Davison Fuel & Dock Co. v. Pickands Mather & Co.

• Decision Date: 14 September 1977
• Citation: 376 N.E.2d 965,54 Ohio App.2d 177
• Court: Ohio Court of Appeals
• Parties: , 8 O.O.3d 324 DAVISON FUEL & DOCK COMPANY, Appellee, v. PICKANDS MATHER & COMPANY et al., Appellants. *

Page 177

54 Ohio App.2d 177

376 N.E.2d 965, 8 O.O.3d 324

DAVISON FUEL & DOCK COMPANY, Appellee, v. PICKANDS MATHER & COMPANY et al., Appellants. ^*

Court of Appeals of Ohio, First District, Hamilton County.

Sept. 14, 1977.

Syllabus by the Court

1. The mere existence of a plaintiff's inchoate cause of action against one party for breach of contract does not foreclose an action in tort against another party for all damages suffered by reason of the latter's inducement of such a breach.

2. Where a plaintiff earlier has recovered full damages for breach of contract against a defaulting party to the contract, and fails to allege and prove the existence of additional damages attributable solely to the wrongful acts of interference by the alleged tortfeasor, he is precluded from any further recovery against a defendant in a subsequent tort action.

Thomas A. Luebbers, Timothy L. Bouscaren, Taft, Stettinius & Hollister, Robert G. Stachler and W. Stuart Dornette, Cincinnati, for appellee The University of Cincinnati and Directors individually.

Frost & Jacobs and James G. Headley, Cincinnati, for appellee Sentry Ins. Co. Paxton & Seasongood, and Jacob K. Stein, Cincinnati, for appellee.

Dinsmore, Shohl, Coates & Deupree, John W. Beatty, David W. Jones, Cincinnati, Arter & Hadden, John E. Martindale and Thomas V. Koykka, Cleveland, for appellant Pickands Mather & Co. PALMER, Judge.

In July 1973, plaintiff Davison Fuel & Dock Co. (Davison) entered into a contract with the University of Cincinnati, one defendant-appellee herein, to supply 50,000 tons of coal to the University for an agreed price of $16.15 per ton. The contract specified that the coal to be supplied by Davison was, inter alia, to contain no more than nine per cent ash and one per cent sulphur, with a heat content of 13,000 B. t. u.'s per ton. Davison, in turn, contracted with its supplier, defendant-appellant Pickands Mather & Co. (Pickands) for the delivery of 50,000 tons of coal to Davison's storage facility in North Bend Ohio, for a price of $9.60 per ton. The specifications for ash, sulphur and heat content of the coal to be supplied by Pickands were substantially identical ¹ with those recited in Davison's contract with the University, and Pickands' agents in fact knew that the coal purchased by Davison was to be used to fulfill the latter's contractual obligations to the University.

Deliveries under the respective contracts, which were to continue until June 1974, were timely commenced in July 1973, and continued throughout the summer and autumn months of 1973. During this period, the University addressed frequent complaints to Davison that the coal delivered by Davison from that supplied to it by Pickands consistently had failed to comply with contractual specifications. Nevertheless, Pickands continued its shipment of generally substandard coal which, when delivered by Davison to the University, was accepted and burned "under protest" by the latter until December 1973.

This period also was marked by the advent of the Arab oil embargo, which occasioned a rapid escalation in the demand and price paid for coal on the open market. Accordingly, in October 1973, Pickands warned Davison that future shipments of coal would be discontinued unless Davison agreed to pay Pickands a price higher than that originally provided in the contract between the two parties. When the University refused a request to consent to a voluntary price increase under its contract with Davison, Davison informed Pickands of its intent to hold the latter to the original contract price.

Thereafter, in December 1973, Pickands gave notice to Davison terminating the coal supply contract between the two parties, having theretofore delivered only 12,000 of the 50,000 tons of coal originally contracted for. Davison, unable to find any alternate supplier for its needs, subsequently notified the University that it would be unable to complete its coal supply contract with the latter. Left to its own resources, the University was unable to locate sufficient quantities of coal meeting the original contract specifications in the open market, and, as a result, was forced to purchase and burn coal of somewhat inferior quality throughout the winter months of 1973 and 1974.

