Digitalight Sys., Inc. v. Cleveland Clinic Found. , 2022 Ohio 1400 ( 2022 )

[Cite as Digitalight Sys., Inc. v. Cleveland Clinic Found., 2022-Ohio-1400.]
COURT OF APPEALS OF OHIO
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
DIGITALIGHT SYSTEMS, INC., :
Plaintiff-Appellant, :
No. 110723
v. :
CLEVELAND CLINIC FOUNDATION, :
Defendant-Appellee. :
JOURNAL ENTRY AND OPINION
JUDGMENT: AFFIRMED
RELEASED AND JOURNALIZED: April 28, 2022
Civil Appeal from the Cuyahoga County Court of Common Pleas
Case No. CV-20-935343
Appearances:
Davis & Young and Dennis R. Fogarty, for appellant.
Hahn Loeser & Parks, LLP, Robert J. Fogarty, and
Gregory A. Thompson, for appellee.
FRANK DANIEL CELEBREZZE, III, J.:
Plaintiff-appellant, Digitalight Systems, Inc., brings this appeal
challenging the trial court’s decision granting summary judgment in favor of
defendant-appellee, Cleveland Clinic Foundation, in Digitalight’s action for breach
of contract, unjust enrichment, action on an account, and promissory estoppel.
Digitalight argues that genuine issues of material fact existed that precluded
judgment as a matter of law in Cleveland Clinic’s favor on Digitalight’s breach-of-
contract claim and that the trial court erred in granting summary judgment in
Cleveland Clinic’s favor on Digitalight’s claims for unjust enrichment, promissory
estoppel, and action on an account. After a thorough review of the record and law,
this court affirms.
I. Factual and Procedural History
Digitalight is a Florida corporation that supplies health care equipment.
In response to the equipment needs associated with the COVID-19 pandemic,
Cleveland Clinic engaged Digitalight for the purpose of purchasing “KN95” surgical
masks (hereinafter “masks”).1
Digitalight submitted a quote to the Cleveland Clinic on March 20,
2020. The unit price of each individual mask was $3.99. Digitalight’s quote
provided that the total cost of the 500,000 masks Cleveland Clinic sought to
purchase would be $1,995,000. The quote made no mention of any terms and
conditions that would apply to the sale.
The next day, on March 21, 2020, Cleveland Clinic submitted a “rush”
purchase order to Digitalight, offering to purchase 500,000 masks for $1,995,000.
Cleveland Clinic’s purchase order provided, in relevant part, “Deliver by March 22,
2020 unless specified by line[.]” Steve Pohlman, Cleveland Clinic’s senior director
1 Cleveland Clinic also purchased hand sanitizer from Digitalight.
of materials management, verbally extended the delivery deadline to March 31,
2020.2
Cleveland Clinic’s purchase order incorporated Cleveland Clinic’s
“Purchase Order Terms and Conditions.” The purchase order provided, in relevant
part, “*Seller’s commencement of Services or Seller’s shipment of any Products shall
be deemed to be acceptance of Terms and Conditions located at
www.clevelandclinic.org/SCM[.]” Cleveland Clinic’s terms and conditions contain
a “Cancellation/Termination,” under which Cleveland Clinic could terminate or
cancel a purchase order, in whole or in part, “at any time upon written notice to
Seller.”
The record reflects that Digitalight accepted Cleveland Clinic’s offer.
Digitalight began working to fulfill Cleveland Clinic’s order on March 23, 2020, and,
on March 25, 2020, Digitalight sent a “revised [p]roposal”3 to Cleveland Clinic
confirming Cleveland Clinic’s order. Digitalight’s revised proposal contained, in
relevant part, the specifications, instructions, and the “Certification of FDA
Registration” for the masks. The revised proposal also included Digitalight’s “Terms
of Sale and Security Agreement.”
Digitalight sent three shipments of masks to Cleveland Clinic. First, in
late March or early April, Digitalight donated 6,000 masks to Cleveland Clinic.
2
See Pohlman’s affidavit, executed on March 19, 2021, at ¶ 12.
3See affidavit of Dewey Gosselin, Digitalight’s CEO and owner, executed on
February 18, 2021, at ¶ 7.
Cleveland Clinic’s main point of contact at Digitalight was James Haney. Haney sent
an email to Pohlman and other Cleveland Clinic representatives on March 30, 2020,
indicating that he “was able to get 6,000 mask[s] out tonight” and that “these
[masks] are not out of [Cleveland Clinic’s] order[,] these are a donation.” The parties
dispute whether Cleveland Clinic received the first shipment. Subsequently, as set
forth in further detail below, Pohlman offered to pay Digitalight for the donated
masks.
Digitalight failed to deliver the 500,000 masks to Cleveland Clinic by
March 31, 2020. On April 15, 2020, Pohlman sent an email to Haney cancelling
Cleveland Clinic’s purchase order explaining “[i]t has taken too long to get the
[masks] to the [United States].” Pohlman indicated that Cleveland Clinic would pay
for the 6,000 masks that Digitalight donated to Cleveland Clinic. Pohlman’s email
was sent at 3:25 p.m. At 4:44 p.m., Haney sent an email to Pohlman acknowledging
the cancellation and thanking Pohlman for the update. Subsequent emails were sent
from Cleveland Clinic to Digitalight on April 27 and 28, 2020, confirming
cancellation of the purchase order.
