Dana Ltd. v. TACS Automation, L.L.C.

2021 Ohio 2555

• Court: Ohio Court of Appeals
• Decided: July 23, 2021
• Docket: L-19-1203
• Status: Published

Opinion

[Cite as Dana Ltd. v. TACS Automation, L.L.C., 2021-Ohio-2555.]

IN THE COURT OF APPEALS OF OHIO SIXTH APPELLATE DISTRICT LUCAS COUNTY

Dana Limited Court of Appeals No. L-19-1203

Appellee Trial Court No. CI0201801822

v.

TACS Automation, LLC DECISION AND JUDGMENT

Appellant Decided: July 23, 2021

*****

Thomas G. Cardelli, for appellee.

Scott A. Ciolek, for appellant.

OSOWIK, J.

{¶ 1} This is an appeal from an August 20, 2019 judgment of the Lucas County

Court of Common Pleas, awarding appellee, Dana Limited (“Dana”), $630,534.13 in

damages against appellant, TACS Automation, LLC (“TACS”), following a July 26,

2019 breach of contract jury verdict in favor of Dana. {¶ 2} The parties are both commercial business entities engaged in operations

related to the domestic automobile manufacturing industry. For the reasons set forth

more fully below, this court affirms the judgment of the trial court.

{¶ 3} Appellant, TACS, sets forth the following three (3) assignments of error:

FIRST ASSIGNMENT OF ERROR: THE LOWER COURT

ERRED IN GRANTING DANA’S MOTION FOR A DIRECTED

VERDICT AS TO THE [] CONTRACT.

SECOND ASSIGNMENT OF ERROR: THE LOWER COURT

VERDICT AS TO THE NO ORAL OR WRITTEN MODIFICATION

CLAUSE.

THIRD ASSIGNMENT OF ERROR: THE LOWER COURT

ERRED IN LIMITING THE EVIDENCE [THAT] TACS COULD

PRESENT REGARDING ADEQUATE ASSURANCES.

{¶ 4} The following undisputed facts are relevant to this appeal. This case arises

from a failed contractual business relationship between the parties occurring in 2016-

2017.

{¶ 5} The business involvement between the parties arose from the pre-planned

January, 2018 launch of a redesigned Dodge Ram pick-up truck model by Chrysler. The

redesigned Ram necessitated various facility modifications at a Dana driveshaft facility

2. located in Auburn Hills, Michigan. The facility serves as one of the parts suppliers to

Chrysler in the direct supply chain engaged in the manufacture of the Ram pickup truck.

{¶ 6} As an established, ongoing supplier to Chrysler, Dana agreed to timely

undertake all requisite modifications to its Auburn Hills driveshaft facility in order to

accommodate the new vehicle design specifications. Dana also agreed to do so in

conformity with Chrysler’s January, 2018 product launch date.

{¶ 7} TACS is engaged in the business of performing the type of facility

modifications needed by Dana to comply with its obligations connected to the redesigned

Chrysler product.

{¶ 8} Accordingly, on August 23, 2016, Dana executed a contract with TACS

entitled, “Equipment Purchase Terms and Conditions” (hereinafter “terms”).

{¶ 9} The mutually agreed upon purpose of the terms, which served as the base

contract governing the relationship between the parties, was for TACS to provide various

machinery tools and related services to Dana to enable the timely modifications of the

Auburn Hills facility for its role in the manufacture of the redesigned 2018 Ram pickup

truck. The terms contract was executed by TACS’ principal/owner, Michael Scott.

{¶ 10} Paragraph 2 of the terms contract defined separate documents, known as

“purchase agreements”, which would subsequently be issued between the parties. It

established that, “From time to time, as agreed to by the parties, seller [TACS] will

furnish to purchaser [Dana], and purchaser will purchase from seller, the machine tools

and associated services described on purchase term sheets.”

3. {¶ 11} In the course of their business relationship underlying this appeal, the

parties agreed to a total of four of the above-described purchase agreements, which were

likewise signed by TACS’ principal/owner, Michael Scott.

{¶ 12} In addition to the above-discussed documents, the contractual relationship

between the parties also entailed documents referred to as purchase term sheets.

Purchase term sheets are the above-defined purchase agreements, prior to their execution.

{¶ 13} Lastly, documents referred to as “purchase orders” were also created.

Purchase orders are administrative documents created by Dana to enable vendors, such as

TACS, to invoice Dana in order to be compensated for the successful provision of

products and services to Dana.

{¶ 14} Unfortunately, as time progressed following the launch of the contractual

business relationship between the parties, concerns mounted amongst Dana officials

involved in the project that worsening performance and timeliness deficiencies by TACS

were becoming so problematic that it would preclude Dana from timely fulfilling its

obligations to Chrysler.

