[Cite as Jeffrey Allen Industries, L.L.C. v. Manco, 2011-Ohio-2655.]
COURT OF APPEALS
RICHLAND COUNTY, OHIO
FIFTH APPELLATE DISTRICT
JUDGES:
JEFFREY ALLEN INDUSTRIES, LLC, : Hon. W. Scott Gwin, P.J.
ET AL : Hon. William B. Hoffman, J.
: Hon. Patricia A. Delaney, J.
Plaintiffs-Appellants :
:
-vs- : Case No. 2010-CA-0145
:
RONALD J. MANCO, ET AL :
: OPINION
Defendants-Appellees
CHARACTER OF PROCEEDING: Civil appeal from the Richland County Court
of Common Pleas, Case No. 08-CV-1342H
JUDGMENT: Affirmed in part; Reversed in part
DATE OF JUDGMENT ENTRY: June 1, 2011
APPEARANCES:
For Plaintiffs-Appellants For Defendants-Appellees
JOSEPH T. OLECKI ROBERT A. FRANCO
WELDON, HUSTON & KEYSER 1007 Lexington Avenue
76 North Mulberry Mansfield, OH 44907
Mansfield, OH 44902
[Cite as Jeffrey Allen Industries, L.L.C. v. Manco, 2011-Ohio-2655.]
Gwin, P.J.
{¶1} Plaintiffs-appellants Jeffrey Allen Industries, LLC and Stacey L. Trimble,
and third-party defendant-appellant Jeffrey Benton appeal a summary judgment of the
Court of Common Pleas of Richland County, Ohio, entered in favor of defendants-
appellees John Offenburger and Stonybrook Cabinet Company, Inc. on all claims
against appellees and on their third-party claim against appellant Benton. Appellants
assign six errors to the trial court:
{¶2} “I. THE TRIAL COURT ERRED IN CONCLUDING THE PURCHASE
AGREEMENT WAS A FULLY INTEGRATED AGREEMENT.
{¶3} “II. THE TRIAL COURT ERRED IN FAILING TO CONSIDER MANCO’S
CLEAR DECLARATION AGAINST INTEREST IN DETERMINING WHETHER THE
PURCHASE AGREEMENT WAS A FULLY INTEGRATED AGREEMENT.
{¶4} “III. THE TRIAL COURT ERRED IN GRANTING SUMMARY JUDGMENT
TO OFFENBURGER BASED ON HIS CLAIMED LACK OF KNOWLEDGE OF THE
AGREEMENT BECAUSE, AT A MINIMUM, A GENUINE ISSUE OF MATERIAL FACT
EXISTS AS TO OFFENBURGER’S AWARENESS AND ASSENT TO THE
AGREEMENT.
{¶5} “IV. THE TRIAL COURT ERRED IN HOLDING THAT DEFENDANTS ARE
NOT LIABLE FOR UTILITY BILLS WHILE THEY OCCUPIED THE FORMER
PREMISES OF JEFFREY ALLEN INDUSTRIES, LLC.
{¶6} “V. THE TRIAL COURT ERRED IN FINDING PLAINTIFFS WAIVED
THEIR CLAIMS BY EXECUTING THE PURCHASE AGREEMENT.
Richland County, Case No. 2010-CA-0145 3
{¶7} “VI. THE TRIAL COURT ERRED IN ENTERING SUMMARY JUDGMENT
FOR DEFENDANTS ON THEIR CONVERSION CLAIM AGAINST JEFFREY
BENTON.”
{¶8} The central issue in this case is whether an agreement to purchase
business assets for a stated price may be modified by a prior agreement increasing the
purchase price, if the purchase agreement contains an integration clause. We find
evidence of the prior agreement is barred by the parol evidence rule.
{¶9} The trial court journalized an extensive judgment entry in this case. The
court found the undisputed material facts are that Jeffrey Allen Industries, LLC was a
cabinet making business wholly owned by Stacey Trimble, but operated and managed
by her fiancé Jeffrey Allen Benton. Benton and Trimble decided to close the cabinet
making business and sell off its assets, because Benton wanted to become a
homebuilder. Their employee, Ronald Manco, met an investment advisor, John
Offenburger, at a birthday party. Manco told Offenburger about the proposed sale of
the cabinet making business. Benton had announced the assets of the business would
soon be put up for auction.
