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Ohio Federal Court Declines to Dismiss Action Against the Officer of a General Contractor Who Allegedly Submitted False Certifications Regarding Payments Made to Subcontractors With Payment Applications

Decker Constr. Co. v. Wesex Corp., No. 2:18-cv-727, 2019 BL 232653 (S.D. Ohio June 24, 2019)

Author: Emily D. Anderson

10/23/2019

Read the full post at Constructlaw

Ohio Federal Court Declines to Dismiss Action Against the Officer of a General Contractor Who Allegedly Submitted False Certifications Regarding Payments Made to Subcontractors With Payment Applications

In Decker Construction Co. v. Wesex Corporation, the United States District Court for the Southern District of Ohio declined to dismiss a cause of action for fraudulent misrepresentation against Third-Party Defendant Mark Schrader (Schrader), the former Chief Financial Officer of Wesex Corporation (Wesex). Wesex served as the general contractor on a construction project in New Albany, Ohio (the Project). In its claim against Schrader, Third party plaintiff CCL Label, Inc. (CCL), the construction manager on the Project, alleged that Schrader signed affidavits included in Wesex’s payment applications that falsely certified Wesex’s subcontractors had been paid for their work on the Project. Schrader sought dismissal on the basis that the Court lacked personal jurisdiction over him and that CCL failed to state a claim.

Schrader argued that the Court lacked personal jurisdiction over him because, as an individual officer of Wesex, the Fiduciary Shield Doctrine protected him from being compelled into Ohio courts merely due to Wesex being subject to Ohio’s personal jurisdiction. The Court rejected this argument on the basis that Schrader engaged in solicitation and negotiations that gave rise to a continuing obligation in Ohio, namely, that Schrader regularly called and dealt with CCL representatives about the Project in Ohio, including submitting the payment applications with false certifications, which induced CCL to continue construction on the Project in Ohio.

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