[Cite as Kauffman Family Trust v. Keehan, 2013-Ohio-2707.]
Court of Appeals of Ohio EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION No. 99423
KAUFFMAN FAMILY TRUST PLAINTIFF-APPELLEE
vs.
DONALD JAMES KEEHAN, ET AL. DEFENDANTS-APPELLANTS
JUDGMENT: AFFIRMED
Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-779110
BEFORE: E.T. Gallagher, J., Rocco, P.J., and Blackmon, J.
RELEASED AND JOURNALIZED: June 27, 2013 ATTORNEY FOR APPELLANTS
Stephen P. Hanudel 326 North Court Street Medina, Ohio 44256
ATTORNEY FOR APPELLEE
Patrick C. Mackin 33463 Lake Road P.O. Box 77 Avon Lake, Ohio 44012-0077 EILEEN T. GALLAGHER, J.:
{¶1} This cause came to be heard on the accelerated calendar pursuant to App.R.
11.1 and Loc.R. 11.1.
{¶2} Defendants-appellants Donald James Keehan, Robert Kelly, Patrick Kelly,
Nicholas Rossi, and Randall Rossi (collectively referred to as “appellants”), appeal the
trial court’s decision granting summary judgment in favor of appellee Kauffman Family
Trust (“Kauffman”). We find no merit to the appeal and affirm.
{¶3} In July 2008, Kauffman loaned $150,000 plus interest at a rate of 15 percent
per annum to BCR Development Group, L.L.C. (“BCR”). The promissory note
contained a warrant of attorney, authorizing a confession of judgment against BCR in the
event of default. The loan agreement provided, in part: “The loan shall be guaranteed
individually by Nicholas Rossi, Randy Rossi, Bob Kelly, Patrick Kelly and Donald James
Keehan, Jr..” Each of the appellants signed the loan agreement as a guarantor in his
individual capacity.
{¶4} Following default on the loan, Kauffman obtained a cognovit judgment
against BCR, which remains unpaid because BCR has no assets. Kauffman subsequently
filed the instant action against appellants, to recover the amount of the loan plus accrued
interest. The trial court granted summary judgment in favor of Kauffman and entered
judgment against appellants, jointly and severally, in the amount of $150,000 plus accrued interest in the amount of $95,625, plus statutory interest from the date of
judgment. This appeal followed.
{¶5} In their sole assignment of error, appellants argue the trial court erred in
granting summary judgment to Kauffman. Appellants contend they did not promise to
guarantee the loan and they assert their promises are unenforceable because Kauffman did
not provide any consideration in exchange for appellants’ guarantees.
{¶6} We review an appeal from summary judgment under a de novo standard.
Grafton v. Ohio Edison Co., 77 Ohio St.3d 102, 105, 1996-Ohio-336, 671 N.E.2d 241.
Civ.R. 56(C) provides that summary judgment is appropriate when, after construing the
evidence most favorably for the party against whom the motion is made, reasonable
minds can only reach a conclusion that is adverse to the nonmoving party. Zivich v.
Mentor Soccer Club, 82 Ohio St.3d 367, 369-370, 1998-Ohio-389, 696 N.E.2d 201;
Temple v. Wean United, Inc., 50 Ohio St.2d 317, 327, 364 N.E.2d 267 (1977).
{¶7} Appellants argue that “despite what the loan agreement states and the
signatures on the loan agreement,” Kauffman provided no consideration that would bind
appellants as personal guarantors. In support of their argument, appellants rely on
Cheap Escape Co. v. Crystal Windows & Doors Corp., 8th Dist No. 93739,
2010-Ohio-5002. However, Cheap Escape does not support appellant’s position. In
Cheap Escape, the guarantor of a loan argued the parties’ contract was unconscionable
and therefore unenforceable. This court affirmed the trial court’s judgment enforcing the
guaranty and found that the clause was not substantively unconscionable. Cheap Escape at ¶ 19. In the instant case, appellants are not arguing that the terms of the loan
agreement are unconscionable. They argue that the guaranty provision is unenforceable
for lack of consideration.
{¶8} A guaranty is a promise by one person to pay the debts of another. Valspar
Corp. v. Nguyen, 5th Dist. No. 11 CAE 12 0116, 2012-Ohio-2710, ¶ 15. Courts
generally construe guaranties in the same manner as contracts. G.F. Business Equip., Inc.
v. Liston, 7 Ohio App.3d 223, 224, 454 N.E.2d 1358 (8th Dist.1982). The elements of a
contract include 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. Kostelnik v. Helper, 96 Ohio St.3d 1, 2002-Ohio-2985, 770
N.E.2d 58,¶ 16. Thus, to be enforceable, consideration must be provided for the
guaranty.
