Thе following appeal arises from a decision of the Cuyahoga County Court of Common Pleas that granted partial summary judgment against plaintiff-appellant Ferro Corporation (“Ferro”) in favor of defendant-appellee Blaw Knox Food & Chemical Equipment Company (“Blaw Knox”) and granted summary judgment against Ferro in favor of defendant-appellee American Tank & Fabricating Company (“ATF”). For the reasons that follow, we affirm in part, reverse in part, and remand for further proceedings.
The record reveals that in 1989, Ferro sought proposals from design and manufacturing companies for the design, fabrication and manufacture of a high pressure three-thousand-gallon gross capacity 316-L stainless steel reactor with design pressure of three thousand psig at 4000° F. This reactor was intended for use both in the production of TROUNCE for Chevron pursuant to a toll processing agreement and for other products. During the course of negotiations, Ferro received written proposals from both Nooter Corporation and Blaw Knox. The negotiations included such issues as the expertise оf the manufacturer, the timing of both the fabrication and the delivery, and the cost of the reactor. Blaw Knox submitted a proposal to Ferro on November 3, 1989. This proposal was rejected by Ferro on November 17. On November 20, Blaw Knox submitted its modified proposal to Ferro. On December 27, by letter, Ferro informed Blaw Knox of its acceptance of the quotе for the reactor. On January 2, 1990, Ferro issued its purchase order for the reactor. Blaw Knox accepted the Ferro purchase order on January 4, 1990, and designated a shipping date of July 23, 1990. Blaw Knox subcontracted eighty-five to ninety percent of the manufacturing, fabrication and assembly of the reactor to ATF. The reactor was shipped to Ferro in January, 1991.
In December, 1991, the initial batches of TROUNCE failed to meet Chevron’s specifications. Upon investigation of the process deficiencies, the reactor was unsealed in July 1992. It was then discovered that the reactor liner had failed. Ferro was forced to repair the damage to the reactor and to replace the stainless steel liner. Early in 1993, Chеvron canceled the TROUNCE project and bought out the Ferro contract for $2.1 million.
On December 29, 1992, Ferro filed a nine-count complaint against Blaw Knox and ATF, alleging both tort and contract claims. Ferro’s claims against Blaw Knox were for fraud, breach of contract, negligent misrepresentation, negligence, negligent supervision, breach of fiduciary duty and breаch of warranty of
“Motion for summary judgment filed by Defendant American Tаnk & Fabricating is hereby GRANTED. The Court relies on Queen City Terminals v. Gen. Am. Trans. Corp. (1995) [73 Ohio St.3d 609 ,653 N.E.2d 661 ].
“Motion for Summary Judgment filed by Defendant Blaw Knox is hereby granted in part and denied in part. The motion is granted for the counts of Fraud and Misrepresentation, Strict Liability in Tort and Negligence. The Motion is denied as to the Contract Claims as there are material issues of fact. The Court relies on Chemtrol Adhesives, Inc. v. American Manufacturers Mutual Insurance Co. [(1989),42 Ohio St.3d 40 ,537 N.E.2d 624 ].”
On June 12,1996, Ferro voluntarily dismissеd the remaining claims pursuant to Civ.R. 41 and filed a timely notice of appeal and subsequent amended notice of appeal. This consolidated appeal follows. Appellant Ferro raises the following assignments of error for our review:
ASSIGNMENT OF ERROR NO. I
“The trial court erred by granting summary judgment for blaw knox as to fraud because genuine issues of material fact exist.”
ASSIGNMENT OF ERROR NO. II
“The trial court erred by granting summary judgment for Blaw Knox as to fraud, negligent misrepresentation and negligent supervision by relying solely on Chemtrol Adhesives, Inc. v. American Manufacturers Mutual Insurance Company (1989),42 Ohio St.3d 40 ,537 N.E.2d 624 , because Chemtrol is inapplicable to a cause of action for fraud, negligent misrepresentation and negligent supervision.”
ASSIGNMENT OF ERROR NO. Ill
• “The trial court erred by granting summary judgment for ATF based solely on Queen City Terminals, Inc. v. General American Transportation Corporation (1995),73 Ohio St.3d 609 ,653 N.E.2d 661 .”
ASSIGNMENT OF ERROR NO. IV
“The trial court erred by granting summary judgment for ATF because genuine issues of material fact exist.”
Each of appellant’s assigned errors challenges the lower court’s grant of summary judgment in favor of the appellees. This court reviews the lower court’s grant of summary judgment
de novo. Brown v. Scioto Bd. of Commrs.
