Payette Fin., Servs., L.L.C. v. Mtge. Electronic Registration Sys., Inc.

[Cite as Payette Fin., Servs., L.L.C. v. Mtge. Electronic Registration Sys., Inc., 2020-Ohio-5055.]
IN THE COURT OF APPEALS
ELEVENTH APPELLATE DISTRICT
PORTAGE COUNTY, OHIO
PAYETTE FINANCIAL SERVICES, LLC, : OPINION
Plaintiff, : CASE NO. 2020-P-0010
- vs - :
MORTGAGE ELECTRONIC :
REGISTRATION SYSTEMS, INC.,
ACTING SOLELY AS NOMINEE FOR :
MB FINANCIAL BANK, N.A., et al.,
:
Defendants-Third Party
Plaintiffs-Appellants/ :
Cross-Appellees,
:
DAVID GRAY, et al.,
:
Third Party Defendants-
Appellees/Cross-Appellants. :
Civil Appeal from the Portage County Court of Common Pleas, Case No. 2016 CV
00969.
Judgment: Affirmed.
Kerin Lyn Kaminski and Kathleen A. Nitschke, Giffen & Kaminski, LLC, 1300 East Ninth
Street, Suite 1600, Cleveland, Ohio 44114 (For Defendants-Third Party Plaintiffs-
Appellants/Cross-Appellees).
Jeffrey Mark Levinson, Levinson LLP, 55 Public Square, Suite 1750, Cleveland, Ohio
44113 (For Third Party Defendants-Appellees/Cross-Appellants).
MARY JANE TRAPP, J.
{¶1} Cross-appellants, David and Shelly Gray (collectively, “the Grays”), appeal
from the judgments of the Portage County Court of Common Pleas, which adopted the
magistrate’s decision and overruled their objections, finding that while the Grays asserted
a “vague” affirmative defense of release in their answer to the Third Party Complaint, they
did not assert a “counterclaim of any kind” that “meets the requirements of the Ohio Rules
of Civil Procedure as a properly pleaded claim for damages” for breach of contract.
{¶2} In the Grays’ sole assignment of error, they argue that the trial court erred
in failing to find that they asserted a valid breach of contract claim via an affirmative
defense because the cross-appellees, Douglas and Kristine Ritzel (collectively, “the
Ritzels”), commenced and prosecuted third party claims against them in direct
contravention of the parties’ earlier mutual release, thus entitling the Grays to damages.
They further assert the trial court erred in failing to find the issue was tried by implied
consent pursuant to Civ.R. 15(B) after the Ritzels made a motion to amend their pleadings
to conform to the evidence.
{¶3} A review of the record and pertinent law reveals the Grays only asserted a
breach of the mutual release as an affirmative defense and did not file a counterclaim or
a motion for leave to amend. There is sparse testimony by Mr. Gray regarding the costs
they incurred from the underlying litigation as a result of the alleged breach. Further,
objections were made to this line of questioning, which were sustained. Moreover, to find
a breach of contract claim was impliedly tried by consent would cause a substantial
prejudice to the Ritzels.
{¶4} Thus, the judgment of the Portage County Court of Common Pleas is
affirmed.
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Substantive and Procedural Facts
{¶5} This case arises from a foreclosure action in which the Ritzels were the
defendants/third-party plaintiffs along with their lender and co-defendant/third-party
plaintiff, MB Financial Bank, N.A. (“MBFinancial”), and the Grays were third-party
defendants.
{¶6} In 2011, the Ritzels entered into a lease with an option to purchase with the
Grays for the subject residential property. In 2015, the Ritzels signed a purchase
agreement for the property. At the time the purchase agreement was executed, three
mortgages encumbered the property – two held by Wells Fargo and a third originally held
by Lake National Bank. It was alleged that Payette Financial Services, LLC (“Payette”)
subsequently acquired a participation interest in that third note and mortgage (the
“Payette mortgage”).
