1215 Superior, L.L.C. v. Berger

2025 Ohio 645

• Court: Ohio Court of Appeals
• Decided: February 27, 2025
• Docket: 113882
• Status: Published

Opinion

[Cite as 1215 Superior, L.L.C. v. Berger, 2025-Ohio-645.]

COURT OF APPEALS OF OHIO

EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA

1215 SUPERIOR, LLC, :

Plaintiff-Appellee, : No. 113882 v. :

JACOB BERGER, :

Defendant-Appellant. :

JOURNAL ENTRY AND OPINION

JUDGMENT: AFFIRMED RELEASED AND JOURNALIZED: February 27, 2025

Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-23-977211

Appearances:

Benesch, Friedlander, Coplan & Arnoff LLP, Andrew G. Fiorella, and Vincent J. Michalec, for appellee.

Singerman, Mills, Desberg & Kauntz Co., L.P.A., and Christopher O’Connell, for appellant.

KATHLEEN ANN KEOUGH, J.:

Defendant-appellant, Jacob Berger (“Berger”), brings this appeal

challenging the trial court’s grant of summary judgment in favor of 1215 Superior,

LLC (“Lender”) premised upon a breach of a guaranty agreement and several subsequent forbearance agreements. After a thorough review of the law and record,

this court affirms.

I. Factual History

Lender was the former owner of a commercial property located at

1215 Superior Avenue in Cleveland, Ohio. On November 7, 2019, 1215 Superior

entered into a contract with Hampton Realties, LLC to sell the property. Part of this

transaction included Lender making two loans to two different entities, 1215

Superior Holdings LLC and Superior GP Holdings. These loans were reduced to

writing in the form of a subordinated promissory note with a principal of

$1,000,000 (“Loan A”) and a promissory note with a principal of $250,000 and

interest (“Loan B”) (collectively, “the Loans”). Each of the Loans was set to mature

in March 2021.

The day after the Loans were executed, Berger executed a document

titled “Unconditional Guaranty of Payment and Performance” (“the Guaranty”). In

this document, Berger “unconditionally and absolutely guarantee[d] to Lender, the

full and prompt payment of any and all of [both borrowers of the Loan’s] liabilities,

obligations and debts to Lender in respect of the Loans . . . .” The Guaranty provided

that if the Loans were not paid, the Loans “shall become the direct and primary

indebtedness and obligation of” Berger “as if [he] was the maker or principal obligor

under the Loan Documents.” The Guaranty also provided that Berger was responsible for all costs

and expenses, including attorney fees incurred by Lender in enforcing, modifying or

amending, or prosecuting any actions or proceedings arising out of the Guaranty.

In March 2021, when the Loans were set to mature, neither of the

borrowers nor Berger had paid Lender.

In June 2021, Lender and Berger entered into a forbearance

agreement where Lender agreed that it would not exercise its rights and remedies

under the Guaranty until September 30, 2021. Pertinently, the forbearance

agreement that Berger signed indicated that (1) the Loans are valid, binding, and

enforceable obligations; (2) the outstanding balance on the Loans owed to Lender

totaled $1,395,685.02; (3) Berger is obligated to pay all outstanding amounts

pursuant to the terms of the Guaranty; and (4) Berger has “no defenses,

counterclaims, rights of setoff, or rights of recoupment” with respect to the amount

owed to Lender. Berger once again agreed to pay all legal fees, costs, and expenses

associated with the forbearance agreement.

By September 30, 2021, Lender had not received payment. In

November 2021, Lender and Berger entered into a first amended forbearance

agreement. In the first amended agreement, Lender again agreed not to exercise its

rights and remedies under the Guaranty until March 31, 2022. The agreement that

Berger signed indicated that (1) he was in default of his obligations under the Loans,

(2) the outstanding balance due to Lender was $1,487,043.87, (3) he would pay

Lender the total principal and accrued and unpaid interest with respect to Loan B. In February 2022, Berger tendered a lump sum payment of

$250,579.93, which paid off Loan B’s principal and interest per the terms of the

second amended forbearance agreement. Berger also made several more partial

payments throughout 2022. However, the entirety of the debt was not paid by

March 31, 2022, as agreed, and Berger remained in default of the Guaranty and first

amended forbearance agreement.

The parties entered into a second amended forbearance agreement,

extending Berger’s time to pay until December 31, 2022. This agreement, that

Berger signed, provided that (1) the original borrowers continued to be in default of

its obligations under the Loans, and (2) that Berger was now in default of his

obligations under the Guaranty, the forbearance agreement, and the first amended

forbearance agreement. The agreement further provided that the outstanding

balance of Loan A was $1,258,517.92 and the outstanding balance of Loan B was

$147,869.84, and provided for lower interest rates that would be rendered null and

void should Berger not pay them before December 31, 2022.

By December 31, 2022, however, Berger still had not paid all amounts

due with respect to Loan A.

On March 28, 2023, Lender filed the underlying case, naming Berger

as the sole defendant, alleging breach of the Guaranty and forbearance agreements.

II. Procedural History

Lender’s complaint named Berger as the sole defendant and asserted

claims for default of the Guaranty and forbearance agreements. Berger appeared and answered. Lender filed its motion for summary

judgment that the court granted and subsequently ordered the parties to brief the

issues surrounding attorney fees. After the court granted Lender’s motion for

attorney fees, Berger timely filed the instant appeal.

