[Cite as Paramount Farms Intl., L.L.C. v. Ventilex B.V., 2014-Ohio-986.]
IN THE COURT OF APPEALS
TWELFTH APPELLATE DISTRICT OF OHIO
BUTLER COUNTY
PARAMOUNT FARMS INTERNATIONAL, : LLC, : CASE NO. CA2013-04-060 Plaintiff-Appellant, : OPINION 3/17/2014 - vs - :
: VENTILEX B.V., et al., : Defendants-Appellees. :
CIVIL APPEAL FROM BUTLER COUNTY COURT OF COMMON PLEAS Case No. CV12-02-0854
Millikin & Fitton Law Firm, Steven A. Tooman, Thomas A. Dierling, 9032 Union Centre Blvd., Suite 200, West Chester, Ohio 45069 and Klapach & Klapach, P.C., Joseph S. Klapach, 8200 Wilshire Blvd., Suite 300, Beverly Hills, CA 90211, for plaintiff-appellant
Frost Brown Todd LLC, Scott D. Phillips, Thomas B. Allen, 9277 Centre Pointe Drive, Suite 300, West Chester, Ohio 45069 and Morrison Cohen LLP, Donald H. Chase, Edward P. Gilbert, 909 Third Avenue, 27th Floor, New York, New York 10022, for defendants-appellees, Ventilex B.V. and Thomas J. Schroeder
RINGLAND, P.J.
{¶ 1} Plaintiff-appellant, Paramount Farms International LLC ("Paramount Farms"),
appeals from the Butler County Court of Common Pleas decision granting summary
judgment in favor of defendants-appellees, Ventilex, B.V. and Thomas Schroeder. Butler CA2013-04-060
{¶ 2} Paramount Farms is a Delaware corporation that grows and processes almonds
in California. Ventilex, B.V. is a Dutch company that manufactures nut pasteurization
systems and is the sole shareholder of Ventilex USA. Thomas Schroeder is the former
President and Chief Executive Officer of Ventilex USA.
{¶ 3} In response to concerns regarding a salmonella outbreak in 2004, the USDA
notified the almond industry that it was planning to issue a rule requiring the pasteurization of
all almonds sold within the United States. In order to comply with the impending regulations,
Paramount Farms entered into a contract with Ventilex USA to purchase a pasteurization
system. However, the pasteurization system subsequently failed to obtain government
approval. As a result, Paramount Farms was forced to ship its almonds to processors with
approved pasteurizers until such time as the Ventilex system could be replaced.
{¶ 4} In June 2008, Paramount Farms filed a notice of demand for arbitration against
Ventilex USA and Ventilex B.V., pursuant to the terms of the contract. Paramount Farms
alleged breach of contract, breach of warranty and rescission. Ventilex B.V. claimed it was
not a party to the contract and therefore could not be forced into arbitration. Paramount
Farms subsequently commenced an action against Ventilex B.V. in the Eastern District of
California and withdrew its arbitration demand against that company. The arbitration
proceeded against Ventilex USA alone. Prior to the arbitration hearing, Paramount Farms
amended its arbitration demand to include claims for fraud, negligent misrepresentation and
violation of California's Business & Professions Code.
{¶ 5} In February of 2010, a panel of three arbitrators ruled that Ventilex USA
"breached its warranty to provide a pasteurization system that would obtain the necessary
approvals and that it would work with Paramount [Farms] at its expense to correct the
machine so it could obtain approval." However, the panel rejected Paramount Farms' claims
for fraud, negligent misrepresentation and violations of California's Business & Professions -2- Butler CA2013-04-060
Code. Including interest and costs, total judgment amounted to over $5 million. As a result
of the judgment, Ventilex USA filed for bankruptcy.
