[Cite as Stalloy Metals, Inc. v. Kennametal, Inc., 2014-Ohio-4134.]


                                    IN THE COURT OF APPEALS

                                ELEVENTH APPELLATE DISTRICT

                                       GEAUGA COUNTY, OHIO


STALLOY METALS, INC.,                                    :            OPINION

                 Plaintiff-Appellant,                    :
                                                                      CASE NO. 2013-G-3151
        - vs -                                           :

KENNAMETAL, INC.,                                        :

                 Defendant-Appellee.                     :


Civil Appeal from the Geauga County Court of Common Pleas, Case No. 10 M
000478.

Judgment: Affirmed.


Charles P. Royer, McCarthy, Lebit, Crystal & Liffman Co., L.P.A., 101 West Prospect
Avenue, Suite 1800, Cleveland, OH 44115 (For Plaintiff-Appellant).

Mark S. Fusco and William R. Hanna, Walter & Haverfield LLP, The Tower at Erieview,
1301 E. Ninth Street, Suite 3500, Cleveland, OH 44114 (For Defendant-Appellee).



CYNTHIA WESTCOTT RICE, J.

        {¶1}     Appellant, Stalloy Metals, Inc., appeals the judgment of the Geauga

County Court of Common Pleas, following this court’s remand, in which the trial court

found in favor of appellee, Kennametal, Inc., on Stalloy’s breach-of-contract claim. At

issue is whether the trial court’s finding that Stalloy failed to prove its entitlement to

damages was against the manifest weight of the evidence. For the reasons that follow,

we affirm.
       {¶2}    On May 3, 2010, Stalloy filed a complaint against Kennametal alleging

breach of contract. Stalloy alleged that Kennametal had agreed to purchase 120,000

pounds of scrap carbide from it at $12.25/pound for a total price of $1,470,000. Stalloy

alleged that Kennametal wrongfully rejected the scrap and breached the parties’

contract. Stalloy alleged it attempted to mitigate its damages by reselling the scrap.

However, based on changed market conditions, Stalloy was forced to resell it at an

average price of $7.124/pound totaling $854,880, for a loss of $615,120, for which it

sought an award of damages. Stalloy filed an answer denying the material allegations

of the complaint. The case proceeded to bench trial.

       {¶3}    Stalloy’s president, Suger Peck, testified that Stalloy had 120,000 pounds

of carbide it wanted to sell to Kennametal.         On October 17, 2008, she called

Kennametal’s buying agent, David Burns, and asked if Kennametal was interested in

buying it.    He said Kennametal was interested and offered to buy it at a price of

$12.25/pound, which Ms. Peck accepted.

       {¶4}    Ms. Peck was familiar with Kennametal’s terms and conditions regarding

shipping, which required that no more than 1,000 pounds of carbide be shipped in any

one container. She told Mr. Burns that the material was already packaged in 2,000-

pound containers, and asked if she needed to repackage it in 1,000-pound containers.

Mr. Burns said it would be all right to send it in the 2,000-pound containers. Later that

day, Mr. Burns sent Ms. Peck a confirmation order by e-mail, stating that Kennametal

had purchased 120,000 pounds of carbide at $12.25/pound. Ms. Peck sent an e-mail to

him, stating that Kennametal’s confirmation order had been received and was accepted.




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      {¶5}   Soon after Stalloy shipped the scrap to Kennametal, the price of scrap

carbide dropped precipitously. On October 22, 2008, Mr. Burns sent an e-mail to Ms.

Peck stating that Kennametal was no longer accepting shipments this large so it was

sending the carbide back to Stalloy.         One week later, on October 29, 2008,

Kennametal’s agent, Tom Barrett, sent a letter to Ms. Peck stating that Kennametal did

not accept Stalloy’s shipment because it did not comply with the provision in

Kennametal’s terms and conditions requiring that no more than 1,000 pounds of carbide

be shipped in any one container. This was the first time Ms. Peck was informed there

was a problem with the weight of the containers.

      {¶6}   A few days later, Ms. Peck met with Mr. Barrett. She told him that Mr.

Burns had said the drums were fine the way they were. He asked her if she had it in

writing and she said she did not. He said, “well, then you have no proof.”

      {¶7}   Thereafter, between November 2008 and January 2009, Stalloy resold the

material to another purchaser in a series of private sales at an average price of

$7.12/pound for a total of $854,880.

      {¶8}   Following the trial, the court entered judgment in favor of Kennametal on

Stalloy’s complaint. The court found that, due to a no-oral modification clause in

Kennametal’s terms and conditions, the parol evidence rule prevented Stalloy from

relying on the parties’ oral agreement to vary the 1,000-pound weight limitation. Thus,

the court found it could not consider the oral agreement between Ms. Peck and Mr.

