Santomauro v. SUMSS Property Mgt., L.L.C.

[Cite as Santomauro v. SUMSS Property Mgt., L.L.C., 2019-Ohio-4335.]
STATE OF OHIO ) IN THE COURT OF APPEALS
)ss: NINTH JUDICIAL DISTRICT
COUNTY OF SUMMIT )
MARSHA SANTOMAURO, et al. C.A. Nos. 29032
29217
Appellees
v.
APPEAL FROM JUDGMENT
SUMSS PROPERTY MANAGEMENT, ENTERED IN THE
LLC COURT OF COMMON PLEAS
COUNTY OF SUMMIT, OHIO
Appellant CASE No. CV-2014-04-1498
DECISION AND JOURNAL ENTRY
Dated: October 23, 2019
SCHAFER, Judge.
{¶1} Appellant-Defendant, SUMSS Property Management, LLC (“SUMSS”), appeals
from the March 28, 2018 journal entry and April 18, 2018 order of the Summit County Court of
Common Pleas. For the reasons that follow, this Court affirms in part and reverses in part.
I.
{¶2} This matter stems from a dispute among six siblings regarding the management of
a family real estate and property management business, SUMSS, formed by their father, Anthony
Santomauro, in 2004. Following their father’s passing in 2014, each of the following siblings
was a member with a one-sixth interests in the business: Marsha Santomauro, Lisa Madden,
Brenda Elaine Loss, Andrea Renee Cowan, Craig Santomauro, and Christopher Santomauro.
Appellees-Plaintiffs, Marsha and Lisa, commenced this action on April 4, 2014, as members of
SUMSS seeking judicial dissolution of the company. Marsha and Lisa alleged, inter alia, that
Christopher, as manager of SUMSS, had mismanaged the company and breached his fiduciary
2
duties, and alleged that such conduct made it impracticable to carry on the business of SUMSS.
Marsha and Lisa’s one-count complaint named SUMSS as the only defendant, and they did not
assert any causes of actions against the other siblings individually.
{¶3} SUMSS answered the complaint and litigation ensued. On September 7, 2016,
SUMSS filed a counterclaim against Lisa. In the counterclaim, SUMSS alleged that “Lisa, either
directly or indirectly through her son, Blake Madden,” formed a limited liability company under
the name Urban Imperial Building and Rental, LLC (“Urban Imperial”). SUMSS alleged that
Lisa, as chief operating officer and general manager of Urban Imperial, engaged in direct and
unfair competition with SUMSS, breached fiduciary duties to SUMSS, and unlawfully used
SUMSS’s trade name “Urban Rental” in operating Urban Imperial to confuse the public and
usurp SUMSS’s good will.
{¶4} The litigation carried on to the trial date of December 4, 2017. Rather than
proceed to trial, the parties engaged in settlement discussions spanning over the course of three
days. The settlement discussions culminated with the parties’ announcement on December 6,
2017, that they reached an agreement to resolve the case. On December 6, 2017, SUMSS’s
attorney, Mr. Soles, entered the terms of the settlement agreement on the record in open court in
the presence of the judge assigned to hear this matter. The parties—all present and represented
by counsel—confirmed their acquiescence to the stated terms of the settlement agreement and
represented to the court that the matter was settled. The parties indicated that Mr. Soles would
draft “something” regarding the mutual releases and present the trial judge with a proposed
judgment entry to mark the case settled and dismissed pursuant to the terms of the agreement
read into the record.
3
{¶5} Then, on December 22, 2017, SUMSS filed a motion to return the matter to the
active docket, which was, essentially, a motion to set aside the settlement agreement. In the
motion, SUMSS disputed the existence of an enforceable settlement agreement, contending that
there was no meeting of the minds as to all relevant terms and asserting defenses to the
enforceability of the agreement. Marsha and Lisa each filed a brief in opposition to SUMSS’s
motion, to which SUMSS filed a reply. The trial court issued a journal entry on January 16,
2018, ruling on SUMSS’s motion; the court concluded that SUMSS was not entitled to an
evidentiary hearing on its motion, denied the request to return the matter to the active docket, and
found that parties entered into an enforceable settlement agreement. The trial court also ordered
Marsha and Lisa to submit “a draft of a final judgment entry incorporating the terms of the
settlement agreement as entered into at the hearing of December 6, 2017[.]”
{¶6} SUMSS filed objections to plaintiffs’ proposed final order on January 26, 2018,
and filed renewed objections on February 6, 2018. However, on February 13, 2018, the trial
court issued an order reconsidering its prior decision and setting an evidentiary hearing to
determine whether the parties had reached a settlement agreement. One day prior to the March
13, 2018 evidentiary hearing, SUMSS filed a supplemental motion to return the matter to the
active docket.
{¶7} At the evidentiary hearing, SUMSS presented the testimony of its managing
member, Christopher, and the testimony of a physician who had treated Christopher for
bronchitis in December of 2017. Following the hearing, the trial court took the matter under
advisement and then issued a journal entry on March 28, 2018, ruling on SUMSS’s motion to
return the matter to the active docket. In its entry, the trial court found “that there was an
enforceable settlement agreement entered by the parties to this lawsuit on December 6, 2017[,]”
4
and further found that “[Mr.] Soles, on behalf of his client, [SUMSS] had apparent authority to
enter into the settlement agreement.” The trial court also found “that the settlement agreement
was certain in its terms and that there was a meeting of the minds on all essential elements to the
settlement agreement.” Following the trial court’s discussion of the terms of the settlement
agreement, and the trial court’s decision as to which of those terms were essential to the
settlement agreement, the court again ordered counsel for Marsha and Lisa to submit “a draft of a
final judgment entry incorporating the essential terms of the settlement agreement as set forth
above * * *” noting that the “judgment entry should also retain jurisdiction by [the trial court] for
the sole purpose of enforcing the settlement as agreed to by the parties on December 6, 2017.”
