Santomieri v. Mangen

[Cite as Santomieri v. Mangen, 2018-Ohio-1443.]
IN THE COURT OF APPEALS OF OHIO
THIRD APPELLATE DISTRICT
AUGLAIZE COUNTY
GREGG S. SANTOMIERI,
PLAINTIFF-APPELLEE, CASE NO. 2-17-05
v.
CHARLES L. MANGEN, OPINION
DEFENDANT-APPELLANT.
Appeal from Auglaize County Common Pleas Court
Trial Court No. 2016-CV-0090
Judgment Affirmed
Date of Decision: April 16, 2018
APPEARANCES:
Royce A. Link for Appellant
Jonathan S. Zweizig for Appellee
Case No. 2-17-05
PRESTON, J.
{¶1} Defendant-appellant, Charles L. Mangen (“Mangen”), appeals the
February 10, 2017 judgment of the Auglaize County Common Pleas Court awarding
plaintiff-appellee, Gregg S. Santomieri (“Santomieri”), $53,334.00 in damages
under a promissory note executed between Mangen and Santomieri. For the reasons
that follow, we affirm.
{¶2} Under the terms of the promissory note, Mangen promised to pay
Santomieri a single balloon payment of $40,000 on May 6, 2016. (Plaintiff’s Ex.
9). On May 20, 2016, Santomieri filed a complaint seeking enforcement of the
amount owed on the past-due promissory note, interest, and attorney fees. (Doc.
No. 1). On June 16, 2016, Mangen filed an answer to Santomieri’s complaint, two
counterclaims for fraudulent representation and breach of contract, and a request for
attorney fees. (Doc. No. 10). Mangen answered Santomieri’s complaint in part by
asserting an affirmative defense of want of consideration for the note. (Id.). On
June 22, 2016, Santomieri filed his answer to Mangen’s counterclaims. (Doc. No.
15).
{¶3} On January 25, 2017, Mangen filed a motion in limine seeking to
exclude text messages and proof of the content of text messages exchanged between
Mangen and Santomieri. (Doc. No. 27). On January 31, 2017, Santomieri filed a
memorandum in opposition to Mangen’s motion in limine. (Doc. No. 32). Also on
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January 31, 2017, Mangen submitted an additional memorandum in support of his
motion in limine. (Doc. No. 35). On February 2, 2017, the trial court denied
Mangen’s motion in limine. (Doc. No. 37).
{¶4} Following a bench trial on February 10, 2017, the trial court issued its
judgment awarding Santomieri $53,334.00. (Doc. No. 44).
{¶5} On March 1, 2017, Mangen filed a notice of appeal. (Doc. No. 51).1
He raises four assignments of error.2 For the sake of clarity, we will begin by
addressing his second assignment of error, followed by his first, third, and fourth
assignments of error.
Assignment of Error No. II
The trial court erred by finding that adequate consideration
existed to support a judgment on the promissory note, because
agreeing to do what one is already legally bound to do does not
constitute adequate consideration.
{¶6} Before ruling on the merits of this appeal, we must first consider
whether this court has jurisdiction to hear this appeal. Although neither party raised
the issue of whether the trial court’s judgment entry is reviewable by this court as a
1
Shortly after he filed the notice of appeal, Mangen filed for bankruptcy in the United States Bankruptcy
Court for the Northern District of Ohio. (See Doc. No. 129). As a result, Mangen’s appeal was stayed on
April 4, 2017. This court lifted the stay of appeal on November 15, 2017.
2
From Mangen’s appellate brief, it is unclear whether he raises four assignments of error or five assignments
of error. His third assignment of error presents two separate issues which he discusses under different
headings in his brief. Given that Mangen consolidated these issues into a single assignment of error and that
our overall analysis is the same regardless of whether we treat the two issues as composing a single
assignment of error or separate assignments of error, we regard Mangen’s brief as raising just four
assignments of error.
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final, appealable order, this is a jurisdictional question which we must raise sua
sponte. In re Murray, 52 Ohio St. 3d 155, 159-160 (1990), fn. 2; Whitaker-Merrell
Co. v. Geupel Constr. Co., 29 Ohio St. 2d 184, 186 (1972).
