Dana Ltd. v. TACS Automation, L.L.C. ( 2021 )

[Cite as Dana Ltd. v. TACS Automation, L.L.C., 2021-Ohio-2555.]
IN THE COURT OF APPEALS OF OHIO
SIXTH APPELLATE DISTRICT
LUCAS COUNTY
Dana Limited Court of Appeals No. L-19-1203
Appellee Trial Court No. CI0201801822
v.
TACS Automation, LLC DECISION AND JUDGMENT
Appellant Decided: July 23, 2021
*****
Thomas G. Cardelli, for appellee.
Scott A. Ciolek, for appellant.
*****
OSOWIK, J.
{¶ 1} This is an appeal from an August 20, 2019 judgment of the Lucas County
Court of Common Pleas, awarding appellee, Dana Limited (“Dana”), $630,534.13 in
damages against appellant, TACS Automation, LLC (“TACS”), following a July 26,
2019 breach of contract jury verdict in favor of Dana.
{¶ 2} The parties are both commercial business entities engaged in operations
related to the domestic automobile manufacturing industry. For the reasons set forth
more fully below, this court affirms the judgment of the trial court.
{¶ 3} Appellant, TACS, sets forth the following three (3) assignments of error:
FIRST ASSIGNMENT OF ERROR: THE LOWER COURT
ERRED IN GRANTING DANA’S MOTION FOR A DIRECTED
VERDICT AS TO THE [] CONTRACT.
SECOND ASSIGNMENT OF ERROR: THE LOWER COURT
ERRED IN GRANTING DANA’S MOTION FOR A DIRECTED
VERDICT AS TO THE NO ORAL OR WRITTEN MODIFICATION
CLAUSE.
THIRD ASSIGNMENT OF ERROR: THE LOWER COURT
ERRED IN LIMITING THE EVIDENCE [THAT] TACS COULD
PRESENT REGARDING ADEQUATE ASSURANCES.
{¶ 4} The following undisputed facts are relevant to this appeal. This case arises
from a failed contractual business relationship between the parties occurring in 2016-
2017.
{¶ 5} The business involvement between the parties arose from the pre-planned
January, 2018 launch of a redesigned Dodge Ram pick-up truck model by Chrysler. The
redesigned Ram necessitated various facility modifications at a Dana driveshaft facility
2.
located in Auburn Hills, Michigan. The facility serves as one of the parts suppliers to
Chrysler in the direct supply chain engaged in the manufacture of the Ram pickup truck.
{¶ 6} As an established, ongoing supplier to Chrysler, Dana agreed to timely
undertake all requisite modifications to its Auburn Hills driveshaft facility in order to
accommodate the new vehicle design specifications. Dana also agreed to do so in
conformity with Chrysler’s January, 2018 product launch date.
{¶ 7} TACS is engaged in the business of performing the type of facility
modifications needed by Dana to comply with its obligations connected to the redesigned
Chrysler product.
{¶ 8} Accordingly, on August 23, 2016, Dana executed a contract with TACS
entitled, “Equipment Purchase Terms and Conditions” (hereinafter “terms”).
{¶ 9} The mutually agreed upon purpose of the terms, which served as the base
contract governing the relationship between the parties, was for TACS to provide various
machinery tools and related services to Dana to enable the timely modifications of the
Auburn Hills facility for its role in the manufacture of the redesigned 2018 Ram pickup
truck. The terms contract was executed by TACS’ principal/owner, Michael Scott.
{¶ 10} Paragraph 2 of the terms contract defined separate documents, known as
“purchase agreements”, which would subsequently be issued between the parties. It
established that, “From time to time, as agreed to by the parties, seller [TACS] will
furnish to purchaser [Dana], and purchaser will purchase from seller, the machine tools
and associated services described on purchase term sheets.”
3.
{¶ 11} In the course of their business relationship underlying this appeal, the
parties agreed to a total of four of the above-described purchase agreements, which were
likewise signed by TACS’ principal/owner, Michael Scott.
{¶ 12} In addition to the above-discussed documents, the contractual relationship
between the parties also entailed documents referred to as purchase term sheets.
Purchase term sheets are the above-defined purchase agreements, prior to their execution.
{¶ 13} Lastly, documents referred to as “purchase orders” were also created.
Purchase orders are administrative documents created by Dana to enable vendors, such as
TACS, to invoice Dana in order to be compensated for the successful provision of
products and services to Dana.
{¶ 14} Unfortunately, as time progressed following the launch of the contractual
business relationship between the parties, concerns mounted amongst Dana officials
involved in the project that worsening performance and timeliness deficiencies by TACS
were becoming so problematic that it would preclude Dana from timely fulfilling its
obligations to Chrysler.