{¶ 6} In November 2010, Paramount Farms' federal action against Ventilex B.V.
proceeded to trial in the Eastern District of California. Paramount Farms claimed that
Ventilex B.V. had provided an express warranty regarding the Ventilex system and breached
that warranty. Paramount Farms presented evidence alleging that the guarantee occurred at
a meeting in the spring of 2005, wherein the Managing Director of Ventilex B.V., Henk
Dijkman, promised that Ventilex B.V. would "stand behind" the system. The court found
there to be an issue of "credibility as to whether or not the express warranty was given, and,
if given, relied upon to - - to any extent, in that there was no memorializing the ever so
important guarantee." Having found that the evidence indicated "that either the express
warranty wasn't made or it was not relied upon," the court entered judgment in favor of
Ventilex B.V. The Ninth Circuit Court of Appeals affirmed the district court's decision.
{¶ 7} The present action was filed on February 29, 2012, alleging intentional
interference with contractual relations against Ventilex B.V. and fraudulent inducement
against Ventilex B.V. and Schroeder. On March 12, 2013, the trial court granted Ventilex
B.V. and Schroeder's motions for summary judgment based on the application of California's
doctrine of res judicata. Specifically, the court held that Paramount Farms' claims against
Ventilex B.V. should have been raised in the federal action, and that the claims against
Schroeder should have been raised in the federal action or arbitration.
{¶ 8} Paramount Farms appeals from that decision, raising three assignments of
error for our review.
Statute of Limitations
{¶ 9} Before addressing Paramount Farms' assignments of error, we begin by
addressing appellees' contention that the underlying causes of action are barred by -3- Butler CA2013-04-060
California's statute of limitations. Appellees do not contest that Paramount Farms' complaint
was not barred by Ohio's four-year statutes of limitations for interference with contractual
relations and fraudulent inducement. R.C. 2305.09. However, appellees argue that
California law should apply, thus barring those causes of action pursuant to California's two
and three-year statutes of limitations, respectively.
{¶ 10} In Ohio:
The Ohio Supreme Court has adopted the Restatement (Second) of Conflict of Laws to govern conflict of law issues. Cole v. Mileti, 133 F.3d 433, 437 (6th Cir.1998). When there is a conflict between two states' statutes of limitations, the Restatement provides that "[a]n action will be maintained if it is not barred by the statute of limitations of the forum, even though it would be barred by the statute of limitations of another state." Id. (citing Restatement (Second) of Conflict of Laws § 142(2) (1971)). [Footnote omitted.] Therefore, Ohio courts are required to apply Ohio's statute of limitations to an action filed in Ohio even if that action would be time-barred in another state. Id.
Dudek v. Thomas & Thomas Attorneys & Counselors at Law, LLC, 702 F.Supp.2d 826, 834
(N.D.Ohio 2010).
{¶ 11} On the other hand, Ohio's borrowing statutes provides that:
No civil action that is based upon a cause of action that accrued in any other state, territory, district, or foreign jurisdiction may be commenced and maintained in this state if the period of limitation that applies to that action under the laws of that other state, territory, district, or foreign jurisdiction has expired or the period of limitation that applies to that action under the laws of this state has expired.
R.C. 2305.03(B). Unfortunately, Ohio's borrowing statute does not clarify how to determine
where a cause of action accrues, and case law has not offered a definitive answer. Jarvis v.
First Resolution Investment Corp., et al., 9th Dist. Summit No. 26042, 2012-Ohio-5653, ¶ 18.
{¶ 12} In resolving that issue, other Ohio courts have looked to the time of accrual to
help determine where the cause of action accrued. Id. In the case of fraud, a cause of
action accrues either when the fraud is discovered, or when in the exercise of reasonable -4- Butler CA2013-04-060
diligence, the fraud should have been discovered. E.g., Cundall v. U.S. Bank, 122, Ohio
St.3d 188, 2009-Ohio-2523, ¶ 29. In the present case, the alleged fraud was or should have
been discovered once the Ventilex system failed to obtain government approval and
Paramount Farms was forced to ship their almonds to another producer in the spring of 2008.
However, under the facts of the case at bar, the timing of the accrual does not aid in
determining where the cause of action accrued. Regardless of when the fraud was
discovered, the question remains of whether the cause of action accrued in the place where
the allegedly fraudulent representation was made, or the place where representation was
relied upon.
