Vindicator Printing Company v. Northeast Industries, Inc. et al

Filing 62

Memorandum Opinion and Order: Plaintiff's motion for summary judgment against defendants Sam Boyles and Lessie Boyles is granted as to the breach of contract claim, and denied as to the promissory estoppel claim; judgment is rendered in f avor of plaintiff and against defendants Sam Boyles and Lessie Boyles in the amount of $250,000, as well as expenses and attorney fees; plaintiff shall submit an itemization of expenses and attorneys' fees, as well as a supporting affidavit , to the Court on or before 8/12/11; further, based upon the entry of judgment on the breach of contract claim, the promissory estoppel claim is dismissed sua sponte as a matter of law (Related document 60 ). Signed by Magistrate Judge George J. Limbert on 8/5/11. (S,AA)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION

VINDICATOR PRINTING COMPANY,

v.
SAM W. BOYLES, et al.,

)
)
Plaintiff,
)
)
)
)
)
)
Defendants. )

CASE NO. 4:09CV01973
MAGISTRATE JUDGE GEORGE J.
LIMBERT
MEMORANDUM OPINION AND ORDER

This matter is before the Court on the motion for summary judgment1 against Defendants,
Sam and Lessie Boyles (collectively “the Boyles”) filed on behalf of Plaintiff, Vindicator Printing
Company (“Plaintiff”) on June 28, 2011. ECF Dkt #60. No response brief was filed.
The pending motion is actually the second motion for summary judgment filed by Plaintiff
in this case. Plaintiff filed its original motion for summary judgment on April 22, 2011. ECF Dkt.
#51. The Boyles did not file a response brief to the original motion, however, in a letter dated May
6, 2011, Sam Boyles wrote that he intends to file personal bankruptcy and is “waiting to see what
[JPMorgan] Chase [Bank] (“JPMorgan”) is going to do.” ECF Dkt. #54. As of the date of this
memorandum opinion and order, the electronic filing system for the United States Bankruptcy Court
for the District of Arizona reflects that neither Sam Boyles nor Lessie Boyles has filed a voluntary
petition. This Court granted the original motion and entered judgment in favor of Plaintiff on the

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On October 19, 2009, the parties voluntarily consented to have a United States magistrate judge
conduct any and all further proceedings in the case, including the trial, and order the entry of final judgment.
ECF Dkt. #13.

breach of contract claim on June 23, 2011, however the memorandum opinion and order and the
judgment were vacated five days later. Plaintiff’s counsel filed a motion to vacate on June 28, 2011
due to his failure to properly serve the original motion for summary judgment. ECF Dkt #59. On
that same date, Plaintiff’s counsel filed the pending motion for summary judgment.
For the following reasons, the motion for summary judgment is granted in part with respect
to the breach of contract claim (Count One) and denied in part with respect to the promissory
estoppel claim (Count Two). Furthermore, the promissory estoppel claim (Count Two) is dismissed
as a matter of law.
Pursuant to 11 U.S.C. 362, this matter was automatically stayed with respect to the third
defendant, Northeast Industries, Inc (“Northeast”), which filed Chapter 11 bankruptcy on July 8,
2010 in the District of Arizona. ECF Dkt. #38. On December 7, 2010, by marginal entry order, this
Court severed the claims against the Boyles and Northeast, in order to allow the claims against the
Boyles to proceed to judgment. ECF Dkt. #44.
I.

FACTS AND PROCEDURAL HISTORY
In support of the motion for summary judgment, Plaintiff submitted the Declaration of Ted

Suffolk, Plaintiff’s Assistant General Manager. Attached to the Suffolk Declaration were the
Amended and Restated Reimbursement Agreement (“Reimbursement Agreement”), the contract at
issue in this case, and a demand letter, dated April 20, 2009, from Plaintiff’s counsel to the Boyles,
demanding enforcement of the Reimbursement Agreement. The following facts are taken from the
Suffolk Declaration, the Complaint, and the Answer.
On August 21, 2009, Plaintiff filed a complaint alleging breach of contract and promissory
estoppel claims against Defendants. ECF Dkt. #1, Notice of Removal, Exhibit A, Complaint.