{¶ 15} In response to these circumstances, on November 15, 2017, Dana issued a
written demand for performance to TACS. Nevertheless, TACS’ performance and
timeliness shortcomings persisted. Dana’s ability to have its facility ready for the
looming Chrysler product launch remained compromised.
{¶ 16} Accordingly, on December 20, 2017, Dana notified TACS in writing of the
termination of the parties’ contractual business relationship.
4.
{¶ 17} In order to adhere to its obligations to Chrysler, Dana was required to
rapidly complete the project utilizing alternative vendors and personnel. This resulted in
Dana incurring considerable additional expenses.
{¶ 18} On March 16, 2018, Dana filed suit against TACS for breach of contract.
TACS answered and filed counterclaims. On July 23, 2020, following several years of
intensive commercial litigation activity between the parties, the matter proceeded to a
four-day jury trial.
{¶ 19} Dana first presented testimony from key witness Dale Carson, Dana’s
director of platform launches. Carson testified that one of his professional
responsibilities for Dana was to perform audits of the readiness of Dana facilities to
comply with the requirements and deadlines associated with new product launches
related to Dana customers, such as Chrysler.
{¶ 20} Carson testified that pursuant to his job duties and responsibilities for
Dana, he became aware near the end of 2017 that TACS’ inadequate performance at the
Auburn Hills facility was jeopardizing Dana’s ability to comply with Chrysler’s January,
2018 Ram launch deadline.
{¶ 21} Accordingly, Carson met with Scott in person to review the ongoing issues
and concerns. Carson conveyed to Scott the urgency of the issues being remediated, and
the ramifications of TACS’ failure to do so.
{¶ 22} Despite multiple meetings between Carson and Scott, and despite
subsequent correspondence from the Dana legal department to TACS demanding
5.
adequate assurances of the ability to timely meet the contractual obligations, TACS failed
to rectify the situation, resulting in Dana issuing the December 20, 2017 written
notification to TACS of the termination of their contractual business relationship.
{¶ 23} Dana’s next witness was Brad McArthur, their global manager of capital
purchasing. McArthur testified that whenever a contractor is utilized by Dana who is
expected to perform in excess of $100,000 in work for Dana, as was the case with TACS,
a terms agreement serving as the base contract is executed between the parties.
{¶ 24} McArthur further testified that all such terms agreements entered into by
Dana specify that all modifications to the agreement must be done in writing, and must be
executed by authorized representatives of both parties, in order to take effect.
{¶ 25} As applied to this case, all four purchase agreements arising from the
original terms agreement were executed by both parties. No objections to the agreements
were raised. No contractual modifications occurred.
{¶ 26} Dana next presented the testimony of their engineering manager, Sasa
Bjelica. Bjelica testified that following the contract termination, he secured all of the
requisite change orders and purchase orders for the alternative vendors who were brought
in to complete the project before the Chrysler deadline.
{¶ 27} Dale Bales, the Dana operations manager responsible for working with and
assisting TACS at the Auburn Hills facility in the course of the project, next testified.
Bales gave detailed testimony regarding the persistent difficulty in communicating with
Scott, in getting cooperation from Scott in being present in person at the plant as needed,
6.
and in getting Scott to facilitate any of the adjustments necessary to successfully get the
project back on track once issues had arisen.
{¶ 28} Bales testified that in his 25-year career, this case was the first time that he
was forced to terminate a supplier contract due to unresolved performance and timeliness
issues jeopardizing a successful project completion.
{¶ 29} Bales further testified that despite his multiple in-person meetings with
Scott, TACS continued to miss deadlines. Bales ultimately recognized that termination
with TACS had become necessary. The continuing impasse would not only adversely
affect Dana, but would also impact the Chrysler facilities involved in manufacturing the
Ram.
{¶ 30} At the conclusion of presenting its case, Dana moved the trial court for
directed verdict on various matters. Dana sought a directed verdict ruling that the terms
agreement and the four purchase agreements constituted the only written contracts
between the parties. The trial court did not concur with Dana.
{¶ 31} The trial court held in pertinent part, “[T]his court based on that will find
that all the terms of the parties contract, as contained in equipment purchase terms and
conditions, purchase agreements, and purchase orders are part of the contract and the
contract does exist.” (Emphasis added).
{¶ 32} Accordingly, the trial court ruled favorably to TACS, over the opposition
of Dana, that the purchase orders were also part of the contracts to be considered in
resolving this case.
7.
{¶ 33} The trial court also denied Dana’s motion for a directed verdict that TACS
had breached the contract. It further denied Dana’s motion for a directed verdict on
TACS’ counterclaim.
