Advance Sign Group, LLC v. Optec Displays, Inc.

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 13a0178p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
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Plaintiff-Appellee, -
ADVANCE SIGN GROUP, LLC,
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No. 12-3321
v.
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Defendant-Appellant. -
OPTEC DISPLAYS, INC.,
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Appeal from the United States District Court
for the Southern District of Ohio at Columbus.
No. 2:07-cv-380—Edmund A. Sargus, Jr., District Judge.
Argued: January 24, 2013
Decided and Filed: July 15, 2013
Before: MARTIN, SUHRHEINRICH, and GIBBONS, Circuit Judges.
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COUNSEL
ARGUED: Charles A. Koenig, Columbus, Ohio, for Appellant. Charles H. Cooper, Jr.,
COOPER & ELLIOTT, LLC, Columbus, Ohio, for Appellee. ON BRIEF: Charles A.
Koenig, Columbus, Ohio, for Appellant. Charles H. Cooper, Jr., Rex H. Elliott,
COOPER & ELLIOTT, LLC, Columbus, Ohio, for Appellee.
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OPINION
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BOYCE F. MARTIN, JR., Circuit Judge. Advance Sign Group, LLC, brought
this diversity action against Optec Displays, Inc., for breach of contract, unjust
enrichment, and tortious interference after a business arrangement between the two
parties went awry. A jury found in favor of Advance Sign on the breach of contract and
tortious interference claims, and awarded damages to Advance Sign. Optec filed a post-
trial motion for judgment as a matter of law concerning Advance Sign’s breach of
1
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contract and tortious interference claims. Optec also moved for a new trial, or in the
alternative, for a remittitur on damages. The district court denied Optec’s motions and
Optec appeals the district court’s judgment. For the following reasons, we AFFIRM the
district court.
I.
Advance Sign manufactures, installs, and services commercial signs. Optec
manufactures a type of commercial sign known as an electronic messaging center.
Advance Sign alleges that in 2005, James Wasserstrom, the President of Advance Sign,
entered into an agreement with Bill McHugh, Optec’s then Vice President of Sales,
whereby Optec and Advance Sign would partner to sell Optec’s electronic messaging
signs to Advance Sign’s customers in the foodservice industry. As part of the
agreement, Optec agreed to sell the signs to Advance Sign at discounted prices, Advance
Sign agreed to sell only Optec’s signs, and Optec agreed not to sell directly to the
foodservice companies introduced to it by Advance Sign.
Darrell Rogers, one of the largest franchisees of Sonic Restaurants, a fast food
chain, was a long-standing customer of Advance Sign. In late 2005, after Advance Sign
pitched the idea to Rogers and Sonic, Advance Sign and Optec participated in a pilot
project to install electronic messaging signs at several Sonic corporate-owned locations
and franchise locations owned by Rogers. Optec provided the electronic messaging
signs and Advance Sign provided the installation services. The purpose of the project
was to determine whether the use of the electronic messaging signs could increase sales
for Sonic. The pilot program was successful, and Sonic became interested in purchasing
the electronic messaging signs for its corporate locations.
Advance Sign alleges that Optec violated the 2005 agreement when, in the first
quarter of 2006, Optec began negotiating with Sonic Restaurants for the direct sale of
its electronic messaging signs. In an attempt to salvage the business relationship and
after negotiating from March through May of 2006, Advance Sign and Optec came to
a second agreement during a telephone conference. Optec agreed to pay Advance Sign
twelve percent of the net invoice price on all sales made by Optec to the foodservice
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customers introduced to it by Advance Sign. Wasserstrom and Roger Wallace, Advance
Sign’s Chief Operating Officer and Chief Financial Officer, claimed that McHugh orally
agreed to the terms during the phone call. On June 1, 2006, Advance Sign sent McHugh
a letter memorializing the terms to which the parties allegedly agreed over the phone.
McHugh made a minor change to the letter that was unrelated to the twelve percent
commission figure, and Advance Sign incorporated the change and sent the letter back
to McHugh on June 6, 2006. McHugh never signed the letter.