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Plaintiff owns The Vindicator, a daily newspaper circulated in Youngstown, Ohio. Id. at ¶11.
Northeast sells, manufactures, repairs, engineers and installs printing presses. Id. at ¶8. Northeast
is owned by Sam Boyles. Suffolk Decl. at ¶9.
Northeast and Plaintiff entered into a written contract whereby Northeast agreed to supply
and install equipment at Plaintiff’s production facility in Youngstown, Ohio. Id. at ¶2. Plaintiff
required that Northeast obtain a performance bond to guarantee its performance of the printing press
installation. Id. at ¶3. U.S. Specialty Insurance Company (“U.S. Specialty”) agreed to provide a
performance bond, conditioned upon Northeast obtaining a $250,000 letter of credit that U.S.
Specialty could draw upon if it paid a claim to Plaintiff. Id. JPMorgan offered to establish the
$250,000 letter of credit, but required $250,000 in collateral to secure the letter of credit. Id. at ¶5.
Plaintiff agreed to provide the $250,000 collateral conditioned upon the promise of Northeast and
the Boyles to reimburse it for any amount of the collateral claimed by JPMorgan. Id.
On June 30, 2008, the parties entered into the Reimbursement Agreement. Id. at ¶6. The
Reimbursement Agreement reads, in pertinent part:
Payor hereby absolutely and unconditionally agrees to reimburse [Plaintiff] for any
amounts claimed by JPMorgan against, or debited from, the Collateral and for all
expenses of any nature whatsoever, including without limitation, reasonable
attorney’s fees, incurred or paid by Buyer in exercising any right, power, or remedy
conferred by this Reimbursement Agreement (collectively, the “Reimbursement
Obligations”). Mr. Boyles, Mrs. Boyles and [Northeast] shall be jointly and severally
liable for their Reimbursement Obligations as Payor.
ECF Dkt. #1, Notice of Removal, Exhibit A, Complaint, Exhibit 1-1, Amended and Restated
Reimbursement Agreement, ¶1.
On April 1, 2009, Plaintiff declared Northeast to be in default of the installation contract and
Plaintiff made a claim on the performance bond. Suffolk Decl. at ¶7. This led U.S. Specialty to

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draw down the entire $250,000 letter of credit issued by JPMorgan. Id. Consequently, JPMorgan
claimed the collateral deposited by Plaintiff. Id. On April 20, 2009, Plaintiff sent a letter by
overnight mail to Defendants demanding that they reimburse it for the $250,000 claimed by
JPMorgan. Id. at ¶8.
Plaintiff alleges a breach of the Reimbursement Agreement in the first count of its complaint.
Plaintiff avers that the Reimbursement Agreement was a valid and binding contract, and argues that
it fulfilled its obligations by depositing $250,000 with JPMorgan in accordance with the contract.
Compl. at ¶¶35-36. Plaintiff further avers that Defendants have failed to reimburse it and as a
result, it has been damaged in the amount of $250,000, plus interest and attorney’s fees. Id. at ¶¶37,
39.
In the second count of its complaint, Plaintiff alleges promissory estoppel based on the
Reimbursement Agreement. Plaintiff avers that Defendants each promised to reimburse it for any
amount of collateral claimed by JPMorgan. Id. at ¶41. Plaintiff states that it relied on Defendants’
respective promises by depositing the $250,000 in the JPMorgan account. Id. at ¶42. Further,
Plaintiff avers that its reliance on Defendants’ promises was reasonable and foreseeable as Plaintiff
deposited the $250,000 in exchange for Defendants’ promise to reimburse it for any of the collateral
claimed by JPMorgan. Id. at ¶43. Plaintiff argues that by relying on Defendants’ promise, Plaintiff
has sustained losses of at least $250,000. Id. at ¶44.
On August 21, 2008, Defendants filed their answer. ECF Dkt. #3. In the answer, Defendants
admit that the Reimbursement Agreement is a contract. Answer at ¶35. Defendants further admit
that Plaintiff deposited the $250,000 with JPMorgan, Id. at ¶36, that they promised to reimburse

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Plaintiff for any amount of collateral claimed by JPMorgan, Id. at ¶41, and that they have not
reimbursed Plaintiff. Id. at ¶37.
Despite the foregoing admissions, Defendants contend in their answer that the
Reimbursement Agreement is unenforceable as “Plaintiff is not out any money that is not of its own
doing and fault.” Id. at ¶35. Defendants argue that Plaintiff has not fulfilled its obligations under
the contract and allege that Plaintiff breached the implied covenant of good faith and fair dealing.
Id. at ¶36. They further argue they have no contractual obligation to reimburse Plaintiff as “any
default declared under the agreements of the parties was without basis in fact or law, and arbitrary
and capricious.” Id. at ¶37. Finally, Defendants assert that they entered into the agreement under
false pretenses and with fraudulent purpose by Plaintiff. Id. at ¶35.2
II.