{¶ 34} With respect to any alleged modifications of the contracts, while the trial
court affirmed that the plain language of the contract necessitated that modifications be
written and executed by authorized persons in order to be effectuated, the trial court
clearly acknowledged the possibility that TACS could submit evidence demonstrating
contract modifications during the pending presentation of their evidence to the trial court.
{¶ 35} The trial court held in relevant part, “So as to modifications of the contract
or arguments that there was modifications in the contract, unless that has been or will be
submitted, and at this point it has not * * * then any submission of any modifications will
not pass directed verdict.” (Emphasis added).
{¶ 36} TACS next presented their evidence to the trial court. Scott, as
principal/owner of TACS, testified chiefly on the issue of his provision of what he
deemed to be adequate assurances of performance to Dana. Scott provided scant
testimony related to the bulk of the issues raised on appeal.
{¶ 37} TACS also presented the testimony of Thomas Rhodes, a TACS
subcontractor who worked on the Dana project.
{¶ 38} Rhodes unpersuasively claimed that various work performed by alternative
contractors, after Dana terminated its contractual relationship with TACS, was not work
8.
required by the contract. Rhodes incongruously conceded to his lack of actual knowledge
on the scope of the work that TACS had contractually agreed to perform for Dana.
{¶ 39} TACS also provided the testimony of several former Dana employees
relevant to the disputed damages claims.
{¶ 40} At the conclusion of TACS’ presentation of its case, Dana again moved for
a directed verdict in its favor on breach of contract. The motion was again denied,
enabling submission to the jury.
{¶ 41} Dana also moved for a directed verdict on TACS’ counterclaim of
promissory estoppel. The trial court held in relevant part, “It is well-settled that
promissory estoppel is not available as a remedy when a legal relationship between the
parties is, in fact, governed by a valid and enforceable contract, and, as such, it should be
this court should grant the plaintiff’s [Dana’s] motion for directed verdict as to the
counterclaim.”
{¶ 42} TACS did not object to, or raise any issue related to, the trial court’s
disposition and dismissal of the promissory estoppel counterclaim. The balance of the
case was then submitted to the jury.
{¶ 43} On July 26, 2020, the jury held that Dana had successfully proven breach
of contract by TACS. This appeal ensued.
{¶ 44} We note that appellant’s opposition to the trial court’s contract-related
directed verdict rulings is curious given that the trial court denied both of Dana’s motions
for directed verdict against TACS on the issue of breach of contract.
9.
{¶ 45} In addition, the trial court’s directed verdict rulings sided with TACS on
the issue of whether the purchase order documents should be considered part of the
contractual documents between the parties.
{¶ 46} We further note that TACS raised no issues or objections before the trial
court in relation to the now disputed directed verdict rulings. This is unsurprising given
that the rulings were predominantly favorable to TACS.
{¶ 47} The following legal standards govern our consideration and disposition of
this matter.
{¶ 48} It is well-established that the standard of appellate review applied to
disputed directed verdict decisions is de novo. Grau v. Kleinschmidt, 31 Ohio St.3d 84,
509 N.E.2d 399 (1987).
{¶ 49} This court construes the evidence presented most strongly in favor of the
nonmoving party and, thereby, determines whether reasonable minds could only find
favorably to the nonmoving party. This court assumes the truth of the evidence
supporting the nonmoving party, and gives that party the benefit of all reasonable
inferences. Fifth Third Bank v. Gen. Bag Corp., 8th Dist. Cuyahoga No. 92793, 2010-
Ohio-2086, ¶ 30.
{¶ 50} In conjunction with the above, we note that arguments raised for the first
time on appeal are generally barred. As set forth at ¶ 17 in Cawley JV, LLC v. Wall St.
Recycling, LLC, 35 N.E.3d 30, 2015-Ohio-1846 (8th Dist.), “Such arguments are barred
by the doctrine of waiver for failure to raise these arguments before the trial court. It is
10.
well-established that a party cannot raise any new issues or legal theories for the first
time on appeal * * * Litigants must not be permitted to hold their arguments in reserve
for appeal, thus evading the trial court process.” (Emphasis added).
{¶ 51} Lastly, with respect to the contractual roots of this case, as set forth at ¶ 11
in Westfield Ins. Co. v. Galatis, 100 Ohio St.3d 216, 797 N.E.2d 1256, 2003-Ohio-5849,
“When confronted with an issue of contract interpretation, the role of the court is to give
effect to the intent of the parties to the agreement * * * we look to the plain and ordinary
meaning of the language used in the policy unless another meaning is clearly apparent
from the contents.” (Emphasis added).
{¶ 52} In the first assignment of error, appellant alleges that the trial court erred in
connection to the directed verdict contract ruling. We do not concur.
