Norco Equip. Co. v. Simtrex, Inc.

[Cite as Norco Equip. Co. v. Simtrex, Inc., 2011-Ohio-3688.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 95914
NORCO EQUIPMENT COMPANY
PLAINTIFF-APPELLEE
vs.
SIMTREX, INC.
DEFENDANT-APPELLANT
JUDGMENT:
AFFIRMED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-518421
BEFORE: Cooney, J., Kilbane, A.J., and S. Gallagher, J.
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RELEASED AND JOURNALIZED: July 28, 2011
ATTORNEYS FOR APPELLANT
Richard E. Hackerd
2000 Standard Building
1370 Ontario Street
Cleveland, Ohio 44113
ATTORNEY FOR APPELLEE
Brent L. English
Law Offices of Brent L. English
M.K. Ferguson Plaza, Suite 470
1500 West Third Street
Cleveland, Ohio 44113-1422
COLLEEN CONWAY COONEY, J.:
{¶ 1} Defendant-appellant, Simtrex, Inc. (“Simtrex”), appeals the trial
court’s judgment awarding money damages and prejudgment interest to
plaintiff-appellee, Norco Equipment Company (“Norco”). We find no merit to
the appeal and affirm.
{¶ 2} Norco is a dealer of industrial air compressors and ancillary
equipment. Simtrex exports equipment to companies in the Middle East.
In 2006, Norco filed suit against Simtrex, claiming breach of contract and
unjust enrichment for failing to pay for an air compressor that Norco sold to
Simtrex. Simtrex asserted counterclaims for breach of contract, breach of
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Uniform Commercial Code (“UCC”) warranties, and fraud. Simtrex also
asserted a third-party complaint for fraud and conversion against Norco’s
president, Eric Niedermeyer (“Niedermeyer”). Simtrex alleged that Norco,
through Niedermeyer, falsely represented that the air compressor it sold to
Simtrex was new, when, in fact, it was used.
{¶ 3} At the close of evidence at the first trial, the court granted a
directed verdict in favor of Norco and Niedermeyer, and entered judgment in
favor of Norco in the amount of $162,355, the contract price for the air
compressor and equipment. The court dismissed Simtrex’s counterclaims
against Norco and Niedermeyer. The trial court also granted Norco’s motion
for prejudgment interest for the period from September 3, 2003 to August 29,
2008 in the amount of $55,514.52. Simtrex appealed to this court, which
reversed and remanded the case for a new trial, finding factual questions for
a jury to decide on several of the claims.1
{¶ 4} On remand, the parties conducted additional discovery and
retried the case in September 2010. The same live witnesses testified in the
second trial except that, this time, the court allowed Simtrex to present the
videotaped trial testimony of Gerard Muller (“Muller”) as an expert on air
compressors.
Norco Equip. Co. v. Simtrex, Inc., Cuyahoga App. No. 92479, 2009-Ohio-5562.
1
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{¶ 5} Niedermeyer testified that he “absolutely” told Shaji Simon
(“Simon”), Simtrex’s owner, that there were 400 engineering test hours on the
air compressor but that it had full warranties on the motor and the whole
package would be guaranteed for one year. Simon, however, testified that he
understood the air compressor was “to be new,” and denied knowing anything
about engineering test hours.
{¶ 6} Muller testified, over Norco’s objection, that a piece of equipment
ordered from the manufacturer that arrived with 400 hours indicated on the
hour meter would not be regarded as a “new” piece of equipment. Further,
Muller testified that when a piece of industrial equipment such as an air
compressor is identified in a sales contract, the equipment is presumed new
unless otherwise specified.
{¶ 7} The jury returned a verdict in favor of Norco in the amount of
$162,355.00. Norco moved for prejudgment interest, which the trial court
granted in the amount of $63,197.77 for the period from August 30, 2003 to
the date of judgment for a total judgment of $225,552.77, plus post-judgment
interest. Simtrex now appeals, raising three assignments of error.