{¶ 15} In response to these circumstances, on November 15, 2017, Dana issued a

written demand for performance to TACS. Nevertheless, TACS’ performance and

timeliness shortcomings persisted. Dana’s ability to have its facility ready for the

looming Chrysler product launch remained compromised.

{¶ 16} Accordingly, on December 20, 2017, Dana notified TACS in writing of the

termination of the parties’ contractual business relationship.

4. {¶ 17} In order to adhere to its obligations to Chrysler, Dana was required to

rapidly complete the project utilizing alternative vendors and personnel. This resulted in

Dana incurring considerable additional expenses.

{¶ 18} On March 16, 2018, Dana filed suit against TACS for breach of contract.

TACS answered and filed counterclaims. On July 23, 2020, following several years of

intensive commercial litigation activity between the parties, the matter proceeded to a

four-day jury trial.

{¶ 19} Dana first presented testimony from key witness Dale Carson, Dana’s

director of platform launches. Carson testified that one of his professional

responsibilities for Dana was to perform audits of the readiness of Dana facilities to

comply with the requirements and deadlines associated with new product launches

related to Dana customers, such as Chrysler.

{¶ 20} Carson testified that pursuant to his job duties and responsibilities for

Dana, he became aware near the end of 2017 that TACS’ inadequate performance at the

Auburn Hills facility was jeopardizing Dana’s ability to comply with Chrysler’s January,

2018 Ram launch deadline.

{¶ 21} Accordingly, Carson met with Scott in person to review the ongoing issues

and concerns. Carson conveyed to Scott the urgency of the issues being remediated, and

the ramifications of TACS’ failure to do so.

{¶ 22} Despite multiple meetings between Carson and Scott, and despite

subsequent correspondence from the Dana legal department to TACS demanding

5. adequate assurances of the ability to timely meet the contractual obligations, TACS failed

to rectify the situation, resulting in Dana issuing the December 20, 2017 written

notification to TACS of the termination of their contractual business relationship.

{¶ 23} Dana’s next witness was Brad McArthur, their global manager of capital

purchasing. McArthur testified that whenever a contractor is utilized by Dana who is

expected to perform in excess of $100,000 in work for Dana, as was the case with TACS,

a terms agreement serving as the base contract is executed between the parties.

{¶ 24} McArthur further testified that all such terms agreements entered into by

Dana specify that all modifications to the agreement must be done in writing, and must be

executed by authorized representatives of both parties, in order to take effect.

{¶ 25} As applied to this case, all four purchase agreements arising from the

original terms agreement were executed by both parties. No objections to the agreements

were raised. No contractual modifications occurred.

{¶ 26} Dana next presented the testimony of their engineering manager, Sasa

Bjelica. Bjelica testified that following the contract termination, he secured all of the

requisite change orders and purchase orders for the alternative vendors who were brought

in to complete the project before the Chrysler deadline.

{¶ 27} Dale Bales, the Dana operations manager responsible for working with and

assisting TACS at the Auburn Hills facility in the course of the project, next testified.

Bales gave detailed testimony regarding the persistent difficulty in communicating with

Scott, in getting cooperation from Scott in being present in person at the plant as needed,

6. and in getting Scott to facilitate any of the adjustments necessary to successfully get the

project back on track once issues had arisen.

{¶ 28} Bales testified that in his 25-year career, this case was the first time that he

was forced to terminate a supplier contract due to unresolved performance and timeliness

issues jeopardizing a successful project completion.

{¶ 29} Bales further testified that despite his multiple in-person meetings with

Scott, TACS continued to miss deadlines. Bales ultimately recognized that termination

with TACS had become necessary. The continuing impasse would not only adversely

affect Dana, but would also impact the Chrysler facilities involved in manufacturing the

Ram.

{¶ 30} At the conclusion of presenting its case, Dana moved the trial court for

directed verdict on various matters. Dana sought a directed verdict ruling that the terms

agreement and the four purchase agreements constituted the only written contracts

between the parties. The trial court did not concur with Dana.

{¶ 31} The trial court held in pertinent part, “[T]his court based on that will find

that all the terms of the parties contract, as contained in equipment purchase terms and

conditions, purchase agreements, and purchase orders are part of the contract and the

contract does exist.” (Emphasis added).

{¶ 32} Accordingly, the trial court ruled favorably to TACS, over the opposition

of Dana, that the purchase orders were also part of the contracts to be considered in

resolving this case.

7. {¶ 33} The trial court also denied Dana’s motion for a directed verdict that TACS

had breached the contract. It further denied Dana’s motion for a directed verdict on

TACS’ counterclaim.

