Martin v. Lamrite West, Inc.

[Cite as Martin v. Lamrite West, Inc., 2015-Ohio-3585.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 102251
BARBARA MARTIN, ET AL.
PLAINTIFFS-APPELLANTS
vs.
LAMRITE WEST, INC.
DEFENDANT-APPELLEE
JUDGMENT:
AFFIRMED IN PART, REVERSED IN PART
AND REMANDED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-12-783766
BEFORE: Stewart, J., Celebrezze, A.J., and Blackmon, J.
RELEASED AND JOURNALIZED: September 3, 2015
ATTORNEYS FOR APPELLANTS
Patrick J. Perotti
Nicole T. Fiorelli
Dworken & Bernstein Co., L.P.A.
60 South Park Place
Painsville, OH 44077
ATTORNEYS FOR APPELLEE
Brian D. Sullivan
Anthony M. Catanzarite
Reminger Co., L.P.A.
1400 Midland Building
101 Prospect Avenue, West
Cleveland, OH 44115
MELODY J. STEWART, J.:
{¶1} Plaintiffs-appellants Barbara Martin and Erin Bovee brought this action
against defendant-appellee Lamrite West, Inc., d.b.a. as Pat Catan’s, alleging that Pat
Catan’s deceptively advertises savings. Bovee alleged that she purchased supplies from
Pat Catan’s on the basis of advertising that she could “Save 40% or more ON
THOUSANDS OF ITEMS EVERY DAY!”; Martin alleged that she purchased picture
framing services that had been advertised by Pat Catan’s as “50% Off Your CUSTOM
FRAMING Order EVERY DAY.” The appellants alleged that the advertised percentage
off its everyday prices was illusory because Pat Catan’s always sells those items for that
discount — in other words, the advertised item is always the same percentage off, every
day, such that the claimed savings are non-existent. Pat Catan’s sought summary
judgment on grounds that it was advertising savings based on the manufacturer’s
suggested retail price and that, regardless of what its print advertising represented, the
shelf tags for those products showed both a “retail price” and a “you pay” price, reflecting
the actual discount. The court granted Pat Catan’s motion for summary judgment on the
deceptive advertising claim, and further rejected the plaintiffs’ claims for fraud, breach of
contract, and unjust enrichment. The plaintiffs appeal from each ruling, with the primary
focus of this appeal being the deceptive advertising claim (the plaintiffs sought class
certification of that issue).
{¶2} The Ohio Consumer Sales Practices Act (“CSPA”) expressly prohibits
retailers from advertising “discounts” on a price other than the regular price. Ohio
Adm.Code 109:4-3-12 describes a “declaration of policy” relating to price comparisons,
stating:
The rule stems from the general principle, codified in division (B) of
section 1345.02 of the Revised Code, that it is deceptive for any claimed
savings, discount, bargain, or sale not to be genuine, for the prices which
are the basis of such comparisons not to be bona fide, genuine prices, and
for out-of-store advertisements which indicate price comparisons to create
false expectations in the minds of consumers.
{¶3} To that end, R.C. 1345.02(B)(8) makes it a deceptive act in a consumer
transaction for a supplier to represent “that a specific price advantage exists, if it does
not.” Ohio Adm.Code 109:4-4-12(E) makes it clear that:
(1) It is deceptive for a supplier in its out-of-store advertising to make any
price comparison by the use of such terms as “regularly.........., now ..........,”
“......... per cent off,” “reduced from ......... to ..........,” “save $.......,” unless:
(a) The comparison is to the supplier’s regular price; or
(b) If the reference price is the regular price of a previous season, the season
and year are clearly and conspicuously disclosed; or
(c) There is language in the advertisement which clearly and conspicuously
discloses that the comparison is to another price and which discloses the
nature of the reference price.
{¶4} The appellants claim as deceptive two particular advertisements: one that
claimed to save the customer 50% off a custom framing order; the other that promised
savings of 40% (or more!) “on thousands of items every day!”