{¶10} Manco told Offenburger that the business had been consistently profitable
for several years. Manco said he would have tried to buy the business himself, but he
did not have the means. Manco proposed that if Offenburger could buy the business
assets, Manco would manage a new cabinet making business, and Offenburger and
Manco would share any profits. Offenburger was interested even though Manco had no
assets, meaning the purchase would depend wholly on Offenburger’s assets and
credits.
Richland County, Case No. 2010-CA-0145 4
{¶11} Offenburger and Manco met with Benton to see the tools and assets of the
business. Benton volunteered that his auctioneer told him the assets of the business
would sell for between $175,000 and $225,000 at auction. At Offenburger’s request,
Manco prepared a list of the assets and inventory to be sold. Offenburger then took the
list to consult with the industrial equipment salesman who had sold and serviced the
tools and equipment. The industrial equipment salesman’s opinion of the value of the
items was within the range Benton’s auctioneer had estimated.
{¶12} Offenburger then met with a bank officer at FirstMerit Bank to pursue
financing in the event the parties were able to come to terms. Offenburger had the loan
package structured so both he and Manco would be obligated on the loan.
{¶13} The court found Benton rejected Offenburger’s initial offer to buy the
assets for $150,000. Benton was asking $300,000, despite having disclosed that his
own auctioneer had put a much lower value on the assets. After several weeks of
negotiations, Offenburger presented Benton with a written Asset Purchase Agreement,
offering a purchase price of $200,000 for the assets and inventory, to be paid in full, in
cash or certified funds, at a closing to be held on March 23, 2007.
{¶14} On March 16, 2007, Trimble, Benton, Manco, and Offenburger met at
Offenburger’s Merrill Lynch office where all four signed the Asset Purchase Agreement
before a notary public. Trimble signed both as an individual and in a representative
capacity for Jeffery Allen Industries, LLC, and the other three signed solely as
individuals.
{¶15} On March 23, 2007, Trimble and Benton met Manco, Offenburger, and
their banker for the closing. On behalf of Jeffrey Allen Industries, LLC, Trimble and
Richland County, Case No. 2010-CA-0145 5
Benton accepted the $200,000 in certified funds tendered for the assets being sold, and
transferred the assets to Manco and Offenburger, for their new company, Stonybrook
Cabinet Company, Inc. The new company was not a party to the Asset Purchase
Agreement.
{¶16} After the closing, Manco and Offenburger transferred the assets to
Stonybrook Cabinet Company. The new company operated out of Jeffrey Allen
Industries’ former premises. Offenburger did not work in the new business, but
continued his employment as an investment adviser.
{¶17} The court found it was undisputed that within a few weeks of the closing,
without Manco’s or Offenburger’s knowledge or permission, Benton approached certain
Stonybrook Cabinet customers and convinced them to give Benton their payments for
amounts the customers owed to Stonybrook Cabinet Company. The court found there
was no dispute that Benton never advised Manco or Offenburger he intended to
intercept these payments from their customers, nor did Benton tell them he had done so
after the fact. The court found Benton admitted he never turned any of the funds he
received from Stonybrook’s customers over to Stonybrook. In late April when Manco
and Offenburger discovered Benton had possession of their customers’ payments,
Offenburger directed Manco to contact the Crawford County Sheriff’s Department.
{¶18} Benson maintained Manco and Offenburger owed Jeffrey Allen Industries
an additional $97,000 for the purchase of the business’s assets. This included a
payment of $50,000, and Benson’s retention of approximately $47,000 worth of certain
assets he claimed were not included in the sale.
Richland County, Case No. 2010-CA-0145 6
{¶19} Stonybrook Cabinet Company experienced mounting losses until
FirstMerit Bank contacted Offenburger to advise him that Manco had completely
exhausted the company’s $100,000 operating line of credit, and checks were being
presented for payment without sufficient funds available to cover them. Offenburger
examined the finances and closed Stonybrook Cabinet Company, paying off the bank
loans from his personal funds.
{¶20} The court found there was no dispute over what assets were being sold
and no dispute that the assets were being transferred at the time of the closing. The
court also found there was no dispute that the list of the assets and inventory to be sold
was prepared sometime prior to the closing. The court found Benton conceded in his
deposition testimony the parties had agreed what would be sold and that everything that
they intended to sell was actually sold to Manco and Offenburger.
{¶21} However, the court found the parties did not agree on whether a final
listing of the assets was attached as an exhibit to the Asset Purchase Agreement at or
before the closing. The court found the dispute was not material, because such exhibits
to a contract are often not attached to the actual contract being signed.
