Thogus Prods. Co. v. Bleep, LLC

• Docket Number: 1:20-cv-01887
• Decision Date: 30 August 2023
• Parties: THOGUS PRODUCTS COMPANY, Plaintiff/Counter-Defendant, v. BLEEP, LLC, Defendant/Counter-Claimant.
• Court: U.S. District Court — Northern District of Ohio

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THOGUS PRODUCTS COMPANY, Plaintiff/Counter-Defendant,
v.
BLEEP, LLC, Defendant/Counter-Claimant.

No. 1:20-cv-01887

United States District Court, N.D. Ohio, Eastern Division

August 30, 2023

MEMORANDUM OPINION AND ORDER

BRIDGET MEEHAN BRENNAN, UNITED STATES DISTRICT JUDGE.

Before this Court are cross-motions for summary judgment filed by Bleep, LLC (“Bleep”) (Doc. No. 50) and Thogus Products Company (“Thogus”) (Doc. No. 59). Both motions are fully briefed. (Doc. Nos. 71, 72, 75, 77.) For the reasons that follow, both summary judgment motions are GRANTED in part and DENIED in part.

I. Background

A. Factual Background

The following is a brief recitation of facts that are both undisputed and pertinent to ruling on the summary judgment motions.

Thogus is a family-owned custom plastic injection molder and contract manufacturer. (Doc. No. 59-1 at 3088.)^[1] It is headquartered in Avon Lake, Ohio. (Id.) Bleep is a North Carolina limited liability company that develops and sells sleep apnea treatment devices. (Doc. 12 at 254-55.) Bleep developed the DreamWay and DreamPort devices (the “Goods”). (Id. at 255.)

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The Goods worked with continuous positive airway pressure (“CPAP”) machines to aid those suffering from sleep apnea. (Id.)

With the help of an engineering consultant, Bleep selected Thogus to be the Goods' primary manufacturer. (Doc. No. 61-1 at 3274-75.) In March 2018, the parties formalized their relationship in the Manufacturing Supply Agreement (the “MSA”). (Doc. No. 50-3 at 1012.) The MSA contemplated Bleep submitting purchase orders to Thogus, which request that specific amounts and types of Goods be delivered by a particular time. (Id. at 994.) Thogus would then accept or, in limited circumstances, reject these purchase orders. (Id.) If accepted, Thogus was obligated to manufacture and ship the Goods. (Id. at 994-95.)

In November 2018, Bleep issued Purchase Order 25. (Doc. No. 50-15.) Purchase Order 25 provided that deliveries were to occur on January 22, 2019, February 11, 2019, and March 4, 2019. (Id.) However, due to a delay in installing manufacturing equipment at Thogus' facilities, Thogus did not complete the shipment of all Purchase Order 25 Goods until July 31, 2019. (Doc. No. 59-2 at 3093; Doc. No. 59 at 3077.)

On March 1, 2019, Bleep and Thogus executed the Second Amendment to the MSA. (Doc. No. 71-10; Doc. No. 71-11 at 4074.) This Amendment memorialized Bleep's decision to have Thogus stretch a component of the Goods called the Short Hose. (Doc. No. 71-10.) It then provided that Thogus shall have “no liability whatsoever” from this decision. (Id.)

Bleep issued Purchase Order 28 on March 11, 2019. (Doc. No. 50-8.) Purchase Order 28 required deliveries in June 2019, July 2019, and August 2019.^[2] (Id.) Thogus made its first

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delivery under Purchase Order 28 on August 6, 2019 - two months late. (Doc. No. 75-8.)

Beginning in August 2019, Bleep received customer complaints regarding issues with the Goods, including complaints about missing or damaged parts. (Doc. No. 71-1 at 3992; Doc. No. 51.)

In the second week of August 2019, Bleep representatives traveled to Ohio to meet with Thogus representatives. (Doc. No. 59-1 at 3089.) At the meeting, Bleep directed Thogus to immediately cease the shipment and manufacture of all Goods ordered in Purchase Order 28. (Id.) Thogus complied with this directive. (Id.)

On July 16, 2020, Thogus demanded payment from Bleep for, among other things, unshipped Goods that were manufactured to fulfill Purchase Order 28. (Doc. No. 71-18.) Bleep notified Thogus that it was cancelling Purchase Order 28 the next day. (Doc. No. 71-20 at 4114.) Bleep also issued Notice of Recall and Warranty Claims on July 20, 2020, and August 25, 2020. (Doc. Nos. 71-21, 71-22.)

B. Procedural Background

Thogus initiated this action on July 20, 2020. (Doc. No. 1-1 at 7.) Bleep removed the case to this Court on August 25, 2020, pursuant to the Court's diversity jurisdiction. (Doc. No. 1.)

On September 8, 2020, the parties filed a joint motion to stay the case until the parties completed non-binding mediation. (Doc. No. 6.) The Court granted the motion to stay the next day. (9/9/2020 Non-Document Order.)

