The Andersons v. Consol

RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Sixth Circuit Rule 206 2 The Andersons, Inc. v. Consol, Inc. No. 02-3417 ELECTRONIC CITATION: 2003 FED App. 0385P (6th Cir.) File Name: 03a0385p.06 James R. Miller, DICKIE, McCAMEY & CHILCOTE, Pittsburgh, Pennsylvania, for Appellee. UNITED STATES COURT OF APPEALS _________________ FOR THE SIXTH CIRCUIT OPINION _________________ _________________

THE ANDERSONS, INC., X KENNEDY, Circuit Judge. Plaintiff The Andersons, Inc. - (plaintiff) appeals the district court’s award of summary Plaintiff-Appellant, judgment for defendant Consol, Inc. (defendant) on plaintiff’s - - No. 02-3417 claims of unjust enrichment, promissory estoppel, and v. - intentional and/or negligent misrepresentation on the ground > that genuine issues of material fact exist to support such , claims. Because we find that, taking plaintiff’s factual CONSOL, INC., - Defendant-Appellee. - allegations as true, no genuine issues of material fact exist to support any of those claims, we affirm the district court’s N award of summary judgment to defendant. Appeal from the United States District Court for the Northern District of Ohio at Toledo. I. Jurisdiction and Procedural History No. 00-07290—James G. Carr, District Judge. Plaintiff filed this action against defendant in the Lucas Argued: July 31, 2003 County Court of Common Pleas. Defendant removed the case to the United States District Court for the Northern Decided and Filed: October 31, 2003 District of Ohio based on diversity jurisdiction. Plaintiff’s complaint alleged claims of breach of commitments and Before: KENNEDY, GILMAN, and GIBBONS, Circuit understandings, unconscionable conduct, unjust enrichment, Judges. reasonable reliance/promissory estoppel, and intentional and/or negligent misrepresentation arising out of the parties’ _________________ negotiations for defendant’s lease of rail cars from plaintiff. On January 25, 2002, the district court granted defendant’s COUNSEL renewed motion for summary judgment on all of plaintiff’s claims. Plaintiff appeals the grant of summary judgment only ARGUED: James R. Jeffery, SPENGLER NATHANSON, with respect to its claims of unjust enrichment, promissory Toledo, Ohio, for Appellant. Rodger L. Puz, DICKIE, estoppel, and intentional and/or negligent misrepresentation. McCAMEY & CHILCOTE, Pittsburgh, Pennsylvania, for Appellee. ON BRIEF: James R. Jeffery, SPENGLER NATHANSON, Toledo, Ohio, for Appellant. Rodger L. Puz,

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II. Facts PEPCO. In early November of 1998, defendant learned that it had received the PEPCO contract. On November 18, 1998, The following is plaintiff’s version of the facts in support Dillon sent Brown a letter confirming defendant’s intent to of its claims. Defendant is currently a publicly-held lease 131 specified rail cars from plaintiff for a term of six corporation that mines, processes, and markets coal from years at a rental rate of $389 per rail car per month, with an various locations throughout the United States. During the option to end the lease after three years. However, in that relevant period for purposes of this litigation, defendant was same letter of intent, Dillon expressly conditioned any such a privately-held corporation. Plaintiff is a publicly-held lease transaction upon PEPCO’s formal execution of its corporation that, among other business activities, sells, leases, agreement with defendant, giving rise to defendant’s need to and repairs railroad cars. lease the rail cars, and “upon the successful negotiation of a definitive lease agreement containing terms and conditions NationsBank, a lender of plaintiff, notified plaintiff of . . . [that] are acceptable to” defendant’s senior management. defendant’s need to lease rail cars. On July 21, 1998, At this point, Dillon still retained plaintiff’s standard, full- plaintiff’s representatives met with James Dillon, defendant’s service lease agreement and rider. Plaintiff began to prepare employee, to discuss defendant’s possible lease of plaintiff’s for placing the rail cars into defendant’s service. Dillon rail cars. Dillon informed plaintiff’s representatives that declined plaintiff’s offer to allow defendant to inspect the rail defendant was interested in lease pricing for up to 240 rail cars at their storage site in Indiana. Per Dillon’s request, cars because defendant wished to bid on a coal requirements plaintiff sent some rail cars to a shop in Altoona, contract with Potomac Electric Power Company (PEPCO), Pennsylvania to repair them before they went into service. which would require defendant to furnish the rail cars Plaintiff also moved some rail cars to various shops necessary for coal transportation. On August 13, 1998, throughout Ohio and Pennsylvania. plaintiff sent defendant a lease proposal for 240 rail cars at a rental rate of $395 per rail car per month. On September 2, At defendant’s request, plaintiff agreed to allow defendant 1998, per Dillon’s request, Thomas Connolly, plaintiff’s to inspect the rail cars at the Altoona repair shop. Dillon employee, sent Dillon a copy of plaintiff’s standard, full- testified that defendant desired this inspection before the rail service lease agreement and rider. In reviewing the lease cars’ repair because PEPCO and defendant were concerned agreement to determine if it contained any provisions that