Wehr v. Petraglia , 2016 Ohio 3126 ( 2016 )

[Cite as Wehr v. Petraglia, 2016-Ohio-3126.]
STATE OF OHIO, COLUMBIANA COUNTY
IN THE COURT OF APPEALS
SEVENTH DISTRICT
MYRON C. WEHR PROPERTIES, LLC ) CASE NO. 14 CO 7
)
PLAINTIFF-APPELLEE )
CROSS-APPELLANT )
)
VS. ) OPINION
)
JAMES F. PETRAGLIA, EXECUTOR )
OF THE ESTATE OF CATHERINE T. )
PETRAGLIA )
)
DEFENDANT-APPELLANT )
CROSS-APPELLEE )
CHARACTER OF PROCEEDINGS: Civil Appeal from the Court of Common
Pleas of Columbiana County, Ohio
Case No. 2011 CV 858
JUDGMENT: Affirmed.
APPEARANCES:
For Plaintiff-Appellee: Atty. Timothy A. Barry
Fitch, Kendall, Cecil,
Robinson & Barry Co., LPA
600 East State Street
P.O. Box 590
Salem, Ohio 44460
For Defendant-Appellant: Atty. Kevin P. Murphy
Atty. Matthew M. Ries
Harrington, Hoppe & Mitchell, Ltd.
108 Main Avenue, S.W., Suite 500
Warren, Ohio 44481
JUDGES:
Hon. Cheryl L. Waite
Hon. Gene Donofrio
Hon. Mary DeGenaro
Dated: May 16, 2016
[Cite as Wehr v. Petraglia, 2016-Ohio-3126.]
WAITE, J.
{¶1} Appellant, James F. Petraglia (“James”), Executor of the Estate of his
mother, Catherine T. Petraglia (“Catherine”), appeals the trial court judgment entry
granting a motion to enforce a settlement agreement in favor of Appellee, Myron C.
Wehr Properties, LLC (“Wehr”).
{¶2} In April 2011, the parties signed a contract for the sale of land
(“contract”) wherein Wehr was to purchase approximately one hundred (100) acres of
farmland (“the property”) from Catherine for $380,450.00. The property had certain
encumbrances, including an oil and gas lease which was scheduled to expire in May
of 2012. The contract also included a number of contingencies, including a property
survey, acceptance of the survey by Catherine, and transfer at closing by means of a
general warranty deed. The survey was performed in April, 2011. A protracted
period of back and forth communication ultimately revealed the property was subject
to both an IRS tax lien as well as a reverse mortgage encumbrance. Following a
lengthy period where Catherine and her counsel failed to respond to Wehr’s
entreaties to set a date for closing, Wehr filed the underlying breach of contract
action. The trial court recommended mediation, and the matter was apparently
concluded when the parties reached a settlement agreement (“settlement”). That
settlement, memorialized in writing in September of 2012, provided that Catherine
would transfer the property pursuant to all of the terms of the 2011 contract, with
closing to occur by December 15, 2012. Two weeks prior to the agreed closing date,
Wehr received a copy of the title work which reflected that Catherine had negotiated
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a new oil and gas lease for the property with Chesapeake Exploratory, LLC, in May of
2012, without his knowledge or consent.
{¶3} Wehr and Catherine filed separate motions to enforce the settlement. A
hearing was held on the matter. The trial court concluded that Catherine had
purposefully delayed the closing in order to negotiate the new oil and gas lease and
had accepted $391,000.00 as a signing bonus; that Wehr presented evidence that
the parties had discussed his ability to negotiate the new, upcoming, oil and gas
lease as a basis for Wehr’s purchase offer on the property of $380,450.00; and that
the signing bonus Catherine received from Chesapeake was intended to be used by
Wehr to offset the purchase price set forth in the April, 2011 contract. The trial court
denied Wehr’s motion for attorney fees in the matter and denied Catherine’s motion
for enforcement as well as her motion for sanctions and compensatory damages.
Catherine timely appeals the trial court order. Wehr filed a cross appeal. Catherine
T. Petraglia died in the intervening time period and, by order of this Court, her son
James filed a notice of substitution as executor of her estate.
{¶4} The evidentiary record in this matter supports the trial court’s order.
The assignments of error are without merit and are overruled. Moreover, as the trial
court did not abuse its discretion in denying Wehr’s motion for attorney fees, Wehr’s
cross-assignment of error is also without merit and is overruled. The judgment of the
trial court is affirmed.