While the appeal was pending, the parties stipulated that the trial

court made a clerical mistake and inadvertently granted interest on the judgment

twice. This court then issued a limited remand order for the trial court to issue a

corrected judgment entry on the matter. Based on this journal entry and the

previous award of attorney fees, the total judgment included: $1,091,479 due

Lenders for the outstanding principal, $419,226.93 due Lenders for the total interest

due, $36,211.50 due Lenders for its reasonable attorney fees, and $441.75 for

reasonable litigation expenses.

III. Law and Analysis

In his sole assignment of error, Berger contests the trial court’s grant

of summary judgment.

On appeal, summary judgment motions are reviewed de novo,

applying the same standard as the trial court. Grafton v. Ohio Edison Co., 77 Ohio

St.3d 102, 105 (1996). The standard under Civ.R. 56 sets forth that summary

judgment is appropriate when (1) no genuine issue as to any material fact exists, (2)

the party moving for summary judgment is entitled to judgment as a matter of law,

and (3) viewing the evidence most strongly in favor of the nonmoving party,

reasonable minds can reach only one conclusion that is adverse to the nonmoving party. The party moving for summary judgment bears this burden and must set

forth specific facts that demonstrate its entitlement to summary judgment. Dresher

v. Burt, 75 Ohio St.3d 280, 292-293 (1996). When responding to a motion for

summary judgment, the adverse party “must set forth specific facts showing that

there is a genuine issue for trial.” Civ.R. 56(E).

The sole basis for Berger’s assigned error is that the Guaranty was not

supported by consideration, which would render the contract not legally binding on

the parties.

A contract includes the following elements: “an offer, an acceptance,

contractual capacity, consideration (the bargained-for legal benefit or detriment), a

manifestation of mutual assent, and legality of object and of consideration.” Lake

Land Emp. Group of Akron, LLC v. Columber, 2004-Ohio-786, ¶ 14. Unless

supported by consideration, a contract is not binding. Id. at ¶ 16, citing Judy v.

Louderman, 48 Ohio St. 562 (1891), paragraph two of the syllabus. Consideration

“may consist of either a detriment to the promisee or a benefit to the promisor.” Id.,

citing Irwin v. Lombard Univ., 56 Ohio St. 9, 19 (1897). “A benefit may consist of

some right, interest, or profit accruing to the promisor, while a detriment may

consist of some forbearance, loss, or responsibility given, suffered, or undertaken by

the promise.” Id., citing Irwin at 20.

Berger argues that “to have a valid guaranty, there must be sufficient

consideration provided to the purported guarantor – i.e., Mr. Berger.” This

contention is unsupported by Ohio law. “In the case of a guaranty . . . the benefit of the consideration need not

accrue to the promisor.” FPC Fin. v. Wood, 2007-Ohio-1098, ¶ 11 (12th Dist.), citing

Restatement of Law 2d, Contracts, § 71(4) (1981). “‘The performance or return

promise may be given to the promisor or to some other person. It may be given by

the promisee or by some other person. It matters not from whom the consideration

moves or to whom it goes. If it is bargained for and given in exchange for the

promise, the promise is not gratuitous.’” Wood at id., citing Restatement of Law 2d

at id.

Berger relies heavily on Wood for the proposition that since he

purportedly has no ownership interest in the entities that borrowed Loan A and

Loan B, the Guaranty was not supported by consideration. The Wood Court held

that the at-issue personal guaranty was not supported by consideration. Id. at ¶ 41.

However, Wood presents an entirely distinguishable scenario wherein the court

examined several factors in making this determination, including whether the

guaranty was essential to the underlying agreement and that the evidence

demonstrated that the agreement was not bargained for or negotiated. Id. at ¶ 49.

Wood’s lack of ownership interest in the company to which credit was being

extended was only one of many factors that the Wood Court considered.

Here, Berger’s contention that his ownership, or lack thereof, in the

underlying borrowers of the Loans impacts the consideration in this matter is

without merit. Ohio law provides that “‘consideration which supports the

underlying agreement is sufficient to bind the guarantor. “The consideration running from the creditor to the debtor is deemed sufficient to support the surety’s

promise to make the debt good.”’” McInnis v. Spin Cycle-Euclid, LLC, 2009-Ohio-

2370, ¶ 16 (8th Dist.), quoting Solon Family Physicians, Inc. v. Buckles, 96 Ohio

App.3d 460, 464 (8th Dist. 1994), quoting United States v. Tilleraas, 709 F.2d 1088,

1091 (6th Cir. 1983). “‘The obligation of the surety rests upon a consideration as

adequate as that of the principal; for, though he received no pecuniary or other

benefit for his undertaking, credit is extended to the principal, and advantages are

obtained by him, upon the faith of the surety’s engagement.’” McInnis at id., quoting

Medina Supply Co. v. Corrado, 116 Ohio App.3d 847, 853 (8th Dist. 1996).

Here, Berger’s guaranty of the Loans constituted consideration, even

if the benefit was not conferred upon Berger. His ownership or lack thereof need

not be considered to find that the Guaranty was supported by consideration. Since

Berger does challenge any other aspect of the trial court’s decision granting

summary judgment in favor of Lender, we overrule Berger’s sole assignment of

error.

Judgment affirmed.

It is ordered that appellee recover from appellant costs herein taxed.

The court finds there were reasonable grounds for this appeal.

It is ordered that a special mandate be sent to said court to carry this judgment

into execution. A certified copy of this entry shall constitute the mandate pursuant to Rule 27

of the Rules of Appellate Procedure.

KATHLEEN ANN KEOUGH, JUDGE

EILEEN A. GALLAGHER, A.J., and MICHELLE J. SHEEHAN, J., CONCUR