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Airborn Electronics, Inc. v. Magnum Energy Solutions, LLC

Court of Appeals of Ohio, Ninth District, Summit

January 11, 2017

AIRBORN ELECTRONICS, INC. Appellee/Cross-Appellant
v.
MAGNUM ENERGY SOLUTIONS, LLC Appellant/Cross-Appellee

         APPEAL FROM JUDGMENT ENTERED IN THE COURT OF COMMON PLEAS COUNTY OF SUMMIT, OHIO CASE No. CV 2013 06 2736

          DEAN S. HOOVER, Attorney at Law, for Appellant/Cross-Appellee.

          PHILIP F. DOWNEY and STEVEN A. CHANG, Attorneys at Law, for Appellee/Cross-Appellant.

          DECISION AND JOURNAL ENTRY

          JENNIFER HENSAL JUDGE

         {¶1} Magnum Energy Solutions, LLC appeals a judgment of the Summit County Court of Common Pleas that awarded damages to AirBorn Electronics, Inc. on its breach of contract claim. AirBorn has cross-appealed the court's judgment awarding Magnum damages on its conversion claim. For the following reasons, this Court affirms in part and reverses in part.

         I.

         {¶2} AirBorn promotes itself as a one-stop shop for electronics design and manufacturing. In 2010, Magnum hired AirBorn to manufacture a power strip for it. It later hired AirBorn to design and manufacture an "access point" that would help wireless devices communicate with a network and a "dimmer relay" that would control overhead lighting. Magnum also hired AirBorn to design an infrared motion sensor and to design a new version of the power strip after the original did not perform as well as anticipated.

         {¶3} According to Magnum, none of the products that AirBorn designed or manufactured worked correctly. It, therefore, began outsourcing its projects to a different company. After Magnum stopped using AirBorn, AirBorn sued Magnum for breach of contract and unjust enrichment, alleging that Magnum had failed to pay for all the work it performed. Magnum counterclaimed, alleging breach of contract, conversion, negligence, and breach of warranty, alleging that AirBorn had sold it defective products and had improperly retained some of its materials after the contracts were cancelled.

         {¶4} The case eventually proceeded to trial on AirBorn's breach of contract and unjust enrichment claims and Magnum's breach of contract and conversion claims. Following the presentation of the evidence, the trial court directed a verdict in favor of AirBorn with respect to its allegation that Magnum failed to pay for all of the work it performed on the two versions of the power strip and the dimmer relay. The jury found that Magnum breached its contract with AirBorn with respect to the access points and motion sensors. The jury found in favor of Magnum on its conversion claim and also awarded Magnum punitive damages. Following the trial, however, the court granted AirBorn judgment notwithstanding the verdict with respect to the jury's punitive damages award. Magnum has appealed the trial court's judgment, assigning three errors, and Airborn has cross-appealed, assigning two errors.

MAGNUM'S ASSIGNMENT OF ERROR I
THE TRIAL COURT ERRED AS A MATTER OF LAW IN GRANTING AIRBORN'S MOTION FOR DIRECTED VERDICT IN FAVOR OF AIRBORN'S CONTRACT CLAIMS, AND AGAINST MAGNUM'S COUNTERCLAIMS, WITH RESPECT TO THREE OF AIRBORN'S PROJECTS THAT DID NOT RESULT IN WORKING PRODUCTS.

         {¶5} Magnum argues that the trial court incorrectly granted AirBorn's motion for directed verdict as to the two versions of the power strip and the dimmer relays. Under Civil Rule 50(A)(4), the trial court shall grant a motion for directed verdict after the evidence has been presented if, "after construing the evidence most strongly in favor of the party against whom the motion is directed, * * * reasonable minds could come to but one conclusion upon the evidence submitted * * *." Civ.R. 50(A)(4); Parrish v. Jones, 138 Ohio St.3d 23, 2013-Ohio-5224, ¶ 16. "By the same token, if there is substantial competent evidence to support the party against whom the motion is made, upon which evidence reasonable minds might reach different conclusions, the motion must be denied." Hawkins v. Ivy, 50 Ohio St.2d 114, 115 (1977). Because a motion for directed verdict presents a question of law, this Court's review is de novo. Jackovic v. Webb, 9th Dist. Summit No. 26555, 2013-Ohio-2520, ¶ 6.

         {¶6} Magnum argues that AirBorn was not entitled to a directed verdict on the parties' breach of contract claims because none of the products it produced worked. It notes that there was evidence that the original version of the power strip tended to explode and that there were even char marks on the example presented at trial. Magnum notes that one of AirBorn's employees admitted that the dimmer relays also blew up when they were installed at their intended destination. It contends that, even though the second version of the power strip never made it to production, the prototype it received also did not work. According to Magnum, because AirBorn did not produce working products, it had no obligation to pay AirBorn.

         {¶7} Regarding the first version of the power strip, the evidence at trial was that Magnum hired AirBorn to manufacture a design that Magnum provided, using a list of components that Magnum also provided. Although it was not disputed that some of the power strips did not work correctly, Magnum did not present any evidence that the reason the power strips failed was because of AirBorn's manufacturing process instead of the design Magnum provided or the components Magnum selected. According to one of AirBorn's engineers, he attempted to replicate what caused some of the power strips to stop working, but was unable to duplicate the issue. He, therefore, concluded that it must have been some sort of catastrophic event at the facility where they were being used that caused them to fail. AirBorn also presented evidence that it delivered over 2, 600 power strips to Magnum and that only a few had been returned to it.

         {¶8} Regarding the second version of the power strip, Magnum hired AirBorn to redesign the power strip, hoping to correct the alleged problems with the first version. The record indicates that AirBorn developed a prototype of a redesigned power strip, but Magnum chose not to use it. Magnum did not submit any evidence that AirBorn failed to perform its obligations with respect to the redesign of the power strip.

         {¶9} Regarding the dimmer relays, one of AirBorn's engineers testified that the relays were designed to operate on a 110-volt system. After completing the design, they produced a prototype, which Magnum approved. AirBorn, therefore, began manufacturing the relays. When the relays were installed at a federal courthouse, however, they malfunctioned because it had a 277-volt system. According to AirBorn's engineer, AirBorn replaced a part on the relays at its own cost so that the relays would work at the courthouse. He testified that there were no further issues with the dimmer relays and that Magnum even ordered another 102 dimmer relays after the problem was corrected.

         {¶10} Upon review of the record, AirBorn demonstrated that it performed its obligations under the parties' contracts regarding the two versions of the power strip and the dimmer relays. Magnum did not offer any expert testimony that the alleged problems with the first version of the power strip were attributable to AirBorn's manufacturing process, and it approved the version of the dimmer relay that did not initially work at the federal courthouse. In addition, there was no evidence that AirBorn failed to design a second version of the power strip. We, therefore, conclude that the ...


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