Facts
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{¶5} Appellee Myron Wehr, via Myron C. Wehr Properties, LLC, has been
farming the 100 acre parcel of land with the street address of 49763 Heck Road, East
Palestine, Ohio, (the “property”) since the 1970s. Wehr leased this property from its
owner, Catherine Petraglia. In March of 2011 Wehr was contacted by Catherine,
who told him he could no longer lease the property because she was putting it up for
sale. Catherine indicated she had received an offer of $3,500 per acre to buy the
farm. Wehr said that he was interested in purchasing the property. Wehr
subsequently engaged in discussions with both Catherine and her son, James, about
the sale of the property. Catherine gave Wehr a copy of a 2007 oil and gas lease
that was then in effect relative to the property. It was noted that the lease was to
expire in May of 2012. Wehr testified at the hearing that the 2007 lease was
discussed during the negotiations to purchase the property, as well as the status of
oil and gas lease negotiations in general that were ongoing throughout Columbiana
County. (Tr., p. 17.) Wehr also testified that Catherine indicated that current leases
were offering approximately $2,000 an acre and, as he had offered $3,850 an acre,
once he bought the property he could recoup some of his purchase price through the
negotiation of a new oil and gas lease. (Tr., p. 17.)
{¶6} On April 5, 2011, the parties entered into an Offer to Purchase Real
Estate and Acceptance – Vacant Land (“contract”). The document was drafted by
Catherine, a retired attorney. (Tr., Exh. B.) The contract contained a number of
pertinent provisions including, “Conditions of Sale” which indicated, “1. Sale subject
to BUYER’S and SELLER’S acceptance and approval of survey of PROPERTY. (2)
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The transfer of the PROPERTY shall include the transfer of all mineral rights and all
oil and gas rights.” Id. Furthermore, the contract contained a clause entitled, “TITLE”
which provides:
BUYER agrees to pay the purchase price upon the presentation to
BUYER of a general warranty deed conveying the premises free and
clear of any encumbrances except zoning ordinances, easements,
restrictions, leases, conditions, rights of way of record and real estate
taxes and assessments.
{¶7} Wehr testified that the survey was completed sometime in May or June
of 2011 and that he paid his half of the survey expenses at that time pursuant to the
terms of the contract. Wehr contacted Myron Smith at Farm Credit, the banker with
whom he had worked with for approximately thirty-five years. Smith testified that he
had the loan documents finalized and approved on May 6, 2011. (Tr., p. 77.)
{¶8} The contract specified that a specific title agency, Commerce Title
Agency of Youngstown, LLC, was to “coordinate and conduct the preparation of the
title work, title insurance and closing of [the] transaction.” (Tr., Exh. B.) Several
weeks passed with no action on the sale. Ultimately, Wehr contacted James in July
of 2011 to inquire when the closing would occur. James, who is a licensed
Pennsylvania attorney, informed Wehr there were problems with the title, but did not
indicate specifically what those problems were. He stated only that they were
working to resolve them. Wehr testified that he called again approximately thirty days
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later in August of 2011 and again in September, and each time was informed there
were still issues regarding the title. (Tr., p. 21.)
{¶9} Wehr next contacted Heritage Title, an agency that has done real estate
work for him in the past. He asked them to do a title search on the property. Their
search revealed an IRS tax lien and a reverse mortgage on the property. (Tr., Exh.
C, D, and E.) It was then that Wehr sought his own legal counsel to assist in
contacting the Petraglias to set closing. Wehr testified that after more “indefinite
answers” as to when the closing would occur, he decided to file a breach of contract
action in December of 2011. (Tr., p. 22.) In his complaint he sought specific
performance of the April, 2011 purchase contract.
{¶10} The trial court referred the parties to mediation, which occurred on
September 12, 2012. At mediation, the parties agreed to proceed with the terms of
the 2011 purchase contract. A written settlement agreement was executed by both
parties and dated November 3, 2012. An agreed dismissal entry was issued on
November 14, 2012, with the trial court retaining jurisdiction to enforce the terms of
the settlement agreement.
{¶11} The settlement agreement provided, inter alia, “[u]nless specifically
modified by this Settlement Agreement, all terms and conditions set forth in the
Purchase and Sale Agreement of April 5, 2011 shall remain in full force and effect.”
(Tr., Exh. F.) The closing was scheduled to take place on December 15, 2012. Wehr
contacted Farm Credit to inform them of the pending closing on the property. He was
notified shortly thereafter by Farm Credit that a subsequent title search on the
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property revealed a new encumbrance, specifically a Paid-up Oil & Gas Lease that
was executed on May 3, 2012, between Catherine and Chesapeake Exploration,
LLC. It contained a five year lease term commencing May 25, 2012 with an
additional five year extension option. The payments provision of the lease reflected
that, in addition to the royalty payments, there was a bonus payment paid to
Catherine for executing the lease. The amount was not specified in the lease
document. James testified at the hearing that the bonus received was $390,000.00.
(Tr. p. 84.) The actual bonus amount totaled $391,000.00. Wehr was never informed
by either of the Petraglias of the new oil and gas lease or the bonus payment made to
the Petraglias at any time leading up to the execution of the lease or after it was
executed.
{¶12} Upon discovering the existence of the new lease, counsel for Wehr filed
a motion for enforcement of the settlement agreement with the trial court on
December 14, 2012, asserting that the settlement agreement required both parties to
adhere to the April, 2011, contract terms. Catherine filed a cross-motion to enforce
the settlement agreement on January 24, 2013, claiming that Wehr was refusing to
abide by the terms of the settlement in not closing on the property on December 15,
2012. Wehr amended his motion to include a request for attorney fees relative to the
motion to enforce settlement. Catherine subsequently filed a motion seeking
compensatory damages and sanctions for Wehr’s alleged breach of the settlement
agreement.
