Altercare of Canal Winchester Post-Acute Rehab. Ctr. v. Turner

[Cite as Altercare of Canal Winchester Post-Acute Rehab. Ctr. v. Turner, 2019-Ohio-1011.]
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
Altercare of Canal Winchester Post-Acute :
Rehabilitation Center, Inc.
:
Plaintiff-Appellant,
: No. 18AP-466
v. (M.C. No. 2015CVF-24361)
:
Connie S. Turner et al., (REGULAR CALENDAR)
:
Defendants-Appellees.
:
D E C I S I O N
Rendered on March 21, 2019
On brief: Bonezzi Switzer Polito & Hupp Co. L.P.A., Steven J.
Hupp, and Christopher F. Mars, for appellant.
Argued: Christopher F. Mars.
On brief: Legal Aid Society of Columbus, Ashley B. Saltzman
Socha, and Kathleen C. McGarvey, for appellee Victoria Cox.
Argued: Ashley B. Saltzman.
APPEAL from the Franklin County Municipal Court
SADLER, J.
{¶ 1} Plaintiff-appellant, Altercare of Canal Winchester Post-Acute Rehabilitation
Center, Inc., appeals the May 9, 2018 judgment of the Franklin County Municipal Court
rendering judgment in favor of defendants-appellees, Victoria Cox ("Cox") and Connie S.
Turner ("Turner"), and dismissing appellant's complaint. For the following reasons, we
affirm the judgment of the trial court.
No. 18AP-466 2
I. FACTS AND PROCEDURAL HISTORY
{¶ 2} Appellant is a licensed nursing home located in Canal Winchester. Turner
was a resident at appellant's facility on two separate occasions in the fall of 2014 following
her back surgeries. Cox is Turner's adult grandchild.
{¶ 3} On July 28, 2015, appellant filed a complaint seeking judgment against
Turner for unjust enrichment and on account and seeking judgment against Cox for breach
of contract and personal guarantee of payment. In the complaint, appellant generally
alleged that Turner had not paid $7,764 for nursing care and services appellant provided to
Turner and that, by signing two residency agreements and two personal guarantee of
payment agreements ("guaranties"), Cox was liable for Turner's financial obligation and
breached those agreements in not paying appellant in full. Turner filed an answer and
counterclaim on September 8, 2015, and Cox filed an answer on September 16, 2015.
{¶ 4} The parties attempted mediation twice in the first half of 2016, but the case
was not settled and was thereafter returned to the active docket of the trial court. On May 5,
2016, Turner dismissed her counterclaim. The parties thereafter filed cross-motions for
summary judgment. On August 16, 2017, the trial court denied both motions for summary
judgment and set a non-jury trial before a magistrate on the merits of the case.
{¶ 5} The trial before the magistrate was held on September 19, 2017; all parties
appeared and were represented by counsel. Appellant called Bridget Bazzinotti, a senior
account representative for appellant, to testify. According to Bazzinotti, Turner received
skilled services under Medicare as an in-house patient for the periods of July 17 through
September 13 and September 30 through October 18, 2014. Turner's primary payer was
Medicare. Bazzinotti testified that Medicare allows 100 days of eligibility whereby
Medicare pays 100 percent for days 1 through 20 and then pays 80 percent for days 21
through 100; a coinsurance amount of $152 per day begins at day 21. Turner had secondary
insurance through Anthem, who would pay the coinsurance for days 21 through 30 at 100
percent. Bazzinotti testified that after Medicare and Anthem's coverage ended, Turner
accrued a balance of $7,764 and had not paid that amount. On cross-examination,
Bazzinotti testified she was not present for Turner's admissions and had no personal
knowledge of conversation that occurred during Turner's admission.