that the rail cars would be in poor condition. On December would affect the coal’s transportation, Gerald Rutka, 11, 1998, plaintiff leased an airplane, flew to Pittsburgh, defendant’s employee, found none. Rutka used the pricing Pennsylvania to pick up defendant’s representatives, and then information in plaintiff’s lease agreement to calculate flew to Altoona. During the inspection, plaintiff first learned defendant’s requirements regarding the lease of the rail cars that defendant intended to rotary dump the rail cars rather for the PEPCO bid. In mid-September of 1998, Dillon than unload them from the bottom–a process that would informed Charles Brown, plaintiff’s employee, that defendant require plaintiff to bolt the bottoms of the rail cars shut. had not received the PEPCO bid but that defendant intended Although plaintiff reasonably believed that the rail cars only to bid on another PEPCO coal contract requiring up to 131 needed patching, defendant demanded that plaintiff re-sheet rail cars. the rail cars, a repair which is considerably more expensive than patching. Plaintiff ultimately agreed to bolt the bottoms Plaintiff submitted a new lease rate of $389 per rail car per and re-sheet the rail cars without raising defendant’s lease month, which defendant used in formulating its second bid to

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rate. Because of this work, defendant agreed to extend the all of those that defendant requested. After being unable to lease’s start date from January 1, 1999 to March 1, 1999. reach Dillon to discuss these revisions, Connolly left Dillon a message that the department was closing at noon on While plaintiff and defendant were working through the December 24, 1998, but provided his home phone number so “mechanical issues” regarding the 131 rail cars, they were that Dillon could reach him. On December 24, 1998, after negotiating a written lease. On November 23, 1998, Dillon 4:00 pm, Dillon left a message in Connolly’s voice mail that sent plaintiff defendant’s requested changes to the standard, a deal no longer existed due to plaintiff’s December 23, 1998 full-service lease and rider. On December 10, 1998, after version of the lease that left several of its provisions still in reviewing these proposed changes, plaintiff sent Dillon “a dispute. Four of the lease provisions that defendant disputed revised lease incorporating a number of those [requested] involved OT-5 approval,1 tax liability indemnification, changes which were acceptable to” plaintiff. Dillon and property and liability insurance, and change in defendant’s Connolly spoke over the telephone concerning the December ownership. According to plaintiff, defendant fabricated these 10, 1998 lease revisions. In mid-December of 1998, issues, which should not have been in dispute at all, by defendant learned that the Public Utility of New Hampshire, misrepresenting and withholding facts so as to “frustrate any Bow Terminal, was not renewing its contract with defendant reasonable chance to reach agreement between the parties.” and, consequently, that the 100 rail cars that defendant leased from GATX at the rate of $315 per car per month for coal III. Analysis transportation to the public utility would become available on December 31, 1998. According to plaintiff, when defendant We review the district court’s order granting summary learned that 100 rail cars were available at a cheaper lease rate judgment de novo. Williams v. Mehra, 186 F.3d 685, 689 from GATX, defendant no longer desired to lease the 131 rail (6th Cir. 1999). Summary judgment is proper “if the cars from plaintiff and, thus, frustrated and then unilaterally pleadings, depositions, answers to interrogatories, and terminated its on-going lease negotiations with plaintiff. To admissions on file, together with affidavits, if any, show that accomplish this alleged end, Dillon faxed a letter dated there is no genuine issue of material fact and that the moving December 18, 1998 to plaintiff stating: party is entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56(c). We must believe the non-moving party’s On two occasions, CONSOL has had phone evidence, and draw all justifiable inferences in his favor. conversations with The Andersons to elaborate on one Anderson v. Liberty Lobby, 477 U.S. 242, 255 (1986). another’s positions rectifying some points but leaving Moreover, we must view the inferences that we draw from CONSOL with the impression that The Andersons will those underlying facts in the light most favorable to the non- not acceptably alter or remove several provisions to moving party. Matsushita Elec. Indus. Co. v. Zenith Radio which CONSOL will not agree. Corp., 475 U.S. 574, 587 (1986). A “material” fact is one If this impression is correct, we need to recognize this “that might affect the outcome of the suit.” Anderson, 477 fact, part company and go our separate ways. If this impression is not correct, we need to come to agreement by December 24, 1998. 1 As a prerequisite to running rail cars on interstate railways, the On December 23, 1998, Connolly faxed Dillon a revised railroads require that the operators of such rail cars o btain the ir OT -5 app roval, which depends upon the operators demo nstrating that they have version of the lease, incorporating additional changes, but not sufficient track storage capacity for the rail cars when they are idle.

