Buffalo Wings & Rings, L.L.C. v. M3 Restaurant Group, L.L.C. , 2015 Ohio 3843 ( 2015 )

[Cite as Buffalo Wings & Rings, L.L.C. v. M3 Restaurant Group, L.L.C., 2015-Ohio-3843.]
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
Buffalo Wings & Rings, LLC, :
c/o Slovin & Associates Co. LPA,
:
Plaintiff-Appellant, No. 14AP-980
: (C.P.C. No. 12CVO-13779)
v.
: (ACCELERATED CALENDAR)
M3 Restaurant Group, LLC
Assignee of 3M Restaurant Group, :
LLC et al.,
:
Defendants-Appellees.
:
D E C I S I O N
Rendered on September 22, 2015
Cors & Bassett, LLC, and Michael L. Gay, for appellant.
Bailey Cavalieri, LLC, Dan L. Cvetanovich, and Jolene S.
Griffith, for appellees.
APPEAL from the Franklin County Court of Common Pleas.
BROWN, P.J.
{¶ 1} Buffalo Wings & Rings, LLC, plaintiff-appellant, appeals from the judgment
of the Franklin County Court of Common Pleas, in which the court granted summary
judgment to M3 Restaurant Group, LLC ("M3"), Alex Mendoza, Marc Mendoza, and
William McRaith, defendants-appellees.
{¶ 2} On March 6, 2008, M3 (which was named 3M Restaurant Group, LLC, at
the time) entered into a Franchise Agreement ("agreement") for the operation of a
restaurant. On the same day, the Mendozas and McRaith executed a guarantee and
indemnification.
No. 14AP-980 2
{¶ 3} On March 23, 2011, appellees sent a letter to appellant outlining disputes
they had with appellant and proposing to end the business relationship. Appellant did not
reply. On April 15, 2011, appellees mailed appellant another letter in which they indicated
they assumed appellant had no objection to the proposed termination of their relationship
given its failure to reply to the first letter.
{¶ 4} On November 1, 2012, appellant filed a complaint against appellees, alleging
claims for breach of contract, breach of guaranty, quantum meruit, and money owed on
an account. On March 26, 2013, appellees filed answers. On April 16, 2013, appellees filed
counterclaims against appellant.
{¶ 5} On January 16, 2014, appellant filed a motion for summary judgment and,
on January 17, 2014, appellees filed a motion for partial summary judgment with each of
the parties arguing, among other things, that the other party's claims were barred by the
one-year limitations provided in section 19.9 of the agreement. Section 19.9 prohibits
either party from bringing a claim more than one year after the party discovers the facts
relevant to such claim, unless the claim falls within one of three exceptions specifically
stated in the agreement. Although the parties agreed that none of the claims fell under the
first two exceptions in sections 19.9(i) and (ii), appellant argued that its claims fell under
the exception in section 19.9(iii).
{¶ 6} On October 31, 2014, the trial court issued a judgment granting appellees'
motion for summary judgment. The trial court found that appellant's claims were subject
to the one-year limitations provided in section 19.9 of the agreement, instead of the usual
15-year statute of limitations for breach of contract, and none of the exceptions to the one-
year limitations period in section 19.9 applied to the present case. The court specifically
concluded that section 19.9(iii) clearly set forth an exception for claims for injunctive
relief only, and, because appellant was seeking monetary damages, the exception did not
apply. Appellant appeals the judgment of the trial court, asserting the following
assignment of error:
The trial court erred, to the prejudice of the Appellant, in
granting summary judgment in favor of the Appellee.
{¶ 7} In its sole assignment of error, appellant argues that the trial court erred
when it granted summary judgment. Summary judgment is appropriate when the moving
No. 14AP-980 3
party demonstrates 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) reasonable minds can come to but
one conclusion when viewing the evidence most strongly in favor of the non-moving
party, and that conclusion is adverse to the non-moving party. Hudson v. Petrosurance,
Inc., 127 Ohio St. 3d 54, 2010-Ohio-4505, ¶ 29; Sinnott v. Aqua-Chem, Inc., 116 Ohio St. 3d
158, 2007-Ohio-5584, ¶ 29. Appellate review of a trial court's ruling on a motion for
summary judgment is de novo. Hudson at ¶ 29. This means that an appellate court
conducts an independent review, without deference to the trial court's determination.
