Bratt Enterprises, Inc. v. Noble Intern., Ltd., C-1-99-543.

• Decision Date: 16 June 2000
• Docket Number: No. C-1-99-543.,C-1-99-543.
• Citation: 99 F.Supp.2d 874
• Parties: BRATT ENTERPRISES, INC., Plaintiff, v. NOBLE INTERNATIONAL, LTD., et al., Defendants.
• Court: U.S. District Court — Southern District of Ohio

Page 874

99 F.Supp.2d 874

BRATT ENTERPRISES, INC., Plaintiff, v. NOBLE INTERNATIONAL, LTD., et al., Defendants.

No. C-1-99-543.

United States District Court, S.D. Ohio, Western Division.

June 16, 2000.

John Byron Pinney, Graydon Head & Ritchey, Michael A. Roberts, Graydon Head & Ritchey, Cincinnati, OH, for Bratt Enterprises Incorporated, plaintiffs.

Robin Elise Harvey, Baker & Hostetler, Cincinnati, OH, for Noble International Ltd., H & H Steel Processing Inc., defendants.

ORDER

SPIEGEL, Senior District Judge.

This matter is before the Court on Defendants' Motion to Compel Arbitration and Dismiss Count IV of the Complaint (doc. 4); Plaintiff's Response (doc. 11); Defendants' Reply (doc. 12); Plaintiff's Motion for Partial Summary Judgment (doc. 16); Defendants' Response (doc. 20); Plaintiffs Reply (doc. 24); and the Declaration of Terry Hill in Support of Plaintiff's Motion for Partial Summary Judgment (doc. 25).

BACKGROUND

On July 15, 1999, Plaintiff Bratt Enterprises, Inc. (hereinafter, "Bratt" or "Plaintiff"), an Ohio corporation which has its principal place of business at Cincinnati, Ohio, filed suit in a diversity action against Defendant Noble International, Ltd., a Delaware corporation which has its principal place of business at Bloomfield Hills, Michigan, and Defendant H & H Steel Processing, Inc. (hereinafter, collectively referred to as "Noble" or "Defendants"), which is a wholly owned subsidiary of nonparty Noble Metal Processing-Midwest, Inc. (formerly known as [Defendant] H & H Steel Processing, Inc. and Utilase Blank Welding Technologies, Inc.), a Michigan corporation which has its principal place of business at Bloomfield, Michigan (see docs. 1 & 6).

According to the original Complaint that was filed on July 15, 1999, Bratt sold the assets of H & H Steel Processing Company, Inc. to Noble Processing-Midwest, Inc. (doc. 1). This transaction was memorialized in an Asset Purchase Agreement (hereinafter, the "Purchase Agreement") and a Performance Premium Agreement (hereinafter, the "Premium Agreement") (see doc. 4, Exs. A & B). Specifically, Plaintiff asserts against Defendants three claims for breach of contract that allegedly resulted in several million dollars in damage to Plaintiff (doc. 1). In addition, Plaintiff seeks a declaration that Defendants may not avoid paying Plaintiff the sums owed under the Purchase Agreement and the Premium Agreement (hereinafter, collectively referred to as the "Agreements"), which are now properly due and owing by Defendants, under the terms and conditions of the Agreements (Id.).

Shortly thereafter, Plaintiff filed an Amended Complaint asserting a fifth cause of action claiming that Defendants wrongfully converted refunds that were overpaid by Plaintiff to the Ohio Bureau of Workman's Compensation when Plaintiff originally owned H & H Steel Processing Company, Inc. (doc. 2).¹ Defendants filed their Answer denying Plaintiff's claims for breach of contract, declaratory judgment and conversion, as well as defending against Plaintiff's claims with a total of fifteen affirmative defenses (doc. 5). In their Answer, Defendants assert a total of four counterclaims against Plaintiff, which include several allegations of breach of contract by Plaintiff for accounts receivable and undisclosed liabilities that are allegedly owed to Defendants (Id.).

On October 12, 1999, Defendants filed an Amended Answer moving this Court to allow them the right of set-off against any claims that were asserted against Defendants by Plaintiff in its Amended Complaint (doc. 5).² The following facts are taken from the Amended Complaint, the Amended Answer and the Parties' briefs that were submitted to this Court.

Noble International, Ltd., Utilase Blank Welding Technologies, Inc. (hereinafter "Utilase"), H & H Steel Processing Company, Inc., Terry Hill, and Robert G. Kreiling entered into an Asset Purchase Agreement dated September 30, 1998 (doc. 5). Under this Purchase Agreement, Utilase agreed to purchase certain assets and assume certain liabilities of H & H Steel Processing Company, Inc. (Id.). According to the §§ 1.3(a) and (b) of the Purchase Agreement, Noble agreed to pay $13,108,159.12 (over thirteen million dollars) to Bratt (or to third parties on behalf of Bratt) in partial satisfaction of Noble's "Purchase Price" obligation (see docs. 11 & 16). In addition, § 1.3(c) of the Purchase Agreement also contained a procedure for calculating post-closing adjustments to the Purchase Price (Id.).