{¶5} Pat Catan’s claims that it does not use the term “sale” or “limited time offer”
in its advertising, arguing that “Pat Catan’s offers these reduced prices to their customers
every day of the year, such that it is like a sale every day.” Appellee’s brief at 4. But
that argument concedes the plaintiffs’ point — if the prices are always 40 percent off, the
advertised discount is illusory and thus deceptive. And Pat Catan’s makes no argument
that its advertised savings are a comparison to the regular price; that the price is a
reference to a price charged in a previous year; or that the claimed savings is in
comparison to another price, the nature of which it disclosed in the advertising. Nor
would such an argument be availing given that Pat Catan’s has admitted that the
“savings” it advertised was not a discount off its regular price and that it always sold
those items at the claimed discount.
{¶6} Pat Catan’s next argues that its advertised pricing shows a discount against
the prices offered by other retailers, but reasonable minds could differ on whether its
advertisements support that contention. Viewing the evidence most favorably to the
appellants, there is nothing in the advertising that shows that the sales price references a
reduction on prices offered by other retailers or that the reference price is a
manufacturer’s suggested retail price. Ohio Adm.Code 109:4-3-12(F) indicates that:
(1) It is deceptive for a supplier in its out-of-store advertising to use as a
reference price in making a price comparison any “list,” “catalogue,”
“manufacturer’s suggested,” “competitor’s,” or any other price which is not
its own unless:
(a) Such a reference price is genuine; and
(b) The advertisement clearly and conspicuously indicates that the reference
price is not the supplier’s own price.
(Emphasis added.)
{¶7} The advertisements in questions simply promote 40 or 50 percent savings
“everyday,” but without any reference to what prices those discounts apply. Pat Catan’s
assumes that the consumer will understand that it is referencing some other retailer’s
price, and went so far as to assert that it is “plainly stated” by the advertisements that “Pat
Catan’s customers save 40% every day off what they would pay if they shopped at
another craft store based upon industry retail prices.” August 15, 2013 Motion for
Summary Judgment at 10. There is no basis in the evidence for this assertion because the
advertising does not say what Pat Catan’s asserts — Pat Catan’s advertising makes no
reference to any other retailer or retail price. In any event, Ohio Adm.Code
109:4-3-12(F)(1) makes it clear that the reference to a price other than the supplier’s own
price must be “conspicuous.” Pat Catan’s advertising at issue in this case did not
reference a competitor’s prices — it merely stated that customers could save a stated
percentage, but failed to indicate whether that savings was off its own regular pricing or a
competitor’s prices. With the advertising making no mention of any other price as a basis
for comparison, it cannot be said that the purported savings were conspicuously based on
some other retail price.
{¶8} Pat Catan’s argues that its advertising is not deceptive because the
advertisement claiming a 40 percent savings contains fine print that states: “Bring in any
current competitor’s ad and if, on an identical item, our price is not as low or lower than
their advertised price, we will immediately match it!” It argues that this proves that the
40 percent discount is based on competitors’ prices and not its own prices. The difficulty
with this argument is that the fine print does not clearly and conspicuously indicate that
the reference price is not Pat Catan’s own price. In a sense, Pat Catan’s is trying to have
it both ways: it advertises a 40 percent savings, yet says that if a competitor has a price
that is lower, it will match the competitor’s price. The customer has no way of knowing
whether the 40 percent discount is applied to Pat Catan’s own pricing or a competitor’s
pricing. And if Pat Catan’s is merely price-matching a competitor, it cannot be the case
that it is offering a product for a 40 percent discount.
{¶9} Taking this argument at face value can only lead to the conclusion that the
stated discount is not applied to competitor prices; for if that were true, Pat Catan’s would
do more than simply match the competitor’s price — it would offer its promised 40
percent savings off the competitor’s matched price. For Pat Catan’s to claim otherwise
would be to concede that the advertised 40 percent discount is illusory insofar as it is not
based on any real savings. B. Sanfield, Inc. v. Finlay Fine Jewelry Corp., 258 F.3d 578
(7th Cir.2001).
