USA. Inc. v. Allied Office Prod.s Inc. .

• Decision Date: 13 July 2010
• Docket Number: Case No. 2:06-cv-71.
• Citation: 724 F.Supp.2d 861
• Parties: KONICA MINOLTA BUSINESS SOLUTIONS, U.S.A., INC., Plaintiff, v. ALLIED OFFICE PRODUCTS, INC. et al., Defendants.
• Court: U.S. District Court — Southern District of Ohio

724 F.Supp.2d 861

KONICA MINOLTA BUSINESS SOLUTIONS, U.S.A., INC., Plaintiff,

v.ALLIED OFFICE PRODUCTS, INC. et al., Defendants.

Case No. 2:06-cv-71.

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

July 13, 2010.

COPYRIGHT MATERIAL OMITTED.

COPYRIGHT MATERIAL OMITTED.

Timothy G. Warner, Eric J. Weiss, Lori Ross Tark, Cavitch, Familo, Durkin & Frutkin Co., LPA, Cleveland, OH, for Plaintiff.

Phillip Louis Harmon, Worthington, OH, for Defendants.

OPINION AND ORDER

JAMES L. GRAHAM, District Judge.

This matter is before the court on a motion for summary judgment filed by plaintiff Konica Minolta Business Solutions, U.S.A., Inc. (Konica) against defendant Jon D. McCarthy (McCarthy) and Allied Office Products, Inc. (Allied). Konica seeks judgment on a promissory note and guaranty, an action on an account, and for unjust enrichment. Konica also seeks judgment in its favor on McCarthy's defamation counterclaim.

I. Factual Background and Procedural History

Konica is a New York corporation with its principal place of business in New Jersey, formed through the merger of Minolta Co., Ltd. and Konica, Inc., in 2003. Allied is an Ohio corporation with its principal place of business in Ohio. McCarthy is the majority shareholder and CEO of Allied and is an Ohio resident. Both Konica and Allied sell or distribute office equipment and accessories including copy machines. The nexus of the parties' relationship is that at certain times relevant to the parties' claims, Allied was an authorized dealer of products manufactured or distributed by Konica by virtue of a “dealer agreement.”

Pursuant to the dealer agreement, Allied was assigned a sales quota, which identified the number of units to be sold and revenue to be generated by Allied, to wit: $949,287.48, by March 31, 2005. As a dealer, Allied was permitted to participate in Konica's National Account Program, which is designed to allow Konica and its dealers to service accounts that are national in scope. On November 5, 2004, Konica informed Allied that its year-to-date sales were well below the sales quota. In addition, Allied was behind in payments to Konica for equipment. On December 22, 2004, McCarthy executed a promissory note on behalf of Allied and a personal guaranty in the amount of $90,276.90.

By mid-April, 2005, Konica had received complaints regarding Allied's service and determined that it could no longer support Allied as a representative of Konica's national account program. Allied was notified of this decision in May 2005. In June 2005, Konica advised Allied that its sales amounted to less than 14% of the sales quota required under the dealer agreement and gave Allied sixty days in which to cure its breach. When Allied failed to do so, the dealer agreement was terminated, effective September 9, 2005. Allied ceased making any payments on its promissory note as of July 2005. In addition to the remaining amount owed on the note, in its complaint Konica alleges that Allied owed $5, 029.89 ¹ to Konica for equipment purchased after January 2005.

On January 30, 2006, Konica filed its complaint alleging breach of a promissory note, breach of a personal guaranty, action on an account, and unjust enrichment. Defendants filed a joint answer, counterclaim and third party complaint on March 7, 2006. In their counterclaim, Allied and McCarthy made claims for breach of contract, tortious interference with contract and defamation. Specifically, Defendants asserted that Konica breached its 1999 and 2004 dealer agreement with Allied by allowing a third party to sell Konica products in Defendants' exclusive geographical area. Defendants third party complaint was against Gary Ell, an employee/agent of Konica for tortious interference and defamation.

On April 26, 2006, Konica filed a motion to dismiss the claims against Ell and Konica based on the 1999 dealer agreement and sought to stay the remaining claims pending arbitration. While the motion to dismiss was pending, McCarthy filed for Chapter 13 bankruptcy in the United States Bankruptcy Court for the Southern District of Ohio. On December 27, 2006, this court granted Defendant Ell's motion to dismiss, without prejudice, finding that Ell was not a proper third-party defendant. This court also dismissed the defendants' claims based on the 1999 Dealer Agreement as time-barred by the plain language of the agreement between the parties and stayed Allied's claims based on the 2004 Dealer Agreement pending arbitration. Because McCarthy was not a party to the dealer agreement which contained the arbitration clause, his individual defamation claim was not stayed pending arbitration. However, McCarthy's individual defamation claim was stayed pending a determination by the bankruptcy court regarding whether the defamation claim was a “core proceeding” under 28 U.S.C. § 157(b). Konica's remaining claims were also stayed pending the resolution of the bankruptcy proceedings.

