M & G Automotive Serv., Inc. v. Bouscher

[Cite as M & G Automotive Serv., Inc. v. Bouscher, 2014-Ohio-5370.]
COURT OF APPEALS
TUSCARAWAS COUNTY, OHIO
FIFTH APPELLATE DISTRICT
JUDGES:
M&G AUTOMOTIVE SERVICE, INC., : Hon. W. Scott Gwin, P.J.
MARK AND VIRGINIA PORTER : Hon. John W. Wise, J.
: Hon. Craig R. Baldwin, J.
Plaintiffs-Appellants :
:
-vs- : Case No. 2014 AP 03 009
:
MATTHEW C. BOUSCHER, ET AL :
: OPINION
Defendants-Appellees
CHARACTER OF PROCEEDING: Civil appeal from the Tuscarawas County
Court of Common Pleas, Case No. 2008
CV 07 0519
JUDGMENT: Affirmed
DATE OF JUDGMENT ENTRY: December 4, 2014
APPEARANCES:
For Plaintiffs-Appellants For Defendants-Appellees
SCOTT SANDROCK STEVEN SHROCK
ELIZABETH SHIVELY BOATWRIGHT Critchfield, Critchfield & Johnston, Ltd
Brennan, Manna & Diamond, LLC 138 East Jackson Street
75 East Market Street Millersburg, OH 44654
Akron, OH 44308
[Cite as M & G Automotive Serv., Inc. v. Bouscher, 2014-Ohio-5370.]
Gwin, P.J.
{¶1} Appellants appeal the February 13, 2014 judgment entry of the
Tuscarawas County Court of Common Pleas denying their motion to enforce settlement.
Facts & Procedural History
{¶2} In April of 2002, appellants Mark Porter (“Mark”) and Virginia Porter
(“Virginia”) entered into a stock purchase agreement with appellees Matthew Bouscher
(“Matthew”) and Michael Bouscher (“Michael”) for Matthew and Michael to purchase
M&G Automotive Service, Inc. (“M&G”), a car repair business owned by Mark and
Virginia. On July 1, 2008, M&G, Mark, and Virginia filed a complaint against Matthew
and Michael for breach of contract by failing to complete the purchase, breach of
shareholder duty, injunctive relief, tortuous interference with business relationships,
misappropriation of trade secrets, and disclosure of confidential information.
{¶3} The case ultimately resulted in an agreed resolution and the case was
dismissed on May 14, 2009. To memorialize the agreement between the parties,
counsel for appellants drafted a settlement agreement and counsel for appellees drafted
the attached land installment contract.
{¶4} The settlement agreement provides, in pertinent part, that appellees would
purchase the remaining 160 shares of M&G for a purchase price of $185,000. In
addition, that appellees and Margin Properties, LLC, with sole members Mark and
Virginia, would enter into a land contract where appellees would purchase the building
located at 2615 North Wooster Avenue, Dover, Ohio, for a purchase price of $185,000
pursuant to the terms and conditions provided.
{¶5} Under the heading “Land Contract,” the settlement agreement states:
Tuscarawas County, Case No. 2014AP 0009 3
The Bouchers will enter into a certain Land Contract with Margin
Properties, LLC to purchase the building located at 2615 N. Wooster
Avenue, Dover, Ohio, pursuant to the terms of a Land Contract attached
to this Agreement as Exhibit C. The parties agree that the Land Contract
will be for a purchase price of $185,000 with a monthly payment of $1,250.
The purchase price will bear interest at the rate of 6% per annum with the
Buyers to be responsible for all insurance, taxes, and maintenance of the
building. The Buyers may, at their own expense, conduct an
environmental phase one and a real estate title search. The Land
Contract will provide for the loan obligation due in full on or before June 1,
2013. There will be a cross default provision in the Land Contract and the
Promissory Note and the default of one will be deemed a default of the
other. No early purchase of the building will be permitted unless there is a
simultaneous payment of the balance of the Promissory Note.
