Digitalight Sys. v. Cleveland Clinic Found.

2022-Ohio-1400

DIGITALIGHT SYSTEMS, INC., Plaintiff-Appellant, v. CLEVELAND CLINIC FOUNDATION, Defendant-Appellee.

No. 110723

Court of Appeals of Ohio, Eighth District, Cuyahoga

April 28, 2022

Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-20-935343

JUDGMENT AFFIRMED

Appearances:

Davis & Young and Dennis R. Fogarty, for appellant.

Hahn Loeser & Parks, LLP, Robert J. Fogarty, and Gregory A Thompson, for appellee.

JOURNAL ENTRY AND OPINION

FRANK DANIEL CELEBREZZE, III, JUDGE

{¶ 1} Plaintiff-appellant, Digitalight Systems, Inc. brings this appeal challenging the trial court's decision granting summary judgment in favor of defendant-appellee Cleveland Clinic Foundation, in Digitalight's action for breach of contract, unjust enrichment, action on an account, and promissory estoppel. Digitalight argues that genuine issues of material fact existed that precluded judgment as a matter of law in Cleveland Clinic's favor on Digitalight's breach-of-contract claim and that the trial court erred in granting summary judgment in Cleveland Clinic's favor on Digitalight's claims for unjust enrichment, promissory estoppel, and action on an account. After a thorough review of the record and law, this court affirms.

I. Factual and Procedural History

{¶ 2} Digitalight is a Florida corporation that supplies health care equipment. In response to the equipment needs associated with the COVID-19 pandemic, Cleveland Clinic engaged Digitalight for the purpose of purchasing "KN95" surgical masks (hereinafter "masks").^[1]

{¶ 3} Digitalight submitted a quote to the Cleveland Clinic on March 20, 2020. The unit price of each individual mask was $3.99. Digitalight's quote provided that the total cost of the 500, 000 masks Cleveland Clinic sought to purchase would be $1, 995, 000. The quote made no mention of any terms and conditions that would apply to the sale.

{¶ 4} The next day, on March 21, 2020, Cleveland Clinic submitted a "rush" purchase order to Digitalight, offering to purchase 500, 000 masks for $1, 995, 000. Cleveland Clinic's purchase order provided, in relevant part, "Deliver by March 22, 2020 unless specified by line[.]" Steve Pohlman, Cleveland Clinic's senior director of materials management, verbally extended the delivery deadline to March 31, 2020.^[2]

{¶ 5} Cleveland Clinic's purchase order incorporated Cleveland Clinic's "Purchase Order Terms and Conditions." The purchase order provided, in relevant part, "*Seller's commencement of Services or Seller's shipment of any Products shall be deemed to be acceptance of Terms and Conditions located at www.clevelandclinic.org/SCM[.]" Cleveland Clinic's terms and conditions contain a "Cancellation/Termination," under which Cleveland Clinic could terminate or cancel a purchase order, in whole or in part, "at any time upon written notice to Seller."

{¶ 6} The record reflects that Digitalight accepted Cleveland Clinic's offer. Digitalight began working to fulfill Cleveland Clinic's order on March 23, 2020, and, on March 25, 2020, Digitalight sent a "revised [p]roposal"^[3] to Cleveland Clinic confirming Cleveland Clinic's order. Digitalight's revised proposal contained, in relevant part, the specifications, instructions, and the "Certification of FDA Registration" for the masks. The revised proposal also included Digitalight's "Terms of Sale and Security Agreement."

{¶ 7} Digitalight sent three shipments of masks to Cleveland Clinic. First, in late March or early April, Digitalight donated 6, 000 masks to Cleveland Clinic. Cleveland Clinic's main point of contact at Digitalight was James Haney. Haney sent an email to Pohlman and other Cleveland Clinic representatives on March 30, 2020, indicating that he "was able to get 6, 000 mask[s] out tonight" and that "these [masks] are not out of [Cleveland Clinic's] order[, ] these are a donation." The parties dispute whether Cleveland Clinic received the first shipment. Subsequently, as set forth in further detail below, Pohlman offered to pay Digitalight for the donated masks.

{¶ 8} Digitalight failed to deliver the 500, 000 masks to Cleveland Clinic by March 31, 2020. On April 15, 2020, Pohlman sent an email to Haney cancelling Cleveland Clinic's purchase order explaining "[i]t has taken too long to get the [masks] to the [United States]." Pohlman indicated that Cleveland Clinic would pay for the 6, 000 masks that Digitalight donated to Cleveland Clinic. Pohlman's email was sent at 3:25 p.m. At 4:44 p.m., Haney sent an email to Pohlman acknowledging the cancellation and thanking Pohlman for the update. Subsequent emails were sent from Cleveland Clinic to Digitalight on April 27 and 28, 2020, confirming cancellation of the purchase order.