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U.S. at 248. A “genuine” issue exists if “the evidence is such plaintiff], it would be unconscionable for the . . . [defendant] that a reasonable jury could return a verdict for the to retain the benefit.” Id. (internal quotation marks omitted). nonmoving party.” Id. Plaintiff claims that genuine issues of material fact exist as In diversity cases, the district court is to apply the choice of to whether: 1) plaintiff conferred the benefit of securing the law rules of the state in which the court sits. Klaxon Co. v. PEPCO contract on defendant when plaintiff gave defendant Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941). The a lease rate for 131 rail cars because defendant needed that district court held that Ohio law governs plaintiff’s claims. rate to calculate its PEPCO bid; and 2) plaintiff has superior Plaintiff does not appeal this determination. equity rendering defendant’s retention of that benefit unconscionable because defendant had declined plaintiff’s A. Unjust Enrichment request for defendant to inspect the rail cars in Indiana; plaintiff, at defendant’s request, sent some of the rail cars to To recover for unjust enrichment under Ohio law, a Altoona, Pennsylvania, for repair; plaintiff picked up the plaintiff must prove that: (1) the plaintiff conferred a benefit defendant’s representatives in Pittsburgh in its chartered upon the defendant; (2) the defendant knew of such benefit; airplane so that defendant could conduct its requested and (3) the defendant retained the benefit “under inspection in Altoona; and, lastly, plaintiff, per defendant’s circumstances where it would be unjust to do so without demands, agreed to bolt the bottom of and re-sheet the rail payment.” Brown-Graves Co. v. Obert, 648 N.E.2d 1379, cars without raising defendant’s lease rate–an undertaking 1383 (Ohio Ct. App. 1994). The plaintiff must show that the that cost $78,300.00. In short, plaintiff argues: “Consol took substantial benefit to the defendant is “causally related” to the Andersons’ lease rate and negotiated a sales contract for coal substantial detriment to the plaintiff. Gaier v. Midwestern with PEPCO, then dumped Andersons when it learned it Group, 601 N.E.2d 624, 627 (Ohio Ct. App. 1991). In could lease rail cars for a cheaper rate, leaving Consol with a determining whether a defendant received an unjust or windfall of profit and Andersons with a pile of damages.” unconscionable benefit, we must consider whether “the defendant was the party responsible for the plaintiff’s Even taking all of plaintiff’s factual allegations as true, we detrimental position.” U.S. Health Practices, Inc. v. Blake, find that plaintiff’s unjust enrichment claim fails as a matter No. 00AP-1002, 2001 WL 277291, at *2 (Ohio Ct. App. of law. Assuming arguendo that defendant’s ability to secure March 22, 2001) (holding that the plaintiff’s responsibility for the PEPCO bid were a cognizable benefit that plaintiff had his detrimental position breaks the requisite causal connection conferred on defendant by giving it a lease rate, plaintiff has between the defendant’s benefit and the plaintiff’s loss). not demonstrated the requisite causal connection between this “The doctrine of unjust enrichment provides an equitable benefit and any alleged detriment to plaintiff. Rather, the remedy imposed to prevent injustice.” Giles v. Hanning, No. only detriment that plaintiff establishes is the expenses that it 2001-P-0073, 2001 WL 1173512, at *2 (Ohio Ct. App. incurred in preparing to lease its rail cars to defendant; yet, May 31, 2002). Thus, the plaintiff must show enrichment that such a detriment stems from defendant’s failure ultimately to is unjust. Id. It is insufficient for the plaintiff to prove enter into a lease agreement with plaintiff, not from merely that he conferred a benefit upon the defendant. Katz defendant’s use of plaintiff’s tendered lease rate in its PEPCO v. Banning, 617 N.E.2d 729, 735 (Ohio Ct. App. 1992). bid. If, after plaintiff had incurred these expenses, defendant Rather, the plaintiff must prove that, under the circumstances, had actually entered into a lease agreement with plaintiff in the plaintiff has a “superior equity so that, as against . . . [the executing its PEPCO contract, defendant’s use of plaintiff’s