After Cleveland Clinic cancelled the purchase order, Digitalight sent a
second shipment of approximately 85,000 masks to Cleveland Clinic on or about
May 21, 2020. The parties dispute whether Cleveland Clinic “accepted” the second
shipment. Digitalight sent a third shipment of approximately 409,000 masks to
Cleveland Clinic on or about May 21, 2020. It is undisputed that Cleveland Clinic
rejected this third shipment. Before Digitalight sent the second and third
shipments, Pohlman sent an email to Haney on May 19, 2020, that provided, in
relevant part, “I cancelled the [purchase order] for the mask shipment on April 27,
2020. If I receive these[,] I will not be paying for them. Please do not ship them.
Please confirm you received this e-mail.”
Based on the disputes that arose during the course of the parties’
transaction, Digitalight filed a complaint against Cleveland Clinic on July 29, 2020.
Digitalight asserted causes of action for breach of contract, unjust enrichment or
quantum meruit, action on an account, and promissory estoppel.
Cleveland Clinic filed an answer on September 29, 2020. Therein,
Cleveland Clinic acknowledged that (1) it received the first shipment of
approximately 6,000 masks, (2) it received the second shipment of masks after
Cleveland Clinic had cancelled the purchase order, and (3) it rejected the third and
final shipment of masks.
On March 2, 2021, Digitalight filed a motion for partial summary
judgment. Therein, Digitalight argued that it was entitled to judgment as a matter
of law on its breach-of-contract claim pertaining to the first and second shipments
of masks to Cleveland Clinic. Digitalight acknowledged that genuine issues of
material fact remained regarding the third shipment that was rejected by Cleveland
Clinic.
On March 22, 2021, Cleveland Clinic filed a motion for summary
judgment on all of Digitalight’s claims. Therein, Cleveland Clinic argued that it was
entitled to judgment as a matter of law on Digitalight’s breach-of-contract claim
because (1) Digitalight failed to deliver the 500,000 masks on or before March 31,
2020, (2) Cleveland Clinic cancelled the purchase order, and (3) Digitalight
acknowledged Cleveland Clinic’s cancellation before shipping the masks. Cleveland
Clinic argued that it was entitled to judgment as a matter of law on Digitalight’s
claim for action on an account because it “rises and falls with its underlying breach
of contract claim.” Finally, Cleveland Clinic argued that it was entitled to judgment
as a matter of law on Digitalight’s equitable claims for unjust enrichment or
quantum meruit and promissory estoppel because a binding contract existed
between the parties. In support of its summary judgment motion, Cleveland Clinic
submitted an affidavit of Pohlman, Cleveland Clinic’s “Purchase Order Terms and
Conditions” that were incorporated into the purchase order, and email
correspondence between Pohlman and other Cleveland Clinic representatives and
Haney and other Digitalight representatives.
On April 19, 2021, Digitalight filed a combined brief in support of its
motion for partial summary judgment and in opposition to Cleveland Clinic’s
motion for summary judgment. Therein, Digitalight argued that Cleveland Clinic
owed approximately $400,000 for the first and second shipments of masks, and
that Cleveland Clinic cancelled the purchase order for the remaining masks without
justification. Digitalight raised a “battle of the forms” argument, maintaining that
the transaction was governed by Digitalight’s “Terms of Sale and Security
Agreement,” rather than Cleveland Clinic’s “Purchase Order Terms and Conditions.”
Finally, Digitalight argued that it did not breach any contractual provision by failing
to deliver the masks on or before a specific date.
On April 26, 2021, Cleveland Clinic filed a reply brief in support of its
motion for summary judgment. Therein, Cleveland Clinic argued that Digitalight
failed to meet the contractual requirement that the masks would be delivered on or
before March 31, 2020. Cleveland Clinic argued that it was discharged from its duty
to tender payment to Digitalight upon canceling the order. Cleveland Clinic
disputed Digitalight’s claim that Cleveland Clinic was obligated to pay for the first
shipment of 6,000 masks, arguing that these masks were donated by Digitalight and
Cleveland Clinic never received the first shipment.
On July 9, 2021, the trial court issued a judgment entry denying
Digitalight’s motion for partial summary judgment and granting Cleveland Clinic’s
motion for summary judgment. Regarding Digitalight’s breach-of-contract claim,
the trial court concluded that (1) there was no contract regarding the first shipment
of 6,000 donated masks and that Pohlman’s subsequent offer to pay Haney for the
masks was not supported by consideration; (2) Digitalight’s breach-of-contract
claim fails due to lack of performance — Digitalight’s failure to deliver the masks on
or before March 30, 2020; (3) alternatively, even if Digitalight’s late delivery did not
constitute failed performance, Cleveland Clinic cancelled the purchase order before
Digitalight sent the second and third shipments. The trial court also held that
Cleveland Clinic was entitled to judgment as a matter of law on Digitalight’s
remaining claims for unjust enrichment or quantum meruit, promissory estoppel,
and action on an account.