{¶7} At closing, the Wells Fargo liens were satisfied from the sale proceeds
funded by MBFinancial. Neither the Ritzels nor MBFinancial discovered, nor did the
Grays disclose, the third mortgage prior to the closing of the sale of the property
{¶8} To further complicate matters, after the purchase agreement was executed,
but before closing, the relationship between the Ritzels and the Grays grew tumultuous –
culminating in the Grays filing an eviction action. The Grays alleged non-payment of
amounts due under the lease agreement, and the Ritzels filed a counterclaim for specific
performance and money damages. The parties eventually signed a confidential
settlement agreement and mutual release – the subject of this appeal – and dismissed
the eviction action.
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{¶9} The Ritzels then completed the purchase, and the Grays delivered a
general warranty deed. Later, having been unable to collect against the Grays, Payette
brought its foreclosure action, asserting its lien against the Ritzels’ residence as first in
priority when it discovered the property had been sold to the Ritzels.
{¶10} In the foreclosure action, MBFinancial and the Ritzels filed amended third-
party claims against the Grays for breach of warranty deed, fraudulent misrepresentation,
and unjust enrichment. In turn, the Grays filed an amended answer denying the
allegations and raising various affirmative defenses, including a defense that “the claims
against the Grays contained in the Third-Party Complaint were released.” In their prayer
for relief, the Grays requested the court to “enter judgment in favor of the Grays on the
Third-Party Complaint as to each and every Count therein, assessing any costs of this
litigation against the Defendants and grant the Grays such further and additional relief as
is just.” There were no further amendments to the pleadings.
{¶11} After a lengthy discovery phase, which included, by the parties’ stipulation,
the filing of the mutual release from the eviction action into the record of the foreclosure
action, a three-day trial was held before a magistrate.
Trial Testimony and the Grays’ Claims
{¶12} Counsel for the Grays concluded his opening statement by stating: “At the
end of this case, the Grays, who are the parties least able to afford this expense, will ask
the Court for an award that the Defendants pay the costs the Grays incurred in this
meritless litigation due to their breach of the contract of the mutual release.”
{¶13} Mr. Gray testified briefly as to the mutual release:
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{¶14} “Q. So once you saw this mutual release in the closing documents, did you
expect to be done with the Ritzels forever?
{¶15} “A. Absolutely.
{¶16} “Q. Did you think we would be here today?
{¶17} “A. No.
{¶18} “Q. Would you please read aloud the mutual release paragraph of this
document found on Page 2 at 1.0, starting with mutual releases?
{¶19} “A. Mutual releases. Each party, including their respective families,
assignees, agents, heirs, beneficiaries, fiduciaries, representatives, insurers, successors,
and assigns, exchange for the other party’s promises and covenants and for all other
good and valuable consideration, the sufficiency of which are acknowledged, irrevocably
and non-conditionally release, acquits, and forever discharges the other party from any
and all claims, demands, costs, expenses, and cause of action of any kind or description
whatsoever whether known or unknown, vested or contingent, legal or equitable, that
each has or might have against the other relating to or arising out of subject matter of
litigation to lease the purchase agreement, from the beginning of time until the date the
agreement is fully executed.
{¶20} “Q. It’s pretty comprehensive; isn’t it?
{¶21} “A. Yes.
{¶22} “Q. There are no exceptions to the mutual promise of finality there that I
can see; do you?
{¶23} “A. I think it all says it right there.
{¶24} “Q. It covers all claims?
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{¶25} “A. Yes.
{¶26} “Q. Known or unknown?
{¶27} “A. Correct.
{¶28} “Q. It doesn’t say anywhere except for any type of claims; does it?
{¶29} “A. No, it does not.
{¶30} “Q. All is all; right?
{¶31} “A. Correct.
{¶32} “Q. Unknown is unknown; right?
{¶33} “A. Yes.
{¶34} “Q. And yet in plain breach of that mutual promise of finality, we’re here
now; right?
