FirstMerit Bank, N.A. v. Inks
138 Ohio St. 3d 384
| Ohio | 2014Background
- In 2005 Ashland Lakes, Daniel and Deborah Inks, and David and Jacqueline Slyman executed a $3.5M promissory note secured by mortgages and personal guaranties that included cognovit confession-of-judgment clauses.
- After defaults, FirstMerit filed for foreclosure; parties entered successive written forbearance/standstill agreements containing integration clauses requiring written amendments.
- FirstMerit scheduled an auction for March 9, 2011; in early March 2011 bank representatives and the borrowers negotiated potential terms to avoid sale, including a term sheet requiring a $200,000 deposit and a written forbearance agreement.
- The borrowers claim an oral agreement was made reducing the deposit to $150,000 and promising to release the mortgage; the bank disputes this and required a written agreement. The auction proceeded and resulted in a deficiency judgment by confession.
- The borrowers moved for relief from judgment under Civ.R. 60(B), asserting the alleged oral forbearance/settlement as a defense and seeking to file a counterclaim to enforce it; the trial court denied relief as barred by the statute of frauds, the appellate court reversed, and this Court granted review.
Issues
| Issue | FirstMerit (Plaintiff) Argument | Inkses & Slymans (Defendants) Argument | Held |
|---|---|---|---|
| Whether R.C. 1335.05 (statute of frauds) bars asserting an oral agreement involving an interest in land as a defense to defeat a written-contract judgment | R.C. 1335.05 bars enforcement of oral agreements concerning interests in land regardless of procedural vehicle; a Civ.R. 60(B) motion seeking to enforce such an oral agreement is effectively an action barred by the statute | The statute bars only affirmative suits; raising the oral agreement as a defense in a Civ.R. 60(B) motion is not a separate "action" and thus is not barred | The statute of frauds bars enforcement of oral agreements involving land as either claim or defense; defendants cannot rely on the oral agreement in Civ.R. 60(B) relief |
Key Cases Cited
- Finch v. Finch, 10 Ohio St. 501 (1860) (statute of frauds bars enforcing oral agreements as either claim or defense)
- Reinheimer v. Carter, 31 Ohio St. 579 (1877) (answer relying on an unwritten agreement subject to statute of frauds is insufficient)
- Webb’s Admr. v. Roff, 9 Ohio St. 430 (1859) (mortgage is a conveyance within the statute of frauds)
- Hummel v. Hummel, 133 Ohio St. 520 (1938) (agreements not complying with statute of frauds are unenforceable)
- Olympic Holding Co., L.L.C. v. ACE Ltd., 122 Ohio St.3d 89 (2009) (reaffirming that noncomplying agreements are unenforceable)
- Sherman v. Haines, 73 Ohio St.3d 125 (1995) (oral settlement agreement concerning an interest in land violates statute of frauds and may be disallowed)