## Facts

- Admiral Plastics Corp., a manufacturer of plastic containers, sought additional production capacity and contacted Trueblood, Inc., a machine manufacturer, about building injection blow mold machines.
- Trueblood had not previously built a blow mold machine but agreed to consider building machines if Admiral provided specifications.
- After meetings about desired features and Admiral’s intent to protect certain trade secrets, Admiral placed an oral order on May 24, 1966, for three machines at $39,750 each, with a written purchase order, specifications, and a 25% down payment to follow.
- Trueblood received the purchase order, specifications, and a down payment check for $29,812.50 on July 20, 1966.
- The project required new design work by Trueblood based on Admiral’s specifications and coordination concerning components tied to Admiral’s trade secrets.
- The relationship deteriorated; the parties were found to have been uncooperative and to have failed to act in good faith in performing the agreement.
- Admiral treated the agreement as terminated and demanded return of its down payment; Trueblood asserted Admiral impeded performance and counterclaimed for damages.
- In a bench trial under Ohio law, the district court found both parties failed to act in good faith and to cooperate, rendered the contract void, ordered return of Admiral’s down payment, and dismissed Trueblood’s counterclaim.

## Issues

1. Whether the district court correctly found that both parties failed to act in good faith and to cooperate in performance, making the contract unenforceable.
2. Whether Admiral was entitled to restitution of its down payment and whether Trueblood was entitled to recover on its counterclaim.
3. Whether the district court’s factual findings were clearly erroneous under Federal Rule of Civil Procedure 52(a).

## Decision

- The Sixth Circuit affirmed the district court’s judgment in full.
- The court upheld the finding that both parties failed to act in good faith and failed to cooperate, rendering the contract void.
- The court affirmed the award of $29,812.50 to Admiral as return of the down payment.
- The court affirmed dismissal of Trueblood’s counterclaim and denied additional damages to either side.

## Legal Principles

- Under Ohio contract law, parties have an implied duty of good faith and cooperation in performance, particularly where performance depends on ongoing coordination.
- A party that materially contributes to nonperformance or frustrates performance cannot obtain contract damages premised on the other party’s failure to perform.
- Where both parties materially fail in good faith and cooperation, a court may treat the agreement as effectively rescinded/void and limit relief to restitution restoring the status quo (such as return of a down payment), rather than awarding expectation damages.
- In a bench trial, appellate review of factual findings— including determinations about the parties’ conduct and good faith— is under the Rule 52(a) “clearly erroneous” standard, with substantial deference to the trial court’s credibility and fact determinations.

## Conclusion

The Sixth Circuit upheld a restitutionary remedy—return of Admiral’s down payment—because the trial court permissibly found that both sides breached their implied duties of good faith and cooperation, preventing enforceable performance and barring contract damages for either party.


Admiral Plastics Corp. v. Trueblood, Inc., 436 F.2d 1335 (6th Cir. 1971)