Hollish v. Maners

2011 Ohio 4823

• Court: Ohio Court of Appeals
• Decided: September 21, 2011
• Docket: 2011CA000005
• Status: Published

Opinion

[Cite as Hollish v. Maners, 2011-Ohio-4823.]

COURT OF APPEALS KNOX COUNTY, OHIO FIFTH APPELLATE DISTRICT

JOSEPH C. HOLLISH : JUDGES: : : Hon. W. Scott Gwin, P.J. Plaintiff-Appellee : Hon. John W. Wise, J. : Hon. Patricia A. Delaney, J. -vs- : : Case No. 2011CA000005 JAY R. MANERS : : : Defendant-Appellant : OPINION

CHARACTER OF PROCEEDING: Appeal from the Knox County Court of Common Pleas, Case No. 09AC12-0734

JUDGMENT: AFFIRMED

DATE OF JUDGMENT ENTRY: September 21, 2011

APPEARANCES:

For Appellant: For Appellee:

JOHN S. DILTS KENNETH E. LANE 28 S. Park St. 5 N. Gay St., Suite 220 Mansfield, OH 44902 P.O. Box 888 Mount Vernon, OH 43050 [Cite as Hollish v. Maners, 2011-Ohio-4823.]

Delaney, J.

{¶1} Defendant-Appellant, Jay R. Maners, appeals the January 27, 2011

judgment of the Knox County Court of Common Pleas in this breach of contract action.

Plaintiff-Appellee is Joseph C. Hollish.

STATEMENT OF THE FACTS AND CASE

{¶2} On December 9, 2009, Hollish filed a complaint on account against

Maners. Hollish alleged the parties entered into a contract on December 31, 1995 for

the sale of a business where Maners agreed to pay Hollish $285,500 per a payment

arrangement described in the contract. Hollish alleged Maners breached the contract

by his failure to pay and owed $72,692.62, plus interest at 7.5% from December 2,

2003.

{¶3} Maners answered the complaint on January 4, 2010. Maners raised as

affirmative defenses: (1) laches, (2) estoppel, (3) waiver, (4) failure to state a claim upon

which relief can be granted, and (5) failure to join a necessary party, Bobcat of

Columbus, Inc.

{¶4} The case proceeded to a bench trial on December 6, 2010. The following

evidence was adduced at trial. Hollish and Maners were the only witnesses.

{¶5} Hollish was the owner of Taylor Rental Center located in Mount Vernon,

Ohio. On December 31, 1995, Hollish and Maners entered into a contractual

agreement where Maners purchased Taylor Rental Center from Hollish. Pursuant to

the terms of the contract, Maners purchased the business for $285,500. Maners was to

pay $45,000 in cash to Hollish on January 2, 1996 and Hollish agreed to finance the Knox County, Case No. 2011CA000005 3

balance of $240,500 over ten years at an interest rate of 7.5%. Maners was to make

monthly payments to Hollish in the amount of $2,908.30, starting April 1, 1996.

{¶6} To secure his obligation to Hollish, Maners agreed to grant Hollish a

security interest in all of the assets of the business, including accounts receivable and

after acquired property. Maners also granted Hollish a security interest or lien upon all

of his personal assets, except his house, the lot on which it sat, and the furnishings

within. Hollish testified that he never filed a UCC-II statement to secure his interest in

the assets.

{¶7} Maners made timely payments on the contract to Hollish.

{¶8} In March 2000, Maners sold the Taylor Rental Center to Bobcat of

Columbus, Inc. Maners briefly spoke to Hollish about the sale to Bobcat before the sale

was completed, but the three parties did not enter into any contractual agreements

regarding the impact of the sale on the December 31, 1995 contract and the payment

arrangement between Maners and Hollish. The contract between Maners and Bobcat

was not entered into evidence. Maners stated that he called Hollish on behalf of Bobcat

with an offer of a lump sum to pay off the contract, but Hollish rejected the offer. Hollish

never spoke to a representative of Bobcat before the sale of the business. Maners

testified that he was unaware that Bobcat had not spoken to Hollish prior to the sale

because a financial officer with Bobcat told Maners he had taken care of all the

arrangements.