{¶10} And even if Pat Catan’s was right in its argument that its price match
guarantee shows that it is matching other retailers’ prices, that argument applies only to
the advertisement claiming 40 percent savings; the advertisement claiming a 50 percent
savings on custom framing did not mention that Pat Catan’s would price match its
competitors. While it may be true that the final price for each framing project is different
based on variables selected by the customer (size, type of frame, etc.), nothing indicates
that the discount quoted is off a manufacturer’s suggested retail price. Pat Catan’s
assumes that the customer will understand that it is referencing the manufacturer’s
suggested retail price, but Ohio Adm.Code 109:4-3-12(F)(1) requires more than
conjecture.
{¶11} Pat Catan’s further argues that its advertising must be read in context with
its shelf tags, which it claims specifically tell the consumer how the discount is derived
for each individual item. Those shelf tags list a “retail price” followed by a “you pay
after 40% discount” price. The absence of the word “manufacturer’s” makes the
reference to a “retail” price ambiguous — it is unclear whether this refers to Pat Catan’s
retail price or another’s retail price. The distinction is important because if the 40
percent discount is Pat Catan’s everyday price, its use of a retail price as a point of
comparison would be illusory — Pat Catan’s “discounted” price is its everyday, regular
price. And if the price is meant to mean a manufacturer’s suggested retail price, that
shelf tag does not conspicuously disclose that fact as required by Ohio Adm.Code
109:4-3-12(F)(1).
{¶12} What is more, there is no connection between that retail price and the
out-of-store advertisements that are the subject of this action. The out-of-store
advertisements do not reference a manufacturer’s suggested retail price, so whether a
shelf tag references such a price is immaterial to a claim of deceptive advertising. Pat
Catan’s asserts that its customers will understand that it is referencing a manufacturer’s
suggested retail price in its advertising, but that cannot be the case when the
advertisements do not even mention the word “retail,” much less conspicuously make
clear that the savings is a discount from the manufacturer’s suggested retail price.
{¶13} As postured, reasonable minds could draw two conclusions about the
allegations of the complaint: that the advertising in question either promotes a discount
off Pat Catan’s everyday pricing (advertising that promotes illusory savings) or it purports
to show a discount off the retail price recommended by the manufacturer (but without
saying so clearly and conspicuously). Under either scenario, reasonable minds could find
the practice deceptive, so the court erred by granting summary judgment. We sustain the
first assignment of error.
{¶14} In their second assigned error, the appellants argue that the trial court erred
by granting summary judgment on their unjust enrichment claim. They claimed that Pat
Catan’s was unjustly enriched by reaping the benefit of advertising that deceptively
induced customers to purchase goods under the mistaken impression that the price they
paid was discounted, when in fact those prices were Pat Catan’s regular prices.
{¶15} Unjust enrichment occurs where “a person has and retains money or benefits
which in justice and in equity belong to another.” Johnson v. Microsoft Corp., 106 Ohio
St.3d 278, 2005-Ohio-4985, 834 N.E.2d 791, ¶ 20. To prevail on a claim for unjust
enrichment, a plaintiff must prove by a preponderance of the evidence that: (1) the
plaintiff conferred a benefit upon the defendant, (2) the defendant had knowledge of such
benefit, and (3) the defendant retained that benefit under circumstances in which it would
be unjust for him to retain that benefit. Johnson at ¶ 20, citing Hambleton v. R.G. Barry
Corp., 12 Ohio St. 3d 179, 183, 465 N.E.2d 1298 (1984).
