2023 Ohio 4813
Ohio Ct. App.2023Background
- Huntington National Bank sued Raymond Schneider for breach of a guaranty agreement related to a $75 million loan for seven senior skilled nursing facilities.
- Schneider signed a guaranty that appeared to make him absolutely and unconditionally liable for repayment of the debt.
- Schneider opposed summary judgment, arguing Huntington concealed adverse facts increasing his risk and that his waiver applied only to known defenses.
- Huntington contended Schneider had waived all defenses and that it owed him no special duty of disclosure.
- The trial court granted summary judgment to Huntington, holding Schneider had waived all defenses and owed only a secondary (guarantor) obligation.
- On appeal, the First District reversed, finding genuine disputes on whether Schneider’s waiver covered unknown defenses and holding that he was a primary obligor (surety), not merely a guarantor.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did Schneider waive all defenses to the guaranty? | Waiver provision covers all defenses | Waiver covers only known defenses | Waiver only applies to known defenses; summary judgment reversed |
| Was Schneider a mere guarantor or a surety (primary obligor)? | He is only a guarantor, so no duty owed | He is a surety, so heightened duty of disclosure applies | Schneider is a surety; Huntington owed duties of disclosure |
| Did Huntington owe a duty to disclose adverse material facts to Schneider? | No duty to disclose, waiver precludes it | Huntington had duty to disclose facts increasing risk | Huntington owed disclosure duty as creditor to a surety |
| Was summary judgment proper given factual disputes on risk and disclosure? | No genuine issues remain, judgment proper | Genuine issues remain regarding knowledge and disclosure duties | Summary judgment reversed; genuine issues remain |
Key Cases Cited
- Grafton v. Ohio Edison Co., 77 Ohio St.3d 102 (Ohio 1996) (standard for granting summary judgment; movant must show no genuine issue of material fact exists)
- Dresher v. Burt, 75 Ohio St.3d 280 (Ohio 1996) (burden-shifting standard in Ohio summary judgment practice)
- Center Ridge Ganley, Inc. v. Stinn, 31 Ohio St.3d 310 (Ohio 1987) (multiple documents in the same transaction may be construed together)
- Madison Natl. Bank v. Weber, 117 Ohio St. 290 (Ohio 1927) (distinguishing sureties from guarantors)
- O’Brien v. Ravenwoods Apartments, Ltd., 169 Ohio App.3d 233 (Ohio Ct. App. 2006) (liability of a guarantor is determined by the terms of the contract)