Holloway v. Bucher , 2018 Ohio 3301 ( 2018 )

[Cite as Holloway v. Bucher, 2018-Ohio-3301.]
IN THE COURT OF APPEALS OF OHIO
SIXTH APPELLATE DISTRICT
WOOD COUNTY
Janet Holloway Court of Appeals No. WD-18-014
Appellant Trial Court No. 2017-CV-0115
v.
Suzanne Bucher, et al. DECISION AND JUDGMENT
Appellees Decided: August 17, 2018
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Cory B. Kuhlman, for appellant.
John C. Filkins, for appellee Suzanne Bucher.
*****
JENSEN, J.
I. Introduction
{¶ 1} This is an accelerated appeal from the judgment of the Wood County Court
of Common Pleas, granting summary judgment to appellees, Suzanne and William
Bucher, and dismissing appellant’s, Janet Holloway, claim for breach of contract.
Because the oral agreement alleged in the complaint is barred by the statute of frauds, we
affirm the trial court’s grant of summary judgment to appellees.
A. Facts and Procedural Background
{¶ 2} On February 27, 2017, appellant filed a complaint with the trial court in
which she alleged that appellees owed her $60,059.70 stemming from a loan that
appellees received on January 1, 2004. According to the complaint, appellant orally
agreed to loan appellees a total of $163,800 at an annual interest rate of 1.5 percent. The
loan was provided to appellees in two installments. The first installment of $6,800 was
provided to appellees on January 15, 2004. The first installment was used to pay off a
home equity loan in order to facilitate the sale of appellees’ residence (the “old
residence”). Two weeks later, appellant loaned appellees the remaining $157,000 to fund
appellees’ purchase of another residence (the “new residence”).
{¶ 3} Pursuant to the terms of the oral agreement, appellees were obligated to
make monthly payments in the amount of $300 until they sold their old residence. Once
the old residence was sold, the monthly payment was to increase to $500. Pursuant to the
agreement, appellees made monthly payments of $300 until they sold the old residence in
August 2004. Appellees profited $63,025.50 from the sale of the old residence. This
profit was applied to the balance of the loan at issue in this case, and appellees
subsequently commenced making monthly payments of $500.
{¶ 4} Beginning in February 2013, appellees ceased making monthly payments.
According to the record, appellant granted Suzanne, her daughter, a forbearance from
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making monthly payments due to Suzanne’s loss of her job. The parties disagree as to
the nature of this forbearance. Suzanne understood that the remaining balance of the loan
was forgiven. Appellant insists that the forbearance was temporary, and that payments
were to resume once Suzanne’s financial condition improved.
{¶ 5} According to her deposition testimony, appellant demanded a continuation
of monthly payments from appellees once she concluded that Suzanne was not making a
good faith effort to secure meaningful employment. When appellees failed to resume
monthly payments on the oral agreement, appellant filed the aforementioned complaint
with the trial court, alleging one claim for breach of contract.
{¶ 6} Approximately one month after appellant filed her complaint, appellees filed
a motion to dismiss, in which they argued that appellant’s breach of contract claim should
be dismissed because the agreement was unenforceable under R.C. 1335.05, the statute of
frauds, because it could not be completed within a period of one year.
{¶ 7} Upon its consideration of the allegations contained in appellant’s complaint,
the trial court denied appellees’ motion to dismiss on April 27, 2017. Because appellant
alleged that the $300 and $500 monthly payments were minimum payments, the court
found that the loan could have been repaid before the expiration of the one-year period
and, therefore, the agreement fell outside the statute of frauds.
{¶ 8} The matter then proceeded through discovery until appellees filed a motion
for summary judgment on December 7, 2017. Appellant filed her own motion for
summary judgment the following day.
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{¶ 9} In appellees’ motion for summary judgment, they reasserted their statute of
frauds argument. In support of their argument, appellees referenced the deposition
testimony from appellant and Suzanne that revealed that the monthly payments
contemplated by the parties were not minimum payments, and that early payoff of the
loan was not a term of the oral agreement. At a rate of $500 per month, appellees noted
that the loan would not have been repaid within one year of the date of the oral
agreement. As such, appellees contended that the oral agreement was unenforceable
under R.C. 1335.05.
{¶ 10} In response, appellant asserted that the agreement could have been
completed within one year if appellees repaid the loan early. Appellant pointed to her
acceptance of appellees’ lump sum payment of $63,025.50 as evidence of the possibility
of an early payoff. Further, appellant cited her deposition testimony, in which she stated
that she would have accepted payments in excess of the required $500 monthly payments,
and would have allowed appellees to pay off the balance of the loan at any time.
Additionally, appellant contended that the statute of frauds should not be applied here
given the parties’ partial performance under the agreement.