Davison thereafter brought the instant action for damages against Pickands based upon the latter's breach of its coal supply contract with Davison, and also joined the University, through its board of directors, as a party defendant in the action, alleging the University's wrongful refusal to pay for certain coal delivered by Davison prior to the forced termination of its coal supply contract with the University. Pickands, in its answer, generally denied Davison's claims, and asserted a counterclaim against Davison based upon the latter's alleged failure to pay for any of the coal delivered thereto by Pickands. The university also denying Davison's claims, asserted a counterclaim against Davison for the latter's breach of its coal supply contract with the University. ² In addition to the foregoing flurry of claims, the University presented a cross-claim against Pickands for the same specifications and amount of damages, including punitive damages, alleged in its counterclaim against Davison, asserting as its basis for the claim that Pickands "maliciously and intentionally and without justification procured the breach of the contract existing between defendant Board and plaintiff Davison of which Pickands had knowledge."

Thereafter, all claims except the cross-claim of the University against Pickands were settled and resolved to the satisfaction of the respective parties during or at the conclusion of the jury trial below, by the entry of an agreed judgment under which the University received a net sum of $293,671.68, and are not the subject of any challenge in the instant appeal. On the unresolved cross-claim of the University against Pickands, however, a judgment was entered on the verdict of the jury awarding $20,000 in compensatory damages and $500,000 in punitive damages in favor of the University and against Pickands. Pickands timely filed this appeal, asserting in its single assignment of error that the trial court erred in overruling its motion for judgment notwithstanding the verdict on the cross-claim.

Pickands advances a number of arguments in support of its assignment of error, one of which we view as dispositive, viz., that the University failed, as a matter of law, to demonstrate the existence of any injury for which Pickands was liable to respond in compensatory damages. Since the rule is well-settled that punitive damages may be awarded only in those cases in which compensatory damages have been proved and properly assessed against the party from whom recovery is sought, Richard v. Hunter (1949), 151 Ohio St. 185, 85 N.E.2d 109; Trainor v. Deters (1969), 22 Ohio App.2d 135, 259 N.E.2d 131; McClanahan v. Koviak (1939), 62 Ohio App. 307, 23 N.E.2d 975 and, generally, Annotation, 17 A.L.R.2d 527, Sections 1 and 2, ³ the threshold determination must obviously be made whether the University, in its action on the cross-claim, presented competent proof of compensatory damages properly attributable to the misconduct of Pickands, sufficient to sustain the judgment of $20,000 therefor. We conclude that it did not.

In an action based upon a tortious interference with contractual relations, a plaintiff may, upon competent proof, recover any and all damages proximately caused by the tortfeasor's misconduct. Reichman v. Drake (1951), 89 Ohio App. 222, 100 N.E.2d 533. See, generally, Annotation, 26 A.L.R.2d 1227, Section 43. Such damages necessarily include but are not limited to, those items of damage otherwise recoverable in an action for breach of contract brought against the defaulting party to the contract. McNutt Oil & Refining Co. v. D'Ascoli (1955), 79 Ariz. 28, 281 P.2d 966; Anthony v. George T. Bye, Inc. (1935), 243 App.Div. 390, 277 N.Y.S. 222. See generally Annotation, 26 A.L.R.2d 1227, Section 43. Thus, an action in tort based upon malicious interference with a plaintiff's contractual rights, where appropriate, poses a viable alternative to an action on the contract itself, and the mere existence of a plaintiff's inchoate cause of action against one party for breach of contract does not foreclose an action in tort against another party for all damages suffered by reason of the latter's inducement of such a breach. See, e. g., Phillips & Benjamin Co. v. Ratner (C.A.2, 1953), 206 F.2d 372; Inland Finance Corp. v. Champion Cigarette Vending Co. (C.A.4, 1958), 260 F.2d 243. See, generally, Annotation 26 A.L.R.2d 1227, Section 19.

However, the...