{¶ 13} While acknowledging that the issues relating to conflicts of law and place of
accrual are not identical, their similarities are sufficient for us to find guidance in the Ohio
Supreme Court's adoption of the Second Restatement of Conflict of Laws in determining
where the causes of action in the present case accrued. In relation to the claims of
fraudulent inducement, under Restatement 2nd, Conflict of Laws, Section 148(2), courts are
directed to consider the place where plaintiff acted in reliance on defendant's
representations, where plaintiff received the representations, where defendant made the
representations, the domiciles or place of incorporation of the parties, and the place of
performance or any tangible thing at issue. The key issues are where plaintiff acted in
reliance, where the plaintiff received the representations, and where the defendant made the
representations. Section 148(2) Comments (f), (g) and (h).
{¶ 14} Looking first to Paramount Farms' claim of fraudulent inducement against
Ventilex B.V., we find that (1) Paramount Farms acted in reliance on the alleged
representations in Ohio as the contract was entered into in Ohio, (2) Paramount Farms
received the alleged representations in California, and (3) Ventilex B.V. made the alleged
-5- Butler CA2013-04-060
representations in California.1 The place of incorporation for the businesses provides no
further insight as Paramount Farms and Ventilex B.V. are incorporated in Delaware and the
Netherlands, respectively. Weighing all of those factors, we find that the cause of action for
fraudulent inducement accrued in California rather than Ohio. California's statute of
limitations for fraudulent inducement is three years. Paramount Farms was or should have
been aware of the allegedly fraudulent representations in the spring of 2008, and the present
cause of action was not filed until approximately four years later on February 29, 2012.
Accordingly, Paramount Farms' claim for fraudulent inducement against Ventilex B.V. is
barred by California's statute of limitations.
{¶ 15} Conversely, Paramount Farms' claim for fraudulent inducement against
Schroeder is not subject to California's statute of limitations. Applying the same factors as
above, (1) Paramount Farms acted in reliance on the alleged representations in Ohio as the
contract was entered into in Ohio, (2) Paramount Farms received the alleged representations
in California, (3) Schroeder made the alleged representations in Ohio, and (4) Schroeder's
alleged fraudulent representations in this case were made as an agent of an Ohio
corporation. Given the totality of the circumstances, we find that the cause of action for the
alleged fraudulent inducement made by Schroeder accrued in Ohio and is subject to Ohio's
four-year statute of limitations for fraudulent inducement.
{¶ 16} Finally, we also find that Paramount Farms' claim of intentional interference with
contractual relations is not subject to California's statute of limitations. The contract allegedly
interfered with is one that was entered into in Ohio, was executed by an Ohio corporation and
allegedly interfered with in Ohio. Therefore, we find there to be little question that Ohio's
1. The alleged misrepresentations were said to have been made at a meeting in April 2005 at the site of another processor, Cal-Nut, in Madera, California.
-6- Butler CA2013-04-060
four-year statute of limitations for intentional interference with contractual relations applies to
that cause of action.
{¶ 17} Assignment of Error No. 1:
{¶ 18} THE TRIAL COURT ERRED IN GRANTING SUMMARY JUDGMENT IN
FAVOR OF VENTILEX B.V. UNDER CALIFORNIA'S RES JUDICATA LAW BECAUSE THE
INTENTIONAL INTERFERENCE AND FRAUDULENT INDUCEMENT CLAIMS ASSERTED
BY PARAMOUNT FARMS IN THIS ACTION AROSE OUT OF A DIFFERENT PRIMARY
RIGHT THAN THE CONTRACT CLAIMS LITIGATED IN THE FEDERAL ACTION.