{¶9} This court has held that the consideration supporting the underlying
agreement is generally sufficient to bind the guarantor. McInnis v. Spin Cycle-Euclid,
L.L.C., 8th Dist. No. 91905, 2009-Ohio-2370, ¶ 16. “‘The consideration running from
the creditor to the debtor is deemed sufficient to support the surety’s promise to make the
debt good.’” Solon Family Physicians, Inc. v. Buckles, 96 Ohio App.3d 460, 464, 645
N.E.2d 150 (8th Dist.1994), quoting United States v. Tilleraas, 709 F.2d 1088, 1091 (6th
Cir. 1983). In McInnis, this court explained that, although the guarantor receives no
direct pecuniary benefit for his undertaking, there is consideration to bind the guarantor
because by extending credit to the principal, the principal is able to obtain the loan and the guarantor receives benefit from the loan to the principal. McGinnis at ¶ 16, quoting
Neininger v. State, 50 Ohio St. 394, 400-401, 34 N.E. 633 (1893). Therefore, appellant’s
act of guaranteeing the loan for BCR is supported by consideration.
{¶10} Appellants also contend that the loan agreement is ambiguous because there
is no provision in the agreement that the loan would not have been given unless they
guaranteed the loan. They further argue that because the contract is ambiguous, the trial
court should have considered parol evidence to properly determine the parties’ intent.
{¶11} When construing a contract, a court’s primary objective is to ascertain and
give effect to the intent of the parties. Hamilton Ins. Servs., Inc. v. Nationwide Ins. Cos.,
86 Ohio St.3d 270, 273, 1999-Ohio-162, 714 N.E.2d 898. To achieve this objective, we
must examine the contract as a whole and presume that the language used reflects the
parties’ intent. Kelly v. Med. Life Ins. Co., 31 Ohio St.3d 130, 509 N.E.2d 411 (1987),
paragraph one of the syllabus. Thus, when the contract is clear and unambiguous, the
court may look no further than the four corners of the contract to find the intent of the
parties. Alexander v. Buckeye Pipeline Co., 53 Ohio St.2d 241, 374 N.E.2d 146 (1978),
paragraph two of the syllabus.
{¶12} However, if a contract is reasonably susceptible to more than one meaning,
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[Cite as Kauffman Family Trust v. Keehan, 2013-Ohio-2707.]
Court of Appeals of Ohio EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION No. 99423
KAUFFMAN FAMILY TRUST PLAINTIFF-APPELLEE
vs.
DONALD JAMES KEEHAN, ET AL. DEFENDANTS-APPELLANTS
JUDGMENT: AFFIRMED
Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-779110
BEFORE: E.T. Gallagher, J., Rocco, P.J., and Blackmon, J.
RELEASED AND JOURNALIZED: June 27, 2013 ATTORNEY FOR APPELLANTS
Stephen P. Hanudel 326 North Court Street Medina, Ohio 44256
ATTORNEY FOR APPELLEE
Patrick C. Mackin 33463 Lake Road P.O. Box 77 Avon Lake, Ohio 44012-0077 EILEEN T. GALLAGHER, J.:
{¶1} This cause came to be heard on the accelerated calendar pursuant to App.R.
11.1 and Loc.R. 11.1.
{¶2} Defendants-appellants Donald James Keehan, Robert Kelly, Patrick Kelly,
Nicholas Rossi, and Randall Rossi (collectively referred to as “appellants”), appeal the
trial court’s decision granting summary judgment in favor of appellee Kauffman Family
Trust (“Kauffman”). We find no merit to the appeal and affirm.
{¶3} In July 2008, Kauffman loaned $150,000 plus interest at a rate of 15 percent
per annum to BCR Development Group, L.L.C. (“BCR”). The promissory note
contained a warrant of attorney, authorizing a confession of judgment against BCR in the
event of default. The loan agreement provided, in part: “The loan shall be guaranteed
individually by Nicholas Rossi, Randy Rossi, Bob Kelly, Patrick Kelly and Donald James
Keehan, Jr..” Each of the appellants signed the loan agreement as a guarantor in his
individual capacity.
{¶4} Following default on the loan, Kauffman obtained a cognovit judgment
against BCR, which remains unpaid because BCR has no assets. Kauffman subsequently
filed the instant action against appellants, to recover the amount of the loan plus accrued
interest. The trial court granted summary judgment in favor of Kauffman and entered
judgment against appellants, jointly and severally, in the amount of $150,000 plus accrued interest in the amount of $95,625, plus statutory interest from the date of
judgment. This appeal followed.
{¶5} In their sole assignment of error, appellants argue the trial court erred in
granting summary judgment to Kauffman. Appellants contend they did not promise to
guarantee the loan and they assert their promises are unenforceable because Kauffman did
not provide any consideration in exchange for appellants’ guarantees.
{¶6} We review an appeal from summary judgment under a de novo standard.
Grafton v. Ohio Edison Co., 77 Ohio St.3d 102, 105, 1996-Ohio-336, 671 N.E.2d 241.
Civ.R. 56(C) provides that summary judgment is appropriate when, after construing the
evidence most favorably for the party against whom the motion is made, reasonable
minds can only reach a conclusion that is adverse to the nonmoving party. Zivich v.
Mentor Soccer Club, 82 Ohio St.3d 367, 369-370, 1998-Ohio-389, 696 N.E.2d 201;
Temple v. Wean United, Inc., 50 Ohio St.2d 317, 327, 364 N.E.2d 267 (1977).