{¶ 11} On January 29, 2018, the trial court issued its decision on the foregoing
motions for summary judgment. Relevant here, the court found that the parties’ oral
agreement could not be completed within one year because the parties agreed to monthly
payments of $300 and $500, and did not contemplate increasing or decreasing the
required monthly payments during the repayment period. Therefore, the court held that
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the agreement was unenforceable under R.C. 1335.05. Thus, the court granted appellees’
motion for summary judgment and denied appellant’s motion for summary judgment.
{¶ 12} Thereafter, appellant filed her timely notice of appeal.
B. Assignments of Error
{¶ 13} On appeal, appellant asserts two assignments of error, as follows:
Assignment of Error No. 1: The Trial Court erred in its application
of O.R.C. Section 1335.05 by failing to grant Plaintiff’s Motion for
Summary Judgment.
Assignment of Error No. 2: The Trial Court erred in its application
of the standards of review when granting the Defendant’s Motion for
Summary Judgment in favor of Defendant Suzanne Bucher.
II. Analysis
{¶ 14} In appellant’s first assignment of error, she argues that the trial court erred
in granting appellees’ motion for summary judgment upon the conclusion that the parties’
oral agreement was unenforceable under the statute of frauds. In her second assignment
of error, appellant contends that the trial court misapplied the standard of review
governing motions for summary judgment by failing to consider the evidence in a light
most favorable to her as the nonmoving party. We will address these assignments of
error together.
{¶ 15} A motion for summary judgment is reviewed de novo by an appellate court.
Grafton v. Ohio Edison Co., 77 Ohio St.3d 102, 105, 671 N.E.2d 241 (1996). “‘When
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reviewing a trial court’s ruling on summary judgment the court of appeals conducts an
independent review of the record and stands in the shoes of the trial court.’” Baker v.
Buschman Co., 127 Ohio App.3d 561, 566, 713 N.E.2d 487 (12th Dist.1998).
{¶ 16} In order to obtain summary judgment at the trial level,
[I]t must be determined that (1) there is no genuine issue of material
fact; (2) the moving party is entitled to judgment as a matter of law; and (3)
it appears from the evidence that reasonable minds can come to but one
conclusion when viewing the evidence in favor of the nonmoving party,
and that conclusion is adverse to the nonmoving party. State ex rel. Cassels
v. Dayton City School Dist. Bd. of Edn., 69 Ohio St.3d 217, 219, 631
N.E.2d 150 (1994), citing Davis v. Loopco Industries, Inc., 66 Ohio St.3d
64, 65-66, 609 N.E.2d 144 (1993); see also Civ.R. 56(C).
{¶ 17} Here, appellant argues that the trial court erred in its application of R.C.
1335.05, which provides, in pertinent part:
No action shall be brought whereby to charge the defendant * * *
upon an agreement that is not to be performed within one year from the
making thereof; unless the agreement upon which such action is brought, or
some memorandum or note thereof, is in writing and signed by the party to
be charged therewith or some other person thereunto by him or her lawfully
authorized.
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{¶ 18} The foregoing provision “applies only to agreements which, by their terms,
cannot be fully performed within a year; and not to agreements which may possibly be
performed within a year.” Sherman v. Haines, 73 Ohio St.3d 125, 127, 652 N.E.2d 698(1995). “[T]hus, where the time for performance under an agreement is indefinite, or is
dependent upon a contingency which may or may not happen within a year, the
agreement does not fall within the Statute of Frauds.” Id.{¶ 19} Appellant urges, as she did before the trial court, that the statute of frauds
should not apply here because the oral agreement could have been completed within one
year if appellees repaid the loan early. Appellant cites her acceptance of appellees’ lump
sum payment of $63,025.50, as well as her deposition testimony that she would have
accepted monthly payments in excess of $500, as evidence that the oral agreement
included the possibility of an early payoff.
{¶ 20} An oral agreement similar to the one at issue here was examined by the
Supreme Court of Ohio in Sherman, supra. In that case, the agreement required the
defendant to pay $3,000 to plaintiff in monthly installments of $25. Id. at 125. When
defendant failed to make the required monthly payments, plaintiff brought a breach of
contract action. Defendant filed a motion to dismiss, which was subsequently granted by
the trial court upon the finding that the agreement was subject to the statute of frauds
because it could not be completed within one year. Id. at 126.
