EnQuip Techs. Grp. Inc. v. Tycon Technoglass S.R.l

• Decision Date: 28 December 2012
• Docket Number: No. 2011–CA–39.,2011–CA–39.
• Citation: 986 N.E.2d 469
• Parties: EnQUIP TECHNOLOGIES GROUP INCORPORATED, et al., Plaintiff–Appellant/Cross–Appellee v. TYCON TECHNOGLASS S.R.l, et al., Defendant–Appellee/Cross–Appellant.
• Court: Ohio Court of Appeals

986 N.E.2d 469

EnQUIP TECHNOLOGIES GROUP INCORPORATED, et al., Plaintiff–Appellant/Cross–Appellee

v.TYCON TECHNOGLASS S.R.l, et al., Defendant–Appellee/Cross–Appellant.

No. 2011–CA–39.

Court of Appeals of Ohio, Second District, Greene County.

Dec. 28, 2012.

John B. Pinney, Kara A. Czanik, Katherine M. Lasher, Graydon Head & Ritchey LLP, Cincinnati, OH, for appellant/cross-appellee plaintiffs.

Matthew E. Liebson, Thompson Hine LLP, Cleveland, OH, Christine M. Haaker, Terry W. Posey, Jr., Thompson Hine LLP, Dayton, OH, for appellee/cross-appellant defendants.

HALL, J.

{¶ 1} This case concerns an international commercial contract between an Italian manufacturer and its Florida sales representative. The contract contains a choice-of-law provision and a forum-selection clause. The choice-of-law provision provides that the contract is to be governed by and interpreted in accordance with Italian law; the forum-selection clause provides that the Court of Venice is competent to settle any disputes.

{¶ 2} There are two central issues that we must decide. One is whether the forum-selection clause is permissive or exclusive. The other issue is whether Ohio law applies to determine the plaintiff's right to recover statutory exemplary damages. On the first issue, we conclude, based on Ohio contract law and Italian jurisdictional law, that the forum-selection clause is exclusive. And on the second issue, we conclude, under Ohio's choice-of-law rules, that Ohio law does not apply to the exemplary-damages issue because Ohio does not have the “most significant relationship” to the occurrences or parties in this case. So the plaintiff may not bring a claim for exemplary damages under R.C. 1335.11.

{¶ 3} All of the claims in this case must be dismissed. The trial court's three orders to the contrary are reversed.

I. Background

{¶ 4} This case has been before this Court twice before.¹ The history of this case was set out in our first opinion. Here we give only some highlights and the facts that are material to the issues in the present appeal.

{¶ 5} Plaintiff, EnQuip Technologies Group, Inc., is a Florida corporation and Florida is where it is based. EnQuip was a commissioned sales representative for Defendant Tycon Technoglass S.r.l. (TyTg), an Italian manufacturer of glass-lined vessels, reactor systems, and related products used in the chemical and pharmaceutical industries. EnQuip sold TyTg's products in all 50 states, Canada, Mexico, and the Bahamas.

{¶ 6} EnQuip and TyTg's relationship was governed by a written contract, the Agency Agreement. The agreement provides that TyTg will pay EnQuip a fixed commission for each equipment sale. It further provides that EnQuip may perform post-sale service work on the equipment. The agreement contains a choice-of-law provision providing that the agreement is governed by and is to be interpreted in accordance with Italian law. And the agreement contains a forum-selection clause providing that the Court of Venice, Italy, is competent to settle any dispute between EnQuip and TyTg.

{¶ 7} EnQuip and TyTg's relationship soured, and in June 2007, TyTg unilaterally terminated the Agency Agreement. In 2008, EnQuip brought an action against TyTg.² Since TyTg's parent company was headquartered here,³ the action was brought in Ohio. EnQuip asserted five claims against TyTg: Count One, breach of contract requiring indemnity under the Italian Civil Code; Count Two, an accounting to recover unpaid commissions; Count Four, exemplary damages under R.C. 1335.11; Count Five, breach of contract resulting in loss of profits from service work; and Count Six, fraud. ⁴ Among TyTg's asserted defenses was an improper-forum defense based on the Agency Agreement's forum-selection clause. TyTg also asserted several contingent counterclaims against EnQuip.⁵

{¶ 8} Both EnQuip and TyTg moved for judgment on the pleadings based on TyTg's improper-forum defense. In a February 17, 2009 order, the trial court sustained EnQuip's motion and overruled TyTg's. The court concluded that the forum-selection clause is permissive rather than exclusive. In other words, the Court of Venice is a proper forum but it is not the proper forum, not the sole proper forum. The trial court concluded that it, too, was a proper forum. ⁶

{¶ 9} The parties agreed that Italian law applied to determine their substantive rights and liabilities under the Agency Agreement. The trial court appointed an Italian-law expert to advise it. The parties submitted questions (approved by the trial court) to the expert, and the expert answered the questions in a written report.