The land installment contract provides that appellants’ company, Margin Properties,
LLC, agreed to sell to appellees the real estate located at 2615 N. Wooster Ave., Dover,
Ohio for the purchase price of $185,000 with monthly installment payments of $1,250
beginning in May of 2009 and continuing until the balance was paid in full, provided that
the remaining unpaid principal balance would be due and payable on June 1, 2013.
With regards to the “Seller’s Mortgage,” the land contract states as follows:
Seller’s Mortgage; Encumbrances. Buyers shall pay the First
Federal bank loan currently secured by the building. Seller acknowledges
that no additional mortgages will be filed on the property by the Seller of if
Tuscarawas County, Case No. 2014AP 0009 4
so, Seller is responsible for payment of any of those obligations. If Seller
is in default under any such mortgage, then Buyers may cure such default,
and all sums so paid by Buyers shall be credited by Sellers as payments
under this Contract.
The Premises are presently subject to the following encumbrances;
zoning ordinances; legal highways; covenants; restrictions; conditions and
easements of record; the lien of real estate taxes and assessments not yet
due and payable.
{¶6} During the term of the land installment contract, appellees paid both the
monthly installment payments as well as the First Federal mortgage payments. At the
conclusion of the land installment contract, Margin Properties, LLC still owed
$65,588.82 on the First Federal mortgage. The parties participated in a closing of the
real estate purchase relative to the land installment contract on May 31, 2013. The
Settlement Statement reflects a payoff of the mortgage loan to First Federal Community
Bank of $65,588.82, which was paid by the Seller, Margin Properties, LLC, c/o Mark F.
Porter and Virginia B. Porter. The Settlement Statement was executed by appellants
and appellees.
{¶7} On December 3, 2013, appellants filed a motion to enforce settlement and
a detailed motion to enforce settlement agreement on December 31, 2013 alleging that
appellees breached the settlement agreement by failing to pay the balance of the First
Federal Bank Loan debt. Appellees filed a memorandum in opposition on January 24,
2014 and a supplemental memorandum in opposition on February 5, 2014. The trial
court held a motion hearing on appellants’ motion on January 27, 2014. On February
Tuscarawas County, Case No. 2014AP 0009 5
13, 2014, the trial court issued a judgment entry denying appellants’ motion to enforce
settlement agreement. The trial court found that by the clear language of the settlement
agreement, appellees were to pay $185,000. Further, that the language of the
settlement agreement offers little guidance as to the intention of the parties respecting
the loan obligation beyond the term of the land installment contract. However, by the
clear language of the land installment contract, the sale price of the real estate was
$185,000 and that during the period of the land installment contract appellees would
make other payments incidental to the real estate. Finally, that appellants acquiesced
to the settlement of the amounts due by proceeding with the closing as set forth on the
settlement statement.
{¶8} Appellants appeal the February 13, 2014 judgment entry of the
Tuscarawas County Court of Common Pleas and assigns the following as error:
{¶9} “I. THE TRIAL COURT ERRED IN FAILING TO ENFORCE THE
UNAMBIGUOUS LANGUAGE OF THE SETTLEMENT AGREEMENT, WHICH
CLEARLY REQUIRED APPELLEES TO PAY THE FIRST FEDERAL BANK LOAN
OBLIGATION.
{¶10} "II. THE TRIAL COURT ERRED IN CONSIDERING OUTSIDE EVIDENCE
IN FINDING THAT APPELLANTS ACQUIESCED TO THE SETTLEMENT OF THE
AMOUNTS DUE BY PROCEEDING WITH THE CLOSING.
{¶11} "III. THE TRIAL COURT ERRED WHEN IT INTERPRETED AN
ALLEGEDLY AMBIGUOUS PROVISION OF THE SETTLEMENT AGREEMENT
WITHOUT FIRST HOLDING AN EVIDENTIARY HEARING CONCERNING THE
PARTIES’ INTENT.”
Tuscarawas County, Case No. 2014AP 0009 6
I.
{¶12} Appellants first contend the trial court erred in failing to follow the
unambiguous language of the settlement agreement, which appellants argue required
appellees to pay the First Federal loan obligation. Appellants cite paragraph 2 and 4 of
the settlement agreement and paragraph 7 of the land contract as unambiguously
requiring appellees to pay the First Federal loan obligation. We disagree.
