Cranpark, Inc. v. Rogers Grp., Inc.

• Citation: 821 F.3d 723
• Decision Date: 22 April 2016
• Docket Number: Nos. 14–3753,14–3832.,s. 14–3753
• Parties: CRANPARK, INC., Plaintiff–Appellant/Cross–Appellee, v. ROGERS GROUP, INC., Defendant–Appellee/Cross–Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

821 F.3d 723

CRANPARK, INC., Plaintiff–Appellant/Cross–Appellee

v.ROGERS GROUP, INC., Defendant–Appellee/Cross–Appellant.

Nos. 14–3753

14–3832.

United States Court of Appeals, Sixth Circuit.

Argued: Dec. 10, 2015.

Decided and Filed: April 22, 2016.

Rehearing En Banc Denied May 31, 2016.

ARGUED: David E. Mills, The Mills Law Office LLC, Cleveland, Ohio, for Appellant/Cross–Appellee. David A. Kutik, Jones Day, Cleveland, Ohio, for Appellee/Cross–Appellant. ON BRIEF: David E. Mills, The Mills Law Office LLC, Cleveland, Ohio, Jonathon M. Yarger, Yarger Radel & Pentz, LLC, Cleveland, Ohio, Michael B. Pasternak, Beachwood, Ohio, for Appellant/Cross–Appellee. David A. Kutik, Jones Day, Cleveland, Ohio, Chad A. Readler, Jones Day, Columbus, Ohio, for Appellee/Cross–Appellant.

Before GRIFFIN and KETHLEDGE, Circuit Judges; and CLELAND, District Judge.^*

OPINION

CLELAND, District Judge.

This case is grounded in a story all too familiar to jurists (and to business interests, we suspect): a promising joint venture gone wrong. Following the breakdown of the parties' business relationship, Cranpark, Inc. (“Cranpark”) sued and won a $15.6 million jury verdict based on a promissory-estoppel claim against Rogers Group, Inc. (“RGI”). That jury verdict, however, was set aside when the district court granted RGI's renewed motion for judgment as a matter of law on the ground that Cranpark did not prove standing at trial. Cranpark now seeks review of that decision. RGI files a cross-appeal as well on a number of issues. We reverse the district court's decision, reinstate the jury's verdict, and remand the case to the district court for calculation of interest on the verdict.

I.

Cranpark is the successor-in-interest to Hardrives Paving and Construction, Inc. (“Hardrives”). Hardrives was an asphalt paving company based near Youngstown, Ohio that was owned and operated by James Sabatine. Asphalt production requires crushed stone. In the 1990s, the main crushed-stone supplier in the Youngstown area decided to discontinue its stone product. Seeing an opportunity, RGI, a supplier with a quarry in Sandusky, Ohio, approached Hardrives. RGI was interested in growing its business into the Youngstown area and wanted to partner with a large purchaser like Hardrives. The two parties began discussing the possibility of jointly establishing a large facility in Youngstown that would serve as a distribution center for RGI and a new asphalt production plant for Hardrives.

The parties began to develop plans for a joint venture. On September 1, 1998, Tom Stump (RGI's lead on the Youngstown project), Greg Gould (Stump's boss and second in command at RGI), and Sabatine met to outline their plan for the distribution and production facility. A document produced at the meeting established the basic terms of their agreement and included certain contingencies that would need to be met for the venture to be profitable, such as the minimum amount of stone Hardrives was to buy from RGI, low-cost railroad transportation rates, and the need for certain incentives from the city. The document also stated that it was subject to RGI senior management approval. Both parties signed the document once all the key terms were in place.

A critical component of RGI and Hardrives' plan was affordable railroad access to and from the distribution center. Rail transportation was the least expensive way to transport stone from the Sandusky quarry to the distribution center, and without low transportation costs the venture could not succeed. However, Sabatine was not having any luck convincing Norfolk Southern, the railroad company, to establish rail access. So, in 1998, while RGI and Hardrives were developing plans for their joint venture, Sabatine enlisted Congressman James Traficant to help him convince Norfolk Southern to establish rail access at the contemplated Youngstown distribution center. The plan worked, and Sabatine, Traficant, and representatives from Norfolk Southern met and began discussions that, after subsequent meetings, resulted in RGI and Hardrives arriving at an acceptable rail rate with Norfolk Southern.

Throughout 1998 Hardrives and RGI moved forward with their joint plans, and that year they selected a site for the facility on Center Street in Youngstown. Based on the belief that its deal with RGI was progressing according to plan, Hardrives began bidding on larger paving projects and purchasing equipment for its soon-to-be expanded business. By December, all the contingencies that RGI and Hardrives agreed upon in September were fulfilled, except RGI had arguably not given explicit senior management approval. Also by December, Sabatine was ready to place an order for a large asphalt plant that would be installed at the Center Street location. Because the plant was a large investment—more than $1.5 million—Sabatine called Tom Stump before making the final purchase. During that phone conversation, according to Sabatine, Stump was enthusiastic about Sabatine's plans to purchase the plant and gave him the go ahead. Sabatine then purchased the plant.

