Court Opinion

ID: 2974755
Source: CourtListenerOpinion
Date Created: 2015-09-22 17:22:55.836561+00
Date Added: 2024-06-11T09:18:48.166567
License: Public Domain

NOT RECOMMENDED FOR PUBLICATION
                               File Name: 07a0149n.06
                               Filed: February 23, 2007

                                           No. 06-3777

                          UNITED STATES COURT OF APPEALS
                               FOR THE SIXTH CIRCUIT

Wagner-Meinert, Inc.,                              )
                                                   )
       Plaintiff-Appellant,                        )
                                                   )
v.                                                 )   ON APPEAL FROM THE UNITED
                                                   )   STATES DISTRICT COURT FOR THE
EDA Controls Corporation,                          )   NORTHERN DISTRICT OF OHIO
                                                   )
       Defendant-Appellee.                         )
                                                   )
                                                   )

BEFORE:        Merritt, Daughtrey, and Griffin, Circuit Judges.

       MERRITT, Circuit Judge. The District Court granted judgment on the pleadings against

Wagner-Meinert, Inc., the plaintiff, under Rule 12(b)(6) and (c), and this appeal followed. In 1995,

by written contract, Wagner-Meinert, Inc. became the agent of its customer, Frozen Specialties, Inc.

(a producer of frozen food) to design, build, install, maintain and manage an ammonia refrigeration

system. As part of providing the refrigeration system, Wagner-Meinert contracted with EDA

Controls Corporation to provide ammonia detection equipment for the refrigeration system to detect

any release of ammonia in the refrigeration system. The ammonia detection system cost $13,228 and

was delivered to Frozen Specialties in August 1995. The ammonia detection system was installed
No. 06-3777
Wagner-Meinert v. EDA Controls

by Wagner-Meinert, not by EDA,1 although EDA did provide a “check” of the system after it was

installed by Wagner-Meinert and provided one day of onsite training to personnel from Frozen

Specialties. No further goods or services were provided by EDA to Wagner-Meinert in connection

with the ammonia detection system at Frozen Specialties, and the record indicates no further

communication between the two parties concerning any aspect of the ammonia detection system until

the events that gave rise to this lawsuit.

        On January 16, 1999, three and one-half years after the ammonia detection system was

installed, a fire broke out at Frozen Specialties, causing extensive damage reimbursed by insurance

in the amount of $12,744,126.93. The cause of the fire is unknown, but Wagner-Meinert alleges that

EDA’s detection system failed to detect a release of ammonia that provided fuel for the fire,

increasing the damage to Frozen Specialties. Wagner-Meinert further alleges that the failure of EDA

to properly train the Frozen Specialties employees caused the fire damage to be substantially worse.

        Frozen Specialties’ insurer, Atlantic Mutual Insurance Company, paid the loss on the policy

and, as the subrogee of Frozen Specialties’ rights, brought an action against Wagner-Meinert alleging

breach of contract and negligence. EDA was not named as a party and Wagner-Meinert did not

implead or otherwise seek to join EDA as a third party to the action so that the respective rights of

all of these parties could be adjudicated in one action. The jury found Wagner-Meinert liable for

        1
        The parties dispute which company installed the ammonia detection system, with Wagner-
Meinert claiming that EDA installed the system and EDA claiming that Wagner-Meinert installed
it. Although not discussed as a factual dispute in the district court’s order, the district court found
that Wagner-Meinert installed the system and we do not hold this finding clearly erroneous. In any
event, even if EDA installed the system, it would not change the outcome of this appeal.

                                                 -2-
No. 06-3777
Wagner-Meinert v. EDA Controls

breach of contract and awarded Atlantic Mutual $2,500,000. Atlantic Mutual Ins. Co. v. Wagner-

Meinert, Inc., No. 3:01CV7302 (N.D. Ohio Apr. 8, 2004) (jury verdict) (J.A. at 68). Following the

jury verdict, Wagner-Meinert and Atlantic Mutual settled the action for $3,000,000. Atlantic Mutual

withdrew the negligence claim before the case was submitted to the jury, so the resulting verdict was

only on the breach of contract claim.

       Wagner-Meinert filed this diversity action in federal court against EDA in 2004 before the

suit between Wagner-Meinert and Atlantic Mutual was resolved. By agreement of the parties, the

action between Wagner-Meinert and EDA was stayed to await the outcome of the suit between

Wager-Meinert and the insurance company. In May 2005, a year after the jury trial concluded, the

stay was lifted and the suit between Wagner-Meinert and EDA continued. Wagner-Meinert’s

complaint presents alternative counts for indemnification for breach of an “express contract,” or

“implied contract,” or “negligent” performance of the contract and for contribution under Ohio

Revised Code § 2307.25. (J.A. at 6) EDA filed a motion for judgment on the pleadings pursuant

to Rule 12(c) which the district court granted on April 12, 2006. Wagner-Meinert, Inc. v. EDA

Controls Corp., 444 F. Supp. 2d 800 (N.D. Ohio 2006), J.A. at 36.

