Hirschvogel Incorporated v. Allison Transmission Inc
Filing
49
ORDER granting in part and denying in part 35 Motion for Summary Judgment; granting in part and denying in part 36 Motion for Summary Judgment. Signed by Judge James L. Graham on 5/10/19. (jlg6)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
HIRSCHVOGEL INCORPORATED,
Case No. 2:17-cv-458
Judge Graham
Plaintiff,
v.
Chief Magistrate Judge Deavers
ALLISON TRANSMISSION, INC.,
Defendant.
OPINION AND ORDER
This matter is before the Court on Plaintiff Hirschvogel Incorporated’s (“Hirschvogel”)
Motion for Partial Summary Judgment (Pl.’s Mot. Partial Summ. J., ECF No. 35) with respect to
its breach of contract claim and Defendant Allison Transmission, Inc.’s (“Allison”) Motion for
Summary Judgment (Def.’s Mot. Summ. J., ECF No. 36) on Hirschvogel’s claims of breach of
contract and unjust enrichment. For the reasons that follow, Hirschvogel’s Motion for Partial
Summary Judgment (ECF No. 35) is GRANTED as to liability, and Allison’s Motion for
Summary Judgment (ECF No. 36) is GRANTED in part and DENIED in part.
I.
BACKGROUND
A. Factual Background
This case arises from a contractual dispute between the parties. Hirschvogel, an Ohio
corporation, fabricates and produces highly specialized metal parts used in the automotive
industry. (Compl. ¶¶ 1, 6, ECF No. 1 at 1–2; ECF No. 35 at 333.) Both parties are merchants as
the term is defined in the Uniform Commercial Code (“UCC”). U.C.C. § 2-104(1). For almost
twenty years, Hirschvogel supplied Allison, a Delaware corporation with its principal place of
business in Indiana, with automotive components for the manufacture of automobile transmissions.
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(Id. at ¶ 2, 7; ECF No. 35 at 333; ECF No. 36 at 373.) During the course of their relationship, the
parties operated pursuant to scheduling agreements issued by Allison, which is standard practice
in the automotive industry. (ECF No. 36 at 377.) The scheduling agreements outlined the parties’
finalized pricing terms and listed a begin date and an end date indicating the applicable pricing
time frame. (Def.’s Ex. 3, Purser Dep.65:19-24, 66:3-13, ECF No. 38-37 at 826–27; Def.’s Ex. 4,
Rutherford-Driscoll Dep. 98:7-24, 99:1, ECF No. 38-38 at 857–58; Def.’s Ex. 6, Johnston Dep.
10:13-14, 23-24, ECF No. 38-40 at 899.) If the parties agreed to extend the end date of their
current scheduling agreement or negotiate new pricing, Allison would issue a form entitled,
“Scheduling Agreement Change,” reflecting the new end date and pricing. (Def.’s Ex.1.F, ECF
No. 38-7; Rutherford-Driscoll Dep. 98: 22-24, 99:1, ECF No. 38-38 at 857–58; ECF No. 45 at
1048)
Prior to the end date of their 2010 Scheduling Agreement, Allison and Hirschvogel
attempted to enter into a long-term purchase agreement but failed to reach an agreement on its
terms. (Compl., Ex. A, ECF No. 1-1 at 2–3.) By letter dated September 19, 2011 and entitled,
‘Termination Agreement Offer: Allison Transmission” (the “2011 Termination Agreement”),
Hirschvogel offered to continue supplying parts to Allison based on a fair termination agreement:
Based on both parties not being able to resolve the terms and conditions for a Long
Term Agreement, Hirschvogel is offering to continue to supply of [sic] Allison’s
parts based on a fair termination agreement stated below:
Both companies (Allison Transmission and Hirschvogel Incorporated) agree to
give 12 months advanced notice of termination in writing to the other party. At
time of written termination is received, both parties will meet to discuss an exit
strategy.
Please sign and return this document stating you accept our offer, and if you have
any questions, please contact me at 614-340-5639 or by email at
Burke.Gruber@hirschvogel.com.
(Compl., Ex. B, ECF No. 1-2 at 10; Def.’s Ex.1.B, ECF No. 38-3.)
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On November 7, 2011, Allison representative, Tanya Beckett, accepted Hirschvogel’s offer
by signing the 2011 Termination Agreement. (Id.)
The parties continued negotiating pricing from 2011 until 2017. (ECF No. 35 at 333; ECF
No. 36 at 373.) Once the parties agreed upon pricing for a particular period, a scheduling
agreement change was issued with the finalized pricing and time period to which that pricing
applied. (ECF No. 36 at 373.) According to then Allison Commodity Manager, Michael Larsen,
Allison’s negotiations with Hirschvogel were similar to its negotiations with other suppliers. (Pl.’s
Ex. B, Larsen Dep. 63:8-19, ECF No. 35-2 at 346.) Allison consistently requested price reductions,
while suppliers resisted their attempts. (Id. at 58: 16-19, ECF No. 35-2 at 345.)
