United States District Court, N.D. Ohio, Eastern Division
C. NORRIS MANUFACTURING, LLC., Plaintiff,
BRT HEAVY EQUIPMENT, LLC. et al., Defendants.
MEMORANDUM OPINION & ORDER
J. LIMBERT UNITED STATES MAGISTRATE JUDGE.
matter is before the Court upon a motion for partial summary
judgment filed pursuant to Rule 56 of the Federal Rules of
Civil Procedure by Plaintiff/Counterclaim Defendants
Christopher Norris, (“Mr. Norris”) Robert Rogers
(“Mr. Rogers”), and International Barge &
Steel, LLC, (“IBS”) (collectively
“Counterclaim Defendants”) against amended
counterclaims filed against them by Defendants/Counterclaim
Plaintiffs BRT Heavy Equipment, LLC., doing business as
Beelman Heavy Equipment, LLC. and Beelman River Terminals,
“Counterclaim Plaintiffs”). ECF Dkt. #82.
Plaintiff/Counterclaim Defendant C. Norris Manufacturing
(“CNM”) has filed a separate motion for summary
judgment incorporating the same facts, law and arguments
asserted by Counterclaim Defendants against the same amended
counterclaims made by Counterclaim Plaintiffs. ECF Dkt. #83.
following reasons, the Court GRANTS IN PART AND DENIES IN
PART Counterclaim Defendants' and Counterclaim CNM's
motions for partial summary judgment. ECF Dkt. #s 82, 83.
FACTUAL AND PROCEDURAL HISTORY
December 19, 2015, BRT removed to this Court a complaint
filed in the Stark County Court of Common Pleas against it by
CNM alleging a breach of contract and promissory estoppel.
ECF Dkt. #1-1. Upon removal, Counterclaim Plaintiffs
thereafter filed an answer to the complaint and alleged
counterclaims against Mr. Norris, CNM, Mr. Rogers and IBS.
ECF Dkt. #38. Counterclaim Defendants moved to dismiss
several of the counterclaims for failure to state claims upon
which relief can be granted pursuant to Rule 12(b)(6) of the
Federal Rules of Civil Procedure and the Court denied the
motions as moot on December 10, 2015 after Counterclaim
Plaintiffs filed an amended counterclaim that is the subject
of the instant motions for partial summary judgment against
Counterclaim Defendants. ECF Dkt. #s 47, 49, 59.
amended counterclaim, Counterclaim Plaintiffs averred that
BRT uses work barges in its operations at various port
facilities and it decided to procure spud barges to increase
its capacity to handle additional materials and other
products at in-land port facilities in Illinois. ECF Dkt. #59
at 9. They alleged that Mr. Norris, a representative of CNM,
contacted Mr. Beelman, a representative of BRT, and inquired
about submitting a proposal to design and construct the
additional spud barges. Id.
Plaintiffs further alleged that Mr. Norris had no experience
in designing and manufacturing barges, but he advised Mr.
Beelman that he knew Mr. Rogers and Mr. Rogers had
“extensive experience” in the barge industry. ECF
Dkt. #59 at 3. They averred that Mr. Norris told Mr. Beelman
that he and Mr. Rogers would form or had formed IBS to design
and manufacture spud barges and Mr. Rogers had experience
with barges for use in salt water applications even though he
had not designed or constructed this type of inland-river
barge. Id. Counterclaim Plaintiffs alleged that Mr.
Norris and Mr. Rogers formed IBS on August 22, 2014 and on
that same date, Mr. Norris vouched to Mr. Beelman about Mr.
Rogers' competence and capacity to perform and guaranteed
his performance. Id.
Plaintiffs further averred that on or about August 22, 2014,
in order to induce Mr. Beelman into the barge contract, Mr.
Norris and Mr. Rogers told Mr. Beelman that Mr. Rogers had
“extensive experience” with barges and that IBS
would “be hiring the necessary people to design and
build the contemplated barges.” ECF Dkt. #59 at 3. They
further alleged that also as an inducement into the contract,
Mr. Norris and Mr. Rogers promised Mr. Beelman that they
would work with a professional engineer to develop the barge
designs and all designs would be stamped and approved by that
engineer. Id. at 3.
