Consolo v. Menter
2011 Ohio 6241
Ohio Ct. App.2011Background
- Consolo and Menter were business partners in a credit card processing venture; Menter operated the business, Consolo owned a membership, and both participated in operation.
- They disputed alleged fraud and diverted funds; Consolo claimed Menter wrongfully kept hundreds of thousands due to him.
- Prior to trial, the parties settled; Consolo agreed to relinquish ownership in exchange for a payment, and a consent judgment for $500,000 was prepared.
- After settlement, Menter stopped making monthly payments; Consolo filed the consent judgment on December 9, 2009.
- Menter moved to enforce the settlement and to vacate the judgment under Civ.R. 60(B); the trial court held a hearing on February 16, 2010.
- The trial court ultimately found Menter’s escrow of $5,000 monthly payments noncompliant but not a breach, voided the consent judgment, and denied the Civ.R. 60(B) motion as moot; on appeal, the court reversed and remanded for clarification of the settlement amount.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Menter’s escrow of payments breached the settlement. | Consolo contends escrow breached the settlement. | Menter argues noncompliance was nonmaterial and nonbreaching. | Yes; Menter’s escrow breached the payment terms. |
| Whether the $500,000 consent judgment was an unenforceable penalty. | Consolo argues the consent judgment reflected a valid amount for breach. | Menter contends the parties settled for $270,000; the $500,000 figure was a penalty. | The trial court erred; amount ambiguous, but the consent judgment was not unenforceable as a penalty; remand for settlement amount determination. |
Key Cases Cited
- Rulli v. Fan Co., 79 Ohio St.3d 374 (Ohio 1997) (elements of breach of settlement enforceable under contract law; preponderance of the evidence required)
- Textron Fin. Corp. v. Nationwide Mut. Ins. Co., 115 Ohio App.3d 137 (Ohio App. Dist. 1996) (breach elements; contract interpretation standard)
- Garofalo v. Chicago Title Ins. Co., 104 Ohio App.3d 95 (Ohio App. Dist. 1995) (contract enforceability; interpretation of settlement terms)
- Lake Ridge Academy v. Carney, 66 Ohio St.3d 376 (Ohio 1993) (penalty versus liquidated damages analysis for stipulated damages)
- Samson Sales, Inc. v. Honeywell, 12 Ohio St.3d 27 (Ohio 1984) (criteria for distinguishing liquidated damages from penalties; intent and reasonableness)