Zurz v. 770 W. Broad AGA, L.L.C., 192 Ohio App. 3d 521, 2011-Ohio-832, ¶ 5 (10th Dist.);
White v. Westfall, 183 Ohio App. 3d 807, 2009-Ohio-4490, ¶ 6 (10th Dist.).
{¶ 8} When seeking summary judgment on grounds that the non-moving party
cannot prove its case, the moving party bears the initial burden of informing the trial
court of the basis for the motion and identifying those portions of the record that
demonstrate the absence of a genuine issue of material fact on an essential element of the
non-moving party's claims. Dresher v. Burt, 75 Ohio St. 3d 280, 293 (1996). The moving
party does not discharge this initial burden under Civ.R. 56 by simply making a
conclusory allegation that the non-moving party has no evidence to prove its case. Id.
Rather, the moving party must affirmatively demonstrate by affidavit or other evidence
allowed by Civ.R. 56(C) that the non-moving party has no evidence to support its claims.
Id. If the moving party meets its burden, then the non-moving party has a reciprocal
burden to set forth specific facts showing that there is a genuine issue for trial. Civ.R.
56(E); Dresher at 293. If the non-moving party does not so respond, summary judgment,
if appropriate, shall be entered against the non-moving party. Id.
{¶ 9} The present appeal concerns the language contained in section 19.9 of the
agreement which provides a one-year limitation for any and all claims arising out of the
agreement or relationship between the parties, subject to three categories of exceptions.
Specifically, section 19.9 provides:
19.9 Limitation of Claims. Except for:
(i) claims against Franchisee concerning the underreporting
of Net Sales and corresponding underpayment of Royalty and
Advertising Fees,
No. 14AP-980 4
(ii) claims against Franchisee by Franchisor relating to third
party claims or suits brought against Franchisor as a result
[of] Franchisee's operation of the Franchised Restaurant, and
(iii) claims for injunctive relief to enforce the provisions of this
Agreement relating to Franchisee's use of the Marks,
Franchisee's obligations upon the termination or expiration
of this Agreement, Franchisee's obligations under Articles 15
or 18 of this Agreement, or an assignment of this Agreement
or any ownership interest therein,
any and all claims arising out of or relating to this Agreement
or the relationship between the parties will be barred unless
an action is commenced within one year from the date
Franchisee or Franchisor knew or should have known of the
facts giving rise to such claims.
{¶ 10} The parties agree that the exceptions in sections 19.9(i) and (ii) do not apply
here. However, they disagree as to the meaning of the third exception contained in section
19.9(iii). Appellees interpret section 19.9(iii) as exempting from the one-year limitations
period claims for injunctive relief relating to the four subjects that follow. In other words,
as the trial court put it, appellees believe the phrase "claims for injunctive relief to enforce
the provisions of this Agreement relating to" modifies the four items that follow.
{¶ 11} To the contrary, appellant interprets section 19.9(iii) as exempting from the
one-year limitations period "claims for" (1) "injunctive relief to enforce the provisions of
this Agreement relating to Franchisee's use of the Marks"; (2) "Franchisee's obligations
upon the termination or expiration of this Agreement"; (3) "Franchisee's obligations
under Articles 15 or 18 of this Agreement"; or (4) "an assignment of this Agreement or any
ownership interest therein." In other words, as the trial court put it, appellant believes
that the phrase "claims for" modifies the enumerated list, and "injunctive relief" pertains
only to claims relating to the use of appellant's mark.
{¶ 12} The trial court did not explicitly explain its rationale in its decision as to why
it found the provision unambiguously exempts certain claims for injunctive relief from the
one-year limitations period but, instead, cited agreement with the arguments set forth in
pages six through nine in appellees' memorandum in opposition, which are the same as
the arguments appellees advance on appeal. Appellees argued in their memorandum in
opposition that section 19.9(iii) applies to four different types of claims for injunctive
No. 14AP-980 5
relief. Appellees asserted that section 19.9(iii) allows for appellant to pursue injunctive
relief to stop a terminated franchisee from portraying itself as a franchisee, in reference to
the steps in section 19.4 that a franchisee must take after termination of the agreement to
ensure that the terminated franchisee is not mistaken for a franchise. Appellees also
contended that if appellant's interpretation were correct, the second, third, and fourth
exceptions in section 19.9(iii) would more properly have been placed in section 19.9(i) or
(ii), which are the exceptions that relate to "claims against franchisee" as compared to
section 19.9(iii), which deals with "claims for injunctive relief to enforce." Based upon the
foregoing, appellees argued that the only logical reading is that the opening portion of
section 19.9(iii) referring to "claims for injunctive relief to enforce" applies to all four of
the exceptions that follow in that subsection. Therefore, because appellant was on notice
of the facts giving rise to appellees' claim as of appellees' April 15, 2011 letter, appellant's
November 1, 2012 complaint, which did not include any claim for injunctive relief, was
filed beyond the one-year limitation provided in section 19.9.