After the closing of the Purchase Agreement (hereinafter, the "Closing"), Utilase changed its name to H & H Steel Processing Company, Inc. (hereinafter, "H & H Steel" or the "Company"), and, subsequently, to Noble Metal Processing-Midwest, Inc., which is a nonparty and a wholly owned subsidiary of another nonparty, Noble Technologies, Inc., which is a wholly owned subsidiary of Defendant Noble International, Ltd. (Id.).

Effective October 1, 1998, under the terms and conditions of the Purchase Agreement, Plaintiff alleges that Defendants agreed to the following terms and conditions:

(1) pay Bratt $5,270,382.80 at the October 1, 1998 Closing;

(2) pay The Provident Bank $5,668,281.52 on behalf of Bratt at the Closing;

(3) pay Bratt an amount equal to the actual cash expenditures for property, plant, and equipment of the North Vernon Plant of the H & H Steel business for the period July 31, 1998, to the date of Closing;

(4) pay Bratt $1,500,000.00 for Bratt's expense in acquiring a 50% partnership interest in Precision Blanking Limited;

(5) pay Bratt a minimum of $500,000.00 and a maximum of $2,000,000.00 under an ancillary Performance Premium Agreement;

(6) undertake responsibility for payment or discharge of certain designated liabilities;

(7) lease real estate in Cincinnati, Ohio from Bratt for a minimum of one year;

(8) pay Bratt $140,927.20 within five days of Plaintiff's delivery of evidence to Defendants that Plaintiff satisfied certain liens on the H & H Steel business; and

(9) pay Bratt up to $50,000.00 as reimbursement to Bratt for transaction expenses related to the Purchase Agreement.

(doc. 2).

In addition, Plaintiff asserts in Count II of the Amended Complaint that, after the October 1, 1998 Closing, Noble promised to pay Bratt $140,927.20 upon Noble's receipt of proof that Bratt satisfied certain tax liens, as set forth in paragraph 6(h) (docs. 2 & 25). Plaintiff further asserts that, although proof of the paid tax liens has been provided to Defendants, they have refused to pay the almost $141,000 outstanding debt (Id.).

Moreover, Plaintiff contends in Count I of the Amended Complaint that, even though Noble agreed to pay for Bratt's expenditures on property, plant, and equipment at the North Vernon Plant of the H & H Steel business through the date of Closing, Noble still owes Bratt $110,874.00 for Bratt's "Actual Cash Expenditures," as set forth at paragraph 6(c) (Id.). Plaintiff also contends that, even though Noble agreed to pay Bratt as much as $50,000 for Bratt's transaction expenses, as set forth at paragraph 6(g), Plaintiff maintains that Noble owes it an additional $10,000 because Noble has reimbursed Bratt only $40,000 of the $50,000 owed (Id.). Furthermore, Plaintiff alleges in Count V of the Amended Complaint that, it is entitled to a 1995/1996 worker's compensation refund of $30,554 that Noble has wrongfully converted for its own use by refusing to reimburse Bratt the $30,554 which rightfully belongs to Plaintiff (Id.).

Lastly, in Count IV of the Amended Complaint, Plaintiff moves this Court for a declaratory judgment of its rights under the Agreements (Id.). Specifically, Plaintiff asserts that, according to the Premium Agreement, Noble agreed to pay Bratt between $500,000 and $2,000,000 over, at most, a five-year period as a "Premium Payment" based on the performance of the H & H Steel business during the period of 1999 to 2003 (Id.). However, Plaintiff alleges that Noble has represented to Bratt that, it does not intend on paying Bratt the minimum sums which must be paid under the Premium Agreement (Id.). Thus, according to Plaintiff, Defendants have allegedly performed an anticipatory breach of the Agreements (Id.). Plaintiff moves this Court to decree a declarative judgment as to Count IV and monetary relief against Defendants in the principal amount of $292,355.20 as requested in Counts I, II, III and V of the Amended Complaint, plus any other damages, interests, costs, and attorney fees as permitted by law for the "undisputed, actual breach and the anticipatory breach" of the Agreements by Defendants (Id.).

In contrast, Defendants allege that, under § 1.3(a)(ii) of the Purchase Agreement and as part of the Purchase Price of the assets, Noble agreed to pay Bratt "an amount equal to the actual cash expenditures for property, plant and equipment of the Company relating to the North Vernon Plant between July 31, 1998 and the Closing, as shown in the Closing Balance Sheet (determined as set forth in Section 1.3(c) below)" (doc. 12). Defendants maintain that, since the amount of actual cash expenditures could not be determined as of the date of Closing, the Parties estimated the amount to be $669,494.80 and Noble paid Bratt the same at Closing, pursuant to § 1.3(b)(ii) of the Purchase Agreement (Id.).

Following the Closing, Defendants contend that the Parties to the Purchase Agreement provided a method for making final adjustments to the purchase price, if needed (doc. 12). Specifically, under § 1.3(c)(i), Defendants assert that Noble was required to prepare and deliver to Bratt a Closing Balance Sheet in order to determine the amount of Assumed Liabilities and any adjustments that were necessary, pursuant to §§ 1.3(a)(iii) and 1.3(d) of the Purchase Agreement (Id.).

In their Amended Answer, Defendants allege in Counterclaim I that, under §§ 1.2 and 1.3(a)(v) of the Purchase Agreement, Noble agreed to assume certain Assumed Liabilities...