Caterpillar Fin. Servs. Corp. v. Harold Tatman & Son's, Enters., Inc.

• Decision Date: 20 November 2015
• Docket Number: No. 14CA3449.,14CA3449.
• Citation: 50 N.E.3d 955
• Parties: CATERPILLAR FINANCIAL SERVICES CORPORATION, Plaintiff–Appellee, v. HAROLD TATMAN AND SON'S, ENTERPRISES, INC., et al., Defendants/Third–Party Plaintiffs–Appellants, Vermeer Midwest, Inc., et al., Third–Party Defendants–Appellees.
• Court: Ohio Court of Appeals

50 N.E.3d 955

CATERPILLAR FINANCIAL SERVICES CORPORATION, Plaintiff–Appellee

v. HAROLD TATMAN AND SON'S, ENTERPRISES, INC., et al., Defendants/Third–Party Plaintiffs–AppellantsVermeer Midwest, Inc., et al., Third–Party Defendants–Appellees.

No. 14CA3449.

Court of Appeals of Ohio, Fourth District, Ross County.

Nov. 20, 2015.

Michael L. Benson, Benson & Sesser, LLC, Chillicothe, OH, for defendant/third-party plaintiff-appellant Harold Tatman and Son's Enterprises, Incorporated.

Joel E. Sechler, Carpenter Lipps & Leland LLP, Columbus, OH, and Melissa R. Stull (pro hac vice), Soule & Stull LLC, Minneapolis, MN, for third-party defendant-appellee Vermeer Manufacturing Company.

HOOVER

, P.J.

{¶ 1} Defendant/third-party plaintiff-appellant, Harold Tatman and Son's Enterprises, Incorporated (“Tatman and Son's”), appeals the judgment of the Ross County Court of Common Pleas, which dismissed Tatman and Son's second amended third-party complaint for failure to state a claim for which relief can be granted, as to the claims asserted against third-party defendant-appellee, Vermeer Manufacturing Company (“Vermeer”). Tatman and Son's contends that the trial court erred when it granted Vermeer's motion to dismiss. Because Tatman and Son's tort claims are claims upon which relief may be granted, we agree in part. Accordingly, we affirm in part, and reverse in part, the judgment of the trial court.

I. Facts and Procedural History

{¶ 2} In May 2009, Tatman and Son's purchased a Vermeer Horizontal Grinder, Model HG8000, from Vermeer Heartland, Incorporated (“Heartland”), formerly doing business as Vermeer of Southern Ohio, for a total purchase price of $762,823.80, inclusive of trade-ins, fees, warranties, and finance charges. Tatman and Son's financed the purchase through Vermeer Midwest, Incorporated (“Midwest”), which later assigned its rights and responsibilities under the financing contract to Caterpillar Financial Services Corporation. Tatman and Son's warrantied and registered the grinder with Vermeer, the purported manufacturer of the grinder. Vermeer provided a written one-year or 1,000–hour warranty, which expressly disclaimed all implied warranties. Caterpillar, Incorporated (“Caterpillar Corporate”) and Heartland provided warranties for the grinder's engine.

{¶ 3} On November 8, 2012, Caterpillar Financial Services Corporation initiated a breach of contract and replevin action against Tatman and Son's, and Douglas Tatman, Dwayne Tatman, and Delbert Tatman, individually, alleging that Tatman and Son's had defaulted under the terms of the financing contract and that the individuals had breached their personal guarantees of the loan.

{¶ 4} In November 2013, after having filed two prior third-party complaints, Tatman and Son's, Douglas Tatman, Dwayne Tatman, and Delbert Tatman, filed their second amended third-party complaint (hereinafter the “complaint”) in the trial court against Midwest, Caterpillar Corporate, Ohio Machinery Company, d/b/a Ohio Cat, Vermeer, and Heartland. Through the complaint, Tatman and Son's claimed that the grinder was broken and inoperable and that it was “financially damaged” as a result of the grinder's failure. According to the complaint, in June 2010, the grinder's engine failed. The engine was allegedly replaced by Caterpillar Corporate, Vermeer, Heartland, Midwest, “and/or” Ohio Cat. Then, in July 2011, the replacement engine failed; and the engine was replaced for a second time by Caterpillar Corporate, Vermeer, Heartland, Midwest, “and/or” Ohio Cat. Tatman and Son's contends that the installation of the third engine did not correct the failure, and that the grinder remains inoperable.

{¶ 5} In count one of the complaint, Tatman and Son's alleges that Vermeer, among others, breached “express written warranties”. In count two, Tatman and Son's alleges that Vermeer, among others, breached implied warranties. The third count of the complaint does not assert any claims against Vermeer. In count four, Tatman and Son's alleges that Vermeer, among others, were unjustly enriched. Finally, in the fifth and sixth counts respectively, Tatman and Son's alleges that Vermeer's attempts to repair the grinder were negligent and that the grinder was a “defective product”.

{¶ 6} Vermeer moved for dismissal of the claims asserted against it pursuant to Civ.R. 12(B)(6)

. After full briefing, the trial court granted Vermeer's motion to dismiss concluding in its written decision that the motion was “well taken”. About a month later the trial court entered another order, adding “no just cause for delay” language to its previous order granting the motion to dismiss. Tatman and Son's appeals the dismissal of its claims against Vermeer, raising a single assignment of error. The notice of appeal does not identify Douglas Tatman, Dwayne Tatman, or Delbert Tatman as parties to the appeal.