{¶8} On April 10, 2018, SUMSS filed an objection and opposition to a proposed final
order submitted by Lisa’s attorney. Over SUMSS’s objection, the trial court entered an order on
April 18, 2018, reiterating its denial of SUMSS’s motion to return the matter to the active docket
and finding that the parties entered into a valid and enforceable settlement agreement on
December 6, 2017. The April 18, 2018 entry purported to memorialize the terms of the
settlement agreement as follows:
1) Titles to the 17 real estate properties, all of which are accurately identified in
the Transcript made on December 6, 2017, to-wit, 307 Broad, 310/316 Broad, 330
Broad, 1940 3rd Street, 1941 4th Street, 1937 4th Street, 1523 Broad Street, 2032
3rd Street, 2035 Bird, 528 Stow, 2250 4th Street, 2026 3rd Street, 2431
Northland, 542 Sackett, 346/348 Broad, 1868 2nd Street, and 1880 2nd Street,
shall all be transferred by [SUMSS] by quit claim deed, “as-is” [as of
December 6, 2017] to [Marsha and Lisa] or to [their] designee(s) forthwith.
2) Leases incident to each of the 17 properties described above and in the
December 6, 2017 transcript shall be transferred to [Marsha and Lisa], or to their
designated LLC, by [SUMSS] forthwith and [SUMSS] shall further provide to
[Marsha and Lisa] or their designee(s), all records reflecting lease payments made
from January 1, 2018 for each of the 17 properties described above through April
1, 2018, including all amounts actually paid for each unit, the identity (identities)
of the tenant/tenants making the payments and the dates on which the payments
5
were made. These documents shall be provided by [SUMSS] to [Marsha and
Lisa], or their designee(s) forthwith.
3) All security deposits pertaining to the 17 properties described by street
addresses above and in the December 6, 2017 transcript shall be transferred by
[SUMSS] to [Marsha and Lisa] or their designee(s) no later than April 5, 2018.
4) All January, February, March and April, 2018 rental payments made incident
to the 17 properties described herein and in the December 6, 2017 transcript shall
be transferred by [SUMSS] to [Marsha and Lisa] or their designee(s) forthwith.
5) [Marsha and Lisa] shall transfer their membership units in [SUMSS] to
[SUMSS] forthwith;
(Emphasis sic.) SUMSS timely appealed from the April 18, 2018 order, presenting four
assignments of error for our review.
{¶9} On May 16, 2018, Lisa filed a motion in the trial court seeking attorney fees from
SUMSS pursuant to R.C. 2323.51. The motion was filed while SUMSS’s appeal from the trial
court’s April 18, 2018 order was pending in this Court. This Court granted Lisa’s motion for
limited remand and remanded the matter to the trial court for the limited purpose of ruling on
Lisa’s motion for attorney fees. The trial court issued its ruling on July 23, 2018, denying the
motion for attorney fees without a hearing. Lisa moved to consolidate the appeals. Initially, we
denied the motion. However, upon further consideration we now consolidate the appeals for the
purpose of this decision.
{¶10} For ease of analysis, we reorder and consolidate certain assignments of error.
II.
SUMSS’s Assignment of Error II
The trial court erred in holding that the settlement agreement was
enforceable when SUMSS’s managing member lacked the authority or
capacity to enter into the agreement and was operating under duress.
6
{¶11} In its second assignment of error, SUMSS contends that the settlement agreement
was unenforceable because Christopher lacked the authority to transfer SUMSS’s properties.
SUMSS also argues that Christopher lacked the capacity to enter into the settlement agreement
due to illness, and that the settlement agreement is unenforceable due to duress.
{¶12} The standard of review applicable to a trial court’s decision as to the
enforceability of a settlement agreement depends on the question presented on appeal. Technical
Constr. Specialties, Inc. v. New Era Builders, Inc., 9th Dist. Summit No. 25776, 2012-Ohio-
1328, ¶ 18. This Court will not overturn a trial court’s findings on an evidentiary question if
there was sufficient evidence to support such a finding. Id. citing Chirchiglia v. Bur. of Workers’
Comp., 138 Ohio App.3d 676, 679 (7th Dist.2000). However, if the dispute is a question of law,
this Court “must review the decision de novo to determine whether the trial court’s decision to
enforce the settlement agreement is based upon an erroneous standard or a misconstruction of the
law.” New Era Builders at ¶ 18, citing Continental W. Condominium Unit Owners Assn. v.
Howard E. Ferguson, Inc., 74 Ohio St.3d 501, 502 (1995).
A. Authority to Transfer SUMSS’s Properties
{¶13} While maintaining that a settlement agreement does not exist, SUMSS first argues
in its second assignment of error that Christopher lacked the authority to enter into the
“purported settlement agreement” that would require SUMSS to transfer seventeen “rental
properties along with the leases and security deposits for those properties.”
{¶14} During the evidentiary hearing, counsel for SUMSS argued that Christopher
lacked authority under R.C. 1705.25. In its ruling, the trial court found that Attorney Soles
advised the court that the parties had reached a settlement and proceeded to place the terms of
the settlement on the record in the presence of both Christopher and Craig, neither of whom
7
raised any objections to counsel’s authority to agree to the stated terms. Regardless of any issues
as to Christopher’s authority, the trial court concluded that SUMSS had been represented by
counsel and that counsel possessed apparent authority to enter into the settlement agreement.
Having found that SUMSS’s attorney had authority to agree to the terms of the settlement, the
trial court rejected SUMSS’s claim that Christopher lacked authority to enter the settlement
agreement.
{¶15} On appeal, SUMSS does not directly address the trial court’s finding that trial
counsel for SUMSS exercised apparent authority to enter the settlement agreement on behalf of
his client. Rather, SUMSS contends that R.C. 1705.25 limits the authority of a manager of a
limited liability company and prevents the manager from making any agreement that would
make it impossible to carry out the ordinary business of the company. SUMSS argues that
Christopher, as manager, was statutorily prohibited from entering the agreement because the
transfer of seventeen properties would contravene this statute. SUMSS maintains that
Christopher lacked authority to transfer the seventeen properties without agreement of SUMSS’s
other members because doing so would prevent SUMSS from carrying on its ordinary business.