STANDARD OF REVIEW AND GOVERNING LAW
A.

SUMMARY JUDGMENT

Summary judgment should be granted “where the moving party has carried its burden of
showing that the pleadings, depositions, answers to interrogatories, admissions and affidavits in the
record construed favorably to the non-moving party, do not raise a genuine issue of material fact for
trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The court must view the evidence in the
light most favorable to the non-moving party and draw all reasonable inferences in its favor.
Johnson v. Karnes, 398 F.3d 868, 870-873 (6th Cir. 2005). The Court must decide, “whether the
evidence presents sufficient disagreement to require submission to a jury or whether it is so

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Northeast asserted a counterclaim against Plaintiff. ECF Dkt. #3, Counterclaim. Plaintiff filed an
answer to Northeast’s counterclaim, as well as a counterclaim to the counterclaim. ECF Dkt. #7. Because
both “counterclaims” only involve Northeast, and not the individual defendants, the counterclaims are subject
to the automatic bankruptcy stay.

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one-sided that one party must prevail as a matter of law.” Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 251-252 (1986).
A party seeking summary judgment bears the initial burden and must inform the court of the
basis for its motion. Celotex, 477 U.S. at 323. Further, the moving party must identify those
portions of “the pleadings, depositions, answers to interrogatories, and admissions on file, together
with the affidavits” which demonstrate the absence of a genuine issue of material fact. Id. The
moving party must make a showing that no reasonable jury could find other than for the moving
party. 60 Ivy St. Corp. v. Alexander, 822 F.2d 1432, 1435 (6th Cir. 1987).
Once the moving party satisfies its burden, the nonmoving party must demonstrate that
“there is [more than] some metaphysical doubt as to the material facts.” Moore v. Philip Morris
Cos., Inc., 8 F.3d 335, 340 (6th Cir. 1993), see Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 586 (1986). The non-moving party must present “some significant probative evidence
that makes it necessary to resolve the parties' differing versions of the dispute at trial.” 60 Ivy St.
Corp., 822 F.2d at 1435, see First Nat’l Bank of Ariz. v. Cities Servs. Co., 391 U.S. 253, 288-290
(1968).
B.

CHOICE OF LAW

In Ohio, courts apply the law of the state chosen by the parties to govern their contractual
rights and duties. Ohayon v. Safeco Ins. Co. (2001), 91 Ohio St. 3d 474, 477, 747 N.E.2d 206. The
Reimbursement Agreement explicitly states, “This Reimbursement Agreement shall be governed
by the laws of the State of Ohio, without regard to its conflict of law principles.” ECF Dkt. #1,
Exhibit 1. Therefore, Ohio substantive law shall be applied.

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III.

LAW AND ANALYSIS
A.

BREACH OF CONTRACT

Under Ohio law, to establish a breach of contract, a plaintiff must prove (1) the existence of
a contract, (2) performance by the plaintiff, (3) breach by the defendant, and (4) damage or loss to
the plaintiff. Powell v. Grant Med. Ctr. (2002), 148 Ohio App. 3d 1, 10, 771 N.E.2d 874.
There is no genuine dispute of material fact regarding the first element as both Defendants
and Plaintiff admit that the Reimbursement Agreement is a contract. Compl. at ¶35; Answer at ¶35.
The second element of a breach of contract claim is satisfied as Plaintiff deposited $250,000
pursuant to the Reimbursement Agreement. Suffolk Decl. at ¶5. The Reimbursement Agreement
states that Plaintiff “agreed to deposit $250,000 with JPMorgan as collateral…” ECF Dkt. #1,
Exhibit 1. Defendants do not dispute that Plaintiff deposited the $250,000 with JPMorgan pursuant
to the 2008 Reimbursement Agreement. Answer at ¶36. Defendants contend in their answer that
Plaintiff has not fulfilled its obligations under the contract and that Plaintiff breached the implied
covenant of good faith and fair dealing. Answer at ¶36. However, conclusory statements
unsupported by specific facts are not sufficient to survive summary judgment. Lewis v. Philip
Morris Inc., 355 F.3d 515, 533 (6th Cir. 2004). Therefore, there is no genuine dispute of material
fact regarding the second element of the breach of contract claim as Defendants failed to present
“significant probative evidence” presenting a genuine issue for a jury. 60 Ivy St. Corp., 822 F.2d
at 1435.
The third element is satisfied as Defendants admit they have not reimbursed Plaintiff.
Answer at ¶24. The Reimbursement Agreement explicitly states, “[Defendants] hereby absolutely
and unconditionally agree [] to reimburse [Plaintiff] for any amounts claimed by JP Morgan…”

