COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 70835 KEEVA J. KEKST ARCHITECTS INC.: : Plaintiff-appellee : : JOURNAL ENTRY -vs- : AND : OPINION CHARLES GEORGE D.B.A. GEORGE : DEVELOPMENT GROUP : : Defendant-appellant : : DATE OF ANNOUNCEMENT OF DECISION: MAY 15, 1997 CHARACTER OF PROCEEDING: Civil appeal from Court of Common Pleas Case No. CV-271702 JUDGMENT: Affirmed in part, Reversed in Part and Remanded DATE OF JOURNALIZATION: APPEARANCES: For Plaintiff-Appellee: For Defendant-Appellant: JEFFREY A. KEY, ESQ. MARK M. GEORGE, ESQ. 900 Skylight Office Tower 9119 Brookpark Road 1660 West 2nd Street Parma, Ohio 44129 Cleveland, Ohio 44113-1411 - 2 - DYKE, J.: Defendant, Charles George dba George Development Group, appeals from the judgment of the trial court entered in favor of plaintiff, Keeva J. Kekst Architects, Inc. For the reasons set forth below, we affirm in part, and reverse and remand for further proceedings. On June 6, 1994, plaintiff Keeva J. Kekst Architects, Inc. (hereafter referred to as "Keeva" or "plaintiff") filed this action for breach of contract against Charles George dba George Development Group (hereafter referred to as "George" or "defendant") for recovery of $17,092.25 for architectural services. In paragraph three of its complaint, Keeva alleged that George "engaged the services of Plaintiff for a project referred to as the Broadview Heights Town Centre." This was referred to by Plaintiff as project number 92227-01/00. In his answer, George admitted the allegations of paragraph three. He further alleged that plaintiff's services were not provided as requested and included unnecessary work. The matter was referred to mandatory arbitration pursuant to Loc. R. 29 of the Court of Common Pleas of Cuyahoga County, General Division. Defendant subsequently moved to amend his answer to indicate that plaintiff had actually contracted with Sebring Development Corporation which was involved in bankruptcy proceedings in the Bankruptcy Court for the Northern District of Ohio, Case No. 94-12125. Defendant also sought to join that entity - 3 - in the proceedings then stay the matter pending the conclusion of the bankruptcy action. These motions were denied, and on July 7, 1995, the arbitrators issued a report and award in favor of plaintiff and against defendant for the amount prayed for in the complaint. Defendant subsequently filed an appeal de novo to the court of common pleas, and the matter proceeded to trial on May 9, 1996. Keeva's evidence established that Charles George met with Richard Huelsman, Keeva's California partner, in Los Angeles and again in Cleveland to discuss the project. Keeva's executive vice president Daniel Brogan and vice president David H. Bader established that Sebring Development Corporation was initially considered the client for whom services were rendered. In January 1993, the Georges notified plaintiff that the client should be listed as George Development Group, and plaintiff prepared a letter to defendant reflecting that it had noted this change. In 1993, or months after work had been undertaken, Keeva forwarded a "Proposal" to defendant which provided in relevant part as follows: KA'S BASIC SERVICES Pre-Design Phase KA to review Program furnished by GDG defining goals, requirements, schedule and budget for the PROJECT. KA to visit site, investigate Building codes, zoning regulations, and other regulatory items governing PROJECT. *** Schematic Design Phase - 4 - Based upon GDG's written approval of Pre-Architectural intent concepts, KA shall prepare for GDG's approval Schematic Design Studies, which illustrate design concepts, aesthetic concepts, scale, and relationships of PROJECT's components. *** Design Development Phase Based upon GDG's written approval of Schematic Design Studies, KA shall prepare for GDG's approval Design Development Documents consisting of drawings, other documents and material samples. *** Tenant Related Services KA to prepare for GDG's approval storefront and signage criteria for tenant spaces to be included in GDG's lease exhibit. BASIS OF COMPENSATION GDG shall compensate KA for the 'Basic Services' as follows: Retainer Retainer of Four Thousand Dollars ($4,000), approximately 10% of design services work, to be paid KA upon instruction to proceed with services. This sum to be applied to final invoice for services. * * * Basic Fee *** The first fee shall be Forty Thousand Dollars ($40,000) or approximately $0.25/s.f. GBA to produce a set of Schematic Design documents for the entire 160,000+ project. In order to minimize the impact of this $40,000, KA's initial predesign services, site planning design services and concept imaging design services shall be invoiced to GDG on a time and expense rate billed against the $40,000 schematic design fee. Then, upon written authorization from GDG to proceed with producing schematic design phase services, KA shall finish producing said services. KA's fee to then conclude professional architectural and engineering services for this project Phase I and II (160,000 s.f.) shall be One Hundred Thirty Six Thousand Dollars ($136,000) or approximately $0.85/s.f. GBA, for a total KA Basic Services Fee for Phases I and II of the project at One Hundred Seventy Six Thousand Dollars ($176,000) or approximately $1.10/s.f. GBA. - 5 - According to plaintiff's witness, Keeva's completed drawings had a dramatic "California feel," in order to attract tenants. The design was a departure from the architectural style of the area, but plaintiff's witnesses testified that the Georges were very impressed with them. Further, according to plaintiff, Mark George asked Keeva's vice president to take the site plan to First Interstate Development to determine whether they would be interested in becoming joint venture partners in the project. Plaintiff sent bills for the project to Sebring Development Corporation. Thereafter, in early 1993, Minor George and Mark George tendered $2,800 to plaintiff through Broad-Breck Development Corporation, leaving a balance of $17,092.25. Keeva's accounts receivable manager Bonita Vorachek testified that there were no further payments upon the outstanding balance. She further established that her department receives the time sheets for individual architects, reviews them, prepares a monthly report with the project managers then computes the monthly billing. Vorachek also authenticated the time sheets of the architects who worked on the project and established that the invoices sent to Mark George and Charles George were generated from these time sheets. In various collection calls to Mark George and Charles George, there were no complaints regarding the style of the building. Vorachek acknowledged, however, that some of the later time sheets indicate that Keeva had undertaken revisions of its earlier work. Finally, plaintiff's evidence demonstrated that - 6 - Charles George did not object to being billed by plaintiff and did not protest that he was merely an employee of George Development Group. Defendant's evidence demonstrated that the architectural firm George Draeger and Associates prepared a preliminary site plan for development of the property at no charge, in order to help the developer market the property to prospective tenants. The firm of Kluchin Doty & Miller indicated that it would charge defendant $5,000 for a site plan, picture, and other materials needed to submit the project to the Zoning Committee and render it ready for building. After that firm ceased operations, defendant contacted plaintiff to modify documents which had already been prepared. According to Charles George, Keeva was retained simply to modify one section of the plans prepared by Kluchin, Doty & Miller in order to accommodate a new proposed tenant. Defendant's evidence further indicated that the Georges at no time requested that Keeva create a new design, and they were displeased when Keeva delivered a two story design which included an open air escalator. In short, defendant maintained that the completed design was wholly inappropriate in relation to the climate, and traditional look of the area. In addition, the actual cost of building Keeva's design would result in rental prices in excess of the customary rate for tenants in this area. Moreover, defendant was unsuccessful in marketing the project for actual development. Defendant also presented the testimony of Jay - 7 - Gardner, a professional planner retained by the City of Broadview Heights; James Butler, Chairman of the Broadview Heights Planning Commission; and Terrance A. Leonard, Building Commissioner for the City of Broadview Heights. According to Gardner and Butler, the master plan for the city envisioned a mid-America, Western Reserve, small town look, and the design prepared by plaintiff was not consistent with that vision. Further, according to Butler and Leonard, plaintiff's design