The Ohio Court of Appeals has issued a split decision in a legal dispute over whether a flooring product used in new apartments failed to meet contractual promises, potentially impacting residents and property values. The case centers on allegations that the flooring component did not provide adequate sound insulation, leading to tenant complaints and financial losses for the developer.
The appeal was filed by Rialto on Hurstbourne, LLC, in Hamilton County against US LBM Operating Co. 3009, LLC, doing business as K-I Lumber & Building Materials and Kentucky Indiana Lumber — US LBM, LLC. The judgment entry was recorded on April 1, 2026.
According to court documents, Rialto developed a 268-unit apartment complex in Louisville, Kentucky. In 2018, company representatives selected ExtremeGreen magnesium oxide cement board as a novel component for floor and ceiling assemblies after reviewing promotional materials highlighting its sound transmission properties. Rialto incorporated ExtremeGreen into its project specifications and later contracted with US LBM to supply the material under an agreement signed on August 22, 2019.
The contract included express warranties from US LBM stating that materials would be “free from defects in title, workmanship and material; free from defects in design except to the extent that such items comply with any detailed designs provided by [Rialto]; [and] of merchantable quality and suitable for the purposes for which the material or goods are intended.” An indemnification clause also required US LBM to cover certain costs arising from breaches of warranty unless caused by Rialto’s gross negligence or illegal conduct.
After project completion in 2022 and move-in by residents, Rialto began receiving numerous noise complaints attributed to excessive sound transmission between units. These issues reportedly led to early lease terminations and high tenant turnover rates. Rialto investigated the problem and concluded that ExtremeGreen’s inadequate sound-insulation properties were responsible.
Rialto filed suit in Hamilton County as required by the contract’s forum selection clause. Its complaint initially alleged breach of contract, misrepresentation or nondisclosure resulting in property damage (later dismissed), and breach of warranty. Following discovery, both parties moved for summary judgment—US LBM arguing that claims were governed by Ohio’s Products Liability Act (OPLA) or otherwise unsupported by evidence; Rialto seeking partial summary judgment on liability.
The trial court ruled largely in favor of US LBM: it held OPLA did not apply but found ExtremeGreen was exempted from some warranty provisions due to detailed design specifications provided by Rialto; determined there was insufficient evidence linking ExtremeGreen directly to acoustical issues; and concluded that indemnification only applied to third-party claims.
On appeal, Judge Crouse wrote that factual disputes precluded summary judgment on key warranty claims related to merchantability and suitability for intended purpose. Specifically, expert reports submitted by Rialto indicated that assemblies using ExtremeGreen consistently failed industry-standard sound tests (ASTC/AIIC ratings), sometimes falling below minimum building code requirements. One expert opined: “the ExtremeGreen MGO used at the Project significantly failed at providing the specified sound isolation…and is not suitable for its intended use.” Another stated: “the STC and IIC ratings as measured at [the Project] show that the product fails to perform as specified…nor does it meet minimum code requirements…the ExtremeGreen MGO assembly used…is defective and not suitable for its intended purpose.”
However, because some evidence suggested possible improper storage or installation practices by Rialto—and because not all tested assemblies fell below code—the appeals court found these issues must be resolved at trial rather than through summary judgment.
Conversely, the appellate panel affirmed dismissal of claims based on design defect warranties since there was no allegation or evidence showing ExtremeGreen posed an unreasonable risk of harm beyond poor performance. The court also agreed with prior rulings that indemnification provisions did not require US LBM to pay attorney fees or costs incurred solely through direct litigation between contracting parties absent explicit language allowing such fee-shifting.
As relief, Rialto seeks damages reflecting lost rent revenue, unit turnover costs, administrative expenses related to noise complaints, temporary repair costs, diminished property value, and inability to raise rents—all allegedly resulting from substandard flooring performance.
The case will return to trial court so remaining breach-of-warranty claims can proceed before a jury or judge consistent with these findings. Attorneys representing Rialto include John B. Pinney and Kellie A. Kulka of Bricker Graydon LLP; attorneys for US LBM are Kent A. Britt, David F. Hine, and Emily E. St. Cyr of Vorys Sater Seymour & Pease LLP. The case is identified as Appeal No. C-250077 / Trial No. A-2301364.