{¶16} Even if SUMSS were to successfully argue that R.C. 1705.25 could, as a matter of
law, extinguish counsel’s authority under these circumstances, SUMSS has not demonstrated the
factual basis upon which it seeks to invoke R.C. 1705.25 as grounds for constraining SUMSS’s
authority to enter the settlement agreement. SUMSS has not cited to any evidence in the record
to establish that the transfer of the seventeen properties or any other term of the agreement would
“make it impossible to carry on the ordinary business of the company” as stated in R.C.
1705.25(A)(3)(c). Indeed, a review of the record shows that aside from eliciting testimony from
Christopher regarding this issue, SUMSS did not present evidence in support of this argument.
8
Therefore, we conclude that the trial court did not err by overruling the request to set aside the
settlement agreement on this basis.
B. Christopher’s Illness
{¶17} SUMSS next argues that Christopher was too ill to understand the settlement
agreement. Specifically, SUMSS argues that because Christopher was suffering from an
illness—bronchitis and/or pneumonia—and because he was “heavily medicated[,]” Christopher
did not understand the terms of the purported agreement and did not have the mental capacity to
understand the complex settlement agreement. On this basis, SUMSS’s argues the settlement is
unenforceable because Christopher, as manager, lacked the capacity to enter the agreement.
{¶18} Contractual capacity is an essential element of a contract. Kostelnik v. Helper, 96
Ohio St.3d 1, 2002-Ohio-2985, ¶ 16. A party who enters into a settlement agreement and later
claims to have been incompetent to enter into that settlement must demonstrate by clear and
convincing evidence that the agreement was executed while he was mentally incompetent.
Bretzfelder v. Bretzfelder, 9th Dist. Summit No. 23674, 2008-Ohio-2669, ¶ 6, citing DiPietro v.
DiPietro, 10 Ohio App.3d 44, 46, (10th Dist.1983). To demonstrate a lack of competency, a
party must show that his mind was so affected at the time he entered the agreement that he did
not possess the ability to comprehend the nature or scope of his act, or to appreciate its effect or
consequences. Miller v. Miller, 9th Dist. Summit No. 21770, 2004-Ohio-1989, ¶ 16, quoting
Kaltenbach v. Kaltenbach, 4th Dist. Ross No. 1313, 1987 WL 15494, *2 (Aug. 11, 1987).
{¶19} In its ruling, the trial court found it significant that Christopher participated in the
negotiations prior to entering the settlement agreement, but at no time during the proceedings did
he raise the issue that he was suffering from any medical condition that might render him
incapacitated to make decisions. In fact, as the trial court noted, Christopher did not raise this
9
issue until sixteen days after the settlement. Considering the evidence SUMSS presented at the
hearing, the trial court found that the physician SUMSS called to testify regarding Christopher’s
condition did not offer any opinion as to Christopher’s mental capacity as of December 6, 2017.
The trial court concluded that there was no evidence upon which the court could find that the
effects of the medicine rendered Christopher incompetent as of that date.
{¶20} On appeal, SUMSS reiterated the arguments raised in the trial court, but failed to
point to evidence in the record to substantiate its claim that Christopher’s illness or medication
affected his mind so severely that he was unable to comprehend the terms of the settlement to
which SUMSS agreed. Additionally, our review of the record shows that, aside from
Christopher’s own testimony that he did not feel well, lacked oxygen, and experienced
confusion, SUMSS did not present sufficient evidence to demonstrate that he lacked the mental
capacity to authorize SUMSS’s attorneys to settle the matter pursuant to those terms. Therefore,
we cannot conclude that the trial court erred by rejecting the argument that Christopher’s alleged
illness prevented him from authorizing SUMSS’s attorneys to enter into the settlement
agreement on December 6, 2017.
C. Duress
{¶21} In the final argument of this assignment of error, SUMSS contends that the
agreement was unenforceable because it was the product of duress. SUMSS argues that, prior to
the three-day negotiation period leading up to the December 6, 2017 settlement agreement,
Marsha’s attorney sent “inappropriate texts” to Andrea Renee, “threatening her with criminal
prosecution for her support of SUMSS during the litigation.” It is SUMSS’s theory that
Marsha’s attorney did this to “gain an unfair advantage and procure a better settlement position”
because he “knew” that Andrea Renee would relay this threat to Christopher. SUMSS asserts
10
that this caused Christopher to worry about Andrea Renee, and placed him in a state of duress
which “motivated him to attend the court dates while ill and attempt to settle the lawsuit.” The
trial court found that any alleged overreaching or duress directed at Andrea Renee—a non-
managing member of SUMSS—rather than Christopher as the managing member would not be
relevant as to whether SUMSS had entered into a settlement agreement.
{¶22} “‘To avoid a contract on the basis of duress, a party must prove coercion by the
other party to the contract. It is not enough to show that one assented merely because of difficult
circumstances that are not the fault of the other party.’” Feathers v. Tasker, 9th Dist. Summit
No. 26318, 2012-Ohio-4917, ¶ 8, quoting Blodgett v. Blodgett, 49 Ohio St.3d 243 (1990),
syllabus. “Three common elements of duress include (1) the involuntary acceptance of terms by
one party, (2) no alternative to acceptance under the circumstances, and (3) coercive acts by the
other party gave rise to those circumstances.” Id. citing Blodgett at 246.
{¶23} On appeal, SUMSS has not pointed to any evidence in the record to demonstrate
coercive acts that left SUMSS with no alternative under the circumstances but to involuntarily
accept Marsha and Lisa’s settlement terms. See Feathers at ¶ 8. SUMSS’s subsequent
dissatisfaction with the terms of the settlement agreement does not constitute grounds to set aside
the agreement in the absence of evidence that coercion forced SUMSS to accept the terms of the
agreement. See Feathers ¶ 11-12. The allegedly “inappropriate texts” sent by Marsha’s attorney
were directed to Andrea Renee; she was neither a party to this litigation in her individual
capacity nor a managing member of SUMSS. Even assuming that the substance of these text
messages caused concern, personally, for Andrea Renee or Christopher, the record does not
support the contention that the messages somehow forced SUMSS to accept the terms of the
settlement agreement reached as a result of three days of counseled negotiations between the
11
parties. In fact, SUMSS contends on appeal that the alleged duress compelled Christopher to
participate in negotiations while ill, but does not explain how the text messages actually caused
SUMSS to involuntarily accept any settlement terms presented by Marsha. At best, this amounts
to a claim that SUMSS entered the agreement under difficult circumstances, which is insufficient
to establish duress. Feathers at ¶ 8.