did not meet the city's set back requirements, and variances would be required. Finally, defendant's evidence demonstrated that no one from Keeva visited the site or ever ascertained the building or zoning restrictions to which the parcel was subject. Thereafter, on May 16, 1996, the trial court entered judgment for plaintiff for the full amount set forth in the complaint. Defendant now appeals and assigns five errors for our review. Defendant's first and second assignments of error are related and state: THE TRIAL COURT ERRED IN NOT GRANTING APPELLANT'S TWO MOTIONS TO JOIN SEBRING DEVELOPMENT CORPORATION AND DROP CHARLES GEORGE AS EMPLOYEE, AND AMEND THE ANSWER PURSUANT TO CIV. R. 19 AND CIV. R. 12(B)(7). THE TRIAL COURT ERRED IN GRANTING JUDGMENT AGAINST EMPLOYEE OF CORPORATION TO BE INDIVIDUALLY LIABLE FOR PROJECT FEES IN THE NAME OF THE CORPORATION. Within these assignments of error, defendant complains that the trial court erred in denying his motion to: amend his answer to delete his previous admission that he engaged plaintiff's services; - 8 - to aver instead that he was not responsible for payment of plaintiff's services; and to obtain the joinder of Sebring Development Corp. The amendment of pleadings is governed by Civ. R. 15(A) which provides in relevant part as follows: Amendments. A party may amend his pleading once as a matter of course at any time before a responsive pleading is served or, if the pleading is one to which no responsive pleading is permitted and the action has not been placed on the trial calendar, he may so amend it at any time within twenty eight (28) days after it is served. Otherwise a party may amend his pleading only by leave of court or by written consent of the adverse party. Leave of court shall be fully given when justice so requires. *** In this instance, defendant's answer was filed on September 6, 1994, and defendant's motion to amend was not filed until June 26, 1995. Thus, defendant exceeded the twenty-eight days allotted for amendments as of right and was required to obtain leave of court in order to amend his answer. Denial of leave to so amend rests within the sound discretion of the trial court and will not be disturbed on appeal absent an affirmative showing of an abuse of discretion. St. Mary's v. Dayton Power & Light Co. (1992), 79 Ohio App.3d 526, 535. Actual prejudice to an opposing party is the most important factor to be considered in the granting or withholding of leave to amend. Id.; Frayer Seed, Inc. v. Century 21 Fertilizer & Farm Chemical, Inc. (1988), 51 Ohio App.3d 158, 164. Here, the evidence demonstrates that although Sebring Development Corp. was initially the client for this project, defendant subsequently notified plaintiff that it was the client for the project, and plaintiff prepared a written confirmation of this change on January 14, 1993. The record therefore demonstrates - 9 - that plaintiff had in fact named the correct party, and there is no basis from which we may conclude that the trial court abused its discretion in denying defendant's motions. In any event, it is essentially undisputed that defendant George Development Group has the same principals as Sebring Development Corp., but Sebring is currently involved in bankruptcy proceedings. Thus, the proposed amendments would have, as defendant acknowledges, required additional proceedings aimed at piercing Sebring's corporate veil. (Appellant's brief at p. 5). The first and second assignments of error are overruled. Defendant's third assignment of error states: THE TRIAL COURT ERRED IN NOT GRANTING APPELLANT'S MOTION AT TRIAL TO EXCLUDE THE WORK AND BILLING RECORDS OF THE ARCHITECTS NOT PRESENT AT TRIAL. Within this assignment of error, defendant complains that the billing records were erroneously introduced into evidence since they were not authenticated by the architects who generated them. Evid. R. 802 sets forth a general prohibition against the introduction of hearsay. Evid. R. 803 states exceptions to the general prohibition against the introduction of hearsay and provides in relevant part as follows: (6) Records of Regularly Conducted Activity. A memorandum, report, record, or data compilation, in any form, of acts, events, or conditions, made at or near the time by, or from information transmitted by, a person with knowledge, if kept in the course of a regularly conducted business activity, and if it was the regular practice of that business