Cafaro-Peachcreek Joint Venture Partnership v. Spanggard

2022 Ohio 4468

• Court: Ohio Court of Appeals
• Decided: December 12, 2022
• Docket: 2022-T-0004
• Status: Published

Opinion

[Cite as Cafaro-Peachcreek Joint Venture Partnership v. Spanggard, 2022-Ohio-4468.]

IN THE COURT OF APPEALS OF OHIO ELEVENTH APPELLATE DISTRICT TRUMBULL COUNTY

CAFARO-PEACHCREEK CASE NO. 2022-T-0004 JOINT VENTURE PARTNERSHIP,

Plaintiff-Appellee/ Civil Appeal from the Cross-Appellant, Court of Common Pleas

-v- Trial Court No. 2020 CV 01043 JILL SPANGGARD d.b.a. VAPOR GUY,

Defendant-Appellant/ Cross-Appellee.

OPINION

Decided: December 12, 2022 Judgment: Reversed and remanded

Leonard D. Hall and Ronald J. Yourstowsky, 5577 Youngstown-Warren Road, Niles, OH 44446 (For Plaintiff-Appellee/Cross-Appellant).

Steven W. Mastrantonio and Daniel J. Orlando, Weisensell, Mastrantonio & Niese, LLP, The Nantucket Building, 23 South Main Street, Suite 301, Akron, OH 44308 (For Defendant-Appellant/Cross-Appellee).

MARY JANE TRAPP, J.

{¶1} Defendant-appellant/cross-appellee, Jill Spanggard (“Ms. Spanggard”), and

plaintiff-appellee/cross-appellant, Cafaro-Peachcreek Joint Venture Partnership

(“Cafaro”), appeal from the judgments of the Trumbull County Court of Common Pleas

granting summary judgment in favor of Cafaro on its breach of contract claim against Ms.

Spanggard and on Ms. Spanggard’s counterclaims and awarding Cafaro damages of

$18,513.67. {¶2} Ms. Spanggard asserts two assignments of error. First, Ms. Spanggard

contends that the trial court erred in granting summary judgment to Cafaro on its breach

of contract claim by failing to void the parties’ agreement based on the doctrine of

frustration of purpose, by failing to “balance the equities” in the case, and by failing to find

that Cafaro materially breached the parties’ agreement. Second, Ms. Spanggard

contends that the trial court erred in calculating Cafaro’s damages.

{¶3} Cafaro asserts one cross-assignment of error, contending that the trial court

erred in failing to award post-judgment interest at a contractual rate of 18% per annum.

{¶4} After a careful review of the record and pertinent law, we find as follows:

{¶5} (1) The trial court erred by granting summary judgment to Cafaro on its

breach of contract claim. The trial court did not err in failing to void the parties’ agreement

based on the doctrine of frustration of purpose or by failing to “balance the equities.”

However, the record reflects there are genuine issues of material fact regarding whether

Cafaro performed its contractual obligations.

{¶6} (2) Because we reverse the trial court’s summary judgment in favor of

Cafaro on its breach of contract claim, we necessarily reverse the trial court’s damages

award in favor of Cafaro.

{¶7} (3) In light of our disposition of Ms. Spanggard’s assignments of error,

Cafaro’s cross-assignment of error is moot.

{¶8} Thus, we reverse the judgments of the Trumbull County Court of Common

Pleas and remand for further proceedings consistent with this opinion.

Substantive and Procedural History

{¶9} Cafaro is an Ohio general partnership with a principal place of business in

Niles, Ohio. Ms. Spanggard is a resident of Erie, Pennsylvania, who conducted business 2

Case No. 2022-T-0004 under the name, “Vapor Guy.” In November 2019, the parties entered into an “In-Line

License Agreement,” whereby Cafaro granted Ms. Spanggard a license to occupy and

use the premises known as unit 410 at the Millcreek Mall in Erie, Pennsylvania, for a term

of 14 months. Ms. Spanggard agreed to use the unit “for the sole purpose of the first-

class operation of a retail unit selling electronic cigarettes and accessories, and for no

other purpose.” She further agreed to pay monthly charges for rent, marketing, and trash

removal. The parties’ agreement contains no “force majeure” provision.