{¶24} Based on the foregoing, we cannot say that the trial court erred by concluding that
there was no apparent nexus between the text messages to Andrea Renee and SUMSS’s decision
to enter the settlement agreement. Therefore, we conclude that the trial court did not err by
denying SUMSS’s request to set aside the agreement on the basis of duress.
{¶25} We conclude that SUMSS has not shown that the trial court’s decision—rejecting
SUMSS’s arguments that the settlement agreement was unenforceable due to a lack of authority,
capacity to enter the agreement, or as a result of duress—was not supported by sufficient
evidence. SUMSS’s second assignment of error is overruled.
SUMSS’s Assignment of Error I
The trial court erred in holding that there was an enforceable settlement
agreement between [SUMSS] and [Marsha] and [Lisa] as of December 6,
2017.
{¶26} In its first assignment of error, SUMSS argues that the trial court erred by finding
that the terms placed on the record on December 6, 2017, resulted in an enforceable settlement
agreement. Within this single assignment of error, SUMSS asserts numerous issues with regard
to two distinct contentions: (1) that the settlement agreement was unenforceable because there
was no meeting of the minds as to essential terms, and (2) that the settlement agreement is
unenforceable under the statute of frauds.
12
A. Statute of Frauds
{¶27} Initially, we must address an issue with SUMSS’s contention that the settlement
agreement is unenforceable under the statute of frauds. SUMSS challenges that, because the
“purported oral” settlement agreement involves the transfer of real property, the enforcement of
the agreement would violate the statute of frauds. SUMSS asserts that “the trial court erred in
determining that the oral settlement agreement was valid when it involved the transfer of real
property.” Although SUMSS ignores the fact that the trial court’s subsequent journal entry
would eliminate any issue related to the statute of frauds, see Michaels v. Michaels, 9th Dist.
Medina No. 09CA0047-M, 2010-Ohio-963, ¶ 15, our review of the record reveals that SUMSS
never raised the issue to the trial court. “Arguments that were not raised in the trial court cannot
be raised for the first time on appeal.” JPMorgan Chase Bank, Natl. Assn. v. Burden, 9th Dist.
Summit No. 27104, 2014-Ohio-2746, ¶ 12. Generally, a reviewing court does “not consider
questions not presented to the court whose judgment is sought to be reversed.’” Carnegie Cos.,
Inc. v. Summit Properties, Inc., 9th Dist. Summit No. 25622, 2012-Ohio-1324, ¶ 8, quoting
Goldberg v. Indus. Com’n of Ohio, 131 Ohio St. 399 (1936), paragraph four of the syllabus.
Because SUMSS raised this statute of frauds argument for the first time on appeal, this Court
declines to consider it. See Klever v. City of Stow, 13 Ohio App.3d 1, 5 (9th Dist.1983).
B. Meeting of the Minds as to Essential Terms
{¶28} On appeal, SUMSS contends that the trial court erred by determining that a
settlement agreement exists, because there was not a sufficient meeting of the minds as to the
settlement terms read into the record to create an enforceable settlement agreement. SUMSS
raises numerous issues on this point—some of which were presented to the trial court through
13
SUMSS’s motion to return the case to the active docket and objections to proposed orders, and
some of which appear to be raised for the first time on appeal.
{¶29} Generally, where parties voluntarily enter into an oral settlement agreement in the
presence of the court, the agreement constitutes a binding contract and a trial court may sign an
entry reflecting the settlement agreement in the absence of a motion to set the agreement aside.
Spercel v. Sterling Industries, Inc., 31 Ohio St.2d 36 (1972), paragraphs one and two of the
syllabus. In a case such as this, where “the terms of a settlement agreement were read into the
record, but the settlement agreement was not reduced to judgment by the trial court and a dispute
subsequently arises as to the terms of the agreement, ‘the trial judge should [ ] conduct [ ] an
evidentiary hearing to resolve the parties’ dispute about the existence of an agreement or the
meaning of its terms as read into the record at the hearing, before reducing the matter to
judgment.’” City of Cuyahoga Falls v. Wells, 9th Dist. Summit No. 19959, 2001 WL 81260, *2,
quoting Rulli v. Fan Co., 79 Ohio St.3d 374, 377 (1997). When a party disputes “whether the
evidence shows that a settlement agreement exists, this Court will not reverse the trial court’s
decision so long as its finding is supported by sufficient evidence in the record.” Brown v.
Dillinger, 9th Dist. Medina No. 05CA0040-M, 2006-Ohio-1307, ¶ 7.
{¶30} Although a settlement agreement memorialized in writing is preferable, “an oral
settlement agreement may be enforceable if there is sufficient particularity to form a binding
contract.” Kostelnik, 2002-Ohio-2985 at ¶ 15. “[T]he terms of the agreement must be
reasonably certain and clear[,]” because
[a] court cannot enforce a contract unless it can determine what it is. It is not
enough that the parties think that they have made a contract. They must have
expressed their intentions in a manner that is capable of being understood. It is
not even enough that they had actually agreed, if their expressions, when
interpreted in the light of accompanying factors and circumstances, are not such
that the court can determine what the terms of that agreement are. Vagueness of
14
expression, indefiniteness and uncertainty as to any of the essential terms of an
agreement, have often been held to prevent the creation of an enforceable
contract.
Rulli at 376 , quoting 1 Corbin on Contracts (Rev. Ed.1993) 525, Section 4.1. However, it is
axiomatic that “[a]ll agreements have some degree of indefiniteness and some degree of
uncertainty.” Kostelnik at ¶ 17.