On December 14, 2020, Thogus filed a motion to amend its complaint instanter. (Doc. No. 8.) On December 15, 2020, the Court lifted the stay and granted Plaintiff's motion to amend. (12/15/2020 Non-Document Order; Doc. No. 11.) Plaintiff's amended complaint

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contains two counts: breach of contract (Count One) and enforcement of lien rights under Ohio law (Count Two). (Doc. No. 8-2.)

Bleep filed its answer and verified counterclaims on December 29, 2020. (Doc. No. 12.) Bleep alleges seven counterclaims: fraud, fraudulent inducement, and promissory fraud (Counterclaim One), breach of the MSA's mandatory mediation provision (Counterclaim Two), breach of the MSA's bailed property return obligations (Counterclaim Three), breach of the MSA's warranty provisions (Counterclaim Four), breach of the MSA's regulatory obligations (Counterclaim Five), violation of North Carolina's unfair and deceptive trade practices act (Counterclaim Six), and declaratory judgment (Counterclaim Seven). (Doc. No. 12.)

On December 30, 2020, Bleep filed a motion for a preliminary and permanent injunction. (Doc. No. 15.) On March 12, 2021, the Court held an in-person evidentiary hearing on this motion. (Doc. No. 39.) Afterwards, the Court granted the request for a preliminary injunction and ordered that Thogus immediately release all bailed property. (Doc. No. 40 at 749.)

Thogus moved to dismiss Bleep's Counterclaim Six on January 20, 2021. (Doc. No. 21.) The Court granted this motion on June 4, 2021. (Doc. No. 43.) On January 28, 2022, Bleep and Thogus both moved for summary judgment. (Doc. Nos. 50, 59.) Thogus moved for summary judgment in its favor on Count One in its amended complaint and Bleep's first, second, fourth, fifth, and seventh counterclaims. (Doc. No. 59 at 3062.) Bleep moved for summary judgment on both counts in Thogus' amended complaint and on its fourth, fifth, and seventh counterclaims. (Doc. No. 50 at 946.)

II. Discussion

A. Summary Judgment Standard

“A party may move for summary judgment, identifying each claim or defense - or the

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part of each claim or defense - on which summary judgment is sought.” Fed.R.Civ.P. 56(a). “Summary judgment is appropriate only if the pleadings, depositions, answers to interrogatories, and affidavits show there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. The moving party bears the burden of showing that no genuine issues of material fact exist.” Williams v. Maurer, 9 F.4th 416, 430 (6th Cir. 2021) (citations and quotations omitted); see also Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Mining Mach., Inc. v. Copley, 145 Fed.Appx. 149, 152 (6th Cir. 2005) (“The moving party bears the initial burden of informing the court of the basis for its motion and identifying those portions of the record that establish the absence of a genuine issue of material fact.”).

A “material” fact is one that “might affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). And a genuine dispute of material fact exists if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Abu-Joudeh v. Schneider, 954 F.3d 842, 849-50 (6th Cir. 2020) (additional citations and quotations omitted).

“Once the moving party satisfies its burden, the burden shifts to the nonmoving party to set forth specific facts showing a triable issue of material fact.” Queen v. City of Bowling Green, Kentucky, 956 F.3d 893, 898 (6th Cir. 2020) (quotation and citations omitted). “[O]n summary judgment the inferences to be drawn from the underlying facts . . . must be viewed in the light most favorable to the party opposing the motion.” United States v. Diebold, 369 U.S. 654, 655 (1962); see also Kalamazoo Acquisitions, L.L.C. v. Westfield Ins. Co., 395 F.3d 338, 342 (6th Cir. 2005).

A party asserting or disputing a fact must cite evidence in the record or show that the record establishes the absence or the presence of a genuine dispute. See Fed.R.Civ.P. 56(c)

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and (e). Rule 56 further provides that “[t]he court need consider only” the materials cited in the parties' briefs. Fed.R.Civ.P. 56(c)(2); see also Street v. J.C. Bradford & Co., 886 F.2d 1472, 1479-80 (6th Cir. 1989) (“The trial court no longer has the duty to search the entire record to establish that it is bereft of a genuine issue of material fact.”).

“Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). However, the Court's role is not to make credibility determinations or “weigh” conflicting evidence. Payne v. Novartis Pharms. Corp., 767 F.3d 526, 530 (6th Cir. 2014); Arban v. W. Publ'g Corp., 345 F.3d 390, 400 (6th Cir. 2003). “The ultimate question is whether the evidence presents a sufficient factual disagreement to require submission of the case to the jury, or whether the evidence is so one-sided that the moving parties should prevail as a matter of law.” Payne, 767 F.3d at 530.

When reviewing cross-motions for summary judgment, the court's analysis remains the same. Taft Broad. Co. v. United States, 929 F.2d 240, 248 (6th Cir. 1991) (“It is true that both parties seek to resolve this case through the vehicle of cross-motions for summary judgment, but the standards upon which the court evaluates the motions for summary judgment do not change simply because the parties present cross-motions.”). The Court must draw all reasonable inferences in favor of the non-moving party and determine whether a genuine dispute of...