Ineos USA L.L.C. v. Furmanite America, Inc.

2014 Ohio 4996
Ohio Court of Appeals·Decided November 10, 2014·No. 1-14-06·Published·Cited by 5 cases

Opinion

IN THE COURT OF APPEALS OF OHIO THIRD APPELLATE DISTRICT

ALLEN COUNTY

INEOS USA LLC, PLAINTIFF-APPELLANT, CASE NO. 1-14-06 v.

FURMANITE AMERICA, INC., ET AL., OPINION DEFENDANTS-APPELLEES.

Appeal from Allen County Common Pleas Court Trial Court No. CV20090371

Judgment Reversed and Cause Remanded Date of Decision: November 10, 2014

APPEARANCES:

Vincent Atriano for Appellant Jeffrey T. Cox for Appellee, Furmanite America, Inc.

ROGERS, J.

{¶1} Plaintiff-Appellant, Ineos USA LLC (“Ineos”), appeals the judgment of the Court of Common Pleas of Allen County granting summary judgment in favor of Defendant-Appellee, Furmanite America, Inc. (“Furmanite”), and dismissing two claims of fraud alleged in the complaint. On appeal, Ineos contends that the trial court erred by (1) finding that the economic loss rule barred the fraud claims; (2) failing to construe the evidence most strongly in Ineos’s favor; and (3) failing to strike Furmanite’s reply memorandum or, in the alternative, denying Ineos’s request to file a surreply. For the reasons that follow, we reverse the trial court’s judgment.

{¶2} As this matter implicates multiple years’ worth of discovery, we will only discuss matters which are relevant to this appeal. In 1993, Ineos’s predecessors in interest contracted with Furmanite to provide technical services for a chemical facility located in Lima, Ohio. In 1998, those services were expanded to include leak detection and repair (“LDAR”) to ensure compliance with the U.S. Environmental Protection Agency (“EPA”) LDAR regulations. Todd Grant, an employee of Furmanite, was the technician in charge of conducting the monitoring from 1998 until June 14, 2005, when he was fired. In April of 2005, the chemical plant was the subject of an audit conducted by the EPA regarding the LDAR monitoring program at the plant. An investigation followed, resulting in the EPA

issuing Ineos a “Finding of Violation (“FOV”)” for failing to adequately monitor the plant.

{¶3} On April 17, 2009, Ineos filed a complaint (“original complaint”) in the Court of Common Pleas of Allen County against Furmanite and Grant seeking recovery for damages that stemmed from incorrect LDAR monitoring. The complaint included five claims: (1) fraudulent misrepresentation; (2) fraudulent concealment; (3) breach of contract; (4) contractual indemnification; and (5) unjust enrichment. Specifically, Ineos alleged that not only did Furmanite fail to correctly monitor its chemical facility, but it also misrepresented the equipment and procedures used to conduct the monitoring, as well as the results of the monitoring. The results, which were either based upon the incorrect monitoring or completely fabricated, were then entered into a database that Ineos used to generate reports for the EPA. The complaint also alleged that Furmanite knew, but never disclosed, that the monitoring was either being performed incorrectly, or not at all. While the EPA sought civil penalties against Ineos for the FOV, at the time the complaint was filed, negotiations were as yet unresolved.

{¶4} On May 11, 2009, Furmanite filed its answer, wherein it denied the allegations set forth in Ineos’s original complaint and asserted that the “fraud claims fail because those claims are premised on breach of contract claims.” (Docket No. 5, p. 9). The court stayed the proceedings while the EPA

enforcement action was still pending. On June 12, 2013, Furmanite filed a motion for summary judgment on Ineos’s contractual indemnification and unjust enrichment claims. Furmanite argued that the Ohio Revised Code rendered “the indemnification clauses in the parties’ Contract * * * void and unenforceable.” (Docket No. 33., p. 8). In response, on June 28, 2013, Ineos filed for a continuance of the summary judgment briefing under Civ.R. 56(F), arguing that Furmanite’s summary judgment motion was premature and that inadequate discovery had taken place. The trial court granted the continuance on July 10, 2013, extending the time for filing a response brief to September 12, 2013.

{¶5} On September 12, 2013, Ineos filed its memorandum in opposition to Furmanite’s motion for summary judgment, arguing in part that whether the indemnification clause was void was a question of fact, as it depended upon how the clause was applied, not how it was written. Furmanite filed a reply on September 20, 2013, arguing again that the indemnity provisions in the contract were void under Ohio law. In the trial court’s September 25, 2013 judgment entry, it found that

the indemnification clause could be read broadly to cover plaintiff’s own negligence, however, as applied in the context of the instant case, there is at least a genuine issue as to whether plaintiff’ [sic]

complaint seeks enforcement of the indemnification clause to recover for plaintiff’s negligence. So construed in favor of the plaintiff, the indemnification clause does not violate [Ohio law].

(Emphasis sic.) (Docket No. 46, p. 7-8). As a result, the trial court denied Furmanite’s motion for summary judgment.

{¶6} Ineos filed a motion for leave to file a first amended complaint (“first amended complaint”) on October 9, 2013, to add the claim of negligent hiring, retention and supervision; update facts and averments as a result of discovery; and clarify that the unjust enrichment claim includes a claim of quantum meruit, which Furmanite opposed. The trial court granted Ineos’s motion and Furmanite filed an amended answer in response to Ineos’s amended complaint.

{¶7} On October 10, 2013, competing motions for partial summary judgment were filed. Ineos filed a motion for partial summary judgment on its breach of contract and indemnification claims. Ineos contended that the contract required the use of certain equipment, and that Grant admitted that he never used the equipment in question. In Furmanite’s memorandum in opposition, it raised the question as to what duties actually arose from the contract. Specifically, it argued that even if Grant failed to use certain equipment, the failure to use that equipment did not result in a breach of contract.

{¶8} Furmanite’s second motion for partial summary judgment sought dismissal of the two fraud claims and a narrowing of the temporal scope of all of the claims. Furmanite argued that the fraud claims were barred by the economic loss rule. Specifically, Furmanite argued that the gravamen of Ineos’s complaint

was for breach of contract and the economic loss rule prevents a plaintiff from alleging a contractual breach as a tort claim. Furmanite also argued that Ineos’s fraud claim did not allege damages that were separate and distinct from the breach of contract. In essence, any loss compensable in fraud would be covered under the indemnification provision of the contract. However, while acknowledging that the trial court had ruled that there remained an issue of material fact as to whether the indemnity provisions were valid, Furmanite continued to assert “that the indemnity provisions included in the Contract are barred under Ohio law.” (Docket No. 49, p 17, fn. 6).

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Ineos USA L.L.C. v. Furmanite America, Inc., 2014 Ohio 4996 (Ohio Ct. App. 2014).

2014 Ohio 4996 (Ineos USA L.L.C. v. Furmanite America, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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