{¶7} Article IV, Section 3(B)(2), of the Ohio Constitution limits our
jurisdiction to the review of final orders. Grieshop v. Hoyng, 3d Dist. Mercer No.
10-06-27, 2007-Ohio-2861, ¶ 15. “A final and appealable order must meet the
requirements of R.C. 2505.02(B) and, if applicable, Civ.R. 54(B).” Id., citing Chef
Italiano Corp. v. Kent State Univ., 44 Ohio St. 3d 86, 88 (1989). Under R.C.
2505.02(B)(1), an order is a final, appealable order if it “affects a substantial right
in an action that in effect determines the action and prevents a judgment.” A
“substantial right” is defined as “a right that the United States Constitution, the Ohio
Constitution, a statute, the common law, or a rule of procedure entitles a person to
enforce or protect.” R.C. 2505.02(A)(1). Civ.R. 54(B) is implicated in multi-party
or multi-claim litigation. Civ.R. 54(B) provides:
When more than one claim for relief is presented in an action whether
as a claim, counterclaim, cross-claim, or third-party claim, and
whether arising out of the same or separate transactions, or when
multiple parties are involved, the court may enter final judgment as to
one or more but fewer than all of the claims or parties only upon an
express determination that there is no just reason for delay. In the
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absence of a determination that there is no just reason for delay, any
order or other form of decision, however designated, which
adjudicates fewer than all the claims or the rights and liabilities of
fewer than all the parties, shall not terminate the action as to any of
the claims or parties, and the order or other form of decision is subject
to revision at any time before the entry of judgment adjudicating all
the claims and the rights and liabilities of all the parties.
Thus, in an ordinary multi-party or multi-claim case, when a trial court’s judgment
entry affects a substantial right of some but not all parties or determines some but
not all claims pending before the trial court, the absence of a Civ.R. 54(B)
certification bars an appellate court from entertaining an appeal of the judgment.
{¶8} However, there are occasions where a trial court’s judgment may be
reviewed as a final appealable order despite the fact that some claims appear to be
pending before the trial court and in spite of the absence of Civ.R. 54(B) language.
For example, “a judgment in an action which determines a claim in that action and
has the effect of rendering moot all other claims in the action as to all other parties
to the action is a final appealable order pursuant to R.C. 2505.02, and Civ.R. 54(B)
is not applicable to such a judgment.” Wise v. Gursky, 66 Ohio St. 2d 241, 243
(1981).
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{¶9} In this case, Mangen filed two counterclaims against Santomieri for
fraudulent representation and breach of contract. (Doc. No. 10). In its February 10,
2017 judgment entry, the trial court did not expressly dismiss or dispose of
Mangen’s counterclaims. However, in rendering judgment in favor of Santomieri,
the trial court made factual findings and legal conclusions which are inconsistent
with a judgment in favor of Mangen on his counterclaims. Thus, we conclude that
the trial court implicitly rejected and mooted Mangen’s counterclaims and, as such,
the trial court’s February 10 judgment is reviewable by this court as a final
appealable order. See Brookridge Party Ctr., Inc. v. Fisher Foods, Inc., 12 Ohio
App.3d 130, 135 (8th Dist.1983), fn. 4; City of Westlake v. Mascot Petroleum Co.,
Inc., 8th Dist. Cuyahoga No. 57508, 1990 WL 48960, *2 (Apr. 19, 1990), fn. 1.
{¶10} Having concluded that this court has jurisdiction to hear Mangen’s
appeal, we turn now to the merits of his second assignment of error. In his second
assignment of error, Mangen argues that the trial court erred by concluding that the
promissory note is supported by consideration. Specifically, Mangen argues that
the consideration identified by the trial court— (1) Mangen receiving the benefit of
Santomieri proceeding to close the sale of a parcel of real estate Mangen negotiated
to purchase from Santomieri under a written purchase contract and (2) Santomieri’s
forbearance of litigation concerning the parties’ respective rights under that written
purchase contract—do not constitute consideration for the note.
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{¶11} “‘When reviewing a civil appeal from a bench trial, we apply a
manifest weight standard of review.’” Lump v. Larson, 3d Dist. Logan No. 8-14-
14, 2015-Ohio-469, ¶ 9, quoting San Allen, Inc. v. Buehrer, 8th Dist. Cuyahoga No.