Prejudgment Interest
{¶ 8} In the first assignment of error, Simtrex argues the trial court
erred in granting prejudgment interest to Norco without a hearing and before
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the deadline for Simtrex to file a response brief. Simtrex contends the trial
court abused its discretion in awarding prejudgment interest because Simtrex
asserted “good faith defenses.”
{¶ 9} An award of prejudgment interest on a breach of contract claim is
governed by R.C. 1343.03(A). Galmish v. Cicchini (2000), 90 Ohio St.3d 22,
33, 734 N.E.2d 782. In pertinent part, R.C. 1343.03(A) provides that: “when
money becomes due and payable upon any * * * contract or other transaction,
the creditor is entitled to interest at the rate of ten per cent per annum.”
Thus, where a party has been granted judgment on an underlying contract
claim, that party is entitled to prejudgment interest as a matter of law.
Reminger & Reminger Co., L.P.A. v. Fred Siegel Co. (Mar. 1, 2001), Cuyahoga
App. No. 77712, citing Dwyer Elec., Inc. v. Confederated Builders, Inc. (Oct.
29, 1998), Crawford App. No. 3-98-18. The court has no discretion on the
issue of whether to grant prejudgment interest. Id.{¶ 10} Prejudgment interest acts as compensation and serves to
ultimately make the aggrieved party whole. Wasserman v. The Home Corp.,
Cuyahoga App. No. 90915, 2008-Ohio-5477, citing Royal Elec. Constr. Corp. v.
Ohio State Univ. (1995), 73 Ohio St.3d 110, 115, 652 N.E.2d 687.
“Prejudgment interest under R.C. 1343.03(A) is based on the premise that a
party to a contract should not retain the use of money owed under a contract
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when that amount is due and payable to the other contracting party.” Fiorilli
Constr., Inc. v. A. Bonamase Contracting, Inc., Cuyahoga App. No. 94719,
2011-Ohio-107, ¶59, quoting Wasserman at ¶7.
{¶ 11} Although the right to prejudgment interest under R.C. 1343.03(A)
is nondiscretionary, the trial court has discretion to determine when the
money became “due and payable” and the aggrieved party should be
compensated for the lapse of time between the accrual of the claim and
judgment. Royal Elec. at 115-116. Thus, while the right to prejudgment
interest in a contract claim is a matter of law, the amount awarded is based
on the court’s factual determination of an accrual date. Id.{¶ 12} Simtrex does not challenge the court’s August 30, 2003 accrual
date. Simtrex argues the court should have held a hearing and should not
have ruled on the motion for prejudgment interest before Simtrex had filed a
response brief. However, since the trial court had no discretion whether to
award prejudgment interest under R.C.1343.03(A), once liability was
established, neither a hearing nor a response brief would have changed that
result.
{¶ 13} Furthermore, the evidence at trial established that Simtrex
issued a purchase order on August 11, 2003 for the air compressor and
related items. The same purchase order required Simtrex to pay Norco
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$162,355.00 by an irrevocable letter of credit and provided that the
equipment would be delivered within two weeks. Accordingly, the trial court
determined that Simtrex owed Norco the purchase price for the air
compressor on or before August 30, 2003, and calculated prejudgment interest
from that date. Because the accrual date was conclusively established at
trial, we find no reason to conclude that a hearing or response brief would
have changed the accrual date. Accordingly, we find no error in the trial
court’s award of prejudgment interest without a hearing or a response brief.
{¶ 14} The first assignment of error is overruled.
Evidence of Merchantability
{¶ 15} In the second assignment of error, Simtrex argues the trial court
committed “reversible error” by not permitting Simon to express his opinion
that an air compressor with 400 engineering test hours “would not have
passed among merchants.” In the third assignment of error, Simtrex argues
the trial court abused its discretion by excluding its expert’s opinion as to
whether the air compressor was “new” or “used.” Simtrex contends that had
its expert been allowed to testify that 400 hours of developmental work on the
air compressor would not be consistent with new equipment, the outcome of
the trial would have been different. Because these assigned errors involve
similar analysis of the legal issues, we discuss them together.