In 2015, Allison developed concerns about Hirschvogel’s seemingly uncompetitive
pricing, but Hirschvogel refused to lower its prices and instead raised its pricing on two of the six
parts it supplied to Allison. (ECF No. 36 at 373.) At one point during the parties’ 2015
negotiations, Hirschvogel urged Allison to commit to pricing, so parts shipments would not be
interrupted. (Def.’s Ex. 1.E, ECF No. 38-6 at 666.) To convey that message, then Hirschvogel
Account Manager, Rachel Purser, emailed Mr. Larsen stating, “Hirschvogel will need your
commitment on 2015 pricing no later than 3/6, so that shipments are not interupted [sic] as
discussed.” (Id.) Allison perceived that message as a threat. (ECF No. 36 at 376.) Hirschvogel
counters that its message was merely a negotiation tactic, and that it, in fact, never stopped any
shipments to Allison. (Def.’s Ex.5, Dusenberry Dep. 108:4-24, ECF No. 38-39 at 894.)
Allison claims that throughout 2015 and 2016, it informed Hirschvogel that unless
Hirschvogel lowered its pricing, Allison would obtain the services of another supplier upon the
expiration of the parties’ then-current Scheduling Agreement. (ECF No. 36 at 373.) For example,
Mr. Larsen emailed then Hirschvogel Account Manager, Krystie Rutherford-Driscoll, in late 2015
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stating, “I want to ask 1 more time if Hirschvogel’s management understands that by not offering
a better LTA that some or possibly all of our current business may move sometime in 2016.”
(Def.’s Ex. 1.T, ECF No. 38-21 at 734.) Hirschvogel never considered Allison’s statements to be
serious threats, as Hirschvogel believed the parties’ supply relationship would continue as it had
in previous years. (Dusenberry Dep. 149:6-13, ECF No. 38-39 at 895.) Hirschvogel claims Allison
made similar threats on an annual basis and considered these statements part of Allison’s “typical
rhetoric” before the parties eventually came to an agreement on price. (Id. at 149:22-24.)
Throughout the parties’ negotiations, Hirschvogel focused on the possibility of a long-term
agreement, something it considered to extend beyond a one-year period. (Dusenberry Dep. 74:1721.) During the parties’ 2015 pricing discussions, Ms. Purser also emailed Allison relaying,
“Hirschvogel does not consider a standard scheduling agreement as a[n] LTA.” (Def.’s Ex. 1.O,
ECF No. 38-16 at 723.) On December 22, 2016, Allison agreed to extend the pricing associated
with the parties’ then-current Scheduling Agreement through March 31, 2017. (Def’s Ex. 1.G,
ECF No. 38-9; Def.’s Ex. 1.BB, ECF No. 38-28.) As of January 17, 2017, then Hirschvogel
Account Manager, Ms. Rutherford-Driscoll, still believed the parties continued to negotiate a longterm agreement, as evidenced by her email request to Allison for “a 3 year LTA” in return for a
cost “improvement.” (Def.’s Ex.1.EE, ECF No. 38-30 at 768.)
The following month, Allison verbally informed Ms. Rutherford-Driscoll by phone of its
intent to switch suppliers following the March 31, 2017 end date of the then-current Scheduling
Agreement. (Compl. ¶ 12, ECF No. 1 at 3; Def.’s Ex.1G, ECF No. 38-8 at 674.) After relaying
the news to her supervisor, Eric Dusenberry, Mr. Dusenberry instructed Ms. Rutherford-Driscoll
to review the contents of the Allison account binder to determine Allison’s contractual obligations
upon termination. (Dusenberry Dep. 47:14–24, 48:10, ECF No. 38-39 at 880–81.) Ms. Rutherford-
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Driscoll emailed Allison representative Mr. Larsen conveying her surprise at his earlier phone call,
attaching a copy of the 2011 Termination Agreement, and suggesting a follow up phone call with
management to further discuss the situation. (Def.’s Ex.1.CC, ECF No. 38-29 at 766.) Allison
refused to rescind its decision. (ECF No. 36 at 387.) Effective April 1, 2017, Hirschvogel ceased
supplying Allison with automotive components. (Compl. at ¶ 14, ECF No. 1 at 3.)