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{¶13} A hearing on all motions was finally held on August 8, 2013. Both
parties presented testimony regarding the terms of the original purchase contract and
subsequent conduct relative to the settlement agreement and closing on the property.
Wehr also presented the testimony of Myron Smith. Smith testified about Wehr’s
actions in obtaining financing for the transaction and the subsequent discovery of the
new lease. The parties submitted post hearing briefs on the matter. The trial court
issued a judgment entry on October 2, 2013, overruling Catherine’s motion to enforce
settlement and granting Wehr’s motion. The court ordered the parties to perform
according to the terms of the settlement. In addition, the trial court ordered both
parties to file post hearing briefs on the issues of attorney fees and the disposition of
the $391,000.00 signing bonus.
{¶14} A follow up hearing was held on November 18, 2013, on the remaining
issues. In a judgment entry dated January 9, 2014, the trial court denied Wehr’s
motion for attorney fees. Regarding the disbursement of the signing bonus received
by Catherine from Chesapeake, the trial court awarded Wehr the $391,000.00
signing bonus subject to certain credits to Catherine. The signing bonus actually
covered 112.5 acres at a payment of $3,476.00 per acre. As Wehr purchased only
100 acres, there was an offset of $43,450.00 for the acreage not included in the
purchase contract. The trial court also credited Catherine $18,744.00 in legal fees for
negotiating the signing bonus. Lastly, the trial court credited Catherine $5,325.00,
which represents payment for Wehr’s 2013 lease to farm the property. Thus, the trial
court awarded Catherine a total of $67,519.00 in credits from the signing bonus,
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reducing Wehr’s portion of the bonus to $323,481.00. As the 2011 purchase
agreement fixed the purchase price at $380,450.00, pursuant to the trial court
judgment entry Wehr still owed Catherine $56,969 on the purchase contract. After
incorporating the judgment entry of October 2, 2013 and unsealing all records, the
trial court issued a final appealable order. Both parties subsequently appealed.
ASSIGNMENT OF ERROR NO. 1
THE TRIAL COURT ERRED IN GRANTING MR. WEHR’S MOTION
TO ENFORCE THE SETTLEMENT AGREEMENT AND AWARDING
MR. WEHR THE SIGNING BONUS FROM THE CHESAPEAKE
LEASE.
{¶15} In Catherine’s first assignment of error she raises two issues: whether
the trial court properly granted Wehr’s motion to enforce the settlement agreement
and whether the trial court erred in awarding Wehr the signing bonus from the new
Chesapeake lease.
{¶16} Settlement agreements are highly favored as a means for resolving
disputes between parties because they serve to prevent or bring to a close
additional litigation. State ex rel. Wright v. Weyandt, 50 Ohio St. 2d 194, 197, 363
N.E.2d 1387 (1977). A settlement agreement is an enforceable contract resolving a
legal dispute by preventing or ending litigation. Continental W. Condominium Unit
Owners Assn. v. Howard E. Ferguson, Inc., 74 Ohio St. 3d 501, 502, 660 N.E.2d 431
(1996). “A contract is generally defined as a promise, or a set of promises,
actionable upon breach.” Kostelnik v. Helper, 96 Ohio St. 3d 1, 2002-Ohio-2985, 770
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N.E.2d 58, at ¶16, quoting Perlmuter Printing Co., v. Strome, Inc., 436 F.Supp 409,
414 (N.D. Ohio 1976). The trial court has full authority to enforce settlement
agreements that have been voluntarily entered into by the parties. Mack v. Polson
Rubber Co., 14 Ohio St. 3d 34, 36, 470 N.E.2d 902 (1984). In order to be
enforceable, a contract must have “an offer, acceptance, contractual capacity,
consideration (the bargained for legal benefit and/or deteriment), a manifestation of
mutual assent and legality of object and of consideration.” Kostelnik at ¶16. There
also must be a meeting of the minds as to the essential terms of the contract. Id.
{¶17} There is a two-fold standard of review that applies to a ruling on a
motion to enforce a settlement agreement. Regarding legal questions concerning
the interpretation of the settlement agreement, an appellate court is to determine
whether the trial court applied an erroneous legal standard or misconstrued the law.
Continental W. Condominium Unit Owners Assn., supra at 502. Where the question
at issue is a factual or evidentiary one, the trial court’s findings will not be overturned
if there was sufficient evidence to support such a finding. Chirchiglia v. Ohio Bur. of
Workers’ Comp., 138 Ohio App. 3d 676, 679, 742 N.E.2d 180 (2000).
{¶18} In the instant case, Catherine asserts that this issue strictly concerns a
legal question of contract interpretation. Specifically, whether Catherine breached
the settlement agreement by entering into the Chesapeake lease and whether the
Chesapeake lease’s signing bonus was part of the settlement agreement.