{¶22} The court found the undisputed evidence is that the list of inventory and
equipment was prepared, and exchanged between the buyers and sellers, and each
side understood precisely what was to be sold. The court found the sellers signed the
contract and then proceeded to the closing; the buyers tendered full payment for the
assets; the sellers accepted payment; and all assets the parties intended to be included
in the sale were actually sold.
Richland County, Case No. 2010-CA-0145 7
{¶23} The trial court found Section 2 of the Asset Purchase Agreement states
Manco and Offenburger would not assume or be responsible for any liabilities,
obligations, indebtedness, or claims against Jeffrey Allen Industries LLC or any other
person employed by or affiliated with it. In Section 15, the Agreement provides Jeffrey
Allen Industries LLC indemnifies and promises to defend and hold the buyer harmless
against all claims, losses, liabilities, damages, costs, and expenses for any assertion of
any liability, obligation, indebtedness, or claim arising from a related operation prior to
the closing, or for liabilities not expressly assumed by the buyers pursuant to their
contract.
{¶24} Finally, the court found Section 22 of the Agreement stated it contains the
entire understanding and supersedes all prior and contemporaneous negotiations,
statements, and agreements with respect to the subject matter. The court found
nowhere in the agreement do the parties agree that the buyers would assume any
liability for unpaid utility charges, nor does the agreement provide the sellers would
receive or share in any accounts receivable after the closing.
{¶25} On May 5, 2009, Manco’s counsel filed a notice that Manco had died, and
no one filed a motion to intervene or substitute for him in the lawsuit. The court
dismissed all claims by or against Manco pursuant to Civ. R. 25 (A).
{¶26} The trial court found the claims remaining were the claims of Jeffrey Allen
Industries against Offenburger and Stonybrook Cabinet Company, and the third party
claims by Stonybrook Cabinet Company against Benton. Jeffrey Allen Industries
asserted four claims against Offenburger and Stonybrook: breach of contract, fraud,
replevin, and unjust enrichment. The court found the breach of contract and fraud
Richland County, Case No. 2010-CA-0145 8
claims are predicated on the alleged parol agreement to pay an additional $97,000 over
and above the $200,000 purchase price of the Asset Purchase Agreement. Jeffrey Allen
Industries alleged Manco had made a verbal promise to make the further payment
within a year after the closing, and alleged the appellants relied on the promise in
signing the Asset Purchase Agreement. In their answer to the complaint, Offenburger
and Stonybrook denied any additional agreement or fraud, and asserted affirmative
defenses of the parol evidence rule, waiver, and lack of authority, among other
defenses.
{¶27} The court found the third claim of Jeffrey Allen Industries was for replevin
of a single double head wide-belt sander. The court found Benton admitted in his
deposition this item had been sold to and rightfully belonged Manco and Offenburger,
and abandoned the claim.
{¶28} The fourth claim was for unjust enrichment, concerning utility bills from the
City of Galion and from Columbia Gas Company, charged against an account belonging
to Jeffrey Allen Industries but ostensibly for service after Stonybrook took possession of
the business premises.
{¶29} In its counterclaim Stonybrook Cabinet Company alleged conversion and
civil theft, for three checks it claimed Benton intercepted from Stonybrook Cabinet
Company’s customers, totaling $17,258. Offenburger’s affidavit also stated Benton
converted three checks totaling $17,258. Benton’s affidavit admitted taking two of the
checks totaling $12,345 from Stonybrook customers, but asserted he took the funds as
self-help to satisfy in part the $97,000 he claimed was due on the parties’ oral
agreement, but not contained in the Assert Purchase Agreement. The court found it was
Richland County, Case No. 2010-CA-0145 9
undisputed that Benton had taken the third check because he did not expressly deny
the allegation in his deposition or affidavit.
{¶30} The trial court found the Asset Purchase Agreement contained an
integration clause, and the parol evidence rule barred introduction of any alleged verbal
agreement.
{¶31} The court found the utility bills concerned both current and delinquent
charges, and do not differentiate how much of the bills are due for utility service before
the closing. The court found no party offered any evidence from which it could
determine what portion of the utility service bill was incurred by Stonybrook Cabinet,
and found the agreement provided the buyer would not be responsible or liable in any
way for bills of the seller unless it expressly accepted responsibility for them. The court
found Offenburger and Stonybrook Cabinet Company did not agree to undertake
transfer of utility service accounts out of Jeffrey Allen Industries’ name, and the court
found it was probable that no one but the account’s owner could have transferred the
account to Stonybrook. The court stated it could not break down the bills, and for this
reason, it could not find Offenburger and Stonybrook Cabinet Company would not be
unjustly enriched if appellants paid the entire bills.
