M & G Automotive Serv., Inc. v. Bouscher

2014 Ohio 5370

• Court: Ohio Court of Appeals
• Decided: December 4, 2014
• Docket: 2014AP03009
• Status: Published

Opinion

[Cite as M & G Automotive Serv., Inc. v. Bouscher, 2014-Ohio-5370.]

COURT OF APPEALS TUSCARAWAS COUNTY, OHIO FIFTH APPELLATE DISTRICT

JUDGES: M&G AUTOMOTIVE SERVICE, INC., : Hon. W. Scott Gwin, P.J. MARK AND VIRGINIA PORTER : Hon. John W. Wise, J. : Hon. Craig R. Baldwin, J. Plaintiffs-Appellants : : -vs- : Case No. 2014 AP 03 009 : MATTHEW C. BOUSCHER, ET AL : : OPINION Defendants-Appellees

CHARACTER OF PROCEEDING: Civil appeal from the Tuscarawas County Court of Common Pleas, Case No. 2008 CV 07 0519

JUDGMENT: Affirmed

DATE OF JUDGMENT ENTRY: December 4, 2014

APPEARANCES:

For Plaintiffs-Appellants For Defendants-Appellees

SCOTT SANDROCK STEVEN SHROCK ELIZABETH SHIVELY BOATWRIGHT Critchfield, Critchfield & Johnston, Ltd Brennan, Manna & Diamond, LLC 138 East Jackson Street 75 East Market Street Millersburg, OH 44654 Akron, OH 44308 [Cite as M & G Automotive Serv., Inc. v. Bouscher, 2014-Ohio-5370.]

Gwin, P.J.

{¶1} Appellants appeal the February 13, 2014 judgment entry of the

Tuscarawas County Court of Common Pleas denying their motion to enforce settlement.

Facts & Procedural History

{¶2} In April of 2002, appellants Mark Porter (“Mark”) and Virginia Porter

(“Virginia”) entered into a stock purchase agreement with appellees Matthew Bouscher

(“Matthew”) and Michael Bouscher (“Michael”) for Matthew and Michael to purchase

M&G Automotive Service, Inc. (“M&G”), a car repair business owned by Mark and

Virginia. On July 1, 2008, M&G, Mark, and Virginia filed a complaint against Matthew

and Michael for breach of contract by failing to complete the purchase, breach of

shareholder duty, injunctive relief, tortuous interference with business relationships,

misappropriation of trade secrets, and disclosure of confidential information.

{¶3} The case ultimately resulted in an agreed resolution and the case was

dismissed on May 14, 2009. To memorialize the agreement between the parties,

counsel for appellants drafted a settlement agreement and counsel for appellees drafted

the attached land installment contract.

{¶4} The settlement agreement provides, in pertinent part, that appellees would

purchase the remaining 160 shares of M&G for a purchase price of $185,000. In

addition, that appellees and Margin Properties, LLC, with sole members Mark and

Virginia, would enter into a land contract where appellees would purchase the building

located at 2615 North Wooster Avenue, Dover, Ohio, for a purchase price of $185,000

pursuant to the terms and conditions provided.

{¶5} Under the heading “Land Contract,” the settlement agreement states: Tuscarawas County, Case No. 2014AP 0009 3

The Bouchers will enter into a certain Land Contract with Margin

Properties, LLC to purchase the building located at 2615 N. Wooster

Avenue, Dover, Ohio, pursuant to the terms of a Land Contract attached

to this Agreement as Exhibit C. The parties agree that the Land Contract

will be for a purchase price of $185,000 with a monthly payment of $1,250.

The purchase price will bear interest at the rate of 6% per annum with the

Buyers to be responsible for all insurance, taxes, and maintenance of the

building. The Buyers may, at their own expense, conduct an

environmental phase one and a real estate title search. The Land

Contract will provide for the loan obligation due in full on or before June 1,

2013. There will be a cross default provision in the Land Contract and the

Promissory Note and the default of one will be deemed a default of the

other. No early purchase of the building will be permitted unless there is a

simultaneous payment of the balance of the Promissory Note.