Therefore, she asks this Court to undertake a de novo review of the law pursuant to
Continental W. Condominium Unit Owners Assn., supra at 502.
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{¶19} However, a review of the record reveals there are factual matters in
dispute; most notably, the intention of the parties in discussing the expiration of the
existing oil and gas lease on the property at the time they entered the purchase
contract and if it had any effect on the purchase price and the parties’ subsequent
conduct, including the years long delay on closing—all factual, evidentiary issues
which were raised at the hearing on the motion to enforce.
{¶20} Wehr testified that he and/or his LLC had rented Catherine’s property
for close to forty years. When Catherine contacted Wehr in March of 2011 to inform
him she was selling, Wehr requested an opportunity to purchase the property. Wehr
began discussions regarding the purchase, first with Catherine and subsequently
with her son, James. James gave Wehr a copy of the existing 2007 oil and gas
lease for the property. Wehr testified that the two discussed that the lease was set
to expire in May of 2012 and the amounts other properties in the area were receiving
from oil and gas lease negotiations, including the fact that landowners were at that
time receiving $2,000 per acre in signing bonuses. (Tr., p. 17.) Wehr testified that
James informed him that if he bought the property, Wehr could negotiate a new oil
and gas lease on the property and get part of the purchase price back in bonus
revenue. Id. Wehr testified that it was based on these early negotiations that he
arrived at his offer to purchase of $3,850 per acre. According to Wehr, this reflected
a fair market value for the land and include the potential for Wehr to negotiate a new
oil and gas lease after the expiration of the existing lease.
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{¶21} The purchase agreement was signed on April 5, 2011. Wehr promptly
contacted Farm Credit to secure financing and the survey was conducted. Wehr
paid his one-half portion of the survey cost. At that point, the process broke down.
There was an extended period of time when Wehr received little or no response from
Catherine or her counsel regarding his entreaties to close on the sale, and that
during this period any response contained only vague statements regarding
problems with the title. It was only after Wehr had his own title agency perform a full
title search did he discover the IRS lien and reverse mortgage encumbrance, neither
of which should have presented a bar to closing as the purchase price was far in
excess of the total amount of both liens. Counsel for Wehr contacted Catherine’s
counsel with this information and still received no commitment by Catherine as to
closing. At that point, in December of 2011, Wehr filed his breach action seeking
specific performance.
{¶22} The parties ultimately entered mediation in September of 2012, at
which time it was agreed that they would proceed with the real estate transfer
pursuant to the terms of the April 5, 2011 contract. At the time of the mediation and
proposed settlement, the only party aware that Catherine had entered into extended
negotiations with Chesapeake to encumber the property with a new oil and gas
lease and had entered such lease were Catherine and her counsel. That new lease
had been signed in May of 2012, some six months after Wehr commenced litigation
seeking specific performance and four months prior to the mediation. Despite the
fact that Wehr was not consulted or included in the lease negotiations in any way,
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and had no knowledge of them, James curiously asserted at the hearing that the
new lease was entered into to protect Wehr and ensure he obtained a higher royalty
rate. That protection did not include, however, sharing the $391,000.00 signing
bonus received upon execution of the new lease. Moreover, James continues to
claim that the estate is entitled to the original purchase price of the April, 2011
contract as well as the ability to retain the entire signing bonus.
{¶23} At hearing and in the appellate brief, Catherine’s estate asserts a
number of interesting and, at times, contradictory facts. James, a licensed
Pennsylvania attorney, testified that he was unaware that the proceeds of the sale
could be used to pay off any liens on the property, such as the tax lien and reverse
mortgage. He also testified that he did not recall discussing the expiration of the oil
and gas lease to the extent that Wehr indicated. Furthermore, he testified that he
hired an attorney to begin oil and gas lease negotiations in January of 2012, just one
month after Wehr filed his complaint seeking specific performance on the sale of the
property. Moreover, Catherine asserts that the new oil and gas lease was entered
into for the benefit of Wehr, to “give him the best possible lease”, and yet the fact
that they were contemplating, negotiating, and finally executing a new lease was
information that Wehr, although allegedly being protected, was not privy to even
during mediation discussions and despite multiple attempts by Wehr beginning in
June of 2011 to discuss closing on the sale of the property. (Tr., pp. 59-60.) The
amount of the bonus monies received by Catherine was not ultimately revealed until
the hearing on the motion to enforce the settlement. (Tr., p. 97.) James also
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testified that, as power of attorney for his mother, he entered into a new farming
lease with Wehr in March of 2012, wherein Wehr voluntarily offered to pay an
increased monthly rent to retain the ability to farm the land pending closing of the
sale.
{¶24} Catherine’s estate claims on appeal that Wehr’s failure to proceed with
the sale once he discovered a new oil and gas lease had been signed and pursuing
the signing bonus proceeds are tantamount to purposeful delay and greed on
Wehr’s part.