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Defendants contend that they do not have a contractual obligation to do so as “any default declared
under the agreements of the parties was without basis in fact or law, and arbitrary and capricious.”
Answer at ¶37. However, as noted above, conclusory statements unsupported by specific facts are
insufficient to survive summary judgment. Lewis, 355 F.3d at 533. Furthermore, to prove a breach,
a plaintiff must show that the defendant “did not perform one or more of the terms of a contract.”
Little Eagle Props. v. Ryan, 10 Dist. No. 03AP-923, 2004 Ohio 3830, ¶15. Therefore, there is no
genuine dispute of material fact regarding the third element as Defendants failed to reimburse
Plaintiff, a term explicitly stated in the contract.
Lastly, there is no genuine dispute of a material fact regarding the fourth element as Plaintiff
suffered damage and loss as a result of Defendants’ breach.

Suffolk Decl. ¶¶8-9.

The

Reimbursement Agreement states that Defendants would reimburse Plaintiff for any amount claimed
by JPMorgan. ECF Dkt. #1, Exhibit 1. After U.S. Specialty drew down the entire $250,000 line of
credit, JPMorgan claimed the collateral deposited by Plaintiff. Suffolk Decl. at ¶7. Defendants
concede that they have not reimbursed Plaintiff. Answer at ¶37. In addition, the Reimbursement
Agreement states that Defendants would reimburse Plaintiff for “all expenses of any nature
whatsoever, including without limitation, reasonable attorneys fees, incurred or paid by Buyer in
exercising any right, power, or remedy conferred by this Reimbursement Agreement.” Therefore,
Plaintiff has suffered a loss of $250,000, as well as expenses incurred in exercising its right under
the Reimbursement Agreement. Suffolk Decl. at ¶9. Accordingly, Plaintiff’s motion for summary
judgment is granted in part, and Plaintiff may recover the $250,000, plus expenses and attorneys’
fees based upon the breach of the Reimbursement Agreement.

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B.

PROMISSORY ESTOPPEL

In Ohio, the doctrine of promissory estoppel is defined as “a promise which the promisor
should reasonably expect to induce action or forbearance on the part of the promisee or a third
person and which does induce such action or forbearance.” Tally v. Teamsters, Chauffeurs,
Warehousemen, & Helpers (1976), 48 Ohio St. 2d 142, 146, 357 N.E.2d 44, 47. The promise is
“binding if injustice can be avoided only by enforcement of the promise.” Id. However, in Ohio,
promissory estoppel is an equitable remedy unavailable to a plaintiff where a signed agreement
exists. Olympic Holding Co., L.L.C. v. ACE Ltd. (2009), 122 Ohio St. 3d 89, 96-97, 909 N.E.2d 93,
100-101. In Blessing v. USW, 244 F.App’x 614 (6th Cir. 2007, unreported), the court stated
“promissory estoppel is not available when an unambiguous contract exists that covers the issue for
which damages are sought.”

Id. at 622.

Both Defendants and Plaintiff admit that the

Reimbursement Agreement is a contract. Compl. at ¶25; Answer at ¶35. Accordingly, Plaintiff’s
motion for summary judgment is denied in part, as Plaintiff cannot recover under the promissory
estoppel claim.
IV.

CONCLUSION
For the above reasons, Plaintiff’s motion for summary judgment against the Boyles, ECF

Dkt. #60, is granted as to the breach of contract claim and denied as to the promissory estoppel
claim. For the reasons stated herein, judgment is rendered in favor of Plaintiff and against
Defendant, Sam and Lessie Boyles, in the amount of $250,000, as well as expenses and attorney
fees. Plaintiff shall submit an itemization of expenses and attorneys’ fees, as well as a supporting
affidavit, to the Court on or before August 12, 2011. Furthermore, based upon the entry of judgment

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on the breach of contract claim, the promissory estoppel claim is dismissed sua sponte as a matter
of law.
IT IS SO ORDERED.

Dated: August 5, 2011

/s/ George J. Limbert
GEORGE J. LIMBERT
UNITED STATES MAGISTRATE JUDGE

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