135 F.3d 421 (6th Cir. 1998), 96-3686, Orchard Group, Inc. v. Konica Medical Corp.
| Citation | 135 F.3d 421 |
| Party Name | ORCHARD GROUP, INC., Plaintiff-Appellee/Cross-Appellant, v. KONICA MEDICAL CORP., Defendant-Appellant/Cross-Appellee. |
| Case Date | February 03, 1998 |
| Court | United States Courts of Appeals, U.S. Court of Appeals — Sixth Circuit |
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Argued Aug. 5, 1997.
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Daina B. VanDervort (briefed), Climaco, Climaco, Seminatore, Lefkowitz & Garofoli, Cleveland, OH, Thomas K. Christo (argued and briefed), David B. Chaffin (briefed), Hare & Chaffin, Boston, MA, for Plaintiff-Appellee/Cross-Appellant.
2Robin G. Weaver (briefed), Stacy D. Ballin (argued and briefed), Mark P. Gustaferro (briefed), Squire, Sanders & Dempsey, Cleveland, OH, for Defendant-Appellant/Cross-Appellee.
Before: KEITH and SUHRHEINRICH, Circuit Judges; ROSEN, District Judge. [*]
ROSEN, District Judge.
OPINION
Defendant Konica Medical Corporation appeals the judgment entered by the District Court in favor of Plaintiff, Orchard Group, Inc., and the denial of its post-trial Motion for Judgment as a Matter of Law. OGI cross-appeals the denial of its Motion for Pre-Judgment Interest. For the following reasons, we REVERSE.
I. INTRODUCTION
This breach of contract/fraudulent misrepresentation action was filed by the Orchard Group Inc. ("OGI") against Konica Medical Corporation ("Konica") on September 3, 1992 in the United States District Court Northern District of Ohio Eastern Division. Following discovery, Konica filed a Motion for Summary Judgment on May 27, 1994. The District Court denied that motion on January 8, 1996, and the case proceeded to trial on February 26, 1996.
On March 6, 1996, the jury returned a general verdict for OGI on the breach of contract claim for $1,000,000 and found for Konica on the fraudulent misrepresentation claim. The damage award was based on expert testimony regarding profit projections for OGI if Konica had supplied it with x-ray film pursuant to the terms of an April 13, 1992 letter from Konica to OGI.
On March 12, 1996, OGI filed a motion for pre-judgment interest. On March 21, 1996, Konica filed a Fed. R. Civ. Pro. 50 motion for judgment as a matter of law. On May 13, 1996, the District Court denied both motions by Margin Entry Order, without a written opinion. The parties now appeal.
II. FACTUAL BACKGROUND
OGI, an Ohio Corporation, was formed by Drs. Norbert Reich and Frank Seidelman and two businessmen, Kim Bernatz and John Detelich, in early 1992. The company was set up as a buying group for the purpose of offering small non-hospital providers of health care (such as chiropractors and podiatrists) a group discount on medical supplies, such as x-ray film. In return for a fee paid to OGI, members of the group would be permitted to purchase film and medical supplies from a supplier at a discount group rate to be negotiated by OGI. OGI contacted
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Konica to negotiate a discount on film and medical supplies.
During March of 1992, Mr. Kim Bernatz of OGI engaged in discussions with Ms. Barbara Hunter, a Konica sales representative or "Territory Manager" for the Cleveland marketplace. The discussions concerned the possibility of Konica agreeing to supply x-ray film at a discount price. On March 31, 1992, Ms. Hunter sent a letter proposing to offer x-ray film at a 40% discount to OGI members with a rebate, based on percent of gross sales, sent directly to OGI. After orally agreeing to the terms of the letter, Mr. Bernatz asked if there was anything he needed to sign. Ms. Hunter said this was not necessary, and that the letter was the agreement. Subsequently, Ms. Hunter had the terms of this letter approved by her boss, Mr. Dunn, the Regional Manager. Hunter advised Bernatz of Dunn's approval.
Bernatz had known Hunter and Dunn prior to these deals. Hunter had made many similar written proposals to Bernatz when he was the Administrative Director of Radiology at Lakewood Hospital. The proposals said nothing to suggest any requirement of further Konica approval of the terms being offered. Konica was aware that Hunter was making such proposals. Neither Hunter nor anyone at Konica ever informed Bernatz that Hunter had limited authority.
