RotoSolutions, Inc. v. Crane Plastics Siding, L.L.C. , 2013 Ohio 4343 ( 2013 )

[Cite as RotoSolutions, Inc. v. Crane Plastics Siding, L.L.C., 2013-Ohio-4343.]
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
RotoSolutions, Inc., :
Plaintiff-Appellant, :
v. : Nos. 13AP-1
and 13AP-52
Crane Plastics Siding, LLC., : (C.P.C. No. 12CV-04- 5503)
Defendant-Appellee. : (REGULAR CALENDAR)
D E C I S I O N
Rendered on September 30, 2013
Stark & Knoll, and David P. Bertsch, for appellant.
Porter Wright Morris & Arthur, LLP, James D. Curphey and
Anthony R. McClure, for appellee.
APPEALS from the Franklin County Court of Common Pleas
TYACK, J.
{¶ 1} Plaintiff-appellant, RotoSolutions, Inc. ("RotoSolutions"), brought an action
for breach of contract against defendant-appellee, Crane Plastics Siding, LLC ("Crane"), in
the Franklin County Court of Common Pleas. RotoSolutions appeals from a decision and
judgment entry of the court denying RotoSolutions' Civ.R. 15(A) motion for leave to file an
amended complaint, and a decision and judgment entry granting Crane's motion for
judgment on the pleadings. For the reasons that follow, we reverse.
Alleged Facts and Procedural Posture
{¶ 2} The following facts and allegations are from the complaint and proposed
amended complaint.
{¶ 3} RotoSolutions and Crane entered into an agreement in 2006 for
RotoSolutions to manufacture and package Crane's patented faux-stone siding products
Nos. 13AP-1 and 13AP-52 2
for sale to Crane. The "Polymer Stone Toll Processing Agreement" provided that Crane
would provide estimates at RotoSolutions' request, but that Crane was under no
obligation to purchase product from RotoSolutions. The agreement contained a provision
stating:
This Agreement may not be amended, modified, supple-
mented or superseded orally or by any credit application, pur-
chase order, sales invoice, order acknowledgment or other
document, except by an instrument in writing duly signed by
both parties.
Agreement, at 14.
{¶ 4} In March 2007, Crane sent RotoSolutions a letter via email that provided as
follows:
Re: Annual Commitment for Ovens 2 & 3
***
Per our conversation, Crane will buy 1,500,000 square feet of
product per year for next three years from each of the two
ovens you have purchased.
Yours truly,
/s/James E. Hosley
James E. Hosley
Director, Supply Chain
{¶ 5} RotoSolutions, relying upon Crane's commitment letter, purchased and
installed the ovens in its facility with the full knowledge, understanding and approval of
Crane. After RotoSolutions acquired and installed the two ovens, Crane continued to
acknowledge its commitment to purchase the 9,000,000 square feet of product in email
exchanges and other communication between the parties.
{¶ 6} RotoSolutions further alleged that Crane waived any provision in the
original agreement that required that a modification of terms had to be set forth in writing
signed by both parties.
Nos. 13AP-1 and 13AP-52 3
{¶ 7} Crane terminated the original agreement and the alleged supplemental
contract in November 2011, without purchasing the additional square feet of product as
set forth in the "annual commitment" email.
{¶ 8} RotoSolutions filed a complaint for breach of contract on April 30, 2012.
Crane filed an answer and an amended answer and, on August 10, 2012, filed a motion for
judgment on the pleadings. On October 8, 2012, before the court ruled on the motion for
judgment on the pleadings, RotoSolutions filed a motion for leave to file an amended
complaint. In addition to the original contract, and the "annual commitment" email,
RotoSolutions attached an email chain from August and September 2008 discussing the
"annual commitment" letter to the proposed amended complaint. RotoSolutions also
alleged reliance on the letter and that Crane had waived any provision in the original
agreement that a modification of its terms had to be in writing signed by both parties.
{¶ 9} On October 9, 2012, the court granted Crane's motion for judgment on the
pleadings. The court reasoned that the annual commitment letter could not be a contract
modification because of the provision in the original agreement that required a writing
signed by both parties. Moreover, the court found that the letter did not state an intent to
be a modification to the original agreement. In addition, the original agreement stated
that Crane was not obligated to purchase any product from RotoSolutions. The court
agreed with Crane that the letter was merely an estimate because the court could not
believe that after entering into the agreement with a provision providing that Crane was
under no obligation to purchase product from RotoSolutions, that Crane would
unilaterally modify the agreement to require itself to purchase millions of square feet of
product per year.