Plaintiffs further alleged that about the same time, Mr.
Beelman told Mr. Norris about his distrust and discomfort
with doing business with Mr. Rogers and IBS. However, in
order to induce Mr. Beelman into signing the Purchase Order
that is the contract at issue in this case, Mr. Norris
promised Mr. Beelman that the contract would be with CNM and
all money paid would be kept in a separate bank account,
controlled exclusively by Mr. Norris. ECF Dkt. #59 at 3-4.
Counterclaim Plaintiffs averred that on August 26, 2014, Mr.
Norris and Mr. Beelman entered in the Purchase Order contract
for the design and manufacture of three barges and Mr.
Beelman agreed to pay $307, 000.00 as an initial payment.
Id. at 4. Counterclaim Plaintiffs alleged that Mr.
Beelman wired the payment to Mr. Norris on August 27, 2014,
and on or about September 3, 2014, $50, 000.00 of that money
was transferred out of the Norris bank account and into an
account in the name of IBS. Id. They further alleged
that in September and November of 2014, the only transactions
made in the IBS bank account were transfers of the initial
payment from Norris and transfers into the personal account
of Mr. Rogers. Id. at 4-5. They averred that the
funds transferred to Mr. Rogers' personal account were
used to pay for trips to Nassau, Bahamas, bar tabs, and other
expenses wholly unrelated to the barge contract. Id.
Plaintiffs also averred in their amended counterclaim that as
of September 29, 2014, Mr. Norris knew that Mr. Beelman's
initial payment money was not being properly used even though
Mr. Norris represented to Mr. Beelman on that date that
Norris set up a separate bank account for the Purchase Order,
his money was “safe, ” and that none of the
Purchase Order money would be mixed with “other
company” money and would be used solely for expenses
relating to the completion of the barges ordered by BRT. ECF
Dkt. #59 at 3-4. They alleged that Mr. Norris' statements
were false when he made them and furthered the fraudulent
scheme to defraud Mr. Beelman and BRT. Id. at 6.
They averred that Mr. Norris knew that at least $26, 000.00
of the initial payment was mixed with other Norris
Manufacturing Company money and knew or should have known
that at least $50, 000.00 was transferred to IBS and then to
Mr. Rogers' personal account. Id. Counterclaim
Plaintiffs further alleged that Mr. Norris failed to disclose
that at least $84, 718.10 of the payment money was already
spent on or around September 15, 2014. Id.
Plaintiffs further alleged that CNM failed to perform as
required by the Purchase Order as they submitted the initial
drawings on September 16, 2014 when they were due on
September 10, 2014. ECF Dkt. #59 at 7. Further, they averred
that the drawings that were submitted were deemed deficient
and Mr. Beelman's engineer did not approve revised
drawings thereafter submitted by CNM. Id. at 7-8.
Plaintiffs also allege that on November 5, 2014, Mr. Beelman
met with Mr. Norris and Mr. Rogers, on behalf of CNM and IBS,
and told Mr. Beelman that it would cost an additional $100,
000.00 per barge to complete the design and manufacturing of
the three barges. ECF Dkt. #59 at 8. They allege that on
November 6, 2014 and November 7, 2014, a representative from
IBS called Mr. Beelman and requested information from other
companies that provided quotes to him for the barges,
including the materials lists, in order to help IBS in the
design and engineering of the barges. Id.
Counterclaim Plaintiffs allege that due to the untimely
submission of the drawings, the repeated submission of barge
drawings that were deficient, and the representations and
comments from Mr. Norris, Mr. Rogers and representatives of
IBS, Mr. Beelman provided a written notice of immediate
termination of the Purchase Order to Norris as he concluded
that CNM, Mr. Norris, Mr. Rogers and IBS lacked the knowledge
and expertise to build inland-river spud barges. Id.