{¶35} “[Counsel for MBFinancial/the Ritzels]: Objection. Just leading all the way
through, but I got tired of objecting, but that’s just –
{¶36} “The Magistrate: Sustained.
{¶37} “[Counsel for the Grays]: Okay.
{¶38} “Q. So it would be a legitimate question to ask why we’re here now in light
of this release?
{¶39} “A. Yes.
{¶40} “Q. Can you tell me how?
{¶41} “A. It’s been ongoing for two years now. Emotionally, it’s like a big, black
cloud hanging over us. Financially, up to this trial it’s cost us $35,000.00 to deal with this.
It’s caused a lot of friction and undue distress on us as a family.
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{¶42} “Q. Can you describe generally what the financial costs – or I’m sorry, give
me general categories of what the financial cost to you consists of?
{¶43} “A. Missed work. I’ve had to miss obviously these last three days. I missed
a day for the deposition, hotel costs, flight costs, attorney fees.
{¶44} “Q. Did you also have to buy transcripts?
{¶45} “A. Yes. We had to buy transcripts. I think that’s – covers it.
{¶46} “Q. All expenses incurred because of the Ritzels’ breach of the mutual
release; correct?
{¶47} “[Counsel for MBFinancial/the Ritzels]: Objection.
{¶48} “The Magistrate: Sustained.”
{¶49} Toward the end of trial after the court ruled on admission of evidence,
MBFinancial and the Ritzels moved to amend the pleadings to conform to the admitted
evidence. The Grays did not object. Payette moved for a directed verdict, which was
overruled. At that point, Payette indicated to the court that it had no rebuttal and that it
would “like to make a similar motion to conform.” The magistrate responded that “the
motion to have it conform to the evidence has already been put on by the Defendants
[MBFinancial and Ritzels], so its conforming how it conforms. Okay.” Payette’s counsel
replied, “Okay,” and the Grays’ counsel said, “Prospectively as well.” The magistrate
responded, “All right. So that will be granted for all parties * * *.”
{¶50} During closing arguments, both sides spoke briefly about the mutual
release. The Grays contended that the Ritzels had released all claims relating to the
purchase agreement in the mutual release and asked the court for “judgment in their favor
on each of the Defendant’s claims and also an award of the costs they incurred in this
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litigation on account of the Defendant’s clear breach of contract by proceeding in the face
of the mutual release, which again, they hid.”
{¶51} In rebuttal, counsel for MBFinancial and the Ritzels stated that “Mr. Gray’s
counsel brought up that they should be able to get fees based on breach of contract, and
I think he means breach of the purchase agreement although I’m not quite sure. And so
to the extent that that’s what he is indeed seeking, I would then say that such fees can’t
be recovered, because there’s no contract to be breached. The purchase agreement
merged into the warranty deed, and so, therefore, there’s no way to enforce the purchase
agreement at this point.”
{¶52} The magistrate issued her decision, finding, in relevant part that: the Ritzels
and the Grays entered into and executed a purchase agreement offer, receipt and
acceptance for the property, which was subsequently amended six times; the Grays
signed a seller pre-closing information form that did not disclose the Payette mortgage on
the property; the Grays and the Ritzels were having various disputes that culminated in
February of 2016 when the Grays filed an eviction action against the Ritzels; however,
the parties decided to proceed with a sale of the property and executed a purchase
agreement for the property in April of 2016; and the Grays signed an owner’s affidavit and
closing disclosure statements in connection with the sale of the property, none of which
disclosed the Payette mortgage.
{¶53} The magistrate further found that the Grays then signed the ALTA
Settlement Statement showing payments to Wells Fargo and a Closing Disclosure that
failed to disclose the third mortgage. The magistrate found that on the same date, the
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Grays and the Ritzels “executed a Confidential Settlement Agreement and Mutual
Release, which resolved the eviction litigation between them.”
