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Bridgestone Americas Tire Operations, LLC v. Harris

Court of Appeals of Ohio, Fifth District, Stark

January 9, 2018

RONNIE HARRIS, ET AL. Defendants-Appellants

         Civil Appeal from the Court of Common Pleas, Case No. 2016 CV 00688

          For Plaintiff-Appellee DAVID T. MOSS JOHN R. CHLYSTA HANNA, CAMPBELL & POWELL.

          For Defendants-Appellants TERRENCE L. SEEBERGER STARK & KNOLL.

          Hon. John W. Wise, P. J. Hon. Craig R. Baldwin, J. Hon. Earle E. Wise, Jr., J.


          Wise, John, P. J.

         {¶1} Defendants-Appellants Ronnie Harris and B&S Transport, Inc. appeal the decision of the Stark County Court of Common Pleas, which granted summary judgment against them and in favor of Plaintiff-Appellee Bridgestone Americas Tire Operations, LLC on several counterclaims in a dispute commenced over payment for automotive tires following termination of a dealership agreement between the parties. The relevant facts leading to this appeal are as follows.

         Parties' Contractual Relationships

         {¶2} Appellant B&S Transport, Inc. is a subchapter "S" corporation primarily owned by Appellant Harris. Appellants developed a tire distribution business using minority "set-aside" and related programs, particularly for supplying tires to the federal government. In 1991, the parties (B & S and appellant's predecessor) entered into a standard dealership agreement, which inter alia provided that "[appellants] shall be entitled to purchase the Products at prices in the applicable Bridgestone price lists, less any applicable discounts and allowances and subject to such further terms and conditions as may be in effect from time to time." See Agreement para. 6(a). The agreement, by its terms, was to be construed under the laws of the State of California. Id. at para. 13.

         {¶3} The aforesaid dealership agreement was accompanied by a mutually signed letter dated April 1, 1991 that expressly amended the agreement. The letter included language wherein appellee recognized that because of the nature of appellants' business, "it is not realistic for you to perform certain of the functions performed by a typical tire dealer, such as handling warranty adjustments, or providing services to purchasers of Bridgestone products ***." Appellee also therein stated that it proposed to proceed with orders being accepted or rejected on a "deal-specific basis, " extending to appellants that same "net store prices" and "other prices, discounts and payment terms available to any other Bridgestone dealer ***."

         {¶4} The amending letter also stated: "At any time, and for any reason, either party may terminate this relationship upon 30 days' written notice, provided that each party shall honor all commitments incurred prior to the effective date of any such termination. *** The intent of this approach is that our business should - and can best -grow over the long term if it is based primarily upon our developing relationship, upon whatever success we have, and upon mutual good faith." (Emphases added).

         {¶5} Subsequent to 1991, the parties engaged in business under the aforesaid dealership agreement and amending letter, resulting in appellants obtaining numerous federal government contracts benefiting appellee for the provision of Bridgestone and Firestone brand tires.

         {¶6} In late 2011, appellants won six contract awards, for two years each, from the Defense Logistics Agency ("DLA"), with DLA having the unilateral right to extend each contract by a year. See Ronnie Harris Affidavit, para. 18-24. Appellee was notified that B&S was bidding for the DLA contracts and was timely provided copies of all six contracts. Appellee thereupon began to furnish tires in support of these DLA contracts. Harris Affidavit, para. 23. Appellee specifically advised B&S that it was an authorized dealer to the federal government pursuant to those contracts (referred to by Bridgestone as "their GSA contract"). Harris Affidavit, para. 24. According to Harris, B&S relied upon Bridgestone's support in bidding for this DLA business. Harris Affidavit, para. 20.

         {¶7} However, on or about February 28, 2013, appellee caused to be personally delivered to Appellant Harris a written notification that appellee had "decided to terminate B&S Transport as an authorized dealer of all Bridgestone and Firestone brand product lines ***." The stated reasons for termination included "Bridgestone's change in distribution and go-to-market solutions strategies." See Exhibit B of Affidavit #1of Landers Gaines. The effective termination date was set forth as January 1, 2014.

         Appellants' Federal Lawsuit

         {¶8} On December 19, 2013, Appellants Ronnie Harris, who is African-American, and B&S Transport sued Appellee Bridgestone Americas Tire Operations in the United States District Court for the Northern District of Ohio, case number 5:13-cv-02793-SL Appellants therein alleged that Bridgestone had racially discriminated against Harris by terminating the dealer agreement without cause and by allegedly favoring a nonminority dealer. See B&S Transport v. Bridgestone Americas Tire Opers., 171 F.Supp.3d 669, 676 (N.D. Ohio 2016). They also asserted state-law claims, including breach of contract, breach of implied covenant of good faith, promissory estoppel, and others. Appellants sought damages and injunctive relief, arguing that appellee, even after the termination, was obligated to continue selling tires to appellants so that appellants could fulfill their tire contracts with the federal government.

         {¶9} After an oral hearing, the federal court denied appellants injunctive relief, finding that the discrimination claim did "not present a high likelihood of success on the merits." B&S Transport v. Bridgestone Americas Tire Opers., 2014 U.S. Dist. LEXIS 26119, 14 (Feb. 27, 2014, N.D. Ohio). Appellee also produced evidence of legitimate business reasons for the termination, reasons the federal court found "compelling." Id. at 19.

         {¶10} After discovery, the federal court granted appellee summary judgment on appellants' discrimination claims. 171 F.Supp.3d at 680-83, 689. The federal court further declined jurisdiction over appellants' state-law claims, although we note the court addressed some of the underlying arguments appellants have raised again in the present case.

         Appellee's Common Pleas Lawsuit / Appellants' Counterclaims

         {¶11} After the federal court declined jurisdiction over the state-law claims, appellee filed an action on March 23, 2016 in the Stark County Court of Common Pleas, seeking to recover more than $1, 000, 000.00 that Appellants B&S and Harris allegedly owed for tires they had purchased on credit. Appellants, on April 22, 2016, counterclaimed for breach of contract, breach of the implied covenant of good ...

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