The land installment contract provides that appellants’ company, Margin Properties,

LLC, agreed to sell to appellees the real estate located at 2615 N. Wooster Ave., Dover,

Ohio for the purchase price of $185,000 with monthly installment payments of $1,250

beginning in May of 2009 and continuing until the balance was paid in full, provided that

the remaining unpaid principal balance would be due and payable on June 1, 2013.

With regards to the “Seller’s Mortgage,” the land contract states as follows:

Seller’s Mortgage; Encumbrances. Buyers shall pay the First

Federal bank loan currently secured by the building. Seller acknowledges

that no additional mortgages will be filed on the property by the Seller of if Tuscarawas County, Case No. 2014AP 0009 4

so, Seller is responsible for payment of any of those obligations. If Seller

is in default under any such mortgage, then Buyers may cure such default,

and all sums so paid by Buyers shall be credited by Sellers as payments

under this Contract.

The Premises are presently subject to the following encumbrances;

zoning ordinances; legal highways; covenants; restrictions; conditions and

easements of record; the lien of real estate taxes and assessments not yet

due and payable.

{¶6} During the term of the land installment contract, appellees paid both the

monthly installment payments as well as the First Federal mortgage payments. At the

conclusion of the land installment contract, Margin Properties, LLC still owed

$65,588.82 on the First Federal mortgage. The parties participated in a closing of the

real estate purchase relative to the land installment contract on May 31, 2013. The

Settlement Statement reflects a payoff of the mortgage loan to First Federal Community

Bank of $65,588.82, which was paid by the Seller, Margin Properties, LLC, c/o Mark F.

Porter and Virginia B. Porter. The Settlement Statement was executed by appellants

and appellees.

{¶7} On December 3, 2013, appellants filed a motion to enforce settlement and

a detailed motion to enforce settlement agreement on December 31, 2013 alleging that

appellees breached the settlement agreement by failing to pay the balance of the First

Federal Bank Loan debt. Appellees filed a memorandum in opposition on January 24,

2014 and a supplemental memorandum in opposition on February 5, 2014. The trial

court held a motion hearing on appellants’ motion on January 27, 2014. On February Tuscarawas County, Case No. 2014AP 0009 5

13, 2014, the trial court issued a judgment entry denying appellants’ motion to enforce

settlement agreement. The trial court found that by the clear language of the settlement

agreement, appellees were to pay $185,000. Further, that the language of the

settlement agreement offers little guidance as to the intention of the parties respecting

the loan obligation beyond the term of the land installment contract. However, by the

clear language of the land installment contract, the sale price of the real estate was

$185,000 and that during the period of the land installment contract appellees would

make other payments incidental to the real estate. Finally, that appellants acquiesced

to the settlement of the amounts due by proceeding with the closing as set forth on the

settlement statement.

{¶8} Appellants appeal the February 13, 2014 judgment entry of the

Tuscarawas County Court of Common Pleas and assigns the following as error:

{¶9} “I. THE TRIAL COURT ERRED IN FAILING TO ENFORCE THE

UNAMBIGUOUS LANGUAGE OF THE SETTLEMENT AGREEMENT, WHICH

CLEARLY REQUIRED APPELLEES TO PAY THE FIRST FEDERAL BANK LOAN

OBLIGATION.

{¶10} "II. THE TRIAL COURT ERRED IN CONSIDERING OUTSIDE EVIDENCE

IN FINDING THAT APPELLANTS ACQUIESCED TO THE SETTLEMENT OF THE

AMOUNTS DUE BY PROCEEDING WITH THE CLOSING.

{¶11} "III. THE TRIAL COURT ERRED WHEN IT INTERPRETED AN

ALLEGEDLY AMBIGUOUS PROVISION OF THE SETTLEMENT AGREEMENT

WITHOUT FIRST HOLDING AN EVIDENTIARY HEARING CONCERNING THE

PARTIES’ INTENT.” Tuscarawas County, Case No. 2014AP 0009 6

I.

{¶12} Appellants first contend the trial court erred in failing to follow the

unambiguous language of the settlement agreement, which appellants argue required

appellees to pay the First Federal loan obligation. Appellants cite paragraph 2 and 4 of

the settlement agreement and paragraph 7 of the land contract as unambiguously

requiring appellees to pay the First Federal loan obligation. We disagree.