{¶13} The standard of review to be applied to a ruling on a motion to enforce
settlement agreement depends primarily on the question presented. If the question is
an evidentiary one, this court will not overturn the trial court’s finding if there was
sufficient evidence to support such finding. Chirchiglia v. Ohio Bur. of Workers’ Comp.,
138 Ohio App. 3d 676, 742 N.E.2d 180 (7th Dist. 2000). If the dispute is a question of
law, an appellate 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. Continental W. Condominium Owner’s Assn.
v. Howard E. Ferguson, Inc., 74 Ohio St. 3d 501, 1996-Ohio-158, 660 N.E.2d 431.
{¶14} As detailed below, appellants waived an evidentiary hearing as the record
shows no indication that appellants requested an evidentiary hearing or objected to the
nature of the motion hearing proceedings. Monea v. Campisi, 5th Dist. Stark No.
2004CA00381, 2005-Ohio-5215. Further, appellants did not file a transcript of the
motion hearing held before the trial court and thus this Court must presume the validity
of the trial court’s proceedings and accept the factual determinations of the trial court.
Knapp v. Edwards Laboratories, 61 Ohio St. 2d 197, 400 N.E.2d 384 (1980).
Tuscarawas County, Case No. 2014AP 0009 7
Accordingly, the question before this Court is whether the trial court erred as a matter of
law in dismissing the motion to enforce the settlement agreement.
{¶15} Settlement agreements are contractual in nature and, as such, basic
principles of contract law apply. Rulli v. Fan Co., 79 Ohio St. 3d 374, 1997-Ohio-380,
683 N.E.2d 337. “[A] valid settlement agreement is a contract between parties,
requiring a meeting of the minds as well as an offer and an acceptance thereof.” Id.
Additionally, the terms of the settlement agreement must be reasonably certain and
clear. Id. It is a fundamental principle in contract construction that contracts should “be
interpreted so as to carry out the intent of the parties, as that intent is evidenced by the
contractual language.” Skivolocki v. East Ohio Gas Co., 38 Ohio St. 2d 244, 313 N.E.2d
374 (1974). A reviewing court should give the contract’s language its plain and ordinary
meaning unless some other meaning is evidenced with the document. Alexander v.
Buckeye Pipe Line Co., 53 Ohio St. 2d 241, 374 N.E.2d 146 (1978). If the terms of the
contract are determined to be clear and unambiguous, the interpretation of the language
is a question of law reviewed de novo on appeal. State ex rel. Parsons v. Fleming, 68
Ohio St. 3d 509, 628 N.E.2d 1377 (1994). A contract is ambiguous if its terms cannot be
clearly determined from a reading of the entire contract or if its terms are susceptible to
more than one reasonable interpretation. United States Fidelity & Guar. Co. v. St.
Elizabeth Medical Ctr., 129 Ohio App. 3d 45, 716 N.E.2d 1201 (2nd Dist. 1998). A court
cannot in effect create a new contract “by finding an intent not expressed in the clear
language employed by the parties.” Alexander v. Buckeye Pipe Line Co., 53 Ohio St. 2d
241, 374 N.E.2d 146 (1978).
Tuscarawas County, Case No. 2014AP 0009 8
{¶16} Appellants contend that paragraph 2 of the settlement agreement provides
support for their contention that appellees were unambiguously supposed to pay the
First Federal loan obligation. However, pursuant to the plain and clear language of this
paragraph, it has no impact or instruction as to who is to pay the First Federal
obligation. Paragraph 2 is entitled “Stock Purchase” and deals exclusively with
appellees agreement to purchase the shares of stock owned by appellants, an
obligation separate from appellees’ purchase of the real property on which M&G
operates. Paragraph 2 provides that appellees, “acknowledge that in addition to
purchasing the stock, they will be responsible for the payment of all notes and other
loans owed by M&G to First Federal and others and will agree to indemnify and hold the
Porters harmless from and against any obligations on such third party notes.” Utilizing
the plain meaning of the language used, it refers only to debts owed by M&G but not the
mortgage debt at issue which was owned by Margin Properties, LLC, as evidenced by
the land installment contract which states that the “Seller” is “Margin Properties, LLC.”
