Court Opinion

ID: 2704449
Source: CourtListenerOpinion
Date Created: 2014-08-04 20:25:39.334302+00
Date Added: 2024-06-11T08:37:19.506127
License: Public Domain

[Cite as Digiknow, Inc. v. PKSL Cards, Inc., 2011-Ohio-3592.]

                     Court of Appeals of Ohio
                               EIGHTH APPELLATE DISTRICT
                                  COUNTY OF CUYAHOGA

                              JOURNAL ENTRY AND OPINION
                                       No. 96034

                                     DIGIKNOW, INC.

                                                           PLAINTIFF-APPELLEE

                                                     vs.

                                   PKXL CARDS, INC.
                                                           DEFENDANT-APPELLANT

                                           JUDGMENT:
                                            AFFIRMED

                                      Civil Appeal from the
                             Cuyahoga County Court of Common Pleas
                                      Case No. CV-704719

        BEFORE: Stewart, P.J., Celebrezze, J., and Rocco, J.

        RELEASED AND JOURNALIZED:                          July 21, 2011
ATTORNEY FOR APPELLANT

Peter R. Harwood
Deacon Harwood Law
2794 SOM Center Road, Suite 1
Willoughby Hills, OH 44094

ATTORNEY FOR APPELLEE

Michael F. Schmitz
Weltman, Weinberg & Reis Co., L.P.A.
Lakeside Place, Suite 200
323 West Lakeside Avenue
Cleveland, OH 44113

MELODY J. STEWART, P.J.:

       {¶ 1} Defendant-appellant, PKXL Cards, Inc., appeals from a summary judgment

rendered against it on its counterclaim to a complaint filed by plaintiff-appellee,

Digiknow, Inc. Digiknow, an internet website designer, brought this action on account

seeking PKXL’s payment of $33,725.52 for costs in designing PKXL’s custom website.

PKXL counterclaimed, alleging that Digiknow’s finished product was so shoddy as to

constitute professional negligence. Digiknow filed a motion for summary judgment on

the counterclaim, arguing that PKXL failed to offer expert opinion to back up its

professional negligence claim and that, in any event, PKXL’s counterclaim was barred by

the economic loss rule.      The court granted summary judgment on the counterclaim

without opinion. The case went to trial solely on Digiknow’s complaint, and a jury

returned a verdict in Digiknow’s favor in the amount of $33,725.52, plus interest. PKXL

does not assign any error relating to the trial.
       {¶ 2} The dispositive question posed by this appeal is whether PKXL filed a tort

or a contract counterclaim.    Under the doctrine of “economic loss,” a party cannot

recover purely economic damages in a tort action against another party based upon the

breach of contractually created duties. Corporex Dev. & Constr. Mgt., Inc. v. Shook,

Inc., 106 Ohio St.3d 412, 2005-Ohio-5409, 835 N.E.2d 701, syllabus. The reasoning

behind the economic loss doctrine is that tort law is not intended to compensate parties

for monetary losses suffered as a result of duties that are owed to them simply as a result

of the contract. Floor Craft Floor Covering, Inc. v. Parma Community Gen. Hosp. Assn.

(1990), 54 Ohio St.3d 1, 7, 560 N.E.2d 206. This is because of the sense that if the tort

law was “allowed to progress too far, contract law would drown in a sea of tort.” E.

