ACUTUS INDUSTRIES INC V AK STEEL CORP
Annotate this Case
Download PDF
STATE OF MICHIGAN
COURT OF APPEALS
ACUTUS INDUSTRIES, INC. and AG
INDUSTRIES, INC.,
UNPUBLISHED
September 17, 2002
Plaintiffs-Appellants,
v
No. 232483
Oakland Circuit Court
LC No. 00-026841-CB
AK STEEL CORPORATION,
Defendant-Appellee.
Before: Smolenski, P.J., and Neff and Bandstra, JJ.
PER CURIAM.
In this contract action, plaintiffs appeal by right from a judgment dismissing their case.
This appeal is being decided without oral argument pursuant to MCR 7.214(E). We affirm.
Defendant concisely sets forth the facts of this case in its brief as follows.1 Defendant
owns and operates a steel mill in Ashland, Kentucky, known as the “Ashland Works.” At
Ashland Works, iron ore is combined and heated with other metals to produce molten steel. The
molten steel is then poured into a caster, a downward-sloping machine in which the molten steel
is cooled and shaped into slabs. The caster at Ashland Works is comprised of seventeen
individual segments.
In July 1995, defendant contracted with plaintiff Acutus Industries, Inc [“Acutus
Industries”]2 for the maintenance and repair of the caster segments at Ashland Works. The
Contractors and Service Providers Master Agreement [“Acutus Industries CMA”] provided the
terms and conditions for purchase orders issued by defendant for caster segment maintenance
work and repairs. The Acutus Industries CMA also contained a forum selection clause. Acutus
Industries maintained an inventory of spare parts for the caster segments in order to quickly
repair and complete service on the caster. Defendant eventually terminated this contract with
Acutus Industries when it decided to use another vendor for maintenance and repair of the caster.
1
We have supplemented the factual history where necessary and eliminated conclusory or
argumentative statements.
2
Acutus Industries is an indirect, wholly-owned subsidiary of plaintiff AG Industries, Inc [“AG
Industries”], also known as the Gladwin Corporation.
-1-
As a result, Acutus Industries had an inventory of unused spare parts for the Ashland Works
caster.
In 1998, defendant decided to increase the maximum width of the steel slabs produced by
the Ashland Works caster. The “caster widening project” entailed modification to each segment
of the caster. Defendant selected Mannesmann Demag Corp [“Demag”], which had originally
designed the Ashland Works caster, as its contractor. Defendant and Demag agreed that AG
Industries would be the primary subcontractor. AG Industries was to perform most of the actual
modification work, while Demag was to provide engineering and supervisory expertise. On
September 29, 1998, defendant and Demag entered into a formal contract [“Demag CMA”]
regarding the caster widening project. In June 1998, in anticipation of the Demag CMA, AG
Industries and Demag executed a contract [“Demag-AG Industries Cooperation Agreement”],
which outlined the duties and rights of each company.
The Demag CMA contained operational and performance guarantees by Demag, and
provided for liquidated damages in the event these guarantees were not met. At the end of the
caster widening project, defendant concluded that some of the guarantees were not met and,
therefore, withheld certain payments from Demag. In turn, Demag withheld payment from AG
Industries. Acutus Industries also provided services on the caster widening project.
Subsequently, plaintiffs filed this action in Oakland County alleging promissory estoppel
and unjust enrichment (counts I and II) based on defendant’s refusal to pay for the inventory of
caster spare parts which Acutus Industries possessed at the time the Acutus Industries CMA was
terminated, and unjust enrichment and fraud (counts III and IV) based on non-payment for
services performed in connection with the caster widening project. Defendant filed a motion to
dismiss and/or strike, and argued that the forum selection clause in the Acutus Industries CMA
and the Demag CMA required that plaintiffs bring suit in Ohio. The trial court agreed and
dismissed plaintiffs’ suit. Plaintiffs appealed.
