2016 Ohio 3276
Ohio Ct. App.2016Background
- StarStone (exclusive licensee) and E. Khashoggi Industries (guarantor) entered a Unit Purchase Agreement (UPA) with Manufacturers Equipment Co. (MECO) requiring StarStone to pay the balance of $110,000 “within three (3) days after commissioning of the Russian main and coating lines.”
- MECO’s subsidiary built a Russian production line with a main line and a coating line for KGS; MECO alleges commissioning occurred April 6, 2010; StarStone admits coating-line commissioning but disputes main-line commissioning.
- MECO sued StarStone and EKI for breach of contract after StarStone failed to pay; cross-motions for summary judgment followed.
- MECO submitted in reply a previously unfiled affidavit and a signed “Deed of Equipment Line Commissioning” dated April 6, 2010, showing KGS and MECO acceptance; defendants moved to strike the reply as untimely and presenting new evidence.
- The trial court granted summary judgment to MECO and denied the motion to strike; the appellate court reversed and remanded, finding a genuine dispute over main-line commissioning and that the trial court should have allowed defendants an opportunity to respond to the newly submitted Deed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether StarStone breached UPA paragraph 2(c) by failing to pay within 3 days after commissioning | MECO: Both lines (main and coating) were commissioned (Deed dated April 6, 2010); payment due and unpaid | StarStone: Coating commissioned but main line never commissioned; KGS never accepted main line so condition precedent unmet | Reversed and remanded: genuine factual dispute exists about main-line commissioning; summary judgment premature unless defendant allowed to respond to the Deed and fails to show a triable issue |
| Whether the trial court erred by overruling the motion to strike MECO’s reply evidence | MECO: Deed and affidavit support commissioning and were properly considered in ruling | StarStone: Reply introduced new evidence/argument by ambush; trial court should have struck the reply or allowed a surreply | Reversed: trial court abused discretion by not giving StarStone an opportunity to respond to critical new evidence; remand to permit surreply and re-evaluate summary judgment burden |
Key Cases Cited
- Anderson v. Liberty Lobby, 477 U.S. 242 (summary-judgment standard and genuine-issue inquiry)
- GNFH, Inc. v. W. Am. Ins. Co., 172 Ohio App.3d 127 (2d Dist.) (de novo review of summary judgment)
- Smith v. Five Rivers MetroParks, 134 Ohio App.3d 754 (2d Dist.) (summary-judgment standard; construing evidence for nonmoving party)
- Napier v. Brown, 24 Ohio App.3d 12 (2d Dist.) (role of trial court is to determine existence of triable issues, not resolve credibility)
- In re Fuel Adjustment Clauses for Columbus S. Power Co. & Ohio Power Co., 140 Ohio St.3d 352 (Ohio 2014) (party may not raise new arguments or evidence for first time in reply)