activity to make the memoran- dum, report, record, or data compilation, all as shown by - 10 - the testimony of the custodian or other qualified witness or as provided by Rule 901(B)(10), unless the source of information or the method or circumstances of preparation indicate lack of trustworthiness. The term "business" as used in this paragraph includes business, institution, association, profession, occupation, and calling of every kind, whether or not conducted for profit. The decision to admit a business record into evidence pursuant to this exception rests within the sound discretion of the trial court, and such determination will not be disturbed on appeal absent a clear showing of an abuse of discretion. WUPW TV-36 v. Direct Results Marketing, Inc. (1990), 70 Ohio App.3d 710, 714. Under this exception, the witness providing the foundation for the document need not have firsthand knowledge of the transaction. Id. Rather, the witness must simply demonstrate that he or she is sufficiently familiar with the operation of the business and with the circumstances of the preparation, maintenance, and retrieval of the record in order to reasonably testify on the basis of this knowledge that the record is what it purports to be, and was made in the ordinary course of business. Id.; accord AMF, Inc. v. Mravec (1981), 2 Ohio App.3d 29, 33 (where witness established that invoices were kept under her supervision and control, she was qualified to testify as to the identity of the document, and the manner in which it was prepared). In this instance, Keeva's accounts receivable manager Bonita Vorachek testified that the client invoices were kept under her supervision and control and also testified as to the manner in which the documents were prepared. According to Vorachek, her - 11 - department receives the time sheets for individual architects, reviews them, prepares a monthly report with the project managers, then completes the monthly billing. She further demonstrated that the invoices sent to Mark George and Charles George were generated from time sheets prepared by the architects who worked on the project. The invoices were therefore properly admitted into evidence. Id. The third assignment of error is overruled. Defendant's fourth and fifth assignments of error are interrelated and state: THE TRIAL COURT ERRED IN ALLOWING THIRD PARTY TESTIMONY OF THE ARCHITECTS WORKMANSHIP AS SATISFACTORY OR INTENT OF THE GEORGES REQUIREMENTS OF THE ARCHITECTS DOING THE WORK, WHO WERE NOT PRESENT AT TRIAL. THE TRIAL COURT ERRED IN GRANTING JUDGMENT OF FEES AGAINST CHARLES GEORGE FOR SPECIFIC SERVICES NOT RENDERED BY ARCHITECT TO SATISFACTION OR APPROVAL OF CLIENT AS BURDEN OF PROOF REQUIRED CONTRARY TO THE WEIGHT OF THE EVIDENCE. Within these assignments of error, defendant complains that Keeva's fee is not reasonable since it failed to provide services which met defendant's approval. In evaluating one party's contractual performance which is subject to the satisfaction of the other party, we note that: Contract clauses which make the duty of performance of one of the parties conditional upon his satisfaction are generally referred to as 'satisfaction clauses.' These clauses have been divided by the courts into two categories, and have been interpreted in accordance with the category. Mattei v. Hopper (1958), 51 Cal.2d 119, 121, 330 P.2d 625, 626. - 12 - Where the satisfaction clause requires satisfaction as to such matters as commercial value or quality, operative fitness, or mechanical utility, dissatisfaction cannot be claimed unreasonably. In these contracts, an objective standard is applied to the satisfaction clause and the test is whether the performance would satisfy a reasonable person. Id; Cranetex, Inc. v. Precision Crane & Rigging of Houston, Inc. (1988), 760 S.W.2d 298, 301- 302. If, on the other hand, the satisfaction clause related to matters involving fancy, personal taste, or judgment, then a subjective standard is applied, and the test is whether the party is actually satisfied. Id. Although application of a subjective standard to a satisfaction clause would seem to give the obligor virtually unlimited latitude to avoid his duty of performance, such is not the case. In these situations, courts impose the limitation that the obligor act in good faith. Mattei, supra, 51 Cal.2d at 121, 330 P.2d at 626. Thus, under the subjective standard, the promisor can avoid the contract as long as