{¶ 13} In construing the terms of a written contract, our primary objective is to
give effect to the intent of the parties, which is presumed to rest in the language they have
chosen to employ. Shifrin v. Forest City Ents., Inc., 64 Ohio St. 3d 635, 638 (1992), citing
Kelly v. Med. Life Ins. Co., 31 Ohio St. 3d 130 (1987), paragraph one of the syllabus. When
contract terms are clear and unambiguous, courts will not create a new contract by
finding an intent which is not expressed in the clear language utilized by parties.
Alexander v. Buckeye Pipe Line Co., 53 Ohio St. 2d 241 (1978), paragraph one of the
syllabus. "Whether a contract's terms are clear or ambiguous is a question of law for the
court." KeyBank Natl. Assn. v. Southwest Greens of Ohio, L.L.C., 10th Dist. No. 11AP-
920, 2013-Ohio-1243, ¶ 27, citing Nationwide Life Ins. Co. v. Canton, 10th Dist. No.
09AP-939, 2010-Ohio-4088, ¶ 20. Moreover, the construction of a written contract is a
question of law, which we review de novo. In re All Kelley & Ferraro Asbestos Cases, 104
Ohio St. 3d 605, 2004-Ohio-7104, ¶ 29.
{¶ 14} A contract is ambiguous where it cannot be given a "definite legal meaning."
Westfield Ins. Co. v. Galatis, 100 Ohio St. 3d 216, 2003-Ohio-5849, ¶ 11. "Ambiguity
exists only when a provision at issue is susceptible of more than one reasonable
interpretation." Lager v. Miller-Gonzalez, 120 Ohio St. 3d 47, 2008-Ohio-4838, ¶ 16.
No. 14AP-980 6
However, as the Supreme Court of Ohio has cautioned, "[o]nly when a definitive meaning
proves elusive should rules for construing ambiguous language be employed. Otherwise,
allegations of ambiguity become self-fulfilling." State v. Porterfield, 106 Ohio St. 3d 5,
2005-Ohio-3095, ¶ 11. "When parties to a contract dispute the meaning of the contract
language, courts must first look to the four corners of the document to determine whether
an ambiguity exists." KeyBank at ¶ 27, citing BCI v. DeRycke, 9th Dist. No. 21459, 2003-
Ohio-6321, ¶ 16.
{¶ 15} In its appeal, appellant argues that section 19.9(iii) provides a list of four
separate exceptions, each separated by a comma, with the use of the disjunctive "or" for
the final category of exceptions. Appellant contends that the trial court's interpretation
leads to an illogical result, in that an action for monetary damages due to a breach of
contract would not involve injunctive relief under any circumstances. Although injunctive
relief would be used to enforce provisions of an agreement involving trademark and
intellectual rights, appellant asserts, injunctive relief would never be a viable tool for a
party in a case involving monetary damages.
{¶ 16} After reviewing the agreement, we agree with the trial court's reading of
section 19.9(iii) and find it unambiguous. From a grammatical perspective, appellant's
reading of the provision is unsound. Although both parties' readings involve a list of items
with parallel structure, appellant's reading would result in awkward phrasing, at best, and
non-sensical phrasing, at worst. Under appellant's reading, section 19.9(iii) would
prohibit the parties from initiating actions unless under one of the following
circumstances: (1) "Except for * * * claims for injunctive relief to enforce the provisions of
this Agreement relating to Franchisee's use of the Marks"; (2) "Except for * * * claims for
* * * Franchisee's obligations upon the termination or expiration of this Agreement";
(3) "Except for * * * claims for * * * Franchisee's obligations under Article 15 or 18 of this
Agreement"; and (4) "Except for * * * claims for * * * an assignment of this Agreement or
any ownership interest therein." Only the first phrase is grammatically sound. A party
may make a claim "for" injunctive relief. However, the second, third, and fourth phrases
are awkward in that the object does not properly match "for." In a legal action, one does
not make a claim "for" a franchisee's obligations or "for" an assignment of an agreement.
