Meinert Plumbing v. Warner Indus., Inc.

90 N.E.3d 966

2017 Ohio 8863

MEINERT PLUMBING, et al., Plaintiffs–Appellants

v.WARNER INDUSTRIES, INC., et al., Defendants–Appellees

No. 104817

Court of Appeals of Ohio, Eighth District, Cuyahoga County.

RELEASED AND JOURNALIZED: December 7, 2017

Steven W. Albert, The Albert Law Firm, 29425 Chagrin Boulevard, Suite 216, Pepper Pike, Ohio 44122, John C. Kealy, 123 West Prospect Avenue, Suite 250, Van Sweringen Arcade, Cleveland, Ohio 44115, ATTORNEYS FOR APPELLANTS

K. James Sullivan, Mitchell G. Blair, Lindsey E. Sacher, Anthony F. Stringer, Calfee, Halter & Griswold, L.L.P., 1405 East Sixth Street, Cleveland, Ohio 44114, ATTORNEYS FOR APPELLEES

BEFORE: Laster Mays, J., E.A. Gallagher, P.J., and E.T. Gallagher, J.

JOURNAL ENTRY AND OPINION

ANITA LASTER MAYS, J.:

{¶ 1} Plaintiffs-appellants¹ appeal the trial court's grant of summary judgment in favor of defendants-appellees Rust–Oleum Service Company ("ROSC"), RPM International, Inc. ("RPM"), and Rust–Oleum Corporation ("Rust–Oleum") on appellants' claims under Ohio's Business Opportunity Plans Act ("BOPA"),² breach of contract, and related theories of liability. We affirm the trial court's findings.

I. Summary

{¶ 2} RPM is a multinational holding company whose numerous subsidiaries include manufacturers of sealants, coatings, building materials, and specialty chemicals. Rust–Oleum is a direct subsidiary of nonparty RPM Consumer Holding Company, a direct subsidiary of RPM. Rust–Oleum manufactures specialty floor coating products, including the EpoxyShield floor coating products ("Products") involved in this case. ROSC was formed in 2005 as a direct subsidiary of nonparty Rust–Oleum International, L.L.C., which is a subsidiary of Rust–Oleum.

{¶ 3} In 2004, The Home Depot ("Home Depot") and Rust–Oleum developed a pilot program for Home Depot's At Home Service Program ("HD Program"). ROSC was formed in 2005 to provide the Products and installation services for the HD Program. The parties later formalized the arrangement in a 2008 contract.

{¶ 4} Warner Industries, Inc. d.b.a. Stone–To–Foam ("Warner/STF") was incorporated in Ohio in 1996 to sell and install flooring and foam insulation to a national market. Warner/STF outsourced its product installation services to third-party independent contractors such as appellants. In 2008, due to fiscal difficulties, ROSC contracted with Warner/STF to provide installation of the Products for the HD Program. Shortly thereafter, Home Depot contracted directly with Warner/STF for installation of the Products.³

{¶ 5} The 15 appellants, small business owners, had dealer agreements with Warner/STF to sell, promote, and provide installation services for the Warner/STF's products. Thirteen of the 15 appellants entered into additional agreements with Warner/STF to perform installation services for the HD Program Products.

{¶ 6} In 2009, Home Depot decided to terminate the HD Program. The termination had a domino effect, as will be detailed later herein, and appellants' services were no longer needed. Appellants filed suit against RPM, Rust–Oleum, ROSC, Warner/STF, and Warner/STF owner Alan C. Warner. Home Depot is not a party to the action. According to the record, several appellants entered into settlement agreements with Home Depot. The Warner/STF parties were dismissed under Civ.R. 41(A).

II. Facts

A. HD Program Pilot—Home Depot, Rust–Oleum, and ROSC

{¶ 7} Rust–Oleum and Home Depot entered into an April 22, 2004 agreement to implement a pilot program to determine the potential viability of the HD Program. Under the pilot program, Rust–Oleum would supply the Products to Home Depot and provide installation services to Home Depot's customers. ROSC was formed in furtherance of this effort.

{¶ 8} The term of the agreement was for six months, identified Rust–Oleum as an independent contractor, and specified that the relationship was not one of "franchisor-franchisee," or "partner, joint venture, fiduciary or co-employer." Each party disclaimed authority to bind the other. The agreement was executed by Ed Voorhees, vice-president of sales, and Rust–Oleum Brands Company.

B. Program Agreements

1. October 11, 2007 Home Depot and ROSC Service Provider Agreement

{¶ 9} The October 11, 2007 Home Depot Service Provider Agreement ("HD–ROSC SPA") formalized the pilot program. The agreement includes a "service provider classification" that indicates ROSC's role is to "sell, furnish and install." ROSC's employees, agents and subcontractors are to provide "services, products and/or materials" to Home Depot's customers. The term of the agreement is for one year and automatically renews. The agreement is terminable for convenience by either party at any time upon 90 days written notice.