{¶ 53} Although TACS asserts in support of the first assignment that the trial court
should have ruled that each purchase agreement was a separate contract, and that the
Dana purchase orders were not governed by the terms base agreement, there are no
conclusions or statements of the trial court reflected in the record that would have
negated TACS ability to pursue and raise such arguments and positions before the trial
court. TACS elected not to do so.
{¶ 54} The trial court did not rule the purchase orders were necessarily governed
by the terms base agreement, as suggested by appellant in an apparent belief that such a
ruling would have negated appellant’s counterclaim. However, the trial court made no
such ruling.
11.
{¶ 55} In addition, while TACS further asserts that the trial court’s contract
directed verdict rulings were premature, the record reflects that TACS did not raise or
assert the issue of timeliness to the trial court.
{¶ 56} Accordingly, we find that the timeliness contentions set forth in the first
assignment of error are rooted in an issue that was not raised to the trial court, and is,
thereby, waived for purposes of appeal.
{¶ 57} Upon our de novo review, we find that the balance of contentions in
support of the first assignment of error are rooted in conjecture and mistaken
interpretation. They are without merit. Accordingly, appellant’s first assignment of error
is not well-taken.
{¶ 58} In appellant’s second assignment of error, appellant similarly maintains
that the trial court erred in the contract directed verdict ruling in connection to
modifications. We do not concur.
{¶ 59} Appellant perceives that the trial court’s directed verdict rulings somehow
improperly precluded appellant from presenting evidentiary arguments premised upon
claimed oral contractual modifications or upon claimed modifications that were written,
but unsigned by a Dana representative.
{¶ 60} The plain meaning of the language utilized in the terms base agreement
contract executed between the parties does not bear out appellant’s claims.
12.
{¶ 61} Paragraph 35 of the Terms base agreement establishes, “Amendments. No
amendment to these terms or any purchase agreement will be effective unless it is in
writing and executed by the authorized representatives of both parties.” (Emphasis
added).
{¶ 62} The relevant portion of the subject directed verdict ruling held, “So as to
modifications of the contract or arguments that there were modifications in the contract,
unless that has been or will be submitted * * * that was executed by -- in writing by the
authorized representatives of both parties, then any submission of any modification will
not pass directed verdict.”
{¶ 63} The subject trial court ruling constitutes a true and accurate interpretation
of the plain meaning of the relevant contractual language. Oral contractual modifications
are not permitted. Written contractual modifications must be executed by authorized
representatives of both parties in order to take effect.
{¶ 64} If TACS was in possession of evidence in support of contractually
compliant modifications to the contract, they could have presented same to the trial court
for consideration. They did not do so.
{¶ 65} We find that the assertions in support of the second assignment of error
connected to timeliness are waived on the same basis as was set forth in our response to
the first assignment of error.
{¶ 66} With respect to the balance of arguments in support of the second
assignment of error, we find them to be without merit. The disputed trial court directed
13.
verdict ruling is clearly a proper, plain meaning doctrine interpretation of the relevant
contract provision on effectuating contract modifications.
{¶ 67} Accordingly, we find appellant’s second assignment of error not well-
taken.
{¶ 68} In the third assignment of error, appellant maintains that the trial court
improperly limited appellant’s introduction of evidence related to adequate assurances of
performance. We do not concur.
{¶ 69} The record reflects that while the trial court ruled that TACS had not yet
submitted evidence establishing a written contract modification properly executed by
authorized representatives of both parties, that ruling did not abrogate appellant’s ability
to present any such evidence to the trial court for consideration and determination.
{¶ 70} Further, appellant raised no issue below connected to the submission of
evidence of adequate assurances of performance. As such, the matter is waived for
purposes of appeal.
{¶ 71} Accordingly, we find appellant’s third assignment of error not well-taken.
{¶ 72} On consideration whereof, the judgment of the Lucas County Court of
Common Pleas is hereby affirmed. Appellant is ordered to pay the costs of this appeal
pursuant to App.R. 24.
Judgment affirmed.
14.
L-19-1203
Dana Limited v.
TACS Automation,
LLC
A certified copy of this entry shall constitute the mandate pursuant to App.R. 27.
See also 6th Dist.Loc.App.R. 4.
Mark L. Pietrykowski, J. _______________________________
JUDGE
Thomas J. Osowik, J.
_______________________________
David A. D’Apolito, V.J. JUDGE
CONCUR.
_______________________________
JUDGE
Judge David A. D’Apolito, Seventh District Court of Appeals, sitting by assignment of
the Chief Justice of the Supreme Court of Ohio.
This decision is subject to further editing by the Supreme Court of
Ohio’s Reporter of Decisions. Parties interested in viewing the final reported
version are advised to visit the Ohio Supreme Court’s web site at:
http://www.supremecourt.ohio.gov/ROD/docs/.
15.