In addition, at the beginning of the settlement agreement that sets out the settlement
terms, it is clear that the stock purchase of appellees is separate from the land contract
by which appellees would purchase the building from Margin Properties, LLC.
{¶17} Appellants also cite paragraph 4 of the settlement agreement and argue
that the last sentence of the paragraph that “The Land Contract will provide for the loan
obligation due in full on or before June 1, 2013” refers to the First Federal mortgage
loan. However, it is clear from the language of the paragraph, in conjunction with the
language of the land contract, that the “loan” referred to in paragraph 4 is the loan
created by the land contract itself. Writings executed together as part of the same
Tuscarawas County, Case No. 2014AP 0009 9
transaction should be read together, and the intent of each part will be gathered from a
consideration of the whole. Foster Wheeler Enviresponse, Inc. v. Franklin Cty.
Convention Facilities Auth., 78 Ohio St. 3d 353, 1997-Ohio-202, 678 N.E.2d 519.
{¶18} Paragraph 4 requires appellees to enter into the land contract with Margin
Properties and the remainder of the paragraph recites the terms to be included in the
land contract. Paragraph 4 describes an installment purchase of the property with
monthly payments, interest on the unpaid principal balance, and a balloon payment of
the remaining balance, or the “loan obligation” in four years. This section of the
settlement agreement is confirmed by the land contract which provides that the
purchase price of the premises is $185,000 and that the purchase price is payable in
monthly installments payments of $1,250.00 from May 1, 2009 and “continuing on the
same day of each subsequent month until said balance is paid in full; provided,
however, that unless sooner paid the remaining unpaid principal balance shall be due
and payable on June 1, 2013.” Reading these written instruments in conjunction, the
intent that can be gathered from both together is that it is the remaining unpaid principal
balance on the $185,000 purchase price which must be paid in full by June 1, 2013 is
the only “loan obligation” included in paragraph 4 of the settlement agreement.
{¶19} Appellants finally cite to paragraph 7 of the land contract which provides
that appellees “shall pay the First Federal bank loan currently secured by the building * *
* If Seller is in default under any such mortgage, then Buyers may cure such default,
and all amounts so paid by Buyers shall be credited by Seller as payments under this
Contract.” As noted by the trial court, this provision clearly requires appellees to make
the mortgage payments during the term of the land contract. However, the provision
Tuscarawas County, Case No. 2014AP 0009 10
does not state, as appellants argue, that appellees were required to pay the mortgage
at closing or after the four-year term of the installment contract.
{¶20} The provisions in the land contract (Paragraph 1) and settlement
agreement (Paragraph 1(C) and Paragraph 4) clearly and unambiguously provide that
the agreed-upon purchase price of the real property was $185,000. As noted above,
writings executed together as part of the same transaction should be read together and
the intent of each party should be gathered from a consideration of the whole. Foster
Wheeler Enviresponse, Inc. v. Franklin Cty. Convention Facilities Auth., 78 Ohio St. 3d
353,1997-Ohio-202, 678 N.E.2d 519. Utilizing the plain language contained in these
provisions, there is no indication that the purchase price is $185,000 plus the First
Federal mortgage balance. Paragraph 7 of the land contract provides that appellees
had to pay for the mortgage during the four-year term of the land contract and there is
no dispute that appellees paid the mortgage during the land contract term. However,
from the plain language of the documents, there is no indication that appellees were
required to pay the balance of the mortgage at the end of the land contract.
{¶21} The trial court found that: by the clear language of the settlement
agreement, appellees were to pay $185,000; that by the clear language of the land
installment contract, the sale price of the real estate was $185,000; and that during the
period of the land installment contract, appellees would make other payments incidental
to the real estate.
{¶22} Accordingly, based upon our analysis above, we find that the trial court did
enforce the unambiguous language of the settlement agreement in denying appellants’
motion to enforce as the settlement agreement and land contract terms regarding the
Tuscarawas County, Case No. 2014AP 0009 11
First Federal obligation is not ambiguous. Based upon the unambiguous language of
the documents, the parties’ intent was for appellees to pay the First Federal mortgage
during the land contract term and purchase the property by the end of the land contract
term for the sum of $185,000, with no obligation to pay the balance of the First Federal
obligation of Margin Properties, LLC. Accordingly, appellants’ first assignment of error
is overruled.
