Fordyce v. Hattan
141 N.E.3d 574
Ohio Ct. App.2019Background
- Seller Fordyce hired broker Hattan/Acquisition Services to market Fordyce Finishing Co.; Couch was the buyer.
- June 2010 letter of intent and later Asset Purchase Agreement (APA) contemplated $1.9M sale with $515,000 seller-financing "to comply with the Purchaser’s banks’ requirements."
- Huntington Bank required financing conditions; Huntington sought a full-term standby agreement subordination; Fordyce signed a Statement of Intent and later a Standby Creditor’s Agreement subordinating his payments to Huntington.
- At closing (Nov. 19, 2010) Couch executed a Huntington note ($1,128,000) and a subordinated Seller Note to Fordyce; post-closing a separate Consulting Agreement was signed providing $515,000 to Fordyce on delayed/conditional terms (a perceived “work‑around”).
- Payments under the Consulting Agreement began after two years but stopped after Huntington discovered them and warned they violated the Standby Agreement; Fordyce sued Hattan in 2016 for negligent and fraudulent misrepresentation and for return of commission.
- Trial court granted summary judgment for Hattan; on appeal the court affirmed, holding no justifiable reliance and that the claims were time-barred.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Fordyce justifiably relied on Hattan's alleged assurance that Seller Note payments would begin after two years | Fordyce: Hattan told him standby was formality and payments would begin in two years; Fordyce relied on that | Hattan: He only gave general possibilities lenders follow; documents contradicted any assurance so reliance was unjustified | No justifiable reliance — summary judgment for Hattan |
| Whether Hattan, as broker/agent, had an affirmative duty to disclose the full-term standby agreement such that omission supports fraud | Fordyce: Hattan, as agent/fiduciary, had duty to disclose material facts (standby) and failure rendered sale agreements fraudulent | Hattan: No duty to override written documents or attorneys’ roles; omissions insufficient where documents and counsel existed | Court treated agency context but found written agreements and attorney warnings made reliance unjustified |
| Whether negligent misrepresentation claim is timely | Fordyce: Claims timely under discovery; argued he discovered misrepresentation later | Hattan: Misrepresentations occurred at closing (2010); 4-year statute applies and expired by 2014 | Accrual at latest on closing; negligent misrepresentation barred by four-year statute of limitations |
| Whether fraudulent misrepresentation claim is timely under the discovery rule | Fordyce: Discovery occurred later when payments were made/stopped; suit filed within 4 years of discovery | Hattan: Conflict in documents at closing was enough to put Fordyce on inquiry notice earlier | Court: Constructive knowledge from conflicting documents and attorney warnings meant Fordyce should have inquired at closing; claim time‑barred |
Key Cases Cited
- Harless v. Willis Day Warehousing Co., 375 N.E.2d 46 (Ohio 1978) (summary judgment standard)
- Field v. Mans, 516 U.S. 59 (1995) (justifiable reliance focuses on plaintiff’s characteristics and circumstances)
- Preferred Capital, Inc. v. Power Eng. Group, Inc., 860 N.E.2d 741 (Ohio 2007) (signatory is bound by contract he willingly signed)
- Cundall v. U.S. Bank, 909 N.E.2d 1244 (Ohio 2009) (discovery rule: facts that would lead a reasonable person to inquire start the limitations period)
- Investors REIT One v. Jacobs, 546 N.E.2d 206 (Ohio 1989) (fraud discovery rule governs accrual of fraud claims)
- ABM Farms v. Woods, 692 N.E.2d 574 (Ohio 1998) (axiom that one must read what one signs)