Columbus Steel Castings Co. v. Transp. & Transit Assoc., L.L.C., 2007 Ohio 6640 (Ohio App. 12/13/2007)

• Decision Date: 13 December 2007
• Docket Number: No. 06AP-1247.,06AP-1247.
• Citation: 2007 Ohio 6640
• Parties: Columbus Steel Castings Company, Plaintiff-Appellee, (Cross-Appellant), v. Transportation & Transit Associates, LLC, Defendant-Appellant, (Cross-Appellee).
• Court: Ohio Court of Appeals

Page 1

2007 Ohio 6640

Columbus Steel Castings Company, Plaintiff-Appellee, (Cross-Appellant), v. Transportation & Transit Associates, LLC, Defendant-Appellant, (Cross-Appellee).

No. 06AP-1247.

Court of Appeals of Ohio, Tenth District, Franklin County.

Rendered on December 13, 2007

APPEALS from the Franklin County Court of Common Pleas. (C.P.C. No. 04CVH12-13504).

Chernett Wasserman Yarger & Pasternak, LLC, Jonathon M. Yarger, Victor D. Radel, and Jeffrey R. Gerish, for appellee (cross-appellant).

Porter, Wright, Morris & Arthur, LLP, James B. Hadden and Anne M. Hughes, for appellant (cross-appellee).

OPINION

PETREE, J.

{¶1} Defendant-appellant, Transportation & Transit Associates, LLC, appeals, and plaintiff-appellee, Columbus Steel Castings Company cross-appeals, from a judgment of the Franklin County Court of Common Pleas that in effect granted summary judgment in favor of Columbus Steel Castings Company. For the reasons that follow, we reverse the judgment of the common pleas court and remand the matter to that court.

{¶2} In September 2000, TTA Manufacturing, a division of Transportation & Transit Associates, LLC ("TTA"), and Buckeye Steel Castings Company, Inc. ("Buckeye Steel") executed a purchase order in which Buckeye Steel agreed to manufacture, sell, and deliver truck components to TTA for the manufacture of train cars. TTA, in turn, apparently installed, among other things, wiring harnesses and delivered the assembled products to Alstom Transportation. Alstom Transportation then purportedly performed finishing tasks and delivered the assembled train cars to the New Jersey Transit Authority.

{¶3} Between December 2000 and November 2002, Buckeye Steel provided approximately 155 separate deliveries of truck components to TTA. (Complaint, at paragraph 7.) Sometime in 2002, however, Buckeye Steel stopped filling orders as required under the purchase agreement with TTA. Although TTA accepted delivery of all 155 separate shipments, TTA failed to pay for 21 of these separate deliveries. (Complaint, at paragraph 8.)

{¶4} In December 2002, Buckeye Steel and certain of its affiliates ("debtors") sought Chapter 11 bankruptcy protection. (Complaint, at paragraph 10.) That same day Buckeye Steel and Columbus Steel Castings Company ("Columbus Steel Castings") entered into an asset purchase agreement. Id. After receiving approval from the bankruptcy court, Columbus Steel Castings later purchased the assets, including accounts receivable, of Buckeye Steel and certain of its affiliates. (Complaint, at paragraph 16.)

{¶5} Claiming that TTA was in default of payment obligations under an account receivable, Columbus Steel Castings later sued TTA in the Franklin County Court of Common Pleas for payment of an alleged debt. TTA asserted recoupment as an affirmative defense, as well as other affirmative defenses and also asserted a breach-of-contract counterclaim against Columbus Steel Castings.

{¶6} In its counterclaim, TTA alleged, among other things, that Buckeye Steel failed to deliver all the required truck components under the purchase order agreement; Columbus Steel Castings was subject to any defenses that TTA may have had against Buckeye Steel; and TTA was damaged in excess of any account claim that Buckeye Steel may have had against it. (Counterclaim, at paragraphs 1-3.) TTA further alleged that, after Buckeye Steel failed to perform under the purchase order agreement, TTA and Buckeye Steel executed a second purchase order; Alstom Transportation agreed to make advance payments for components under the second purchase order agreement; and Buckeye Steel breached this second purchase order agreement. (Counterclaim, at paragraphs 81-0.)

{¶7} Columbus Steel Castings thereafter moved for summary judgment. TTA made a competing request for relief by filing a cross-motion for summary judgment. Finding that neither party was entitled to judgment as a matter of law, the trial court denied the parties' motions for summary judgment.

{¶8} Claiming that TTA lacked standing under R.C. 1705.58 to assert a counterclaim or to assert the defense of recoupment, Columbus Steel Castings then moved in limine to preclude TTA from asserting a counterclaim or the defense of recoupment, or both. Columbus Steel Castings also moved for leave to amend instanter its answer to TTA's counterclaim so that it could raise lack of standing by TTA as an additional defense. Claiming that TTA was precluded from proffering evidence contrary to the deposition testimony of TTA's corporate designee, Columbus Steel Castings also moved in limine to preclude TTA from introducing evidence of damages that was contradictory to TTA's corporate designee's deposition testimony.