{¶54} The magistrate continued her findings by noting that pursuant to the Mutual
Release, the Grays and the Ritzels “released, acquitted and forever discharged any and
all claims, whether known or unknown, vested or contingent, legal or equitable, that each
party had or might have against the other relating to or arising out of the subject matters
of the eviction action, the Lease Agreement, or the Purchase Agreement, from the
beginning of time until the date the Mutual Release was fully executed on May 24, 2016.
On May 24, 2016, the Grays executed a General Warranty Deed in favor of the Ritzels.”
{¶55} The magistrate also found that “MB Financial did not rely upon the Grays’
Owners Affidavit regarding the condition of the title to the Property, but relied upon the
defective title exam and title commitments. No evidence was presented that the Ritzels
justifiably relied upon any misrepresented statements by the Grays to induce reliance in
the purchase of the Property. No evidence was presented that the Grays intended to
mislead any party.”
{¶56} The magistrate then ordered, as is pertinent to this appeal, that (1) “the
Grays were granted judgment against MB Financial on each of their claims”; (2) the
Ritzels were “granted judgment on their claim against Third-Party Defendants, Shelly
Gray and David Gray, for breach of warranty deed”; (3) the Grays were “granted judgment
against Third-Party Plaintiffs, Douglas Ritzel and Kristine Ritzel, on the remainder of
Third-Party Plaintiffs’ claims.”
{¶57} Upon review, the trial court adopted the magistrate’s decision without
modifications. MBFinancial, the Ritzels, and the Grays subsequently filed objections. In
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their objections, the Grays argued they were entitled to a judgment in their favor and
against the Ritzels and MBFinancial for breach of contract and to a hearing to determine
damages incurred by the Grays as a result of the breach.
{¶58} Based upon the court’s review of the pleadings, the trial transcript, the
various stipulations between the parties, the exhibits admitted into evidence, the
objections asserted by the parties, and the arguments submitted in opposition to the
objections, the court found the objections not well-taken.
{¶59} More specifically, the court found that the Grays asserted in their objections
that MBFinancial and the Ritzels violated a Confidential Settlement Agreement and
Mutual Release in conjunction with an unrelated eviction action. They further argued that
the magistrate’s decision found “all of the requisite elements of the Grays’ breach of
contract claim.”
{¶60} Upon review of the pleadings, the court found that the Grays did not file any
claim at any time against MBFinancial or the Ritzels for breach of contract or any other
claim for relief. In their amended answer, the Grays did assert an affirmative defense that
“[t]he claims against the Grays contained in the Third-Party Complaint were released” and
requested that the court “grant the Grays such further and additional relief as is just.”
{¶61} The court concluded that “while the Grays may have asserted a valid (but
vague) affirmative defense, they clearly did not assert a viable claim that meets the
requirements of the Ohio Rules of Civil Procedure as a properly pleaded claim for
damages.”
{¶62} The instant appeal followed, with MBFinancial, the Ritzels, and the Grays
all filing appeals of the trial court’s judgments adopting the magistrate’s decision and
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overruling their respective objections. MBFinancial’s and the Ritzels’ appeal against
Payette was subsequently dismissed.
{¶63} The Grays now raise one assignment of error on appeal:
{¶64} “The trial court erred as a matter of both fact and law in failing to find that
the Grays properly asserted a valid breach of claim on account of the Ritzels’
commencement and prosecution of the third-party claims against the Grays in violation
of the Mutual Release, entitling the Grays to damages therefor.”
Standard of Review
{¶65} On appeal, a trial court's overruling of objections and adoption of a
magistrate’s decision will not be overruled unless the trial court abused its discretion.
(Citations omitted.) Davis v. J & J Concrete, 11th Dist. Trumbull No. 2018-T-0074, 2019-
Ohio-1407, ¶18. The term “abuse of discretion” is one of art, “connoting judgment
exercised by a court which neither comports with reason, nor the record.” State v.
Underwood, 11th Dist. Lake No. 2008-L-113, 2009-Ohio-2089, ¶30, citing State v.
