Reed v. Dayton Electroplate, Inc. (In re Bill Young & Co.)

115 B.R. 102, 1989 Bankr. LEXIS 2637
CourtUnited States Bankruptcy Court, S.D. Ohio
DecidedOctober 6, 1989
DocketBankruptcy No. 1-87-04107; Adv. No. 1-88-0065
StatusPublished

This text of 115 B.R. 102 (Reed v. Dayton Electroplate, Inc. (In re Bill Young & Co.)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, S.D. Ohio primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Reed v. Dayton Electroplate, Inc. (In re Bill Young & Co.), 115 B.R. 102, 1989 Bankr. LEXIS 2637 (Ohio 1989).

Opinion

FINDINGS OF FACT, OPINION AND CONCLUSIONS OF LAW

J. VINCENT AUG, Jr., Bankruptcy Judge.

This matter came on for trial before the Court on May 22 and 23, and June 7, 1989 on the Complaint for Turnover Order, filed by Frederick R. Reed, Trustee for the estate of Bill Young & Company, Debtor in Case No. 1-87-04107, a Chapter 11 case, and the Counterclaim of Dayton Electroplate, Inc. (“DEI”). The trustee’s complaint asserts a claim for recovery against DEI on a business account for goods sold by Debtor to DEI prior to the filing of Debtor’s petition for relief under Chapter 11. DEI’s counterclaim seeks recovery for damages resulting from negligence and breach of contract in the performance of services by Debtor in connection with the sale of goods.

We find that the Trustee is entitled to judgment in his favor on his turnover complaint. We also find . that the Trustee is entitled to judgment in his favor on DEI’s counterclaim.

The Court having considered evidence offered by the parties, the stipulation of facts as set forth in their Joint Pre-Trial Statement, the arguments of the parties, and the parties’ respective proposed findings of fact and conclusions of law, and being otherwise sufficiently advised, hereby makes and enters the following Findings of Fact and Conclusions of Law, pursuant to Bankruptcy Rule 7052.

FINDINGS OF FACT

1. On November 20, 1987, Bill Young & Company filed a voluntary bankruptcy peti[103]*103tion in the United States Bankruptcy Court for the Southern District of Ohio, Western Division, Case No. 1-87-04107. Frederick R. Reed was appointed Trustee in the bankruptcy action.

2. On March 22, 1988, the Trustee filed a Complaint for Turnover Order against DEI to collect money owed by DEI to Bill Young & Company.

3. Bill Young & Company was a supplier of chemicals and equipment to the electroplating industry. It supplied proprietary chemicals, generic chemicals, equipment, and stripping chemicals to DEI.

MacDermid, Inc. is a supplier of proprietary chemicals. MacDermid supplied chemicals to Bill Young & Company, but is not a party to this lawsuit.

4. DEI obtained relief from the automatic stay and asserted a counterclaim against Bill Young & Company alleging damages arising out of breach of contract and negligence.

DEI claims that Bill Young assumed the duty to provide technical chemical expertise to DEI’s electroplating business and that Bill Young breached that duty by failing to realize that the “low concentration” chemical mixture it was recommending resulted in a large number of defectively plated goods and scrap parts.

5. DEI is an Ohio corporation whose sole shareholder is Charles J. Borum. It was incorporated in May, 1984, for the purpose of purchasing certain assets of Dayton Rustproof, a company in the electroplating business. DEI is in the business of electroplating parts manufactured by other companies. DEI primarily plates wire goods, such as fan guards and wire shelving; metal stamped goods, such as computer housings; and other metal parts, such as refrigerator shelving brackets, refrigerator and oven door handles.

Electroplating

6. Electroplating is a process of depositing a metal finish on a part by means of passing an electric current through a solution which includes the metal. An electrical current is generated and passed through the metal which is being plated (the anode), then through the conducting solution, depositing the metal on the surface of the part to be plated (the cathode).

7. In nickel electroplating, the electrons passing through the current change the electrically neutral nickel into nickel ions, positively charged particles, which then travel to the cathode, the part to be plated, and are deposited as nickel on the surface of the part.

8. DEI uses automatic platers in its nickel and nickel-chrome plating operation. The part to be plated is suspended from a rack and the part is automatically transferred from one tank to another during the course of the operation. The first part of the nickel and nickel-chrome plating operation is the cleaning and rinsing cycle, which is followed by the nickel plating. The operation is then followed by another series of rinsing, followed by chromium plating and then once again, rinsing.

Surface finish, roughness, weld marks, and spatter, among other things, are defects from the part fabricator which can affect the plating process.

9. Parts may be plated for a variety of reasons, including the prevention of rusting, general appearance, and the production of base metal parts with the surface properties of a metal such as nickel, but which would be produced at a lesser cost than one of solid nickel.

10. Nickel sulfate, nickel chloride and boric acid are basic chemicals, or commodities used in a nickel plating bath.

Proprietary chemicals include the conditioners, brighteners, and wetting agents which are added to the bath. A proprietary chemical is one which is normally produced through a patented process.

11. The basic formula deposits what is characterized as a dull nickel finish. Organic additives have been produced which permit a modification of the grain structure of the nickel to impart brightness to the finish, commonly referred to as a bright nickel process. The additives generally consist of a control agent, primary and secondary brighteners and wetting agents.

[104]*10412. During the 1970’s, the electroplating industry faced problems with respect to costs and treatment of pollution. As a result, lower concentration nickel plating formulas were developed. Dayton Rustproofing and DEI used a low concentration formula.

Throughout the time period in which DEI used the low concentration formulation, it experienced a problem in its nickel plating operations in that a number of parts, whether plated with nickel alone or nickel and chrome, yielded defective plating. These defects were manifested primarily in the form of “burns” at high current density areas and very thin plating in low current density areas. Efforts by DEI to rectify these problems by adjusting the DC current flow were to no avail. Increasing the current to alleviate poor plating in the low current density areas resulted in “burning” in the high current density areas, while decreasing the current to avoid “burning” in the high current density areas resulted in thin plating in low current density areas.

Prior to the fall of 1987, the period during which the low concentration formulation was in use at DEI, Mr. Borum, the owner of DEI, estimated the percentages of parts that manifested defects ranged from approximately 8% to 30%. Upon conversion to a bath with an increased sulfate concentration in November of 1987, Mr. Borum estimated his reject rate to be in the range of 2%. He also switched to another chemical supplier.

DEI, however, did not keep records of defectively plated parts or scrap parts during the period from June, 1984 to October, 1987.

Charles J. Borum and DEI

13. Charles J. Borum, the sole shareholder of DEI, has an engineering degree from the University of Texas and a law degree from the American University, Washington College. He is a member of the bar of the State of Ohio. At one time, he was a member of the patent bar.

14. Mr.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Whitaker-Merrell Company v. Profit Counselors, Inc.
748 F.2d 354 (Sixth Circuit, 1984)
Barton v. Ellis
518 N.E.2d 18 (Ohio Court of Appeals, 1986)
Menifee v. Ohio Welding Products, Inc.
472 N.E.2d 707 (Ohio Supreme Court, 1984)

Cite This Page — Counsel Stack

Bluebook (online)
115 B.R. 102, 1989 Bankr. LEXIS 2637, Counsel Stack Legal Research, https://law.counselstack.com/opinion/reed-v-dayton-electroplate-inc-in-re-bill-young-co-ohsb-1989.