{¶9} After the sale of Taylor Rental Center to Bobcat and beginning March

2000, Hollish received the monthly payment under the terms of the December 31, 1995

contract directly from Bobcat. Bobcat made approximately 3 ½ years of payments to Knox County, Case No. 2011CA000005 4

Hollish. In December 2003, Bobcat filed for bankruptcy protection. Hollish no longer

received payments from Bobcat.

{¶10} In Bobcat’s bankruptcy filings, Hollish was listed as a creditor. Hollish did

not pursue any action within the bankruptcy proceeding.

{¶11} On June 1, 2004, Hollish sent Maners and his wife a letter stating:

{¶12} “Jay [Appellant] asked me [Appellee] to report on the status of the

payments being made to me by Bobcat of Columbus. The last payment made was in

December, 2003. (check no. 220838 Dec. 9, 2003). That means that there are 26

payments remaining, the last one originally scheduled by our agreement to be made on

March 1, 2006.

{¶13} “I don’t know exactly what the results of the Bobcat bankruptcy will be;

perhaps you don’t know either. I do know that getting screwed big-time can really hurt

and cause people to do uncharacteristic things for reasons of self-preservation. Myself,

I am worried about getting the balance owed me, and even further along, what about

that never-ending lawsuit by Servistar against you and me?

{¶14} “I understand you are in difficult times right now so I am not anxious to

make any demands on you. I hope your new venture of Ohio Rentals succeeds better

than your most optimistic expectations. Please keep me posted on any news that might

have some effect on us.” (Trial Exhibit A).

{¶15} Maners testified that he interpreted the letter to mean that Hollish was not

demanding money from him. Hollish testified that he wrote the letter because he

wanted to encourage Maners, because in his experience, he knew when a party

declares bankruptcy and owes money, it is difficult to get the debt repaid. Hollish stated Knox County, Case No. 2011CA000005 5

it was not his intention to indicate that he was forgiving any debt that Maners may owe

him.

{¶16} At the conclusion of the bench trial, the parties filed post-trial briefs.

Maners argued in his post-trial brief the affirmative defenses of novation, waiver, and

estoppel. On January 27, 2011, the trial court granted judgment to Hollish and against

Maners. The trial court found damages in the amount of $72,049.69 and awarded that

amount, plus interest at the rate of 7.5% per annum from December 2, 2003. The

judgment entry was served on the parties by ordinary mail on January 27, 2011.

{¶17} On February 10, 2011, Maners filed a Civ.R. 52 request for findings of fact

and conclusions of law. Hollish responded, arguing the Civ.R. 52 request was made

later than seven days from the date of notice of the judgment and therefore untimely.

The trial court agreed and denied the request.

{¶18} Maners filed a timely appeal of the January 27, 2011 judgment entry.

{¶19} Appellant raises two Assignments of Error:

{¶20} “I. THE COURT ERRED IN FINDING THE DEFENDANT/APPELLANT

LIABLE TO THE PLAINTIFF/APPELLEE WITHOUT REFERENCE TO THE

DEFENDANT/APPELLANT’S AFFIRMATIVE DEFENSES WHICH WERE PURSUED

AND PROVEN AT TRIAL, INCLUDING WAIVER, ESTOPPEL, AND LATCHES [SIC].

{¶21} “II. THE COURT ERRED IN FINDING THAT THE PLAINTIFF/APPELLEE

WAS NOT ESTOPPED FROM PURSUING THIS CLAIM DUE TO: (1) THE

PLAINTIFF/APPELLEE’S FAILURE TO FILE HIS UCC-II AND FINANCING

STATEMENTS AS REQUIRED BY THE PARTIES [SIC] CONTRACT AND OHIO

REVISED CODE §1303.70; AND (2) THE LETTER SENT TO THE Knox County, Case No. 2011CA000005 6

DEFENDANT/APPELLANT AFTER THE BANKRUPTCY FILING OF BOBCAT OF

COLUMBUS, STATING THE PLAINTIFF/APPELLEE WAS NOT LOOKING TO THE

DEFENDANT/APPELLANT FOR THESE FUNDS.”

I., II.

{¶22} We consider the first and second Assignments of Error together because

Appellant noted in his brief that he was presenting the errors simultaneously to the

Court.

{¶23} This matter was heard by the trial court without a jury. An appellate court

will not reverse a trial court's judgment so long as it is supported by any competent,

credible evidence going to all of the essential elements of the case. C.E. Morris Co.