Ferranto, 112 Ohio St. 667, 676-78 (1925). Stated differently, an abuse of discretion is
the trial court’s “failure to exercise sound, reasonable, and legal decision-making.” State
v. Beechler, 2d Dist. Clark No. 09-CA-54, 2010-Ohio-1900, ¶62, quoting Black Law's
Dictionary 11 (8th Ed.Rev.2004).
Did the Grays Present a Claim for Relief?
{¶66} The Grays assert that the trial court erred in finding that they did not assert
a breach of contract claim at trial because they established, without objection, all of the
elements necessary to establish such a claim. They further contend that to find they did
not assert a claim for breach of contract by way of a pleading ignores and is contrary to
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the plain provisions of Civ.R. 15(B), which allows amendments of pleadings to conform
to the evidence and trial of a claim not raised in the pleadings by implied consent. Thus,
they assert that we should reverse for the trial court to hold a hearing on the issue of
damages resulting from the Ritzels’ breach.
{¶67} At the outset, we note that the Grays raise the second contention in their
assignment of error (trial by implied consent) for the first time on appeal. This argument
was not raised in the Grays’ objections to the Magistrate’s Decision. A party may
not raise a claimed error on appeal unless that party has properly objected to that factual
finding or legal conclusion in his or her objections to the magistrate's decision. Civ.R.
53(D)(3)(b)(iv); Stauffer v. Stauffer, 11th Dist. Geauga No. 2008-G-2860, 2009-Ohio-998,
¶21, citing Loss v. Claxton, 11th Dist. Portage No. 2003-P-0128, 2005-Ohio-347, ¶71.
{¶68} It is a well-established rule of appellate review that a court will not consider
issues that an appellant fails to raise initially at the trial court. Warmuth v. Sailors, 11th
Dist. Lake No. 2007-L-198, 2008-Ohio-3065, ¶36, citing Lippy v. Society Natl. Bank, 88
Ohio App.3d 33, 40 (11th Dist.1993) (appellant cannot raise an argument on appeal for
the first time when there was no indication that the argument was brought to the trial
court’s attention and considered below); MKB Leasing Corp. v. Sagowitz, 4th Dist.
Washington No. 02CA3, 2002-Ohio-5749, ¶24; McKenzie v. Spangler, 6th Dist. Lucas
No. L-96-236, 1997 WL 243578, *2 (May 9, 1997) (an issue is not ripe for appellate review
unless it was presented to the trial court and the court made a definitive ruling on the
issue).
{¶69} “The well-settled rule which requires the parties to adhere on appeal to the
theory upon which they presented the case in the trial court, operates to limit the scope
12
of the review * * * the case, on appeal, must be reviewed and decided on the theory on
which it was tried in the court below * * *.” Webb v. Grimm, 116 Ohio App. 63, 74 (2d
Dist.1961), quoting 3 American Jurisprudence, Section 830, at 372.
{¶70} Moreover, the Grays failed to support their claimed error with arguments
and failed to cite any legal authority as required by App.R. 16(A)(7) and Loc.R. 16(C)(4).
An appellant's brief must include argument and law, “containing the contentions of
appellant with respect to each assignment of error presented for review * * *, with citations
to the authorities, statutes, and parts of the record on which appellant relies.” S. Russell
v. Upchurch, 11th Dist. Geauga Nos. 2001-G-2395 & 2001-G-2396, 2003-Ohio-2099, ¶9,
citing App.R. 16(A)(7)6. Therefore, this court may disregard appellant's assignments of
error pursuant to App.R. 12(A)(2). Id. at ¶11; see also Karnofel v. Superior Waterproofing,
Inc., 11th Dist. Trumbull No. 2018-T-0055, 2019-Ohio-1409, ¶39.
{¶71} Had it been raised below, however, we would still find the claimed error to
be without merit.
{¶72} The trial court found that “while the Grays may have asserted a valid (but
vague) affirmative defense, they clearly did not assert a viable claim that meets the
requirements of the Ohio Rules of Civil Procedure as a properly pleaded claim for
damages.” We agree.