On August 9, 2021, Digitalight filed the instant appeal challenging the
trial court’s July 9, 2021 judgment. Digitalight assigns two errors for review:
I. The trial court erred in granting [Cleveland Clinic’s] [m]otion for
[s]ummary [j]udgment on Digitalight’s claim for breach of contract.
II. The trial court erred in granting [Cleveland Clinic’s] [m]otion for
[s]ummary [j]udgment on Digitalight’s claims for unjust enrichment,
promissory estoppel, and action on an account.
A. Summary Judgment
Both of Digitalight’s assignments of error challenge the trial court’s
decision granting summary judgment in favor of Cleveland Clinic.
1. Standard of Review
Summary judgment, governed by Civ.R. 56, provides for the expedited
adjudication of matters where there is no material fact in dispute to be determined
at trial. In order to obtain summary judgment, the moving party must show that
“(1) there is no genuine issue of material fact; (2) the moving party is entitled to
judgment as a matter of law; and (3) it appears from the evidence that reasonable
minds can come to but one conclusion when viewing evidence in favor of the
nonmoving party, and that conclusion is adverse to the nonmoving party.” Grafton
v. Ohio Edison Co., 77 Ohio St.3d 102, 105, 671 N.E.2d 241 (1996), citing State ex
rel. Cassels v. Dayton City School Dist. Bd. of Edn., 69 Ohio St.3d 217, 219, 631
N.E.2d 150 (1994).
The moving party has the initial responsibility of establishing that it
is entitled to summary judgment. Dresher v. Burt, 75 Ohio St.3d 280, 292-293, 662
N.E.2d 264 (1996). “[I]f the moving party meets this burden, summary judgment is
appropriate only if the nonmoving party fails to establish the existence of a genuine
issue of material fact.” Deutsche Bank Natl. Trust Co. v. Najar, 8th Dist. Cuyahoga
No. 98502, 2013-Ohio-1657, ¶ 16, citing Dresher at 293.
Once the moving party demonstrates no material issue of fact exists
for trial and the party is entitled to judgment, the burden shifts to the nonmoving
party to put forth evidence demonstrating the existence of a material issue of fact
that would preclude judgment as a matter of law. Dresher at id. In order to meet
this burden, the nonmoving party may not merely rely upon allegations or denials
in his or her pleadings, and must set forth specific facts, by affidavit or as otherwise
provided in Civ.R. 56(E), demonstrating the existence of a genuine issue of material
fact for trial. See Houston v. Morales, 8th Dist. Cuyahoga No. 106086, 2018-Ohio-
1505, ¶ 7, citing Mootispaw v. Eckstein, 76 Ohio St.3d 383, 385, 667 N.E.2d 1197(1996). Summary judgment is appropriate if the nonmoving party fails to meet this
burden. Dresher at id.
2. Breach of Contract
In its first assignment of error, Digitalight argues that the trial court
erred in granting summary judgment in favor of Cleveland Clinic on Digitalight’s
breach-of-contract claim.
“A cause of action for breach of contract requires the claimant to
establish the existence of a contract, the failure without legal excuse of the other
party to perform when performance is due, and damages or loss resulting from the
breach.” Lucarell v. Nationwide Mut. Ins. Co., 152 Ohio St.3d 453, 2018-Ohio-15,
97 N.E.3d 458, ¶ 41.
In this appeal, Digitalight argues that genuine issues of material fact
existed that precluded summary judgment in favor of Cleveland Clinic on its breach-
of-contract claim. Specifically, Digitalight argues that genuine issues of material fact
existed regarding (1) whether the first shipment of 6,000 masks was a donation, (2)
the timeliness of the delivery of the second and third shipments of masks and
whether Digitalight breached the parties’ agreement with respect to the timeliness
issue, and (3) whether Cleveland Clinic accepted the masks after attempting to
cancel the purchase order.
a. First Shipment of 6,000 Masks
First, Digitalight argues that a genuine issue of material fact exists
regarding whether the first shipment of 6,000 masks was a donation from
Digitalight to Cleveland Clinic.
As noted above, the parties dispute whether the first shipment of
masks was, in fact, received by Cleveland Clinic. Pohlman averred in his affidavit
that “[t]he 6,000 mask donation from Digitalight never arrived at any Cleveland
Clinic facility.” Id. at ¶ 15. In support of its partial summary judgment motion,
Digitalight submitted a July 24, 2020 letter from Cleveland Clinic’s Deputy Chief
Legal Officer, Lisa Barrett, to Digitalight’s counsel, that provided, in relevant part,
After receiving the “good faith” shipment of the 6,000 masks in early
April, we had the masks fit tested, as required by [the Occupational
Safety and Health Administration] in order for them to be used by our
employees. The masks were of such poor quality that they could not
sustain a seal; and therefore could not pass the fit test and could not be
used for the purposes for which they were purchased.
This letter suggests that Cleveland Clinic did, in fact, receive the
shipment of the 6,000 masks. Regardless of whether Cleveland Clinic received these
masks, the record reflects that these masks were donated by Digitalight.