On August 20, 2007, the Bankruptcy Court entered an order adopting a Chapter 13 plan for McCarthy ² . As part of the bankruptcy proceedings, Konica filed a proof of claim for $95,200.22, relating to the personal guaranty signed by McCarthy. Konica's proof of claim was accepted by the bankruptcy court and was not disputed by McCarthy. Pursuant to the Chapter 13 plan Konica would receive 2% of the total claim, or $1,904.00. The Bankruptcy Court also entered an agreed order granting a relief from the stay in order to permit Konica and McCarthy to pursue the remaining claims before this court. The remaining claims are Konica's claims against McCarthy and Allied, and McCarthy's claim for defamation.

Pursuant to court order, on October 29, 2008, McCarthy filed a Notice of Filing of Statement of Defamation and Damages in which he clarified the factual basis of his defamation claim. (doc. 50). Essentially, McCarthy alleges that there were three defamatory statements made against Allied prior to the termination of the business relationship between the parties. This matter is now before the court on Konica's motion for summary judgment. Konica asserts that it is entitled to judgment on its own claims against Allied and McCarthy. Konica further asserts that McCarthy has failed to show the evidence of material questions of fact that would bar summary judgment on his defamation claim. The matter is before this court on diversity jurisdiction pursuant to 28 U.S.C. § 1332.

II. Standard of Review

Under Fed.R.Civ.P. 56(c), summary judgment is proper “if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” See Longaberger Co. v. Kolt, 586 F.3d 459, 465 (6th Cir.2009). The moving party bears the burden of proving the absence of genuine issues of material fact and its entitlement to judgment as a matter of law, which may be accomplished by demonstrating that the nonmoving party lacks evidence to support an essential element of its case on which it would bear the burden of proof at trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Walton v. Ford Motor Co., 424 F.3d 481, 485 (6th Cir.2005).

The “mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (emphasis in original); see also Longaberger, 586 F.3d at 465. “Only disputed material facts, those ‘that might affect the outcome of the suit under the governing law,’ will preclude summary judgment.” Daugherty v. Sajar Plastics, Inc., 544 F.3d 696, 702 (6th Cir.2008) (quoting Anderson, 477 U.S. at 248, 106 S.Ct. 2505). Accordingly, the nonmoving party must present “significant probative evidence” to demonstrate that “there is [more than] some metaphysical doubt as to the material facts.” Moore v. Philip Morris Cos., Inc., 8 F.3d 335, 340 (6th Cir.1993).

A district court considering a motion for summary judgment may not weigh evidence or make credibility determinations. Daugherty, 544 F.3d at 702; Adams v. Metiva, 31 F.3d 375, 379 (6th Cir.1994). Rather, in reviewing a motion for summary judgment, a court must determine whether “the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Anderson, 477 U.S. at 251-52, 106 S.Ct. 2505. The evidence, all facts, and any inferences that may permissibly be drawn from the facts must be viewed in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Eastman Kodak Co. v. Image Technical Servs., Inc., 504 U.S. 451, 456, 112 S.Ct. 2072, 119 L.Ed.2d 265 (1992). However, “[t]he mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff.” Anderson, 477 U.S. at 252, 106 S.Ct. 2505; see Dominguez v. Corr. Med. Servs., 555 F.3d 543, 549 (6th Cir.2009).

III. Legal Discussion

“In a diversity action, a federal court applies the choice of law rules of the state in which the court sits.” See, Extracorporeal Alliance, L.L.C. v. Rosteck, 285 F.Supp.2d 1028, 1036 (N.D.Ohio, 2003). Under Ohio law, subject to limited exceptions, courts should apply the law of the state chosen by the parties to a contract to govern their contractual rights and duties. Ohayon v. Safeco Ins. Co., 91 Ohio St.3d 474, 747 N.E.2d 206, 209 (2001). Absent such a choice by the parties, Ohio's choice of law rules require a court to apply the law of the state with the most significant relationship to the contract. Id. at 477, 209, 747 N.E.2d 206. To...