{¶31} SUMSS lists a variety of issues in support of its contention that there was no
meeting of the minds. Specifically, SUMSS contends that the settlement lacked sufficient details
and that the agreement was “complicated and several terms were undecided” because: (1) it was
unclear whether the seventeen properties would be transferred to plaintiffs personally or to their
designee; (2) the parties did not confirm whether it was possible to transfer all seventeen
properties in the manner indicated in the agreement; (3) the parties did not specify details as to
when, and to whom, the security deposit and rents would be paid or who would bear
responsibility for the properties prior to transfer; (4) the agreement lacked details regarding the
description of the estate claims Marsha and Lisa agreed to waive, and did not specify “which
claims were to be assigned to which party[;]” (5) the parties included “additional terms” at the
last minute by including a provision for mutual releases, altering the identity of the transferee of
the properties from Marsha and Lisa to an unnamed entity, and raising an issue regarding family
cemetery plots; and (6) counsel for Marsha and Lisa subsequently inquired as to whether the
property transfer would include an adjacent lot. Additionally, SUMSS argues that the “parties
never reached an enforceable agreement because there was an intent to reduce the agreement to
writing” and because “there was no meeting of the minds to bind non-parties.”
15
Complicated and Undecided Terms
{¶32} While arguing that certain terms are complicated, undecided, or unclear, SUMSS
does not point to any terms of the settlement agreement that are actually disputed by the parties.
Instead, SUMSS claims that the settlement agreement was “anything but [] simple” and that it
failed to include sufficient detail.
{¶33} “A meeting of the minds as to the essential terms of the contract is a requirement
to enforcing the contract.” Kostelnik, 2002-Ohio-2985 at ¶ 16. “A dispute over the meaning of a
term does not constitute an absence of a material term that could defeat the enforceability of the
contract.” Allen v. Bennett, 9th Dist. Summit Nos. 23570, 23573, and 23576, 2007-Ohio-5411, ¶
14. In the event that incidental terms or details are not concluded in the agreement, they can be
resolved later—judicially or by agreement—but their omission does not render the agreement
unenforceable. See Murra v. Farrauto, 10th Dist. Franklin No. 16AP-347, 2017-Ohio-842, ¶
16. Whether a meeting of the minds has occurred as to the essential terms of a contract is a
question of fact to be determined from all the relevant facts and circumstances. Aber v.
Vilamoura, 184 Ohio App.3d 658, 2009-Ohio-3364, ¶ 10 (9th Dist).
{¶34} SUMSS has not identified any details of the parties’ agreement, the omission of
which might render the settlement agreement unenforceable. Otherwise put, the issues raised by
SUMSS involve terms and details that, conceivably, could have been included in the settlement.
However, SUMSS has not demonstrated that these additional details constitute essential or
material terms, as opposed to being incidental or collateral matters that would not defeat the
formation or enforceability of a contract. See Mr. Mark Corp. v. Rush, Inc., 11 Ohio App.3d
167, 169 (8th Dist.1983), quoting Restatement of the Law 2d, Contracts, Section 33, Comment a
16
(1981) (“Where the parties have intended to conclude a bargain, uncertainty as to incidental or
collateral matters is seldom fatal to the existence of the contract.”)
{¶35} SUMSS asserts that certain terms were added or discussed during “the last
minute” of settlement negotiations. The mere fact that these issues were discussed or included
near the end of the settlement hearing does not substantiate SUMSS’s contention that there was
no meeting of the minds as to the material terms of the settlement agreement. Likewise, the fact
that Marsha’s attorney subsequently inquired as to whether an adjacent parcel would be included
in the term of the agreement describing the transfer of real property does not mean that the term
was unclear or disputed, let alone establish that there was no meeting of the minds.
Written Agreement
{¶36} SUMSS next argues that the settlement terms read into the record cannot
constitute an enforceable agreement because “the parties intended to formalize the agreement in
writing,” “did not intend to be bound by the oral agreement[,]” and instead “contemplated the
future action of drafting an agreed order for the judge to sign.” In support of this contention
SUMSS notes the parties’ stated intention to execute mutual releases, mentions a term of the
agreement that anticipated the transfer of the properties would occur after the signing of the
settlement agreement, and again references the statute of frauds.
{¶37} Once the parties have assented to the terms of a settlement, the settlement
agreement exists such that it cannot be repudiated by either party, “‘and the court has the
authority to sign a journal entry reflecting the agreement and to enforce the settlement.’”
Feathers, 2012-Ohio-4917 at ¶ 7, quoting Haas v. Bauer, 156 Ohio App.3d 26, 2004-Ohio-437,
¶ 16 (9th Dist.). “‘The mere fact that parties who have reached a verbal agreement also have
agreed to reduce their contract to writing does not prevent the agreement from being a contract if
17
the writing is not made.’” PNC Mtge. v. Guenther, 2d Dist. Montgomery No. 25385, 2013-Ohio-
3044, ¶ 15, quoting Union Sav. Bank v. White Family Cos., Inc., 183 Ohio App.3d 174, 2009-
Ohio-2075, ¶ 26 (2d Dist.). “It is only where the parties intend that there will be no contract until
the agreement is fully reduced to writing and executed that no settlement exists unless the final,
written settlement agreement is signed by all of the parties.” Rayco Mfg., Inc. v. Murphy,
Rogers, Sloss & Gambel, 8th Dist. Cuyahoga No. 106714, 2019-Ohio-3756, ¶ 69, citing
Guenther.
{¶38} Even assuming that the record supports SUMSS’s claim that the parties intended
to execute a written settlement agreement, the fact that the settlement was not reduced to a
writing would not negate the validity of the settlement or divest the trial court of the authority to
sign a journal entry reflecting the parties’ agreement. Regardless of any intent the parties may
have had to reduce their settlement agreement to writing or to execute documents pursuant to
their agreement, SUMSS did not present any evidence to establish that the parties did not intend
for the settlement agreement to exist until it was reduced to a writing signed by all parties.
Whether the parties intended to be bound by the settlement agreement is a question to be
resolved by the trier of fact. Oglebay Norton Co. v. Armco, Inc., 52 Ohio St.3d 232, 235 (1990).