{¶ 19} This court's review of a trial court's ruling on a summary judgment motion is de
novo. Lindsay P. v. Towne Properties Asset Mgt. Co., Ltd., 12th Dist. Butler No. CA2012-11-
215, 2013-Ohio-4124, ¶ 16. Civ.R. 56 sets forth the summary judgment standard and
requires that (1) there be no genuine issues of material fact to be litigated, (2) the moving
party is entitled to judgment as a matter of law, and (3) reasonable minds can come to only
one conclusion being adverse to the nonmoving party. Slowey v. Midland Acres, Inc., 12th
Dist. Fayette No. CA2007-08-030, 2008-Ohio-3077, ¶ 8.
{¶ 20} An Ohio forum court applies the procedural law of the forum state, but must
give effect to the substantive law of the state with the most significant contacts to the case.
Lawson v. Valve-Trol Co., 81 Ohio App.3d 1, 3-4 (9th Dist.1991). The trial court found that
California was the state with the most significant contacts, and the parties do not dispute that
on appeal. Ohio courts have determined that res judicata is a substantive rule of law, and
therefore we will apply California's doctrine of res judicata.
{¶ 21} California's doctrine of res judicata differs from Ohio's transactional theory.
Under Ohio's doctrine of res judicata, a second action is barred if it arises out of the same
transaction or occurrence that was the subject of the first action. In contrast, under
California's doctrine of res judicata, a second action is not barred even if it arises out of the -7- Butler CA2013-04-060
same transaction or occurrence so long as there is a separate "primary right" involved.2
{¶ 22} The California Supreme Court explained how their courts determine whether
two proceedings involve identical causes of action for purposes of claim preclusion:
California courts have "consistently applied the 'primary rights' theory." Under this theory, "[a] cause of action ... arises out of an antecedent primary right and corresponding duty and the delict or breach of such primary right and duty by the person on whom the duty rests. 'Of these elements, the primary right and duty and the delict or wrong combined constitute the cause of action in the legal sense of the term....'"
"In California the phrase 'cause of action' is often used indiscriminately ... to mean counts which state [according to different legal theories] the same cause of action...." But for purposes of applying the doctrine of res judicata, the phrase "cause of action" has a more precise meaning: The cause of action is the right to obtain redress for a harm suffered, regardless of the specific remedy sought or the legal theory (common law or statutory) advanced. As we explained in Slater v. Blackwood, * * *: "[T]he 'cause of action' is based upon the harm suffered, as opposed to the particular theory asserted by the litigant. Even where there are multiple legal theories upon which recovery might be predicated, one injury gives rise to only one claim for relief. 'Hence a judgment for the defendant is a bar to a subsequent action by the plaintiff based on the same injury to the same right, even though he presents a different legal ground for relief.'" Thus, under the primary rights theory, the determinative factor is the harm suffered. When two actions involving the same parties seek compensation for the same harm, they generally involve the same primary right.
(Internal citations omitted.) Boeken v. Philip Morris USA, Inc., 48 Cal.4th 788, 797-98 (2010).
{¶ 23} Put succinctly, California's "primary right" theory of res judicata states that two
proceedings are based on the same cause of action only if they are based on the same
primary right. The plaintiff's primary right is defined as "the right to be free from a particular
injury, regardless of the legal theory on which liability for the injury is based. * * * An injury is
2. Unlike most jurisdictions, including Ohio and the federal courts, that apply the Restatement's "transaction" theory, California instead applies the "primary right" theory articulated by University of California Hastings College of Law Professor John Norton Pomeroy in the late 19th century.
-8- Butler CA2013-04-060
defined in part by reference to the set of facts, or transaction, from which the injury arose."
(Internal citations omitted.) Crosby v. HLC Properties, Ltd., 167 Cal.Rptr.3d 354
(Cal.App.2014), quoting Federation of Hillside & Canyon Assns. v. City of Los Angeles, 126
Cal.App.4th 1180, 1202 (2004).
Intentional Interference with Contractual Relations
{¶ 24} Paramount Farms alleges that Ventilex B.V. tortiously interfered with Ventilex
USA's ability to perform on the contractual obligations it owed to Paramount Farms.