Pohlman averred in his affidavit that “[b]y email dated March 30,
2020, Digitalight claimed that it had obtained 6,000 masks, which were being
shipped to Cleveland Clinic that night. Digitalight stated the 6,000 masks were a
donation.” Id. at ¶ 14. The emails that Cleveland Clinic submitted in support of its
summary judgment motion demonstrate that the masks were donated to Cleveland
Clinic by Digitalight.
The March 30, 2020 email from Haney to Kevin Velasquez,4 provided,
in relevant part, “I was able to get 6,000 masks[s] out tonight. Again these are not
out of your order these are a donation.” (Emphasis added.) The April 10, 2020
email from Pohlman to Haney provided, in relevant part, “For the record, we never
received the 6,000 masks. * * * In addition, these 6,000 [masks] were not part of
4 Velasquez was Cleveland Clinic’s nonclinical sourcing director.
our order, this was a good faith shipment that you made to me because of the now,
almost 2 week miss on your promised delivery date.” (Emphasis added.)
Cleveland Clinic did, in fact, offer to pay for the donated masks.
Pohlman averred in his affidavit that “Cleveland Clinic later offered to pay
Digitalight for the 6,000 masks, but that offer was gratuitous, lacked consideration,
and has since been withdrawn.” Id. at ¶ 15. The April 15, 2020 email from Pohlman
to Haney, provided, “[u]nfortunately, [i]t has taken too long to get the [masks] to
the [United States]. As a result, I asked my team to cancel the [purchase order]
today. We will pay for the 6,000 [masks] you sent so you are made whole on those.”
In an April 28, 2020 email from Pohlman to Velasquez and Haney, Pohlman
confirmed that he agreed to pay for the 6,000 masks because Cleveland Clinic
cancelled the rest of the order.
Although Cleveland Clinic offered to pay for the donated masks, the
record reflects that this offer was not supported by consideration.
“Contract formation requires an offer, acceptance, consideration, and
mutual assent between two or more parties with the legal capacity to act.” Widok v.
Estate of Wolf, 8th Dist. Cuyahoga No. 108717, 2020-Ohio-5178, ¶ 52. Courts may
generally not inquire into the adequacy of consideration, which is left to the parties
as “the sole judges of the benefits or advantages to be derived from their contracts.”
Hotels Statler Co., Inc. v. Safier, 103 Ohio St. 638, 644-645, 134 N.E. 460 (1921).
Whether there is consideration at all, however, is a proper question for a court.
Williams v. Ormsby, 131 Ohio St.3d 427, 2012-Ohio-690, 966 N.E.2d 255, ¶ 17.
“Gratuitous promises are not enforceable as contracts, because there is
no consideration. * * * A written gratuitous promise, even if it
evidences an intent by the promisor to be bound, is not a contract. * * *
Likewise, conditional gratuitous promises, which require the promisee
to do something before the promised act or omission will take place,
are not enforceable as contracts. * * * While it is true, therefore, that
courts generally do not inquire into the adequacy of consideration once
it is found to exist, it must be determined in a contract case whether
any ‘consideration’ was really bargained for. If it was not bargained for,
it could not support a contract.”
Id., quoting Carlisle v. T & R Excavating, Inc., 123 Ohio App.3d 277, 283-284, 704
N.E.2d 39 (9th Dist.1997).
In the instant matter, we find that there remain no genuine issues of
fact as to whether the alleged contract — Cleveland Clinic’s offer to pay for the 6,000
masks — contained bargained-for consideration. The donation was purportedly
shipped from Digitalight to Cleveland Clinic on March 30, 2020. Cleveland Clinic
did not offer to pay for the donated masks until April 15, 2020, when it cancelled the
purchase order. Accordingly, when Cleveland Clinic offered to pay for the masks,
they had already been donated by Digitalight. The trial court did not err in granting
summary judgment in favor of Cleveland Clinic in this respect.
b. Timeliness of Delivery
Second, Digitalight argues that a genuine issue of material fact exists
regarding whether the timeliness of the delivery of the second and third shipments
of masks constituted a breach of the parties’ agreement and justified Cleveland
Clinic’s cancellation of the purchase order.
As it did in opposing Cleveland Clinic’s motion for summary judgment
in the trial court, Digitalight argues in this appeal that “the date of delivery was not
specified in any of the documents” and that Digitalight did not breach the agreement
by delivering the masks in installments or shipments as they became available.
Appellant’s brief at 8. Digitalight’s argument is unsupported by the record.
Cleveland Clinic’s purchase order unequivocally specified the date of
delivery for the 500,000 masks ordered by Cleveland Clinic as March 22, 2020.
Pohlman averred in his affidavit that he verbally extended the March 22 deadline to
March 31, 2020. Id. at ¶ 12.
The emails Cleveland Clinic submitted in support of its summary
judgment motion demonstrate that the timeliness of delivery was, in fact, a material
term of the parties agreement. In an April 10, 2020 email from Pohlman to Haney,
Pohlman references the fact that almost two weeks had passed since the delivery
date promised by Haney. In the April 15, 2020 email from Pohlman to Haney in
which Pohlman cancelled the purchase order, Pohlman cited the fact that “[i]t has
taken too long to get the [masks] to the [United States].” In an April 28, 2020 email
from Haney to Pohlman, Haney acknowledges that the 6,000 masks had been “sent
prior to the delay of the full order.” (Emphasis added.)