When McHugh refused to sign, Advance Sign representatives traveled to Optec’s
offices in California in August of 2006 to have a meeting about the commission
agreement. Optec’s President, Shu Wu, was present at the meeting. During the meeting,
the parties discussed an arrangement that would make Advance Sign the primary sales
agent for all of Optec’s foodservice industry clients, regardless of whether Optec
attained the client with the help of Advance Sign. In exchange for Advance Sign playing
a larger role than had been discussed during the call with McHugh, the parties talked
about Advance Sign receiving less than a twelve percent commission on Optec’s sales
to Sonic. The parties never agreed on the appropriate commission rate. Advance Sign
put the discussed terms in writing, including a requirement that Optec pay Advance Sign
a two percent commission on all sales to Sonic, and sent the agreement to Optec. Optec
failed to sign the August agreement, and it failed to pay the commission required under
either the June or August iteration of the commission contract.
On November 21, 2006, Wasserstrom sent an email to Wu complaining that
Optec had not honored its obligations under the commission agreement. Wasserstrom
concluded the email by warning Wu that he would not wait much longer for Optec to
keep its promises. Six days later, on November 27, 2006, Shawn Klinger, Optec’s
National Accounts Manager, sent an email to Steve Reed, Sonic’s Vice President. In the
email, Klinger explained that Advance Sign was the cause of some of the problems
associated with the installation of Optec’s signs at various Sonic locations. In particular,
he claimed that Advance Sign had used non-preferred installation vendors against
Optec’s recommendation and that many of Advance Sign’s installers were incapable of
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performing the installations. The email went on to say that the best way to resolve the
installation issues would be to allow Sonic to manage all aspects of the project, including
installation. Klinger reported directly to McHugh, and he presented McHugh with a
draft of the email prior to sending it to Reed. On January 22, 2007, Reed recommended
to Optec that Advance Sign be removed from the project and gave Optec the right to
perform the installations. Subsequently, Optec signed a two-year agreement with Sonic
providing that Optec would be an approved supplier for two years. Optec went on to
install signs at approximately 1,400 of Sonic’s corporate locations.
Advance Sign sued Optec for breach of the original 2005 agreement as well as
for breach of the 2006 agreement to pay Advance Sign a commission on Optec’s sales
to Sonic. Advance Sign also brought unjust enrichment and tortious interference claims
against Optec. Following a jury trial, the jury found in favor of Advance Sign on both
of its breach-of-contract claims and its claim for tortious interference. The jury did not
award Advance Sign damages for Optec’s breach of the original 2005 agreement, but it
awarded Advance Sign damages in the amount of $3,444,000 for Optec’s breach of the
2006 commission agreement. The jury based its damages calculation on the June
iteration of the commission agreement. The jury also awarded Advance Sign $1,029,000
in damages for the tortious interference claim.
Optec filed post-trial motions. Optec moved for judgment as a matter of law
regarding Advance Sign’s claims for breach of the commission agreement and tortious
interference. Optec also moved for a new trial, or in the alterative, for a remittitur on
damages. The district court denied both motions. Optec appeals the district court’s
denial of its motions and, in doing so, makes several challenges to the jury’s verdict.
Optec claims: 1) that there was no meeting of the minds as to the June commission
agreement; 2) that Ohio’s Statute of Frauds precludes the enforcement of the
commission agreement; 3) that Advance Sign did not establish all of the elements of its
tortious interference claim; and 4) that the evidence did not support either of the jury’s
damages awards.
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II.
Optec argues that the district court erred in denying its motion for judgment as
a matter of law regarding Advance Sign’s claims for breach of the commission
agreement and tortious interference.
This Court reviews the District Court’s denial of a Rule 50(b) motion de novo.
K & T Enters., Inc. v. Zurich Ins. Co., 97 F.3d 171, 175 (6th Cir.1996) (citing Hill v.