(1993) ,
“(1) No genuine issue as to any material fact remains to be litigated; (2) the moving party is entitled to judgment as ,a matter of law; and (3) it appears frоm the evidence that reasonable minds can come to but one conclusion, and viewing such evidence most strongly in favor of the party against whom the motion for summary judgment is made, that conclusion is adverse to that party.”
Temple v. Wean United, Inc.
(1977),
Moreover, it is well settled that the party seeking summary judgment bears the burden of showing that no genuine issue of material fact exists for trial.
Celotex Corp. v. Catrett
(1987),
In accordance with Civ.R. 56(E), “a nonmovant may not rest on the mere allegations or denials of his pleading but must set forth specific facts showing that there is a genuine issue for trial.”
Chaney v. Clark Cty. Agricultural Soc., Inc.
(1993),
It is uncontested in this appeal that appellant Ferro and appellee Blaw Knox acknowledge that the purchase and sale of the reactor was made pursuant to a contract between them; however, each of the assigned errors relates only to the tort claims as pled against both appellees Blaw Knox and ATF.
We address the appellant’s second assigned error first. In its second assignment of error, appellant contends that the trial court erred in granting summary judgment to Blaw Knox as to the fraud, negligent misrepresentation and negligent supervision claims made against it. Specifically, appellant argues that Chemtrol Adhesives, Inc. v. Am. Mfrs. Mut. Ins. Co., supra, is not applicable to its causes of action for fraud, negligent misrepresentation and negligent supervision.
The first question for our consideration is whether a commercial purchaser such as Ferrо, which buys a product from a commercial seller such as Blaw Knox pursuant to a contract of sale, is limited to all recovery under contract law and is precluded from maintaining any action in tort by the holding in Chemtrol.
It is undisputed that a contract exists as to these parties. The decision in
Chemtrol
is grounded on the contractual relationship between the parties.
Chemtrol
held that а commercial buyer seeking recovery from a seller for economic losses resulting from damage to the defective product itself may maintain a contract action for breach of warranty under the uniform commercial code; however, in the absence of injury to persons or damage to other property, the commercial buyer may not recover for economic losses premised on tort theories of strict liability or negligence.
Chemtrol,
Therefore, we find that because Ferro may bring a contract action against Blaw Knox, it may not recover economic losses through a negligence action. It is the character of the loss, here the economic losses incurred as a result of the failure of the product, that determines that the cause of action lies in contract.
Chemtrol, supra;
see, also,
Bronze Bushing Co., Inc. v. North Am. Mfg. Co.
(Apr. 4, 1996), Cuyahoga App. No. 68852, unreported,
However, pursuant to the holding of
Chemtrol,
it cannot be said that Ferro must be precluded from bringing its separate and distinct tort claims of
As we have determined that Ferro is not precluded from bringing its claim for fraud against Blaw Knox by the holding of Chemtrol, we review appellant’s first assigned error. Appellant contends that it was error for the trial court to grant summary judgment to Blaw Knox on its claim against it for fraud where genuine issues of material fact exist. We agree.
The elements of fraud are set forth in
Gaines v. Preterm-Cleveland, Inc.
(1987),
“(a) a representation or, where there is a duty to disclose, conceаlment of a fact, (b) which is material to the transaction at hand, (c) made falsely, with knowledge of its falsity, or with such utter disregard and recklessness as to whether it is true or false that knowledge may be inferred, (d) with the intent of misleading another into relying upon it, (e) justifiable reliance upon the representation or concealment, and (f) a resulting injury proximately caused by the rеliance.”
Appellee Blaw Knox, with its motion for summary judgment, has presented its evidence intended to contradict the allegations of misrepresentations made in the complaint. A review of the complaint and the supporting documentation presented reveals that the allegations establish that the appellant has presented evidence thаt Blaw Knox made material representations that were false and were intended to mislead appellant, and it justifiably relied on these misrepresentations with the resulting injury proximately caused by this reliance. These representations included the statements that Blaw Knox and its employees were expert in the design, manufacture and fabrication of a reactor of this type; that Blaw Knox had the capability to manufacture and fabricate this reactor in-house and within the time frame; and that Blaw Knox had the expertise to supervise the manufacture and fabrication of this kind of reactor. Appellant has presented evidence that Blaw Knox intended that appellant rely upon the statements made. Apрellant alleges that it relied upon the representations when it entered into the contract to purchase the reactor. Problems with the reactor occurred, and appellant alleges that the diminution of value of the reactor, the financial losses, attorney fees and the costs to investigate and repair the defect were the dirеct
Civ.R. 56(C) requires that the evidence be construed most strongly in favor of the appellant, against whom the motion for summary judgment was made. When viewing the evidence before us in a light most favorable to the nonmoving party, as we must do, we believe that reasonable minds could find that each of the elements of fraud have been proven by the appellant here. The motion must be overruled if reasonable minds could find for the party opposing the motion.