Plaintiffs first argue that the forum-selection clause in the Acutus Industries CMA does
not apply to their complaint’s counts I and II, which involve the inventory of spare parts for the
Ashland Works caster. We disagree. Contract interpretation represents a question of law, which
we review de novo. Sands Appliance Services, Inc v Wilson, 463 Mich 231, 238; 615 NW2d 241
(2000).
The Acutus Industries CMA’s forum selection clause reads as follows:
This contract shall be governed by and interpreted in accordance with the laws of
the State of Ohio, and any action or other legal proceeding of any kind, civil or
criminal, legal or equitable, based upon or in any way related to the subject matter
of this contract shall be brought exclusively in an appropriate court of competent
jurisdiction (state or federal) located in Butler County, Ohio (if the action is
brought in state court) or in the Southern District of Ohio (if the action is brought
in federal court). Any action brought within such courts shall not be transferred
or removed to any other state or federal court. It is further understood and agreed
by the parties that, by this clause, they consent to the exercise of jurisdiction by
the above-named courts as their freely negotiated choice of forum for all actions
arising out of or in any way related to the subject-matter of this contract.
-2-
In their complaint, plaintiffs acknowledged that the inventory of spare parts for the
Ashland Works caster was a “prerequisite to obtaining maintenance work at Ashland Works.” In
other words, if Acutus Industries did not maintain the inventory, defendant would not issue a
purchase order for the performance of maintenance or repair work.
Plaintiffs argue that the forum selection clause is inapplicable because defendant never
issued a purchase order. However, this fact is irrelevant. The language of the forum selection
clause is clear. It applies to all actions “based upon, … arising out of, or in any way related to
the subject-matter” of the contract. According to its terms, the subject-matter of the Acutus
Industries CMA is “all purchase orders which may in the future be issued from [defendant] to
[Acutus Industries]” regarding maintenance and repair of the Ashland Works caster. The
inventory kept by Acutus Industries is clearly related to purchase orders which “may in the
future” be issued. In fact, plaintiffs admit that the inventory was held for future work.
Furthermore, there is no merit to plaintiffs’ arguments that the forum selection clause is
not applicable because the Acutus Industries CMA (1) only applies to work done on defendant’s
premises, and (2) its terms and conditions only apply if they could be linked to an actual, issued
purchase order. The forum selection clause contains no such restrictions. Therefore, the forum
selection clause of the Acutus Industries CMA applied to plaintiffs’ counts I and II.
Plaintiffs next argue that the forum-selection clause in the Demag CMA3 does not apply
to their claims involving the caster widening project (counts III and IV). Plaintiffs first note that
they were not a party to the Demag CMA. However, this is not conclusive of whether plaintiffs
are bound by the terms of the Demag CMA. First, the contract to which plaintiffs were a party,
the Demag-AG Industries Cooperation Agreement, provides that Demag was the sole contractor
with defendant, and that, subject to certain limitations, Demag’s negotiated terms with defendant
were binding on AG Industries.
Second, ¶ 10.8 of the Demag CMA, which the Demag-AG Industries Cooperation
Agreement gave Demag express powers to negotiate, provides that
[Demag] shall make all the terms and conditions of this Contract (so far as they
are applicable) the terms and conditions of any permitted subcontract, except
where [Demag] decides that it is advantageous to use any other terms and
conditions; provided, however, that no such variance shall relieve [Demag] of its
duties and obligations herein.
Therefore, the issue is whether the forum selection clause of the Demag CMA was incorporated
into the Demag-AG Industries Cooperation Agreement.
The Demag-AG Industries Cooperation Agreement was signed several months before the
Demag CMA was executed. Therefore, plaintiffs assert, the exception to the rule—that Demag
could vary the terms and conditions in subcontracts where advantageous—was specifically
negotiated by Demag because it had already entered into the Demag-AG Industries Cooperation
Agreement which did not contain a forum selection clause.
3
This forum selection clause is almost identical to the one in the Acutus Industries CMA.