B. Procedural Background
Hirschvogel filed this action on May 26, 2017, setting forth two theories of recovery: (1)
breach of contract and (2) unjust enrichment. (Compl. ¶¶ 18–28, ECF No. 1 at 3–4.) Hirschvogel
alleges Allison breached the 2011 Termination Agreement by failing to provide twelve months’
notice prior to termination. (Id. at ¶ 23.) Hirschvogel claims it has been unable to replace the
machinery and labor previously scheduled for Allison, resulting in significant factory downtime
and a loss of over $1.4 million in profits. (Id. at ¶¶ 15–16.) Hirschvogel further claims that it has
been unable to find any suitable use for the raw materials purchased for the manufacture of
Allison’s automotive components, resulting in further losses due to the purchase and storage of
the presently unusable raw materials. (Id. at ¶ 17.) Hirschvogel also asserts an unjust enrichment
claim stating that it relied on Allison’s promise to provide twelve months’ notice, and in doing so,
refrained from seeking alternate customers to which to devote its labor, equipment, and resources
and has suffered damages as a result. (Id. at ¶¶ 26–28.)
On October 10, 2017, the Court issued an Order (ECF No. 11) staying this action while a
parallel action filed by Allison and styled, Allison Transmission, Inc. v. Hirschvogel, Inc., Case
No. 1:17-cv-01687-TWP-MJD was pending in the Southern District of Indiana, (the “Indiana
Action”). On April 4, 2018, the parties notified the Court that the Southern District of Indiana
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entered an Entry and Final Judgment on March 21, 2018, dismissing the Indiana Action. (ECF No.
12.) That same day, this Court lifted the stay on the present action.
Throughout this litigation, the parties have viewed their previous business relationship
differently. Allison does not dispute the 2011 Termination Agreement’s clear and unambiguous
language regarding termination, nor does it dispute providing less than twelve months’ notice to
Hirschvogel, because it perceives no obligation to do so under the parties’ supply agreement. (ECF
No. 36 at 394, 399.) Allison argues that the Scheduling Agreement Changes governed not only
the pricing for the parts Hirschvogel supplied to it, but also the duration of the parties’ supply
agreement. (ECF No. 45 at 1048–49.) Allison further contends that the 2011 Termination
Agreement applies only to situations where one of the parties seeks to terminate the parties’ supply
agreement, and not where the Scheduling Agreement expired on its own. (Id. at 1061–62.) Allison
emphasizes its belief of a meaningful distinction between “expiration” and “termination” in the
context of the parties’ supply relationship. (Id.)
Allison maintains that neither party was even aware of the 2011 Termination Agreement
from 2014 through February 2017, and therefore the 2011 Termination Agreement cannot govern
the parties’ relationship, as neither party was relying on its terms. (ECF No. 36 at 374–76.) Allison
also argues that Hirschvogel’s conduct and communication throughout the course of their pricing
negotiations demonstrates a lack of intent to assert the twelve months’ advanced written notice
provision of the 2011 Termination Agreement, and as such, Hirschvogel has waived its contractual
rights by estoppel. (ECF No. 45 at 1064–67.) Specifically, Allison points to Hirschvogel’s 2015
statement concerning halting shipments if the parties could not reach a pricing agreement and
internal and external Hirschvogel communications concerning Allison’s ability to switch suppliers
after the end date of a current Scheduling Agreement. (Id. at 1065; ECF No. 36 at 376.)
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Allison highlights an internal Hirschvogel memo drafted during the parties’ 2016 pricing
dispute as evidence that Hirschvogel never intended to enforce the twelve-month notice
requirement:
[Allison] repeatedly mentioned that their contract with [Hirschvogel] HVI is ending
on 12/31/2015 and they fully intend NOT to renew the contract without having
2016 pricing. Additionally, Robert informed us that Allison Transmissions [sic]
have not submitted releases beyond 12/31/2015 and do not intend on doing so until
we have provided 2016 pricing. At this point, Allison was informed of the lengthy
steel lead times and by not providing release information beyond 12/31/2015 they
put themselves at risk of not having enough material to support their requirements.
Their response was that they fully understand the consequences and are prepared.
(Def.’s Ex. 1.R, ECF No. 38-19 at 731)
Allison also focuses on an email sent by Hirschvogel Account Manager, Ms. RutherfordDriscoll, to then Allison Commodity Manager, Mr. Larsen, and Global Purchasing Manager,
Robert Johnston, stating:
One key item I want to touch on. In the meeting Robert adamantly expressed
Allison Transmissions [sic] contract with Hirschvogel Automotive ends on
12/31/2015 and that Hirschvogel will not receive any releases or forecast
information beyond that date. At that point, Allison was informed of the lengthy
steel lead times and by not providing release information beyond 12/31/2015, they
put themselves at risk of not having enough material to support their
requirements. Roberts [sic] response was that he fully understands the
consequences of not ordering parts can potentially shut off their supply and is
prepared for that possibility.