No. 18AP-466 3
{¶ 6} Both Turner and Cox testified in their own defense. Turner, who was
approximately 73 years old when she entered appellant's facility in 2014, testified she was
competent on admission to appellant's facility but was not asked to sign a residency
agreement for either of her stays. According to Turner, she asked appellant's staff multiple
times whether she would owe money and was told the stays were being paid through
insurance companies, and Turner would not owe appellant anything out of pocket. Turner
testified she would not have continued to stay at the nursing facility and would have left
immediately had she known she would owe money. According to Turner, she expressly told
appellant's staff she could not afford out-of-pocket payments since her husband was in
another nursing home with dementia, and she was assured by appellant's staff she did not
owe anything.
{¶ 7} Cox, who was approximately 21 years old when her grandmother entered
appellant's facility in 2014, testified she was not Turner's power of attorney in July or
September 2014 and did not have authority to manage, access, or control any of Turner's
income or financial accounts. According to Cox, Turner admitted herself into appellant's
care, but appellant's staff called Cox numerous times to get her to sign paperwork, did not
tell her signing the paperwork was optional, and instead "made it seem like it was
mandatory" and "urgent." (Tr. at 48.) Cox went to appellant's facility after normal business
hours to sign the paperwork. Appellant's secretary had the paperwork at her desk and, in
Cox's view, implied the paperwork was required for her grandmother to be able to stay at
the facility.
{¶ 8} Appellant's exhibits, admitted into evidence, included the July 7, 2014
residency agreement, September 30, 2014 residency agreement, the July 22, 2014 personal
guarantee of payment, the October 2, 2014 personal guarantee of payment, a resident
census detail and statement, and two post-admission letters. Turner and Cox submitted a
bill from appellant as an exhibit, which was also admitted into evidence.1
{¶ 9} On November 1, 2017, the magistrate filed a decision finding in favor of Cox
on the breach of contract claim and finding in favor of appellant on the action on account
against Turner. Regarding the breach of contract claim against Cox, the magistrate found
1 We note the exhibits admitted for both parties do not appear in the appellate record. However, the
documents necessary to resolve this appeal (the residency agreements and the guaranties) are in the record of
appeal as attachments to the complaint and to appellant's motion for summary judgment.
No. 18AP-466 4
Cox was not authorized to sign the residency agreements on Turner's behalf and was not an
agent of Turner, no valid contract had formed between Turner and appellant based on the
residency agreements, and, without a valid underlying contract, the guaranties could not
be enforced against Cox. In doing so, the magistrate found "[t]he language in the personal
guarantee form makes clear that the personal guarantee is for payment for services
rendered under a contract." (Mag.'s Decision at 3.) Regarding the action on account
against Turner, the magistrate found Turner had not established equitable estoppel and
was liable to appellant on the account claim.
{¶ 10} Appellant and Turner filed objections to the magistrate's decision pursuant
to Civ.R. 53(D)(3). Turner objected, in pertinent part, to the magistrate's finding on the
evidence of promissory estoppel, and appellant generally objected to the magistrate failing
to find a contract existed between Cox and appellant.
{¶ 11} The trial court, on May 9, 2018, issued a judgment sustaining Turner's
objection as to promissory estoppel; in doing so, the trial court noted appellant did not
present any evidence to contest Turner's testimony that she continued to stay at the facility
in reliance on appellant's assurances that insurance companies were paying for everything.
The trial court further overruled appellant's objection regarding Cox, stating:
The Magistrate found the evidence showed * * * Cox did not
have any authority to sign a contract on behalf of * * * Turner.
The Court agrees. [Appellant's] objection cites cases about
enforcing parties' intent in a contract. However, the issue is
that the evidence showed * * * Cox did not have legal authority
to sign the contract for her grandmother, as a matter of fact.
Because no contract was formed, * * * Cox is not liable on the
personal guarantees.
(May 9, 2018 Jgmt. Entry at 1.) Thus, the trial court adopted the magistrate's decision to
the extent it denied judgment against Cox and then denied judgment against Turner and
dismissed appellant's complaint.
