Ott & Associates Co., Lpa, Prevails In Ohio Supreme Court Case

On May 14, 2014, the Ohio Supreme Court issued a Decision in Oaktree Condominium Assn., Inc., v. Hallmark Bldg. Co., Slip Opinion No. 2014-Ohio-1937, in favor of our client, Oaktree Condominium Association, Inc. After a hard-fought battle that has lasted over 11 years, including two appeals to the 11th District Court of Appeals, the Ohio Supreme Court reinstated a jury verdict for the Association, in the amount of $210,000.00.

From 1988-1990, Oaktree Condominiums, constructed between 1988-1990, consist of seven condominium units in Willoughby, Ohio. Problems first appeared in 1999 when significant drywall cracks appeared in one of the units, which were repaired. Unfortunately, the problems that were believed to be isolated to the single unit returned in 2003 when other unit owners began to observe symptoms of settling in their units, such as cracks in interior walls, and doors that were becoming misaligned. An expert, based upon his inspection, determined that the original contractor installed the footer depths of the units in the frost plane, against existing codes. In fact, some of the footers had been installed as little 17 inches beneath the surface, which is well below the city code requirement of 36 inches deep and the developer’s requirement of 42 inches deep. The improperly installed footers caused the property to become unstable and dangerous, and resulted in a huge repair cost to the Association that involved steep special assessments to the owners.

The appeal to the Ohio Supreme Court arises out of a lawsuit filed by Oaktree Condominium Association, Inc. in the Lake County Court of Common Pleas on December 16, 2005, based on Hallmark Building Co.’s failure to perform in a workmanlike manner and negligence in its role as the developer of Oaktree Condominiums. The lawsuit was filed before the four-year statute of limitations had run. However, after the defect was discovered and Oaktree’s cause of action accrued, but before Oaktree filed suit, the Ohio General Assembly enacted a statute of repose (R.C. 2305.131), which bars claims for construction defects after ten years after completion of construction. On February 29, 2008, the insurance company for the developer filed a Motion for Summary Judgment based solely on arguments relating to R.C. 2305.131, arguing that Oaktree’s claims were time-barred by the ten-year statute of repose that applies to the construction of real estate. The trial court issued its order on May 7, 2008 denying Hallmark’s motion for summary judgment on the basis that R.C. 2305.131 did not apply to the facts of the case. Hallmark appealed. The 11th District Court of Appeals dismissed Hallmark’s appeal due to lack of jurisdiction on the basis that the trial court’s order denying the motion for summary judgment was not a final appealable order. A jury trial was held in August of 2009, and the jury returned a verdict in favor of Oaktree on its claims against Hallmark, and awarded damages in the amount of $210,000.00. Hallmark appealed this judgment. The 11th District Court of Appeals issued its Opinion on December 28, 2010, reversing and remanding the issue back to the trial court to determine whether R.C. 2305.131 is constitutional as applied to Oaktree’s claims. Hallmark filed a Motion for Summary Judgment on February 7, 2011, which was granted on the grounds that R.C. 2305.131 was not unconstitutional as applied to Oaktree’s particular facts. Oaktree appealed to the 11th District Court of Appeals, who subsequently issued a decision affirming the ruling of the trial court in August of 2012, which left Oaktree without money to reimburse the owners to repair the construction defects.

Oaktree filed a Notice of Appeal and Memorandum of Jurisdiction to the Ohio Supreme Court, and the case was accepted for review on February 6, 2013. Both parties filed merit briefs, and oral arguments were held on October 9, 2013. Attorney Steven M. Ott argued on behalf of Oaktree.

On May 14, 2014, the Ohio Supreme Court issued a decision in favor of Oaktree, which reversed the prior decision of the 11th District Court of Appeals and reinstated the jury’s verdict of $210,000.00. The decision in favor of Oaktree was a 4-3 vote. The Ohio Supreme Court determined that Ohio’s statute of repose is unconstitutional as applied to Oaktree. In making this determination, the Court had to decide whether the Association had filed its lawsuit within a reasonable time after the enactment of the statute of repose. The Ohio Supreme Court determined that a reasonable time was based on a respective statute of limitations; therefore, Oaktree’s lawsuit against Hallmark was filed within a reasonable time because it was filed before the statute of limitations ran.

If you have any questions regarding this case or any related issues, please do not hesitate to contact Steven M. Ott at (216) 771-2600 or steven.ott@ottesq.com.