Universal Windows & Doors, Inc. v. Eagle Window & Door, Inc.

• Decision Date: 11 December 1996
• Docket Number: No. C-950669,C-950669
• Citation: 116 Ohio App.3d 692,689 N.E.2d 56
• Court: Ohio Court of Appeals
• Parties: UNIVERSAL WINDOWS & DOORS, INC., d.b.a. Eagle Wood Window & Door Center of Cincinnati, Appellee, v. EAGLE WINDOW & DOOR, INC., Appellant, et al. * First District, Hamilton County

Page 692

116 Ohio App.3d 692

689 N.E.2d 56

UNIVERSAL WINDOWS & DOORS, INC., d.b.a. Eagle Wood Window & Door Center of Cincinnati, Appellee, v. EAGLE WINDOW & DOOR, INC., Appellant, et al. ^*

No. C-950669.

Court of Appeals of Ohio,

First District, Hamilton County.

Decided Dec. 11, 1996.

Vesper & Algie, and Paul J. Vesper, Crescent Springs, KY, for appellee.

Frost & Jacobs, and Susan G. Faller, Cincinnati, for appellant.

PAINTER, Judge.

After discussions with representatives of the defendant-appellant, Eagle Window and Door, Inc. ("Eagle"), the plaintiff-appellee, Universal Windows and Doors, Inc., d/b/a Eagle Wood Window and Door Center of Cincinnati ("Universal"), signed a dealer agreement in 1991 to be a dealer of Eagle windows and doors in the Cincinnati area. The relationship lasted less than one year, ending when Eagle terminated Universal for failing to comply with Eagle's payment terms and conditions.

The rocky relationship was marred by complaints from both sides. Universal complained that Eagle's shipments were often late, incomplete, and defective, that Eagle did not properly credit Universal pursuant to the warranty for defective products, that the showroom was not properly completed by Eagle, and that Eagle improperly took away the unlimited line of credit granted to Universal. Eagle complained that Universal did not keep its account balance current and did not complete its part of the showroom in order for Eagle to finish it. Pursuant to negotiations between the parties, Eagle gave Universal credit, enabling Universal to order windows and doors first and pay within thirty days of receiving them. On March 13, 1992, Eagle terminated Universal's credit. At that point, Universal could not carry on its business because it did not have alternative credit immediately available. Dennis Smith, a representative of Eagle who worked with dealers including Universal, supplied Eagle products to the customers of Universal whom Universal did not supply after being terminated by Eagle.

Eagle had authority to immediately terminate Universal for cause under the dealer agreement. The dealer agreement also contained an integration clause stating, "This agreement constitutes and contains the entire understanding and agreement between the parties concerning the subject matter herein, and supersedes all prior negotiations, agreements or understandings, if any, between the parties, and any terms and conditions contained in any of the Dealer's purchase orders." The dealer agreement was the framework for the dealer-manufacturer relationship. However, specific terms of the relationship were not all detailed in the agreement. For example, paragraph 5.01 of the agreement concerned delivery of the product, but left the actual shipping schedule to be determined. Payment for Eagle products and the display of Eagle products were also mentioned but left open, apparently for supplemental agreements. However, paragraph 8.07 of the dealer agreement specifically stated, "The time within which the Dealer may bring an action for breach of this Agreement shall be one (1) year from the date of any such breach."

Universal filed a complaint on September 1, 1993, seeking damages for breach of contract and tortious interference with contract. The court referred the case to its arbitration program, and the panel, in a split decision, found in Eagle's favor. When the decision was appealed de novo to the court, Eagle moved for summary judgment, which was denied. The case was tried before a jury, which awarded $79,830 in compensatory damages and $170 in punitive damages to Universal. The jury found that $10,000 of the compensatory damages was for tortious interference with contract. The trial judge denied Eagle's motions for a directed verdict during trial and also denied Eagle's motion for judgment notwithstanding the verdict after trial. ¹ Eagle then filed this appeal.

Eagle brings four assignments of error in its appeal. The disposition of the first assignment of error renders moot all or part of the others, so we begin with it. Eagle asserts that the trial court erred by failing to apply the one-year limitations period in the contract. We find this assignment of error to be well taken.

The Dealer Agreement's Limitation Period

The dealer agreement, signed on behalf of both parties by experienced businessmen, provided that suit for breach of the agreement must be brought within one year from the date of the breach. ² Universal claims that Eagle breached by terminating the credit agreement without proper notice and therefore failed to act in good faith. Universal also claims that Eagle breached its agreement to ship orders in a timely manner. Obviously, these breaches occurred during the relationship, and the last possible breach occurred upon Universal's termination on March 13, 1992. However, Universal did not file suit until September 1, 1993, well after a year from the date of the last breach.