Foley Construction (1978), 54 Ohio St.2d 279, 376 N.E.2d 578. “A reviewing court does

not decide whether it would have come to the same conclusion as the trial court.

Rather, we are required to uphold the judgment so long as the record, as a whole,

contains some evidence from which the trier of fact could have reached its ultimate

conclusions.” Hooten Equipment Co. v. Trimat, Inc., 4th Dist. No. 03CA16, 2004–Ohio–

1128, ¶ 7. We are to defer to the findings of the trier of fact because in a bench trial the

trial judge is best able to view the witnesses and observe their demeanor, gestures, and

voice inflections, and use these observations in weighing the credibility of the testimony.

Seasons Coal Company, Inc. v. City of Cleveland (1984), 10 Ohio St.3d 77, 461 N.E.2d

1273. We may not substitute our judgment for that of the trier of fact. Pons v. Ohio

State Medical Board (1993), 66 Ohio St.3d 619, 614 N.E.2d 748, 621.

{¶24} Maners argues in his first Assignment of Error the trial court erred in

finding him liable to Hollish without reference to his affirmative defenses, which Maners Knox County, Case No. 2011CA000005 7

contends were proven at trial. In the answer, Maners raised the affirmative defenses of

laches, estoppel, waiver, failure to state a claim upon which relief can be granted, and

failure to join a necessary party, Bobcat of Columbus, Inc. At trial and in Maners’ post-

trial brief, he argued that Hollish’s claims were barred by the affirmative defenses of

novation, waiver, and estoppel.

{¶25} Maners made an untimely request for findings of fact and conclusions of

law pursuant to Civ.R. 52 and the trial court denied the same. Based on the lack of

findings of fact and conclusions of law, we cannot say the trial court did not consider

Appellant’s affirmative defenses. However, we will review Maners’ affirmative defenses

based on the evidence presented to determine whether the trial court’s finding in favor

of Hollish was supported by competent, credible evidence. Maners has the burden of

proof in establishing his affirmative defenses.

{¶26} Maners failed to address at the trial court level, and on appeal, the

affirmative defenses of laches, failure to state a claim, and failure to join a necessary

party. We therefore decline to address those affirmative defenses.

{¶27} Maners argued at trial and in his post-trial brief that a novation had

occurred in this case. Maners did not assert novation in his answer or through an

amended pleading. Novation is an affirmative defense. Sheet Metal Workers Natl.

Pension Fund v. Bryden House Ltd. Partnership (1998), 130 Ohio App.3d 132, 719

N.E.2d 646. A novation “is created where a previous valid obligation is extinguished by

a new valid contract, accomplished by substitution of parties or of the undertaking, with

the consent of all the parties, and based on valid consideration.” Swayne v. Beeble Knox County, Case No. 2011CA000005 8

Invests., Inc., 176 Ohio App.3d 293, 2008-Ohio-1839, 891 N.E.2d 1216, ¶22 citing

McGlothin v. Huffman (1994), 94 Ohio App.3d 240, 244, 640 N.E.2d 598.

{¶28} The Ohio Supreme Court in Jim's Steakhouse, Inc. v. Cleveland (1998),

81 Ohio St.3d 18, 688 N.E.2d 506, provides for waiver of an affirmative defense if it is

not raised in a pleading or an amended pleading. See Civ.R. 8. Because Maners did

not assert novation as an affirmative defense in the pleadings, we find Maners has

waived this issue pursuant to Civ. R. 8(C). In any event, the evidence presented at trial

did not establish that a novation had occurred between Bobcat, Maners and Hollish.

{¶29} We next address Maners’ affirmative defenses of waiver and estoppel.

Maners argues Hollish waived his claim to funds under the December 31, 1995 contract

and/or is estopped from pursuing a claim because Hollish was aware of Bobcat’s

bankruptcy and failed to take any action against Bobcat. Maners further argues in his

second Assignment of Error, in part, Hollish was estopped from pursuing his claim

against Maners because Hollish failed to file his UCC-II statements as required by the

December 31, 1995 contract and R.C. 1303.70. Maners argues that if Hollish had filed

his UCC-II statements to secure his interests in the assets of the business and Maners’

personal assets, Hollish could have been made whole through the bankruptcy case.