{¶13} The standard of review to be applied to a ruling on a motion to enforce

settlement agreement depends primarily on the question presented. If the question is

an evidentiary one, this court will not overturn the trial court’s finding if there was

sufficient evidence to support such finding. Chirchiglia v. Ohio Bur. of Workers’ Comp.,

138 Ohio App.3d 676, 742 N.E.2d 180 (7th Dist. 2000). If the dispute is a question of

law, an appellate court must review the decision de novo to determine whether the trial

court’s decision to enforce the settlement agreement is based upon an erroneous

standard or a misconstruction of the law. Continental W. Condominium Owner’s Assn.

v. Howard E. Ferguson, Inc., 74 Ohio St.3d 501, 1996-Ohio-158, 660 N.E.2d 431.

{¶14} As detailed below, appellants waived an evidentiary hearing as the record

shows no indication that appellants requested an evidentiary hearing or objected to the

nature of the motion hearing proceedings. Monea v. Campisi, 5th Dist. Stark No.

2004CA00381, 2005-Ohio-5215. Further, appellants did not file a transcript of the

motion hearing held before the trial court and thus this Court must presume the validity

of the trial court’s proceedings and accept the factual determinations of the trial court.

Knapp v. Edwards Laboratories, 61 Ohio St.2d 197, 400 N.E.2d 384 (1980). Tuscarawas County, Case No. 2014AP 0009 7

Accordingly, the question before this Court is whether the trial court erred as a matter of

law in dismissing the motion to enforce the settlement agreement.

{¶15} Settlement agreements are contractual in nature and, as such, basic

principles of contract law apply. Rulli v. Fan Co., 79 Ohio St.3d 374, 1997-Ohio-380,

683 N.E.2d 337. “[A] valid settlement agreement is a contract between parties,

requiring a meeting of the minds as well as an offer and an acceptance thereof.” Id.

Additionally, the terms of the settlement agreement must be reasonably certain and

clear. Id. It is a fundamental principle in contract construction that contracts should “be

interpreted so as to carry out the intent of the parties, as that intent is evidenced by the

contractual language.” Skivolocki v. East Ohio Gas Co., 38 Ohio St.2d 244, 313 N.E.2d

374 (1974). A reviewing court should give the contract’s language its plain and ordinary

meaning unless some other meaning is evidenced with the document. Alexander v.

Buckeye Pipe Line Co., 53 Ohio St.2d 241, 374 N.E.2d 146 (1978). If the terms of the

contract are determined to be clear and unambiguous, the interpretation of the language

is a question of law reviewed de novo on appeal. State ex rel. Parsons v. Fleming, 68

Ohio St.3d 509, 628 N.E.2d 1377 (1994). A contract is ambiguous if its terms cannot be

clearly determined from a reading of the entire contract or if its terms are susceptible to

more than one reasonable interpretation. United States Fidelity & Guar. Co. v. St.

Elizabeth Medical Ctr., 129 Ohio App.3d 45, 716 N.E.2d 1201 (2nd Dist. 1998). A court

cannot in effect create a new contract “by finding an intent not expressed in the clear

language employed by the parties.” Alexander v. Buckeye Pipe Line Co., 53 Ohio St.2d

241, 374 N.E.2d 146 (1978). Tuscarawas County, Case No. 2014AP 0009 8

{¶16} Appellants contend that paragraph 2 of the settlement agreement provides

support for their contention that appellees were unambiguously supposed to pay the

First Federal loan obligation. However, pursuant to the plain and clear language of this

paragraph, it has no impact or instruction as to who is to pay the First Federal

obligation. Paragraph 2 is entitled “Stock Purchase” and deals exclusively with

appellees agreement to purchase the shares of stock owned by appellants, an

obligation separate from appellees’ purchase of the real property on which M&G

operates. Paragraph 2 provides that appellees, “acknowledge that in addition to

purchasing the stock, they will be responsible for the payment of all notes and other

loans owed by M&G to First Federal and others and will agree to indemnify and hold the

Porters harmless from and against any obligations on such third party notes.” Utilizing

the plain meaning of the language used, it refers only to debts owed by M&G but not the

mortgage debt at issue which was owned by Margin Properties, LLC, as evidenced by

the land installment contract which states that the “Seller” is “Margin Properties, LLC.”