{¶ 10} On December 4, 2012, the court denied RotoSolutions' motion for leave to
file an amended complaint. The court reviewed the proposed amended complaint and
determined that the new allegations did nothing to change the court's October 9, 2012
decision granting judgment on the pleadings in Crane's favor.
{¶ 11} This appeal followed.
Assignments of Error
{¶ 12} On appeal, RotoSolutions assigns the following errors:
Nos. 13AP-1 and 13AP-52 4
I. The trial court committed prejudicial error in dismissing
this action on the pleadings under Civ.R. 12(C).
II. The trial court committed prejudicial error in denying
Plaintiff's Civ.R. 15(A) motion for leave to file an amended
complaint.
Standard of Review
{¶ 13} A judgment on the pleadings dismissing an action is subject to a de novo
standard of review. Franks v. Ohio Dept. of Rehab. & Corr., 145 Ohio App. 3d 114, 2011-
Ohio-2048, ¶ 5 (10th Dist.).
{¶ 14} We review a Civ.R. 15(A) motion to amend under an abuse of discretion
standard. Pursuant to Civ.R. 15(A), "[a] party may amend his pleading once as a matter of
course at any time before a responsive pleading is served * * *. Otherwise a party may
amend his pleading only by leave of court or by written consent of the adverse party."
Because the decision of whether to grant or deny a motion to amend is within the trial
court's discretion, an appellate court reviews such a ruling under an abuse-of-discretion
standard. Turner v. Cent. Local School Dist., 85 Ohio St. 3d 95, 99 (1999). While the rule
allows for liberal amendment, motions to amend pleadings pursuant to Civ.R. 15(A)
should be refused if there is a showing of bad faith, undue delay, or undue prejudice to the
opposing party. Id.
Discussion
{¶ 15} Civ.R. 10(D)(1) provides that "[w]hen any claim or defense is founded on an
account or other written instrument, a copy of the account or written instrument must be
attached to the pleading. If the account or written instrument is not attached, the reason
for the omission must be stated in the pleading." Here, RotoSolutions attached a copy of
the written contract and the annual commitment letter to the original complaint. When a
claim is founded upon some written instrument and a copy thereof is attached to the
complaint in accordance with Civ.R. 10(D), the complaint should not be dismissed unless
the complaint and the written instrument show to a certainty some insuperable bar to
relief as a matter of law. Where, as here, a contract and a letter are attached to a
complaint, Civ.R. 10(C) applies. Civ.R. 10(C) reads in part: "A copy of any written
instrument attached to a pleading is a part of the pleading for all purposes." "Material
Nos. 13AP-1 and 13AP-52 5
incorporated in a complaint may be considered part of the complaint for purposes of
determining a Civ.R. 12(B)(6) motion to dismiss." State ex rel. Crabtree v. Franklin Cty.
Bd. of Health, 77 Ohio St. 3d 247, 249, fn. 1 (1997). A motion for judgment on the
pleadings is essentially a motion to dismiss for failure to state a claim after an answer has
been filed. Gawloski v. Miller Brewing Co., 96 Ohio App. 3d 160, 163 (9th Dist.1994).
The Original Complaint
{¶ 16} RotoSolutions was not required to prove the elements of breach of contract
at the pleading stage to support its claim. Civ.R. 10(D)(1), 12(B)(6). Rather,
RotoSolutions merely had to plead the elements of a breach of contract claim, to wit, the
existence of a contract, performance by the plaintiff, a breach by the defendant, and
damage or loss to the plaintiff. See McCamon-Hunt Ins. Agency, Inc., v. Med. Mut. of
Ohio, 7th Dist. No. 02 CA 23, 2003-Ohio-1221, ¶ 10 (elements of proof). A modification of
a contract requires the same elements of mutual assent and consideration that are
necessary for the formation of contracts. Porginski v. New Boston Development Co., 4th
Dist. No. 92 CA 2036 (Dec. 22, 1992), citing 15 Williston on Contracts at 482, Section
1826.2 (3 Ed.1972).
{¶ 17} As we read the original complaint, it appears that RotoSolutions cannot
overcome Crane's motion for judgment on the pleadings. We agree with the trial court
that on the face of the pleadings, RotoSolutions' claim of contract modification must fail
as a matter of law. The clause in the original contract disallowed modifications not signed
by both parties. Here, only one party signed the annual commitment letter. Thus, on the
face of the pleadings, including the attachments, RotoSolutions cannot show any set of
facts that could support its claim for breach of contract.