(Def.’s Ex. 1.T, ECF No. 38-21 at 738–39.)
That same day, Mr. Johnston responded to Ms. Rutherford-Driscoll’s email:
Just so we are clear I never quite said what you have attributed to me. My comment
was that until I have Hirschvogel’s 2016 pricing I am not able to show you
production schedules into 2016 as our current pricing ends on 12/31/15. Yes this is
a problem and I am anxious awaiting to hear from you. Please provide me
something that we can work with immediately.
(Id. at 737.)
Hirschvogel maintains that knowledge of the 2011 Termination Agreement prior to
Allison’s February 2017 notice is irrelevant. (ECF No. 46 at 1099.) Hirschvogel points to Mr.
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Dusenberry’s deposition testimony as evidence that the occasion to review the 2011 Termination
Agreement never arose until Allison notified Hirschovogel that it was ending the parties’ supply
relationship. (ECF No. 46 at 1100 citing Dusenberry Dep. at 48:3-11). Hirschvogel further avers
that a signatory to a contract is bound to its terms whether it remembers those terms or not. (Id. at
1100.)
II.
STANDARD OF REVIEW
Both parties have moved for summary judgment under Federal Rule of Civil Procedure 56.
Under Rule 56, summary judgment is proper if the evidentiary materials in the record show that
there is “no genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(a); see Longaberger Co. v. Kolt, 586 F.3d 459, 465 (6th Cir.
2009). The moving party “always bears the initial responsibility of informing the district court of
the basis for its motion, and identifying those portions” of the record, “which it believes
demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S.
317, 323 (1986).
The movant’s burden is to demonstrate “the absence of a genuine issue of material fact as
to at least one essential element on each of the [non-movant’s] claims.” Johnson v. Univ. of
Cincinnati, 215 F.3d 561, 572 (6th Cir. 2000) (citing Celotex, 477 U.S. at 322). Summary
judgment must be entered “against a party who fails to make a showing sufficient to establish the
existence of an element essential to that party’s case, and on which that party will bear the burden
of proof at trial.” Celotex, 477 U.S. at 322. Conversely, material facts in genuine dispute that “may
reasonably be resolved in favor of either party” require denial of summary judgment in order to be
properly resolved by a jury. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). When
ruling on a motion for summary judgment, a court must assume as true the evidence of the non-
8
moving party and draw all reasonable inferences in that party’s favor. Id. at 255 (citing Adickes v.
S.H. Kress & Co., 398 U.S. 144, 158-59 (1970)). A court must avoid “[c]redibility determinations,
the weighing of the evidence, and the drawing of legitimate inferences from the facts,” which are
“jury functions” that are inappropriate to employ at the summary judgment stage. Id.
There is no obligation to “grant judgment as a matter of law for one side or the other,”
simply because the parties have filed simultaneous cross-motions for summary judgment. Profit
Pet v. Arthur Dogswell, LLC, 603 F.3d 308, 312 (6th Cir. 2010) (citing Taft Broad. Co. v. United
States, 929 F.2d 240, 248 (6th Cir. 1991)). Instead, “a ‘court must evaluate each party’s motion
on its own merits, taking care in each instance to draw all reasonable inferences against the party
whose motion is under consideration.’” Id. (quoting Taft, 929 F.2d at 248). Each motion must be
evaluated under the standard requiring the Court to “view all facts and inferences in the light most
favorable to the non-moving party.” Travelers Prop Cas. Co. of Am. v. Hillerich & Bradsby Co.,
Inc., 598 F.3d 257, 264 (6th Cir. 2010) (quoting Beck v. City of Cleveland, Ohio, 390 F.3d 912,
917 (6th Cir. 2004)).
III.
DISCUSSION
A. Choice of Law
As an initial matter, the Court addresses the parties’ disagreement concerning choice of
law. Hirschvogel brings its claims against Allison based on diversity and asserts Ohio law governs
this matter, whereas Allison asserts Indiana law governs. (ECF No. 36 at 387 n.7.) Where a case
warrants a choice of law determination, a federal court sitting in diversity applies the choice of law
provisions of the forum state. Pedicini v. Life Ins. Co. of Alabama, 682 F.3d 522, 526 (6th Cir.
2012). But the Court finds it unnecessary to do so here, because under Ohio law, “‘if two
jurisdictions apply the same law, or would reach the same result applying their respective laws, a
9
choice of law determination is unnecessary because there is no conflict, and the laws of the forum
state apply.’” Mulch Mfg. Inc. v. Advanced Polymer Sols., LLC, 947 F. Supp. 2d 841, 855 (S.D.