{¶ 34} With respect to any alleged modifications of the contracts, while the trial

court affirmed that the plain language of the contract necessitated that modifications be

written and executed by authorized persons in order to be effectuated, the trial court

clearly acknowledged the possibility that TACS could submit evidence demonstrating

contract modifications during the pending presentation of their evidence to the trial court.

{¶ 35} The trial court held in relevant part, “So as to modifications of the contract

or arguments that there was modifications in the contract, unless that has been or will be

submitted, and at this point it has not * * * then any submission of any modifications will

not pass directed verdict.” (Emphasis added).

{¶ 36} TACS next presented their evidence to the trial court. Scott, as

principal/owner of TACS, testified chiefly on the issue of his provision of what he

deemed to be adequate assurances of performance to Dana. Scott provided scant

testimony related to the bulk of the issues raised on appeal.

{¶ 37} TACS also presented the testimony of Thomas Rhodes, a TACS

subcontractor who worked on the Dana project.

{¶ 38} Rhodes unpersuasively claimed that various work performed by alternative

contractors, after Dana terminated its contractual relationship with TACS, was not work

8. required by the contract. Rhodes incongruously conceded to his lack of actual knowledge

on the scope of the work that TACS had contractually agreed to perform for Dana.

{¶ 39} TACS also provided the testimony of several former Dana employees

relevant to the disputed damages claims.

{¶ 40} At the conclusion of TACS’ presentation of its case, Dana again moved for

a directed verdict in its favor on breach of contract. The motion was again denied,

enabling submission to the jury.

{¶ 41} Dana also moved for a directed verdict on TACS’ counterclaim of

promissory estoppel. The trial court held in relevant part, “It is well-settled that

promissory estoppel is not available as a remedy when a legal relationship between the

parties is, in fact, governed by a valid and enforceable contract, and, as such, it should be

this court should grant the plaintiff’s [Dana’s] motion for directed verdict as to the

counterclaim.”

{¶ 42} TACS did not object to, or raise any issue related to, the trial court’s

disposition and dismissal of the promissory estoppel counterclaim. The balance of the

case was then submitted to the jury.

{¶ 43} On July 26, 2020, the jury held that Dana had successfully proven breach

of contract by TACS. This appeal ensued.

{¶ 44} We note that appellant’s opposition to the trial court’s contract-related

directed verdict rulings is curious given that the trial court denied both of Dana’s motions

for directed verdict against TACS on the issue of breach of contract.

9. {¶ 45} In addition, the trial court’s directed verdict rulings sided with TACS on

the issue of whether the purchase order documents should be considered part of the

contractual documents between the parties.

{¶ 46} We further note that TACS raised no issues or objections before the trial

court in relation to the now disputed directed verdict rulings. This is unsurprising given

that the rulings were predominantly favorable to TACS.

{¶ 47} The following legal standards govern our consideration and disposition of

this matter.

{¶ 48} It is well-established that the standard of appellate review applied to

disputed directed verdict decisions is de novo. Grau v. Kleinschmidt, 31 Ohio St.3d 84,

509 N.E.2d 399 (1987).

{¶ 49} This court construes the evidence presented most strongly in favor of the

nonmoving party and, thereby, determines whether reasonable minds could only find

favorably to the nonmoving party. This court assumes the truth of the evidence

supporting the nonmoving party, and gives that party the benefit of all reasonable

inferences. Fifth Third Bank v. Gen. Bag Corp., 8th Dist. Cuyahoga No. 92793, 2010-

Ohio-2086, ¶ 30.

{¶ 50} In conjunction with the above, we note that arguments raised for the first

time on appeal are generally barred. As set forth at ¶ 17 in Cawley JV, LLC v. Wall St.

Recycling, LLC, 35 N.E.3d 30, 2015-Ohio-1846 (8th Dist.), “Such arguments are barred

by the doctrine of waiver for failure to raise these arguments before the trial court. It is

10. well-established that a party cannot raise any new issues or legal theories for the first

time on appeal * * * Litigants must not be permitted to hold their arguments in reserve

for appeal, thus evading the trial court process.” (Emphasis added).

{¶ 51} Lastly, with respect to the contractual roots of this case, as set forth at ¶ 11

in Westfield Ins. Co. v. Galatis, 100 Ohio St.3d 216, 797 N.E.2d 1256, 2003-Ohio-5849,

“When confronted with an issue of contract interpretation, the role of the court is to give

effect to the intent of the parties to the agreement * * * we look to the plain and ordinary

meaning of the language used in the policy unless another meaning is clearly apparent

from the contents.” (Emphasis added).

{¶ 52} In the first assignment of error, appellant alleges that the trial court erred in

connection to the directed verdict contract ruling. We do not concur.