Specifically, Paramount Farms alleges that Ventilex B.V. pulled money out of Ventilex USA
while directing Schroeder to refuse to service Ventilex machines and instead focus on selling
new machines. In addition, Paramount Farms alleges that Ventilex B.V. stopped providing
sales leads, engineering, maintenance and other support to Ventilex USA. Their contention
is that Ventilex B.V. intentionally acted to deprive Ventilex USA of the ability to meet its
financial obligations with respect to the guarantees made in its contract with Paramount
Farms.
{¶ 25} The trial court granted summary judgment in favor of Ventilex B.V., finding that
the present intentional interference with contractual relations claim and the breach of express
warranty claim made in the federal lawsuit involve the same injury to Paramount Farms and
the same wrong by Ventilex B.V.
{¶ 26} We find Brenelli Amedeo, S.P.A. v. Bakara Furniture, Inc., 29 Cal.App.4th 1828
(1994), persuasive in resolving this issue. In that case, the plaintiff obtained a judgment
against the defendant-corporation for breach of contract. However, before they were able to
execute on the judgment, the corporation filed for bankruptcy. Upon discovering that the
corporation's shareholders had fraudulently conveyed away the corporation's assets, the
plaintiff sued the shareholders for various torts. The appellate court rejected the
shareholders' argument that res judicata barred the plaintiffs' tort claims, holding that "the -9- Butler CA2013-04-060
right to have contractual obligations performed is distinct from the right to be free from
tortious behavior preventing collection of a judgment." Id. at 1837.
{¶ 27} Similar to Brenelli, the present action for intentional interference with
contractual relations and the previously adjudicated federal claims involve separate sets of
facts and distinct harms. While the dissent correctly notes that a single injury gives rise to
only a single cause of action under California's doctrine of res judicata, we find that under the
present set of facts, the harm suffered by the tortious intentional interference with contractual
relations claim differs from the harm suffered as a result of the contractual breach of express
warranty claim. Where the underlying facts and transactions of two causes of action are
entirely distinct, yet the "monetary loss" in two claims is the same, a court may find that "the
plaintiffs have been 'harmed' differently by tortious conduct * * * than by the contractual
breach * * *." Sawyer v. First City Financial Corp., Ltd., 124 Cal.App.3d 390 (1981).
{¶ 28} The federal suit alleged that Ventilex B.V. breached an express warranty to
"stand behind" the system. In contrast, the present intentional interference with contractual
relations claim alleges that Ventilex B.V. intentionally restricted another party, Ventilex USA,
from performing its contractual obligations with Paramount Farms. There is a clear
distinction between whether Ventilex B.V. promised and failed to "stand behind" the system,
and whether it subsequently sought to actively thwart Ventilex USA's ability to satisfy its
obligations to Paramount Farms.
{¶ 29} Accordingly, pursuant to California's primary right theory of the doctrine of res
judicata, Paramount Farms' present claim for intentional interference with contractual
relations is not barred by the previous lawsuit where the present claims are based on
separate facts, transactions and harm suffered. Therefore, we find that the trial court erred in
dismissing the intentional interference with contractual relations claim as barred by res
judicata. - 10 - Butler CA2013-04-060
Fraudulent Inducement
{¶ 30} Having already determined that Paramount Farms' claim for fraudulent
inducement against Ventilex B.V. was barred by California's statute of limitations, Paramount
Farms' argument that the trial court erred in holding that it was barred by res judicata is
rendered moot. However, even if we had found that Ohio's statute of limitations applied, we
would not have found error in the trial court's holding.