{¶25} The instant case raises a question of fact: whether in entering into the
new oil and gas lease with Chesapeake Catherine violated the terms and conditions
of the purchase agreement to which both parties agreed to be bound per the
settlement agreement. If there was sufficient evidence to support the trial court’s
conclusion that Catherine’s decision to enter into a new oil and gas lease violated
the purchase agreement and, by extension, the settlement agreement, the trial
court’s decision should be affirmed.
{¶26} The settlement agreement reads, in pertinent part:
Unless specifically modified by this Settlement Agreement, all terms
and conditions set forth in the Purchase and Sale Agreement of April 5,
2011 shall remain in full force and effect.
The purchase agreement contains a “CONDITIONS OF SALE” provision which
reads:
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Miscellaneous conditions of sale: 1. Sale subject to BUYER’S and
SELLER’S acceptance and approval of survey of PROPERTY. (2) The
transfer of the PROPERTY shall include the transfer of all mineral rights
and all oil and gas rights.
(Tr., Exh. B.)
{¶27} The April 5, 2011, purchase agreement also contains a “TITLE”
provision which reads:
BUYER agrees to pay the purchase price upon the presentation to
BUYER of a general warranty deed conveying the premises free and
clear of any encumbrances except zoning ordinances, easements,
restrictions, leases, conditions, rights of way of record and real estate
taxes and assessments.
Id.
{¶28} At the hearing, Wehr testified about the discussions he had with
Catherine and James regarding the existing oil and gas lease on the property, the
then-current rates of bonus payments being offered to landowners in the area on oil
and gas leases, and conversations relative to setting a purchase price. Wehr was
informed that once he purchased the property he would likely be able to recoup much
of the purchase price by entering into a new oil and gas lease. Wehr clearly
understood that his purchase of the farmland was to be completed and closed prior to
the expiration of the existing lease.
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{¶29} At issue then, was whether the Petraglias purposefully delayed closing
on the sale of the property to obtain a benefit to which they would not have been
entitled. Regarding discussions which occurred between the parties during the
settlement negotiations, the trial court asked James the following:
THE COURT: Okay, so what’s the motivation to enter into the
settlement agreement in November of ’12, which is essentially the same
as the original contract of April of ’11, except for the general release,
which doesn’t pertain to the original purchase agreement, and the
dismissal of the pending lawsuit? Why would you decide to enter into
that?
MR. PETRAGLIA: I don’t know. I mean we wanted to because we
wanted to settle the case. We wanted to close. I mean that’s --
THE COURT: All right. Was the fact that you had already re-leased
the property and received the signing bonus, was that -- since you had
made that money was that additional motivation now to finally go
forward and close the original purchase agreement?
MR. PETRAGLIA: Well, it was a portion of it, yes.
(Tr., pp. 89-90.)
{¶30} Later at the hearing, the trial court questioned James on whether he felt
he could continue to encumber the property with additional leases, of record or not,
prior to the final closing:
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THE COURT: You take the position, evidently, that after you signed the
original purchase agreement you were still free to enter into lease
agreements with regard to this property?
MR. PETRAGLIA: Yes.
THE COURT: Is that fair?
MR. PETRAGLIA: Yes.
THE COURT: And whatever lease agreements you entered into after
the signing of that, Mr. Wehr, upon the closing of that, he’d be stuck
with those agreements or he would have to abide by those agreements;
is that right?
MR. PETRAGLIA: Yes.
THE COURT: So if you had sold timber off the property and received
money for that --
MR. PETRAGLIA: It was still our property, yes.
THE COURT: Okay. If you had decided to enter into a two or three
year lease with a trucking company that wanted to store construction
equipment on a portion of the farm that he was going to buy he would
have been stuck with that as well?
MR. PETRAGLIA: Well, the agreement specifically states leases.
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THE COURT: Right. Which leases? Leases that have to be of record?
MR. PETRAGLIA: It doesn’t say leases of record, Your Honor.
THE COURT: It just says leases?
MR. PETRAGLIA: Yes.
THE COURT: So how was he to discover about any other leases that
you may have entered into that were not of record?
MR. PETRAGLIA: Ask.
THE COURT: All right.
MR. PETRAGLIA: Ask at the mediation or ask us, we would have told
him.
THE COURT: So he has to rely upon you to tell him if there are any
other encumbrances; is that right?
MR. PETRAGLIA: Yes.
THE COURT: So you take the position that the only things of -- the
only things that had to be of record were rights of way; is that right?
MR. PETRAGLIA: Zoning ordinances, easement restrictions, leases
conditions, rights of way of record and real estate taxes and
assessments.
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THE COURT: I heard what your lawyer said, but aren’t all those things,
do they have to be of record before he has to live with them or can they
just be something that you entered into informally and was never
recorded?
MR. PETRAGLIA: I would say it would have to be of record.
THE COURT: All those things?
MR. PETRAGLIA: Yes.
THE COURT: Okay. Because that’s public notice that all those things
exist?
MR. PETRAGLIA: Yeah. I just -- I believe it’s not our responsibility to
go down and, you know, whatever is filed there and then do the work
for them and turn it over. I mean that’s up to them to do that.
***
THE COURT: And at that time there was a lease, I guess we’re calling
it the old lease?