Digitalight failed to present any evidence contradicting the March 22,
2020 delivery date identified in Cleveland Clinic’s purchase order, or Pohlman’s
assertion that he extended the delivery deadline to March 31, 2020. Furthermore,
regarding performance — or delivery of the masks to Cleveland Clinic on or before
March 31, 2020 — Digitalight failed to present any evidence indicating that it either
delivered the masks to Cleveland Clinic or made the masks available to a carrier on
or before the March 31, 2020 deadline, or (2) that it delivered the masks to Cleveland
Clinic or made the masks available to a carrier before Cleveland Clinic provided
written notice that it was cancelling the order on April 15, 2020.
Digitalight further raises a “battle of the forms” argument pursuant to
R.C. 1302.10 and Section 2-207 of the Uniform Commercial Code (“UCC”).
Digitalight contends that the masks were, in fact, delivered in a timely manner, and
as a result, Cleveland Clinic was not relieved of its obligation to accept delivery and
tender payment to Digitalight. The timeliness issue comes down to whether
Digitalight’s “Terms of Sale and Security Agreement,” which was included in
Digitalight’s March 25, 2020 revised proposal to Cleveland Clinic, controls the
parties’ transaction, or whether Cleveland Clinic’s “Purchase Order Terms and
Conditions” are controlling. If Digitalight’s agreement controlled, the delay in
delivery was permissible and did not relieve Cleveland Clinic of its obligation to
perform. If Cleveland Clinic’s terms and conditions are controlling, Cleveland Clinic
had a right to cancel the purchase order prior to shipment.
After reviewing the record, we find that Digitalight failed to meet its
burden of demonstrating the existence of a genuine issue of material fact regarding
Cleveland Clinic’s right to cancel the purchase order. R.C. 1302.10, governing
additional terms in acceptance or confirmation, provides, in relevant part:
(A) A definite and seasonable expression of acceptance or a written
confirmation that is sent within a reasonable time operates as an
acceptance even though it states terms additional or different from
those offered or agreed upon, unless acceptance is expressly made
conditional on assent to the additional or different terms.
(B) The additional terms are to be construed as proposals for addition
to the contract. Between merchants, the terms become part of the
contract unless one of the following applies:
(1) The offer expressly limits acceptance to the terms of the offer.
(2) They materially alter it.
(3) Notification of objection to them has already been given or is given
within a reasonable time after notice of them is received.
(Emphasis added.)
In the instant matter, the offer — Cleveland Clinic’s March 21, 2020
purchase order — provided, in relevant part, “*Seller’s commencement of Services
or Seller’s shipment of any Products shall be deemed to be acceptance of Terms and
Conditions located at www.clevelandclinic.org/SCM[.]” Accordingly, the purchase
order incorporated Cleveland Clinic’s “Purchase Order Terms and Conditions.”
Cleveland Clinic’s terms and conditions provide, in relevant part,
Notwithstanding any different or additional terms or conditions
contained in Seller’s invoice, proposals or other communication, Seller
accepts Buyer’s order for products (“Products”) or services (“Services”)
only on the condition that Seller expressly accepts these Terms and
Conditions. Unless Seller accepts these terms and conditions without
deviation or reservation, no contract shall result from an order. Any
terms and conditions in any confirmation by Seller that states different
or additional terms shall be null and void. Buyer hereby objects to and
rejects such different or additional terms and any such different or
additional terms shall be deemed to be material alterations and notice
of objection to such terms is hereby given. Seller’s commencement of
performance of Services or Seller’s shipment of any Products shall be
deemed to be acceptance of these Terms and Conditions. Any notice
by Seller objecting to these Terms and Conditions must be in writing
separate from any form including but not limited to any invoice or
acknowledgement form, and must be communicated to Buyer prior to
any shipment of Products or commencement of any Services. Any
amendment, waiver or other alteration of these Terms and Conditions
by Seller shall be effective only if made by mutual agreement.
(Emphasis added.)
This language expressly limited acceptance of Cleveland Clinic’s offer
to the terms set forth therein, including the Cleveland Clinic’s terms and conditions.
Digitalight’s “Terms of Sale and Security Agreement” were added into
the March 25, 2020 revised proposal. Digitalight’s agreement provided, in relevant
part,
(a) Unless agreed upon in writing to the contrary, this Agreement shall
govern the sale, delivery and distribution of all products manufactured,
sold or marketed, including spare parts thereto[.] * * *
***
(d) Any purchase contract hereunder shall become effective upon the
mailing of a written acceptance of Purchaser’s order by Seller. Any
conditions of Purchaser which are contradictory to the conditions
contained herein are invalid.
Digitalight’s agreement also contained a “Delivery” provision that
provides, in relevant part, “(e) Seller reserves the right to make delivery in
installments, unless otherwise expressly stipulated to the contrary in a written
document signed by Seller. Delay in delivery of any installments shall not relieve
Purchaser of its obligation to accept remaining deliveries.”