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lease rate would not have harmed plaintiff. As the requisite As to the first element, plaintiff contends that, as of causal chain between the alleged benefit that plaintiff November 18, 1998, plaintiff and defendant had agreed that conferred on defendant and plaintiff’s alleged detriment is defendant would lease from plaintiff 131 specified rail cars at absent, plaintiff’s unjust enrichment claim necessarily fails. a rate of $389 per car per month, with defendant’s ability to Alternatively, we note that it is hardly unconscionable or end the lease after three years and with the anticipated lease “unjust” for a company to secure a third-party requirements start date of January 1, 1999.2 In support of this argument, contract by using the estimate that a supplier provided plaintiff simply cites to Dillon’s letter of intent, which without compensating that supplier for such an estimate. See plaintiff received on November 18, 1998 and which informs W.F. Holt Co. v. A&E Elec. Co., Inc., 665 S.W.2d 722, 738 plaintiff of defendant’s intention to lease the 131 cars under (Tenn. Ct. App. 1983) (A subcontractor to which a general the above-mentioned terms. Revealing the on-going and contractor did not award a bid is not “entitled to uncertain outcome of such negotiations, however, Dillon, in compensation in quantum meruit for its efforts in assisting that same letter, states that defendant is “in the process of . . .[that] general contractor prepare a price on a negotiated reviewing” plaintiff’s lease form and that defendant “will project” because it “would unfairly hamstring general provide . . . [its] comments and suggestions for . . . contractors and owners” in their negotiation of contracts and [plaintiff’s] consideration shortly.” The intent letter explicitly their solicitation of subcontractors’ proposals; rather, the conditions defendant’s entrance into a lease agreement on subcontractor’s efforts are merely an attempt to obtain “successful” negotiation of a “definitive” lease agreement. business and its incurred costs “are merely costs of doing The word successful means “having the desired effect.” business . . .[that] may or may not result in the subcontractor Webster’s Third New International Dictionary 2282 (1986). obtaining the contract.”). Thus, the broad and amorphous condition of “successful negotiation” would presumably allow defendant to abandon B. Promissory Estoppel negotiations if defendant no longer desired to enter into a lease agreement with plaintiff. At that point, any negotiations Under Ohio’s promissory estoppel doctrine, a promise that with plaintiff would no longer have defendant’s “desired the promisor “should reasonably expect to induce action or effect.” Moreover, by the letter’s express terms, defendant forbearance on the part of the promisee or a third person and need not have entered into a lease agreement with plaintiff if . . . [that] does induce such action or forbearance is binding” the proposed lease contained a term or condition that if one can avoid injustice only by enforcing the promise. defendant’s senior management deemed unacceptable. The McCrosky v. Ohio, 456 N.E.2d 1204, 1205 (Ohio 1983) word definitive means “serving to supply a final answer, (adopting Restatement (Second) of Contracts § 90 (1973)) solution, or evaluation and to end an unsettled, unresolved (internal quotation marks omitted). To establish a claim of condition.” Webster’s at 592. The condition of a “definitive promissory estoppel, the plaintiff must prove: “[1] a promise, lease agreement” suggests that defendant’s intention to enter clear and unambiguous in its terms; [2] reliance [on the into the specified lease agreement, per the intent letter, was promise] by the party to whom the promise is made; [3] that the reliance was reasonable and foreseeable; and [4] that the party claiming estoppel was injured by the reliance.” Rigby 2 v. Fallsway Equip. Co., Inc., 779 N.E.2d 1056, 1061 (Ohio Plain tiff argues that defendant promised to enter into a lease Ct. App. 2002); Connolly v. Malkamaki, No. 2001-L-124, agreement, not that any lease agreemen t actually existed; as the district court aptly noted, plaintiff likely makes this novel distinctio n so as to 2002 WL 31813040, at *3 (Ohio Ct. App. Dec. 13, 2002). avoid statute-of-frauds issues.