{¶10} On March 16, 2020, the Governor of Pennsylvania issued an order requiring

non-essential businesses to close for 14 days in an effort to stop the spread of COVID-

19. On the same date, Cafaro issued a notice informing Ms. Spanggard that the mall

would close for business at 6:00 p.m. and would remain closed until the governor’s order

was lifted. According to Ms. Spanggard, Cafaro ordered her to vacate the unit, locked

the mall’s entryways, and denied her access to retrieve her inventory and other assets.

In an email sent later that evening, Ms. Spanggard challenged the legality of Cafaro’s

actions and alleged that it had effectively breached the parties’ agreement.

{¶11} Several weeks later, on May 4, Ms. Spanggard’s associate, Andrew Book

(“Mr. Book”), informed Cafaro that Ms. Spanggard was no longer conducting business at

the mall and returned custody and control of the unit to Cafaro. According to Ms.

Spanggard, Cafaro permitted her to retrieve her property from the unit three days later.

The mall eventually reopened on June 26.

{¶12} In September 2020, Cafaro filed a “complaint for money only” against Ms.

Spanggard in the Trumbull County Court of Common Pleas, seeking a judgment of

Case No. 2022-T-0004 $19,324.27, subsequently incurred charges, and interest at a contractual rate of 18% per

annum.1

{¶13} Ms. Spanggard filed an answer, affirmative defenses, and counterclaims for

wrongful retention of security deposit, breach of implied warranty of quiet enjoyment,

breach of the license agreement, wrongful eviction, and equitable relief. Cafaro filed a

reply to Ms. Spanggard’s counterclaim.

{¶14} Cafaro filed a motion for summary judgment on its breach of contract claim

and on Ms. Spanggard’s counterclaims and requested $42,644.26 in damages, including

$24,130.59 in liquidated damages, plus interest at a contractual rate of 18% per annum.

Ms. Spanggard filed a brief in opposition.

{¶15} On November 17, 2021, the trial court filed a judgment entry denying

Cafaro’s motion for summary judgment. The trial court found that Ms. Spanggard quit the

premises and that her frustration of purpose defense was not available based on this

court’s decision in Wroblesky v. Hughley, 2021-Ohio-1063, 169 N.E.3d 709 (11th Dist.),

appeal not accepted, 164 Ohio St.3d 1421, 2021-Ohio-2923, 172 N.E.3d 1049. The trial

court found that Ms. Spanggard breached the agreement but that Cafaro’s request for

liquidated damages constituted an unenforceable penalty.

{¶16} Cafaro filed a motion for summary judgment “on all matters except for

liquidated damages,” incorporating its prior motion for summary judgment and all other

pleadings and briefs previously filed. Ms. Spanggard filed a brief in opposition.

1. The parties’ agreement required Cafaro to file suit for nonpayment of rent or breach of the agreement in either the Mahoning or Trumbull County Court of Common Pleas. It further provided that Ms. Spanggard waived any defense of improper venue or lack of personal jurisdiction and that Ohio law governed. 4

Case No. 2022-T-0004 {¶17} On December 21, 2021, the trial court filed a judgment entry granting

summary judgment in favor of Cafaro on its breach of contract claim and on Ms.

Spanggard’s counterclaims and awarded Cafaro $18,513.67 in damages for rent, trash

removal, marketing, fire safety, storm sewer, and finance charges. The entry does not

expressly reference post-judgment interest.

{¶18} Ms. Spanggard appealed and raises the following two assignments of error:

{¶19} “[1.] The trial Court erred in its decision to grant Appellee’s Motion for

Summary Judgment on Appellee’s claim for breach of contract in its Order and Judgment

Entry Dated November 17, 2021, finding that Spanggard quit the premises, that the

doctrine of frustration of purpose was unavailable as a defense, and that Spanggard

breached the Lease.

{¶20} “[2.] The trial Court erred in its calculation of damages that it awarded to

Appellee in its Order and Judgment Entry Dated December 21, 2021, by finding that

Appellee was entitled to $18,513.67 for rental payments, trash removal, marketing, fire

safety, storm sewer, and finance charges, many of which were not actually incurred by

Appellee after Appellant vacated the premises, or were incurred only after the mall was

reopened.” [Sic throughout.]