In addition, at the beginning of the settlement agreement that sets out the settlement

terms, it is clear that the stock purchase of appellees is separate from the land contract

by which appellees would purchase the building from Margin Properties, LLC.

{¶17} Appellants also cite paragraph 4 of the settlement agreement and argue

that the last sentence of the paragraph that “The Land Contract will provide for the loan

obligation due in full on or before June 1, 2013” refers to the First Federal mortgage

loan. However, it is clear from the language of the paragraph, in conjunction with the

language of the land contract, that the “loan” referred to in paragraph 4 is the loan

created by the land contract itself. Writings executed together as part of the same Tuscarawas County, Case No. 2014AP 0009 9

transaction should be read together, and the intent of each part will be gathered from a

consideration of the whole. Foster Wheeler Enviresponse, Inc. v. Franklin Cty.

Convention Facilities Auth., 78 Ohio St.3d 353, 1997-Ohio-202, 678 N.E.2d 519.

{¶18} Paragraph 4 requires appellees to enter into the land contract with Margin

Properties and the remainder of the paragraph recites the terms to be included in the

land contract. Paragraph 4 describes an installment purchase of the property with

monthly payments, interest on the unpaid principal balance, and a balloon payment of

the remaining balance, or the “loan obligation” in four years. This section of the

settlement agreement is confirmed by the land contract which provides that the

purchase price of the premises is $185,000 and that the purchase price is payable in

monthly installments payments of $1,250.00 from May 1, 2009 and “continuing on the

same day of each subsequent month until said balance is paid in full; provided,

however, that unless sooner paid the remaining unpaid principal balance shall be due

and payable on June 1, 2013.” Reading these written instruments in conjunction, the

intent that can be gathered from both together is that it is the remaining unpaid principal

balance on the $185,000 purchase price which must be paid in full by June 1, 2013 is

the only “loan obligation” included in paragraph 4 of the settlement agreement.

{¶19} Appellants finally cite to paragraph 7 of the land contract which provides

that appellees “shall pay the First Federal bank loan currently secured by the building * *

* If Seller is in default under any such mortgage, then Buyers may cure such default,

and all amounts so paid by Buyers shall be credited by Seller as payments under this

Contract.” As noted by the trial court, this provision clearly requires appellees to make

the mortgage payments during the term of the land contract. However, the provision Tuscarawas County, Case No. 2014AP 0009 10

does not state, as appellants argue, that appellees were required to pay the mortgage

at closing or after the four-year term of the installment contract.

{¶20} The provisions in the land contract (Paragraph 1) and settlement

agreement (Paragraph 1(C) and Paragraph 4) clearly and unambiguously provide that

the agreed-upon purchase price of the real property was $185,000. As noted above,

writings executed together as part of the same transaction should be read together and

the intent of each party should be gathered from a consideration of the whole. Foster

Wheeler Enviresponse, Inc. v. Franklin Cty. Convention Facilities Auth., 78 Ohio St.3d

353,1997-Ohio-202, 678 N.E.2d 519. Utilizing the plain language contained in these

provisions, there is no indication that the purchase price is $185,000 plus the First

Federal mortgage balance. Paragraph 7 of the land contract provides that appellees

had to pay for the mortgage during the four-year term of the land contract and there is

no dispute that appellees paid the mortgage during the land contract term. However,

from the plain language of the documents, there is no indication that appellees were

required to pay the balance of the mortgage at the end of the land contract.

{¶21} The trial court found that: by the clear language of the settlement

agreement, appellees were to pay $185,000; that by the clear language of the land

installment contract, the sale price of the real estate was $185,000; and that during the

period of the land installment contract, appellees would make other payments incidental

to the real estate.