99786, 2014-Ohio-2071, ¶ 89, citing Revilo Tyluka, L.L.C. v. Simon Roofing &
Sheet Metal Corp., 193 Ohio App. 3d 535, 2011-Ohio-1922, ¶ 5 (8th Dist.). “‘[A]
civil judgment “supported by some competent, credible evidence going to all the
essential elements of the case will not be reversed by a reviewing court as being
against the manifest weight of the evidence.”’” Id., quoting Warnecke v. Chaney,
194 Ohio App. 3d 459, 2011-Ohio-3007, ¶ 13 (3d Dist.), quoting C.E. Morris Co. v.
Foley Constr. Co., 54 Ohio St. 2d 279 (1978), syllabus.
{¶12} “‘“[W]hen reviewing a judgment under a manifest-weight-of-the-
evidence standard, a court has an obligation to presume that the findings of the trier
of fact are correct.”’” Id. at ¶ 10, quoting Warnecke at ¶ 13, quoting State v. Wilson,
113 Ohio St. 3d 382, 2007-Ohio-2202, ¶ 24. “‘The rationale for this presumption is
that the trial court is in the best position to evaluate the evidence by viewing
witnesses and observing their demeanor, voice inflection, and gestures.’” Id.,
quoting Warnecke at ¶ 13, citing Seasons Coal Co. v. Cleveland, 10 Ohio St. 3d 77,
80 (1984). “‘“A reviewing court should not reverse a decision simply because it
holds a different opinion concerning the credibility of the witnesses and evidence
submitted before the trial court.”’” Id., quoting Warnecke at ¶ 13, quoting Seasons
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Coal Co. at 81. “‘“A finding of an error in law is a legitimate ground for reversal,
but a difference of opinion on credibility of witnesses and evidence is not.”’” Id.,
quoting Warnecke at ¶ 13, quoting Seasons Coal Co. at 81.
{¶13} “A promissory note is defined as ‘a written promise to pay a certain
sum of money at a future time, unconditionally.’” Morgan v. Mikhail, 10th Dist.
Franklin Nos. 08AP-87 and 08AP-88, 2008-Ohio-4598, ¶ 66, quoting Burke v.
State, 104 Ohio St. 220, 222 (1922). “‘Generally, the holder of a [promissory note]
* * * establishes a prima facie case for payment on a note where the note is placed
in evidence and the makers’ signature(s) is (are) admitted.’” Gallwitz v. Novel, 5th
Dist. Knox No. 10-CA-10, 2011-Ohio-297, ¶ 23, quoting Dryden v. Dryden, 86
Ohio App. 3d 707, 711 (4th Dist.1993), citing R.C. 1303.36(B). See also Konica
Minolta Business Solutions, U.S.A., Inc. v. Allied Office Products, Inc., 724
F. Supp. 2d 861, 872 (S.D.Ohio 2010). A party may defend against having to pay
under a promissory note by arguing failure or want of consideration for the note.
See W. Ohio Colt Racing Assn. v. Fast, 3d Dist. Mercer No. 10-08-15, 2009-Ohio-
1303, ¶ 13, citing Ohio Loan & Discount Co. v. Tyarks, 173 Ohio St. 564, 568
(1962). See also R.C. 1303.33(B) (“The drawer or maker of an instrument has a
defense if the instrument is issued without consideration.”). However, “‘[t]he law
presumes the existence of a consideration for a promissory note, and this
presumption continues until it is shown that there was none; and the burden of
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showing this is on the party attacking the note for want of consideration.’” Gallon
v. Scouten, 6th Dist. Lucas No. L-06-1168, 2007-Ohio-2957, ¶ 17, quoting
Dalrymple v. Wyker, 60 Ohio St. 108 (1899), paragraph three of the syllabus. “[A]
claim of a lack of consideration for [a promissory note] is an affirmative defense
which must be proved by a preponderance of the evidence.” Sur-Gro Plant Food
Co., Inc. v. Morgan, 29 Ohio App. 3d 124, 129 (12th Dist.1985), citing Riegert v.
Weatherholt, 12th Dist. Butler No. CA82-10-0099, 1983 WL 6321, *4 (Nov. 21,
1983).