Saunders v. McFaul
(1990), 71 Ohio App.Bd 46, 50,
In its third assigned error, appellant contends that the trial court erred in granting summary judgment to ATF on count six (negligence), on count seven (strict liability in tort) and on count nine (breach of warranty of purpose). Specifically, appellant contends that the holding of
Queen City Terminals, Inc. v. Gen. Am. Transp. Corp.
(1995),
First, we are asked to decide whether the trial court properly granted summary judgment in favor of ATF on count six of the аppellant’s complaint, in which appellant alleges negligence against ATF based upon the holding of Queen City, which provides:
“In order to recover indirect economic damages in a negligence action, the plaintiff must prove that the indirect economic damages arose from tangible physical injury to persons or from tangible property damage.” Id. at syllabus.
It is undisputed thаt ATF and Ferro are not in privity of contract. ATF premised its motion for summary judgment solely on its contention that all the damage claims of appellant consisted of purely economic loss. ATF concluded that appellant was therefore precluded from recovery pursuant to R.C. 2307.73 for its failure to show that it had suffered “death, physical injury to person, serious emotional distress, or physical damage to property other than the Reactor in question.”
Appellant asserts that it does not seek recovery simply for economic loss but alleges that it has suffered “harm” as required under the Ohio Products Liability Act. Appellant argues that the liner was an “attachment” to the reactor, that the
Despite the characterization by ATF of the damage claims of the appellant as purely eсonomic, the appellant has made a claim for harm to the liner of the reactor, which is not the “product itself’ but is alleged to be an “attachment” to the product. We conclude that an issue of fact exists concerning the characterization and status of the liner. Therefore, summary judgment granted on the appellant’s' negligence claim on thе basis that appellant has incurred only “economic loss” is error.
Next, appellant argues that
Queen City Terminals
does not control its strict liability claim. We agree. The court in
Queen City
held that “in order to recover indirect economic damages in a negligence action, the plaintiff must prove that the indirect economic damages arose from tangible physical injury to persons or from tangible property damage.”
Queen City, supra,
at the syllabus.
Queen City
is, therefore, inapplicable to the appellant’s strict liability claim made pursuant to Restatement of Torts 2d Section 402(a) in count seven of the complaint. Further,
Chemtrol
found that an action for strict liability seeking purely economic damages may be maintained if the parties lack privity of contract.
Chemtrol, supra,
Finally, appellant argues that it may maintain an action for breach of implied warranty as claimed in count nine of the complaint and that the trial court erred in granting summary judgment to ATF on this claim, as ATF failed to advance any argument on this claim in its motion for summary judgment or provide any evidentiary material in support. We agree. A careful review of ATF’s motion for summary judgment shows us that ATF moved for judgment on the strict liability and negligence counts addressed in the complaint. It is well settled that “a party seeking summary judgment must specifically delineate the basis upon which summary judgment is sought in order to allow the opposing party a meaningful opportunity tо respond.”
Mitseff v. Wheeler
(1988), 38 Ohio
Accordingly, we find that in accordance with the holding of Chemtrol, the trial court properly granted summary judgment in favor of Blaw Knox on count four of the complaint, which alleged negligence, and on count five of the complaint, which alleged negligent supervision and affirm the ruling of the trial court.
We find, hоwever, that the trial court erred in granting summary judgment on appellant’s claims for fraud and negligent misrepresentation. We read the decision of the court in Chemtrol to preclude only strict liability and negligence actions where the parties have contract remedies and, therefore, reverse and remand to the trial court for trial on the fraud and negligent misrepresentation claims.
Finally, we find that the trial court erred in granting the motion for summary judgment in favor of ATF on each of the three counts pled in the complaint and, therefore, reverse and remand for trial on the issues.
The decision of the trial court is affirmed in part and reversed in part, and the cause is remanded for further proceedings consistent with this opinion.
Judgment affirmed in part, reversed in part and cause remanded.