{¶32} The trial court concluded it was appropriate to enter summary judgment
against Jeffrey Allen Industries and Benton on all claims against Stonybrook Cabinet
Company and Offenburger. In addition, the court entered summary judgment in favor of
Stonybrook Cabinet Company and against Benton for damages in converting the
customers’ checks in the amount of $17,258, with interest at the statutory rate.
Richland County, Case No. 2010-CA-0145 10
{¶33} Civ. R. 56 states in pertinent part:
{¶34} “Summary judgment shall be rendered forthwith if the pleadings,
depositions, answers to interrogatories, written admissions, affidavits, transcripts of
evidence, and written stipulations of fact, if any, timely filed in the action, show that
there is no genuine issue as to any material fact and that the moving party is entitled to
judgment as a matter of law. No evidence or stipulation may be considered except as
stated in this rule. A summary judgment shall not be rendered unless it appears from
the evidence or stipulation, and only from the evidence or stipulation, that reasonable
minds can come to but one conclusion and that conclusion is adverse to the party
against whom the motion for summary judgment is made, that party being entitled to
have the evidence or stipulation construed most strongly in the party's favor. A summary
judgment, interlocutory in character, may be rendered on the issue of liability alone
although there is a genuine issue as to the amount of damages.”
{¶35} A trial court should not enter a summary judgment if it appears a material
fact is genuinely disputed, nor if, construing the allegations most favorably towards the
non-moving party, reasonable minds could draw different conclusions from the
undisputed facts, Hounshell v. American States Insurance Company (1981), 67 Ohio St.
2d 427, 424 N.E.2d 311. The court may not resolve ambiguities in the evidence
presented, Inland Refuse Transfer Company v. Browning-Ferris Industries of Ohio, Inc.
(1984), 15 Ohio St. 3d 321, 474 N.E.2d 271. A fact is material if it affects the outcome
of the case under the applicable substantive law, Russell v. Interim Personnel, Inc.
(1999), 135 Ohio App. 3d 301, 733 N.E.2d 1186.
Richland County, Case No. 2010-CA-0145 11
{¶36} When reviewing a trial court’s decision to grant summary judgment, an
appellate court applies the same standard used by the trial court, Smiddy v. The
Wedding Party, Inc. (1987), 30 Ohio St. 3d 35, 506 N.E.2d 212. This means we review
the matter de novo, Doe v. Shaffer, 90 Ohio St.3d 388, 2000-Ohio-186, 738 N.E.2d
1243.
{¶37} The party moving for summary judgment bears the initial burden of
informing the trial court of the basis of the motion and identifying the portions of the
record which demonstrate the absence of a genuine issue of fact on a material element
of the non-moving party’s claim, Drescher v. Burt (1996), 75 Ohio St. 3d 280, 662
N.E.2d 264. Once the moving party meets its initial burden, the burden shifts to the
non-moving party to set forth specific facts demonstrating a genuine issue of material
fact does exist, Id. The non-moving party may not rest upon the allegations and denials
in the pleadings, but instead must submit some evidentiary material showing a genuine
dispute over material facts, Henkle v. Henkle (1991), 75 Ohio App. 3d 732, 600 N.E.2d
791.
{¶38} A failure to respond to a motion for summary judgment does not, by itself,
warrant that the motion be granted. Morris v. Ohio Casualty Insurance Co. (1988), 35
Ohio St.3d 45, 47, 517 N.E.2d 904. Even where the non-movant completely fails to
respond to the summary judgment motion, the trial court's analysis should focus on
whether the movant has satisfied its initial burden of showing that reasonable minds
could only conclude the case should be decided against the nonmoving party. Id. Only
then should the court address whether the non-movant has met its reciprocal burden of
establishing that a genuine issue remains for trial. Id.
Richland County, Case No. 2010-CA-0145 12
I & II
{¶39} In their first assignment of error, appellants argue the trial court erred in
finding the disputed agreement was fully integrated. Their second assignment of error
is related, and asserts the trial court erred in not considering Manco’s statement that the
parties had agreed to a further payment, in determining whether the purchase
agreement was fully integrated.
{¶40} Appellants correctly state the parol evidence applies to integrated writings.