MR. PETRAGLIA: Yes.
THE COURT: The old leases of record. But, as you indicated, it was
going to exist for a while?
MR. PETRAGLIA: Yes.
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THE COURT: But it looked like it was going to run out in about a year?
MR. PETRAGLIA: Yes.
THE COURT: Okay. Now, so -- but you’re saying to me that that
doesn’t stop you from -- because there was a lease then you felt that
you had the right to substitute a new lease for that?
MR. PETRAGLIA: Correct.
THE COURT: Is that right?
MR. PETRAGLIA: Yes.
THE COURT: Okay, why do you think that?
MR. PETRAGLIA: Because he bought the property subject to a lease.
THE COURT: Okay, but --
MR. PETRAGLIA: It’s not changing it at all.
(Tr., pp. 90-95.)
{¶31} Ultimately, the trial court was not persuaded by James’ assertions that
entering the new lease and keeping the accompanying bonus payment was
permissible under the terms of the settlement:
The evidence is clear that when the Purchase Agreement of April 5,
2011 was negotiated, the parties were well aware that an existing oil
and gas lease on the property dated May 24, 2007 would be expiring in
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May of 2012, thus, giving Wehr the opportunity to negotiate a new
lease. * * * Had this transaction closed within a reasonable time, Wehr
would have owned the property for almost a year before the lease
would have expired. He could have negotiated the lease to be in
conformity with his farming plan as well as all the financial benefits. If
Wehr entered into the same contract, the signing bonus of $391,000
would have been his. The evidence supports this Court’s conclusion
that the opportunity for Wehr to lease the acreage was a factor in
setting the per acre price in the contract.
(10/2/13 J.E., pp. 3-4.)
{¶32} The trial court further concluded:
[I]t was Petraglia’s purpose to delay the closing until the expiration of
the 2007 lease in late May of 2012 so that she could pocket the signing
bonus, walk away with a windfall, and defeat Wehr’s rights to that
money. The Defendant’s agreement at mediation to carry out the terms
of the original contract without disclosing the new lease and signing
bonus to Wehr, underscore her purposeful deception in balking at the
setting of a closing date on the April 2011 contract. It had to be the
Defendant’s fervent hope that somehow the fact of the new lease from
Petraglia to Chesapeake, or least [sic] the signing bonus, would not
come to Wehr’s attention at all or at least not until after the sale had
long been concluded.
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(10/2/13 J.E., p. 4.)
{¶33} The colloquy with the trial court demonstrates not only the Petraglias’
cavalier attitude toward the contractual terms and conditions of the original purchase
agreement but also toward the settlement agreement itself. Supplanting an original
oil and gas lease, set to expire on its own terms in approximately a year, with a
second, very different lease with a different company, different royalty rates and,
most notably, with an accompanying hidden signing bonus, flies in the face of the
basic tenets of contract law. As noted, in an enforceable contract, the parties must
have a meeting of the minds as to the essential terms of that contract. Mack v.
Polson Rubber Co., 14 Ohio St. 3d 34, 36, 470 N.E.2d 902 (1984). This mutual
assent prohibits one party from unilaterally modifying the terms of the contract and
from withholding material terms while the other party remains in the dark, operating
under the original contract with all its terms and conditions.
{¶34} Throughout the proceedings below as well as in the brief to this Court,
Catherine asserts that the new oil and gas lease with Chesapeake was simply an
extension of the existing oil and gas lease. Moreover, Catherine contends Wehr was
aware that an oil and gas lease existed on the property when he entered into the
purchase agreement. The trial court was clearly not persuaded by this assertion and
concluded, based upon sufficient evidence presented at hearing, the terms of the
purchase agreement did not contemplate or permit James or Catherine to willfully
delay closing of the sale only to obtain the benefit of entering into a new oil and gas
lease. The trial court determined after weighing the evidence that Wehr would have
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negotiated his own oil and gas lease and the signing bonus at issue would have gone
to Wehr had closing taken place as anticipated in the purchase agreement. The
court determined that to allow Catherine and her estate to retain the entire signing
bonus as well as the farm’s purchase price would lead to an inequitable and
unanticipated result. Moreover, the court determined “the opportunity for Wehr to
lease the acreage was a factor in setting the per acre price in the contract.” (10/2/13
J.E., p. 4.) Accordingly, Catherine’s first assignment of error is without merit and is
overruled.
ASSIGNMENT OF ERROR NO. 2
THE TRIAL COURT ERRED IN DENYING MS. PETRAGLIA’S
MOTION TO ENFORCE THE SETTLEMENT AGREEMENT AND FOR
COMPENSATORY DAMAGES.
{¶35} In the second assignment of error, Catherine argues it was Wehr’s
conduct which caused a delay in closing in December of 2012 and as a result she
incurred significant expenses. Catherine enumerated multiple costs incurred as a
result of Wehr’s alleged delay. Specifically, $2,200 in attorney fees to the law firm
that was required to act as an intermediary to close the real estate transaction as it
was part of a Section 1031 exchange; $19,000 in deposits to a building contractor to
prepare her new home upon her exit from the property; monthly payments to the
same contractor totaling $12,000 to ensure work was done on her new home once
the closing on the property occurred. Lastly, Catherine contends she is entitled to
attorney fees related to the enforcement of the settlement agreement.