No. 14AP-980 7
Instead, one would make a claim "relating to," "involving," or "regarding" a franchisee's
obligations or "relating to," "involving," or "regarding" an assignment of an agreement.
{¶ 17} To the contrary, appellees' reading, which also involves a list of items with
parallel structure, is grammatically sound. Under appellees' reading, section 19.9(iii)
would prohibit the parties from initiating actions unless under one of the following
circumstances: (1) "Except for * * * claims for injunctive relief to enforce the provisions of
this Agreement relating to Franchisee's use of the Marks"; (2) "Except for * * * claims for
injunctive relief to enforce the provisions of this Agreement relating to * * * Franchisee's
obligations upon the termination or expiration of this Agreement"; (3) "Except for * * *
claims for injunctive relief to enforce the provisions of this Agreement relating to * * *
Franchisee's obligations under Articles 15 or 18 of this Agreement"; or (4) "Except for * * *
claims for injunctive relief to enforce the provisions of this Agreement relating to * * * an
assignment of this Agreement or any ownership interest therein." Grammatically, these
phrases all make sense in structure and meaning.
{¶ 18} Words used in a written contract are to be interpreted according to their
common, ordinary, and usual meaning. Carroll Weir Funeral Home v. Miller, 2 Ohio
St.2d 189 (1965). Contracts should be read and understood according to the natural and
most obvious import of the language, without resorting to subtle and forced
constructions. Slingluff v. Weaver, 66 Ohio St. 621, 627 (1902). The court must also read
words and phrases in context and apply the rules of grammar and common usage. Keller
v. Foster Wheel Energy Corp., 163 Ohio App. 3d 325, 2005-Ohio-4821 (10th Dist.).
{¶ 19} In the present case, appellees' view of section 19.9(iii) reflects the most
natural reading of the provision. To follow appellant's reading would result in a strained
construction that violates the rules of grammar and common usage. Thus, we find
appellant's argument, in this respect, unpersuasive.
{¶ 20} Appellant also makes a curious argument in its appellate brief that we
cannot reconcile with the record. In its brief, appellant allegedly quotes from the trial
court's decision that because appellant " 'is seeking monetary damages, and not injunctive
relief for monetary damages, the exception does not apply.' " Appellant then argues this
holding "leads to an illogical result from a legal perspective" because "[a]n action for
monetary damages due to breach of a contract would not involve injunctive relief under
No. 14AP-980 8
any circumstances, and the court simply was wrong in holding that a breach of contract
alleging monetary damages involves a claim for injunctive relief." (Appellant's Brief, 6-7.)
Appellant contends that "injunctive relief cannot be granted in a claim involving only
monetary damages," and "[i]t simply makes no sense for the court to hold that a claim for
monetary damages as a result of the franchisee's breach of a contract is a claim subject to
injunctive relief." (Appellant's Brief, 7-8.)
{¶ 21} However, the trial court did not make the statement that appellant
attributes to the court in its brief. In its decision, the trial court actually stated, "As
Plaintiff is seeking monetary damages, the exception does not apply." (Decision, 6.) The
trial court did not include in this sentence the phrase, "and not injunctive relief for
monetary damages," as appellant quotes in its brief. Although in its brief appellant cites
the correct App.R. 10(B) record number for the trial court's judgment and the correct page
number from the decision, this court cannot find the source of the phrase appellant
attributes to the trial court anywhere in the record. As appellant's argument is based upon
this missing phrase, we must find the argument without merit. As for the trial court's
actual holding, the trial court was merely concluding that, because it found that the
exceptions in section 19.9(iii) all pertain to claims for injunctive relief, and appellant's
complaint sought only monetary damages, the exceptions in section 19.9(iii) did not
apply. For the reasons cited above, we find the trial court did not err in its finding.
Therefore, appellant's assignment of error is overruled.
{¶ 22} Accordingly, appellant's sole assignment of error is overruled, and the
judgment of the Franklin County Court of Common Pleas is affirmed.
Judgment affirmed.
LUPER SCHUSTER and HORTON, JJ., concur.
____________________