[Cite as Republic Steel v. Protrade Steel Co., Ltd., 2018-Ohio-469.]
COURT OF APPEALS STARK COUNTY, OHIO FIFTH APPELLATE DISTRICT
REPUBLIC STEEL : JUDGES: : Hon. W. Scott Gwin, P.J. Plaintiff-Appellee : Hon. William B. Hoffman, J. : Hon. Earle E. Wise, Jr., J. -vs- : : PROTRADE STEEL CO., LTD. : Case No. 2017CA00048 : Defendant-Appellant : OPINION
CHARACTER OF PROCEEDING: Appeal from the Court of Common Pleas, Case No. 2015CV01186
JUDGMENT: Affirmed
DATE OF JUDGMENT: February 5, 2018
APPEARANCES:
For Plaintiff-Appellee For Defendant-Appellant
BENJAMIN C. SASSE WILLIAM H. FALIN JOHN Q. LEWIS JOHN M. MOSCARINO SETH J. LINNICK The Hanna Building PAUL L. JANOWICZ 1422 Euclid Avenue, Suite 630 950 Main Avenue, Suite 1100 Cleveland, OH 44115 Cleveland, OH 44113 Stark County, Case No. 2017CA00048 2
Wise, Earle, J.
{¶ 1} Defendant-Appellant ProTrade Steel Co., LTD (ProTrade) appeals the
February 23, 2017 judgment of the Court of Common Pleas of Stark County, Ohio
overruling Protrade’s objections to the Magistrate’s decision. Plaintiff-Appellee is
Republic Steel (Republic).
FACTS AND PROCEDURAL HISTORY
{¶ 2} Republic is a producer of steel, and ProTrade is a scrap metal broker.
Republic has been purchasing scrap steel from ProTrade since 2005. At some point
during the business relationship, Republic had difficulty making timely payments to
ProTrade, and the companies ceased doing business from 2008 to 2013. In 2013, when
the parties began doing business again, it was with the agreement that Republic would
obtain a letter of credit in favor of ProTrade. HSBC Bank (“HSBC”) issued a $5 million
letter of credit to Republic in August of 2013, which was increased to $10 million in March
of 2014.
{¶ 3} Republic purchased scrap steel from ProTrade by issuing purchase orders.
Each purchase order contained terms of payment within 45 days, listed the type and
quantity of scrap to be purchased, the unit price of the scrap, and the due date for delivery
of the scrap. Under this system, Republic issued a purchase order, ProTrade delivered
the quantity of scrap requested, and either Republic paid the amount due or it was
submitted to HSBC for payment against the letter of credit.
{¶ 4} During the second half of 2014, Republic’s payments became consistently
late. In October 2014 a conference call took place between representatives of Republic
and ProTrade. Republic acknowledged financial difficulty and requested leniency with the Stark County, Case No. 2017CA00048 3
45-day payment terms. According to ProTrade, all parties agreed that ProTrade would
continue to ship scrap even though Republic was behind on payments, but only up to the
$10 million available on the letter of credit. As Republic paid down the balance, ProTrade
would fulfill outstanding scrap orders in an amount equivalent to that paid down by
Republic.
{¶ 5} Following this discussion, Republic continued to place new purchase orders
with ProTrade and ProTrade continued to provide scrap as past-due payments were
submitted by Republic. The dispute here arose when Republic cancelled five purchase
orders between October 2, 2014 and January 12, 2015 because ProTrade failed to
complete delivery of the scrap by the due dates specified in the purchase orders.
{¶ 6} According to Republic, even though it was behind on payments for previous
orders, ProTrade was nonetheless contractually obligated to deliver each order by the
delivery date specified in each purchase order. According to ProTrade, the delivery dates
specified in the purchase orders were ignored due to the parties’ alternative agreement.
{¶ 7} During this same time, ProTrade contacted Republic regarding past due
balances. Republic was warned it needed to catch up on payments or ProTrade would
cancel outstanding purchase orders. Republic responded it had not agreed that the orders
were cancelled.