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not yet settled, resolved, or final–it was not, itself, the simply setting out the minimum physical requirements that “definitive lease agreement” towards which the parties were any rail cars must meet for defendant to desire to lease them. to negotiate. Because defendant’s intent letter, at a minimum, Plaintiff had the choice of whether to accommodate is ambiguous as to whether defendant promised to enter into defendant’s demands so as to generate good will and/or a lease agreement with plaintiff, any such promise is not further the execution of any definitive lease agreement. “clear and unambiguous” for purposes of promissory estoppel. Plaintiff underscores that defendant sabotaged the parties’ lease negotiations so as to avail itself of the lower lease rate Presumably, given this conditional, intent-to-lease letter, from GATX, and that defendant’s senior management did not plaintiff contends that defendant’s conduct created a genuine genuinely find the lease’s terms unacceptable. This is issue of material fact as to whether defendant clearly and tantamount to an argument that defendant, in promising to unambiguously promised to lease 131 rail cars from plaintiff. enter into the lease agreement subject only to specified As evidence, plaintiff asserts that it had to “move the rail cars conditions, thereby promised to negotiate in good faith and from storage to rail shops for repair and then into Consol’s not to fabricate the existence of one of these conditions service” so as to meet the lease’s starting date, and that nullifying such entrance into the agreement. The district plaintiff, in complying with defendant’s demands, used court rejected plaintiff’s claim of bad-faith negotiations, upon defendant’s preferred repair shop and made costly repairs, which plaintiff’s claim for breach of commitments and which plaintiff believed unnecessary. According to plaintiff, understandings hinged, on the ground that plaintiff had not this reveals that “Consol did not act as if its promise to lease shown that Ohio recognizes such a cause of action and that, the rail cars from Andersons was conditional until Consol did in any event, plaintiff’s amended complaint did not allege not need to consummate the lease with Andersons.” Yet, in such a claim. Plaintiff did not appeal from the dismissal of its brief, plaintiff argues that it relied on defendant’s that claim. Consequently, we will not entertain plaintiff’s “promise in beginning to prepare the rail cars for lease”–by promissory estoppel claim sounding in good-faith moving, re-sheeting, and storing the rail cars–and incurred negotiations, regardless of whatever merits it may have under injury via such reliance. However, plaintiff’s submission to Ohio law. defendant’s demands cannot serve as the requisite clear and unambiguous promise on which plaintiff relied in submitting Even if we were to construe plaintiff’s promissory estoppel to such demands in the first place as, following that logic, claim to be that, per the intent letter, defendant made a clear plaintiff’s alleged reliance would precede any such promise. and unambiguous promise to enter into the lease agreement Alternatively, defendant’s demands that plaintiff bolt and re- subject only to specified conditions and that those conditions sheet the rail cars and that plaintiff use defendant’s preferred never, in fact, occurred because PEPCO executed its contract repair shop cannot constitute a clear and unambiguous and defendant’s senior management truthfully found promise that defendant would enter into a lease agreement acceptable the lease’s contested “terms and conditions,” such with plaintiff, especially given the context of the conditional a promissory estoppel claim would still fail. In incurring letter of intent expressly disclaiming any such per se promise. preparatory expenses without securing defendant’s Rather, such demands simply reflect that the parties were, in indemnification, plaintiff could not have reasonably relied on fact, in the process of negotiating toward their possible any promise by defendant to enter into a lease agreement entrance into a lease agreement. For example, in demanding subject only to specified conditions given the possibility that that plaintiff bolt and re-sheet the rail cars, defendant was defendant’s senior management could have genuinely found

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unacceptable at least one term or condition that plaintiff action for fraud/intentional misrepresentation may lie “not would be unwilling to modify.3 See Nilavar v. Osborn, 711 only as a result of affirmative misrepresentations, but also for N.E.2d 726, 737 (Ohio Ct. App. 1998) (concluding that where negative ones, such as the failure of a party to a transaction the defendant made a clear and unambiguous promise to . . . fully [to] disclose facts of a material nature where there submit a bid of employment to a hospital on behalf of exists a duty to speak.” Textron Fin. Corp. v. Nationwide plaintiff and other doctors, plaintiff, as a matter of law, did Mutual Ins. Co., 684 N.E.2d 1261, 1269 (Ohio Ct. App. not reasonably rely on the defendant’s submission of the bid 1996). Under Ohio’s distinct claim of negligent given that the “bid might have been rejected”); CSX