After reviewing the record, we find Digitalight’s battle of the forms
argument to be misplaced. Digitalight’s agreement did not expressly indicate that
Cleveland Clinic’s assent to the added terms set forth in the revised proposal —
including Digitalight’s agreement — was necessary in order to create a valid
contract. Nor do the terms of Digitalight’s agreement expressly state that Digitalight
would be unwilling to proceed with the transaction unless Cleveland Clinic assented
to the additional terms.
Accordingly, the language in Digitalight’s agreement did not make
Digitalight’s acceptance of Cleveland Clinic’s offer conditional on the terms added
in the revised proposal. Pursuant to R.C. 1302.10(A), the additional terms do not
control the parties’ contract. Rather, pursuant to R.C. 1302.10(B), the additional
terms constituted proposed additions to the parties’ contract.
The additional terms in Digitalight’s agreement did not become a part
of the contract between Cleveland Clinic and Digitalight pursuant to R.C.
1302.10(B)(1). As noted above, Cleveland Clinic’s offer expressly limited acceptance
to the terms of the offer, including the Cleveland Clinic’s terms and conditions that
were incorporated therein.
Because Digitalight’s additional terms did not become a part of the
parties’ contract under either R.C. 1302.10(A) or (B), they are not controlling.
Digitalight’s reliance on the provision in its agreement permitting delivery in
installments and delivery delays is misplaced and did not demonstrate the existence
of a genuine issue of material fact that precluded summary judgment in Cleveland
Clinic’s favor.
Cleveland Clinic’s terms and conditions include a
“Cancellation/Termination” provision that provides, “Buyer may terminate or
cancel a [purchase order], in whole or in part, at any time upon written notice to
Seller. Buyer will remain obligated for goods shipped or services performed by
Seller prior to receipt of Buyer’s notice.” Here, after the masks were not delivered
in a timely manner, Cleveland Clinic exercised this right to cancel the purchase order
by providing written notice to Digitalight on April 15, 27, and 28, 2020.
Finally, Digitalight argues, for the first time in this appeal, that
Cleveland Clinic waived the timeliness issue. Digitalight did not raise its waiver
argument in opposing Cleveland Clinic’s motion for summary judgment in the trial
court. It is well-established that a party cannot raise an argument for the first time
on appeal. See, e.g., Lycan v. Cleveland, 2019-Ohio-3510, 142 N.E.3d 210, ¶ 32 (8th
Dist.) (“arguments raised for the first time on appeal are generally barred and a
reviewing court will not consider issues that the appellant failed to raise in the trial
court”).
Nevertheless, we find no merit to Digitalight’s waiver argument.
Digitalight directs this court to an April 10, 2020 email from Pohlman to Haney in
which Pohlman stated, “I will take smaller shipments of masks[.]” Digitalight
assumes that Pohlman was referring to the 500,000 masks Cleveland Clinic
originally offered to purchase from Digitalight, rather than the 6,000 masks
Digitalight donated to Cleveland Clinic. In the same email, Pohlman states that
Cleveland Clinic did not receive the 6,000 donated masks and that the 6,000 masks
were not part of the 500,000 mask order, but rather a “good faith shipment”
Digitalight made “because of the now, almost 2 week miss on your promised
delivery date.” (Emphasis added.)
Digitalight breached the parties’ agreement by failing to timely deliver
the masks to Cleveland Clinic, and Cleveland Clinic exercised its right to cancel the
purchase order before Digitalight shipped the masks to Cleveland Clinic.
Accordingly, the trial court did not err in granting summary judgment in favor of
Cleveland Clinic in this respect.
c. Acceptance
Third, Digitalight argues that a genuine issue of material fact exists
regarding whether, after cancelling or attempting to cancel the purchase order,
Cleveland Clinic accepted the masks.
Digitalight contends that Cleveland Clinic accepted the first two
shipments of masks, and as a result, the trial court erred in concluding that
Cleveland Clinic cancelled the order. Digitalight concedes that Cleveland Clinic
rejected the third shipment of approximately 409,000 masks. Assuming, arguendo,
that Cleveland Clinic accepted the first shipment of 6,000 masks, the record reflects
that these masks were donated by Digitalight and not part of the 500,000 mask
order.
Regarding the second shipment of approximately 85,000 masks,
Digitalight directs this court to Section 2-606 of the UCC and R.C. 1302.64(A)(1),
which provide,
(A) Acceptance of goods occurs when the buyer:
(1) after a reasonable opportunity to inspect the goods signifies to the
seller that the goods are conforming or that he will take or retain them
in spite of their non-conformity; or
(2) fails to make an effective rejection as provided in division (A) of
section 1302.61 of the Revised Code, but such acceptance does not
occur until the buyer has had a reasonable opportunity to inspect them;
or
(3) does any act inconsistent with the seller’s ownership; but if such act
is wrongful as against the seller it is an acceptance only if ratified by
him.
Cleveland Clinic acknowledges that it did, in fact, take possession of
the second shipment of masks after (1) cancelling the purchase order, (2) instructing
Digitalight not to ship the masks, and (3) advising Digitalight that Cleveland Clinic
would not be paying for the masks if they were shipped.