Marshall, 962 F.2d 1209, 1213 (6th Cir. 1992)). When exercising diversity jurisdiction,
we resolve legal questions by applying the federal standard, and we resolve questions
regarding the sufficiency of the evidence by using the standard applicable under the law
of the forum state, which is Ohio in this case. Id. at 174–76. The evidence and facts
must be construed most strongly in favor of the nonmoving party, and when reasonable
minds may reach different conclusions, the motion must be denied. Gray v. Toshiba Am.
Consumer Prods., Inc., 263 F.3d 595, 598 (6th Cir. 2001) (citing K & T Enters., 97 F.3d
at 174–76); Aetna Cas. and Sur. Co. v. Leahey Const. Co., 219 F.3d 519, 532 (6th Cir.
2000) (quoting Posin v. A.B.C. Motor Court Hotel, Inc., 344 N.E.2d 334, 338 (Ohio
1976)). We do not reweigh the evidence or assess the credibility of witnesses. Gray,
263 F.3d at 600 (citing Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150
(2000)); Cardinal v. Family Foot Care Ctrs., Inc., 532 N.E.2d 162, 164 (Ohio Ct. App.
1987). Moreover, the jury verdict is given great deference. Radvansky v. City of
Olmsted Falls, 496 F.3d 609, 614 (6th Cir. 2007); Seasons Coal Co. v. Cleveland,
461 N.E.2d 1273, 1276 (Ohio 1984).
A. Breach of the 2006 Commission Agreement
Optec makes two arguments in support of its claim that the district court erred
in denying its motion for judgment as a matter of law concerning Advance Sign’s claim
for breach of the commission agreement. First, it argues that the evidence does not
support the jury’s finding that there was a meeting of the minds regarding the June
iteration of the commission contract. Second, Optec argues that the Statute of Frauds
precludes enforcement of the June iteration of the contract.
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With regard to Optec’s meeting-of-the-minds argument, parties cannot enter into
an enforceable contract unless they come to a meeting of the minds on the essential
terms of the contract. Alligood v. Proctor & Gamble Co., 594 N.E.2d 668, 669 (Ohio
Ct. App. 1991) (citing Noroski v. Fallet, 442 N.E.2d 1302, 1304 (Ohio 1982)). The
burden of establishing a contract rests upon the party who asserts existence of the
agreement. Guardian Alarm Co. v. Portentoso, 963 N.E.2d 225, 230 (Ohio Ct. App.
2011) (citing Lynd v. Sandy & Beaver Val. Farmers Mut. Ins. Co., 145 N.E.2d 453, 455
(Ohio Ct. App. 1957)).
The concepts of “mutual assent” and “meeting of the minds” have been used
interchangeably in Ohio case law. Costner Consulting Co. v. U.S. Bancorp, 960 N.E.2d
1005, 1009–10 (Ohio Ct. App. 2011) (citation omitted). Manifestation of mutual assent
requires that each party make a promise or begin to render performance. Id. at 1010
(citing Precision Concepts Corp. v. Gen. Emp. & Triad Personnel Servs., Inc., No.
00AP-43, 2000 WL 1015114, at *2 (Ohio Ct. App. July 25, 2000) (citation omitted)).
“The ‘manifestation of assent may be made wholly or partly by written or spoken words,
or by other acts or the failure to act.’” Id. (quoting Precision Concepts Corp., 2000 WL
1015114, at *2). “Whether there has been a manifestation of mutual assent and/or a
meeting of the minds is a question of fact to be determined from all the relevant facts and
circumstances.” Id. (citing Matusoff & Assocs. v. Kuhlman, No. 98AP-1405, 2000 WL
192449, at *3 (Ohio Ct. App. Sept. 28, 1999)).
As an initial matter, there was manifestation of mutual assent because each party
made a promise or began to render performance: Advance Sign had already rendered
performance by introducing Optec to several of its foodservice industry clients, and
Optec made the promise to pay Advance Sign a twelve percent commission on the net
invoice price for all sales to Sonic. The fact that Optec made the promise over the phone
is inconsequential because the manifestation of mutual assent can be made orally.