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{¶36} It is well settled that “a prevailing party in a civil action may not recover
attorney fees as a part of the costs of litigation.” Wilborn v. Bank One Corp., 121
Ohio St. 3d 546, 548, 2008-Ohio-306, 906 N.E.2d 396, at ¶7. However, attorney fees
may be allowed as compensatory damages when they are incurred as a result of a
breach of a settlement agreement. Brown v. Spitzer Chevrolet Co., 5th Dist. No.
2012 CA 00105, 2012-Ohio-5623, ¶20.
{¶37} In its judgment entry, the trial court concluded Catherine’s allegation
that Wehr breached the settlement agreement and the related claims for
compensatory damages was not well taken. As noted above, the trial court, as trier
of fact, concluded the delay in closing was caused purposely by Catherine to obtain
the benefit of a new oil and gas lease and the related signing bonus. As the trial
court did not err in granting Wehr’s motion to enforce the settlement agreement,
Catherine was not entitled to an award of compensatory damages. Catherine’s
second assignment of error is without merit and is overruled.
CROSS-ASSIGNMENT OF ERROR NO. 1
THE TRIAL COURT ERRED IN DENYING WEHR PROPERTIES [SIC]
MOTION FOR PAYMENT OF ATTORNEY FEES.
{¶38} In his cross-assignment of error, Wehr contends the trial court erred in
not awarding attorney fees incurred as a result of seeking enforcement of the
settlement agreement. As earlier noted, while recovery of attorney fees is generally
not permitted in a civil action, courts in Ohio have recognized an exception for
attorney fees arising from enforcement of a settlement agreement. Brown, at ¶20.
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The Tenth Appellate District has recognized “a distinction between cases in which
attorney fees are awarded as costs and those in which the fees are awarded as part
of the aggrieved party’s damages.” Tejeda-Hercules v. State Auto Ins. Co., 10th Dist.
No. 08AP-150, 2008-Ohio-5066, ¶9. Thus, attorney fees may be awarded where it
can be established they were the result of the offending party’s breach of the
settlement agreement and sought as compensatory damages and not merely as
costs of the action. Id. The Eighth District has recognized an award of attorney fees
as compensatory damages as a result of enforcement of a settlement agreement.
Berry v. Lupica, 196 Ohio App. 3d 687, 2011-Ohio-5381, 965 N.E.2d 318, ¶19.
{¶39} Weir did not submit a transcript of the hearing on attorney fees or
otherwise file either a statement of the evidence or proceedings pursuant to App.R.
9(C). On this basis with the limited record before us, we cannot conclude that the
trial court abused its discretion in the matter. Ciura v. Carletti, 7th Dist. No. 02-CA-
212, 2003-Ohio-4460, ¶11.
{¶40} Regarding Wehr’s motion for attorney fees, in a January 9, 2014,
judgment entry, the trial court concluded:
The Court finds Defendant Petraglia’s Post-Hearing Brief to be both
accurate and well-reasoned.
For the reasons set forth therein, the Court hereby denies the Plaintiff’s
Motion seeking attorney fees.” (Emphasis sic.)
(1/9/14 J.E., p. 1.)
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{¶41} In Catherine’s post-hearing brief opposing these fees, she asserted that
attorney fees should not be awarded to Wehr because his documentation in support
was inadequate. Specifically, the documents failed to be “of sufficient detail and
probative value to enable the court to determine with a high degree of certainty that
such hours were actually and reasonably expended in the prosecution of the
litigation.” (11/15/13 Post-Hearing Brf., p. 5 citing Imwalle v. Reliance Med. Prods.,
515 F.3d 531, 553 (6th Cir.2008).
{¶42} Wehr’s counsel submitted an affidavit as well as two invoices along with
copies of checks for payment. The statements are dated August 14, 2013, and
October 15, 2013, respectively. The two invoices for legal work date from November
1, 2012 through September 4, 2013. Wehr’s motion to enforce the settlement
agreement was filed December 14, 2012. Thus, the dates in the invoices are
presumably associated with the relevant time period. However, reviewing both
invoices, billing line items lack the requisite detail to ascertain what legal work was
involved. For example, approximately fifty-one entries list only “Work on file,” while
several others contain only a few words, such as “draft correspondence” and “hearing
preparation,” with little or no indication as to what matter was being addressed or
what was being researched. Such vague and cryptic entries are insufficient to
support an award of attorney fees as compensatory damages contemplated by the
caselaw. See Imwalle, supra; see also Shanker v. Columbus Warehouse Ltd.
Partnership, 10th Dist. No. 99AP-772, 2000 WL 726786 (Jun. 6, 2000.) (noting that
attorney fees can be awarded as compensatory damages flowing from a breach of a
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settlement agreement.) Therefore, the trial court did not err in denying Wehr’s motion
for attorney fees as compensatory damages. Wehr’s cross-assignment of error is
without merit and is overruled.
