufficient by the
insufficiency of one or more of the alternative statements. A party may also state
as many separate claims or defenses as he has regardless of consistency and whether
based on legal or equitable ground.
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Regarding torts generally, “[a] tort claim can proceed where ‘the facts of the case show an
a
intentional tort committed independently, but in connection with a breach of contract[.] Ineos
USA L.L.C. v. Furmanne America, Inc., 2014-Ohio-4996, 21. Nevertheless, “a tort claim based
upon the same actions as those upon which a breach-of-contract claim is based will exist
independently of the contract action ‘only if the breaching party also breaches a duty owed
separately from that created by the contract, that is, a duty owed even if no contract existed.’”
Sutton Funding, L.L.C. v. Herres, 2010-Ohio-3645, 53 (internal citations omitted)
At the beginning of litigation, it is common for plaintiffs to plead claims in the alternative,
and it is expressly allowed by Civ. R. 8(E)(2). Until discovery fleshes the facts out, it is often
uncertain which cause of action a plaintiff will be able to recover under, if any. Here claims of
negligence are included in addition to breach of contract in the complaint. While the law does not
usually permit plaintiffs to ultimately recover under both breach of contract and negligence claims,
there are no restrictions on pleading these claims together under Civ. R. 8(E)(2), even if they are
inconsistent. As the cases progress, however, Defendants are free to raise this argument again in
the future under another standard of review such as Civ. R. 56.
Additionally, in the event the subcontractor agreement is deemed illusory or otherwise
inapplicable between Plaintiff and Defendant Valenzuela, then Plaintiff could potentially recover
under the negligence cause of action. Judgment on the pleadings is improper when the non-moving
party pleads facts that raise reasonable inferences that could potentially entitle them to relief, which
they adequately do so here
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IV. Conclusion
The Court DENIES Defendant Valenzuela’s Motions for Judgment on the Pleadings in
their entirety. Defendant’s Motion to Strike and Motion to Reconsider are also DENIED.
IT IS SO ORDERED.
Electronically Signed By
JUDGE MARK A. SERROTT
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Franklin County Court of Common Pleas
Date: 10-26-2023
Case Title: THE CINCINNATI INSURANCE CO -VS- JHP CONSTRUCTION
INC ET AL
Case Number: 23CV001299
Type: ORDER
It Is So Ordered.
Tinh Ce ee
/s/ Judge Mark A. Serrott
Electronically signed on 2023-Oct-26 page 9 of 9
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Court Disposition
Case Number: 23CV001299
Case Style: THE CINCINNATI INSURANCE CO -VS- JHP
CONSTRUCTION INC ET AL
Motion Tie Off Information:
1. Motion CMS Document Id: 23CV0012992023-06-1999980000
Document Title: 06-19-2023-MOTION FOR JUDGMENT ON
PLEADINGS - DEFENDANT: GERARDO HERNANDEZ
VALENZUELA
Disposition: MOTION DENIED
2. Motion CMS Document Id: 23CV0012992023-06-0199980000
Document Title: 06-01-2023-MOTION TO STRIKE - DEFENDANT:
GERARDO HERNANDEZ VALENZUELA
Disposition: MOTION DENIED
3. Motion CMS Document Id: 23CV0012992023-05-2699980000
Document Title: 05-26-2023-MOTION TO RECONSIDER -
DEFENDANT: GERARDO HERNANDEZ VALENZUELA
Disposition: MOTION DENIED
4. Motion CMS Document Id: 283CV0012992023-04-2699980000
Document Title: 04-26-2023-MOTION FOR JUDGMENT ON
PLEADINGS - DEFENDANT: GERARDO HERNANDEZ
VALENZUELA
Disposition: MOTION DENIED