Galmish v. Cicchini, 90 Ohio St. 3d 22, 2002-Ohio-7, 734 N.E.2d 782. Appellants assert
parol evidence is admissible to assist the court in determining whether an agreement is
integrated, and whether the integration is complete or partial. Olmsted Manor Skilled
Nursing Center Ltd. v. Olmsted Manor, Ltd., Cuyahoga App. No. 80962, 2002-Ohio-
5457, not reported in the Northeast Reporter.
{¶41} The Olmsted case involved the sale of a nursing home business. The
parties agreed to a purchase price of $5,000,000, and entered into a subsequent
agreement that although the sale was accomplished in September of 1997, the skilled
nursing center would continue to maintain its Workers’ Compensation account and pay
the premiums through the end of 1997. Neither agreement between the parties
anticipated that a few months later, the Bureau of Workers’ Compensation discovered it
had surplus funds and issued a payment for $88,248.40 as a rebate on the premiums
the skilled nursing center had paid in 1997. Olmsted, Ltd. cashed the checks and
refused to give the funds to Olmstead Skilled Nursing Center. The trial court awarded
the rebate to the skilled nursing center, and the court of appeals affirmed, finding neither
party had anticipated the situation.
Richland County, Case No. 2010-CA-0145 13
{¶42} The court of appeals found the agreement regarding the transfer of the
Bureau of Workers’ Compensation account from the seller to the buyer could not be
reviewed without also reviewing the purchase agreement, because obviously the
transfer of the account would not have taken place if the nursing home business itself
had not been sold. Thus, the agreement to transfer the account was not a complete
expression of the agreement between the parties. The court found the purchase
agreement for the nursing home business and the agreement to transfer the Bureau of
Workers’ Compensation account are related documents within a single transaction, and
must be construed together. The court found the agreement to transfer the account
defined only the parties’ relationship with the Bureau and did not contradict the terms of
the agreement to purchase the nursing home. The court found it was clear from the two
documents the Bureau of Workers’ Compensation account agreement was not intended
to supersede any provisions of the purchase agreement. The court found this
interpretation was consistent with the parties’ intentions and with the expressed terms of
the documents. The Court of Appeals for the Eighth District noted the purchase
agreement was only partially integrated, so it can be supplemented by evidence of
consistent addition terms. The additional terms must be interpreted as consistent with
the document unless a contradiction is unavoidable. Olmsted at paragraph 23, citing 2
Restatement of Law, Contracts (1981), 92-93, Section 203(a); Ottery v. Bland (1987),
42 Ohio App. 3d 85, 87, 536 N.E. 2d 651.
{¶43} Appellants argue Manco, who was a party to the purchase agreement,
admitted the purchase agreement was not the full expression of the agreement amongst
the parties. When Manco filed his complaint with the Crawford County Sheriff’s
Richland County, Case No. 2010-CA-0145 14
Department, in an unsworn statement he described an agreement whereby he and his
partner (presumably Offenburger) would escrow $50,000 and pay it out to Benton and
Trimble after a year’s time if the business was as profitable as they had represented
and there were no other issues. Manco had a hand-written memo of the terms of the
agreement, calling it a “side agreement”. Manco told the Crawford County Sheriff the
agreement was made prior to closing, and the parties all knew there would be a check
for $200,000 at the closing. Manco indicated the sellers wanted to have more than
$200,000, but Manco and Offenburger could not meet this and only wanted to borrow
$200,000 from the bank. Manco stated that in addition to the $50,000 escrow, Benton
and Trimble would keep a pickup truck, $11,000 from the Shelb account, a $5,000
deposit from Lutz Custom Homes, and $11,500 from the Rush deposit.
{¶44} Although Manco referred to the agreement as verbal, appellants argue he
had a written memo of the terms. Appellants argue the agreement is admissible
because Manco, a party to the agreement, admitted the parties agreed to additional
terms not written into the Asset Purchase Agreement. Appellants urge because of
Manco’s admission, the parol evidence rule does not apply and the statements are
admissible at least to prove the Asset Purchase Agreement is only partially integrated.
{¶45} Appellants urge Manco’s statements to the Crawford County Sheriff are
admissible under Evid. R. 804 (B)(3). This Rule provides a statement against interest, if
the declarant is unavailable as a witness, is an exception to the hearsay rule.
Appellants argue Manco’s statements to the Sheriff’s Department are contrary to
Manco’s pecuniary interest, such that a reasonable person in Manco’s position would
not have made the statements unless he believed them to be true.