Burns to vary the weight limit. The court found that since the parol evidence rule

prevented any modification of the weight limit, Kennametal was entitled to reject

Stalloy’s shipment and did not breach the parties’ contract.




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       {¶9}   Stalloy appealed the trial court’s judgment.       In Stalloy Metals, Inc. v.

Kennametal, Inc., 11th Dist. Geauga No. 2012-G-3054, 2012-Ohio-5597 (“Stalloy I”),

this court held the trial court did not err in finding that the parol evidence rule prevented

Stalloy from relying on the parties’ oral agreement to modify the weight limit. Id. at ¶48.

However, this court held the trial court erred in not considering that agreement on the

issue of whether Kennametal waived its right to enforce the requirement of a writing to

modify the weight limit. Id. at ¶54. This court outlined the evidence presented at trial on

the issue of waiver, and remanded the case to the trial court solely to consider that

evidence in determining whether Kennametal waived the requirement of a writing to

modify the weight limit. Id. at ¶66. Kennametal filed a notice of appeal of this court’s

judgment in Stalloy I, but the Supreme Court of Ohio did not allow such appeal at 134

Ohio St.3d 1489, 2013-Ohio-902.

       {¶10} On remand, the trial court entered two orders. First, on April 1, 2013, the

court found that, based on those parts of the record identified by this court in Stalloy I,

Stalloy reasonably relied on Kennametal’s (via Mr. Burns) representation that it would

be acceptable for Ms. Peck to ship the carbide in 2,000-pound drums. Thus, the court

found that Kennametal waived its requirement that scrap not be shipped in containers

weighing more than 1,000 pounds.         As a result, the court found that Kennametal

wrongfully rejected Stalloy’s shipment. The court entered judgment in favor of Stalloy in

an amount to be established by the court from its review of the record. The court

ordered the parties to submit memoranda regarding the proper amount of damages.

       {¶11} In its initial brief, Stalloy argued it should be awarded the difference

between the contract price ($1,470,000) and the amount it received from reselling the




                                             4
scrap ($854,880), i.e., $615,120, for its damages. In opposition, Kennametal in its brief

argued that Stalloy was barred from receiving this amount because Stalloy did not resell

the scrap in compliance with Section 2706 of Pennsylvania’s version of the Uniform

Commercial Code. According to that provision, in order for a seller to recover damages

for breach of contract by the buyer based on the difference between the contract price

and the resale price received in a private sale, as in this case, the seller must first give

notice to the buyer of the seller’s intent to resell, which Stalloy failed to do. Thereafter,

Stalloy filed a reply brief in which, for the first time, it argued that even if it did not give

notice of sale to the buyer and was not entitled to resale damages under Section 2706,

it was entitled to damages based on the difference between the contract price and the

market value of the scrap pursuant to Section 2708 of the U.C.C. Stalloy did not offer

any credible evidence as to fair market value at the time tender was rejected.

       {¶12} After considering the parties’ briefs, on July 3, 2013, the trial court entered

final judgment. The court found that because Stalloy did not give notice of its intent to

resell the scrap, it could not use Section 2706 to calculate damages based on the

amount received from reselling the scrap. The court noted that in an effort to avoid the

harsh result of its failure to comply with this provision, Stalloy argued that under Section

2708, it was entitled to damages based on the difference between the contract price

and the market value of the scrap. However, the court found that Stalloy made no such

claim at trial. Further, the court found that no credible evidence was presented at trial

as to the market value. The court found that since Stalloy was unable to show it was

entitled to damages under either Code section, the court amended its judgment to show

that judgment was entered in favor of Kennametal.




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       {¶13} Once again, Stalloy appeals the trial court’s judgment, this time asserting

three assignments of error. Because the first two assignments of error are interrelated,

they are considered together. They allege:

       {¶14} “[1.] The Trial Court erred when it found that Plaintiff-Appellant failed to

offer credible evidence of its market damages at the time of Kennametal’s breach of

contract.

       {¶15} “[2.] The Trial Court erred when it found that Plaintiff-Appellant was barred

from obtaining damages because it failed to give notice of a sale under UCC § 2-706.”

       {¶16} Appellant argues that, although it failed to give notice to Kennametal of its

intent to resell the scrap, it was entitled to an award of damages using the difference

between the contract price and the market price as the measure of damages. We do

not agree.

