Lorad, LLC v. Azteca Milling, L.P.

670 F.Supp.3d 470

LORAD, LLC, d/b/a Diversified Fall Protection, Plaintiff, v. AZTECA MILLING L.P., Defendant.

Case No. 1:20-cv-00357

United States District Court, N.D. Ohio, Eastern Division

Signed April 21, 2023

Sean T. Needham, Reminger Co., Cleveland, OH, for Plaintiff.

John N. Dagon, Jonathon J. Korinko, Benesch, Friedlander, Coplan & Aronoff, Cleveland, OH, John B. Diefenbach, Diefenbach Group, Dalas, TX, for Defendant.

MEMORANDUM OPINION AND ORDER

BRIDGET MEEHAN BRENNAN, UNITED STATES DISTRICT JUDGE

Lorad, LLC d/b/a Diversified Fall Protection ("DFP" or "Plaintiff") brought this action against a Texas food manufacturer called Azteca Milling, L.P. ("Azteca" or "Defendant"). Azteca filed counterclaims against DFP. Each side filed a summary judgment motion as to the other's claims. This Order resolves both pending motions.

I. Undisputed Facts

The Court finds that the following facts are undisputed.¹ Additional facts on which the parties disagree are discussed in Part II of this opinion along with the particular issues to which those disputed matters pertain.

A. Jurisdiction

There is diversity of citizenship between the parties. DFP is a limited liability company organized under the laws of the State of Ohio with its principal place of business in Westlake, Ohio. (SF ¶ 1.) Azteca is a limited partnership organized under the laws of the State of Texas with its principal place of business in Irving, Texas. (SF ¶ 2.) Azteca's general partner is GRUMAADM, Inc. and its sole limited partner is Gruma Corporation, both of which have their principal place of business in Irving, Texas. (Id.)

B. The Parties' Dealings and Agreements

Azteca is a milling company that produces corn masa flour. (Doc. No. 23 at PageID# 421.) DFP specializes in the design, development, and manufacture of custom fall protection systems. (Id.; Doc. No. 1 at ¶ 6.) Azteca wanted to purchase a fall protection system for its corn silos. (SF ¶ 3.)²

On or around July 19, 2013, Azteca's Health Safety & Environment Manager Oscar Garza ("Garza") and its Corn Manager Federico G. Ibarra ("Ibarra") met with DFP's Regional Sales Manager Ryan Spikowski ("Spikowski"). (SF ¶ 4.) They discussed the need for fall protection systems in Azteca's silos, as well as a potential custom-made system from DFP. (Id.)

Both sides admitted that a valid, enforceable contract existed between them. (See Doc. No. 1 at ¶ 19; Doc. No. 11 Answer at ¶ 11 and Counterclaim at ¶ 47; Doc. No. 12 at ¶ 47; Doc. No. 23 at PageID# 422 & 428-29; Doc. No. 31 at PageID# 1268.) The agreement between the parties was comprised of several documents, recounted chronologically below.

On July 24, 2013, DFP issued Proposal No. 6353 to Azteca reflecting the terms and conditions of a custom-made White Corn Silo Fall Protection Engineered Horizontal Lifeline System for corn silos located in Edinburg, Texas. (SF ¶ 5.) On August 23, 2013, DFP issued Proposal No. 6424 to Azteca reflecting the terms and conditions of a custom-made White Corn Silo Fall Protection Engineered Horizontal Lifeline System for corn silos located in Plainview, Texas. (SF ¶ 6.) The parties exchanged papers and payments related to this first "test" system. (SF ¶¶ 7-12.)

On July 15, 2014, Azteca sent DFP Purchase Order No. 4501939631 related to Proposal No. 6558, and DFP assigned Project No. 1255 to the engagement. (SF ¶ 14.) On July 16, 2014, DFP sent Azteca a new proposal, Proposal No. 6558, regarding a custom-made fall protection system for Edinburg. (SF ¶ 13.) Proposal No. 6558 replaced Proposal No. 6353. (Id.)

On August 5, 2014, DFP sent Azteca a new proposal, Proposal No. 6424-A, regarding the custom-made fall protection systems for Plainview. (SF ¶ 15.) Proposal No. 6424-A replaced Proposal No. 6424. (Id.) On August 19, 2014, Azteca sent DFP Purchase Order No. 4501958279 related to Proposal No. 6424-A, and DFP assigned Project No. 1263 to the engagement. (SF ¶ 16.)

On October 2, 2014, DFP prepared design specification drawings for the custom-made fall protection systems requested under Project Nos. 1255 and 1263. (SF ¶ 17.) The design specifications and drawings were sent to Azteca for approval on October 6, 2014, and re-issued to Azteca for approval on November 6, 2014 and November 19, 2014. (Id.)

On October 10, 2014, DFP sent Invoice No. 0007975-IN to Azteca for engineering services rendered for Project No. 1255 with payment due "Net 30 Days." (SF ¶ 18.) On October 28, 2014, DFP sent Invoice No. 0007993-IN to Azteca for engineering services rendered for Project No. 1263 with payment due "Net 30 Days." (SF ¶ 19.) On November 4, 2014, DFP received $112,699 from Azteca related to Invoice No. 0007975-IN and $39,257 from Azteca related to Invoice No. 0007993-IN. (SF ¶ 20.)