Transp., misrepresentation, Inc. v. Occidental Chem. Corp., 130 F. Supp. 2d 936, 947-49 (S.D. Ohio 2001) (granting summary judgment for plaintiff as [o]ne who, in the course of his business, profession, or no genuine issue of reasonable reliance existed). employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the C. Intentional and/or Negligent Misrepresentation guidance of others in their business transactions . . . is subject to liability for pecuniary loss caused to them by “The law of misrepresentation protects a plaintiff’s interest their justifiable reliance upon the information, if he fails in ‘formulating business judgments without being misled by to exercise reasonable care or competence in obtaining or others into making unwise decisions . . . [that] result in communicating the information. financial loss.’” Carpenter v. Scherer-Mountain Ins. Agency, 733 N.E.2d 1196, 1205 (Ohio Ct. App. 1999). To establish Delman v. City of Cleveland Heights, 534 N.E.2d 835, 838 a claim for intentional misrepresentation/fraud under Ohio (Ohio 1989) (internal quotation marks and original emphasis law, the plaintiff must show: omitted). As with a fraud claim, the plaintiff must also show that the misrepresentation on which he justifiably relied was (a) a representation or, where there is a duty to disclose, material. Gem Sav. Ass’n v. Aqua Sportsman, Inc., No. C- concealment of a fact, (b) which is material to the 910361, 1992 WL 192500, *2 (Ohio Ct. App. Aug. 12, 1992). transaction at hand, (c) made falsely, with knowledge of Unlike a fraud claim, however, a negligent misrepresentation its falsity, or with such utter disregard and recklessness claim only lies for an affirmative false statement, not an as to whether it is true or false that knowledge may be omission. Leal v. Holtvogt, 702 N.E.2d 1246, 1253 (Ohio Ct. inferred, (d) with the intent of misleading another into App. 1998). relying upon it, (e) justifiable reliance upon the representation or concealment, and (f) a resulting injury Plaintiff contends that defendant made certain proximately caused by the reliance. misrepresentations and omissions that “were critical to the lease transactions” between the parties. Plaintiff clarifies that Id. at 1204 (internal quotation marks omitted) (observing that such misrepresentations were material to the “lease the existence of fraud is generally a question of fact). An negotiations.” As damages resulting from defendant’s alleged misrepresentations and omissions, plaintiff points to its “lost profit or rental income” as well as the costs of travel, 3 W e note that plaintiff has not alleged and no evidence shows that “resheeting the rail cars to satisfy . . . [defendant’s] defendant mad e a clea r and unam biguo us pro mise that defendant would requirements, freight and switching to move the rail cars to bear plaintiff’s preparatory expen ses, should the parties fail to execute a definitive lease agreem ent.

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the repair facilities, [and] storage . . . of the rail cars as a result misrepresented the unacceptability of the OT-5 provision of . . . [defendant’s] failure to enter into the lease.” when it was, in truth, a non-issue, plaintiff’s negligent misrepresentation claim must fail since, as explained above, First, plaintiff claims that defendant failed to disclose that plaintiff has not shown that plaintiff ever relied on such a defendant had received verbal OT-5 approval to run the rail misrepresentation. cars on the railroad where the rail cars where to be in service. According to plaintiff, defendant wanted to delete the lease Second, plaintiff cursorily contends that defendant failed provision that required defendant to obtain such OT-5 “to accept lease provisions similar to [those of] other rail approval. Yet, plaintiff took the position that, although equipment lessors of” defendant. For purposes of plaintiff’s plaintiff was responsible for the rail cars’ mechanical negligent and/or intentional misrepresentation claims, we conditions, only defendant, not plaintiff, was able to infer from this argument the allegation that defendant demonstrate to the railroad granting OT-5 approval that misrepresented the unacceptability of such lease provisions. defendant had track storage capacity for out-of-service rail Yet, even taking plaintiff’s factual allegations as true, such cars–a necessary requirement for obtaining and retaining OT- negligent and/or intentional misrepresentation claims 5 approval. Plaintiff claims that, in any event, defendant had necessarily fail because, as with the OT-5 claim, plaintiff has obtained verbal OT-5 approval from the railroad before not shown that plaintiff relied on any of these alleged defendant unilaterally terminated lease negotiations with misrepresentations to its detriment. For example, plaintiff plaintiff. However, even assuming that defendant failed to asserts that defendant rejected the lease provision requiring inform plaintiff that defendant had received verbal OT-5 defendant to indemnify plaintiff from any tax liability that approval where it had a duty to do so, plaintiff’s negligent plaintiff would suffer due to defendant’s use of the rail cars and/or intentional misrepresentation claims concerning such outside of the continental United Stated during the lease term. an