{¶ 8} In February 2015, however, Republic sent an email to ProTrade advising
that Republic was cancelling 13 outstanding purchase orders, including the five that
became the basis of this litigation. ProTrade had not delivered the scrap for any of those
five purchase orders. Because delivery had not taken place by the date on the invoice,
Republic maintained it had a right to cancel. ProTrade on the other hand, disagreed. Stark County, Case No. 2017CA00048 4
{¶ 9} Republic cancelled these orders at a time when the market price of scrap
fell, meaning if the scrap had been delivered, Republic would have paid more for the
scrap than it was worth. On February 13, 2015, ProTrade claimed a market loss due to
Republic's cancellation of orders for the undelivered scrap. ProTrade issued a
“commercial invoice” to Republic for $1,284,362 in market loss. When Republic refused
to pay, ProTrade submitted the market loss invoice to HSBC and HSBC paid the invoice
from Republic’s letter of credit.
{¶ 10} In June, 2015, Republic filed a breach of contract complaint against
ProTrade to recover the $1,284,362.
{¶ 11} In September 2016, upon written agreement of the parties, the matter went
before a magistrate for a jury trial. The issues before the jury were whether Republic had
the right to cancel overdue purchase orders and whether the due dates in the purchase
orders had been modified or waived. The parties stipulated that the five purchase orders
were written contracts.
{¶ 12} The trial began on September 19, 2016. At trial, the videotaped deposition
of David Spector, Republic’s scrap industry expert, was played for the jury as Spector
was unavailable at the time of trial. Spector explained that the scrap steel market is a 30-
day market, meaning the price of steel scrap fluctuates every 30 days, sometimes
dramatically. Negotiations between suppliers and mills therefore take place monthly.
Spector further explained that because of fluctuations in the cost of scrap, it is common
industry practice for steel mills to cancel overdue purchase orders when the price of scrap
drops. Spector further stated he was personally unaware of a circumstance where a Stark County, Case No. 2017CA00048 5
scrap dealer had invoiced and pursued a mill for market losses after cancellation of an
overdue order of unshipped scrap.
{¶ 13} On cross examination, ProTrade first established that Spector was not
personally aware of an industry practice where a scrap dealer has the right to recover
market losses for unshipped scrap upon a mill’s cancellation. ProTrade then sought to
introduce pleadings from a U.S. District Court for the Northern District of Ohio case
captioned 1795906 Ontario Inc., dba GTA Industrial Metals v. PSC Metals Inc., (the GTA
pleadings). The matter contained a counterclaim for market losses filed by Spector's
former employer PSC Metals, Inc. PSC's counterclaim was based on GTA's cancellation
of purchase orders. Spector had been PSC’s president the year the GTA pleadings were
filed, but he had stepped down the month the counterclaim was filed. Spector testified
had no knowledge or memory of the GTA litigation, nor any recollection of doing business
with GTA, and ProTrade presented no evidence to demonstrate that Spector had any role
in the GTA litigation. At trial, the magistrate excluded this portion of Spector’s testimony.
{¶ 14} On September 23, 2016, the jury returned a unanimous verdict in favor of
Republic in the amount of $1,284,392 plus interest accrued since June 5, 2015.
{¶ 15} On September 28, 2016, the magistrate filed a proposed entry
recommending the trial court enter a verdict reflecting the jury's decision. The trial court
did so on the same day. On October 11, 2016, ProTrade filed objections to the
magistrate’s decision, and supplemental objections on January 10, 2017. The trial court
overruled ProTrade’s objections on February 23, 2017.
{¶ 16} ProTrade now brings this appeal, raising five assignments of error: Stark County, Case No. 2017CA00048 6
I
{¶ 17} "THE TRIAL COURT ABUSED ITS DISCRETION BY OVERRULING
APPELLANT'S OBJECTIONS AND ADOPTING THE MAGISTRATE'S DECISION
BECAUSE APPELLANT WAS MATERIALLY PREJUDICED BY THE EXCLUSION OF
EVIDENCE AND TESTIMONY RELATING TO THE GTA PLEADINGS DURING CROSS-
EXAMINATION OF APPELLEE'S SCRAP METAL INDUSTRY EXPERT, DAVID
SPECTOR."
II
{¶ 18} "THE TRIAL COURT ABUSED ITS DISCRETION BY OVERRULING
APPELLANT'S OBJECTIONS TO THE MAGISTRATE'S DECISION BECAUSE THE GTA
EVIDENCE AND TESTIMONY WAS RELEVANT AND ADMISSIBLE REBUTTAL
EVIDENCE AND APPELLANT WAS MATERIALLY PREJUDICED BY ITS EXCLUSION."