{¶9} The trial court thereafter granted Columbus Steel Castings' motion in limine to preclude TTA from asserting the affirmative defense of recoupment or from asserting a counterclaim. In its decision, the trial court explained its reasoning as to why recoupment was not available as a defense; however, the trial court provided no explanation as to why TTA was precluded from asserting its counterclaim.¹

{¶10} Although the trial court granted Columbus Steel Castings' motion in limine to preclude TTA from asserting the affirmative defense of recoupment or from asserting a counterclaim, the trial court denied Columbus Steel Castings' motion in limine to exclude testimony that was contradictory to TTA's corporate designee's deposition testimony, and the trial court denied as moot Columbus Steel Castings' motion to amend instanter its answer to TTA's counterclaim.

{¶11} The trial court then issued a judgment entry, wherein it declared in part:

Because TTA's remaining defenses were extinguished in the Buckeye Steel Company's bankruptcy, only recoupment remained as a defense. Preventing TTA from asserting its defense of recoupment affects a substantial right of TTA and effectively determines the action in favor of Plaintiff Columbus Steel Casting Company.

Accordingly, the Court finds that there is no just reason for delay in the entry of judgment on Columbus Steel Casting Company's Complaint. * * *² {¶12} From the trial court's judgment, TTA appeals, and Columbus Steel Castings cross-appeals.

{¶13} In its appeal, TTA assigns the following three errors for our consideration:

[1.] The trial court erred by denying summary judgment as a matter of law in favor of Defendant-Appellant Transportation and Transit Associates, LLC ("TTA").

[2.] The trial court erred as a matter of law by precluding TTA from asserting the defense of recoupment.

[3.] The trial court erred as a matter of law by granting final judgment in favor of Columbus Steel Castings.

{¶14} On cross-appeal, Columbus Steel Castings asserts the following three assignments of error:

[1.] The trial court erred when it held that Plaintiff-Cross Appellant Columbus Steel Castings Company's ("Columbus Steel") Motion for Leave to Amend Columbus Steel's Answer to assert that Defendant-Appellant Transportation Transit &amp Associates LLC ("TTA") lacked legal standing to assert a counterclaim or a recoupment defense was moot.

[2.] The trial court erred when it held that Columbus Steel's Motion in Limine to Preclude TTA from maintaining a separate counterclaim or a recoupment defense for lack of legal standing was moot.

[3.] The trial court erred when it overruled Columbus Steel's Motion in Limine to Exclude TTA from introducing evidence of TTA's alleged damages because that evidence contradicted the sworn testimony of the corporate designee of TTA.

{¶15} Without providing any authority to support its claim, in its appeal, TTA asserts that New York law applies in this case. Columbus Steel Castings agrees that New York law is applicable. Notwithstanding the parties' claims that New York law applies, we shall begin by examining what substantive law and procedural law properly should apply to this cause.³

{¶16} In Schulke Radio Productions, Ltd. v. Midwestern Broadcasting Co. (1983), 6 Ohio St.3d 436, the Supreme Court of Ohio held:

The law of the state chosen by the parties to govern their contractual rights and duties will be applied unless either the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties' choice, or application of the law of the chosen state would be contrary to the fundamental policy of a state having a greater material interest in the issue than the chosen state and such state would be the state of the applicable law in the absence of a choice by the parties.

Id. at syllabus; see, also, Jarvis v. Ashland Oil, Inc. (1985), 17 Ohio St.3d 189, syllabus; Restatement of the Law 2d, Conflict of Laws (1971), 561, Section 187. Cf. Auten v. Auten (N.Y.1954), 308 N.Y. 155, 160, 124 N.E.2d 99 (applying "center of gravity" or "grouping of contacts" theory of conflict of law, which, instead of regarding as conclusive the parties' intention or place of making or performance, requires courts to lay emphasis upon the law of the place that has the most significant contacts with the matter in dispute).

{¶17} The parties' purchase order agreement provides in part:

15. Governing Law

This Purchase Order and any material relating thereto shall be governed by the laws of the state in which the Purchaser's office that issues the order is located.

{¶18} The parties agree that TTA is a Delaware limited liability company with its principal place of business in the state of New York. Our review of the record shows that TTA Manufacturing, a division of Transportation & Transit Associates, LLC, issued the purchase order and that TTA Manufacturing is situated in the state of New York. We therefore conclude that New York has a substantial relationship to the parties' agreement. And, as TTA's principal place of business is situated in the state of New York, there exists a reasonable basis for the parties' choice of law provision in their contract....