{¶30} The December 31, 1995 contract states:

{¶31} “To secure Buyer’s obligation to Seller, Buyer agrees to grant to Seller a

security interest in all of the assets, including accounts receivable and after acquired

property, of the business, together with a security interest or lien upon the following

personal assets of the Buyer: Knox County, Case No. 2011CA000005 9

{¶32} “All personal assets excepting the Buyer’s house, the lot on which it sits

and the furnishings within.”

{¶33} Equitable estoppel is an affirmative defense, as opposed to promissory

estoppel, which is a cause of action. Ford Motor Credit Co. v. Ryan, 189 Ohio App.3d

560, 2010-Ohio-4601, 939 N.E.2d 891, ¶94. Equitable estoppel precludes recovery

“‘when one party induces another to believe certain facts exist and the other party

changes his position in reasonable reliance on those facts to his detriment.’” Ford

Motor Credit Co., supra, citing Doe v. Archdiocese of Cincinnati, 116 Ohio St.3d 538,

2008-Ohio-67, 880 N.E.2d 892, ¶ 7, quoting State ex rel. Chavis v. Sycamore City

School Dist. Bd. of Edn. (1994), 71 Ohio St.3d 26, 34, 641 N.E.2d 188.

{¶34} “A waiver is a voluntary relinquishment of a known right. State ex rel.

Athens Cty. Bd. of Commrs. v. Gallia, Jackson, Meigs, Vinton Joint Solid Waste Mgt.

Dist. Bd. of Directors (1996), 75 Ohio St.3d 611, 616, 665 N.E.2d 202, 207. It applies

generally to all personal rights and privileges. Id., citing Sanitary Commercial Serv., Inc.

v. Shank (1991), 57 Ohio St.3d 178, 180, 566 N.E.2d 1215, 1218. Waiver assumes one

has an opportunity to choose between either relinquishing or enforcing of the right. A

waiver may be enforced by the person who had a duty to perform and who changed his

or her position as a result of the waiver. Andrews v. State Teachers Retirement Sys.

Bd. (1980), 62 Ohio St.2d 202, 205, 16 O.O.3d 240, 242, 404 N.E.2d 747, 749.” Chubb

v. Ohio Bur. Of Workers’ Comp. (1998), 81 Ohio St.3d 275, 1998-Ohio-628, 690 N.E.2d

1267.

{¶35} In his brief, Maners refers this Court to R.C 1303.70 to state that Hollish

impaired the value of the collateral securing the December 31, 1995 contract and Knox County, Case No. 2011CA000005 10

therefore Maners’ liability under the debt is discharged. Pertinent to his argument, R.C.

1303.70(E) states:

{¶36} “(E) If the obligation of a party to pay an instrument is secured by an

interest in collateral and a person entitled to enforce the instrument impairs the value of

the interest in collateral, the obligation of an indorser or accommodation party having a

right of recourse against the obligor is discharged to the extent of the impairment. The

value of an interest in collateral is impaired to the extent the value of the interest is

reduced to an amount less than the amount of the right of recourse of the party

asserting discharge or to the extent the reduction in value of the interest causes an

increase in the amount by which the amount of the right of recourse exceeds the value

of the interest. The burden of proving impairment is on the party asserting discharge.”

{¶37} R.C. 1303.70(G) further states:

{¶38} “(G) Under division (E) or (F) of this section, impairing value of an interest

in collateral includes any of the following:

{¶39} “(1) Failure to obtain or maintain perfection or recordation of the interest in

collateral;

{¶40} “(2) Release of collateral without substitution of collateral of equal value;

{¶41} “(3) Failure to perform a duty to preserve the value of collateral owed,

under Chapter 1309. of the Revised Code or other applicable law, to a debtor or surety

or other person secondarily liable;

{¶42} “(4) Failure to comply with applicable law in disposing of collateral.”

{¶43} This Court has reviewed the record and the post-trial briefs. At trial,

Maners contended that Hollish waived or was estopped from pursuing his claim Knox County, Case No. 2011CA000005 11

because Hollish did not perfect his interest in the collateral through UCC filings.