In his affidavit, Pohlman averred, in relevant part,
22. Despite Cleveland Clinic’s several, written notifications of
cancellation of the masks, Digitalight proceeded to ship a portion of the
order over my objection. Digitalight broke the shipment down into two
smaller shipments, which were delivered by two separate carriers on or
about May 21, 2020. Cleveland Clinic was aware of one of the carriers,
but not the other.
a. Cleveland Clinic rejected the [third] shipment delivered by the
known carrier, which contained approx. 409,000 masks.
b. The [second] shipment delivered by the unknown carrier contained
approx. 85,000 masks. That shipment was dropped off at Cleveland
Clinic’s docks with the carrier leaving before Cleveland Clinic could
inspect and reject the shipment. The loading dock clerk did not know
that he was signing for a shipment from Digitalight. Even if he did, the
loading dock clerk did not have authority to accept a shipment from
Digitalight. Had Cleveland Clinic been given the opportunity to inspect
this shipment, or had Cleveland Clinic known what it was, it would have
rejected and refused the shipment.
***
24. * * * The masks Digitalight shipped are sitting in a Cleveland Clinic
warehouse and Digitalight is free to retrieve them.
On May 19, 2020, Pohlman sent an email to Haney that provided, in
relevant part, “I cancelled the [purchase order] for the mask shipment on April 27,
2020. If I receive these I will not be paying for them. Please do not ship them.
Please confirm you received this e-mail.” Pohlman’s email was sent at 4:58 p.m. At
6:11 p.m., Haney forwarded Pohlman’s email to another Digitalight representative,
Andrea Merritt.
The evidence submitted by Cleveland Clinic establishes that
Cleveland Clinic did not “accept” the second shipment of masks pursuant to R.C.
1302.64(A)(1). Cleveland Clinic cancelled the purchase order before the masks were
shipped. Cleveland Clinic rejected the masks before they were delivered. Cleveland
Clinic took possession of the second shipment without having an opportunity to
inspect the contents of the shipment. Finally, after discovering the contents of the
shipment that Cleveland Clinic took possession of, Cleveland Clinic rejected the
shipment and invited Digitalight to retrieve the masks from Cleveland Clinic’s
warehouse at any time.5 Accordingly, the trial court did not err in granting summary
judgment in favor of Cleveland Clinic in this respect.
5 See exhibit No. 3a of Digitalight’s motion for partial summary judgment.
For all of the foregoing reasons, the trial court properly granted
summary judgment in favor of Cleveland Clinic on Digitalight’s breach-of-contract
claim. Digitalight’s first assignment of error is overruled.
3. Remaining Claims
In its second assignment of error, Digitalight argues that the trial
court erred in granting summary judgment in Cleveland Clinic’s favor on
Digitalight’s claims for unjust enrichment, promissory estoppel, and action on an
account.
a. Unjust Enrichment
First, regarding the unjust-enrichment claim, Digitalight argues that
the trial court erred in holding that Digitalight was only entitled to recovery in
accordance with the terms of the contract because the trial court “found a valid
contract did not exist.” Appellant’s brief at 12. Digitalight’s argument is misplaced
and unsupported by the record.
Contrary to Digitalight’s assertion, the trial court did not conclude
that a valid contract did not exist. Rather, the trial court concluded that Digitalight
could not recover under a theory of unjust enrichment because “there is a valid —
albeit, canceled — contract for the second and third shipments [of masks.]”
(Emphasis added.)
A claim for unjust enrichment, or quantum meruit, is an equitable
claim based on a contract implied in law, or a quasi-contract. See Hummel v.
Hummel, 133 Ohio St. 520, 525-528, 14 N.E.2d 923 (1938). “Where a valid contract
exists between the parties, there can be no recovery under a theory of quantum
meruit in the absence of fraud, bad faith, or illegality.” Restivo v. Continental
Airlines, Inc., 192 Ohio App.3d 64, 2011-Ohio-219, 947 N.E.2d 1287, ¶ 12 (8th Dist.),
citing Aultman Hosp. Assn. v. Community Mut. Ins. Co., 46 Ohio St.3d 51, 55, 544
N.E.2d 920 (1989), and Ullmann v. May, 147 Ohio St. 468, 72 N.E.2d 63 (1947),
paragraph three of the syllabus. “Ohio law does not permit recovery under the
theory of unjust enrichment when an express contract covers the same subject.”
Padula v. Wagner, 2015-Ohio-2374, 37 N.E.3d 799, ¶ 48 (9th Dist.), citing Ullmann
at 475, 478-479, and paragraph four of the syllabus, and Wochna v. Mancino, 9th
Dist. Medina No. 07CA0059-M, 2008-Ohio-996, ¶ 18.
In the instant matter, Digitalight alleged in its complaint that
Digitalight “conferred a benefit on [Cleveland Clinic] by ordering and shipping the
masks,” “[a]s [Cleveland Clinic] did not pay for these orders, it is unjust to permit
[Cleveland Clinic] to retain the masks without making payment to [Digitalight],”
and “[Digitalight] is entitled to damages as a result of [Cleveland Clinic’s] unjust
retention of the benefits conferred by [Digitalight].” Digitalight’s complaint at ¶ 20,
22, and 23. There was an express, valid contract between Digitalight and Cleveland
Clinic that covered the same subject — Digitalight ordering and shipping masks to
Cleveland Clinic — that Cleveland Clinic cancelled after Digitalight failed to perform
in a timely manner.