{¶ 53} Although TACS asserts in support of the first assignment that the trial court

should have ruled that each purchase agreement was a separate contract, and that the

Dana purchase orders were not governed by the terms base agreement, there are no

conclusions or statements of the trial court reflected in the record that would have

negated TACS ability to pursue and raise such arguments and positions before the trial

court. TACS elected not to do so.

{¶ 54} The trial court did not rule the purchase orders were necessarily governed

by the terms base agreement, as suggested by appellant in an apparent belief that such a

ruling would have negated appellant’s counterclaim. However, the trial court made no

such ruling.

11. {¶ 55} In addition, while TACS further asserts that the trial court’s contract

directed verdict rulings were premature, the record reflects that TACS did not raise or

assert the issue of timeliness to the trial court.

{¶ 56} Accordingly, we find that the timeliness contentions set forth in the first

assignment of error are rooted in an issue that was not raised to the trial court, and is,

thereby, waived for purposes of appeal.

{¶ 57} Upon our de novo review, we find that the balance of contentions in

support of the first assignment of error are rooted in conjecture and mistaken

interpretation. They are without merit. Accordingly, appellant’s first assignment of error

is not well-taken.

{¶ 58} In appellant’s second assignment of error, appellant similarly maintains

that the trial court erred in the contract directed verdict ruling in connection to

modifications. We do not concur.

{¶ 59} Appellant perceives that the trial court’s directed verdict rulings somehow

improperly precluded appellant from presenting evidentiary arguments premised upon

claimed oral contractual modifications or upon claimed modifications that were written,

but unsigned by a Dana representative.

{¶ 60} The plain meaning of the language utilized in the terms base agreement

contract executed between the parties does not bear out appellant’s claims.

12. {¶ 61} Paragraph 35 of the Terms base agreement establishes, “Amendments. No

amendment to these terms or any purchase agreement will be effective unless it is in

writing and executed by the authorized representatives of both parties.” (Emphasis

added).

{¶ 62} The relevant portion of the subject directed verdict ruling held, “So as to

modifications of the contract or arguments that there were modifications in the contract,

unless that has been or will be submitted * * * that was executed by -- in writing by the

authorized representatives of both parties, then any submission of any modification will

not pass directed verdict.”

{¶ 63} The subject trial court ruling constitutes a true and accurate interpretation

of the plain meaning of the relevant contractual language. Oral contractual modifications

are not permitted. Written contractual modifications must be executed by authorized

representatives of both parties in order to take effect.

{¶ 64} If TACS was in possession of evidence in support of contractually

compliant modifications to the contract, they could have presented same to the trial court

for consideration. They did not do so.

{¶ 65} We find that the assertions in support of the second assignment of error

connected to timeliness are waived on the same basis as was set forth in our response to

the first assignment of error.

{¶ 66} With respect to the balance of arguments in support of the second

assignment of error, we find them to be without merit. The disputed trial court directed

13. verdict ruling is clearly a proper, plain meaning doctrine interpretation of the relevant

contract provision on effectuating contract modifications.

{¶ 67} Accordingly, we find appellant’s second assignment of error not well-

taken.

{¶ 68} In the third assignment of error, appellant maintains that the trial court

improperly limited appellant’s introduction of evidence related to adequate assurances of

performance. We do not concur.

{¶ 69} The record reflects that while the trial court ruled that TACS had not yet

submitted evidence establishing a written contract modification properly executed by

authorized representatives of both parties, that ruling did not abrogate appellant’s ability

to present any such evidence to the trial court for consideration and determination.

{¶ 70} Further, appellant raised no issue below connected to the submission of

evidence of adequate assurances of performance. As such, the matter is waived for

purposes of appeal.

{¶ 71} Accordingly, we find appellant’s third assignment of error not well-taken.

{¶ 72} On consideration whereof, the judgment of the Lucas County Court of

Common Pleas is hereby affirmed. Appellant is ordered to pay the costs of this appeal

pursuant to App.R. 24.

Judgment affirmed.

14. L-19-1203 Dana Limited v. TACS Automation, LLC

A certified copy of this entry shall constitute the mandate pursuant to App.R. 27. See also 6th Dist.Loc.App.R. 4.

Mark L. Pietrykowski, J. _______________________________ JUDGE Thomas J. Osowik, J. _______________________________ David A. D’Apolito, V.J. JUDGE CONCUR. _______________________________ JUDGE

Judge David A. D’Apolito, Seventh District Court of Appeals, sitting by assignment of the Chief Justice of the Supreme Court of Ohio.

This decision is subject to further editing by the Supreme Court of Ohio’s Reporter of Decisions. Parties interested in viewing the final reported version are advised to visit the Ohio Supreme Court’s web site at: http://www.supremecourt.ohio.gov/ROD/docs/.

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