REAL ESTATE CASES

The doctrine of adverse possession is disfavored and its elements stringent.

Crown Credit Co. Ltd. v. Bushman (3rd Dist. 2007), 170 Ohio App.3d 807, 2007-Ohio-1230.  In Bushman, Crown Credit Co., Ltd. brought an action against its neighbors for declaratory judgment as to ownership of a disputed border area, and Bushman filed a counterclaim to quiet title based on adverse possession.  The Auglaize County Court of Common Pleas granted Bushman’s motion for summary judgment, and Crown appealed.  The Appellate Court reversed and remanded the trial court decision. 

The Appellate Court held that to acquire title by adverse possession an adverse possession claimant must demonstrate, by clear and convincing evidence, exclusive possession and open, notorious, continuous, and adverse use of the disputed property for a period of 21 years.  Here, Crown conducted a survey in 2004, which was accompanied by an intent to exercise dominion over the border area such that it was sufficient to disrupt the 21-year period required for Bushman to acquire the area by adverse possession.  Crown entered the land by conducting the survey of the property, including the border area, in preparation for purchasing the property in 2004, posted flags demarcating the border area, and properly filed the survey with the Engineer’s office, giving notice to the world that it intended to possess and control the entire property.  This defeated Bushman’s “exclusive” possession.

Although Bushman’s maintenance of the disputed border area was “open” for purposes of adverse possession, the actual, notorious and adverse elements necessary to establish ownership require more than merely conducting activities on the disputed property where others can observe.  To be notorious for adverse possession purposes, a use must be known to some who might reasonably be expected to communicate their knowledge to the owner if he maintained a reasonable degree of supervision over his premises; in other words, the use of the property must be so patent that the true owner of the property could not be deceived as to the property’s use.  The Appellate Court went on to conclude that Bushman’s use of the disputed border was not actual, notorious, or adverse.

CONSTRUCTION CASES

Failure to follow contractual notice provisions precludes owner from backcharging contractor for alleged construction defects.

Certek, Inc. v. The Ohio State University (Ct. of Cl. May 2, 2007), 2007-Ohio-2750.  OSU entered into a contract with Certek to manufacture and install a laboratory module.  OSU approved the plans, and Certek completed its work in December 2004.  OSU first raised problems with the lab module in a letter dated April 29, 2005.  The contractor argued that the modifications identified by OSU in this letter were not part of the original approved design but were actually improvements.  Certek further argued that it had no chance to modify the work as the notice came after others had already made modifications.  OSU, eager to open the lab, hired other contractors who were already on site to complete the modifications and attempted to backcharge Certek for its costs.

The Referee determined that OSU failed to provide timely notice under the contract, thereby denying Certek a reasonable time to cure any defects.  As in Dugan & Meyers, the court strictly enforced the notice provision – only this time against the owner. 

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Unreasonably late finish prevents builder from collecting full contract amount.

Morton Buildings, Inc. v. Correct Custom Drywall, Inc. (Franklin App. June 7, 2007), 2007-Ohio-2788.  This case arose from construction of a 36,000-square-foot garage with a contract amount of $126,438.  Although the owner wanted it built within 90 days, the signed contract did not contain a completion date but did state that July 1, 2002 would be the “approximate delivery date” for the building materials.  Also, a third proposal, dated the same day as the contract, provided that construction would begin in late July and end in late August.

The owner testified that he signed the original contract because the contractor guaranteed that it would complete the garage by September 1, 2002.  The contractor denied that he ever guaranteed a particular completion date.

As expected, the contractor encountered delays in completion, some of which were caused by plan approval and inspections.  In April 2003, the owner learned that construction was not likely to finish before April 15, 2003.  The owner terminated the contract, having paid only $50,571 – approximately 40% of the original contract amount. 

Morton sued for breach of contract and unjust enrichment, and the owner filed a counterclaim for breach of contract.  Following a bench trial, the court rendered a verdict against Morton on its claims, and against CCD on its counterclaim.  Morton appealed.