In early April 1992, Ms. Hunter put Mr. Bernatz in contact with Robert Weaver, Konica's Regional Manager for the Southwest. Regional managers were two steps removed from the top position in the company and their responsibilities included marketing and sale of Konica film. Mr. Weaver suggested the discount given to OGI be set at 45% to be more competitive. Mr. Weaver then told Ms. Hunter that he had agreed on a 45% discount with Mr. Bernatz. Subsequently, on April 13, 1992, Ms. Hunter personally delivered OGI another letter identical to the earlier letter except that this letter proposed to offer to OGI Konica x-ray film at 45% off list price. The letter offered this discount "in return for a film commitment of 36 months." Bernatz orally accepted the terms in the letter, and Hunter assured Bernatz that no further approval was necessary. Hunter sent a copy of the letter to Dunn and explained that Weaver changed the discount to 45%. Dunn then told Hunter to "run with it."
In relevant part, the April 13, 1992 letter stated:
Thank you for your continued support of Konica. Listed below are the terms of the agreement that you and I discussed for [OGI].
DISCOUNT: 45% off list price on medical x-ray films
REBATE: To be paid as administrative fee, semi-annually. Percentages are based on net purchases made by members of [OGI].
$ 0 $300,000 ....... . . . . . 10% $300,000 $750,000 ..... . . . . . 11% $750,000 $1,000,000 ... . . . . . 13% $1,000,000 and over .... . . . . . 14% EQUIPMENT: [Konica] equipment will be offered at a 25% discount off list price, with 5% administrative fee to [OGI].
PRICING: Per 100 sheet box listed on p. 2
Once again, thank you for your time and consideration.
Thereafter, OGI began to advertise for Sales Representatives. Hunter supplied OGI with free samples of film and packaging kits for their use in signing OGI members to purchase Konica film. Dunn approved the supply of these samples. Hunter knew that OGI was soliciting prospective alliance members. Weaver introduced OGI to IntraTrade, so it could serve as OGI's distributor on the West Coast. Weaver told IntraTrade that Konica had agreed to give OGI members a 45% discount on x-ray film.
On May 6, 1992, three weeks after Ms. Hunter's April 13 letter, Konica informed OGI it did not and would not approve the
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deal, and that it would not enter into any contract. When OGI was unable to find an alternative supplier, it went out of business a few weeks later, and subsequently instituted the instant action.
As indicated, following the close of discovery, Konica moved for summary judgment arguing that the alleged contract with OGI was not a valid "requirements contract" and, because the contract did not have a stated quantity term, it did not comply with the Uniform Commercial Code's Statute of Frauds and was, therefore, not enforceable. The District Court denied this motion. The case proceeded to trial, and after the jury returned a verdict in favor of OGI, Konica moved for judgment as a matter of law, re-asserting its requirements contract/Statute of Frauds arguments and also arguing that the Konica representatives lacked the authority to bind the corporation to the alleged contract. This post-judgment motion was also denied, as was OGI's post-judgment motion for pre-judgment interest. The parties now appeal the District Court's denial of these motions.
III. ISSUES PRESENTED
The parties' appeal and cross-appeal require resolution of the following issues:
1. Whether the representatives of Konica had actual or apparent authority to bind Konica to the contract with OGI?
2. Whether the April 13, 1992 letter from Konica to OGI satisfies the quantity requirement set out in § 2-201 Statute of Frauds of the Uniform Commercial Code, and is an enforceable "requirements contract" under § 2-306 of the Uniform Commercial Code as adopted by Ohio law? and
3. Whether the District Court erred when it denied OGI's motion for pre-judgment interest?
IV. ANALYSIS
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STANDARD OR REVIEW
As noted, Konica seeks review of both the denial of its motion for summary judgment regarding whether there was a requirements contract and the denial of its motion for judgment as a matter of law regarding whether there was a requirements contract and whether there was apparent authority to bind Konica. This Court recently stated that:
"Reviewing a Rule 50 determination is preferable to reviewing a summary judgment decision because the Rule 50 decision is based on the complete trial record and not the incomplete pretrial record available at summary judgment." Therefore, we hold that in cases where an appellant made a Rule 56 motion for summary judgment that was denied, makes those same arguments in a Rule 50(a) motion at the close of evidence that was also denied, lost in front of a jury, then renewed its arguments in a rejected Rule 50(b) motion after the entry of judgment we will review only the denial of the Rule 50(b) motion.
K & T Enterprises, Inc. v. Zurich Ins. Co., 97 F.3d 171, 174 (6th Cir.1996) (citations omitted). As indicated, Konica moved for summary judgment on the same grounds stated in its Motion for Judgment as a Matter of Law. Therefore, we will not review the denial of the summary judgment motion, but rather, will simply review the denial of Konica's Motion for Judgment as a Matter of Law on both the requirements contract and apparent authority issues. See also, Jarrett v. Epperly, 896 F.2d 1013, 1016 (6th Cir.1990) ("Where summary judgment is denied and the movant subsequently loses after a full trial on the merits, the denial of summary judgment may not be appealed.")
Konica's Motion for Judgment as a Matter of Law presents questions of Ohio contract law, specifically whether the alleged contract was entered into on behalf of Konica by a...
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