{¶ 21} Eventually, the matter proceeded to the Supreme Court of Ohio on a
certified question as to whether “[a]n alleged oral agreement for the payment of
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installments is ‘an agreement that is not to be performed within one year from the making
thereof’ pursuant to the R.C. 1335.05 Statute of Frauds when the installment payment
obligation exceeds one year.” Id. In addressing this issue, the court noted:
Most courts that have been confronted with oral agreements to pay
money in installments over a period of time in excess of one year, the terms
of which either precluded an early payoff or were silent as whether the
defendant could pay the entire debt at an earlier time, have held such
agreements to be within the applicable one-year provision of the Statute of
Frauds in their respective jurisdictions. Other than a single dissenting
opinion in Hendry v. Bird, 135 Wash. 174, 185, 237 P. 317, 321 (1925),
none of these courts has expressed the opinion that the potential for early
payment amounts to a legal possibility of performance within one year
sufficient to remove the agreement from the statute. In addition, those
courts that have dealt with oral agreements similar to the agreement in the
case sub judice, which do not specify the actual number of installment
payments to be made but do provide for a periodic payment in such amount
as would necessarily require more than a year to pay the entire obligation,
have held such agreements subject to the statute. (Citations omitted.)
Sherman, 73 Ohio St.3d at 127, 652 N.E.2d 698.
{¶ 22} The court in Sherman went on to acknowledge the existence of cases in
which oral agreements to pay money in installments over a period of time in excess of
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one year were held to fall outside the scope of the statute of frauds. Id. at 128. However,
the court noted that the agreements in these cases provided for the possibility of an early
payoff. Id., citing Steward v. Sirrine, 34 Ariz. 49, 56, 267 P. 598 (1928). Because the
agreement at issue required 120 monthly installment payments, and in light of the
absence of any provision for early payoff within the agreement, the court found the
agreement could not be completed within one year and was therefore unenforceable
under R.C. 1335.05. Id. at 129.
{¶ 23} Similarly here, the evidence contained in the record demonstrates that the
parties did not contemplate early payoff of the loan when the agreement was reached.
Consequently, early payoff was not a term of the oral agreement. The fact that appellant
accepted a large lump sum payment sometime after the agreement was reached is not
relevant in ascertaining the terms of the agreement at its inception. Likewise, appellant’s
self-serving testimony that she would have accepted monthly payments that exceeded
$500 is unavailing.
{¶ 24} The record demonstrates that the parties’ agreement required monthly
payments of $300 until appellees sold the old residence, and monthly payments of $500
thereafter. Although the term of the agreement was not specified, the amount of the
monthly payments would necessarily require more than one year to pay the entire
obligation. Thus, the parties’ oral agreement is unenforceable under R.C. 1335.05.
{¶ 25} Notwithstanding the foregoing, appellant contends that the statute of frauds
should not be applied here given the parties’ partial performance of the oral agreement.
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{¶ 26} The doctrine of partial performance precludes the operation of the statute of
frauds if the “acts of the parties * * * are such that it is clearly evident that such acts
would not have been done in the absence of a contract and * * * there is no other
explanation for the performance of such acts except a contract containing the provisions
contended for by the plaintiff.” Hughes v. Oberholtzer, 162 Ohio St. 330, 337-38, 123
N.E.2d 393 (1954). Notably, this doctrine has been limited in its application to “cases
involving the sale or leasing of real estate, wherein there has been a delivery of
possession of the real estate in question, and in settlements made upon consideration of
marriage, followed by actual marriage.” Hodges v. Ettinger, 127 Ohio St. 460, 189 N.E.
113 (1934), syllabus.
{¶ 27} Here, the agreement involved lending of money from appellant to
appellees, not the sale or leasing of real estate or a settlement made upon consideration of
marriage. Therefore, we agree with the trial court’s conclusion that the doctrine of partial
performance is inapplicable in this case. See Kiser v. Williams, 9th Dist. Summit No.
24968, 2010-Ohio-3390, ¶ 15 (concluding that although loan proceeds are used to fund
the purchase of real estate, the agreement does not involve the sale or leasing of real
estate where the borrower does not purchase the real estate from the lender).
{¶ 28} Because the agreement at issue in this case was not in writing and was not
capable of being completed within one year, it is unenforceable under R.C. 1335.05.
Moreover, the doctrine of partial performance does not preclude the application of the
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statute of frauds to the agreement. Therefore, the trial court properly granted summary
judgment to appellees’ on appellant’s claim for breach of contract.
{¶ 29} Accordingly, appellant’s assignments of error are found not well-taken.
III. Conclusion
{¶ 30} For the foregoing reasons, the judgment of the Wood County Court of
Common Pleas is affirmed. Appellant is ordered to pay the costs of this appeal pursuant
to App.R. 24.
Judgment affirmed.
A certified copy of this entry shall constitute the mandate pursuant to App.R. 27.
See also 6th Dist.Loc.App.R. 4.
Mark L. Pietrykowski, J. _______________________________
JUDGE
Arlene Singer, J.
_______________________________
James D. Jensen, J. JUDGE
CONCUR.
_______________________________
JUDGE
This decision is subject to further editing by the Supreme Court of
Ohio’s Reporter of Decisions. Parties interested in viewing the final reported
version are advised to visit the Ohio Supreme Court’s web site at:
http://www.supremecourt.ohio.gov/ROD/docs/.
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