{¶ 12} Appellant filed a timely notice of appeal.
II. ASSIGNMENT OF ERROR
{¶ 13} Appellant assigns the following as trial court error:
THE TRIAL COURT ERRED IN DISMISSING APPELLANT'S
CASE, AND FAILING TO ENTER JUDGMENT AS A MATTER
No. 18AP-466 5
OF LAW, ON APPELLANT'S CLAIM AGAINST MS. COX FOR
BREACH OF THE PERSONAL GUARANTEE AGREEMENT.
III. STANDARD OF REVIEW
{¶ 14} Pursuant to Civ.R. 53(D)(4)(d), "[i]f one or more objections to a magistrate's
decision are timely filed, the [trial] court shall rule on those objections. In ruling on
objections, the court shall undertake an independent review as to the objected matters to
ascertain that the magistrate has properly determined the factual issues and appropriately
applied the law." Thus, " '[i]f objections are filed, a trial court undertakes a de novo review
of a magistrate's decision.' " Gallick v. Benton, 10th Dist. No. 18AP-171, 2018-Ohio-4340,
¶ 15, quoting Meccon, Inc. v. Univ. of Akron, 10th Dist. No. 12AP-899, 2013-Ohio-2563,
¶ 15.
{¶ 15} Generally, an appellate court reviews the trial court's decision to adopt, reject,
or modify the magistrate's decision for an abuse of discretion. Tedla v. Al-Shamrookh, 10th
Dist. No. 15AP-1094, 2017-Ohio-1021, ¶ 11, citing Bell v. Nichols, 10th Dist. No. 10AP-1036,
2013-Ohio-2559, ¶ 16; Gallick at ¶ 15. An abuse of discretion occurs when a court's
judgment is unreasonable, arbitrary, or unconscionable. Blakemore v. Blakemore, 5 Ohio
St.3d 217, 219 (1983). Questions of law are reviewed de novo on appeal. PHH Mtge. Corp.
v. Ramsey, 10th Dist. No. 13AP-925, 2014-Ohio-3519, ¶ 14; In re Adoption of N.D.D., 10th
Dist. No. 18AP-561, 2019-Ohio-727, ¶ 27. See also AM & JV, LLC v. MyFlori, LLC, 10th
Dist. No. 16AP-713, 2018-Ohio-600, ¶ 18.
IV. LEGAL ANALYSIS
A. Appellant's Assignment of Error
{¶ 16} Appellant contends the trial court erred in finding in favor of Cox on its claim
for breach of the personal guarantee agreements and dismissing its case. For the following
reasons, we disagree.
{¶ 17} "Under Ohio law, '[a] guaranty is a contract through which one party
guarantees payment for debts incurred by another person or entity.' " LB-RPR REO
Holdings, LLC v. Ranieri, 10th Dist. No. 11AP-471, 2012-Ohio-2865, ¶ 23, quoting Thayer
v. Diver, 6th Dist. No. L-07-1415, 2009-Ohio-2053, ¶ 77. SDI/Columbus Equities L.P. v.
Scranton, 10th Dist. No. 93AP-247 (July 13, 1993) (noting distinction between a guaranty,
in which a person becomes secondarily liable for another's debt, and a surety, in which a
No. 18AP-466 6
person is primarily liable with the principal debtor). Generally, a guaranty is an
independent contract separate from and collateral to the original contract of the principal.
Id., citing Black's Law Dictionary 634 (5 Ed.Rev.1979). CIG Toledo LLC v. NZR Retail of
Toledo, Inc., 6th Dist. No. L-17-1282, 2019-Ohio-160, ¶ 23 ("A guaranty is a separate,
independent and collateral contract in which the guarantor undertakes the obligation to
pay for debts incurred by, or the performance of some duty by, another person or entity.").