Ohio 2013) (quoting Wendy’s Intern., Inc. v. Illinois Union Insur. Co., No. 2:05-cv-803, 2007 U.S.
Dist. LEXIS 15699, 2007 WL 710242, at *15 (S.D. Ohio Mar. 6, 2007)).
Furthermore, “[t]he party seeking to apply the foreign law bears the burden of showing that
the foreign law is different from the local law.” Id. Here, Allison, seeking to apply Indiana law
has the burden of showing that Indiana law is different from Ohio law. Not only has Allison failed
to discuss any material differences between Ohio and Indiana law on either of Hirschvogel’s
claims, but as Allison notes, “Ohio law and Indiana law utilize the same elements for breach of
contract and unjust enrichment and have adopted/follow the same relevant UCC provisions.”
(ECF No. 36 at 387 n.7.) Therefore, the Court finds no need to conduct a choice of law analysis
and will apply Ohio law to the issues in this case.
B. Breach of Contract
Under Ohio law, “the elements for a breach of contract are that a plaintiff must demonstrate
by a preponderance of the evidence that (1) a contract existed, (2) the plaintiff fulfilled his
obligations, (3) the defendant failed to fulfill his obligations, and (4) damages resulted from this
failure.” Anzalaco v. Graber, 2012 Ohio 2057, 970 N.E.2d 1143, 1148 (Ohio Ct. App. 2012).
“[T]he interpretation of written contract terms . . . is a matter of law for initial determination by
the court.” Savedoff v. Access Grp., Inc., 524 F.3d 754, 763 (6th Cir. 2008). Allison argues that
the undisputed facts demonstrate that summary judgment is appropriate on Hirschvogel’s breach
of contract claim, because the 2011 Termination Agreement is not an enforceable contract under
the UCC. (ECF No. 36 at 388.) Specifically, Allison insists that the 2011 Termination Agreement
lacks any agreement as to price and quantity, as required by the UCC for a contract for the sale of
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goods. (Id.) Hirschvogel counters that the 2011 Termination Agreement is not a contract for the
sale of goods. (ECF No. 41 at 940.)
i.
Whether the 2011 Termination Agreement is Governed by the UCC
Ohio Revised Code Chapter 1302, the statutory codification of Article Two of the Uniform
Commercial Code, applies to transactions involving the sale of goods. Ohio Rev. Code § 1302.02.
Ohio courts considering the applicability of the UCC to a given contract use the predominant
purpose test. “R.C. 1302 applies if ‘the predominant factor and purpose of the contract is the sale
of goods.’” Airborn Elecs., Inc. v. Magnum Energy Sols., LLC, 2017-Ohio-70, 82 N.E.3d 504 (Ct.
App.) (quoting Renaissance Techs., Inc. v. Speaker Components, Inc., 2003-Ohio-98 ¶ 5 (Ct.
App.). Federal courts applying Ohio law have likewise adopted the predominant purpose test.
See, e.g., Mecanique C.N.C., Inc. v. Durr Envtl., Inc., 304 F. Supp. 2d 971 (S.D. Ohio 2004);
Executone of Columbus, Inc. v. Inter-Tel, Inc., 665 F. Supp. 2d 899 (S.D. Ohio 2009).
Under the predominant purpose test, the issue is “whether the predominant factor and
purpose of the contract is the rendition of service, with goods incidentally involved, or whether
the contract is for the sale of goods, with labor incidentally involved.” Allied Indus. Serv. Corp. v.
Kasle Iron & Metals, Inc., 62 Ohio App. 2d 144, 147, 405 N.E.2d 307, 310 (1977). The burden
of proof lies with the party asserting that the contract is governed by the UCC. Executone, 665 F.
Supp. 2d at 907. Here, Allison must prove that there is no genuine dispute of material fact
concerning whether the 2011 Termination Agreement is governed by the UCC.
Generally, whether the contract involves “predominantly services or predominantly goods
is a question of fact, and the controlling factor is the intention of the parties, as derived from the
contract.” Urban Indus. of Ohio, Inc. v. Tectum, Inc., 81 Ohio App. 3d 768, 774, 612 N.E.2d 382,
383 (1992). But this Court has previously determined that, it is possible to resolve such a dispute
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by summary judgment, because Ohio law provides that, “‘[w]here . . . there are no disputed facts
that raise issues to be decided by the jury, it is proper for the trial court to rule as a matter of law
on
whether
the
contract
is
covered
by
Article
Two
[of
the
UCC].’”
Franklin Publ’ns, Inc. v. Gen. Nutrition Corp., No. 2:05-cv-1061, 2007 U.S. Dist. LEXIS 50946,
at *10 (S.D. Ohio July 13, 2007) (quoting Arlington Elec. Constr. v. Schindler Elevator Corp., No.