The record contains sufficient evidence to support the trial court’s conclusion that the parties
intended to be bound by the agreement. See id.Binding Non-parties
{¶39} Finally, SUMSS argues that there was no meeting of the minds to bind numerous
non-parties. SUMSS argues that “the settlement agreement purported to bind numerous non-
parties who did not participate in the settlement negotiations” or give consent to be bound by the
agreement. First, SUMSS asserts an issue as to a term regarding waiver of estate claims that
18
SUMSS believes “likely referred to Chris, Craig, and [Andrea] Renee.” Second, SUMSS argues
that the agreement required Blake Madden, as a non-party to the litigation, to take certain actions
regarding his company’s website.
{¶40} The transcript of the December 6, 2017 settlement agreement indicates that
Marsha and Lisa would agree to waive “any entitlement to any distribution in [their late father’s]
estate,” and to assign their interests to “SUMSS and/or to Chris, [Andrea] Renee, and Craig.”
Ostensibly, this term places an obligation on Marsha and Lisa, but it does not purport to bind a
non-party as SUMSS contends. Additionally, counsel for SUMSS stated on the record that “Tim
Madden, Blake Madden, and Trisha Madden” would agree to release all claims related to the
probate case. SUMSS did not argue or point to any evidence to support the claim that these non-
parties did not consent to be bound by the agreement. Even assuming these non-parties did not
consent to be bound by the agreement, the import of this particular term is unclear in the context
of the settlement agreement. Accordingly, we conclude that SUMSS’s arguments regarding
these non-parties lack merit.
{¶41} SUMSS also raised an issue as to the terms of the settlement requiring the
removal of certain language from the website of Urban Imperial. Urban Imperial is the subject
of SUMSS’s counterclaim against Lisa, wherein SUMSS alleges that Lisa, along with her son,
Blake, formed Urban Imperial by unlawfully using a trade name and unfairly competing with
SUMSS. The transcript of the settlement agreement does reflect that the parties agreed to terms
involving Urban Imperial. However, the transcript merely references Blake using the name
Urban Imperial for the company, and reflects that Urban Imperial would be permitted to keep its
name but would refrain from using a slogan and remove untruthful statements and information
on the website. The record does not support SUMSS’s claim that the settlement agreement binds
19
Blake, as non-party to the litigation, to take any action in furtherance of the settlement
agreement. Therefore, we conclude that SUMSS has not demonstrated how references to non-
parties indicate a lack of meeting of the minds as to a material term of the settlement agreement.
{¶42} SUMSS’s first assignment of error is overruled.
SUMSS’s Assignment of Error III
The trial court erred in altering the terms of the settlement agreement.
SUMSS’s Assignment of Error IV
The trial court abused its discretion by adopting an additional disputed
settlement term proposed by [Marsha and Lisa] without first holding a
hearing.
{¶43} In SUMSS’s third and fourth assignments of error, SUMSS argues that the trial
court erred when it altered terms and adopted a disputed term in its entry reflecting the settlement
agreement. We agree.
{¶44} SUMSS asserts that, following the March 13, 2018 evidentiary hearing, “the trial
court reduced the agreement to only a few ‘essential’ terms,” and improperly deemed other terms
of the settlement agreement to be nonessential terms and omitted them from the journal entry.
Additionally, SUMSS argues, the trial court added a provision requiring SUMSS to transfer
certain rent payments to Marsha and Lisa despite the fact that the parties never negotiated or
agreed to include such a term in their settlement. In essence, SUMSS contends, “the trial court
amended the settlement agreement to omit terms favoring SUMSS and unilaterally added
significant terms favoring [Marsha and Lisa], in order to reach what it thought was an equitable
result.”
{¶45} When parties reach a settlement agreement in open court and preserve it by
reading it into the record, the trial court may approve a journal entry that accurately reflects the
20
terms of the agreement and adopt the agreement as the court’s judgment. Bolen v. Young, 8 Ohio
App.3d 36, 37 (10th Dist.1982); see Spercel, 31 Ohio St.2d 36, at paragraph two of the syllabus.
In resolving any disputes as to the terms of the agreement, “the trial judge may not adopt the
terms of the agreement as he recalls and understands them in the form of a judgment entry.”
Bolen at ¶ 37. If the terms of an agreement are “clear and unambiguous, the court need not go
beyond the plain language of the agreement to determine the parties’ rights and obligations;
instead, the court must give effect to the agreement’s express terms.” Lorain Cty. Aud. v. Ohio
Unemp. Comp. Rev. Comm., 113 Ohio St.3d 124, 2007-Ohio-1247, ¶ 34. It is reversible error for
a trial court to adopt a judgment entry that fails to accurately reflect the entire settlement
agreement. Schmid v. Rutter, 9th Dist. Wayne No. 2505, 1989 WL 157218, *2.
{¶46} In its March 28, 2018 journal entry, the trial court found that an enforceable
agreement existed and set forth its findings regarding the essential terms of the agreement.
Having overruled SUMSS’s motion requesting to set aside the agreement and return the case to
the active docket, the trial court proceeded to act on its authority to approve an entry adopting the
terms of the settlement. The trial court’s April 18, 2018 order incorporated the settlement terms
into the court’s order dismissing the case Those terms included (1) the transfer of the seventeen
properties from SUMSS to Marsha and Lisa, (2) the transfer of the leases for those properties
along with all records related to lease payments, (3) security deposits related to the leased
properties, (4) all January, February, March, and April rental payments made incident to the
seventeen properties, (5) the transfer of Marsha and Lisa’s membership interests in SUMSS to
SUMSS. SUMSS contends that the trial court erred when it omitted from the entry reflecting
settlement several agreed terms, including “probate matters, the release of claims, and the
removal of advertising statements[.]”
21
{¶47} We summarize below the terms of the settlement agreement placed into the record
on December 6, 2017:
SUMSS will transfer seventeen properties, each identified in the record by
address, to Marsha and Lisa, or to a newly created entity they designate.
SUMSS will transfer the seventeen properties by quitclaim deeds, in an as-is
condition.
The anticipated date for the transfer of the properties is on or before January 1,
2018.
SUMSS will sign any and all leases, including any security deposits, to Marsha
and Lisa within 120 days of the signing of the settlement agreement.
Marsha and Lisa will transfer all membership units to SUMSS and execute any
and all documents necessary to effectuate that transfer.