{¶16} The appellants’ claim for unjust enrichment is based on their allegation that
Pat Catan’s advertised prices induced them to purchase on the basis of discounts that were
in fact the regular prices. As we held above, reasonable minds could disagree as to
whether Pat Catan’s advertising was deceptive when it did not purport to offer savings off
a regular price nor did the advertising clearly and conspicuously refer to a manufacturer’s
suggested retail price as the source of the claimed savings. But a disagreement as to
whether Pat Catan’s committed a violation of the CSPA is not the same as saying that Pat
Catan’s was unjustly enriched. Regardless of the nature of the discounts, both appellants
received the benefit of what they paid for in an arm’s-length transaction, so they cannot
recover on the basis that it would be unjust to allow Pat Catan’s to retain the purchase
price. Hughes v. Oberholtzer, 162 Ohio St. 330, 335, 123 N.E.2d 393 (1954).
{¶17} The third assigned error complains that the court erred by denying the
appellants leave to replead their fraud claim. The court dismissed the fraud claim
“without prejudice” on grounds that the appellants failed to plead the elements of a fraud
action with the requisite degree of particularity. The appellants then sought leave to file
an amended complaint, and in addition to making the allegations of the fraud claim more
particular, they proposed to establish two subclasses of Pat Catan’s customers (the
original complaint claimed a single class) and they redrafted their breach of contract
claim to add that customers failed to receive the 50 percent framing discount. By the
time the motion to amend had been filed, the trial court had already dismissed the contract
claim and the appellants represented that they were refiling the contract claim solely to
preserve that issue for appellate review.
{¶18} The decision to grant leave to amend pleadings rests within the sound
discretion of a trial court. Csejpes v. Cleveland Catholic Diocese, 109 Ohio App. 3d 533,
539, 672 N.E.2d 724 (8th Dist.1996), citing Wilmington Steel Prod., Inc. v. Cleveland
Elec. Illum. Co., 60 Ohio St. 3d 120, 573 N.E.2d 622 (1991). We conclude that the trial
court did not abuse its discretion by denying leave to amend the complaint.
{¶19} The motion for leave to amend the complaint sought more than just to
replead the fraud claim — it redrafted the complaint to allege two subclasses instead of
one and redrafted the breach of contract claim to add that customers failed to receive the
50 percent framing discount. By the time that the motion to amend had been filed, the
trial court had already dismissed the contract claim. A plaintiff must move to amend
under Civ.R. 15(A) in a timely manner. Trustees of Ohio Carpenter’s Pension Fund v.
U.S. Bank Natl. Assn., 189 Ohio App. 3d 260, 2010-Ohio-911, 938 N.E.2d 61, ¶ 25 (8th
Dist.). (“[M]otion to amend complaint was untimely and prejudicial [because] by the
time [the plaintiff] moved to amend the complaint, appropriate individuals had been
deposed, dispositive motions had been submitted, and trial was set to begin within seven
weeks.”). Given these facts, we cannot say that the court abused its discretion by
denying the motion to amend the complaint.
{¶20} The fourth assigned error complains that the court erred by granting Pat
Catan’s Civ.R. 12(B)(6) motion to dismiss appellants’ claim for breach of contract. That
claim was premised on the theory that Pat Catan’s contracted to provide its products to
the appellants “at a discount.” The court dismissed this claim on grounds that there was
no allegation that the appellants were charged a higher price for the products they
purchased than had been agreed to in the sales transaction.
{¶21} Civ.R. 12(B)(6) states that a complaint is not subject to dismissal for failure
to state a claim upon which relief may be granted unless it appears beyond doubt that the
plaintiff can prove no set of facts in support of his or her claim that would entitle the
plaintiff to relief. Doe v. Archdiocese of Cincinnati, 109 Ohio St. 3d 491,
2006-Ohio-2625, 849 N.E.2d 268, ¶ 11, citing O’Brien v. Univ. Community Tenants
Union, Inc., 42 Ohio St. 2d 242, 327 N.E.2d 753 (1975). Therefore, “[a]s long as there is
a set of facts, consistent with the plaintiff’s complaint, which would allow the plaintiff to
recover, the court may not grant a defendant’s motion to dismiss.” York v. Ohio State
Hwy. Patrol, 60 Ohio St. 3d 143, 145, 573 N.E.2d 1063 (1991).