{¶ 31} Paramount Farms' fraudulent inducement claim against Ventilex B.V. stems
from Djikman's alleged promise that Ventilex B.V. would "stand behind" the pasteurization
system. Similarly, Paramount Farms' federal suit against Ventilex B.V. alleged that Ventilex
B.V. expressly warranted that it would "stand behind" the system. Rather than protecting a
distinct primary right, Paramount Farms is simply pursuing recourse for the same harm on a
separate legal theory. This is distinguishable from our holding above as to the intentional
interference with contractual relations claims because Paramount Farms' fraudulent
inducement claim against Ventilex B.V. is based upon the exact same set of facts,
transactions and harm suffered as the federal suit. Both claims center on the alleged
statement by Djikman that Ventilex B.V. would "stand behind" the system, and both claims
allege the same injury resulting from Ventilex B.V.'s failure to subsequently follow through on
that alleged representation. Pursuant to California's doctrine of res judicata, those claims
involve the same primary right and cause of action. Accordingly, even if we were to have
found that Ohio's statute of limitations applied, Paramount Farms' claim for fraudulent
inducement against Ventilex B.V. would be barred by res judicata.
{¶ 32} In light of the foregoing, having found that (1) Paramount Farms' claim for
intentional interference with contractual relations against Ventilex B.V. involves a different
primary right than the cause of action in the federal lawsuit and thus is not barred by
California's doctrine of res judicata, and (2) Paramount Farms' claim for fraudulent - 11 - Butler CA2013-04-060
inducement is barred by California's statute of limitations, or in the alternative is barred by res
judicata as it is based on the same primary right as the federal lawsuit, Paramount Farms'
first assignment of error is sustained as it relates to the claim for intentional interference with
contractual relations and overruled as it relates to the claim for fraudulent inducement.
{¶ 33} Assignment of Error No. 2:
{¶ 34} THE TRIAL COURT ERRED IN GRANTING SUMMARY JUDGMENT IN
FAVOR OF MR. SCHROEDER ON RES JUDICATA GROUNDS.
{¶ 35} Within this assignment of error, Paramount Farms argues that its claim against
Schroeder was not barred by res judicata because (1) Paramount Farms could not compel
Schroeder to arbitrate in the Ventilex USA arbitration, (2) a private arbitration award has no
collateral estoppel effect in favor of third parties under California law, and (3) the fraudulent
inducement claim was not actually litigated and decided in the Ventilex USA arbitration.
{¶ 36} The trial court granted summary judgment in favor of Schroeder on the basis
that (1) Paramount Farms could have compelled Schroeder, as an agent of Ventilex USA, to
arbitrate in the Ventilex USA arbitration, (2) the conduct alleged by Paramount Farms was
directly at issue in the Ventilex USA arbitration and the federal lawsuit against Ventilex B.V.,
and (3) Paramount Farms was aware of the alleged conduct of Schroeder prior to both the
arbitration and federal suit.
{¶ 37} Under California law, a nonsignatory who is the agent of a signatory can be
compelled to arbitrate claims against his will. Smith v. Microskills San Diego L.P., 153
Cal.App.4th 892, 896-97 (2007). Here, the contract containing the arbitration clause was
executed by Paramount Farms and Ventilex USA.
{¶ 38} Pursuant to California Civil Code section 2295: "An agent is one who
represents another, called the principal, in dealings with third persons." Schroeder was the
President of Ventilex USA. Paramount Farms' allegations against Schroeder are comprised - 12 - Butler CA2013-04-060
solely of statements he made in his capacity as President of Ventilex USA. Accordingly,
Paramount Farms could have compelled the nonsignatory Schroeder, as an agent of
signatory Ventilex USA, to arbitrate the claims against him. Paramount Farms' claims
against Schroeder are thus barred by California's doctrine of res judicata.
{¶ 39} Paramount Farms next argues that the trial court's alternative holding that
Paramount Farms' claim for fraudulent inducement against Schroeder was barred by issue
preclusion is erroneous as a matter of law. Because we have found that Paramount Farms'
claims against Schroeder are barred by California's theory of claims preclusion, we need not
address the trial court's alternative holding with regard to issue preclusion, i.e., collateral
estoppel.
{¶ 40} In light of the foregoing, having found that (1) a nonsignatory agent of a
signatory can be compelled to arbitrate, and (2) Schroeder's alleged fraudulent
representations were made in his capacity as an agent of Ventilex USA, we find that (1) the
trial court did not err in holding that Schroeder could have been compelled to arbitrate, and
(2) Paramount Farms' claims against Schroeder were barred by the doctrine of res judicata.