{¶14} We conclude that there is competent, credible evidence supporting the
trial court’s conclusion that Santomieri is entitled to enforce the promissory note
because it is supported by consideration. However, we arrive at this ultimate
conclusion for a different reason than relied on by the trial court. See Iams v.
DaimlerChrysler Corp., 174 Ohio App. 3d 537, 2007-Ohio-6709, ¶ 60 (3d Dist.)
(“‘A judgment by the trial court which is correct, but for a different reason, will be
affirmed on appeal as there is no prejudice to the appellant.’”), quoting Bonner v.
Bonner, 3d Dist. Union No. 14-05-26, 2005-Ohio-6173, ¶ 18.
{¶15} It is undisputed that Mangen executed a $40,000 promissory note in
favor of Santomieri. (See Feb. 10, 2017 Tr. at 42, 85). Mangen admitted that he
signed the promissory note and that he has not paid Santomieri any part of the
$40,000. (See id. at 42, 46-47). Therefore, Santomieri established a prima facie
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case for payment. However, Mangen argued that there was a want of consideration
for the note and that, therefore, the note is unenforceable.
{¶16} In support of his position, at trial Mangen advanced his version of the
circumstances surrounding the execution of the promissory note. According to
Mangen, he executed the promissory note in anticipation of receiving a $40,000
loan from Santomieri to finance the purchase of real estate and other goods. (Id. at
44, 52, 54).3 In other words, Mangen asserted that Santomieri’s payment of the
$40,000 was the consideration for his promise to pay Santomieri. There is no
dispute that Santomieri did not pay Mangen $40,000. (Id. at 115). Thus, Mangen
argued that the promissory note is invalid because of a failure of consideration.
There is a difference between a want of consideration and a failure of
consideration. Want of consideration is a total lack of any valid
consideration * * *. Failure of consideration is the neglect, refusal
and failure of one of the * * * parties to do, perform or furnish, * * *,
the consideration in substance and in fact agreed upon.
John P. Timmerman Co. v. Hare, 3d Dist. Allen No. 1-03-14, 2003-Ohio-4622, ¶
10, citing Colonial Ins. Co. v. Graw, 102 Ohio App. 430, 438 (8th Dist.1955).
3
The version of events Mangen promoted at trial is at odds with Mangen’s original assertion in his
counterclaim that he signed the note because he anticipated difficulties in obtaining bank financing for the
purchase of Santomieri’s property which never materialized. (See Doc. No. 10).
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{¶17} The trial court rejected Mangen’s argument and concluded that
Mangen did not demonstrate that there was a failure of consideration for the
promissory note. The trial court found that “[Mangen’s] allegation that the note was
signed in anticipation of a payment of cash from [Santomieri] to him but which he
never received is unsupported by any evidence other than his self-serving testimony,
and is not believable.” (Doc. No. 44).
{¶18} After reviewing the record, we conclude that there is competent,
credible evidence supporting the conclusion that Mangen did not meet his burden
of proving by a preponderance of the evidence that there was a failure of
consideration for the promissory note. See Whichard v. Matthews, 8th Dist.
Cuyahoga No. 98689, 2013-Ohio-1892, ¶ 32-33, 39. On numerous occasions,
Santomieri’s trial counsel highlighted inconsistencies between Mangen’s testimony
at trial and Mangen’s statements at deposition. (See, e.g., Feb. 10, 2017 Tr. at 60-
65, 153-155). Further, some of the explanations Mangen offered for why he
supposedly signed the promissory note were dubious at best:
[Mangen’s Counsel]: Why’d you sign the promissory note?
[Mangen]: I thought I was helping [Santomieri] out.
[Mangen’s Counsel]: How was it helping him out for him to loan
you the forty thousand bucks?
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[Mangen]: How’s it helping him out? He would get
money. He needed cash. He told me he
needed cash.
(Id. at 133-134). The trial court was in the best position to assess Mangen’s
credibility in testifying about his agreement with Santomieri; this court will not cast
doubt on the trial court’s conclusion that Mangen’s testimony was not believable.
See Seasons Coal Co., 10 Ohio St. 3d at 80.
{¶19} Moreover, when subjected to cross-examination, Santomieri testified
unequivocally that he never agreed to pay Mangen $40,000 to help Mangen
purchase a second parcel of real estate:
[Mangen’s Counsel]: And you didn’t offer to loan him forty
thousand dollars ($40,000.00) so he could
do both deals.