{¶21} Cafaro cross-appealed and raises the following cross assignment of error:

{¶22} “The trial court erred in failing to include the contractual post-judgment

interest rate in its December 21, 2021, Judgment Entry for Plaintiff-Appellee/Cross-

Appellant, such made necessary by Defendant-Appellant/Cross-Appellee’s breach of the

contract.”

Case No. 2022-T-0004 Standard of Review

{¶23} This appeal involves the trial court’s summary judgment orders, which we

review de novo. See Sabo v. Zimmerman, 11th Dist. Ashtabula No. 2012-A-0005, 2012-

Ohio-4763, ¶ 9. A reviewing court applies the same standard a trial court is required to

apply, which is to determine whether any genuine issues of material fact exist and whether

the moving party is entitled to judgment as a matter of law. Id.

{¶24} “Since summary judgment denies the party his or her ‘day in court,’ it is not

to be viewed lightly as docket control or as a ‘little trial.’ The jurisprudence of summary

judgment standards has placed burdens on both the moving and the nonmoving party.”

Welch v. Ziccarelli, 11th Dist. Lake No. 2006-L-229, 2007-Ohio-4374, ¶ 40.

{¶25} “‘Because summary judgment represents a shortcut through the normal

litigation process by avoiding a trial, the burden is strictly upon the moving party to

establish, through the evidentiary material permitted by the rule, that there is no genuine

issue of material fact and that he is entitled to judgment as a matter of law.’” Ames v.

Portage Cty. Budget Comm., 11th Dist. Portage No. 2021-P-0074, 2022-Ohio-1905, ¶ 38,

quoting Fugate v. Volck, 79 Ohio App.3d 263, 266, 607 N.E.2d 78 (2d Dist.1992). Where

a party seeks affirmative relief on its own claim as a matter of law under Civ.R. 56(A), it

bears the burden of affirmatively demonstrating that there are no genuine issues of

material fact with respect to every essential element of its claim. Capital Fin. Credit, L.L.C.

v. Mays, 191 Ohio App.3d 56, 2010-Ohio-4423, 944 N.E.2d 1184, ¶ 5 (1st Dist.).

{¶26} “[I]f the moving party’s burden is not met in the first instance, the burden

never shifts to the nonmoving party, and the motion for summary judgment must be

denied.” Hicks v. Cadle Co., 2016-Ohio-4728, 66 N.E.3d 1255, ¶ 20 (11th Dist.). “If the

moving party has satisfied its initial burden, the nonmoving party has a reciprocal burden 6

Case No. 2022-T-0004 * * * to set forth specific facts showing there is a genuine issue for trial. If the nonmoving

party fails to do so, summary judgment, if appropriate, shall be entered against the

nonmoving party * * *.” Welch at ¶ 40.

Breach of Contract

{¶27} In her first assignment of error, Ms. Spanggard contends that the trial court

erred in granting summary judgment in favor of Cafaro on its breach of contract claim.

{¶28} To establish a breach of contract claim, a party must demonstrate (1) the

existence of a binding contract or agreement; (2) the non-breaching party performed its

contractual obligations; (3) the breaching party failed to fulfill its contractual obligations

without legal excuse; and (4) the non-breaching party suffered damages as a result of the

breach. Utz v. Stovall, 11th Dist. Portage No. 2012-P-0135, 2013-Ohio-4299, ¶ 28.

Frustration of Purpose

{¶29} In her first issue for review, Ms. Spanggard argues that the trial court erred

by failing to void the agreement pursuant to the doctrine of frustration of purpose.

According to Ms. Spanggard, the purpose of the parties’ agreement was frustrated when

the Governor of Pennsylvania shut down the mall due to COVID-19.

{¶30} This court recently discussed the doctrine of frustration of purpose in

Wroblesky, supra. As we explained, Ohio courts that have recognized the doctrine have

adopted the standard set forth in the Restatement of the Law:

{¶31} “Where, after a contract is made, a party’s principal purpose is substantially

frustrated without his fault by the occurrence of an event, the non-occurrence of which

was a basic assumption on which the contract was made, his remaining duties to render

performance are discharged, unless the language or the circumstances indicate the

Case No. 2022-T-0004 contrary.” Restatement of the Law 2d, Contracts, Section 265, at 334 (1981); see

Wroblesky at ¶ 57-58.