{¶73} Civ.R. 8(A), “claims for relief,” states, in pertinent part, that “[a] pleading that
sets forth a claim for relief, whether an original claim, counterclaim, cross-claim, or third-
party claim, shall contain (1) a short and plain statement of the claim showing that the
party is entitled to relief, and (2) a demand for judgment for the relief to which the party
claims to be entitled. If the party seeks more than twenty-five thousand dollars, the party
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shall so state in the pleading but shall not specify in the demand for judgment the amount
of recovery sought, unless the claim is based upon an instrument required to be attached
pursuant to Civ. R. 10.”
{¶74} In addition, Civ.R. 13(A) provides that “[a] pleading shall state as a
counterclaim any claim which at the time of serving the pleading the pleader has against
the opposing party, if it arises out of the transaction or occurrence that is the subject
matter of the opposing party’s claim * * *.” (Emphasis added.)
{¶75} There is no dispute that the Grays did not set forth a counterclaim for money
damages for the alleged breach of the settlement agreement and release. This failure
would appear to resolve the issue inasmuch as it has been waived and the Grays cannot
now assert it on appeal. See Poppe Law Office v. Orick, 3d Dist. Mercer No. 10-13-07,
2013-Ohio-5662, ¶30.
{¶76} The Grays appear to be arguing that an affirmative defense of release was
transformed into a counterclaim via Civ.R. 15(B), which allows for the amendment of
pleadings to conform to evidence presented at trial, and rescues them from waiver when
their claim for breach of the settlement agreement and release was tried by implied
consent of the parties.
{¶77} Civ. R. 15(B) provides:
{¶78} “When issues not raised by the pleadings are tried by express or implied
consent of the parties, they shall be treated in all respects as if they had been raised in
the pleadings. Such amendment of the pleadings as may be necessary to cause them to
conform to the evidence and to raise these issues may be made upon motion of any party
at any time, even after judgment. Failure to amend as provided herein does not affect
14
the result of the trial of these issues. If evidence is objected at the trial on the ground that
it is not within the issues made by the pleadings, the court may allow the pleadings to be
amended and shall do so freely when the presentation of the merits of the action will be
subserved thereby and the objecting party fails to satisfy the court that the admission of
such evidence would prejudice him in maintaining his action or defense upon the merits.
The court may grant a continuance to enable the objecting party to meet such evidence.”
{¶79} An affirmative defense, however, cannot simply be transformed into a
counterclaim. The difference between a defense and a counterclaim is that “the latter is
affirmative in nature, and asserts a separate cause of action, while the former serves to
preclude recovery by asserting facts that defeat the plaintiff's right to recovery.” (Citation
omitted.) BAC Home Loans Servicing, L.P. v. Hall, 12th Dist. Warren No. CA2009-10-
135, 2010-Ohio-3472, ¶18. An affirmative defense generally refers to that which is offered
to defeat an action by “denying, justifying, or confessing and avoiding the plaintiff's cause
of action. It goes to the plaintiff's right and generally would not be considered an
independent claim existing against the plaintiff.” (Citation omitted.) Id.{¶80} Civ.R. 8(C) provides that “[w]hen a party has mistakenly designated a
defense as a counterclaim or a counterclaim as a defense, the court, if justice so requires,
shall treat the pleading as if there had been a proper designation.” This provision,
however, was intended to permit trial courts to remedy clerical errors made in designating
affirmative defenses and counterclaims and was not intended as a means by which a
party could correct a substantive error in a pleading after the time for amendment to the
pleading had passed. BAC Home Loans Servicing at ¶19, citing Am. Outdoor Advertising
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Co., LLC v. P & S Hotel Group, Ltd., 10th Dist. Franklin No. 09-AP-221, 2009-Ohio-4662,
¶26.