{¶22} To state a viable breach of contract claim, the plaintiffs had to allege (1) the
existence of contract, (2) performance by plaintiffs, (3) breach by the defendant, and (4)
damage or loss to the plaintiff. Jarupan v. Hanna, 173 Ohio App. 3d 284,
2007-Ohio-5081, 878 N.E.2d 66, ¶ 18 (10th Dist.). The contracts at issue between
appellants and Pat Catan’s involved a product, not a price for that product. Both
appellants paid a price that had been mutually agreed to and received their products as
agreed. They do not allege that the items were defective or worth less than what they
actually paid. Therefore, they received the benefit of their bargain and no breach
occurred. Accordingly, the appellants’ fourth assigned error is overruled.
{¶23} Judgment affirmed in part, reversed in part and remanded.
It is ordered that appellee and appellants share the costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this court directing the common
pleas court to carry this judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of
the Rules of Appellate Procedure.
______________________________________________
MELODY J. STEWART, JUDGE
FRANK D. CELEBREZZE, JR., A.J., CONCURS;
PATRICIA ANN BLACKMON, J., CONCURS IN PART AND DISSENTS IN PART
(WITH SEPARATE OPINION ATTACHED)
PATRICIA ANN BLACKMON, J., CONCURRING AND DISSENTING:
{¶24} I concur with the majority’s opinion to overrule Martin’s second, third, and
fourth assigned errors, but must respectfully dissent from the majority’s disposition of the
first assigned error regarding Martin’s CSPA claim.
{¶25} I do not believe that Ohio Adm.Code 109:4-3-12(E) applies in the instant
case because section (E) governs situations where the supplier is providing the discount
off its own regular price and not a comparison with other suppliers. I believe the fact
that Pat Catan’s offers these discounts “every day” shows that the discounted prices are,
in fact, Pat Catan’s regular price; the reduced price is logically a comparative price to that
charged by competitors. Moreover, the fact that Pat Catan’s states that it will beat or
match a competitor’s price that is lower, does not discredit that it is comparing its prices
to those normally charged by competitors. Undoubtedly, there will be situations where
competitors will have an isolated sale on items for which it normally charges a higher
price.
{¶26} I also do not believe that evidence was presented that Pat Catan’s violated
section (F), which applies to pricing comparisons with competitors. The majority has
concluded that pursuant to (F)(1), the reference to a price other than the supplier’s own
price must be “conspicuous” and that the current advertising was not conspicuous.
However, section (F)(3) provides as follows:
(3) It is prima facie evidence of compliance with paragraphs (F)(1) and
(F)(2) of this rule if the supplier:
(a) Has no knowledge that the reference price is not genuine; and
(b) Has made reasonable, bona fide efforts to determine whether the
reference price is genuine.
(Emphasis added.)
{¶27} Pat Catan’s presented such evidence by submitting the deposition
testimony of Lamrite’s General Merchandise Manager, David Herbers. Herbers testified
to the factors that go into determining the retail price of an item, including the
manufacturer’s reference price or suggested retail price and research of competitive
pricing in the market place. Depo. 49. Regarding the custom framing, he stated that the
reference prices are based on “manufacturer-suggested prices” from the company that
provides the framing supplies to Pat Catan’s. The 50 percent discount is applied to the
suggested price. Depo. at 113-114.
{¶28} The plaintiffs did not dispute this evidence. In fact, in her deposition,
Martin testified that the items she had purchased at Pat Catan’s products were sold for 50
percent less than what Jo Ann Fabrics was charging. There was absolutely no evidence
presented that Pat Catan’s prices on items were not at least 40 percent cheaper than the
store’s competitors. Likewise, no evidence was presented to contradict Pat Catan’s claim
that its custom framing was 50 percent cheaper than competitors. Because Pat Catan’s
presented evidence in support of (F)(3), it was the plaintiff’s burden to refute that
evidence. Accordingly, I would have affirmed the trial court’s granting of summary
judgment in Pat Catan’s favor in total.