III
{¶ 19} "THE TRIAL COURT ABUSED ITS DISCRETION BY OVERRULING
APPELLANT'S OBJECTIONS TO THE MAGISTRATE'S DECISION BECAUSE THE
GTA PLEADINGS AND TESTIMONY SHOULD HAVE BEEN PLAYED TO THE JURY
FOR IMPEACHMENT OF PLAINTIFF'S EXPERT."
IV
{¶ 20} "THE TRIAL COURT ABUSED ITS DISCRETION BY ADOPTING THE
MAGISTRATE'S DECISION BECAUSE THE MAGISTRATE PERMITTED REPUBLIC
STEEL'S COUNSEL TO MAKE PREJUDICIAL COMMENTS THROUGHOUT TRIAL,
WHICH MATERIALLY PREJUDICED APPELLANT'S RIGHT TO FAIR TRIAL." Stark County, Case No. 2017CA00048 7
V
{¶ 21} "THE TRIAL COURT ABUSED ITS DISCRETION BY ADOPTING THE
MAGISTRATE'S DECISION TO EXCLUDE EVIDENCE AND TESTIMONY OF THE
PAST BUSINESS RELATIONSHIP BETWEEN APPELLANT AND APPELLEE."
I, II, III
{¶ 22} In its first three assignments of error, ProTrade argues the trial court abused
its discretion when it overruled ProTrade’s objections to the magistrate’s evidentiary
rulings regarding aspects of ProTrade’s cross-examination of David Spector, Republic’s
scrap metal industry expert. We address these arguments together.
{¶ 23} ProTrade argues it was materially prejudiced by the exclusion of the GTA
pleadings for cross-examination of Spector, rebuttal evidence, and impeachment
evidence. We disagree.
{¶ 24} We review an appeal from a trial court's order adopting a magistrate's
decision for an abuse of discretion. In order to find an abuse of discretion, we must
determine the trial court's decision was unreasonable, arbitrary or unconscionable and
not merely an error of law or judgment. Blakemore v. Blakemore, 5 Ohio St.3d 217, 450
N.E.2d 1140 (1983).
Cross-examination and Rebuttal
{¶ 25} First, ProTrade mischaracterizes Spector’s testimony. ProTrade argues it
was entitled to introduce the GTA pleadings on cross-examination because Spector
testified that there is no industry practice of attempting to recover market loss, and was
permitted to testify that scrap dealers do not seek recovery for market losses. On direct Stark County, Case No. 2017CA00048 8
examination, however, Spector testified only that he has not seen an invoice for market
losses:
Q. Have you ever seen an invoice in your time in the scrap business
where a company is being invoiced for market losses?
A. No.
{¶ 26} Spector Dep. T. 68-69. On cross-examination, ProTrade also raised the
issue:
Q. You’re not aware of an industry practice that would suggest to a
scrap dealer that it has the right to recover market losses for
unshipped scrap in the face of a mill’s cancellation, correct?
A. Correct.
Q. So you personally are not aware of that occurring, correct?
A. Yes, I’m not aware of it.
Q. So you would agree that it’s possible that it has happened in this
large steel industry, and you’re just not aware of it?
A. I can’t say I’m aware of every contract that was ever entered into
by a scrap yard and a steel mill or broker.
{¶ 27} Id. 89-90. Thus Spector testified only that he was personally unaware of
such practice. Stark County, Case No. 2017CA00048 9
{¶ 28} Additionally, the GTA pleadings ProTrade sought to admit did not contradict
Spector’s testimony as that matter did not involve a claim for market losses in the
domestic steel industry. Rather the GTA litigation involved the sale of a different product
to an international broker under terms requiring pre-payment. Id. 95. In the excluded
portion of his testimony, Spector explained that different rules apply in an international
sale. Id. What is more, PSC’s counterclaim for market losses in the GTA litigation is not
an invoice for market losses based on a mill’s cancellation of an overdue purchase order.
{¶ 29} Cross-examination is permitted on all relevant matters and matters affecting
credibility. Evid.R. 611(B). A counterclaim by PSC in the GTA litigation was not relevant
as it was not analogous to the invoice in the instant matter, was not relevant to Spector’s
testimony that he is personally unaware of an industry practice of invoicing for market
losses, and did not go to Spector’s credibility. The trial court did not abuse its discretion
in adopting the magistrate’s decision to exclude this portion of cross-examination of
Spector’s testimony and the GTA pleadings.