River S.S. Corp. v. Transamerica Delaval, Inc. (1986), 476 U.S. 858, 106 S.Ct. 2295, 90

L.Ed.2d 865, citing G. Gilmore (1974), The Death of Contract 87-94. The doctrine thus

underscores the distinctions between tort and contract law:

       {¶ 3} “In the commercial setting, society places a premium on freedom of

contract. Society allows the parties to set the terms of their bargain and only intervenes

to enforce or give meaning to those terms once a dispute develops. Even within the

context of a dispute, society is not motivated to do what is fair or just in some abstract

sense, but rather seeks to divine and enforce the justifiable expectations of the parties as

determined from the language of their contract. To that end, if the parties agree in

advance to place limits upon the remedies that are available in the event of a breach,

society typically honors that agreement regardless of its consequences.         In the tort
setting, however, society places a premium on protecting people and property from

unreasonable dangers. The overriding concern is to provide a level of compensation

which makes the victim whole and which protects society at large by discouraging the

development of harmful products and conduct. To that end, when someone suffers

personal injury or property damage, society intervenes to provide monetary redress, and

the degree of redress is open-ended, limited only by the requirements of causation and

public policy. Indeed, if the cause of harm is sufficiently egregious, society may punish

the wrongdoer by awarding punitive damages, a form of compensation unhindered by

principles of causation and which has no application in the law of contract.” Rich Prods.

Corp. v. Kemutec, Inc. (E.D. Wis. 1999), 66 F.Supp.2d 937, 968-969.

      {¶ 4} PKXL argues that its counterclaim raised a contract claim, not a

professional negligence claim, but we can easily reject this argument. The specific

wording of the counterclaim leaves no doubt that it was based upon professional

negligence. PKXL alleged that Digiknow “failed to exercise ordinary care to provide

security protection to the product being delivered” and that PKXL had been injured “[a]s

a result of the foregoing instances of negligence and oversight[.]” The counterclaim’s

prayer for relief stated that PKXL had been damaged “[a]s a result of [Digiknow’s]

negligence and indifference[.]” Finally, PKXL concedes that it did not actually use the

word “contract” in the counterclaim.

      {¶ 5} PKXL claims that the parties actually tried all the issues as though they

were contract-based, so under Civ.R. 15(B), we should find that its contract claims are
deemed to have been raised in the complaint. It is an obvious point that the parties

focused solely on contract issues at trial — with summary judgment rendered on PKXL’s

counterclaim well before trial, Digiknow’s contract claim was necessarily the only issue

remaining for trial. In any event, the manner in which the claims were presented at trial

has no bearing on the precise cause of action that PKXL pleaded in its counterclaim

because PKXL’s counterclaim was not addressed at trial. It is thus irrelevant whether the

parties spoke only of “contract” at trial.

       {¶ 6} Finally, PKXL appears to argue that regardless of whether it pleaded the

wrong cause of action, Digiknow undeniably filed a contract cause of action, thus

showing that there was a contractual relationship between the parties. This argument

misconstrues the economic loss doctrine: what Digiknow pleaded is not relevant to the

question of whether PKXL sought economic damages for a tort cause of action. One

would imagine that any case of professional negligence would implicitly entail a

contractual relationship between the professional rendering the services and the party

receiving the services. So even if we accept as a given that the parties had a contract,

that fact is irrelevant to whether PKXL sought economic damages for a claim of

professional negligence.

       {¶ 7} Summary judgment may issue when, after viewing the evidence in a light

most favorable to the nonmoving party, there is no genuine issue as to any material fact

and reasonable minds could conclude only that judgment must issue as a matter of law.

See Civ.R. 56(C). PKXL’s counterclaim sounded in tort and only sought recovery of
damages for economic loss. “A plaintiff who has suffered only economic loss due to

another’s negligence has not been injured in a manner which is legally cognizable or

compensable.” Chemtrol Adhesives, Inc. v. Am. Mfrs. Mut. Ins. Co. (1989), 42 Ohio

St.3d 40, 44, 537 N.E.2d 624. We find as a matter of law that the economic-loss doctrine

barred the recovery of economic loss in a tort claim. The court did not err by granting

summary judgment on the counterclaim.

      Judgment affirmed.

      It is ordered that appellee recover of appellant its 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 Cuyahoga

County Court of Common Pleas 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, PRESIDING JUDGE

FRANK D. CELEBREZZE, JR., J., and
KENNETH A. ROCCO, J., CONCUR