However, we find Maners is utilizing R.C. 1303.70 for the first time on appeal to state

that Hollish impaired the collateral and the debt is discharged. This Court held in

Carrico v. Drake Constr., Stark App. No. 2005CA00201, 2006-Ohio-3138, ¶37:

{¶44} “Such arguments are barred by the doctrine of waiver for failure to raise

these arguments before the trial court. ‘It is well established that a party cannot raise

any new issues or legal theories for the first time on appeal.’ Dolan v. Dolan, Trumbull

App. Nos. 2000-T-0154 and 2001-T-0003, 2002-Ohio-2440, at ¶ 7, citing Stores Realty

Co. v. Cleveland (1975), 41 Ohio St.2d 41, 43, 322 N.E.2d 629. ‘Litigants must not be

permitted to hold their arguments in reserve for appeal, thus evading the trial court

process.’ Mark v. Mellott Mfg. Co., Inc. (1995), 106 Ohio App.3d 571, 589, 666 N.E.2d

631.”

{¶45} We will review Appellant’s arguments as presented to the trial court and

apply them to the facts in evidence to determine if the trial court’s decision was

supported by competent, credible evidence. We find the evidence presented in this

case fails to establish estoppel or waiver. The December 31, 1995 contract contains no

statement as to Hollish’s obligation to file UCC-II statements to secure his interests in

the assets that include Maners’ personal assets. The facts in this case show Maners

sold his interest in Taylor Rental Center to Bobcat without any contractual involvement

of Hollish in the transaction. There is no evidence in the record that the December 31,

1995 contract was a commercial paper capable of being sold or transferred by Hollish or

Maners, or that Bobcat became contractually obligated to Hollish to meet the terms of

the contract thereby permitting Hollish to become involved in the bankruptcy Knox County, Case No. 2011CA000005 12

proceeding. Bobcat listed Hollish as a creditor in its bankruptcy case, but the facts

show that while Bobcat was making payments to Hollish as stated in the contract, there

was no underlying agreement between Hollish and Bobcat to assume Maners’

contractual obligation.

{¶46} The burden is on the defendant to prove his affirmative defenses. The

record in this case fails to clearly establish that Hollish gave up a known right by, as

Maners argues, allowing Maners to sell the business to Bobcat. The casual business

dealings between Maners and Hollish do not show equitable estoppel where Maners

changed his position to his detriment in reliance upon Hollish’s actions. We cannot say

the trial court erred in finding in favor of Hollish based on the evidence presented.

{¶47} Maners also argues in his second Assignment of Error that Hollish was

estopped from pursuing his claim against Maners because the June 1, 2004 letter

stated that Hollish was not looking to Maners for the funds.

{¶48} The June 1, 2004 letter is recited within the Statement of the Facts. Both

parties testified at trial as to their interpretation of the meaning of the letter. Hollish

testified that in writing the letter, it was not his intention to indicate to Maners and his

wife that he forgave the debt. (T. 20). Maners testified that he did not believe that

Hollish was demanding money from him. (T. 33). As stated above, we defer to the trial

court as the finder of fact and the weighing of the credibility of the witnesses’ testimony.

By the trial court’s decision granting judgment to Hollish in the amount demanded in the

complaint, we find the trial court determined Maners failed to demonstrate the

affirmative defense of equitable estoppel as to the June 1, 2004 letter. There was

competent, credible evidence to show that Hollish did not induce Maners to believe that Knox County, Case No. 2011CA000005 13

Hollish would never demand that Maners pay the debt under the December 31, 1995

contract. There was no further evidence presented at trial to show that Maners

changed his position in reasonable reliance on the June 1, 2004 letter.

{¶49} Upon our review of the evidence, we find the trial court’s decision to

award judgment and damages to Hollish to be supported by competent, credible

evidence. We therefore overrule Appellant’s first and second Assignments of Error.

{¶50} The judgment of the Knox County Court of Common Pleas is affirmed.

By: Delaney, J.

Gwin, P.J. and

Wise, J. concur.

HON. PATRICIA A. DELANEY

HON. W. SCOTT GWIN

HON. JOHN W. WISE [Cite as Hollish v. Maners, 2011-Ohio-4823.]

IN THE COURT OF APPEALS FOR KNOX COUNTY, OHIO

FIFTH APPELLATE DISTRICT

JOSEPH C. HOLLISH : : : Plaintiff-Appellee : : -vs- : JUDGMENT ENTRY : JAY R. MANERS : : : Case No. 2011CA000005 Defendant-Appellant :

For the reasons stated in our accompanying Opinion on file, the judgment of the

Knox County Court of Common Pleas is affirmed. Costs assessed to Appellant.

HON. JOHN W. WISE