By November 19, 2014, Azteca signed the design specification drawings for Project 1255 and the design specification drawings for 1263 and returned the signed drawings to DFP. (SF ¶ 21.) On or around December 16, 2014, DFP began procuring materials to fabricate the custom-made fall protection systems for Azteca. (SF ¶ 22.) On or around January 23, 2015, DFP shipped all materials for Project No. 1263 to Azteca's Plainview facility. (SF ¶ 23.)

On January 23, 2015, DFP sent Invoice No. 0003111-IN to Azteca for materials related to Project No. 1263 with payment due "Net 30 Days." (SF ¶ 24.)

Between February 2, 2015 and February 8, 2015, DFP mobilized, installed, and conducted training on the custom-made fall protection systems in six (6) corn silos associated with Project 1263. (SF ¶ 25.) On February 3, 2015, DFP received $21,252 from Azteca related to Invoice No. 0003111-IN. (SF ¶ 26.) On February 8, 2015, Azteca and DFP signed a Project Sign-Off/Owner Acceptance Form for Project No. 1263. (SF ¶ 27.)

On February 9, 2015, DFP sent Invoice No. 0003126-IN to Azteca related to Project No. 1263 with payment due "Net 30 Days." (SF ¶ 28.) On February 24, 2015, DFP received $31,471 from Azteca related to Invoice No. 0003126-IN. (SF ¶ 29.)

On or around June 28, 2015, DFP shipped all materials for Project No. 1255 to Azteca's Edinburg facility. (SF ¶ 30.) On June 30, 2015, DFP sent Azteca Invoice No. 0003231-IN for half of the materials related to Project No. 1255 with payment due "Net 30 Days." (SF ¶ 31.)

Between June 29, 2015 and July 1, 2015, DFP mobilized, installed, and conducted training on the custom-made fall protection systems in four (4) silos associated with Project 1255. (SF ¶ 32.) The remaining twenty (20) silos were scheduled to be installed during the second mobilization reflected in Proposal No. 6558. (Id.)

On July 1, 2015, Azteca and DFP signed a Project Sign-Off/Owner Acceptance Form for Project No. 1255. (SF ¶ 33.) Between August 25, 2015 and September 1, 2015, DFP mobilized, installed, and conducted training on the custom-made fall protection systems in twelve (12) corn silos associated with Project 1255. (SF ¶ 34.) The remaining eight (8) silos were scheduled to be installed during a third mobilization, which required a change order under the Proposal No. 6558. (Id.) On August 31, 2015, DFP sent Azteca Invoice No. 689 for half of the materials related to Project No. 1255 and payment due "Net 30 Days." (SF ¶ 35.)

On September 1, 2015, Azteca and DFP signed another Project Sign-Off/Owner Acceptance Form for Project No. 1255. (SF ¶ 36.) On September 10, 2015, DFP sent Azteca Invoice No. 705 related to Project No. 1255 with payment due "Net 30 Days." (SF ¶ 37.)

1. Description of the Fall Protection System

Azteca's round corn silos were 48 feet in diameter and 48 feet high, with a hatch opening near the top. (Doc. No. 27-3 at PageID# 987; Doc. No. 32-1 at PageID# 1349.)

The project here called for "DFP to design and engineer (2) approx. 45 foot long combination Rigid Tube and horizontal lifeline systems each for (24) silos rated for (2) users each line in restraint." (Doc. No. 32-1 at PageID# 1349-50; see also Doc. No. 27-3 at PageID# 987-88.) The tubes and lifelines were "to be offset at an angle forming a 'V' shape from the point of the access hatch," so that "[w]orkers will be able to walk the system to take samples near the center of the silo." (Id.) The diagram below was included in proposals to show the anticipated placement of the fall protection system:

Image materials not available for display.

(Doc. No. 27-3 at PageID 989; Doc. No. 32-1 at PageID# 1351; Doc. No. 1-1 at PageID# 11-12.)

2. Payment Terms

DFP's proposals included the following payment schedule: 50% upon submission of engineering design for approval, 25% upon shipment of materials to installation site, and 25% upon completion of installation and training. (Doc. No. 1-1 at PageID# 13; Doc. No. 32-1 at PageID# 1352.) Any "retainage if applicable to be paid net 45 after completion of [i]nstallation and training." (Id.)

3. A Safety Apparatus Detaches from an Edinburg Silo

On October 7, 2015, Azteca discovered one of the custom-made fall protection systems separated from the silo wall in Edinburg and provided notice to DFP via email the same day. (SF ¶ 38.) In turn, DFP requested that all systems be tagged out for inspection under the one-year limited warranty provided by DFP. (Id.) No one was using the system when it separated from the silo wall, and no one witnessed the separation. (Id.) However, Azteca took pictures of system after the separation and provided those pictures to DFP. (Id.)

By November 3, 2015, the custom-made fall protection systems were uninstalled and returned to DFP for inspection. (SF ¶ 39.) Edinburg silos 3, 5, 8, and 20 could not be uninstalled until January 7, 2016 due to corn levels, and silo 7 was not ready until March 7, 2016. (Id.) Therefore, those systems were uninstalled and returned on those dates. (Id.)

4. Third-Party Consultant Offers Advice

On December 12, 2015, DFP prepared a Root Cause Analysis Report with Corrective Forms. (SF ¶ 40.) In order to repair or replace the custom-made fall protection system, DFP hired Charles Miller, Jr. of Element...