{¶ 30} ProTrade’s second argument -- that the GTA evidence and testimony were
relevant and admissible rebuttal testimony – is also unavailing.
{¶ 31} ProTrade argues it had an unconditional right to present rebuttal evidence
and testimony. ProTrade cites Phung v. Waste Mgt., Inc., 71 Ohio St.3d 408, 644 N.E.d
286 (1994) in support of this argument. Phung, however, concerned whether a plaintiff
may present rebuttal witnesses who were not disclosed on its witness list. The Phung
court found “[a] party has an unconditional right to present rebuttal testimony on matters
which are first addressed in an opponent's case-in-chief and should not be brought in the
rebutting party's case-in-chief.” Id., 410. ProTrade called no witnesses in rebuttal and Stark County, Case No. 2017CA00048 10
presented no rebuttal evidence. ProTrade’s argument concerns the scope of cross-
examination, not the presentation of rebuttal witnesses.
{¶ 32} Moreover, as noted by Republic, ProTrade did not raise this specific
unconditional right argument in its objections to the magistrate’s decision, and has
therefore forfeited all but plain error. We find no error plain or otherwise and reject
ProTrade's rebuttal argument.
Impeachment
{¶ 33} ProTrade further argues that the GTA pleadings and testimony should have
been admitted for impeachment purposes. ProTrade sought to admit extrinsic evidence
of contradiction to impeach Spector. The trial court found this evidence inadmissible
pursuant to Evid.R. 616(C). That rule addresses methods of impeachment:
(C) Specific Contradiction. Facts contradicting a witness's testimony
may be shown for the purpose of impeaching the witness's
testimony. If offered for the sole purpose of impeaching a witness's
testimony, extrinsic evidence of contradiction is inadmissible unless
the evidence is one of the following:
(1) Permitted by Evid. R. 608(A) [opinion and reputation evidence],
609 [conviction of a crime], 613 [prior inconsistent statement or
conduct], 616(A) [bias], 616(B) [sensory or mental defect], or 706
[learned treatises];
(2) Permitted by the common law of impeachment and not in conflict
with the Rules of Evidence. Stark County, Case No. 2017CA00048 11
{¶ 34} The trial court correctly found that the exhibits ProTrade sought to introduce
fit none of these exceptions. ProTrade argues here that Republic “opened the door” to
this line of questioning when it asked Spector on direct exam if he was aware of prior
claims for market losses. But as discussed above, this is a misreading of Spector’s
testimony. Spector was asked on direct examination whether he was aware of a practice
of invoicing a mill for market losses in the face of a cancelled purchase order. ProTrade
improperly attempted to impeach Spector with extrinsic evidence of a crossclaim for
market losses in a case Spector had no knowledge of. Accordingly, the trial court did not
abuse its discretion in rejecting Protrade’s impeachment argument and adopting the
magistrate’s decision.
{¶ 35} The exclusion of the GTA evidence was proper and therefore did not
materially prejudice ProTrade's ability to present a meaningful defense. The first three
assignments of error are overruled.
{¶ 36} In its fourth assignment of error, ProTrade argues the trial court abused its
discretion by overruling ProTrade’s objection to the magistrate’s decision because
counsel for Republic was permitted to make prejudicial comments affecting ProTrade’s
right to a fair trial. Specifically, ProTrade argues it was prejudiced because Republic was
permitted to make comments that ProTrade “stole” or “took” money from Republic, and
“committed a fraud” during opening statement and closing argument. ProTrade further
argues the trial court should have provided a curative instruction. We disagree.
{¶ 37} During opening statement, T. 228-230, the following took place: Stark County, Case No. 2017CA00048 12
[Counsel for Republic]: One of the first things I learned when I was a child, one of my first memories was when I stole my brother’s Matchbox car and my mom taught me the lesson that I don’t steal things that don’t belong to me.