The United States Supreme Court has stated that in the absence of a statute to the contrary, a contract can limit the time for bringing an action if the time limit is reasonable. Order of United Commercial Travelers of Am. v. Wolfe (1947), 331 U.S. 586, 67 S.Ct. 1355, 91 L.Ed. 1687; see, also, Miller v. Progressive Cas. Ins Co. (1994), 69 Ohio St.3d 619, 635 N.E.2d 317; Reynolds Industries, Inc. v. Mobil Oil Corp. (D.Mass.1985), 618 F.Supp. 419; IBM Corp. v. Catamore Ent., Inc. (C.A.1, 1976), 548 F.2d 1065; Internatl. Business Lists, Ltd. v. AT & T Co. (N.D.Ill.1994), 878 F.Supp. 102. Limiting the time by contract for properly bringing a suit "encourage[s] promptitude in the prosecution of remedies." Order of United Commercial Travelers of Am. v. Wolfe, 331 U.S. at 608, 67 S.Ct. at 1365, 91 L.Ed. at 1700, fn. 20, quoting Riddlesbarger v. Hartford Ins. Co. (1868), 74 U.S. (7 Wall.) 386, 390, 19 L.Ed. 257.

From the record, we conclude that the one-year limitation for a suit based on a breach of the dealer agreement was reasonable. First, the one-year limitation period is clear in the contract. We will not presume any contrary intentions of the parties when contract language is clear. Shifrin v. Forest City Ent., Inc. (1992), 64 Ohio St.3d 635, 597 N.E.2d 499; Graham v. Drydock Coal Co. (1996), 76 Ohio St.3d 311, 667 N.E.2d 949. Next, Universal knew of the breaches when they occurred. Universal complained during the relationship about the problems with the shipping of the product, credits that should have been applied under the warranty, the condition of the showroom, and the termination of its credit line. Universal did not need a long discovery period to learn of its cause of action. Finally, the one-year period should have provided an adequate time for settlement negotiations. We hold that under the circumstances presented the one-year limitation for bringing suit was reasonable and valid, and that the trial court erred in not granting judgment for Eagle on all the breach-of-contract claims.

Universal further asserts that R.C. 2305.19, the saving statute, applies to this case because Universal attempted to intervene and assert the claims at issue here in a case styled Kennedy & Jobe Builders, Inc. v. Jindal, which was separately docketed in the court of common pleas under the number A-9209758. However, Universal did not attempt to intervene until May 6, 1993, which was after the one-year limitation period agreed to in the contract had elapsed. The saving statute has no bearing in this case because Universal did not attempt to bring its claims until after the limitation period had expired. See Branscom v. Birtcher (1988), 55 Ohio App.3d 242, 563 N.E.2d 731.

In order to circumvent the one-year-limitation problem, Universal argues that it is suing under contracts that are independent of the dealer agreement and therefore not subject to the limitation period in the dealer agreement. However, this argument must fail. The other agreements, concerning shipping of the product and the terms of credit, are part of the dealer agreement. These agreements are incidental to the dealer agreement, which encompassed the parties' whole relationship. These other agreements would not exist but for the dealer agreement, which served as an umbrella for the dealings between the parties. For example, Universal argues that the parties had a credit agreement that was separate from the dealer agreement, and that Eagle violated this contract by terminating the credit line without notice, in bad faith. The credit terms were "one percent ten net thirty." Under these terms, Universal received a discount of one percent of the price of the products that it ordered if it paid its account within ten days. Otherwise, Universal would have had to pay within thirty days or be subject to a service charge. We fail to see how this type of arrangement, which standing alone would provide a monetary incentive for paying the debt within ten days, could exist independently of the dealer agreement. This type of arrangement would allow a borrower to make money from the lender for the privilege of borrowing. That type of lender would certainly be hard to find. Further, Eagle did not actually lend any money at all, but instead merely provided the product up front, accepting payment later. This credit arrangement cannot be separated from the dealer agreement.

Moreover, the dealer agreement included an integration clause, which superseded any prior negotiations or agreements between the parties. Supplemental agreements subsequent to the execution of the contract specifying the terms of credit and the shipping schedule, for example, could be used as parol evidence for construing the dealer agreement; however, they were not independent of the dealer agreement, and any breach of those terms had to have been sued upon within a year from the date of the breach.

Granting Eagle judgment on Universal's breach-of-contract claims disposes of Eagle's second, third, and fourth assignments...