Ineos USA L.L.C. v. Furmanite America, Inc.
2014 Ohio 4996
Ohio Ct. App.2014Background
- Ineos contracted with Furmanite (and technician Todd Grant) to perform LDAR (leak detection and repair) monitoring at a Lima, Ohio chemical plant; monitoring allegedly took place 1998–2005.
- EPA audit in 2005 produced a Finding of Violation (FOV) against Ineos for inadequate LDAR monitoring; Ineos later paid civil penalties.
- Ineos sued Furmanite and Grant (2009), asserting fraudulent misrepresentation, fraudulent concealment, breach of contract, contractual indemnification, and unjust enrichment; later amended complaints added negligent hiring/retention and fraudulent inducement.
- Furmanite moved for partial summary judgment seeking dismissal of the fraud claims on economic loss rule grounds and argued indemnity clauses were void under Ohio law; the trial court granted summary judgment on the fraud counts, finding fraud claims duplicative of breach-of-contract.
- On appeal, the Third District reversed: it held summary judgment on the fraud claims was premature because genuine issues of material fact exist about (1) what duties the contract created and (2) whether Ineos’s alleged fraud damages are separate and distinct from contract damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the economic loss rule bars Ineos’s fraud claims | Economic loss rule does not apply to intentional torts; fraud alleges independent duties and separate injuries | Economic loss rule bars tort recovery where losses arise from breach of contract; fraud claims merely recapitulate contract claim | Reversed; application of economic loss rule was premature because factual disputes exist about duties and damages |
| Whether duties alleged in fraud arise from the contract | Fraud alleges misrepresentations (e.g., use of data logger) independent of contract duties — actionable if contract did not require those practices | The contractual documents and LDAR obligations encompass the duties; alleged misrepresentations are essentially contract breaches | Court found genuine dispute about what duties contract imposed; cannot decide on summary judgment |
| Whether damages from fraud are separate and distinct from contract damages | Fraud damages (including EPA civil penalties) can be recovered if proximately caused by fraud; indemnity clause may not be enforceable | Contract indemnity would cover EPA penalties, making fraud damages duplicative; indemnity clause is void/unenforceable under Ohio law so argument inconsistent | Because enforceability of indemnity clause is genuinely disputed, summary judgment on separateness of damages was premature |
| Whether the trial court abused process by considering new arguments in defendant’s reply and denying a surreply/striking | Ineos argued Furmanite raised new issues in reply (Civ.R. 9(B), reliance, timing) and sought strike or surreply | Furmanite said reply merely responded and Ineos was not prejudiced; trial court considered the filings and denied strike motion | Moot on appeal after reversal of summary judgment; appellate court declined to address remaining assignments of error |
Key Cases Cited
- Corporex Dev. & Constr. Mgt., Inc. v. Shook, Inc., 106 Ohio St.3d 412 (2005) (economic loss rule limits tort recovery when duty arises solely from contract)
- Floor Craft Floor Covering v. Parma Community Gen. Hosp. Assn., 54 Ohio St.3d 1 (1990) (economic loss doctrine bars tort recovery for purely economic loss absent independent duty)
- Chemtrol Adhesives, Inc. v. Am. Mfrs. Mut. Ins. Co., 42 Ohio St.3d 40 (1989) (no tort recovery for purely economic loss when duty springs from contract)
- Burns v. Prudential Securities, Inc., 167 Ohio App.3d 809 (2006) (tort and contract claims may arise from same operative facts; intentional torts independent of contract may proceed)
- Haddon View Inv. Co. v. Coopers & Lybrand, 70 Ohio St.2d 154 (1982) (limited exception where contractual relationship creates tort-based fiduciary duties)