Richland County, Case No. 2010-CA-0145 15
{¶46} Appellants also argue because the exhibits listing the assets to be sold
was not attached to the contract the parties signed, it was clearly not a fully integrated
contract.
{¶47} Appellees reply a written contract which appears to be complete and
unambiguous on its face is presumed to be the final and complete expression of the
parties’ agreement. Deutsch Bank National Trust Company v. Pevarski, 187 Ohio App.
3d 455, 471, 2010-Ohio-785, 932 N.E. 2d 887. The parol evidence rule applies where
the language in the agreement is unclear or ambiguous, but the additional terms sought
to be added must be consistent with the terms in the original document. Appellees
assert appellants are arguing the real sales price was $297,000, clearly inconsistent
with the Asset Purchase Agreement’s statement the purchase price was $200,000.
{¶48} Appellants cite loan documents prepared prior to the closing during the
course of negotiations between Offenburger and the banker. Appellees argue the
documents are excluded by the parol evidence rule, and do not support appellants’
assertion the purchase price was anything other than $200,000. The record contains an
affidavit from Offenburger’s banker, who asserts the documents are all progress notes
made while the parties were “haggling” over the final purchase price. The banker’s
affidavit asserts the notes do not represent a purchase price other than the one signed
by the parties for a final total purchase price of $200,000.
{¶49} In National City Bank of Akron v. Donaldson (1994), 95 Ohio App.3d 241,
642 N.E.2d 58, the Court of Appeals for the 9th Dist. found where there is an integrated
contract, the parties may argue about the meaning of terms in the document or they
may argue they had another agreement in addition to the document at issue. However,
Richland County, Case No. 2010-CA-0145 16
the parol evidence rule bars all evidence contradicting the language in the document.
Donaldson, at 245, citations deleted.
{¶50} Appellees also assert the statements by Manco to the Crawford County
Sheriff are hearsay, and Manco asserted this agreement was made prior to the final
Asset Purchase Agreement. The record shows Manco clearly stated the payment of the
$50,000 was payable only after a year, and conditioned on the business proving to be
profitable as represented. Appellees argue if the statement was made, it referred to a
separate agreement, which does not demonstrate the Asset Purchase Agreement was
not integrated. Likewise, appellees argue because Manco explained it was conditional,
and thus Manco’s statement was not against his pecuniary interest. We agree.
{¶51} We find the proposed evidence violates the parol evidence rule, because it
is offered to contradict, not compliment or supplement the original agreement.
{¶52} The first and second assignments of error are overruled.
III.
{¶53} In their third assignment of error, appellants argue there is a genuine
issue of material fact in whether Offenburger knew of the side agreement to which
Manco referred in his statement to the deputy sheriff. The trial court found there was no
evidence Offenburger assented to or joined in the agreement. Manco’s statement to the
sheriff’s department stated he was in communication with Offenburger throughout the
whole process culminating in the side agreement. In his affidavit Benton stated
Offenburger told him the agreement they signed at closing was “for the bank”, and the
parties would have to amend the Asset Purchase Agreement later to include the
$50,000 later payment and to include the exhibit listing the assets to be sold, which was
Richland County, Case No. 2010-CA-0145 17
not attached to the agreement the parties signed. Benton testified he relied on
Offenburger’s assurance the agreement did not include the final purchase price or a list
of all the items included in the sale.
{¶54} We find it is irrelevant whether Offenburger knew of a side agreement,
because we find the statement made by Manco to the sheriff’s department, and the
other evidence about the alleged side agreement is not admissible to attack the parties’
Asset Purchase Agreement.
{¶55} The third assignment of error is overruled.
IV.
{¶56} In their fourth assignment of error, appellants argue the trial court erred in
finding appellees were not liable for the utility bills charged to appellants’ account. We
agree.
{¶57} The court found there was no evidence from which it could apportion the
utility bills, and so the party whose name is on the account, Jeffrey Allen Industries, was
liable for the total amount. The utility bills in question show the dates of service and the
previous and current billing amounts. The current billing on the electric bill is from April
13 to May 14, all after the March 23 closing. The gas bill shows a balance past due from
May 3 and the current usage amount due on June 1. From this, the court could
determine at least a portion of the bills were for utilities used during the time appellees
were in possession of the premises. We find the trial court was incorrect in finding it had
no evidence from which to determine whether appellees were responsible for any of the
bills.