Some 40 years later I find myself in this courtroom asking for that rule to be enforced again. ProTrade took over 1.28 million dollars from the men and women of Republic Steel and was not entitled to do so. *** [Counsel for ProTrade]: Objection. May we approach? *** [Counsel for ProTrade]: The Court has granted summary judgment on the conversion plan (sic) filed by Republic. [Counsel for Republic] just said “stole.” We don’t want – this is a contract case. This is not a case of theft or conversion and I –
[Counsel for Republic]: I said they took money they weren’t entitled to take. That’s a breach of contract.
The Court: I do believe you used the word “stole.”
[Counsel for ProTrade]: Yeah; then you said you’re in this court now 40 years old. The clear inference is that you’re saying that they stole something.
The Court: We’re in opening statement; let’s not use stole or theft. Okay?
[Counsel for Republic]: All right.
[Counsel for ProTrade]: Thank you, Your Honor.
{¶ 38} Counsel for Republic then continued opening statement at T. 230;
[Counsel for Republic]: Ladies and gentlemen of the jury, I’m here
40 years later asking you, as members of the jury, to tell ProTrade
that they owe the money back that they took from Republic Steel’s
bank. * * * Stark County, Case No. 2017CA00048 13
{¶ 39} Later in opening statement, counsel for Republic stated that when ProTrade
created the invoice for market losses on scrap it never delivered and submitted the invoice
to HSBC, ProTrade “* * * breached the contract; it committed a fraud.” ProTrade’s
objection was overruled. This is the only use of the word fraud cited in ProTrade's brief.
{¶ 40} In closing argument, counsel for Republic continued to characterize
ProTrade’s draw on the letter of credit as taking. T. 1236, 1276, 1337, 1339 and 1331.
ProTrade lodged no objection.
{¶ 41} It is well settled that counsel is accorded wide latitude in opening statement;
however, counsel is not permitted to make statements of law or fact that are obviously
erroneous. Silver v. Jewish Home of Cincinnati, 190 Ohio App.3d 549, 2010-Ohio-5314,
943 N.E.2d 577 (12th Dist. Warren). The same is applicable to closing argument. Pang
v. Minch, 53 Ohio St.3d 186, 59 N.E.2d 1313 (1990) paragraph 2 of the syllabus. The
determination of what is appropriate in closing argument is left to the sound discretion of
the trial court. Id. paragraph 3 of the syllabus. Improper comments will be grounds for
reversal “only if the circumstances are of such a reprehensible and heinous nature as to
constitute prejudice.” Bell v. Mt. Sinai Med. Ctr., 95 Ohio App.3d 590, 601, 643 N.E.2d
151(1994); Kubiszak v. Rini's Supermarket, 77 Ohio App.3d 679, 688, 603 N.E.2d
308(1991).
{¶ 42} First, the crux of this dispute was whether or not Republic had a right to
cancel the overdue purchase orders and whether therefore ProTrade appropriately drew
on Republic’s letter of credit for market losses. If Republic had a right to cancel the orders,
and ProTrade thus had no authority to draw the losses from Republic’s letter of credit,
took or taking is an appropriate characterization of the draw on the letter of credit and Stark County, Case No. 2017CA00048 14
what Republic’s counsel believed the evidence would show. The characterization was
equally appropriate at the close of evidence. What is more, ProTrade never objected to
use of the words took or taking. A failure to object waives all but plain error. The plain
error doctrine is applicable in civil cases only where the error “seriously affects the basic
fairness, integrity, or public reputation of the judicial process.” Goldfuss v. Davidson, 79
Ohio St.3d 116, 679 N.E.2d 1099(1997) syllabus.
{¶ 43} Next, while ProTrade faults the trial court for failing to provide a curative
instruction to the jury as to use of the word “stole,” ProTrade never requested a curative
instruction. The failure to request a curative instruction at the time error can be avoided
precludes any claim of error on appeal. Whitenight v. Dominique, 102 Ohio App.3d 769,
771 658 N.E.2d 23 (3rd Dist.1995).
{¶ 44} Finally, the trial court instructed the jury that opening and closing arguments
are not evidence and should not be treated as such. T. 227-228, T 1219-1220. A jury is
presumed to have properly followed instructions given by a trial court. Pang v. Minch, 53
Ohio St.3d 186, 59 N.E.2d 1313 (1990) paragraph 4 of the syllabus.
