W. Environmental Corp. of Ohio v. Hardy Diagnostics

2024 Ohio 3051, 251 N.E.3d 221
Ohio Court of Appeals·Decided August 12, 2024·No. CA2023-12-109·Published·Cited by 3 cases

Opinion

IN THE COURT OF APPEALS

TWELFTH APPELLATE DISTRICT OF OHIO WARREN COUNTY

WESTERN ENVIRONMENTAL : CORPORATION OF OHIO, : CASE NO. CA2023-12-109 Appellee and Cross-Appellant, : OPINION 8/12/2024

- vs - :

:

HARDY DIAGNOSTICS, et al., :

Appellant and Cross-Appellee.

CIVIL APPEAL FROM WARREN COUNTY COURT OF COMMON PLEAS Case No. 21 CV 94033

Millikin & Fitton Law Firm, and Steven A. Tooman Thomas A. Dierling, for appellee and cross-appellant.

Bruns, Connell, Vollmar & Armstrong, LLC, and Thomas B. Bruns and Lucinda C. Shirooni, for appellee and cross-appellant.

The Behal Law Group LLC, and Jack D'Aurora, for appellant and cross-appellee.

S. POWELL, P.J.

{¶ 1} Appellant/cross-appellee, Hardy Diagnostics ("Hardy"), appeals the decision of the Warren County Court of Common Pleas denying it summary judgment for breach of contract against appellee/cross-appellant, Western Environmental Corporation

of Ohio ("WEC"), opting to instead grant summary judgment to WEC for breach of contract against Hardy. WEC also cross appeals the trial court's decision granting summary judgment to Hardy on its spoliation of evidence claim. For the reasons outlined below, we affirm the trial court's decision granting summary judgment to WEC for breach of contract against Hardy, the denial of summary judgment to Hardy on its breach of contract claim against WEC, and dismiss as moot WEC's cross-appeal from the trial court's decision granting summary judgment on its spoliation of evidence claim to Hardy.

The Parties

{¶ 2} Prior to the company being sold in 2022, WEC was a designer and builder of environmental clean areas ("ECA"), or cleanrooms, with its principal place of business located in Franklin, Warren County, Ohio. A cleanroom is a type of controlled environment that requires stringent control of contamination of air, and surfaces, to levels appropriate for accomplishing certain contamination-sensitive activities. Cleanrooms are designed as ISO 1 through 9. The "ISO" abbreviation refers to the International Organization for Standardization 14644-1, a document that sets forth the maximum particulate count for certification of various types of cleanrooms. There is no dispute that ISO standards do not set forth a required minimum number of air changes per hour ("ACH") for cleanrooms that manufacture microbiology products.

{¶ 3} Hardy manufactures various culture media used for microbiological testing in clinical, research, food, and pharmaceutical laboratories. Hardy is incorporated in Wyoming and licensed to do business in Ohio. Prior to WEC and Hardy entering into the contract at issue in this case, Hardy was operating two cleanrooms as part of its business operations: one in Santa Maria, California and the other in Springboro, Warren County, Ohio. There is no dispute that, in 2017, WEC certified the cleanroom that Hardy was

operating in Springboro as meeting the applicable ISO 7 standards. 1 This cleanroom is known as ECA 1. There is also no dispute that, in 2019, WEC certified the cleanroom that Hardy was operating in Santa Maria as ISO 7 compliant. Therefore, given their prior business dealings, it is undisputed that WEC was familiar with Hardy's operating needs, just as Hardy was familiar with WEC's work when certifying ISO 7 compliant cleanrooms, prior to their entering into the contract at issue in this case.

Facts and Procedural History

{¶ 4} The facts in this case are generally not in dispute. On May 16, 2019, WEC submitted a proposal to Hardy to provide a complete turnkey installation of a new ISO 7 cleanroom within Hardy's manufacturing facility located in Springboro for a total cost of $643,998.00. This cleanroom was to be known as ECA 2. Hardy accepted WEC's proposal and thereafter issued a purchase order to WEC on May 22, 2019. The purchase order that Hardy issued to WEC expressly stated that WEC would "provide all of the design, engineering, project management, equipment, and labor" in the construction of an ISO 7 compliant cleanroom for Hardy at the agreed upon price stated above. There is no dispute that, when taken together, the above proposal and purchase order constituted a valid and binding contract between WEC and Hardy that obligated WEC to construct an ISO 7 cleanroom for Hardy in accordance with "nationally accepted practices." There is also no dispute that the contract between WEC and Hardy required the cleanroom that WEC was to build for Hardy be "tested in accordance with accepted industry standards" to ensure that it was ISO 7 compliant.

{¶ 5} The ISO standards provide that cleanrooms like ECA 2, the cleanroom that

1. Pursuant to Table 1 included in the ISO 14644-1 document, a cleanroom certified as meeting ISO 7 standards allow for a maximum concentration limit of 352,000 particles of .5 microns or larger; a maximum concentration limit of 83,200 particles one micron or larger; and a maximum concentration limit of 2,930 particles five microns or larger.

WEC had been contracted to design and build for Hardy in Springboro, may be tested for compliance at various points in their construction and operation. This includes (1) the "as built" stage where construction is complete but with no equipment or personnel present within the room; (2) the "at rest" stage where construction is complete and equipment is installed in the room and ready to operate; or (3) the "in operation" stage where construction is complete and equipment and personnel are present and performing operations in the room. The record indicates that WEC's standard practice was to test the cleanrooms it constructed in the "as built" stage. This was no different for WEC with the construction of ECA 2 for Hardy.

{¶ 6} On March 12, 2020, WEC began its "as built" testing of ECA 2 to ensure it was ISO 7 compliant pursuant to the terms of the contract it had entered into with Hardy. However, as the testing progressed, Bodie Choate, a process engineer employed by Hardy was present for the testing and took his own measurements within ECA 2 that returned low ACH and air pressure readings. Given the low ACH and air pressure readings that he received, Choate questioned whether the "as built" testing of ECA 2 would ultimately pass as ISO 7 compliant, but that ECA 2 would nevertheless fail "later down the road" once Hardy's equipment and personnel were in the room performing operations. Therefore, based upon Choate's measurements, Aaron Buckley, Hardy's director of manufacturing, shut down WEC's testing prior to its completion so that further discussions between Hardy and WEC could take place.

{¶ 7} On March 25, 2020, WEC sent Hardy two "order options" with proposed upgrades to the HVAC system that it had installed for ECA 2. WEC sent this proposal to Hardy in hopes of satisfying its demand requiring ECA 2 to achieve a certain ACH rate at the "in operation" testing stage. WEC did this despite maintaining that the higher ACH rate being demanded by Hardy was not a requirement that ECA 2 needed to achieve

before it could be certified as ISO 7 compliant. Hardy did not accept either of WEC's proposals and thereafter refused to let WEC back onto its property so that it could complete its work on ECA 2 per the terms of their contract. Shortly thereafter, once WEC was removed from the ECA 2 worksite, Hardy contracted with GAME Construction to modify ECA 2 so that it would make the higher ACH rate that it was now demanding ECA 2 to achieve. GAME's modifications to ECA 2 were completed in November of 2020. ECA 2 was subsequently certified as ISO 7 compliant on December 1, 2020.

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W. Environmental Corp. of Ohio v. Hardy Diagnostics, 2024 Ohio 3051, 251 N.E.3d 221 (Ohio Ct. App. 2024).

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