       {¶17} For the reasons set forth in Stalloy I, we apply Pennsylvania law in

addressing the substantive issues and Ohio law in addressing procedural matters in

Stalloy’s appeal. Id. at ¶35; see Lawson v. Valve-Trol Co., 81 Ohio App.3d 1, 4 (9th

Dist.1991), citing Howard v. Allen, 30 Ohio St.2d 130 (1972).

       {¶18} The interpretation of a statute is a question of law. Wilson v. Transport Ins.

Co., 2005 Pa. Super. 401, 889 A.2d 563, 570 (2005). “As with all questions of law, the

appellate standard of review is de novo * * *.” In re Wilson, 2005 Pa. Super. 211, 879

A.2d 199, 218 (2005). The goal in interpreting any statute is to ascertain and effectuate

the intent of the General Assembly. Cimino v. Valley Family Medicine, 2006 Pa. Super.

342, 912 A.2d 851, 853 (2006). The plain language of a statute is the best indication of

the legislative intent that gave rise to the statute. Id. When the language is clear and




                                             6
unambiguous, we discern intent from the language alone. We must construe a statute

in such a way as to give effect to all its provisions, if possible, thereby avoiding the need

to label any provision as mere surplusage. Id.; see 1 Pa.C.S.A. § 1921(b).

       {¶19} 13 Pa.C.S.A. § 2703(4) provides that where a buyer wrongfully rejects

goods, the aggrieved seller may “[r]esell and recover damages as hereafter provided * *

*.”

       {¶20} 13 Pa.C.S.A. § 2706(a) provides that the seller may resell the goods

concerned and, upon resale, the seller may recover the difference between the resale

price and the contract price. 13 Pa.C.S.A. § 2706(b) provides that resale may be at

public or private sale. 13 Pa.C.S.A. § 2706(c) provides that where the resale is at

private sale, the seller must give the buyer reasonable notice of his intention to resell.

       {¶21} Alternatively, 13 Pa.C.S.A. § 2708 provides that the measure of damages

for nonacceptance by the buyer is the difference between the market price at the time

and place for tender and the unpaid contract price. Unlike 13 Pa.C.S.A. § 2706, Section

2708 does not require the seller to give notice to the buyer of the seller’s intent to resell

the goods.

       {¶22} Neither party cites any Pennsylvania case law addressing the interplay of

these statutes. We note, however, that the courts of other states have analyzed them.

“[T]he mandate of UCC § 2-706(3), that notice be provided to a buyer which has

wrongfully revoked acceptance prior to effecting a private sale of goods so returned, is

unequivocal when seeking to recover damages pursuant to UCC § 2-703(d). Recovery

of the difference between the contract price and the amount recovered upon resale is

unavailable to the seller upon failure to comply [with the notice requirement].” (Citations




                                             7
omitted.) Fuji Photo Film USA, Inc. v. Zalmen Reiss & Assoc., Inc., 31 Misc.3d 1240(A),

2011 N.Y. Misc. LEXIS 2803, *6. “The only alternative is to seek recovery pursuant to

UCC §2-708 for ‘the difference between the market price at the time and place for

tender and the unpaid contract price.’”      Id., quoting U.C.C. Section 2-708; accord

Highway Sales, Inc. v. Blue Bird Corp., 504 F. Supp.2d 630, 647 (D. Minn.2007)

(“[F]ailure to comply with § 2-706 deprives the seller of the measure of damages [under

U.C.C. Section 2-706 based on the difference between the contract price and the

amount recovered upon resale] and relegates him to that provided in Section 2-708

[based on the difference between the contract price and market value]”). “The burden,

however, is upon the seller under Section 2-708 to establish the applicable market

[value] so as to demonstrate that the unnoticed private sale resulted in a fair price

reflective of the actual value.” (Citations omitted.) Fuji Photo Film, supra.

       {¶23} In Pennsylvania, the term “market value” is defined as “the price which a

purchaser, willing but not obligated to buy, would pay an owner, willing but not obligated

to sell, taking into consideration all uses to which the property is adapted and might in

reason be applied.” Buhl Found. v. Board of Property Assessment, Appeals and

Review, 407 Pa. 567, 180 A.2d 900, 902 (1962).

       {¶24} Thus, pursuant to Sections 2706 and 2708 of Pennsylvania’s Uniform

Commercial Code, two alternative remedies are available to a seller of goods that are

wrongfully rejected by the buyer and resold by the seller at private sale. If the goods

are sold at private sale and the seller gave the buyer notice of its intent to resell the

goods, the seller can recover damages based on the difference between the contract

price and the resale price. In the alternative, if the goods are sold at private sale, but




                                             8
the seller fails to give the buyer notice of its intent to resell the goods, the seller is

limited in its recovery of damages to the difference between the contract price and the

market value of the goods.      Under the latter alternative, the seller has the duty to

establish the market value of the goods.