The Court of Appeals held that although the contract failed to specify a completion date, the law implies that performance must take place within a reasonable time.  If performance took an unreasonable time, then a material breach of contract had occurred.  Thus, if one party to a contract unreasonably delays its performance, the other party is excused from its contractual obligations.

Here, it was clear that the parties had intended a three-month construction period, and the actual construction stretched over a year.  Although some delays were caused by the city, the Court found the contractor more responsible.  As a result of Morton’s unreasonable delay, the owner was excused from its payment obligation.

Further, the Court rejected Morton’s argument that the owner’s instruction to go forward with construction following the initial three-month period was a waiver of the owner’s right to terminate the contract for unreasonable delay.  Because there was no definite date on which the job was to be finished, the owner could continue to demand that the contractor finish the job without waiving any right to timely performance.  Finally, the Court rejected Morton’s unjust enrichment claim, holding that Morton failed to prove that the owner lured it into building a garage that it did not intend to pay for.

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A corporation’s imputed knowledge of a safety violation is sufficient to charge it with a “serious” violation of OSHA Safety Standards.

Kokosing Construction Company, Inc. v. Occupational Safety and Hazard Review Commission (May 25, 2007), 2007 U.S. App. LEXIS 12835.  The case arose from an accident during the construction of an underground sewer line in Cincinnati.  The project required deep excavations, which in turn required the use of de-watering pumps.  In order to provide power for the de-watering pumps, Kokosing used construction-grade electrical cords connected to portable generators.

The workers on the site also used wire chokers to move equipment on the site.  A wire choker is a device that uses a multi-strand wire to form a loop on each end. 

Just prior to the incident, a Kokosing foreman discovered two electrical cords and two water-discharge hoses lying on top of a choker.  The foreman asked another employee to assist him in pulling the choker out from under the cords and hoses.  When they attempted to pull the choker out, a wire protruding from the midsection of the choker pierced one of the electrical cords.  Two employees suffered electrical shocks.

OSHA conducted an investigation and issued a citation for a serious violation.  The administrative law judge who heard the case determined that the citation was properly issued.  After the Occupational Safety and Hazard Review Commission upheld the decision, Kokosing appealed to the Sixth Circuit. 

Kokosing argued that it had no knowledge of the violation and that the knowledge of its foreman was, at best, constructive knowledge.  According to Kokosing, the Commission should not have imputed the foreman’s knowledge of the violation to the company.  The court stepped through two different earlier cases to reach an answer.

In Carlisle Equip. Co. v. United States Sec’y of Labor, 24 F.3d 790 (6^th Cir. 1994), the court found that as long as the government can prove that knowledge of a risk could have been obtained “with the exercise of reasonable diligence,” a supervisor is considered to have constructive knowledge.  In an earlier case, Donovan v. Capital City Excavating, 712 F.3d 1008 (6^th Cir. 1983), the court found that the actual or constructive knowledge of the employer’s foreman or supervisor can be imputed to the employer. 

Putting these two case together, the Court found that if the foreman could have found a hazard through reasonable diligence, that constructive knowledge would be imputed to Kokosing.  Determining reasonable diligence requires the Court to look at several factors, “including an employer’s obligation to inspect the work area, to anticipate hazards to which employees might be exposed, and to take measures to prevent the occurrence.”

In this case, the foreman knew of the possibility of a hazardous situation.  He admitted that he knew the choker was old but still did not check it for abrasions before he moved it.  He testified that he had been taught to protect electrical cords from sharp metal.  The Court found that the Commission drew the logical conclusion that the foreman knew an old choker could have abrasions that could pierce the electrical cord, thereby presenting a hazard.

The Court determined that the foreman’s constructive knowledge could be imputed to Kokosing.  Such knowledge was sufficient to uphold a serious violation and a fine of $1,875.  This case serves to remind employers that what a foreman may not know but should can hurt both the employees and, ultimately, the company.