{¶7} Appellants argue that “despite what the loan agreement states and the
signatures on the loan agreement,” Kauffman provided no consideration that would bind
appellants as personal guarantors. In support of their argument, appellants rely on
Cheap Escape Co. v. Crystal Windows & Doors Corp., 8th Dist No. 93739,
2010-Ohio-5002. However, Cheap Escape does not support appellant’s position. In
Cheap Escape, the guarantor of a loan argued the parties’ contract was unconscionable
and therefore unenforceable. This court affirmed the trial court’s judgment enforcing the
guaranty and found that the clause was not substantively unconscionable. Cheap Escape at ¶ 19. In the instant case, appellants are not arguing that the terms of the loan
agreement are unconscionable. They argue that the guaranty provision is unenforceable
for lack of consideration.
{¶8} A guaranty is a promise by one person to pay the debts of another. Valspar
Corp. v. Nguyen, 5th Dist. No. 11 CAE 12 0116, 2012-Ohio-2710, ¶ 15. Courts
generally construe guaranties in the same manner as contracts. G.F. Business Equip., Inc.
v. Liston, 7 Ohio App.3d 223, 224, 454 N.E.2d 1358 (8th Dist.1982). The elements of a
contract include 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. Kostelnik v. Helper, 96 Ohio St.3d 1, 2002-Ohio-2985, 770
N.E.2d 58,¶ 16. Thus, to be enforceable, consideration must be provided for the
guaranty.
{¶9} This court has held that the consideration supporting the underlying
agreement is generally sufficient to bind the guarantor. McInnis v. Spin Cycle-Euclid,
L.L.C., 8th Dist. No. 91905, 2009-Ohio-2370, ¶ 16. “‘The consideration running from
the creditor to the debtor is deemed sufficient to support the surety’s promise to make the
debt good.’” Solon Family Physicians, Inc. v. Buckles, 96 Ohio App.3d 460, 464, 645
N.E.2d 150 (8th Dist.1994), quoting United States v. Tilleraas, 709 F.2d 1088, 1091 (6th
Cir. 1983). In McInnis, this court explained that, although the guarantor receives no
direct pecuniary benefit for his undertaking, there is consideration to bind the guarantor
because by extending credit to the principal, the principal is able to obtain the loan and the guarantor receives benefit from the loan to the principal. McGinnis at ¶ 16, quoting
Neininger v. State, 50 Ohio St. 394, 400-401, 34 N.E. 633 (1893). Therefore, appellant’s
act of guaranteeing the loan for BCR is supported by consideration.
{¶10} Appellants also contend that the loan agreement is ambiguous because there
is no provision in the agreement that the loan would not have been given unless they
guaranteed the loan. They further argue that because the contract is ambiguous, the trial
court should have considered parol evidence to properly determine the parties’ intent.
{¶11} When construing a contract, a court’s primary objective is to ascertain and
give effect to the intent of the parties. Hamilton Ins. Servs., Inc. v. Nationwide Ins. Cos.,
86 Ohio St.3d 270, 273, 1999-Ohio-162, 714 N.E.2d 898. To achieve this objective, we
must examine the contract as a whole and presume that the language used reflects the
parties’ intent. Kelly v. Med. Life Ins. Co., 31 Ohio St.3d 130, 509 N.E.2d 411 (1987),
paragraph one of the syllabus. Thus, when the contract is clear and unambiguous, the
court may look no further than the four corners of the contract to find the intent of the
parties. Alexander v. Buckeye Pipeline Co., 53 Ohio St.2d 241, 374 N.E.2d 146 (1978),
paragraph two of the syllabus.
{¶12} However, if a contract is reasonably susceptible to more than one meaning,
then it is ambiguous and the court may consider parol evidence to determine the parties’
intent. Illinois Controls, Inc. v. Langham, 70 Ohio St.3d 512, 1994-Ohio-99, 639 N.E.2d
771. If the terms of the contract are clear and unambiguous, the interpretation of the language is a question of law, which we review de novo. State ex rel. Parsons v. Fleming,
68 Ohio St.3d 509, 511, 1994-Ohio-172, 628 N.E.2d 1377.
{¶13} Appellants argue that even though the contract indicates that they each
signed the loan agreement as individual guarantors, they never intended to personally
guarantee the loan. However, “the un-communicated subjective intentions of one party
have no significance in determining the meaning of disputed terms.” G.F. Business
Equip., 7 Ohio App. 3d at 225, 454 N.E.2d 1358 (8th Dist.1982). The loan agreement
plainly states: “The loan shall be guaranteed individually by Nicholas Rossi, Randy Rossi,
Bob Kelly, Patrick Kelly and Donald James Keehan, Jr.” In accordance with this
provision, each of the appellants individually signed the loan agreement as guarantors.
We find no ambiguity in this contract. According to the plain language of the loan
agreement, we find that appellants agreed to personally guarantee the loan Kauffman
made to BCR.
{¶14} Therefore, the sole assignment of error is overruled.
{¶15} Judgment affirmed.
It is ordered that appellee recover from appellants costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to the common pleas 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. EILEEN T. GALLAGHER, JUDGE
KENNETH A. ROCCO, P.J., and PATRICIA A. BLACKMON, J., CONCUR