-3-
However, there is no indication that Demag considered, or had a reason to consider, the
lack of a forum selection clause regarding disputes between a subcontractor and defendant
advantageous to it. Therefore, it would appear that the forum selection clause was incorporated
into the Demag-AG Industries Cooperation Agreement.
Furthermore, contrary to plaintiffs’ contention, plaintiffs were aware that the terms of the
Demag CMA would apply to them. The Demag-AG Industries Cooperation Agreement
acknowledged that it was being executed in anticipation of the Demag CMA, and specifically
provided that the Demag CMA “shall be an integral part of this Cooperation Agreement” and
that revisions be made to the Demag-AG Industries Cooperation Agreement, if necessary, to
comport with the terms of the Demag CMA. When one writing refers to another instrument for
additional contractual terms, the two writings should be read together. Forge v Smith, 458 Mich
198, 207; 580 NW2d 876 (1998). Because the forum selection clause was in addition to, and did
not conflict with, the terms of the Demag-AG Industries Cooperation Agreement, there was no
need to revise the contract.4 We conclude that the forum selection clause in the Demag CMA
was incorporated into the Demag-AG Industries Cooperation Agreement. Therefore, plaintiffs’
counts III and IV are subject to the forum selection clause.
Lastly, plaintiffs argue that dismissal of their case was not required pursuant to MCL
600.745(3).5 Plaintiffs assert that the trial court’s determination that Ohio was not a substantially
less convenient forum to litigate the claims was in error. We disagree. A trial court’s findings of
fact are reviewed for clear error. Sands Appliance Services, supra at 238.
MCL 600.745(3) provides, in pertinent part:
If the parties agreed in writing that an action on a controversy shall be brought
only in another state and it is brought in a court of this state, the court shall
dismiss or stay the action, as appropriate, unless any of the following occur:
(c) The other state would be a substantially less convenient place for the trial of
the action than this state.
In concluding that Ohio was not a “substantially less convenient” location for the parties to
litigate this suit, the trial court noted that all plaintiffs’ claims involved work performed by
plaintiffs at Ashland Works, in Kentucky just over the Ohio border, and that many potential
witnesses lived in Ohio, near defendant’s headquarters. The trial court further stated the record
reflected that most of the work “at issue” was performed at plaintiffs’ facility in Ohio, and some
in Pennsylvania; while only a portion of the work was done at plaintiffs’ facility in Michigan.
4
The Demag-AG Industries Cooperation Agreement contained a binding arbitration clause and a
choice of law clause. However, the contract is clear that these provisions only applied to the
“parties” to the contract, which were defined as Demag and AG Industries.
5
Plaintiffs also argued that the statute was inapplicable because the forum selection clause did
not apply to their claims. However, having decided to the contrary above, plaintiffs’ argument
has no merit.
-4-
Plaintiffs argue that, in regards to their claims involving inventory for the Ashland Works
caster, a substantial portion of the work manufacturing the inventory parts was performed in
Michigan. Also, because the inventory was never installed in the caster, it had no connection
with Ohio. However, we believe that the physical location of the inventory’s manufacture and
storage is irrelevant. Plaintiffs’ claims allege that defendant should pay for the inventory, citing
certain promises made by defendant over a series of meetings which appear to have taken place
in Ohio or at Ashland Works. The persons who might need to testify are employees of
defendant, all located in Ohio and Kentucky, and plaintiffs’ management, who presumably are in
Michigan. Thus, we cannot say that Ohio would be a “substantially less convenient” forum.
With regard to their claims arising from the caster widening project, plaintiffs assert that
while some work was done in Ohio and Pennsylvania, the work performed in Michigan was
substantial. However, the test is whether Ohio is a “substantially less convenient” forum.
Plaintiffs admit on appeal that Michigan and Ohio are both “appropriate forums for this
litigation.” Therefore, we conclude that the trial court’s finding was not clearly erroneous, and
dismissal of plaintiffs’ claims was proper.
Affirmed.
/s/ Michael R. Smolenski
/s/ Janet T. Neff
/s/ Richard A. Bandstra
-5-
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