The Proposed Amended Complaint
{¶ 18} The trial court denied the motion for leave to file an amended complaint on
the basis that the amended complaint did nothing to alter the court's original analysis.
We disagree.
{¶ 19} The issue presented here is whether RotoSolutions adequately pled that
there was a subsequent modification of the earlier written contract. "[A]n oral
modification of a written contract can be enforceable notwithstanding a provision in the
contract requiring modifications to be in writing where, as alleged here, the parties have
Nos. 13AP-1 and 13AP-52 6
engaged in a course of conduct in conformance with the oral modification and where the
party seeking to enforce the oral modification would suffer injury if the modification were
deemed invalid." Exact Software North America, Inc. v. Infocon Sys., Inc., N.D.Ohio No.
3:03CV7183, 2004 WL 952876 at *5 (Apr. 16, 2004),.
{¶ 20} "[C]ourse of conduct can be considered in certain respects notwithstanding
a 'written changes only' contractual provision, because the series of acts in question are
evaluated only as evidence regarding a continuity of the purpose captured by the original
contractual terms at the time of formation." Lincoln Elec. Co. v. St. Paul Fire and Marine
Ins. Co., 210 F.3d 672, 687 (6th Cir.2000); Smaldino v. Larsick, 90 Ohio App. 3d 691, 698
(11th Dist.1993) ("A gratuitous oral agreement to modify a prior contract is binding if it is
acted upon by the parties and if a refusal to enforce the modification would result in a
fraud or injury to the promisee.") (citing Restatement of Law 2d, Contracts, Section 241
(1981)); 200 West Apartments v. Foreman, 8th Dist. No. 66107 (Sept. 15, 1994) (noting
that even contracts that are required by the statute of frauds to be in writing can be
modified orally when "the parties to the written agreement act upon the terms of the oral
agreement") (citing Nonamaker v. Amos, 73 Ohio St. 163 (1905); 51 Ohio Jurisprudence
3d, Statute of Frauds, Section 108. See also, Wells Fargo Bank, NA v. Smith, 11th Dist.
No. 2010-T-0051, 2012-Ohio-1672 (waiver of no-oral modification clause where opposing
party's subsequent admission or conduct evidenced its treatment of modification as
operative).
{¶ 21} Here, it is evident from the proposed amended complaint and the new
attachment that RotoSolutions pled a valid modification. RotoSolutions alleged Crane
had waived the no written modification provision unless signed by both parties by means
of the letter and the parties' subsequent course of dealing. There appears to be
consideration since RotoSolutions alleges that it relied upon Crane's modification in
purchasing two new ovens to manufacture the promised increase in the volume of
product. Under this set of facts, RotoSolutions' proposed amended complaint sets forth a
valid claim for breach of contract.
{¶ 22} The parties strenuously disagree over how to characterize the annual
commitment letter. However, the legal effect of the letter cannot be determined at the
pleading stage and must await further factual development of the record.
Nos. 13AP-1 and 13AP-52 7
Motion for Leave to File an Amended Complaint
{¶ 23} "[A] pleader is ordinarily not required to allege in the complaint every fact
he or she intends to prove; such facts may not be available until after discovery." State ex
rel. Hanson v. Guernsey Cty. Bd. of Commrs., 65 Ohio St. 3d 545, 549 (1992). If a motion
for judgment on the pleadings is granted, "leave to amend the pleading should be granted
unless the court determines that allegations of other statements or facts consistent with
the challenged pleading could not possibly cure the defect." See Id. (referring to a Civ.R.
12(B)(6) motion).
{¶ 24} By means of its amended complaint, RotoSolutions has set forth a claim for
breach of contract. We can discern no prejudice to Crane from such a motion made early
in the case and in good faith. See Elder v. Fischer, 129 Ohio App. 3d 209, 223 (1st
Dist.1998) (Accordingly, we conclude that the trial court's decision to deny leave to file an
amended complaint was an abuse of discretion).
{¶ 25} Based on the foregoing, we sustain RotoSolutions two assignments of error,
reverse the judgment dismissing the complaint, and reverse the entry denying the motion
for leave to file an amended complaint. The matter is remanded to the Franklin County
Court of Common Pleas for further proceedings in accordance with this decision.
Judgment reversed and
remanded for further proceedings.
CONNOR and DORRIAN, JJ., concur.