{¶22} Accordingly, based upon our analysis above, we find that the trial court did

enforce the unambiguous language of the settlement agreement in denying appellants’

motion to enforce as the settlement agreement and land contract terms regarding the Tuscarawas County, Case No. 2014AP 0009 11

First Federal obligation is not ambiguous. Based upon the unambiguous language of

the documents, the parties’ intent was for appellees to pay the First Federal mortgage

during the land contract term and purchase the property by the end of the land contract

term for the sum of $185,000, with no obligation to pay the balance of the First Federal

obligation of Margin Properties, LLC. Accordingly, appellants’ first assignment of error

is overruled.

II.

{¶23} Appellants argue the trial court erred in considering outside evidence in

finding that appellants acquiesced to the settlement of the amounts due by proceeding

with the real estate closing. Appellants again contend in their second assignment of

error that the trial court erred in interpreting the settlement agreement where it

unambiguously provides that appellees are responsible for the First Federal obligation.

As analyzed in Assignment of Error I, we find the trial court did not err in finding that

appellees were not responsible for the First Federal obligation pursuant to the plain

language of the settlement agreement and land contract.

{¶24} Appellants further argue the trial court erred when it found appellants

acquiesced to the settlement of the amounts due by proceeding with the real estate

closing by considering outside evidence. However, appellants do not include a

description of the outside evidence appellants allege the trial court relied on in making

this determination. The only outside evidence cited to in the trial court’s judgment entry

is the Settlement Statement that reflected a payoff of the mortgage loan to First Federal

which was paid by Margin Properties, LLC, c/o Mark F. Porter and Virginia B. Porter.

However, it is clear from the trial court’s entry that such document was only considered Tuscarawas County, Case No. 2014AP 0009 12

in its finding that appellants acquiesced to the settlement of the amounts due by

proceeding with the closing and was not utilized in the trial court’s determination that the

unambiguous language of the settlement agreement and land contract did not require

appellees’ to pay the mortgage balance of Margin Properties. Further, since the trial

court found that the language of the settlement agreement and land contract did not

require appellees’ to pay off the First Federal mortgage, the acquiescence finding by the

trial court was an alternative basis for denying appellants’ request for relief. Thus, any

error in the alternative basis for denying appellants’ relief is moot based upon our

disposition of appellants’ first and third assignments of error. Appellants’ second

assignment of error is overruled.

III.

{¶25} Appellants finally argue that the trial court erred when it interpreted an

allegedly ambiguous provision of the settlement agreement without holding an

evidentiary hearing. We disagree.

{¶26} The Ohio Supreme Court has held that “where the meaning of terms of a

settlement agreement is disputed, or where there is a dispute that contests the

existence of a settlement agreement, a trial court must conduct an evidentiary hearing

prior to entering judgment.” Rulli v. Fan Co., 79 Ohio St.3d 374, 1997-Ohio-380, 683

N.E.2d 337. However, in the “absence of such a factual dispute, a court is not required

to conduct such an evidentiary hearing.” Id. In this case, the trial court held what it

called a motions hearing. Appellants did not file a transcript of this hearing. The

purpose of an evidentiary hearing is to “clear up any ambiguity with regard to the terms

or existence of a settlement agreement.” Johannsen v. Ward, 6th Dist. No. H-09-028, Tuscarawas County, Case No. 2014AP 0009 13

2010-Ohio-4203. In this matter, as discussed above, the terms of the settlement

agreement and land contract were unambiguous. Since there were no ambiguous

terms in the settlement agreement and land contract, the trial court did not err by failing

to conduct a formal evidentiary hearing.

{¶27} Further, we find appellants waived the issue of an evidentiary hearing as

the record shows no indication that appellants requested an evidentiary hearing or

objected to the nature of the motion hearing proceedings. Monea v. Campisi, 5th Dist.

Stark No. 2004CA00381, 2005-Ohio-5215; Brown v. Spitzer Chevrolet Co., 5th Dist.

Stark No. 2012 CA 00105, 2012-Ohio-5623. Appellants waived their right to an

evidentiary hearing by failing to request such a hearing or to object to the lack of an

evidentiary hearing. Monea v. Campisi, 5th Dist. Stark No. 2004CA00381, 2005-Ohio-

5215. Appellants’ third assignment of error is overruled.

{¶28} Based on the foregoing, appellants’ assignments of error are overruled

and the February 13, 2014 judgment entry of the Tuscarawas County Court of Common

Pleas is affirmed.