L-91-102, 1992 Ohio App. LEXIS 953, 1992 WL 43112 at *4 (Ohio App. 6th Dist. Mar. 6, 1992)).
Allison argues that the relationship between the parties was solely for the sale of goods and
never included a service component. (ECF No. 45 at 1058.) Allison highlights the following
language in the 2011 Termination Agreement as indicative of that point, “Hirschvogel is offering
to continue to supply of [sic] Allison’s parts.” (ECF No. 38-3.) Allison further contends that an
abundance of case law proves that automotive supply contracts are contracts for the sale of goods.
(ECF No. 45 at 1058) (citing e.g., Johnson Controls, Inc. v. Jay Indus., Inc., 459 F.3d 717, 723
(6th Cir. 2006)). Therefore, Allison urges the Court to take the position that the predominant
purpose of the agreement was for the sale of goods. The Court is not persuaded.
In support of its contention that the 2011 Termination Agreement was not a contract for
the sale of goods, Hirschvogel cites an Eighth Circuit case, United Indus. Syndicate, Inc. v. W.
Auto Supply Co., 686 F.2d 1312 (8th Cir. 1982), where the court analyzed whether a notice
agreement between the parties was essentially an agreement for the sale of goods not yet
manufactured. Id. at 1314. The Eighth Circuit examined the history and character of the business
relationship between the parties and recognized that, “the dominant purpose of a particular
agreement may be independent of such sales,” and “outside the UCC.” Id. at 1315. The court also
found that given the length of the parties’ relationship, the contract at issue was not a “single-shot
buy-sell agreement.” Id. Moreover, the notice agreement at issue was deemed to “transcend[] the
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mere sale of goods and reflect[ed] a bargained-for exchange of mutual benefits and detriments that
are independent of particular sales transactions.” Id. at 1315–16. It was these mutual exchanges
not to terminate without the agreed upon six months’ notice that constituted the dominant purpose
of the agreement, and the Eighth Circuit found that this purpose was independent of the sales which
took place between the parties. Id. at 1316.
The Court notes similar circumstances in the parties’ relationship in the instant case. Here,
the parties had been doing business with one another for over a decade when they entered into the
2011 Termination Agreement. Upon entering the agreement, Allison gained a guaranteed supply
of automotive components for its manufacture of automobile transmissions. In turn, it gave up the
right to replace Hirschvogel as the supplier of these parts. Likewise, Hirschvogel gained an
assured parts recipient. In turn, it was obligated to meet Allison’s supply demands. Here too,
mutual benefits were conferred with the security accompanying a significant lead time prior to the
termination of the parties’ relationship. Both parties have acknowledged the substantial time
needed to establish a supply relationship on either end, given the significant time required to
resource parts and familiarize a new supplier with the process. (Larsen Dep. 72:2-13, 74:12-14,
ECF No. 35-2 at 347; Dusenberry Dep. 71:14-16, ECF No. 41-1 at 959.) The parties’ recognition
of the significant lead time required is evinced by their pledge to provide twelve months’ notice
followed by an agreed exit strategy.
The parties do not dispute the clear and unambiguous language of the 2011 Termination
Agreement. Though neither of the signatories to the agreement was still employed by either
company on the date Allison ended the parties’ relationship, it is clear that in 2011, the parties
intended twelve months’ advanced written notice prior to the termination of their supply
relationship to discuss an exit strategy. Furthermore, the 2011 Termination Agreement contains
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none of the provisions courts associate with UCC-governed contracts, such as: warranty;
inspection and return of products; payment for products; payment of taxes on products; acceptance
and rejection of purchase orders; shipment of products; title to product and risk of loss; liens for
payment; and patents and trademarks for products. Executone, 665 F. Supp. 2d at 908. The parties’
mutual exchanges not to terminate without the agreed upon twelve months’ advanced written
notice constitutes the dominant purpose of the 2011 Termination Agreement, and this Court finds
that this purpose was independent of the scheduling agreements. As such, Allison has not
sustained its burden of proof as the party asserting that the 2011 Termination Agreement is covered
by the UCC, and the Court finds as a matter of law that the 2011 Termination Agreement is not
covered by the UCC.
ii.
Expiration Versus Termination
Allison further contends that the undisputed facts show that the 2011 Termination
Agreement only applies to situations where either party seeks to terminate the parties’ supply
relationship and not upon the expiration of a scheduling agreement. (ECF No. 36 at 394.) Allison
relies heavily on Avis Rent A Car Sys., LLC v. City of Dayton, No. 3:12-cv-399, 2013 U.S. Dist.