{¶ 18} The determination of whether the guarantor is liable for the principal's debt
is based on what the parties to the guaranty agreed. Jae Co. v. Heitmeyer Builders, Inc.,
10th Dist. No. 08AP-1127, 2009-Ohio-2851, ¶ 14-16; Whichard v. Matthews, 8th Dist. No.
98689, 2013-Ohio-1892, ¶ 41 ("It is well established in Ohio law that a guarantor is only
bound by the precise words of his contract."). As a contract, a guaranty is subject to the
same rules and principles applicable to general contract formation and interpretation.
Ranieri at ¶ 23; Jae Co. at ¶ 11-12. When reviewing a contract, the objective is "to effectuate
the intent of the parties." State ex rel. Montgomery v. R.J. Reynolds Tobacco Co., 152 Ohio
App.3d 345, 2003-Ohio-1654, ¶ 37 (10th Dist.); Jae Co. at ¶ 12.
{¶ 19} The intent of the parties is presumed to reside in the language in the contract.
Montgomery at ¶ 16. Thus, " '[i]f a guaranty's terms are clear and unambiguous, a court
may not construe it to have another meaning.' " Ranieri at ¶ 23, quoting O'Brien v.
Ravenswood Apts., Ltd., 169 Ohio App.3d 233, 2006-Ohio-5264, ¶ 23 (1st Dist.). Donini
v. Fraternal Order of Police, 4th Dist. No. 08CA325, 2009-Ohio-5810, ¶ 16 ("When the
words used in a contract are clear and unambiguous, courts need look no further than that
language."). Furthermore, " 'if a contract is ambiguous so that it may either extend or limit
a guarantor's obligation, such contract should be construed to limit the obligation.' " Bank
One, Columbus, N.A. v. Girardi's Restaurant & Bar, 10th Dist. No. 93AP-1024 (Mar. 3,
1994), quoting Yearling Properties, Inc. v. Tedder, 53 Ohio App.3d 52, 54 (10th Dist.1988).
{¶ 20} Parties to a guaranty are presumed to have read and understood the terms of
the guaranty he or she signed. Ranieri at ¶ 28, quoting Preferred Capital, Inc. v. Power
Eng. Group, Inc., 112 Ohio St.3d 429, 2007-Ohio-257, ¶ 10.
{¶ 21} In support of its assignment of error, appellant argues the "trial court
improperly considered the residency agreements in deciding whether * * * Cox breached
the personal guarantees of payment," which have "absolutely no bearing" on Cox's
No. 18AP-466 7
responsibility to pay.2 (Appellant's Brief at vii, 8-9.) According to appellant, the guaranties,
as "independent and separate" contracts from the residency agreements, bound Cox to be
jointly and severally3 responsible for Turner's financial obligation to appellant. (Appellant's
Brief at 8.) Appellants cite to Brown Derby v. NTK, 8th Dist. No. 68402 (June 8, 1995),
citing Yearling; Altercare of Mayfield Village, Inc. v. Berner, 8th Dist. No. 104259, 2017-
Ohio-958, and Ohio Jury Instruction 509.01 in support of the proposition that the separate
and independent nature of the guaranties executed here continue to obligate Cox to pay
appellant.
{¶ 22} Cox does not dispute that she signed the guaranties but, instead, asserts the
trial court correctly held the guaranties are unenforceable because the contracts underlying
the guaranties—the residency agreements—do not exist, and, therefore, there is no
obligation for her to guarantee. Cox cites to Dearth Homes, Inc. v. Cline, 5th Dist. No.
03CA000013, 2003-Ohio-6314, ¶ 8, which held "there is nothing for a guarantor to
guarantee" where the nursing home resident was not actually bound to the admission
agreement. Cox argues the Berner case was incorrectly decided, distinguishable, and
demonstrates a pattern of improper admission practices by appellant. Relatedly, Cox
argues requiring her to sign the guaranties as a condition of Turner's admission or
continued stay violates federal law. Cox further argues that because the trial court found
Turner is not liable to appellant and appellant did not appeal that ruling, there is no debt
remaining for Cox to pay even if the guaranties are enforceable.