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{¶ 16} The admission of relevant evidence is within the sound discretion
of the trial court. Its decision to admit or exclude such evidence will not be
reversed absent a showing of an abuse of discretion. Rigby v. Lake Cty.
(1991), 58 Ohio St.3d 269, 569 N.E.2d 1056. Further, Evid.R. 103(A)
provides:
“Error may not be predicated upon a ruling which admits or excludes
evidence unless a substantial right of the party is affected * * *.”
{¶ 17} See, also, O’Brien v. Angley (1980), 63 Ohio St.2d 159, 164-165,
407 N.E.2d 490. (holding that an improper evidentiary ruling constitutes
reversible error only when the error affects the substantial rights of the
adverse party or the ruling is inconsistent with substantial justice).
{¶ 18} In determining whether Simtrex’s rights were substantially
impaired in developing its case, it is necessary to set forth what elements
must be proven in a breach of implied warranty of merchantability claim.
R.C. 1302.27(A) provides that a warranty of merchantability is implied in
every contract for the sale of goods. To be merchantable, R.C. 1302.27(B)
provides, in pertinent part, that the goods must:
“(1) pass without objection in the trade under the contract description;
and
* * *
“(3) [be] fit for the ordinary purposes for which such goods are used; and
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“(4) run, within the variations permitted by the agreement, of even
kind, quality and quantity, within each unit and among all units
involved.”
R.C. 1302.27(B)(1), (3), and (4).
{¶ 19} Although the court did not allow Simon to offer his opinion that
the air compressor would not have passed as merchantable “among
merchants,” the court allowed the expert, Muller, to testify as to the
merchantability of the equipment. He stated that “a piece of equipment
ordered from a manufacturer that arrived with 400 hours indicated on the
hour meter on that piece of equipment would not be regarded as a new piece
of equipment.” Muller also explained what effect 400 engineering test hours
would have on the equipment and that when a piece of industrial equipment
such as an air compressor is identified in a sales contract, this means “new
equipment unless otherwise specified.”
{¶ 20} Although Muller was precluded from testifying that a new air
compressor should not have any developmental hours associated with it, he
was permitted to testify that 400 developmental hours indicated on the hour
meter “would not be regarded as new.” Thus, contrary to Simtrex’s third
assignment of error, the jury heard evidence that 400 hours of developmental
work on air compressor would mean the compressor should not be considered
“new.”
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{¶ 21} Moreover, regarding the second assignment of error, we also find
no error by the court. The objectionable question to Simon, Simtrex’s owner,
was as follows:
“Q: Among merchants, would that compressor have passed? Would they
have accepted those goods, according to your purchase order?”
{¶ 22} Norco’s counsel immediately objected, and the following exchange
took place, beginning with Norco’s counsel objecting as follows:
“MR. ENGLISH: Objection.
“A: No.
“THE COURT: Objection is sustained. The answer is stricken.
“MR. HACKERD: Thank you, your honor.
“BY MR. HACKERD:
“Q: On September 4th of 2003, was the compressor acceptable to you for
the purchase of resale?
“A: No.”
{¶ 23} Although it is not clear on what ground the court sustained the
objection, the objection was properly sustained on at least two grounds.
First, the question was confusing because it was compound in nature.
Second, Simtrex failed to lay a foundation for Simon to testify as to what
other merchants in the industry would do under the circumstances of this
case, if such an opinion would ever be admissible even with a proper
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foundation. Counsel for Simtrex abandoned the question without making
any effort to rephrase it or lay a proper foundation. It is impossible to
determine what the trial court would have done had Simtrex cured the
defects in its objectionable question. Therefore, we find no abuse of
discretion in the court’s excluding Simon’s opinion based on the improper
question.
{¶ 24} Accordingly, the second and third assignments of error are
overruled.
Judgment affirmed.
It is ordered that appellee recover of appellant 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.
______________________________________________
COLLEEN CONWAY COONEY, JUDGE
MARY EILEEN KILBANE, A.J., and
SEAN C. GALLAGHER, J., CONCUR