LEXIS 104545 (S.D. Ohio July 24, 2013), aff’d, Avis Rent-A-Car Sys. v. City of Dayton, 581 F.
App’x 479, 483 (6th Cir. 2014) where this Court and the Sixth Circuit distinguished between
“termination” and “expiration” as constituting two different events in a case involving breach of a
lease agreement. But the Court does not find these cases instructive as to the instant case, because
in the Avis cases, the lease agreement at issue contained both the words “expire” and “terminate,”
and this Court had to determine the specific purpose for the use of each. Avis Rent A Car Sys., LLC
v. City of Dayton, No. 3:12-cv-399, 2013 U.S. Dist. LEXIS 104545 at *14. Whereas in this case,
the 2011 Termination Agreement never uses the word “expire” or the word “expiration.” Neither
14
does the Scheduling Agreement, nor is the Scheduling Agreement incorporated by reference into
the 2011 Termination Agreement.
All references to an expiration of the parties’ supply
relationship are put forth by Allison, but they are never memorialized in a signed agreement. Thus,
the task presently before the Court is to determine the intent of the 2011 Termination Agreement
with regard to the parties’ overall supply relationship and any relation to the parties’ Scheduling
Agreement.
Hirschovogel argues that the plain language of the 2011 Termination Agreement clearly
indicates that the parties intended that agreement to govern their overall supply relationship,
irrespective of any scheduling agreement, which simply denoted the end of a particular pricing
time frame. (ECF No. 41 at 945–46.) “Common words in a contract are given their plain and
ordinary meaning, unless another meaning is clearly evident from the face or overall content of
the contract, or unless the result is manifestly absurd.” Hope Acad. Broadway Campus v. White
Hat Mgmt., L.L.C., 145 Ohio St. 3d 29, 39, 46 N.E.3d 665, 674–75 (2015). Hirschvogel draws the
Court’s attention to the following language in the 2011 Termination Agreement as evidence of the
parties’ intent to apply the terms of the 2011 Termination Agreement to their overall relationship:
“Based on both parties not being able to resolve the terms and conditions for a Long Term
Agreement, Hirschvogel is offering to continue to supply of Allison’s parts based on a fair
termination agreement.” (Id. at 946.)
Hirschvogel maintains that adopting Allison’s proffered reasoning would render the 2011
Termination Agreement meaningless, resulting in manifest absurdity. (Id.) Hirschvogel argues
that if the parties were free to end their relationship at the end of a scheduling agreement, then the
2011 Termination Agreement would have no effect, as there would never be a reason to provide
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notice of termination at the beginning of a twelve-month period if the parties’ supply relationship
would expire regardless after twelve months. (Id.)
In the construction of a contract courts should give effect, if possible, to every
provision therein contained, and if one construction of a doubtful condition written
in a contract would make that condition meaningless, and it is possible to give it
another construction that would give it meaning and purpose, then the latter
construction must obtain.
Foster Wheeler Enviresponse v. Franklin Cnty. Convention Facilities Auth., 1997Ohio-202, 78 Ohio St. 3d 353, 362, 678 N.E.2d 519, 526 (internal quotation marks
omitted).
In applying this rule to the instant case, the Court finds Allison’s interpretation of the
contract to be meaningless, whereas giving effect to Hirschvogel’s interpretation of the 2011
Termination Agreement provides meaning and purpose to the parties’ agreement. Therefore, the
Court finds Allison’s expiration argument to be unavailing.
iii.
Whether the 2011 Termination Agreement is a Valid, Enforceable
Contract
The Court considered at oral argument the issue of whether the 2011 Termination
Agreement is enforceable due to the lack of a material term. Upon further examination of the
agreement, the Court notes that while the agreement itself does not contain a pricing term for the
interim period prior to termination, the agreement required the parties to provide twelve months
advanced written notice of their intention to terminate their long-standing relationship and to
formulate a reasonable exit strategy for the termination of that relationship. (ECF No. 38-3.) The
agreement has all of the material terms necessary for the enforcement of such an agreement, and
the Court therefore finds, as a matter of law, that the 2011 Termination Agreement is a valid,
enforceable contract.
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C. Waiver by Estoppel
Allison alleges that Hirschvogel waived its right to enforce the 2011 Termination
Agreement through “their repeated actions (including the 2015 stop ship threat) and
communications recognizing Allison’s right to switch suppliers upon the expiration of the then
current End Date without requiring twelve months’ notice.” (ECF No. 36 at 398.) “[U]nder the
theory of waiver by estoppel, [defendant] need only show that [plaintiff’s] conduct was
inconsistent with an intent to enforce its rights.” Nat’l City Bank v. Rini, 2005-Ohio-4041, ¶ 26,
162 Ohio App. 3d 662, 668, 834 N.E.2d 836, 840. Waiver by estoppel “‘exists when the acts and
conduct of a party are inconsistent with an intent to claim a right, and have been such as to mislead
the other party to his prejudice and thereby estop the party having the right from insisting upon
it.’” Id. at 834 N.E.2d at¶ 24.