2 Appellant later argues in its appellate reply brief that "[a]lthough consideration of a [r]esidency [a]greement
is improper when analyzing whether a [p]ersonal [g]uarantee is enforceable," the residency agreements are
valid based on Cox entering in the residency agreement as an "apparent agent" of Turner. (Appellant's Reply
Brief at 5, 7.) Appellant did not raise the issue of apparent authority in its objections to the trial court, which,
under Civ.R. 53(D)(3)(b)(ii), are required to be specific and stated with particularity. Furthermore, appellant
did not assign the trial court's adoption of the magistrate's finding on Cox's lack of authority as error on appeal,
raise the issue of apparent authority in its original appellate brief, or argue plain error on appeal. Instead,
appellant chose to base its assignment of error on the premise that considering the residency agreements at
all is improper and, in and of itself, requires reversal. Considering all the above, we find appellant did not
properly raise and argue the issue of apparent authority and decline to address the issue for the first time on
appeal. See Civ.R. 53(D)(3)(b)(iv); Quaye v. N. Mkt. Dev. Auth., 10th Dist. No. 15AP-1102, 2017-Ohio-7412,
¶ 28-29; State v. Quarterman, 140 Ohio St.3d 464, 2014-Ohio-4034, ¶ 18 ("Appellate courts generally will not
consider a new issue presented for the first time in a reply brief.").
3 We note appellant does not argue Cox is primarily liable as a surety (rather than secondarily liable as
guarantor) or provide legal support for this theory. All the legal authority provided by appellant is provided
in support of Cox as a guarantor. The general differences between a guarantor and a surety are summarized
in Madison Natl. Bank v. Weber, 117 Ohio St. 290, 293 (1927).
No. 18AP-466 8
{¶ 23} We agree with Cox. First, consistent with case law such as SDI/Columbus
Equities L.P., provided above, we agree with appellant's characterization of the guaranties
as separate and independent contracts from the underlying residency agreements that
attempted to bind Turner and appellant. However, it appears the trial court did essentially
treat the guaranties as separate contracts and, in interpreting them, found the language of
the guaranties in this case showed the parties intended each guaranty to flow from services
rendered under the residency agreement cited within them. Contrary to appellant's
primary argument, considering the guaranties explicitly reference the residency
agreements, we find the trial court's consideration of the residency agreements in
interpreting the language of the guaranties to be proper.
{¶ 24} Second, the language of the guaranties supports the trial court's conclusion
that the guaranties cannot be enforced without valid underlying contracts. The guaranties
executed by appellant and Cox on July 22 and October 2, 2014 are identical forms entitled
"Personal Guarantee of Payment," with blank spaces provided to identify the resident and
the guarantor. Cox and Turner's names are handwritten into the form. The forms state:
Connie Turner (the "Resident") has entered into an agreement
with Altercare of Canal Winchester Post-Acute Rehabilitation
Center, Inc. ("Facility") for the provision of certain service and
supplies. Victoria Cox (the "Guarantor") wants to ensure that
the Resident receives all service and supplies that he/she
desires regardless of whether he/she can personally afford the
services and supplies, or whether such services or supplies are
covered by a third party payer, such as insurance. Thus, the
Guarantor voluntarily guarantees payment to the facility for all
services and supplies that have been provided, or will be
provided in the future, to the Resident. That is, the Guarantor
agrees to be jointly and severally liable for the Resident's
financial obligations to Facility.
In exchange for this guarantee and for all payments being made
as they are due, Facility agrees to continue to provide services
and supplies to the resident regardless of his/her personal
ability to pay for those services or supplies, or to have the
services or supplies paid for by a third party.
The Guarantor understands that he or she is not required by
law, or by Facility, to personally guarantee payment. The
Guarantor is agreeing to be liable along with and in addition to
No. 18AP-466 9
the Resident for all charges incurred by the Resident at Facility
on a voluntary basis.