Conclusion
{¶43} Catherine presents two assignments of error on appeal. In the first
assignment, she incorrectly asserts the trial court erred in granting Wehr’s motion to
enforce the settlement agreement. The record supports the trial court’s findings
regarding Catherine’s delay so that she could improperly encumber the property with
a new oil and gas lease. In the second assignment of error, Catherine contends the
trial court erred in failing to grant her motion to enforce the settlement agreement and
award her compensatory attorney fees. However, as the trial court did not err in
concluding the original delay in closing was improperly caused by Catherine, the trial
court did not err in concluding attorney fees to Catherine were not warranted. On
cross-appeal, Wehr asserts the trial court erred in failing to award him compensatory
attorney fees relative to the motion to enforce settlement agreement. A review of the
statements and affidavits of the attorney fees in question reveal they lack the
sufficiency and detail required for the court to award such fees. Therefore, based on
the foregoing, Catherine’s assignments of error are overruled. Wehr’s cross-
assignment of error is also overruled. The judgment of the trial court is hereby
affirmed in full.
Donofrio, P.J., concurs.
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DeGenaro, J., concurs in part and dissents in part; see concurring in part and
dissenting in part opinion.
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DeGenaro, J., concurring in part and dissenting in part.
{¶44} While I join the majority in most of its analysis, I respectfully dissent with
respect to attorney fees. I am mindful that Wehr failed to file a transcript of the
attorney fee hearing, which constrains our review. However, the record before us
demonstrates that Wehr presented evidence with sufficient detail to support an award
of attorney fees in some amount; it was an abuse of discretion for the trial court to
summarily reject an award.
{¶45} Catherine's challenge to Wehr's request for attorney fees was two-fold.
First, she asserted that because she did not breach the settlement agreement, Wehr
was not entitled to attorney fees at all; and second, she claimed the hours billed were
excessive and the statements lacked sufficient detail. The trial court denied Wehr's
motion for attorney fees, merely stating: "The Court finds Defendant Petraglia's Post-
Hearing Brief to be both accurate and well-reasoned. For the reasons set forth
therein, the Court hereby denies the Plaintiff's Motion seeking attorney fees."
(emphasis in original) The trial court's rationale is erroneous and therefore an abuse
of discretion for two reasons.
{¶46} First, the trial court's October 2, 2013 judgment granting Wehr's motion
to enforce the settlement agreement rests upon a conclusion that Catherine
breached the settlement agreement by, as the trial court found, her "purposeful
deception" in order to "pocket the signing bonus, walk away with a windfall, and
defeat Wehr's rights to that money." As recognized by the majority, attorney fees
incurred in order to enforce a settlement agreement are in the nature of
compensatory damages rather than the costs of litigation. Majority, ¶ 39.
Accordingly, as a matter of law, Wehr was entitled to attorney fees, and the trial
court's determination otherwise was erroneous.
{¶47} Second, and regardless of the lack of a transcript, as noted in Wehr's
November 27, 2013 post-hearing motion, Wehr's expert testified that the hourly rate
charged and amount of hours spent on the matter were reasonable. The record
further demonstrates that Catherine requested three continuances of the hearing.
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The first occurred two weeks before the original date, the second, two days before
the first rescheduled date, and finally, the third was requested the day of the second
rescheduled date. Although Catherine's post-hearing brief filed with the trial court
indicates that two continuances were due to her hospitalization, regardless of the
reason, counsel for Wehr still had to be fully prepared to go forward each time. Thus,
the argument of repetitive preparation is not valid.
{¶48} Finally, contrary to the assertion of the majority, there was detailed
evidence before the trial court with respect to the nature and amount of attorney fees
incurred by Wehr in the billing invoices submitted for the trial court's consideration via
affidavit. While the entries merely stating "work on file" are clearly insufficient, others
offering more detail, should have been considered. Several examples of the latter
include: 1) telephone conference with Mr. Heck re: Petraglia title issues; 2) draft
enforcement motion; 3) Research re: compensatory damages. Review enforcement
motion; 4) Review pleadings. Telephone conference with Judge Pike's bailiff; 5)
Prepare for hearing. Preparation and attend scheduled hearing; 6) Review
documents from Attorney Murphy. Review Court Order. Telephone conference with
Mr. Wehr; 7) Review testimony sheets. Research 'benefit of the bargain' cases.
Conference with Mr. Wehr. Telephone conference with Attorney Mots. Conference
with Judge Pike's Bailiff.
{¶49} Catherine breached the settlement agreement, and as a result, Wehr
was entitled to an award of attorney fees as a matter of law, and the trial court
abused its discretion by failing to make an award in some amount. Despite the lack
of a hearing transcript, the limited record before us reveals that there was expert
testimony and moreover, the record demonstrates that there were a number of
entries with sufficient detail from which to base an attorney fee award, which the trial
court should have considered and did not. Accordingly, the trial court's decision
regarding attorney fees should be reversed and the matter remanded.