{¶ 45} We do not find the single use of the word fraud to be so reprehensible as to
prejudice ProTrade’s case. We further find no plain error resulted from counsel’s use of
the words took or take. We therefore find the trial court did not abuse its discretion in
overruling ProTrade’s objections to the magistrate's decision. The fourth assignment of
error is overruled. Stark County, Case No. 2017CA00048 15
{¶ 46} In its final assignment of error, ProTrade argues the trial court abused its
discretion by adopting the magistrate’s decision to exclude testimony of the past business
relationship between itself and Republic. Specifically, ProTrade argues the trial court
abused its discretion in adopting the magistrate’s decision to exclude certain testimony
from Peter Paris, ProTrade’s former chief financial officer. The excluded portion of Paris’s
testimony was in regard to a 2009 incident where Republic had failed to pay what it owed
ProTrade and ProTrade was forced to make a claim on its credit insurance policy and pay
a $175,000 deductible. According to ProTrade, exclusion of this piece of evidence
materially prejudiced its case because it prevented ProTrade from presenting evidence
of the past business relationship between the parties, and therefore its ability to explain
why ProTrade was justified in delaying deliveries to Republic in 2014 and 2015. We
disagree.
{¶ 47} First, as the trial court noted, the magistrate permitted extensive evidence
regarding the parties’ past business relationship. Paris was permitted to testify that
Republic had a history with ProTrade of tardy payment and non-payment that caused
ProTrade to stop doing business with Republic in 2008. Further, Paris testified based on
that past history, ProTrade required Republic to obtain a $10 million dollar letter of credit
before they would resume business with Republic in 2013. T. 888-894, 900-906.
{¶ 48} Next, ProTrade’s payment of an insurance deductible in 2009 had nothing
to do with the contracts in this matter, nor the issues before the jury. The matter before
the jury concerned five purchase order contracts from 2014 and 2015. The narrow issues
before the jury were 1) whether Republic had the right to cancel the 2014 and 2015 Stark County, Case No. 2017CA00048 16
purchase orders, and 2) whether the payment due dates in the purchase orders had been
modified or waived. T. 1227-1228, 1233. The payment of a deductible in 2009 by
ProTrade was not relevant to either one of these questions.
{¶ 49} In support of its argument, ProTrade cites this court's decision in Edgar
Spring, Inc., v. Tuscarawas Cty., 5th Dist. No. 88AP010010, 1988 WL 90312 (Aug. 25,
1988). We find Edgar Spring distinguishable.
{¶ 50} Edgar Spring involved a breach of an exclusive dealing contract which
required Edgar Spring to supply all necessary sand and gravel to Tuscarawas County for
road repairs. Tuscarawas County purchased sand and gravel elsewhere, and Edgar
Spring brought an action for breach of contract. Tuscarawas County's defense was that
Edgar Spring breached the contract by failing to be open on a daily basis and thus the
county could look to other suppliers for materials. Edgar Spring sought to introduce
evidence that the county falsified receipts to cover up the fact that it purchased materials
from other suppliers. The trial court excluded the evidence, and this court reversed that
decision.
{¶ 51} In Edgar Spring, the excluded evidence was directly related to the contract
dispute at issue and was relevant to elements of Edgar Spring's claim. ProTrade's 2009
payment of an insurance deductible, however, had nothing to do with the 2014 and 2015
purchase contracts before the jury and nothing to do with ProTrade's defense. Stark County, Case No. 2017CA00048 17
{¶ 52} The trial court did not abuse its discretion in adopting the magistrate's
decision to exclude this evidence. The final assignment of error is overruled.
By Wise, Earle, J.
Gwin, P.J. and
Hoffman, J. concurs separately
EEW/rw Stark County, Case No. 2017CA00048 18
Hoffman, J., concurring
{¶53} I concur in the majority’s analysis and disposition of all five of Appellant’s
assignments of error. I write separate only with regard to the standard of review this Court
is to apply when reviewing a trial court’s order adopting [and/or modifying or reversing] a
{¶54} The majority applies an abuse of discretion standard (Majority Opinion at
¶24). I believe the standard of review depends upon the nature of the objection made to
the trial court. For a fuller analysis see my concurring opinion in Thompson Thrift
Construction v. Lynn, et al., 5th Dist. Delaware No. 16 CAE 10 0044, 2017-Ohio-1530,
¶130 (Hoffman, concurring).
________________________________ HON. WILLIAM B. HOFFMAN