he is genuinely, albeit unreasonably dissatisfied. Which standard applies in a given transaction is a matter of the actual or constructive intent of the parties, which, in turn, is a function of the express language of the contract, or the subject matter of the contract. Kadner v. Shields (1971), 20 Cal.App.3d 251, 262-263, 97 Cal.Rptr. 742, 751-752. Hutton v. Monograms Plus, Inc. (1992), 78 Ohio App.3d 176, 181. In this instance, the undisputed evidence reveals that plaintiff was to furnish a design which met defendant's satisfaction. It is therefore clear that defendant's fancy, personal taste, and judgment were to be applied. Thus, the subjective standard of actual satisfaction was determinative. In this connection we note that there was competent, credible evidence from which the trial court could have concluded that defendant was satisfied with the plan and had it marketed it to other developers. We therefore are unable to find this aspect of the trial court's - 13 - judgment to be against the manifest weight of the evidence. Accord Atelier Design, Inc. v. Campbell (1990), 68 Ohio App.3d 724, 729, citing C.E. Morris Co. v. Foley Construction Co. (1978), 54 Ohio St.2d 279. Turning to the issue of plaintiff's compensation, we note that where an express contract is shown, compensation is in accordance with the terms of the contract. Legros v. Tarr (1989), 44 Ohio St.3d 1, 7; accord Atelier Design, Inc. v. Campbell, supra, at 728 (if architect renders service pursuant to express contract,compensation is determined by terms of contract; if there is no agreement, he is entitled to the reasonable value of his services). Where there is a contract implied in fact, compensation is in accordance with the parties' mutual assent as shown by the surrounding circumstances; or, if no fee was agreed upon, compensation is fixed at the "reasonable value" of the work. Lucas v. Constantini (1983), 13 Ohio App.3d 367-370. Where there is a contract implied in law, compensation is the reasonable value of the services. Id.; Legros v. Tarr, supra. In this instance, the parties entered into an agreement and work was undertaken months before Keeva prepared its written proposal which set forth the fees for its services. We therefore hold that the payment terms of the proposal are not binding upon defendant. Rather, since there was no evidence that payment terms were stipulated at the time the parties reached a meeting of the minds, Keeva is entitled to the reasonable value of its services. - 14 - See Lucas v. Constantini, supra, at 367-368, (where parties agreed upon performance and price, express contract was created; where no fee is agreed upon, the "reasonable value" of the work may be recovered pursuant to an "implied contract"); Cf. Terex Corp. v. Grim Welding Co. (1989), 58 Ohio App.3d 80, 82 (to show a contract implied in fact, services must be rendered, work performed or materials furnished by one party for another under such circumstances that the party to be charged knew or should have known that the services were given with the expectation of being paid on the basis of their reasonable worth). This matter must therefore be remanded for a factual determination of this issue. The fourth and fifth assignments of error are well-taken insofar as they assert that Keeva is entitled to the reasonable value of its fees, not necessarily the fee set forth in plaintiff's itemized statement. The judgment of the trial court is affirmed in part, reversed in part and remanded for further proceedings as to this issue. - 15 - It is ordered that appellee and appellant split the costs herein taxed. The Court finds there were reasonable grounds for this appeal. It is ordered that a special mandate issue out of this Court directing the Common Pleas Court to carry this judgment into execution. A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure. BLACKMON, P.J., AND PORTER, J. CONCUR ANN DYKE JUDGE N.B. This entry is an announcement of the court's decision. See App.R. 22(B), 22(D) and 26(A); Loc.App.R. 27. This decision will be journalized and will become the judgment and order of the court pursuant to App.R. 22(E) unless a motion for reconsideration with supporting brief, per App.R. 26(A), is filed within ten (10) days of the announcement of the court's decision. The time period for review by the Supreme Court of Ohio shall begin to run upon the journalization of this court's announcement of decision by the .