{¶ 10} The case was tried to a jury. After the parties had presented their evidence, TyTg moved for a directed verdict on all of EnQuip's claims. The trial court sustained TyTg's motion with respect to Count Four (exemplary damages under R.C. 1335.11) and Count Six (fraud),⁷ dismissing both claims. The court also determined that Court Two (accounting) should not go to the jury. The jury found for EnQuip. It awarded EnQuip $207,115 in unpaid commissions; $268,423 in damages relating to breach of contract; $105,000 for an indemnity claim allowed under Italian law; and $5,000 in lost service-work profits.

{¶ 11} On June 29, 2011, the trial court entered final judgment, which reflects the court's ruling on TyTg's directed-verdict motion and the jury's verdict. The trial court also entered an order that awarded attorney's fees and court costs, under R.C. 1335.11, to the defendants as the prevailing parties on Count Four.

{¶ 12} EnQuip appealed, and TyTg cross appealed.⁸

II. Analysis

{¶ 13} While EnQuip and TyTg each presents four assignments of error, we will review only EnQuip's first assignment of error and TyTg's first cross assignment of error. Our rulings on these two assignments of error render the others moot. EnQuip's first assignment of error alleges that the trial court erred by granting TyTg's motion for directed verdict, and denying its motion for judgment notwithstanding the verdict, on its claim for exemplary damages under R.C. 1335.11 (Count Four).⁹ TyTg's first cross assignment of error alleges that the trial court erred by overruling its motion for judgment on the pleadings.¹⁰ Taking the two assignments of error in logical order, we begin with TyTg's cross assignment of error.

A. The meaning of the forum-selection clause

{¶ 14} The Agency Agreement's forum-selection clause states that “[t]he law Court of Venice will be competent for any dispute.” The trial court concluded that the clause is permissive. A permissive clause means simply that the parties have waived any right to object to the exercise of personal jurisdiction by the identified court. Valmac Indus., Inc. v. Ecotech Machinery, Inc., 137 Ohio App.3d 408, 413, 738 N.E.2d 873 (2d Dist.2000). It does not mean that they waived their right to commence an action in another court that has jurisdiction. Id. TyTg, though, contends that the forum-selection clause is exclusive. An exclusive forum-selection clause means that the identified court is the only court with jurisdiction—the parties must commence any action in the identified court. Thus the central issue in the first cross assignment of error concerns the meaning of the forum-selection clause, the meaning of language in the parties' contract.

1. Language in a contract bears the meaning intended by the parties to the contract

{¶ 15} The answer to a question about what specific contract language means lies in the contracting parties' intent—what did they intend the language to mean? It is the court's task to determine the parties' intended meaning. St. Marys v. Auglaize Cty. Bd. of Commrs., 115 Ohio St.3d 387, 2007-Ohio-5026, 875 N.E.2d 561, ¶ 18 (“The role of courts in examining contracts is to ascertain the intent of the parties.” (Citation omitted.)). The search for the parties' intended meaning begins with the contract itself. Their intent is presumed to reside in the language they used. Graham v. Drydock Coal Co., 76 Ohio St.3d 311, 313, 667 N.E.2d 949 (1996); Blair v. McDonagh, 177 Ohio App.3d 262, 2008-Ohio-3698, 894 N.E.2d 377, ¶ 49 (1st Dist.) (“In the construction of a written instrument, a court's primary objective is to give effect to the parties' intent, which can be found in the language they chose to employ.”).

{¶ 16} A stumbling block in the search for intended meaning is ambiguity. “Contractual language is ambiguous ‘ * * * where its meaning cannot be determined from the four corners of the agreement or where the language is susceptible of two or more reasonable interpretations.’ ” Savedoff v. Access Group, Inc., 524 F.3d 754, 763 (6th Cir.2008), quoting Covington v. Lucia, 151 Ohio App.3d 409, 784 N.E.2d 186 (10th Dist.2003). But there is no ambiguity if the subject language's meaning can be determined by considering the language in the context of other contractual language. See id. (“In determining whether contractual language is ambiguous, the contract ‘must be construed as a whole’ * * *.”), quoting Tri–State Group, Inc. v. Ohio Edison Co., 151 Ohio App.3d 1, 2002-Ohio-7297, 782 N.E.2d 1240, ¶ 38 (7th Dist.). Often, the intended meaning of a word or phrase may be clear when that word or phrase is considered in the context of other words or phrases in the contract. See18 Ohio Jurisprudence 3d, Contracts, Section 123 (2012) (“A term that would otherwise cause ambiguity can be construed in the context of other terms in the contract to resolve the ambiguity.”), citing Seringetti Const. Co. v. City of Cincinnati, 51 Ohio App.3d 1, 553 N.E.2d 1371 (1st Dist.1988). Thus the intended meaning of any part of the parties' contract should be determined in light of the whole contract. Foster Wheeler Enviresponse, Inc. v. Franklin Cty. Convention Facilities Auth., 78 Ohio St.3d 353, 361, 678 N.E.2d 519 (1997) (“The court should read the contract as a whole and gather the intent of each part from the whole.”).

2. Determining the intended...