omission necessarily fail. Plaintiff’s intentional Plaintiff claims that this dispute was actually a “non-issue” misrepresentation claim cannot lie because plaintiff has not because defendant never intended to use the rail cars outside shown that plaintiff ever relied on defendant’s alleged of the continental United States and defendant had previously omission concerning OT-5 approval. Per plaintiff’s own agreed to “this same or similar” provision with another rail concession, at issue is defendant’s unreasonable refusal “to car lessor. Thus, plaintiff’s claim is that defendant acted to accept . . . [plaintiff’s] proposed lease language concerning plaintiff’s detriment by misrepresenting the unacceptability of OT-5” approval. In essence, plaintiff’s intentional the tax indemnification provision so as to frustrate and, misrepresentation claim is not that plaintiff relied on this ultimately, to terminate negotiations. Because plaintiff would omission by acting to its detriment, but that defendant acted not have done anything differently had defendant not to plaintiff’s detriment in perpetrating this omission so as to misrepresented the unacceptability of the tax indemnification frustrate and, ultimately, to terminate negotiations. In other provision, plaintiff could not have detrimentally relied on words, because plaintiff would not have done anything such a misrepresentation. differently had defendant disclosed its verbal OT-5 approval, plaintiff could not have detrimentally relied on such an Third, plaintiff asserts that defendant misrepresented that it omission. Because it is based on an alleged omission, was completely self-insured and failed to disclose to plaintiff plaintiff’s negligent misrepresentation claim cannot lie. Yet, that defendant carried commercial property and liability even if we were to construe plaintiff’s negligent insurance with large deductibles. Defendant objected to the misrepresentation claim to allege that defendant affirmatively lease provision that required defendant to maintain

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commercial property and liability insurance during the lease Plaintiff’s intentional and negligent misrepresentation term. Plaintiff’s negligent and intentional misrepresentation claims concerning defendant’s commercial liability insurance claims with respect to either property insurance or liability also fail as a matter of law. Plaintiff’s intentional insurance fail as a matter of law, even assuming, arguendo, misrepresentation claims based on defendant’s alleged that defendant misrepresented that it was completely self- misrepresentation that it carried no commercial liability insured and that it had a duty to disclose its insurance insurance and defendant’s failure to disclose its commercial coverage. See Blon v. Bank One, Akron, 519 N.E.2d 363, 367 liability insurance must fail because plaintiff did not (Ohio 1988) (A party to a business transaction may have a detrimentally rely on either this alleged misrepresentation or duty of full disclosure “where such disclosure is necessary to omission and, alternatively, neither the misrepresentation nor dispel misleading impressions that” a “partial revelation of the omission was material to the lease negotiations. the facts” created or might have created.) (internal quotation Plaintiff’s unsubstantiated assertions that defendant’s liability marks omitted). insurance coverage “should have been a factor in lease negotiations” or “could have resolved the parties’ dispute” are Concerning defendant’s property insurance, plaintiff’s insufficient to establish plaintiff’s requisite reliance. intentional misrepresentation claims based on defendant’s Nowhere does plaintiff contend that it relied on either the alleged misrepresentation that it carried no commercial misrepresentation or the omission by not modifying the property insurance and defendant’s failure to disclose its lease’s liability insurance provision to permit defendant’s commercial property insurance must fail because plaintiff did existent liability insurance coverage. In fact, the record not detrimentally rely on either the alleged misrepresentation reveals that the reason, if any, that plaintiff did not modify the or the omission. Because plaintiff’s December 23, 1998 liability insurance provision is that it relied on defendant’s version of the lease permitted defendant to self-insure its alleged omission regarding its planned IPO, not on entire property insurance obligation despite defendant’s defendant’s alleged misrepresentation or omission regarding alleged misrepresentation or omission, plaintiff maintains that its liability insurance. Alternatively, because the deductibles the dispute over that insurance provision was a “non-issue.” on the commercial liability insurance that defendant carried Thus, with respect to the property insurance provision, exceeded plaintiff’s demanded maximum levels for self- plaintiff’s claim is that defendant, not plaintiff, acted to insurance, neither defendant’s alleged misrepresentation nor plaintiff’s detriment by misrepresenting and concealing its omission regarding its commercial liability insurance was defendant’s property insurance coverage so as to frustrate material to the lease negotiations.4 Plaintiff’s negligent and, ultimately, to terminate