{¶ 9} After Cleveland Clinic cancelled the purchase order, Digitalight sent a second shipment of approximately 85, 000 masks to Cleveland Clinic on or about May 21, 2020. The parties dispute whether Cleveland Clinic "accepted" the second shipment. Digitalight sent a third shipment of approximately 409, 000 masks to Cleveland Clinic on or about May 21, 2020. It is undisputed that Cleveland Clinic rejected this third shipment. Before Digitalight sent the second and third shipments, Pohlman sent an email to Haney on May 19, 2020, that provided, in relevant part, "I cancelled the [purchase order] for the mask shipment on April 27, 2020. If I receive these[, ] I will not be paying for them. Please do not ship them. Please confirm you received this e-mail."

{¶ 10} Based on the disputes that arose during the course of the parties' transaction, Digitalight filed a complaint against Cleveland Clinic on July 29, 2020. Digitalight asserted causes of action for breach of contract, unjust enrichment or quantum meruit, action on an account, and promissory estoppel.

{¶ 11} Cleveland Clinic filed an answer on September 29, 2020. Therein, Cleveland Clinic acknowledged that (1) it received the first shipment of approximately 6, 000 masks, (2) it received the second shipment of masks after Cleveland Clinic had cancelled the purchase order, and (3) it rejected the third and final shipment of masks.

{¶ 12} On March 2, 2021, Digitalight filed a motion for partial summary judgment. Therein, Digitalight argued that it was entitled to judgment as a matter of law on its breach-of-contract claim pertaining to the first and second shipments of masks to Cleveland Clinic. Digitalight acknowledged that genuine issues of material fact remained regarding the third shipment that was rejected by Cleveland Clinic.

{¶ 13} On March 22, 2021, Cleveland Clinic filed a motion for summary judgment on all of Digitalight's claims. Therein, Cleveland Clinic argued that it was entitled to judgment as a matter of law on Digitalight's breach-of-contract claim because (1) Digitalight failed to deliver the 500, 000 masks on or before March 31, 2020, (2) Cleveland Clinic cancelled the purchase order, and (3) Digitalight acknowledged Cleveland Clinic's cancellation before shipping the masks. Cleveland Clinic argued that it was entitled to judgment as a matter of law on Digitalight's claim for action on an account because it "rises and falls with its underlying breach of contract claim." Finally, Cleveland Clinic argued that it was entitled to judgment as a matter of law on Digitalight's equitable claims for unjust enrichment or quantum meruit and promissory estoppel because a binding contract existed between the parties. In support of its summary judgment motion, Cleveland Clinic submitted an affidavit of Pohlman, Cleveland Clinic's "Purchase Order Terms and Conditions" that were incorporated into the purchase order, and email correspondence between Pohlman and other Cleveland Clinic representatives and Haney and other Digitalight representatives.

{¶ 14} On April 19, 2021, Digitalight filed a combined brief in support of its motion for partial summary judgment and in opposition to Cleveland Clinic's motion for summary judgment. Therein, Digitalight argued that Cleveland Clinic owed approximately $400, 000 for the first and second shipments of masks, and that Cleveland Clinic cancelled the purchase order for the remaining masks without justification. Digitalight raised a "battle of the forms" argument, maintaining that the transaction was governed by Digitalight's "Terms of Sale and Security Agreement," rather than Cleveland Clinic's "Purchase Order Terms and Conditions." Finally, Digitalight argued that it did not breach any contractual provision by failing to deliver the masks on or before a specific date.

{¶ 15} On April 26, 2021, Cleveland Clinic filed a reply brief in support of its motion for summary judgment. Therein, Cleveland Clinic argued that Digitalight failed to meet the contractual requirement that the masks would be delivered on or before March 31, 2020. Cleveland Clinic argued that it was discharged from its duty to tender payment to Digitalight upon canceling the order. Cleveland Clinic disputed Digitalight's claim that Cleveland Clinic was obligated to pay for the first shipment of 6, 000 masks, arguing that these masks were donated by Digitalight and Cleveland Clinic never received the first shipment.

{¶ 16} On July 9, 2021, the trial court issued a judgment entry denying Digitalight's motion for partial summary judgment and granting Cleveland Clinic's motion for summary judgment. Regarding Digitalight's breach-of-contract claim, the trial court concluded that (1) there was no contract regarding the first shipment of 6, 000 donated masks and that Pohlman's subsequent offer to pay Haney for the masks was not supported by consideration; (2) Digitalight's breach-of-contract claim fails due to lack of performance - Digitalight's failure to deliver the masks on or before March 30, 2020...