II. Assignment of Error

{¶ 7} Tatman and Son's assigns the following error for our review:

The trial court erred in granting Third–Party–Defendant/Appellee, Vermeer Manufacturing Company's, Motion for Judgment on the Pleadings (sic) because construing all material allegations in the Complaint in favor of the Defendants–Appellants, Defendants–Appellants would be entitled to relief.

III. Standard of Review

{¶ 8} As an initial matter we note that Tatman and Son's, in its appellate brief, mistakenly refers to Vermeer's motion to dismiss as a motion for judgment on the pleadings. Vermeer's motion was clearly identified as a motion to dismiss for failure to state a claim, pursuant to Civ.R. 12(B)(6)

. Moreover, it appears that the trial court treated Vermeer's motion as a Civ.R. 12(B)(6) motion to dismiss.

{¶ 9} Because it presents a question of law, we review a trial court's decision regarding a motion to dismiss independently and without deference to the trial court's determination. See Roll v. Edwards, 156 Ohio App.3d 227, 2004-Ohio-767, 805 N.E.2d 162, ¶ 15 (4th Dist.)

; Noe v. Smith, 143 Ohio App.3d 215, 218, 757 N.E.2d 1164 (4th Dist.2000). “A motion to dismiss for failure to state a claim upon which relief can be granted is procedural and tests the sufficiency of the complaint.” State ex rel. Hanson v. Guernsey Cty. Bd. of Commrs., 65 Ohio St.3d 545, 548, 605 N.E.2d 378 (1992)

. A trial court may not grant a motion to dismiss for failure to state a claim upon which relief may be granted unless it appears “beyond doubt from the complaint that the plaintiff can prove no set of facts entitling him to recovery.” O'Brien v. Univ. Community Tenants Union, Inc., 42 Ohio St.2d 242, 327 N.E.2d 753 (1975), syllabus; see also

Taylor v. London, 88 Ohio St.3d 137, 139, 723 N.E.2d 1089 (2000). Furthermore, when considering a Civ.R. 12(B)(6) motion to dismiss, the trial court must review only the complaint, accepting all factual allegations as true and making every reasonable inference in favor of the nonmoving party. Mitchell v. Lawson Milk Co., 40 Ohio St.3d 190, 192, 532 N.E.2d 753 (1988) ; Estate of Sherman v. Millhon, 104 Ohio App.3d 614, 617, 662 N.E.2d 1098 (10th Dist.1995) ; see also

JNS Ents., Inc. v. Sturgell, 4th Dist. Ross No. 05CA2814, 2005-Ohio-3200, 2005 WL 1492002, ¶ 8. The court, however, need not presume the truth of legal conclusions that are unsupported by factual allegations. McGlone v. Grimshaw, 86 Ohio App.3d 279, 285, 620 N.E.2d 935 (4th Dist.1993), citing Mitchell at 193, 532 N.E.2d 753.

IV. Law and Analysis

A. Count One—Express Written Warranty

{¶ 10} First, we must determine whether Tatman and Son's claim for breach of express written warranty under count one of the complaint is a claim upon which relief may be granted. While not entirely clear, it appears that Tatman and Son's claims that Vermeer breached the written warranty it provided by failing to repair or replace the grinder.

{¶ 11} Tatman and Son's claim for breach of express written warranty is governed by the Uniform Commercial Code (“UCC”) as adopted by Ohio, R.C. 1301.101, et seq.

Ohio UCC law provides that express warranties by sellers of goods are created in one of three ways:

(1) Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise.

(2) Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description.

(3) Any sample or model which is made part of the basis of the bargain creates an express warranty that the whole of the goods shall conform to the sample or model.

R.C. 1302.26(A)

. To establish a claim for breach of express warranty under Ohio law, a plaintiff must show that: (1) a warranty existed; (2) the product failed to perform as warranted; (3) plaintiff provided the defendant with reasonable notice of the defect; and (4) plaintiff suffered injury as a result of the defect. Litehouse Prods., Inc. v. A.M.I. Internatl., Ltd., 8th Dist. Cuyahoga No. 46834, 1984 WL 4539, *3 (Mar. 8, 1984).

{¶ 12} In addition, numerous Ohio courts have recognized that there need not be privity to impose liability for breach of an express warranty. Bobb Forest Prods., Inc. v. Morbark Industries, Inc., 151 Ohio App.3d 63, 2002-Ohio-5370, 783 N.E.2d 560, ¶ 51 (7th Dist.)

, citing Rogers v. Toni Home Permanent Co., 167 Ohio St. 244, 147 N.E.2d 612 (1958), paragraph three of the syllabus; Chic Promotion, Inc. v. Middletown Sec. Sys., Inc., 116 Ohio App.3d 363, 368, 688 N.E.2d 278 (12th Dist.1996) ;

Johnson v. Monsanto Co., 3d Dist. Paulding No. 11–02–02, 2002-Ohio-4613, 2002 WL 2030889, ¶ 14

; Hahn v. Jennings, 10th Dist. Franklin No. 04AP–24, 2004-Ohio-4789, 2004 WL 2008474, ¶ 23. Thus, a manufacturer can be held liable by a purchaser for breach of an express warranty even though there is no privity between the two parties. Johnson at ¶ 14.

{¶ 13} Ohio UCC law also allows parties to limit the type of remedies available for breach of warranty....