{¶32} However, we noted that the doctrine is not widely accepted in Ohio and that

neither the Supreme Court of Ohio nor this court has adopted it. See id. at ¶ 54-55. Thus,

we expressly declined to adopt it. See id. at ¶ 56.

{¶33} This court is generally bound by past precedent produced by our own

district. Keytack v. Warren, 11th Dist. Trumbull No. 2005-T-0152, 2006-Ohio-5179, ¶ 51.

Accordingly, the trial court did not err by failing to void the parties’ agreement based on

the doctrine of frustration of purpose.

Balancing of Equities

{¶34} In her second issue for review, Ms. Spanggard argues that the trial court

erred by failing to “balance the equities” in the case. According to Ms. Spanggard, an

“equitable solution” would have been to find that her contractual obligations were

suspended while the mall was closed.

{¶35} Ms. Spanggard did not present this argument to the trial court in opposition

to summary judgment. If the nonmoving party fails to raise an issue when responding to

the moving party’s motion for summary judgment, the nonmoving party has waived that

issue on appeal. Great Lakes Window, Inc. v. Resash, Inc., 11th Dist. Trumbull No. 2006-

T-0114, 2007-Ohio-5378, ¶ 24.

{¶36} Even if Ms. Spanggard had properly preserved this issue for appeal, she

has failed to identify the equitable defense she is asserting or cite any authority in support

of her argument. See App.R. 16(A)(7) (requiring an appellant to include citations to

“authorities” and “statutes” in its brief).

Case No. 2022-T-0004 {¶37} In essence, Ms. Spanggard argues that her performance should have been

excused based on principles of “force majeure.” Force majeure is a term from French

law that literally means “a superior force.” Haverhill Glen, LLC v. Eric Petroleum Corp.,

2016-Ohio-8030, 67 N.E.3d 845, ¶ 25 (7th Dist.). It is commonly defined as “an event or

effect that can be neither anticipated nor controlled.” Id. Commentators have

characterized the COVID-19 pandemic as “‘the very definition of force majeure.’”

Bernhardt & Fersko, The Impacts of the Coronavirus Pandemic on Real Estate Contracts,

35 Probate and Property 34 (Jan./Feb.2021).

{¶38} While force majeure has some overlap with the common law defenses of

impossibility or impracticability, it is based in contract. See Haverhill Glen at ¶ 26.

“[F]undamental principles of contract law teach us that parties to a commercial transaction

should remain free to govern their own affairs.” Chemtrol Adhesives, Inc. v. Am. Mfrs.

Mut. Ins. Co., 42 Ohio St.3d 40, 41-42, 537 N.E.2d 624 (1989). Therefore, courts must

look to the language of a contract’s force majeure provision to determine its applicability.

Haverhill Glen at ¶ 26. For instance, a force majeure provision may not excuse all of a

party’s contractual obligations, such as its obligation to pay rent. See, e.g., Wroblesky at

¶ 65-66.

{¶39} Here, the parties’ agreement contained no force majeure provision, much

less one that excluded Ms. Spanggard’s payment obligations under these circumstances.

Accordingly, we find no error in the trial court’s failure to “balance the equities.”

Cafaro’s Performance

{¶40} In her third issue for review, Ms. Spanggard argues that the trial court erred

by failing to find that Cafaro materially breached the agreement by revoking her access

to the unit. Ms. Spanggard contends that Cafaro did not establish the second element of 9

Case No. 2022-T-0004 its breach of contract claim, i.e., that it performed its contractual obligations. See Utz,

supra, at ¶ 28.

{¶41} The parties’ agreement is referred to as a “license.”2 In the context of real

property, a license is “‘an authority to do a particular act or series of acts upon another’s

land, without possessing any estate therein.’” Mosher v. Cook United, Inc., 62 Ohio St.2d

316, 317, 405 N.E.2d 720 (1980), quoting Rodefer v. Pittsburg, O. V. & C. Rd. Co., 72

Ohio St. 272, 281, 74 N.E. 183 (1905). “One who possesses a license thus has the

authority to enter the land in another’s possession without being a trespasser.” Id. Here,

Cafaro granted Ms. Spanggard “a license to occupy and use” the unit for the operation of

her retail business, “subject to the stated terms and conditions.”