negotiations. Because plaintiff would not have done anything differently had defendant not misrepresented or concealed its property insurance coverage, 4 plaintiff could not have detrimentally relied on such a W e note that the proper m ateriality standard for a misrepresentation misrepresentation or omission. Plaintiff’s negligent claim based so lely on negotiations is unclear; muc h of the relevant case law considers m ateriality in the context of a co ntract. Defendant contends misrepresentation claim based on defendant’s alleged that the materiality standard set out in Mulvey v. King, 39 Ohio St. 491, omission cannot lie. Moreover, plaintiff’s negligent 494-95 (1883), governs the m ateriality req uired for bo th plaintiff’s misrepresentation claim based on defendant’s alleged negligent and intentiona l misrep resentation claims. In that case, the Ohio misrepresentation fails because plaintiff, as explained above, Supreme Court held that, to establish materiality in a misrepresentation did not detrimentally rely on such a misrepresentation. action involving “a person [who] claims the benefit of a contract into which he has induced another to enter by means o f misrepresentations, however honestly mad e”–an exc eption to the genera l rule that a

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misrepresentation claim based on defendant’s alleged claim based upon a concealment of fact will lie only if a duty omission cannot lie. As explained above, plaintiff’s negligent to disclose exists. 738 N.E.2d 842, 854 (Ohio Ct. App. misrepresentation claim fails because plaintiff never 2000). In particular, the court held that “a duty to disclose detrimentally relied on this misrepresentation and the arises primarily in a situation involving a fiduciary or other misrepresentation was immaterial to the lease negotiations. similar relationship of trust and confidence.” Id. at 855. According to the court, a fiduciary relationship is “a Lastly, plaintiff asserts that defendant failed to disclose its relationship in which . . . [one reposes] special confidence and planned IPO. Because defendant was in the process of trust . . . in the integrity and fidelity of another,” thereby preparing for an IPO, defendant objected to a lease provision creating “a position of superiority or influence, acquired by rendering any change in defendant’s ownership an event of virtue of this special trust.” Id. Here, plaintiff has failed to default. According to plaintiff, defendant never informed show that a fiduciary or similar relationship of trust and plaintiff about its planned IPO. Plaintiff contends that, had it confidence existed between plaintiff and defendant. Rather, known about defendant’s planned IPO, it would have both plaintiff and defendant were sophisticated companies modified the liability insurance and default provisions negotiating at arm’s length. We note that defendant may have because plaintiff’s resultant access to defendant’s financial desired not to disclose its planned IPO to plaintiff for several information would have assuaged plaintiff’s concerns about valid reasons, such as issues of confidentiality or concerns defendant’s duty to provide plaintiff with such information. about insider trading. For purposes of the lease negotiations, Plaintiff’s negligent misrepresentation claim based on an it was sufficient for defendant simply to have demanded that alleged omission cannot lie. Plaintiff’s intentional plaintiff remove the provision rendering any change in misrepresentation claim fails because defendant had no duty ownership an event of default; it need not have divulged the to disclose its planned IPO to plaintiff. In Federated reason underlying that demand. Management, Co. v. Coopers & Lybrand, the Ohio Court of Appeals underscored that an intentional misrepresentation In sum, we affirm the district court’s grant of summary judgment for defendant on plaintiff’s claims of unjust enrichment, promissory estoppel, and intentional and/or negligent misrepresentation on the ground that, even taking misrepresentation claim requires actual fraud or gross negligence–, one plaintiff’s factual allegations as true, no genuine issues of must only prove that the representation substantially affected “the material fact exist to support such claims. Thus, the district identity, value or character of the subject-matter of the contract.” Id. The application of Mulvey’s materiality standard to an intentional court did not err in granting defendant summary judgment. misrepresentation claim is unclear as Mulvey seems to predicate that standard on a negligent misrepresentation claim. In any event, we decline to infer from Mulvey, which inv olves a contract of sale, that its materiality standard applies in the context of negotiations, absent a contract. For purposes of plaintiff’s negligent and/or intentional misrepresentation claims, we assume that a misrepresentation is material “if it is likely, under the circumstances, to affect the cond uct of a reasonable person with reference to the transaction,” including lease ne gotiations. See Leal, 702 N.E.2d at 1253 (internal quotation marks omitted) (an intentional misrepresentation claim grounded in a contract of sale); W ebster’s Third New International Dictionary 1514 (1971) (The term negotiation denotes “a business transaction.”).