{¶ 10} ROSC is an independent contractor under the agreement. ROSC's obligations include compliance with Home Depot's Service Provider Reference Guide. William Spaulding ("Spaulding") signed the agreement as vice-president and general manager of ROSC. Spaulding was also vice-president of consumer sales for Rust–Oleum who explained that he was authorized to sign for ROSC and Rust–Oleum.

2. March 1, 2008⁴ ROSC and Warner/STF Agreement

{¶ 11} On March 1, 2008, ROSC and Warner/STF entered into an agreement that references the service provider agreement between Home Depot and ROSC. ROSC agreed to "sell, furnish, and install services for garage floor coatings and installations" for "the [HD] Program." Warner/STF, an independent contractor pursuant to the agreement, agreed to provide installation of the Products through its independent contractors such as appellants. Warner/STF also agreed to be bound by the terms of the HD Program, attached as exhibits to the agreement. The agreement was terminable at-will by either party upon 90 days prior written notice. The agreement was also signed by Spaulding on behalf of ROSC.

a. ROSC and Warner/STF Program Letter

{¶ 12} An April 1, 2008, a public announcement in the form of a "To Whom It May Concern" letter was issued by "Paul Kiminski, New Business Development, Rust–Oleum Service Company":

Rust–Oleum Service Company has a national contract with The Home Depot to exclusively install Garage Floor Coatings. Rust–Oleum also offers two other programs through The Home Depot that will be offered to Stone to Foam [Warner/STF] through The Home Depot partnership: water-based concrete stains and garage storage [and] organization.

Rust–Oleum's goal is to bring best in class products to Stone to Foam's dealers, offer training, and support in all areas. Rust–Oleum is looking forward to an excellent partnership with [Warner/STF].

3. June 1, 2008 Home Depot and Warner/STF Service Provider Agreement

{¶ 13} On June 1, 2008, Home Depot and Warner/STF entered into a service provider agreement for the HD Program ("HD–Warner/STF SPA"). Warner/STF agreed to provide installation services for the Products under the HD Program. Warner/STF was required to "source" the Products, arrange for pick up and delivery of the Products and materials to Home Depot's customer's home for installation at the beginning of the job, and maintain required records.

{¶ 14} Warner/STF was listed as an independent contractor and the agreement is nonexclusive. The agreement was terminable at-will by either party upon 90 days prior written notice.

4. Warner/STF and Appellants

{¶ 15} Between 2006 and 2009, appellants entered into dealer contracts with Warner/STF to sell Warner/STF's products and provide related services. In 2008 and 2009, 13 appellants also signed service agreements with Warner/STF that are specific to the HD Program installation services.

{¶ 16} As exemplars of the standard agreement terms employed by Warner/STF, we summarize the October 3, 2006 dealer contract between Warner/STF and appellant GarCo ("GarCo"), and the July 31, 2009 dealer and service contracts for appellant Old Town Painting.

a. GarCo Dealer Contract

{¶ 17} The 2006 GarCo agreement established GarCo as a "Dealer" to provide services and products exclusively on behalf of Warner/STF in a specific market area. GarCo is required to meet a minimum purchase quota, purchase certain equipment from Warner/STF, pay fees for training, and pay a dealership fee to Warner/STF exceeding $60,000. The contract is for a ten-year term. Jerry Garcia testified to providing services under the dealer agreement for the HD Program, but did not sign a second agreement specifically relating to the HD Program. Home Depot, the HD Program, Rust–Oleum, and ROSC are not referenced.

b. Old Town Painting Contracts

(I) Dealer Contract

{¶ 18} The Old Town Painting ("Old Time") dealer contract is similar in material respects to the GarCo contract. It establishes Old Town as a "Dealer" for Warner/STF to sell and promote Warner/STF's products and services. The relationship between the parties is "vendor and vendee." The contract includes a minimum quota for purchases of Warner/STF's products and services, has a ten-year term, includes a two-year noncompete clause, and references the scope and costs of training requirements, equipment costs, and payment of a dealership purchase fee of over $30,000. Home Depot, ROSC, and Rust–Oleum are not referenced.

(ii) Contract for Services

{¶ 19} The contract for services, entered into the same date as the dealer contract, also identifies Old Town as a "Dealer." The contract states that Warner/STF "has entered into a contract" with Home Depot and Rust–Oleum⁵ to "furnish some or all of the Services" listed in the contract. The services are described in Section I as: "sales and installation [of] products and services, floor coatings, garage cabinetry [and] modular garage flooring." Warner/STF "desires to contract such Services to a qualified Independent Dealer." The Dealer agrees to "perform such Services as a Dealer" for Warner/STF.

{¶ 20} In Section 5 of the contract, the Dealer indemnifies Warner/STF, Home Depot, and Rust–Oleum for mechanic's liens. Section 6 specifies that the Dealer "is an independent Dealer and not an agent, employee,...