      {¶25} Here, it is undisputed that, following Kennametal’s breach of contract,

Stalloy resold the scrap at private sale, but did not give notice of that sale to

Kennametal. Thus, Stalloy is not entitled to recover damages based on the price it

received at private sale. In an effort to avoid this rule, Stalloy argues on appeal, as it

did below, that it is entitled to recover the difference between the contract price and the

market value.

      {¶26} “It is well-settled in Ohio that a reviewing court will not consider issues

which the appellant failed to raise in the trial court.” Fijalkovich v. W. Bishop Co., 123

Ohio App.3d 38, 43 (8th Dist.1997), citing Stores Realty Co. v. Cleveland, 41 Ohio St.2d

41 (1975).

      {¶27} Stalloy argues it did not waive the right to damages based on market

value because its complaint for breach of contract was broad enough to encompass

such damages. Further, Stalloy argues it presented evidence of market value at trial

and the issue was therefore tried by implied consent.

      {¶28} Stalloy argues that the trial court erred in finding no credible evidence was

presented as to market value. However, the argument lacks merit because the trial

court, as the finder of fact, was entitled to find, as it did, that Stalloy presented no

credible evidence on the issue of market value.




                                            9
       {¶29} An appellate court will not reverse a judgment as being contrary to the

weight of the evidence if it is supported by some competent, credible evidence. In re

Kangas, 11th Dist. Ashtabula No. 2006-A-0084, 2007-Ohio-1921, ¶81. Even if we do

not agree with the trial court, we cannot substitute our judgment for that of the trial court.

Id. We must give deference to the trier of fact because it is best able to observe the

witnesses and their demeanor and to determine their credibility.” Id. In determining

whether the judgment is against the weight of the evidence, the court, reviewing the

entire record, weighs the evidence and considers the credibility of the witnesses. Id. at

¶82.

       {¶30} In support of Stalloy’s argument that it presented competent evidence of

the market value of the scrap, it references the testimony of Ms. Peck concerning

Stalloy Exhibit 4. That exhibit was a one-page document, entitled “Tungsten Carbide

Scrap WC Inserts Prices in US$LB.” It listed prices for scrap on various dates between

August 2008 and May 2009. In explaining this document at trial, Ms. Peck testified as

follows:

       {¶31} Q. Would you take a look at Plaintiff’s Exhibit 4, please?

       {¶32} A. Yes.

       {¶33} Q. Can you identify that for the record?

       {¶34} A. This is a gauge. It is not like prices for gold or silver where it is

              exact. This is a gauge of pricing for tungsten carbide scrap during

              that time period.

       {¶35} Q. During what time?




                                             10
       {¶36} A. Well, it starts in August of 2008, and it goes to May of 2009.

              And it goes from, if you look at the average, it goes from $10.75 a

              pound down to $4.75 a pound.

       {¶37} Q.    What happened to the price of carbide after you sold the

              120,000 pounds to Kennametal?

       {¶38} A. It dropped like a rock.

       {¶39} Q. Do you know why?

       {¶40} A. There were many different factors involved. A lot of it had to do

              with the Chinese.      A lot of it had to do with the economy.

              Everything was just starting to drop. I don’t know.

       {¶41} Thus, contrary to Stalloy’s argument, Ms. Peck did not testify that the

prices listed on this chart reflected the market value of scrap. Further, on its face, the

chart does not purport to show the market value as of the dates listed, but, rather,

shows a “low price,” a “high price,” and a “mean price” for certain listed dates. While

Stalloy argues on appeal that the chart is used as “a standard in the industry,” Ms. Peck

did not testify to that effect. Ms. Peck testified that the chart was not intended to provide

the exact price of scrap. Instead, she said it was meant only to provide a gauge or

estimate of the price of carbide for the relevant dates noted on the chart. In addition,

Ms. Peck did not provide the source of this chart or the prices listed thereon. Nor did

she testify as to how the prices are obtained. Further, she did not testify that the chart

is considered reliable by her or the industry. In any event, Ms. Peck did not use the

chart to demonstrate the market value of the scrap. To the contrary, she used it to




                                             11
show that the true reason Kennametal rejected Stalloy’s shipment was the drop in the

price of scrap, not the weight of the shipping containers.

       {¶42} We further note that under 12 Pa.C.S.A. Section 2708, Stalloy was

required, but failed, to prove the market value of the scrap as of the date of its tender.