Accordingly, Paramount Farms' second assignment of error is overruled.
{¶ 41} Assignment of Error No.3:
{¶ 42} THE TRIAL COURT ERRED IN DISMISSING THE COMPLAINT ON RES
JUDICATA GROUNDS BECAUSE PARAMOUNT FARMS' CLAIMS FOR FRAUDULENT
INDUCEMENT TO CONTRACT AND INTERFERENCE WITH CONTRACTUAL RELATIONS
WERE NOT DISCOVERED UNTIL AFTER PARAMOUNT FARMS HAD FILED THE
FEDERAL ACTION.
{¶ 43} Paramount Farms argues that its claims are not barred by res judicata because
the claims were not discovered until after it was able to depose Djikman in July of 2010, well
after the federal lawsuit had been filed. - 13 - Butler CA2013-04-060
{¶ 44} Res judicata serves as a bar to all causes of action that were litigated or that
could have been litigated in the first action. Allied Fire Protection v. Diede Const., Inc., 127
Cal.App.4th 150, 155, (2005). However, res judicata is not a bar to claims that arise after the
initial complaint is filed. Id. The dispositive question then is whether Djikman's deposition
gave rise to the present claims after the federal complaint was filed?
{¶ 45} Paramount Farms cites to Djikman's deposition as having given rise to the
present cause of action because Djikman admitted that Ventilex B.V. created Ventilex USA to
shield it from liability. Paramount Farms essentially alleges that the creation of a wholly-
owned subsidiary to insulate a parent company from liability is evidence of fraud. We
disagree. The creation of subsidiaries to limit liability to a parent company is a common
business practice. If Paramount Farms, a sophisticated corporate entity, wished for Ventilex
B.V. to be liable in the event the contract was breached, it could have required Ventilex B.V.
be a party to the contract. It did not, and it now essentially asks the court to amend the
contract to include Ventilex B.V.
{¶ 46} Regardless, the alleged fraud was or should have been discovered long before
Djikman's testimony. While Paramount Farms may argue that Djikman's testimony was
beneficial to a claim for fraudulent inducement or intentional interference with contractual
relations, it cannot successfully argue that those claims could not have been otherwise
discovered or asserted prior to his deposition. By the spring of 2008, Paramount Farms was
or should have been aware that the alleged representations by Schroeder and Ventilex B.V.
asserting that Ventilex would "stand behind" the system were untrue. By that point, the
system had failed to obtain approval and Ventilex had failed to "stand behind" it. While
Djikman's deposition potentially provides support for the fraudulent nature of those alleged
representations, it did not give rise to those causes of action for the first time.
{¶ 47} The same is true of the claim for intentional interference with contractual - 14 - Butler CA2013-04-060
relations. The conduct that led to Paramount Farms' allegation that Ventilex B.V. halted
sales leads, engineering, maintenance and other support to Ventilex USA was known prior to
Djikman's deposition. Djikman's statements would merely support that claim, not give rise to
it. Accordingly, we cannot find that Djikman's deposition included newly discovered evidence
that first gave rise to the claims in the present case.
{¶ 48} In light of the foregoing, having found that Djikman's deposition may have given
support to the claims in the present case but did not give rise to them, Paramount Farms'
third assignment of error is overruled.
{¶ 49} Finally, we note that appellees argue in the alternative that Paramount Farms'
fraud claims are barred by California's "economic loss" rule. Having already determined that
(1) Paramount Farms' fraud claim against Ventilex B.V. was barred by California's statute of
limitations, and (2) Paramount Farms' fraud claim against Schroeder was barred by
California's doctrine of res judicata, we decline to address appellees' alternative argument.
{¶ 50} Judgment reversed and remanded only insofar as it pertains to the claim of
intentional interference with contractual relations. In all other respects, the trial court's
judgment is affirmed.
M. POWELL, J., concurs.
PIPER, J., concurs in part and dissents in part.
PIPER, J., concurring in part and dissenting in part.