{¶42} On summary judgment, Cafaro did not contend or purport to establish that

it performed its contractual obligations. In disputing the merits of Ms. Spanggard’s

counterclaims, Cafaro contended that it “had nothing to do with [Ms. Spanggard] not being

permitted to operate” due to the governor’s shut-down order. However, the governor’s

order does not establish that Cafaro performed its contractual obligations. At most, the

governor’s order precluded Cafaro from performing. As explained above, there is no force

majeure provision in the agreement that would excuse Cafaro’s performance under that

circumstance. Thus, Cafaro did not meet its initial burden on summary judgment. See

Hicks, supra, at ¶ 20. For this reason alone, Cafaro’s motion for summary judgment

should have been denied. See id.

2. The parties appear to dispute whether their agreement is a license or a lease. “Whether an instrument is a license or a lease depends generally on the manifest intent of the parties gleaned from a consideration of the entire contents of the instrument.” Di Renzo v. Cavalier, 165 Ohio St. 386, 135 N.E.2d 394 (1956), paragraph two of the syllabus. However, the legal distinction between a license and a lease is immaterial to the issues on appeal. 10

Case No. 2022-T-0004 {¶43} Even if Cafaro had met its initial burden, Ms. Spanggard set forth specific

facts showing there is a genuine issue for trial. See Welch, supra, at ¶ 40. In her brief in

opposition, Ms. Spanggard attached an affidavit from Mr. Book, who averred that on

March 16, 2020, Cafaro “cut off our access to the Premises by ordering us to vacate the

Premises”; “closed and locked all entryways into the Premises”; and “denied us access

even to retrieve our inventory and other assets which were still located at the Premises.”

{¶44} This court has recognized that “‘[w]here * * * the evidence is conflicting as

to which [party] committed the breach, or first breach, that issue should be submitted to

the jury * * *.’” Sentinel Consumer Prods. Inc. v. Mills, Hall, Walborn & Assocs., Inc., 110

Ohio App.3d 211, 216, 673 N.E.2d 967 (11th Dist.1996), quoting Mays v. Hartman, 81

Ohio App. 408, 77 N.E.2d 93 (1st Dist.1947), paragraph four of the syllabus.

{¶45} At oral argument, Cafaro countered that the agreement granted it a lien on

Ms. Spanggard’s inventory and business assets, which precluded her from retrieving

them as a matter of law. However, a party cannot raise an argument for the first time at

oral argument, particularly when it had ample opportunity to explore such issues in its

brief. Hughes v. Hughes, 2020-Ohio-4653, 159 N.E.3d 893, ¶ 19 (10th Dist.). Further,

the contractual provision cited by Cafaro does establish this contention as a matter of law.

{¶46} In sum, there are genuine issues of material fact as to whether Cafaro

performed its contractual obligations. Accordingly, the trial court erred by granting

summary judgment to Cafaro on its breach of contract claim.

{¶47} Ms. Spanggard’s first assignment of error has merit in part. We reverse the

trial court’s November and December 2021 judgments.

Case No. 2022-T-0004 Damages

{¶48} In her second assignment of error, Ms. Spanggard contends that the trial

court erred in calculating Cafaro’s damages. Based on our disposition of Ms.

Spanggard’s first assignment of error, in which we have reversed the trial court’s

summary judgment in favor of Cafaro on its breach of contract claim, we necessarily

reverse the trial court’s damages award in favor of Cafaro.

{¶49} Ms. Spanggard’s second assignment of error has merit in part.

Post-Judgment Interest

{¶50} In its cross-assignment of error, Cafaro contends that the trial court erred in

failing to award it contractual post-judgment interest of 18% per annum. In light of our

disposition of Ms. Spanggard’s first and second assignments of error, Cafaro’s cross-

assignment of error is moot. See App.R. 12(A)(1)(c).

{¶51} For the foregoing reasons, the trial court’s November and December 2021

judgments are reversed, and this matter is remanded for further proceedings consistent

with this opinion.

MATT LYNCH, J., concurs,

THOMAS R. WRIGHT, J., concurs in judgment only.

Case No. 2022-T-0004