Richland County, Case No. 2010-CA-0145 18
{¶58} The court found it was “doubtful” whether any person other than Jeffrey
Allen Industries’ owner could have transferred the account over to appellees after the
sale. There is no evidence in the record supporting that finding.
{¶59} Section 2 of the Agreement is entitled “Liabilities Assumed“. The
agreement states on the date of the closing, the buyer agrees to assume and perform
the contracts of the seller listed in Exhibit B. Other than the contracts listed in Exhibit B,
the buyer assumes no liabilities of the seller. Exhibit B is blank. In his deposition
Offenburger stated he believed this section referred to any work in progress and
customer contracts Jeffrey Allen Industries had entered into prior to the sale, but in fact
there were no contracts included in the sale. Offenburger testified he was not involved
with the work at the shop and did not know if Stonybrook completed any work Jeffrey
Allen Industries had begun.
{¶60} Section 15 of the agreement relates to indemnification and states the
seller will indemnify the buyer against all claims, losses, liabilities, damages, costs, and
expenses arising prior to the closing. The agreement does not address how the utilities
are to be transferred or how to apportion the billings if there is a carry-over unpaid
balance. We conclude the agreement does not address the situation with the utility bills
and we find it was not anticipated by the parties. Olmsted, supra.
{¶61} The fourth assignment of error is sustained.
V.
{¶62} In their fifth assignment of error, appellants argue the trial court erred in
finding that in executing the Asset Purchase Agreement and accepting the $200,000
Richland County, Case No. 2010-CA-0145 19
payment at closing, appellants waived any claim for additional payment. The trial court
found accepting performance operates as a waiver of any claim of fraud.
{¶63} In Galmish supra, the Supreme Court discussed the interaction between
the parol evidence rule and allegations of fraud. The court noted the principal purpose
of the parol evidence rule is to protect the integrity of written contracts. Galmish, at 27,
citing Ed Schory & Sons, Inc. v. Society National Bank (1996), 75 Ohio St. 3d 433, 440,
662 N.E. 2d 1074. The court found the parol evidence rule does not prohibit a party
from introducing extrinsic evidence for the purpose of proving fraudulent inducement,
even if the agreement contains an integration clause. Galmish, supra, at 28, citations
deleted.
{¶64} The court went on to hold, however, the parol evidence rule applies in
cases where a party alleges the inducement to sign the writing was a promise, the
terms of which are directly contradicted by the signed writing. This means an oral
agreement cannot be enforced in preference to signed writing which pertains to exactly
the same subject matter, but has different terms. Galmish at 29, citations deleted. The
court explained, “[T]he parol evidence rule will not exclude evidence of fraud which
induced [a party to sign] the written contract. But, a fraudulent inducement case is not
made out simply by alleging that a statement or agreement made prior to the contract is
different from that which now appears in the written contract. Quite the contrary,
attempts to prove such contradictory assertions is exactly what the parol evidence rule
was signed to permit.” Id., citing Shanker Judicial Misuses of Word Fraud to Defeat the
Parol Evidence Rule and the Statute of Frauds (With Some Cheers and Jeers for the
Ohio Supreme Court) (1989), 23 Akron L. Rev. 1.7.
Richland County, Case No. 2010-CA-0145 20
{¶65} In the Galmish case, Galmish acquired certain property under the terms
of the divorce settlement with Cicchini. Two years after the divorce, Galmish gave a
developer an option to purchase the property, but the developer’s interest was
contingent upon its ability to acquire adjacent parcels. The developer contacted
Cicchini and asked for his help to ensure Galmish’s property would be available when
the adjacent parcels’ legal complications were resolved. Cicchini informed the
developer he had either purchased or was going to purchase the property from
Galmish, and he would sell it to the developer when the time came. The developer then
notified Galmish it would not exercise its option to purchase, and informed Galmish she
was free to sell or lease the property.
{¶66} Cicchini then told Galmish if she sold the property to him he would resell
the property to the developer at a better price than she could negotiate. Galmish and
Cicchini agreed Cicchini would purchase the property from Galmish for $765,000 and
re-sell the property to the developer for $1,700,000. The parties agreed to split the
profits. Cicchini subsequently refused to sign the purchase agreement with the
developer, and Galmish sued, arguing Cicchini was attempting to defeat her rights
under their agreement. The jury found in favor of Galmish and awarded her nearly
$1,500,000 in compensatory and punitive damages and attorney fees. This court found
the parol evidence rule barred Galmish’s claim Cicchini fraudulently induced her to sell
the property to him because he never intended to resell the property to developer.