Allison relies on Constr. Sys. v. Garlikov & Assocs., 2012-Ohio-2947 (Ct. App.), where a
commercial tenant entered into a construction project contract allowing the tenant to withhold
payment to subcontractors until the project was completed. Because the tenant engaged in the
affirmative conduct of submitting invoices for payment throughout the project but later attempted
to withhold payment to the subcontractors, the court found that the tenant’s previous conduct of
submitting invoices was inconsistent with its intent to later claim its right to withhold payment. Id.
at ¶ 47. Allison argues Hirschvogel’s conduct is akin to the tenant’s in the aforementioned case.
Specifically, it points to a February 26, 2015 email from Hirschvogel Account Manager Ms. Purser
stating:
Hirschvogel is requiring written acceptance of the 2015 material increase no later
than Friday 3/6/2015. Shipments of 50088 and 50089 will be halted after this
date until we receive your commitment on pricing. Please understand we have
been paying the increased price, to the mill, on the parts you have already been
receiving.
(Ex. 1.M).
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Allison maintains that such conduct is inconsistent with any belief that either side was
required to provide twelve months’ notice before ending the parties’ supply relationship. (ECF No.
36 at 399.) According to Allison, because the parties shared a similar belief regarding notice,
Allison acquiesced and accepted Hirschvogel’s price increase. (Id.)
Despite Allison’s insistence, the Court finds that Hirschvogel’s conduct is not akin to the
commercial tenant’s in Constr. Sys. v. Garlikov & Assocs. Viewing the evidence in the light most
favorable to Hirschvogel, Allison has failed to submit evidence of any misleading conduct by
Hirschvogel that resulted in any prejudice to Allison.
The Court finds that not only was
Hirschvogel not required to dispute Allison’s threat to terminate at the end of a given scheduling
agreement, but any discussion of Hirschvogel potentially stopping shipments was a bargaining
tactic, and as such, its conduct does not amount to waiver by estoppel. Furthermore, Allison did
not change its position to its detriment based on this conduct. Therefore, the Court cannot
determine that Hirschvogel’s conduct constituted a waiver of its rights under the 2011 Termination
Agreement, and it does not bar summary judgment.
D. Unjust Enrichment
Allison notes in its reply brief that Hirschvogel has failed to respond to Allison’s Motion
for Summary Judgment as it pertains to Hirschvogel’s unjust enrichment claim and submits that
Hirschvogel therefore concedes that its unjust enrichment claim fails as a matter of law. (ECF No.
45 at 1046 n.2.) Upon reading Hirschvogel’s response in opposition (ECF No. 41), the Court notes
Hirschvogel’s failure to respond to Allison’s arguments concerning its unjust enrichment claim.
The Sixth Circuit’s position on a plaintiff’s abandonment of a claim is well established.
“[A] plaintiff is deemed to have abandoned a claim when a plaintiff fails to address it in response
to a motion for summary judgment.” Brown v. VHS of Mich., Inc., 545 F. App’x 368, 372 (6th
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Cir. 2013) (citing Hicks v. Concorde Career Coll., 449 F. App’x 484, 487 (6th Cir. 2011)
(holding that a district court properly declines to consider the merits of a claim when a plaintiff
fails to address it in a response to a motion for summary judgment); Clark v. City of Dublin, 178
F. App’x 522, 524-25 (6th Cir. 2006) (recognizing that the failure to respond properly to motion
for summary judgment arguments constitutes abandonment of a claim)). As Hirschvogel never
addresses Allison’s arguments concerning its unjust enrichment claim in response to Allison’s
motion for summary judgment, Hirschvogel is deemed to have abandoned that claim.
Consequently, Allison is entitled to judgment as a matter of law on Hirschvogel’s unjust
enrichment claim.
IV.
CONCLUSION
Based on the foregoing, Hirschvogel’s Motion for Partial Summary Judgment (ECF No.
35) is GRANTED as to liability, but the issue of damages remains for trial. Allison’s Motion for
Summary Judgment (ECF No. 36) is GRANTED in part as it relates to Hirschvogel’s unjust
enrichment claim and DENIED in part as it relates to Hirschvogel’s breach of contract claim.
Accordingly, Hirschvogel’s unjust enrichment claim is DISMISSED WITH PREJUDICE.
IT IS SO ORDERED.
/s/ James L. Graham
JAMES L. GRAHAM
United States District Judge
DATE: May 10, 2019
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