II.
{¶23} Appellants argue the trial court erred in considering outside evidence in
finding that appellants acquiesced to the settlement of the amounts due by proceeding
with the real estate closing. Appellants again contend in their second assignment of
error that the trial court erred in interpreting the settlement agreement where it
unambiguously provides that appellees are responsible for the First Federal obligation.
As analyzed in Assignment of Error I, we find the trial court did not err in finding that
appellees were not responsible for the First Federal obligation pursuant to the plain
language of the settlement agreement and land contract.
{¶24} Appellants further argue the trial court erred when it found appellants
acquiesced to the settlement of the amounts due by proceeding with the real estate
closing by considering outside evidence. However, appellants do not include a
description of the outside evidence appellants allege the trial court relied on in making
this determination. The only outside evidence cited to in the trial court’s judgment entry
is the Settlement Statement that reflected a payoff of the mortgage loan to First Federal
which was paid by Margin Properties, LLC, c/o Mark F. Porter and Virginia B. Porter.
However, it is clear from the trial court’s entry that such document was only considered
Tuscarawas County, Case No. 2014AP 0009 12
in its finding that appellants acquiesced to the settlement of the amounts due by
proceeding with the closing and was not utilized in the trial court’s determination that the
unambiguous language of the settlement agreement and land contract did not require
appellees’ to pay the mortgage balance of Margin Properties. Further, since the trial
court found that the language of the settlement agreement and land contract did not
require appellees’ to pay off the First Federal mortgage, the acquiescence finding by the
trial court was an alternative basis for denying appellants’ request for relief. Thus, any
error in the alternative basis for denying appellants’ relief is moot based upon our
disposition of appellants’ first and third assignments of error. Appellants’ second
assignment of error is overruled.
III.
{¶25} Appellants finally argue that the trial court erred when it interpreted an
allegedly ambiguous provision of the settlement agreement without holding an
evidentiary hearing. We disagree.
{¶26} The Ohio Supreme Court has held that “where the meaning of terms of a
settlement agreement is disputed, or where there is a dispute that contests the
existence of a settlement agreement, a trial court must conduct an evidentiary hearing
prior to entering judgment.” Rulli v. Fan Co., 79 Ohio St. 3d 374, 1997-Ohio-380, 683
N.E.2d 337. However, in the “absence of such a factual dispute, a court is not required
to conduct such an evidentiary hearing.” Id. In this case, the trial court held what it
called a motions hearing. Appellants did not file a transcript of this hearing. The
purpose of an evidentiary hearing is to “clear up any ambiguity with regard to the terms
or existence of a settlement agreement.” Johannsen v. Ward, 6th Dist. No. H-09-028,
Tuscarawas County, Case No. 2014AP 0009 13
2010-Ohio-4203. In this matter, as discussed above, the terms of the settlement
agreement and land contract were unambiguous. Since there were no ambiguous
terms in the settlement agreement and land contract, the trial court did not err by failing
to conduct a formal evidentiary hearing.
{¶27} Further, we find appellants waived the issue of an evidentiary hearing as
the record shows no indication that appellants requested an evidentiary hearing or
objected to the nature of the motion hearing proceedings. Monea v. Campisi, 5th Dist.
Stark No. 2004CA00381, 2005-Ohio-5215; Brown v. Spitzer Chevrolet Co., 5th Dist.
Stark No. 2012 CA 00105, 2012-Ohio-5623. Appellants waived their right to an
evidentiary hearing by failing to request such a hearing or to object to the lack of an
evidentiary hearing. Monea v. Campisi, 5th Dist. Stark No. 2004CA00381, 2005-Ohio-
5215. Appellants’ third assignment of error is overruled.
{¶28} Based on the foregoing, appellants’ assignments of error are overruled
and the February 13, 2014 judgment entry of the Tuscarawas County Court of Common
Pleas is affirmed.