BAS Broadcasting, Inc. v. Fifth Third Bank
110 N.E.3d 171
Ohio Ct. App.2018Background
- BAS Broadcasting (majority-owned by Thomas Klein) sought to refinance a $7.4M Gladstone loan using an SBA-backed loan in late 2013.
- BAS received an SBA-backed offer from Huntington that could close by Dec 30, 2013; BAS then solicited Fifth Third for potentially better terms.
- Fifth Third (via VanHeyst and Gerken) offered a $5M term loan but stated it would submit the loan without using Fifth Third’s SBA "preferred lender" status, warning this could delay approval and "may not meet your needs."
- BAS chose Fifth Third over Huntington based on better terms; Fifth Third submitted the SBA guarantee request, but the SBA later denied the guarantee in March 2014 for underwriting reasons.
- BAS closed with Huntington thereafter and sued Fifth Third for breach of contract and fraud in the inducement (later pursuing only fraud). The trial court granted summary judgment for Fifth Third; BAS appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Fifth Third owed a duty to disclose details about not using preferred lender status | Fifth Third had a duty to disclose that submitting without preferred status exposed the loan to greater scrutiny and risk of denial | No fiduciary or special relationship existed; ordinary arm’s-length banking relationship imposes no such disclosure duty | No duty to disclose as a matter of law; ordinary banking relationship, so no fiduciary duty |
| Whether Fifth Third made knowingly false or recklessly false statements inducing reliance | Statements (e.g., that the loan "may not meet your needs") were intentionally deceptive and induced BAS to forego Huntington | Fifth Third reasonably believed approval would occur and had no reason to believe the SBA would deny the request; statements were opinions, not fraudulent misrepresentations | No evidence Fifth Third knew or recklessly disregarded falsity; mere mistaken optimism is not fraud |
| Whether BAS justifiably relied and suffered proximate injury from any fraudulent inducement | BAS relied on Fifth Third representations and incurred harm by losing the Huntington deal terms and closing under less favorable timing | Reliance was unjustified where BAS knew Huntington’s approval existed and was informed Fifth Third might be delayed; BAS had opportunity to protect itself | Reliance not supported because BAS had notice and opportunities; summary judgment for Fifth Third affirmed |
| Whether genuine issue of material fact existed to avoid summary judgment | Factual disputes (oral assurances, meetings) required jury resolution | Evidence was undisputed on key points (notice about preferred status; no history of SBA denials); law favors no fiduciary duty and no fraudulent intent | No genuine dispute material to elements of fraud; summary judgment appropriate |
Key Cases Cited
- Comer v. Risko, 106 Ohio St.3d 185 (Ohio 2005) (standard of review for summary judgment)
- Bostic v. Connor, 37 Ohio St.3d 144 (Ohio 1988) (summary judgment test under Civ.R. 56)
- Bender v. Logan, 76 N.E.3d 336 (Ohio 2016) (elements and clear-and-convincing standard for fraudulent inducement)
- Volbers-Klarich v. Middletown Mgt., Inc., 125 Ohio St.3d 494 (Ohio 2010) (fraudulent inducement elements cited)
- Groob v. KeyBank, 108 Ohio St.3d 348 (Ohio 2006) (debtor-creditor relationship does not generally create fiduciary duty)
- Umbaugh Pole Bldg. Co. v. Scott, 58 Ohio St.2d 282 (Ohio 1979) (special trust required to create fiduciary relationship)
- Blon v. Bank One, 35 Ohio St.3d 98 (Ohio 1988) (arm’s-length business transactions generally impose no duty to disclose)