{¶81} The transcript reveals that toward the end of trial, MBFinancial and the
Ritzels moved the court to amend the pleadings to conform to the evidence, which the
magistrate granted without objection. Payette then indicated to the court that it would
“like to make a similar motion to conform.” The magistrate responded that “the motion to
have it conform to the evidence has already been put on by the Defendants [MBFinancial
and Ritzels], so its conforming how it conforms. Okay.” Payette’s counsel replied, “Okay,”
and the Grays’ counsel said, “Prospectively as well.” The magistrate responded, “All right.
So that will be granted for all parties * * *.”
{¶82} We must agree with the Ritzels that the statement, “[p]rospectively as well”
was “nebulous,” at best and certainly not a motion to amend. But it would appear from
the magistrate’s response that she was going to accept all pleadings to have been
amended to conform to the evidence presented at trial.
{¶83} Such conformation, however, does not change the fact that the Grays did
not seek affirmative relief under the release (as opposed to using the release as an
affirmative defense to the Ritzels’ claims against them), and there is nothing in this record
on the part of the court or MBFinancial and the Ritzels that suggests an affirmative claim
for damages relating to the release was tried by implied consent.
{¶84} In State ex rel. Evans v. Bainbridge Twp. Trustees, 5 Ohio St.3d 41 (1983),
the Supreme Court of Ohio explained that “[a]n implied amendment of the pleadings will
not be permitted, however, where it results in substantial prejudice to a party. * * * Various
factors to be considered in determining whether the parties impliedly consented to litigate
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an issue include: whether they recognized that an unpleaded issue entered the case * *
*; whether the opposing party had a fair opportunity to address the tendered issue or
would offer additional evidence if the case were to be retried on a different theory * * *;
and whether the witnesses were subjected to extensive cross-examination on the issue *
* *.” (Citations omitted.) Id. at 45-46.
{¶85} Under Civ.R. 15(B), implied consent is not established merely because
evidence bearing directly on an unpleaded issue is introduced without objection. Rather,
it must appear that the parties understood the evidence was aimed at the unpleaded
issue. Id. at 46, citing MBI Motor Company, Inc. v. Lotus/East, Inc., 506 F.2d 709, 711
(6th Cir.1974).
{¶86} A review of the hearing transcript reveals that the only evidence on this
issue was the mutual release agreement itself, which was submitted by stipulation of all
the parties, and Mr. Gray’s brief testimony, which touched upon the mutual release and
that the underlying litigation was costing at least $35,000.
{¶87} Counsel for MBFinancial and the Ritzels made three objections, all of which
were sustained. Further, during closing arguments, counsel for MBFinancial and the
Ritzels expressed confusion over the Grays’ argument, questioning whether they were
talking about the real estate purchase agreement or the mutual release. The magistrate’s
decision is also silent as to the issue. In the magistrate’s findings, the mutual release is
only referenced in conjunction with the confidential settlement agreement and the fact
that it “resolved the eviction litigation between them [the Ritzels and the Grays].”
{¶88} Thus, there is nothing in the record from which it can be inferred that the
Ritzels or the court regarded the issue as one being tried, impliedly or explicitly. It also
17
appears that MBFinancial and the Ritzels would have cross-examined Mr. Gray and/or
offered rebuttal evidence and witnesses on the issue, particularly, damages. Instead they
simply objected to the line of questioning, which the court sustained.
{¶89} “[T]he implication of Civ.R. 15(B) is that a trial court may not base its
decision upon an issue which was tried inadvertently. Whether an unpleaded issue is
tried by implied consent is to be determined by the trial court, whose finding will not be
disturbed, absent showing of an abuse of discretion.” Evans at 46, citing Chesapeake &
Ohio Railway Co. v. Newman, 243 F.2d 804 (6th Cir.1957).
{¶90} For the foregoing reasons, we find the Grays’ assignment of error not well
taken and affirm the judgment of the Portage County Court of Common Pleas.
CYNTHIA WESTCOTT RICE, J., concurs,
THOMAS R. WRIGHT, J., concurs in judgment only.
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