[Santomieri]: Never.
***
[Mangen’s Counsel]: He never said to you, “I need forty thousand
dollars ($40,000.00) cash to buy the other
property because I already backed out of
this deal?”
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[Santomieri]: No. Never once. Never came out of his
mouth. He never asked myself or my wife
ever for any money, ever.
(Feb. 10, 2017 Tr. at 95, 112).
{¶20} Finally, a series of text messages exchanged between Mangen and
Santomieri submitted at trial support the conclusion that Mangen failed to meet his
burden of proving that there was a failure of consideration for the promissory note.
In the text messages, Mangen admitted that he understood that the due date on the
$40,000 promissory note was approaching and that he wished he “had it just lying
around.” (Plaintiff’s Ex. 16). Mangen also detailed his attempts to refinance his
house so that he could pay Santomieri. (Id.). However, Mangen never objected to
Santomieri’s requests for payment by arguing that Santomieri had not paid the
$40,000 purportedly agreed to as consideration for the promissory note. (See id.).
Furthermore, there are no text messages from Mangen in the series asking
Santomieri to pay him the $40,000 or questioning why Santomieri had not yet paid.
(See Plaintiff’s Exs. 15, 16, 17). For his part, Mangen testified that he never sent
any communications to Santomieri inquiring about the expected $40,000 payment.
(Feb. 10, 2017 Tr. at 54-55).
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{¶21} For these reasons, the trial court’s conclusion that Santomieri is
entitled to enforce the promissory note is not against the manifest weight of the
evidence.
{¶22} Mangen’s second assignment of error is overruled.
Assignment of Error No. I
The trial court erred by enforcing an oral agreement rather than
a written real estate purchase agreement where the terms of the
written purchase agreement were not ambiguous and the terms of
the oral agreement directly contradicted the written agreement.
Assignment of Error No. III
The trial court erred by resorting to parol evidence to allow for
the modification of an unambiguous written contract, and by
allowing for the modification of a written contract without the
mutual assent of all parties to the written contract.
Assignment of Error No. IV
The trial court erred by not finding that a waiver or merger by
deed occurred when the purchase price under a written real estate
purchase agreement was paid at closing in exchange for a deed.
{¶23} In his first assignment of error, Mangen argues that by enforcing the
promissory note, the trial court ultimately enforced the terms of an oral real estate
purchase agreement instead of an unambiguous written agreement covering the
same subject matter. In his third assignment of error, Mangen contends that, in
enforcing the promissory note, the trial court effectively permitted the modification
of an unambiguous written real estate purchase contract through the use of parol
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evidence and without the assent of all parties to the written agreement. Finally, in
his fourth assignment of error, Mangen argues that the trial court erred by enforcing
the promissory note because any claim Santomieri had to receiving the $40,000 was
waived when Santomieri tendered a deed to real estate he sold to Mangen under a
separate written real estate purchase agreement.
{¶24} Mangen’s first, third, and fourth assignments of error are premised on
a faulty understanding of the trial court’s judgment. Mangen correctly notes that
the trial court found that Santomieri and Mangen initially entered into a verbal
agreement for Santomieri to sell Mangen a parcel of real estate for $140,000. (Doc.
No. 44). However, Mangen conspicuously omits the fact that the trial court also
found that two discrete agreements were ultimately used to accomplish the
transaction: a $100,000 written real estate purchase contract between Mangen and
his wife, Melissa, and Santomieri and a separate, collateral $40,000 oral agreement
between Mangen and Santomieri that was eventually committed to writing in the
form of the promissory note. (Id.). Thus, in enforcing the promissory note against
Mangen, the trial court was not enforcing an oral agreement in preference to and in
contravention of the clear terms of a written contract; it was enforcing a promissory
note in addition to a separate written contract. As such, Mangen’s arguments under
his first, third, and fourth assignments of error are erroneous.
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{¶25} Mangen’s first, third, and fourth assignments of error are, therefore,
overruled.
{¶26} Having found no error prejudicial to the appellant herein in the
particulars assigned and argued, we affirm the judgment of the trial court.
Judgment Affirmed
ZIMMERMAN and SHAW, J.J., concur.
/jlr
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