The case pending before the trial court will be dismissed with prejudice.
Regarding the probate of the estate of their late father, Lisa and Marsha agree to
execute any forms necessary to waive entitlement to any distribution in the estate
and assign their interest to SUMSS and/or Chris, Andrea Renee, and Craig. This
“would include” Tim Madden, Blake Madden, and Trisha Madden,
Urban Imperial may continue to use its current name, but agrees to stop using
their current slogan and to remove any reference on their website inaccurately
claiming that they have been in business since 1954 and any other untrue
information.
Marsha would receive certain personal items, including a grandfather clock, glass
windows, porcelain vases, and videos of Marsha with her father in Italy.
Lisa would receive some photos of her father.
Each party would pay its own attorney fees, and the court costs would be split
between the parties.
Anyone signing a mutual release would get a release from all other parties.
The parties agreed to divide family cemetery plots in a manner permitted by the
cemetery’s rules and regulations.
22
Our review of the record reveals that several terms stated on the record are not reflected in the
trial court’s April 18, 2018 order memorializing the terms of the agreement.
{¶48} SUMSS claims that the reason the trial court amended the settlement agreement is
because, in the trial court’s view, this was a case of judicial dissolution and SUMSS benefited
merely by avoiding dissolution. Indeed, in the transcript of the evidentiary hearing the trial court
stated the following:
Well, here is the situation: What is easily lost sight of in this issue is that this
settlement or - - alleged settlement on December 6th was to settle the case in front
of this [c]ourt involving the dissolution of the corporation. Anything else, such as
probate matters, burial plots, photographs, they may have been talked about, but I
don’t know why those would be material terms.
{¶49} SUMSS argued that if the trial court deemed certain terms of the agreement
immaterial and excluded them as “unenforceable provisions,” there may not be a meeting of the
minds or a mutual benefit to both sides. In other words, eliminating terms from the agreement
would remove some of the bargained-for benefit to SUMSS. In response, the trial court went on
to say:
But here is what [SUMSS] get[s]. If the settlement would go through, 17 lots go
to the Plaintiffs and they get out of [SUMSS]. [SUMSS] never has to run the risk
of being dissolved.
{¶50} In its March 28, 2019 journal entry holding that the parties entered an enforceable
settlement agreement on December 6, 2017, the trial court stated:
The [c]ourt would note that the main purpose of the settlement was to settle the
litigation in front of it which concerned the petition by the Plaintiffs to dissolve
[SUMSS] pursuant to provisions of R.C. Chapter 1705. Other matters discussed
on December 6, 2017 were, while perhaps subjectively important to the parties,
were not essential to that settlement from a legal analysis.
This is important because [SUMSS] argues that there were persons who would be
affected by the settlement that were not parties to this litigation. Likewise,
[SUMSS] also argues that there were certain issues discussed at the December 6,
2017 hearing that were under the exclusive jurisdiction of the Summit County
23
Probate Court. Both of those may be true but, in this [c]ourt’s view, they were
not essential to the settlement agreement. Therefore, this [c]ourt can adopt the
settlement agreement as to the transfer of the properties whose addresses were
read into the record, the transfer of any security deposits to the Plaintiffs and the
transfer of the Plaintiffs’ membership units back to [SUMSS].
{¶51} Thus, the trial court determined—despite the parties’ negotiations and agreement
on the record to include specific terms of the settlement—that certain terms were not “material”
or “essential” in that they were related only to settlement, but not directly related to the issues
underlying the case. Aside from the trial judge indicating his own interpretation and
understanding of the core or essence of the agreement, the precise basis for the trial court’s
conclusion is unclear. Although the trial court hints at a legal analysis regarding the essential
terms of the settlement, there is no legal basis for including or disregarding terms placed on the
record as terms of the parties’ settlement solely because the court did not consider them to be
“essential” terms of the settlement agreement.
{¶52} SUMSS also argues that the trial court erred when it adopted a term—over
SUMSS’s objection—that Lisa’s attorney included in a proposed judgment entry. SUMSS
contends that the trial court’s April 18, 2019 order altered the parties’ settlement agreement by
including an additional settlement term requiring SUMSS to transfer rent payments for the
seventeen properties.
{¶53} The trial court’s April 18, 2018 order stated:
2) Leases incident to each of the 17 properties described above and in the
December 6, 2017 transcript shall be transferred to Plaintiffs, or to their
designated LLC, by [SUMSS] forthwith and [SUMSS] shall further provide to
Plaintiffs or their designee(s), all records reflecting lease payments made from
January 1, 2018 for each of the 17 properties described above through April 1,
2018, including all amounts actually paid for each unit, the identity (identities) of
the tenant/tenants making the payments and the dates on which the payments were
made. These documents shall be provided by [SUMSS] to Plaintiffs, or their
designee(s) forthwith.
24
3) All security deposits pertaining to the 17 properties described by street
addresses above and in the December 6, 2017 transcript shall be transferred by
[SUMSS] to [Marsha and Lisa] or their designee(s) no later than April 5, 2018.
4) All January, February, March and April, 2018 rental payments made incident
to the 17 properties described herein and in the December 6, 2017 transcript
shall be transferred by [SUMSS] to [Marsha and Lisa] or their designee(s)
forthwith.
(Emphasis sic.) SUMSS maintains that the parties never considered, much less agreed, to
include this as a term of the settlement.
{¶54} The record reflects that the parties anticipated that the date for transfer of the
properties would be on or before January 1, 2018. The parties agreed that SUMSS would assign
leases to Marsha and Lisa within 120 days of the signing of the settlement agreement. The
record does not indicate any agreement for SUMSS to remit four months of rental payments to
Marsha and Lisa as of January 2018.