       Wagner-Meinert raises one issue on appeal phrased as follows:

       Whether the court erred to the prejudice of Appellant by granting a Motion for
       Judgment on the Pleadings and dismissing and closing Appellant’s case when, in
       fact, the complaint filed by Plaintiff/Appellant, Wagner-Meinert, Inc., alleged
       numerous facts supporting the claims, including breach of contract (express and/or
       implied) and claims for contribution and indemnity pertaining to related litigation.

       1. Breach of Contract. Wagner-Meinert’s claims for breach of contract are barred by the

four-year statute of limitations for contracts relating to the sale of goods, as the District Court

                                                -3-
No. 06-3777
Wagner-Meinert v. EDA Controls

concluded. O.R.C. § 1302.98(A). (An action for breach of any contract for sale must be commenced

within four years after the cause of action has accrued.) Wagner-Meinert argues that the contract is

not one for the sale of goods, but is instead a service contract that should be subject to the 15-year

statute of limitations for general contracts in Ohio. This argument is clearly wrong.

        The service portion of the contract was less than 5% of the contract price, and we agree with

the District Court that it should be characterized as a contract for the sale of the system. The contract

in this case is the purchase order sent by Wagner-Meinert to EDA based on EDA’s price quotation.

(J.A. at 16-19) The purchase order itemizes the various components of the ammonia detection

system and gives the amount to be paid as $13,228. This price includes $600 for an “On Site Start

up Assistance,” which the contract specifies is for one day. The record indicates that this service was

to train Frozen Specialties employees about the ammonia detection system. Because the sales

contract includes both goods and services we will view the contract as “mixed” contract. In a mixed

contract for goods and services, the test for inclusion or exclusion under §1302.98 with its four-year

statute of limitations is “whether the predominate 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 (1977). Because we find no disputed facts as to the nature of the sales contract at issue,

it was proper for the district court to rule as a matter of law on the nature of the contract and to

determine that the four year statute was applicable.

        2. Indemnification. Ohio law defines indemnity as arising from “contract, either express

or implied, and is the right of a person who has been compelled to pay what another should have paid

                                                  -4-
No. 06-3777
Wagner-Meinert v. EDA Controls

to require reimbursement.” Worth v. Aetna Cas. & Sur. Co., 32 Ohio St. 3d 238, 240 (1987) (citing

Travelers Indemn. Co. v. Trowbridge, 41 Ohio St. 2d 11, 14 (1975)). In other words, when a person

is secondarily liable due to his relationship to the other party, and is compelled to pay damages to

an injured party, he may recoup his loss for the entire amount of damages paid from the one who is

actually at fault, and who, in fact, caused the injuries. See Globe Indemn. Co. v. Schmitt , 142 Ohio

St. 595, 603 (1944). In an indemnity action, a plaintiff seeks complete reimbursement from the party

primarily liable for the damages plaintiff has incurred. The complaint here, however, states no facts

that would support either an oral contract or an “implied contract” based on the actions of the parties

shifting the loss to EDA under a theory of indemnity. Nor does the complaint state facts that would

support an indemnity action for restitution arising from the relative fault of joint tortfeasors. See

Restatement of Restitution, §§ 89-98 (1937); Palmer, Law of Restitution § 10.6(c)(1978). After a

trial in which the jury returned a large verdict against plaintiff in this action, plaintiff is unable to

state facts showing that EDA was responsible for the fire and should suffer the loss. Hence the

District Court was correct in dismissing the indemnity count.

        3. Statutory Contribution. A contribution action under Ohio law seeks to redistribute

damages in tort based on a “tortfeasor’s proportionate share of the common liability.”2 Wagner-

        2
            2307.25 Right of contribution; settlements; subrogation; indemnity

                  (A) Except as otherwise provided in sections 2307.25 to 2307.28 of
                  the Revised Code, if one or more persons are jointly and severally
                  liable in tort for the same injury or loss to person or property or for
                  the same wrongful death, there may be a right of contribution even
                  though judgment has not been recovered against all or any of them.
                  The right of contribution exists only in favor of a tortfeasor who has

                                                   -5-
No. 06-3777
Wagner-Meinert v. EDA Controls

Meinert alleges that EDA failed “to perform its obligations under the contract” and hence “has an

obligation to contribute to any judgment rendered against [it].” This claim for “contribution” for

breach of contract does not come within the coverage of Ohio’s contribution statute, as the District

Court found, nor does the claim attempt to state how any “common [tort] liability” should be

apportioned. The judgment against Warner-Meinert was in contract. The contribution count

contains no factual or theoretical basis for shifting some of Wagner-Meinert’s liability to EDA.

       For the foreging reasons, the judgment of the district court is affirmed.

               paid more than that tortfeasor's proportionate share of the common
               liability, and that tortfeasor's total recovery is limited to the amount
               paid by that tortfeasor in excess of that tortfeasor's proportionate
               share. No tortfeasor may be compelled to make contribution beyond
               that tortfeasor's own proportionate share of the common liability.
               There is no right of contribution in favor of any tortfeasor against
               whom an intentional tort claim has been alleged and established.
               (Emphasis added.)

                                                 -6-