Digitalight did not allege in its unjust-enrichment claim, much less
demonstrate through Civ.R. 56, evidence, fraud, bad faith, or illegality on Cleveland
Clinic’s behalf. As a result, Digitalight was not permitted to recover under an unjust
enrichment or quantum meruit theory.
The trial court properly granted summary judgment in favor of
Cleveland Clinic on Digitalight’s unjust-enrichment claim. Digitalight’s second
assignment of error is overruled in this respect.
b. Promissory Estoppel
Second, regarding the promissory-estoppel claim, Digitalight argues
that the trial court erred in granting summary judgment in favor of Cleveland Clinic
because the “trial court found the contract in question was invalid,” and therefore,
should have considered the alternative claim for promissory estoppel. As noted
above, the trial court did not find that the contract was invalid. Rather, the trial
court concluded that a valid contract existed and that Cleveland Clinic cancelled the
contract.
The existence of an express contract precludes a claim of an implied
contract or promissory estoppel. Pagano v. Case W. Res. Univ., 2021-Ohio-59, 166
N.E.3d 654, ¶ 78 (8th Dist.), citing Manno v. St. Felicitas Elementary School, 161
Ohio App.3d 715, 2005-Ohio-3132, 831 N.E.2d 1071, ¶ 31 (8th Dist.), citing
Cuyahoga Cty. Hosps. v. Price, 64 Ohio App.3d 410, 416, 581 N.E.2d 1125 (8th
Dist.1989), and Gallant v. Toledo Pub. Schools, 84 Ohio App.3d 378, 616 N.E.2d
1156 (6th Dist.1992). Here, an express contract existed between Digitalight and
Cleveland Clinic. Therefore, Digitalight’s promissory-estoppel claim was barred.
The trial court properly granted summary judgment in favor of
Cleveland Clinic on Digitalight’s promissory-estoppel claim. Digitalight’s second
assignment of error is overruled in this respect.
c. Action on an Account
Digitalight does not make a separate argument or present any
argument or authority challenging the trial court’s judgment in favor of Cleveland
Clinic on Digitalight’s claim for action on an account. See App.R. 16(A). Pursuant
to App.R. 12(A)(2), this court may disregard any assignment of error, or portion
thereof, if the appellant fails to make a separate argument. Cleveland v. Taylor, 8th
Dist. Cuyahoga No. 109371, 2021-Ohio-584, ¶ 87, citing State v. Wells, 8th Dist.
Cuyahoga No. 98388, 2013-Ohio-3722, ¶ 55.
Nevertheless, the record reflects that the trial court properly granted
Cleveland Clinic’s motion for summary judgment on Digitalight’s claim for action
on account.
An action on an account is not a separate claim but, rather, “a pleading
device ‘used to consolidate several claims which one party has against
another.’” Kwikcolor Sand v. Fairmount Minerals Ltd., 8th Dist.
Cuyahoga No. 96717, 2011-Ohio-6646, ¶ 13, quoting AMF, Inc. v.
Mravec, 2 Ohio App.3d 29, 440 N.E.2d 600 (8th Dist.1981), paragraph
one of the syllabus. An action on account “simplifies pleadings by
allowing a party to advance, as one claim, claims for separate breaches
of contract based on a series of transactions by providing a summary of
accounting for the transactions.” Kwikcolor Sand at ¶ 13.
Garfield Estates, L.L.C. v. Whittington, 2021-Ohio-211, 167 N.E.3d 113, ¶ 19 (8th
Dist.).
In the instant matter, Digitalight’s claim for action on an account is
really a claim for breach of contract. Garfield Estates at ¶ 19, citing Schottenstein,
Zox & Dunn Co., L.P.A. v. Reineke, 9th Dist. Medina No. 10CA0138-M, 2011-Ohio-
6201, ¶ 18. As noted above, the trial court properly granted summary judgment in
favor of Cleveland Clinic on Digitalight’s breach-of-contract claim.
Accordingly, Digitalight’s claim for action on an account fails, and
Cleveland Clinic was entitled to judgment as a matter of law. Digitalight’s second
assignment of error is overruled in this respect.
For all of the foregoing reasons, the trial court properly granted
summary judgment in favor of Cleveland Clinic on Digitalight’s claims for unjust
enrichment, promissory estoppel, and action on an account.
II. Conclusion
After thoroughly reviewing the record, we affirm the trial court’s
judgment granting summary judgment in favor of Cleveland Clinic on Digitalight’s
claims for breach of contract, unjust enrichment, promissory estoppel, and action
on an account.
Judgment affirmed.
It is ordered that appellee recover from appellant costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to said 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.
FRANK DANIEL CELEBREZZE, III, JUDGE
SEAN C. GALLAGHER, A.J., and
ANITA LASTER MAYS, J., CONCUR