{¶55} We conclude that the trial court erred by adopting a journal entry that improperly
added terms, and omitted others, contrary to the stated intentions of the parties in reaching an
agreement to settle their claims. At a minimum, a settlement agreement must include a meeting
of the minds as to all essential terms. Kostelnik, 2002-Ohio-2985 at ¶ 16. However, if arguably
“less essential” terms are included in the agreement, the trial court cannot disregard the parties’
expressed intent to include such terms and remove them from the settlement agreement. “Courts
have an obligation to give plain language its ordinary meaning and to refrain from revising the
parties’ contract. Rulli, 79 Ohio St.3d at 380. If the record clearly reflects that the parties
intended to include a term in their settlement agreement, the trial court does not have the
discretion to adopt a judgment entry that unilaterally excludes or adds terms in a manner that
would result in a settlement agreement that is inconsistent with the parties’ agreement. See City
of Cuyahoga Falls v. Wells, 9th Dist. Summit No. 19959, 2001 WL 81260, *3.
25
{¶56} The trial court’s basis for adding and omitting terms of the agreement is not
supported by law, and the evidence in the record does not support the trial court’s decision.
Therefore, this matter is reversed and remanded for the trial court to adopt a journal entry that
accurately reflects the parties’ settlement agreement as stated on the record on December 6,
2016. We caution, however, that our directive on remand should not be construed so as to limit
the trial court’s ability to consider any previously unresolved issues stemming from the terms
disputed in this assignment of error.
{¶57} SUMSS’s third and fourth assignments of error are sustained.
Lisa’s Assignment of Error
The trial court abused its discretion in denying [Lisa]’s motion for an evidentiary
hearing made pursuant to R.C. 2323.51 and thereafter denying [Lisa]’s motion for
attorney fees for SUMSS’[s] frivolous misconduct.
{¶58} In her merit brief on appeal, Lisa argues that the trial court erred when it declined
to hold a hearing on her motion for attorney fees and denied the motion. Specifically, Lisa
argues that the trial court abused its discretion by refusing to grant a hearing where she incurred
unnecessary legal fees because SUMSS moved to vacate the settlement agreement on contrived
bases. Lisa asserts that SUMSS made this motion after participating in negotiations—in court
and represented by three lawyers—over the course of December 4-6, 2017, and after the terms of
the agreement were read into the record in the presence of the trial judge and SUMSS’s
managing member. We disagree.
{¶59} A court’s decision on whether to award sanctions under R.C. 2323.51 will not be
reversed on appeal absent an abuse of discretion. State ex rel. Striker v. Cline, 130 Ohio St.3d
214, 2011-Ohio-5350, ¶ 11. An abuse of discretion involves something more than an error of
law or judgment; it requires the appealing party to show that the trial court’s decision was
26
unreasonable, arbitrary, or unconscionable. See Blakemore v. Blakemore, 5 Ohio St.3d 217, 219
(1983). When applying the abuse of discretion standard, this Court may not simply substitute its
own judgment for that of the trial court. Pons v. Ohio State Med. Bd., 66 Ohio St.3d 619, 621
(1993).
{¶60} R.C. 2323.51(B)(1) permits a “party adversely affected by frivolous conduct [to]
file a motion for an award of court costs, reasonable attorney’s fees, and other reasonable
expenses incurred in connection with the civil action or appeal.” A court may make an award
pursuant to R.C. 2323.51(B)(1) only after the court conducts a hearing “to determine whether
particular conduct was frivolous * * * [and] whether any party was adversely affected by it * *
*.” R.C. 2323.51(B)(2)(a)-(c). However, it is well-settled that “R.C. 2323.51(B)(2) does not
mandate a hearing whenever a motion for fees is made, but only that an evidentiary hearing is a
necessary precondition to awarding fees.” Avon Poured Wall, Inc. v. Boarman, 9th Dist. Lorain
No. 04CA008448, 2004-Ohio-4588, ¶ 24.
{¶61} While acknowledging the overwhelming precedent holding to the contrary, Lisa
contends “that the language of R.C. 2323.51 does not seem to leave the decision whether to grant
a hearing to the discretion of the [t]rial [c]ourt.” Lisa urges that her motion to dismiss presented
a “triable issue” and “arguable basis” for awarding attorney fees and claims, therefore, “an
evidentiary hearing should have been permitted * * *.”
{¶62} We conclude that Lisa has not presented any authority to support her claim that
the trial court was required to hold an evidentiary hearing prior to denying her motion. This
Court has consistently held “that R.C. 2323.51 requires the trial court to hold a hearing before it
can award attorney fees as a sanction for frivolous conduct, but the same is not required when
the trial court declines to award attorney fees.” (Emphasis added.) Sunrise Coop., Inc. v.
27
Joppeck, 9th Dist. Lorain No. 16CA010984, 2017-Ohio-7654, ¶ 25. Lisa has not established that
the trial court abused its discretion when it denied her motion for attorney fees without hearing.
{¶63} Lisa’s assignment of error is overruled.
III.
{¶64} SUMSS’s assignments of error one and two are overruled. SUMSS’s third and
fourth assignments of error are sustained. Lisa’s single assignment of error is overruled. The
trial court’s April 18, 2019 order is reversed, and this matter is remanded for proceedings
consistent with this decision.
Judgment affirmed in part,
reversed in part.
There were reasonable grounds for this appeal.
We order that a special mandate issue out of this Court, directing the Court of Common
Pleas, County of Summit, State of Ohio, to carry this judgment into execution. A certified copy
of this journal entry shall constitute the mandate, pursuant to App.R. 27.
Immediately upon the filing hereof, this document shall constitute the journal entry of
judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the
period for review shall begin to run. App.R. 22(C). The Clerk of the Court of Appeals is
instructed to mail a notice of entry of this judgment to the parties and to make a notation of the
mailing in the docket, pursuant to App.R. 30.
Costs taxed equally to both parties.
JULIE A. SCHAFER
FOR THE COURT
28
HENSAL, J.
CONCURS.
CARR, P. J.
CONCURS IN JUDGMENT ONLY.
APPEARANCES:
KANI HARVEY HIGHTOWER, Attorney at Law, for Appellant.
LOUISE M. MAZUR, Attorney at Law, for Appellant.
ANASTASIA J. WADE, Attorney at Law, for Appellant.
ROBERT C. MEEKER and COLIN G. MEEKER, Attorneys at Law, for Appellee.
ORVILLE L. REED, III and DAVID HILKERT, Attorneys at Law, for Appellee.