The relevant facts and circumstances further support a finding that Advance Sign
and Optec mutually assented to a commission agreement in June 2006. First, prior to the
phone call establishing the twelve percent commission, the parties engaged in
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negotiations for nearly three months about a commission agreement. Second, Wallace
and Wasserstrom testified that McHugh agreed to a twelve percent commission on
Sonic-related business and other foodservice accounts that Advance Sign had provided
Optec, with Wasserstrom testifying that there was “no doubt” in his mind that the parties
had reached an agreement. Third, when Optec sent McHugh the June agreement for him
to sign, McHugh made a minor change to the agreement instead of repudiating the
agreement entirely or making a change to the twelve percent commission figure. Fourth,
Wallace testified that the August 2006 trip to California would not have been necessary
if Optec has simply honored the agreement. In light of such facts, reasonable minds
could differ as to whether there was a meeting of the minds; therefore, the jury’s
determination must stand.
Optec argues in the alternative that, if this Court finds that the evidence supports
the jury’s determination that there had been a meeting of the minds regarding the June
2006 agreement, then it was unreasonable for the jury find that there had not been a
meeting of the minds as to the August agreement. This argument is unpersuasive
because attendees of the August meeting testified that the parties never came to a
conclusion on the appropriate commission rate during the meeting in California. Based
on that testimony alone, a reasonable jury could conclude that there had been no meeting
of the minds regarding the August agreement, and that the June agreement was the
operative agreement.
We now turn to Optec’s argument that the June commission agreement is
unenforceable because it falls within the Statute of Frauds. The Ohio Statute of Frauds,
Ohio Rev. Code § 1335.05, reads as follows:
No action shall be brought whereby to charge the defendant . . . upon an
agreement that is not to be performed within one year from the making
thereof; unless the agreement upon which such action is brought, or some
memorandum or note therefore, is in writing and signed by the party to
be charged therewith or some other person thereunto by him or her
lawfully authorized.
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The Ohio Supreme Court has held that “where the time for performance under an
agreement is indefinite, or is dependent upon a contingency which may or may not
happen within a year, the agreement does not fall within the Statute of Frauds.”
Sherman v. Haines, 652 N.E.2d 698, 700 (Ohio 1995) (citing Nonamaker v. Amos, 76
N.E. 949, 951–52 (Ohio 1905) (citations omitted)). The Ohio Court of Appeals has held
that an agreement does not fall within the Statute of Frauds if, at the time of making the
agreement, there is a possibility that the agreement can be entirely performed as the
parties intended within a year. Weiper v. W.A. Hill & Assocs., 661 N.E.2d 796, 805–06
(Ohio Ct. App. 1995) (citing Bryan v. Looker, 640 N.E.2d 590, 594 (Ohio Ct. App.
1995)) (citation omitted); Ford v. Tandy Transp., Inc., 620 N.E.2d 996, 1007–08 (Ohio
Ct. App. 1993).
In light of Sherman, we hold that the June commission agreement does not fall
within the Statute of Frauds. The June agreement was an agreement of indefinite
duration. Further, at the time that Advance Sign and Optec made the agreement, there
was a possibility that the agreement could be performed within a year of its execution.
In June of 2006, it was unknown how many electronic messaging signs Sonic would
purchase from Optec and for what duration of time. Optec’s two-year agreement with
Sonic does not factor into our analysis because it did not arise until more than seven
months later, in January 2007. Still, even if we were to consider the January 2007
agreement, it is arguable that the June 2006 commission agreement still could have been
performed within a year. Optec’s agreement with Sonic merely provided that Optec
would be an approved supplier for two years. Optec’s agreement with Sonic did not
state that Sonic was bound to make purchases from Optec over that two-year period.
The district court did not err in denying Optec’s motion as to the breach of contract
claim.
B. Tortious Interference
Optec argues that the district court erred in denying its motion as a matter of law
regarding Advance’s Sign’s tortious-interference claim because Advance Sign did not
establish all of the claim’s elements.