This Personal Guarantee of Payment agreement shall
continue until the Resident's admission agreement with
Facility is terminated and all financial obligations to Facility
have been paid in full. The Guarantor may not terminate the
obligations in this Personal Guarantee of Payment agreement
prior to that time.
THE GUARANTOR DOES FOR HIMSELF/HERSELF,
AND ON BEHALF OF HIS/HER HEIRS,
ADMINSTRATORS AND EXECUTORS, AND FACILTY
DOES ITSELF, AGREE TO THE TERMS OF THIS
PERSONAL GUARANTEE OF PAYMENT.
(Italics added and bold sic.) (July 22 and Oct. 2, 2014 Personal Guarantee of Payment at
1.) The guaranties thus are both initially premised on a valid, binding residency agreement
in place between appellant and Turner and continue to exist (or not) based on the status of
the residency agreements. As such, we agree with the trial court that the plain language of
the guaranties impose liability for the resident's financial obligations to the facility arising
out of the residency agreements and that, without a residency agreement, the guaranties
cannot be enforced.
{¶ 25} Third, the posture of this case leaves Turner with no financial obligation to
appellant. Under legal principles of guaranty and suretyship, a judgment rendered in favor
of the principal debtor (or "obligor") generally bars the party owed (or "obligee") from
asserting a claim against the guarantor (or "secondary obligor") to enforce the secondary
obligation. 4 Restatement of Law, Suretyship and Guaranty, Section 67. This principle is
consistent with the nature of a guaranty, which, as stated earlier, is to obligate one party to
pay debts incurred by another person. Ranieri at ¶ 23. Moreover, the language of the
instant guaranty reflects Cox is only liable for "[Turner's] financial obligations to
[appellant]." (July 22 and Oct. 2, 2014 Personal Guarantee of Payment at 1.)
{¶ 26} Here, the trial court held Turner is not liable to appellant. Appellant did not
appeal this holding, does not otherwise argue Turner retains a debt to appellant, or provide
legal support for why a debt survives on these facts. As such, appellant has not shown a
"financial obligation" on the part of Turner that remains to be paid back to appellant, which
would trigger Cox's promise to pay as a guarantor. Therefore, appellant fails to
No. 18AP-466 10
demonstrate reversible error on appeal. "The burden of affirmatively demonstrating error
on appeal rests with the [appellant]." Miller v. Johnson & Angelo, 10th Dist. No. 01AP-
1210, 2002-Ohio-3681, ¶ 2; see also App.R. 9 and 16(A)(7).
{¶ 27} Finally, we note this case is distinguishable from Berner. In Berner, the
Eighth District affirmed the trial court's grant of directed verdict in favor of appellant
against a guarantor who was the daughter of a former resident. Like in this case, in Berner,
the daughter of a resident of appellant signed both a residency agreement and a personal
guarantee of payment. However, the appeal did not involve issues regarding the daughter's
authority to sign the residency agreement and whether the personal guarantee of payment
could be enforced absent a valid contract underlying the guaranty. To the contrary, the
daughter acknowledged the legitimacy of the residency agreement by arguing on appeal
that appellant materially breached the residency agreement through negligent care of her
father. Furthermore, Berner did not involve an appeal of a breach of the personal guarantee
agreement after the trial court held the resident was not liable to appellant at all and that
issue was not appealed. Because of these distinctions, Berner does not support reversal in
this case.
{¶ 28} Considering all the above, we find the trial court did not err in entering
judgment for Cox on the personal guarantee of payment claim.
{¶ 29} Accordingly, we overrule appellant's assignment of error.
V. CONCLUSION
{¶ 30} Having overruled appellant's sole assignment of error, we affirm the
judgment of the Franklin County Municipal Court.
Judgment affirmed.
BROWN and BRUNNER, JJ., concur.
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