{¶67} The Supreme Court reversed our decision, and reinstated the verdict. The
court found Galmish’s claim was essentially that the resale of the property at a profit
was a condition of the sale to Cicchini, and at the time the parties entered into the
Richland County, Case No. 2010-CA-0145 21
contract Cicchini never intended to resell the property. The Supreme Court found
Galmish’s alleged agreement to resell the property did not contradict or vary the terms
of the written agreement under which she sold the property to Cicchini, and thus was
not barred by the parol evidence rule.
{¶68} Here, appellants argue they were defrauded because they were induced
to sign the Asset Purchase Agreement by appellees’ promise, made before the written
contract was signed, to pay a higher price than that set out in the contract. This certainly
varies and contradicts an essential term of the contract. We find the evidence cannot
be produced to show fraud in inducing Trimble, Benton, and Jeffrey Allen Industries to
sign the contract of sale.
{¶69} The fifth assignment of error is overruled.
VI.
{¶70} In their sixth assignment of error, appellants urge the trial court erred in
entering judgment for appellees on their conversion claim against appellant Benton. The
checks at issue are: from Logan Construction for $7,600; from Kay Rush for $4,745;
and from Lutz Custom Homes for $4,912.50. In his deposition Benton claimed as part of
the side agreement Jeffrey Allen Industries was to keep all three checks, but he only
acknowledged receiving two. The court found Benton had converted all three because
his admission of taking two does not constitute a denial that he took the third. The
record does not contain any evidence that Benton either denied or admitted taking the
third. The court found as such, the undisputed evidence is that Benton took and
converted all three checks.
Richland County, Case No. 2010-CA-0145 22
{¶71} For purposes of summary judgment, if appellees presented evidence
Benton received the third check, then Benton was required to come forward with
evidence disputing this. However, we find no evidence in the record showing Benton
ever received or retained the third check. In his affidavit Offenburger states he was
informed by Manco that Benton had converted thousands of dollars from Stonybrook’s
customers. Offenburger stated he confirmed this and then instructed Manco to report
the theft to the Sheriff’s Department. Offenburger stated in his deposition Manco told
him he “got a letter or something” from Benton saying he had photocopied and was
holding checks belonging to Stonybrook. Attached to appellants’ response to appellees’
motion for summary judgment is a copy of a letter from Benton’s counsel to Offenburger
admitting Benton had received two checks totaling $12,345, the sum of the Rush and
Logan checks.
{¶72} Offenburger’s uncorroborated statements are hearsay and do not support
appellees’ allegation Benton converted the third check. Accordingly, we conclude the
court erred in finding Benton converted the check for $4,912.50 from Lutz Custom
Homes, but correctly found the other two checks, totaling $12,345 were retained by
Benton but rightfully belonged to appellees.
{¶73} The sixth assignment of error is sustained in part and overruled in part.
Richland County, Case No. 2010-CA-0145 23
{¶74} For the foregoing reasons, the judgment of the Court of Common Pleas of
Richland County, Ohio, is affirmed in part and reversed in part, and the cause is
remanded to the court for further proceedings in accord with law and consistent with this
opinion.
By Gwin, P.J.,
Hoffman, J., and
Delaney, J., concur
_________________________________
HON. W. SCOTT GWIN
_________________________________
HON. WILLIAM B. HOFFMAN
_________________________________
WSG:clw 0503 HON. PATRICIA A. DELANEY
[Cite as Jeffrey Allen Industries, L.L.C. v. Manco, 2011-Ohio-2655.]
IN THE COURT OF APPEALS FOR RICHLAND COUNTY, OHIO
FIFTH APPELLATE DISTRICT
JEFFREY ALLEN INDUSTRIES, LLC :
:
Plaintiffs-Appellants :
:
:
-vs- : JUDGMENT ENTRY
:
RONALD J. MANCO, ET AL :
:
:
Defendants-Appellees : CASE NO. 2010-CA-0145
For the reasons stated in our accompanying Memorandum-Opinion, the judgment of
the Court of Common Pleas of Richland County, Ohio, is affirmed in part and reversed
in part, and the cause is remanded to the court for further proceedings in accord with
law and consistent with this opinion. Costs to be split between the parties.
_________________________________
HON. W. SCOTT GWIN
_________________________________
HON. WILLIAM B. HOFFMAN
_________________________________
HON. PATRICIA A. DELANEY