Stalloy tendered the scrap to Kennametal on October 22, 2009. After Kennametal

rejected it, Stalloy resold most of the scrap two months later in January 2009. Thus,

even if the resale price of the scrap represented its market value, because the scrap

was resold two months after the scrap was tendered, the resale price (in January 2009)

did not necessarily reflect its market value when it was tendered (in October 2008).

This is particularly true in light of the continuous drop in the price of scrap between

August 2008 and January 2009.

       {¶43} We therefore hold the trial court’s finding that Stalloy failed to present any

credible evidence of the market value of the scrap was not against the manifest weight

of the evidence.

       {¶44} Further, Stalloy argues that because Kennametal did not cross-examine

Ms. Peck on her “market value testimony” or present countervailing evidence on this

issue, the trial court’s judgment was against the manifest weight of the evidence.

However, Ms. Peck did not offer any testimony regarding the market value of the scrap

so there was nothing for Kennametal to discredit.

       {¶45} Moreover, Stalloy argues the trial court improperly disregarded the

testimony of Kennametal’s employees that the price of carbide was $10 to $12 a pound

in August 2008; that the price “dropped big” during the week of October 20, 2008; and

that by the end of the year the price dropped to $2 to $4 a pound. However, the fact




                                            12
that the price of scrap dropped in this four-month period is no evidence of its market

value.

         {¶46} In addition, Stalloy argues that the amount it realized from the resale of

the scrap is evidence of the market value of the property so it was entitled to damages

based on market value, even though it did not give Kennametal notice of its intent to

resell the scrap. The trial court rejected this argument, finding that the amount realized

by Stalloy from the resale of the scrap could not be bootstrapped to establish market

value. The trial court did not err in making this finding in light of Stalloy’s failure to

present any evidence that the price obtained on resale represented the market value of

the scrap.

         {¶47} Stalloy’s reliance on B&R Textile Corp. v. Paul Rothman, Ltd., 101

Misc.2d 98, 420 N.Y.S.2d 609 (1979), is misplaced. In that case, the court held that

market value may be proved by a resale of the rejected goods where the seller has

taken proper measures to ensure as fair and reasonable a sale as possible. Id. at 100.

The court in B&R Textile held that the resale price of the goods accurately reflected the

market value because the goods were sold to several buyers at similar prices, which

indicated there was an available market for the goods. Id. Here, virtually all the scrap

was resold to only one purchaser in a series of private sales, and Stalloy presented no

evidence that it took any measures to ensure that the sales were fair and reasonable or

that there was an available market for the scrap.

         {¶48} Further, Stalloy argues that a comparison of the prices it received on

resale and the alleged market values reflected on Stalloy’s chart shows that the resale

prices were higher than the market value. Stalloy does not explain the legal significance




                                            13
of this argument. However, it appears to be arguing that because it allegedly resold the

scrap for more than its market value, the resale price was at least as much as the

market value and it is thus entitled to the difference between the contract price and the

market value. However, because Stalloy failed to present any evidence that the chart

showed the market value of the scrap, it is impossible to say whether the prices

received by Stalloy on resale were more or less than market value.

      {¶49} We therefore hold the trial court’s judgment finding that Stalloy was not

entitled to the difference between the contract price and the market value was not

against the manifest weight of the evidence.

      {¶50} Stalloy’s first and second assignments of error are overruled.

      {¶51} For its third and final assignment of error, Stalloy alleges:

      {¶52} “The Trial Court erred when it failed to award plaintiff-Appellant

prejudgment interest.”

      {¶53} The right to prejudgment interest on the principal amount of the judgment

entered on a contract claim is a matter of law that we review de novo. Cresci Constr.

Servs. v. Martin, 2013 Pa. Super. 66, 64 A.3d 254, 258 (2013); accord Dwyer Elec. v.

Confederated Builders, 3d Dist. Crawford No. 3-98-18, 1998 Ohio App. LEXIS 5490, *11

(Oct. 29, 1998).

      {¶54} Because the trial court found that no amount of damages was owed to

Stalloy and, further, because this finding was supported by credible evidence, Stalloy

was likewise not entitled to prejudgment interest.

      {¶55} Appellant’s third assignment of error is overruled.




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      {¶56} For the reasons stated in this opinion, appellant’s assignments of error

lack merit and are overruled. It is the judgment and order of this court that the judgment

of the Geauga County Court of Common Pleas is affirmed.



TIMOTHY P. CANNON, P.J.,

COLLEEN MARY O’TOOLE, J.,

concur.




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