They further averred that due to these actions and inactions,
as well as the request for price increases, Mr. Beelman lost
all confidence in Counterclaim Defendants ability to build
the barges and to meet the Purchase Order deadlines.
Id. at 9. Counterclaim Plaintiffs further alleged
that IBS is a sham company as it was formed to induce and
deceive Mr. Beelman into entering into the Purchase Order and
although Mr. Norris represented that he and Mr. Rogers would
be forming IBS, Mr. Norris' name is not listed on the
company, but rather the names of Mr. Rogers and Mr.
Norris' wife are listed. Id. at 10. They further
alleged that IBS had no formal meetings, no documentation
showing its ownership structure, and it commingled its funds
with CNM and Mr. Rogers. Id.
result of these alleged facts, Counterclaim Plaintiffs set
forth seven claims for relief: declaratory judgment against
CNM to determine the parties' rights and duties under the
Purchase Order (Count I), breach of contract against CNM
(Count II), fraud/fraudulent inducement against CNM, Mr.
Norris, Mr. Rogers, and IBS (Count III), negligent
misrepresentation against CNM, Mr. Norris, Mr. Rogers, and
IBS (Count IV), conversion against CNM, Mr. Norris, Mr.
Rogers, and IBS (Count V), unjust enrichment against CNM, Mr.
Norris, Mr. Rogers, and IBS (Count VI), and piercing the
corporate veil against Mr. Norris and Mr. Rogers (Count VII).
ECF Dkt. #59 at 11-20.
January 4, 2016, Counterclaim Defendants filed a motion to
dismiss Counterclaim Plaintiff's amended counterclaims
for fraud/fraudulent inducement, negligent misrepresentation,
conversion, unjust enrichment and piercing the corporate
veil. ECF Dkt. #65. Counterclaim Plaintiffs filed a response
and Counterclaim Defendants filed reply briefs. ECF Dkt. #s
70, 72. On August 1, 2016, the Court denied Counterclaim
Defendants' motion to dismiss. ECF Dkt. #76.
December 7, 2016, Counterclaim Defendants Mr. Norris, Mr.
Rogers, and IBS filed the instant motion for partial summary
judgment, requesting that the Court grant summary judgment in
its favor and dismiss as a matter of law Counterclaim
Plaintiffs' amended counterclaims of fraud/fraudulent
inducement (Count III), negligent misrepresentation (Count
IV), conversion (Count V), unjust enrichment (Count VI), and
piercing the corporate veil (Count VII). ECF Dkt. #82. On the
same date, Counterclaim Defendant CNM filed the instant
motion for partial summary judgment to dismiss the same
amended counterclaims. ECF Dkt. #s 82, 83.
January 20, 2017, Counterclaim Plaintiffs filed a brief in
opposition to the motions for partial summary judgment. ECF
Dkt. #88. On February 3, 2017, Counterclaim Defendants filed
a reply brief. ECF Dkt.#91.
March 17, 2017, the Court granted in part and denied in part
a motion for summary judgment filed by BRT against CNM, who
had asserted claims for breach of contract and promissory
estoppel against BRT concerning the Purchase Order. ECF Dkt.
#s 1, 84, 96, 97. The Court granted summary judgment and
dismissed CNM's claim of promissory estoppel, but denied
BRT's motion for summary judgment on CNM's breach of
contract claim against BRT. ECF Dkt. #s 96, 97.