However, a few months later in February of 1999, RGI told Hardrives that it would no longer be participating in the joint venture. Soon after the deal failed, Hardrives began losing money, and by 2001 Sabatine decided to sell the business and signed an asset purchase agreement with McCourt Construction Company (“McCourt”). As part of the asset sale, Hardrives agreed not to use its name, and so the company became Cranpark, Inc.

Also relevant, during the time the deal between RGI and Hardrives was breaking down, Sabatine was the subject of an FBI investigation into public corruption concerning, among others, Congressman Traficant. Unbeknownst to RGI, after his initial meeting with Norfolk Southern, Sabatine paid Congressman Traficant a $2,400 bribe. In 2001, a few years after the Youngstown deal collapsed, Sabatine pleaded guilty to bribery and was sentenced to spend time in a halfway house, followed by house arrest during two years' probation, and pay fines and restitution.

On September 8, 2004, Cranpark filed suit against RGI alleging breach of contract and promissory estoppel. The parties consented to have all proceedings in the district court conducted by a magistrate judge. 28 U.S.C. § 636(c).

In 2010, the district court granted summary judgment in favor of Defendant RGI, holding that the breach of contract claim was governed by a four-year statute of limitations in the Ohio Commercial Code and that Cranpark had filed suit after this statutory deadline. The court also held that the promissory estoppel claim should be dismissed because RGI's representations were not unambiguous promises on which Sabatine and Hardrives could have reasonably relied. We reversed the grant of summary judgment on both grounds and remanded the case. Cranpark, Inc. v. Rogers Grp., Inc., 498 Fed.Appx. 563 (6th Cir.2012).

In November 2013, the parties presented the case to a jury. When James Sabatine testified about selling the Hardrives business to McCourt he said that he sold everything and agreed that he sold “the site, the plant, the accounts, the contracts, the books, the record, the documents, everything[.]” At the close of evidence, RGI orally moved for judgment as a matter of law under Federal Rule of Civil Procedure 50(a). RGI argued that Cranpark was not the “proper party to [the] case” because it had sold everything, including the right to bring the cause of action, to McCourt. The district court denied the motion, orally ruling, “I think there's enough in there that it's Cranpark's claim.”

The case was then submitted to the jury, which returned a verdict in favor of Cranpark on the promissory-estoppel claim, awarding $15.6 million in damages. On December 2, 2013, the court entered judgment for Cranpark.

Among other post-trial motions, RGI filed a Rule 50(b) renewed motion for judgment as a matter of law. In its renewed motion, RGI argued that during the asset sale Cranpark had transferred its right to sue to McCourt, thus depriving Cranpark of Article III standing. The court agreed, holding that even when a party originally suffers an injury, “if that party subsequently sells its claim for that injury, the party no longer has an injury that can be redressed by a favorable decision and will not satisfy the redressability element of standing.”

Cranpark, Inc. v. Rogers Grp., Inc., No 4:04–cv–1817, 2014 WL 3749401, at *4 (N.D.Ohio July 30, 2014) (citing Lujan v. Defs. of Wildlife, 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) ). Accordingly, the court granted RGI's motion. Id. at *10.

As an alternative ground, RGI also argued in its Rule 50(b) motion that Sabatine's bribe to Traficant should have precluded his claims for breach of contract and promissory estoppel. The district court rejected this argument because it was not raised in RGI's Rule 50(a) motion, as required by the Rule. Id. at *9.

RGI also filed a Rule 59 motion for a new trial, but the court deferred ruling on that motion, stating, “[i]f the instant case is remanded, the Court will then address that Motion.” Id. at *10.

II.

We review de novo a grant of judgment as a matter of law under Federal Rule of Civil Procedure 50. Jones v. Dirty World Entm't Recordings LLC, 755 F.3d 398, 406 (6th Cir.2014).

A.

The first question is whether a plaintiff loses Article III standing when he transfers his interest in a cause of action to another. It is well established that to satisfy Article III's standing requirement, the plaintiff must have suffered an injury in fact. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130 (1992). The plaintiff must also show that the injury is fairly traceable to the defendant's conduct. Id. And lastly, a favorable decision by the court must be likely to redress the injury. Id. at 561, 112 S.Ct. 2130.

RGI argues, as the district court held, that when a party sells its interest in a cause of action, that party loses Article III standing because ...