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Advance Sign claimed that Optec interfered with its business relationship with
Sonic, resulting in Sonic deciding to discontinue using Advance Sign’s installation
services for Optec’s electronic messaging signs. The district court instructed the jury
that, in order to find for Advance Sign on its tortious interference claim, the jury must
find by the greater weight of the evidence that:
(1) there were existing or prospective contractual or business
relationships between Advance Sign and Sonic Restaurants, Inc., D.L.
Rogers, and other Sonic franchisees; and (2) Optec knew of the business
or contractual relationships; and (3) Optec intentionally acted with the
purpose to interfere with Advance Sign’s business or contractual
relationships; (4) Optec lacked a justification; and (5) Advance Sign was
injured as a proximate result of the acts of Optec.
See also Kenty v. Transamerica Premium Ins. Co., 650 N.E.2d 863, 866 (Ohio 1995).
Optec claims that the evidence does not support that Advance Sign established the third,
fourth, and fifth factors.
Optec argues that the only evidence supporting the third factor—intentional
interference with Advance Sign’s business or contractual relationships—is the email
from Klinger to Reed criticizing Advance Sign’s handling of the installation process.
Optec claims that the email was sent for the purpose of making suggestions for
improving the installation process, not for the purpose of interfering with Advance
Sign’s business relationship with Sonic. As the district court pointed out, however, on
its face, the email displays an intention to take the installation business away from
Advance Sign. In the email, Optec asks for the right to manage all aspects of the project,
including installation. Sonic granted Optec’s request two months later and granted
Optec the authority to install the electronic messaging signs. In addition, Klinger sent
the email merely days after Wasserstrom sent Wu an email accusing Optec of breaching
its obligations under the commission agreement. The content of the email, and its
proximity in time to Wasserstrom’s email, support the jury’s finding that Klinger’s email
was an intentional act done with the purpose of interfering with Advance Sign’s
installation business with Sonic.
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Concerning the fourth factor—that Optec lacked justification—the jury
instructions explained that “‘[l]acked a justification’ means that Optec’s interference
with the business or contractual relationship was improper.” The justification element
can be defeated if a party exercises its right to assert a legally protected interest in good
faith. Bridge v. Park Nat’l Bank, 903 N.E.2d 703, 708 (Ohio Ct. App. 2008) (citations
omitted). Optec claims that it was protecting its reputation after Sonic expressed
concerns regarding sign installations.
The jury could have reasonably believed Optec was not acting in good faith.
First, Optec was already in breach of at least one agreement with Advance Sign—the
original 2005 agreement. Second, Wasserstrom testified that the criticisms about
Advance Sign in Klinger’s email were lies. In addition to the evidence that Optec was
not acting in good faith, Advance Sign presented the jury with evidence that Optec’s
Accounts Manager sent the email to Sonic’s Vice President days after receiving a critical
email from Wasserstrom. Furthermore, the jury could interpret Sonic giving Optec the
installation business a couple of months after receiving the email as an indication that
Optec intended to take the business from Advance Sign and was not protecting its
reputation.
Finally, we assess the fifth factor—that Advance Sign was injured as a proximate
result of Optec’s act. It is generally true that, in order to establish proximate cause, one
must show that the act, in a natural and continuous sequence, produces a result that
would not have taken place without the act. Strother v. Hutchinson, 423 N.E.2d 467,
470–71 (Ohio 1981). Optec argues that Advance Sign has not established that it was
injured as a proximate result of Klinger’s email because Sonic representatives testified
that Optec had not interfered with Sonic’s business relationship with Advance Sign.
A reasonable jury could determine that Klinger’s email was the proximate cause
of Sonic’s decision to remove Advance Sign from the installation process. Reed testified
that he based his recommendation to remove Advance Sign from the installation process
on Advance Sign’s performance during the initial installations. He also testified that his
only knowledge concerning Advance Sign’s performance came from Klinger or
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McHugh. One could reasonably conclude that the email from Klinger formed the basis
of Reed’s opinion regarding Advance Sign’s performance.