LAW AND ANALYSIS
Fraud, Fraudulent Inducement and Negligent Misrepresentation
(Counterclaim Counts III and IV)
Defendants first contend that they are entitled to summary
judgment on Counterclaim Plaintiffs' fraud, fraudulent
inducement, and negligent misrepresentation claims because
Counterclaim Plaintiffs cannot establish all of the elements
of those claims. ECF Dkt. #82-1 at 12-24; ECF Dkt. #83-1 at
2-4. They cite to Mr. Beelman's deposition testimony,
Ohio law holding that tort claims must fail when they are
“factually intertwined” with breach of contract
claims, and Ohio law requiring that damages from the alleged
fraud must be separate from breach of contract damages.
parties agree that the elements for a claim for fraud and
fraudulent inducement under Ohio law are:
(1) a representation, or where there is a duty to disclose,
concealment of a fact, (2) which is material to the
transaction at hand, (3) 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,
(4) with the intent of misleading another into relying on it,
(5) justifiable reliance upon the representation or
concealment, and (6) a resulting injury proximately caused by
See C.Norris Manufacturing, LLC. v. BRT Heavy Equipment,
LLC., No. 5:14CV2797, 2016 WL 4079752, at *3 (N.D. Ohio
2016), citing HSBC Bank USA, Nat'l Trust Co. v.
Teagarden, 6 N.E.3d 678, 2013-Ohio-5816 (Ohio App. Ct.
11th Dist. 2013) (citation omitted); Cohen v.
Lamko, Inc., 10 Ohio St.3d 167, 462 N.E.2d 407, 10
O.B.R. (1984), quoting Friedland v. Lipman, 68 Ohio
App.2d 255, 429 N.E.2d 456, 22 O.O.3d 422 (1980); ECF Dkt.
#82-1 at 6-7; ECF Dkt. #83-1 at 2; ECF Dkt. #88 at 11.
Defendants assert that Counterclaim Plaintiffs cannot
establish that they made false representations to Mr. Beelman
in order to induce him into entering the Purchase Order. ECF
Dkt. #82-1 at 12-14; ECF Dkt. #83-1 at 2. They cite to Mr.
Beelman's deposition testimony where he indicated that
prior to the Purchase Order being signed, neither Mr. Norris
nor Mr. Rogers lied to him or made any false
misrepresentations. Id., citing ECF Dkt. #82-4 at
92-93. In opposing the motion for summary judgment,
Counterclaim Plaintiffs cite to other portions of Mr.
Beelman's testimony that they assert establishes a
genuine issue of material fact as to whether false
misrepresentations were made. ECF Dkt. #88 at 12-14. They
first cite to parts of Mr. Beelman's testimony where he
stated that Mr. Norris and Mr. Rogers told him that they were
fully qualified to manufacture and design barges, and Mr.
Rogers had extensive barge background and experience and had
been around barges his whole life. Id. at 13, citing
ECF Dkt. #82-4 at 88-91.
Court finds that the assertions alleged by Counterclaim
Plaintiffs do not rise to the level of false
misrepresentations upon which Mr. Beelman justifiably relied.
While Mr. Beelman testified that Mr. Norris mentioned Mr.
Rogers as someone who could design and manufacture the barges
that Mr. Beelman desired, Beelman also testified that Mr.
Norris never suggested prior to the Purchase Order that he,
CNM, Mr. Rogers, or IBS could or would design or build the
barges that were the subject of the Purchase Order and Mr.
Beelman knew prior to entering into the Purchase Order that
none of the Counterclaim Defendants would be designing or
manufacturing the barges but would be overseeing the project
and hiring the necessary people to make sure that the barges
were designed and built properly. ECF Dkt. #82-4 at 88-92.
Moreover, Mr. Beelman also testified that he did not believe
that Mr. Norris or Mr. Rogers lied to him or made false
representations to him before he signed the Purchase Order.
Id. at 92-93. When counsel asked him at deposition
to identify the alleged false misrepresentations that had
occurred before he signed the Purchase Order, Mr. Beelman
indicated that he misunderstood counsel's question about
the misrepresentations, indicating that he did not believe
that Mr. Norris or Mr. Rogers “lied” to him prior
to signing the Purchase Order. Id. The following
testimony was had between Mr. Beelman (“A”) and
counsel for Counterclaim Defendants (“Q):
Q. Okay. Did Chris Norris ever tell you anything prior to
signing the contract that you believe today is a false
Q. Okay. Tell me every false representation that you believe
Norris made prior to contract.
A. Give me a copy of the contract, please.
Q. The purchase ...