{¶ 51} I concur with the majority's opinion as it relates to the fraudulent inducement
portion of appellant's first assignment of error, as well as appellant's second and third
assignments of error. However, I must dissent with the majority's resolution of the intentional
interference with contractual relations portion of appellant's first assignment of error. I find - 15 - Butler CA2013-04-060
that the trial did not err in holding that Paramount Farms' claim for intentional interference
with contractual relations was barred by California's doctrine of res judicata because that
claim involved the same primary right as the breach of express warranty claim previously
litigated in the federal action.
{¶ 52} The majority quotes the California Supreme Court decision in Boeken for the
proposition that, "[e]ven where there are multiple legal theories upon which recovery might be
predicated, one injury gives rise to only one claim for relief." 48 Cal.4th 788 (2010). The
claim for breach of express warranty in the federal action and the claim for intentional
interference with contractual relations in the present case involve the same injury, and
therefore give rise to only one claim for relief. Paramount Farms' injury from the breach of
express warranty consisted of the cost to replace the Ventilex USA system with a system that
obtained government approval, and the cost of shipping its almonds to another processor in
the intermediate time. I find that to be the same injury that was suffered as a result of
Ventilex B.V.'s alleged intentional interference with Ventilex USA's ability to fulfill its
contractual obligations to Paramount Farms.
{¶ 53} While I agree with the majority that the facts and transactions that gave rise to
the intentional interference with contractual relations claim are separate and distinct from the
facts and transactions that gave rise to the express warranty claim, I would find that the
present claim against Ventilex B.V. is barred by California's doctrine of res judicata because
the injury suffered is the same under both legal theories. As was recently stated in Crosby v.
HLC Properties, Ltd., a plaintiff's primary right is, "the right to be free from a particular injury,
regardless of the legal theory on which liability for the injury is based." 223 Cal.App.4th 597
(2014). Therefore, there are no separate and distinct primary rights under contract and tort
theories where the injury suffered is the same under both claims.
{¶ 54} The majority cites to the Brenelli decision to support the argument that, "the - 16 - Butler CA2013-04-060
right to have contractual obligations performed is distinct from the right to be free from
tortious behavior preventing collection of a judgment." 29 Cal.App.4th 1837 (1994).
However, other California courts have found that the focus should not be on the "distinction
between the legal theories pled in the two actions," but rather on the "difference between the
alleged injuries and the distinction between the alleged wrongs." Hacienda Mgmt. v.
Starwood Capital Group Global I LLC, N.D. California No. 12-0395-SC, 2012 WL 2838708,
*12 (July 10, 2012). While the legal theories in the federal action and present action may
differ, I agree with the trial court's holding that "[t]hese claims and the federal action claims 3 involve the same injury to [Paramount Farms] and the same wrong by Ventilex [B.V.]."
{¶ 55} Accordingly, because I find that (1) Paramount Farms suffered the same injury
regardless of the theory upon which recovery is sought, and (2) California law is unsettled as
to what defines a distinct primary right, I would affirm the trial court with regard to the
intentional interference with contractual relations portion of appellant's first assignment of
error and find that California's doctrine of res judicata barred that claim. I therefore am
compelled to concur in part, and dissent in part.
3. I note that Paramount Farms has had multiple opportunities to litigate this matter, including the arbitration in New York and subsequently through the federal action in California. To allow this matter to continue to be relitigated is contrary to the spirit of the doctrine of res judicata that rests on the ground that, "'the party to be affected, or some other with whom he is in privity, has litigated, or had an opportunity to litigate the same matter in a former action in a court of competent jurisdiction, and should be permitted to litigate it again to the harassment and vexation of his opponent.' Res judicata thus 'not only precludes the relitigation of issues that were actually litigated, but also precludes the litigation of issues that could have been litigated in the prior proceeding.'" (Internal citations omitted.) People v. World Wide Mediacom, Second Dist., Div. 3, Cal. No B241365, 2014 WL 856365 (Mar. 5, 2013).
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