The jury reasonably concluded that Optec tortiously interfered with Advance
Sign’s business relationship with Sonic; therefore, the district court did not err in
denying Optec’s motion as to the tortious interference claim.
III.
By way of a motion under Federal Rule of Civil Procedure 59, Optec claimed
that the evidence did not support the jury’s damages determinations with regard to both
the breach of contract and tortious interference claims.
This Court reviews a Rule 59 motion under an abuse-of-discretion standard.
Mike’s Train House, Inc. v. Lionel, L.L.C., 472 F.3d 398, 405 (6th Cir. 2006). We have
interpreted Rule 59 to require a new trial only “when a jury has reach a ‘seriously
erroneous result’ as evidenced by[ ] (1) the verdict being against the weight of the
evidence; (2) the damages being excessive; or (3) the trial being unfair to the moving
party in some fashion, i.e., the proceedings being influenced by prejudice or bias.” Id.
(quoting Holmes v. City of Massillon, Ohio, 78 F.3d 1041, 1045–46 (6th Cir. 1996)).
Our review of a jury’s damage award is extremely deferential, and we will not order a
remittitur or new trial unless the award is contrary to all reason. Id. at 413 (quoting In
re Lewis, 845 F.2d 624, 635 (6th Cir. 1998)). An award must stand unless it is: (1)
beyond the range supportable by proof; or (2) so excessive as to shock the conscience;
or (3) the result of a mistake. Gregory v. Shelby Cnty., Tennessee, 220 F.3d 433, 443
(6th Cir. 2000) (citing Bickel v. Korean Air Lines Co., Ltd., 96 F.3d 151, 156 (6th Cir.
1996) (citation omitted)).
A. Contract Damages
The jury determined that the evidence supported granting Advance Sign
$3,444,000 in damages for Optec’s breach of the June 2006 commission agreement. The
jury calculated the $3,444,000 damages figure by multiplying the approximate number
of electronic messaging signs that Optec sold to Sonic at the time of trial—1,400—by
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the net invoice price of an electronic messaging sign—$20,500—and then multiplying
that number by the twelve percent commission rate—0.12—due to Advance Sign under
the June agreement. The basis for Optec’s claim that it is entitled to a remittitur on
damages is that the jury erred when it determined that the June 2006 agreement was
valid and enforceable, and that as a result, the twelve percent commission rate was
inapplicable to the damages calculation. Optec does not argue that the jury’s damages
calculation was unreasonable if this Court were to assume that the June 2006 agreement
was indeed valid and enforceable. Given that we have already determined there was
sufficient evidence to support the jury’s determination that the June 2006 agreement was
valid, Optec can no longer support its argument that the jury’s damages calculation was
unreasonable.
B. Tortious Interference Damages
The jury determined that the evidence supported granting Advance Sign
$1,029,000 in damages for Optec’s tortious interference with Advance Sign’s business
relationship with Sonic. The jury calculated the $1,029,000 damages figure by
multiplying the number of electronic messaging signs that Optec sold to Sonic at the
time of trial—1,400—by the average profit that Advance Sign made on each sign
installation—$735.
Optec argues that the damages amount is beyond the range supportable by proof.
There was no agreement in place between Advance Sign and Sonic or Advance Sign and
Optec stating that Advance Sign would handle any installations going forward at the
time that Sonic removed Advance Sign from the installation process. Nevertheless, the
record indicates that, prior to Optec taking over the installations, Advance Sign
exclusively handled all installations for Sonic. Furthermore, Advance Sign pitched the
idea for the pilot project to Sonic and provided Optec with the connection to Sonic.
Taking those facts into consideration, it is reasonable to conclude that, had it not been
for Optec’s interference, Advance Sign would have continued to be the exclusive
installer of Optec’s signs at Sonic restaurant locations for the duration of Sonic’s
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relationship with Optec. The district court did not abuse its discretion in determining
that the jury award was within the range supportable by proof.
We AFFIRM the district court judgment.