2010 Ohio 6513
Ohio Ct. App.2010Background
- G.R.P.L. Enterprises, Inc. (GRPL) contracts to sell land in Fox Den; Russo Builders Unlimited, Inc. has a right of first refusal to build on GRPL lots.
- Gennaro Russo is a shareholder of GRPL and of Russo Builders; he sought to enforce personal damages arising from the Sethis hiring another contractor for an adjacent addition.
- Sethis contracted with GRPL; contract stated Russo shall have the first right of refusal to build the residence on the Sethis' lot.
- GRPL sued for damages; during discovery Russo admitted no damages and that Russo Builders, not Russo personally, was designated to provide construction services.
- Russo, individually, tried to pursue third-party beneficiary status; GRPL denied that Russo was an intended beneficiary; the case proceeded to bench trial after GRPL dismissed claims with prejudice.
- Trial court granted Civ.R. 41(B)(2) involuntary dismissal in favor of the Sethis; judgment was final under Civ.R. 54(B) despite not disposing of a counterclaim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Russo was an intended third-party beneficiary to the contract | Russo contends he is the intended third-party beneficiary due to the first right of refusal. | Sethis argue Russo is not an intended beneficiary; Russo is an agent/shareholder with no personal enforceable rights. | Russo not an intended third-party beneficiary; dismissal affirmed. |
Key Cases Cited
- J.G. Wentworth L.L.C. v. Christian, 7th Dist. No. 07 MA 113, 2008-Ohio-3089 (7th Dist. 2008) (defines intended beneficiary standard)
- Sony Electronics, Inc. v. Grass Valley Group, Inc., 2002-Ohio-1614 (1st Dist. 2002) (intended beneficiary determined by contract purpose)
- Seasons Coal Co., Inc. v. Cleveland, 10 Ohio St.3d 77, 461 N.E.2d 1273 (Ohio 1984) (limits third-party beneficiary rights to intended beneficiaries)
- First Nat. Bank of New Bremen v. Burns, 88 Ohio St. 434, 103 N.E. 93 (Ohio 1913) (agency principle; agent acts in principal's shoes)
- Adair v. Wozniak, 23 Ohio St.3d 174, 492 N.E.2d 426 (Ohio 1986) (corporate separate entity; shareholder cannot recover as beneficiary)
- LeRoux's Billyle Supper Club v. Ma, 77 Ohio App.3d 417, 602 N.E.2d 685 (Ohio App. 1991) (corporation distinct from shareholders; ownership does not confer beneficiary status)
- McCullion v. Ohio Valley Mall Co., 7th Dist. No. 97 C.A. 175, 2000 (Ohio App. 2000) (incidental vs. intended beneficiary distinction)
- Grant Thornton v. Windsor House, Inc., 57 Ohio St.3d 158, 566 N.E.2d 1220 (Ohio 1991) (intent to benefit the third party governs enforceability)
- Visintine & Co. v. New York, C & St. L. R. Co., 169 Ohio St. 505, 9 O.O.2d 4, 160 N.E.2d 311 (Ohio 1959) (duty-based analysis for beneficiary status)
- Martin v. Lake Mohawk Property Owner's Assn., 7th Dist. No. 04 CA 815, 2005-Ohio-7062 (Ohio 7th Dist. 2005) (appellate deference to trial court on Civ.R. 41(B)(2) issues)
- Miller-Yount Paving, Inc. v. Freeman Cargo Carrier, Inc., 7th Dist. No. 98 C.A. 226, 2000 (Ohio 7th Dist. 2000) (legal standard for reviewing discharge of claims)