KeyBank, N.A. v. MRN Ltd. Partnership, 2011 Ohio 1934

KeyBank, N.A. (as trustee) and related appellants claim an ownership interest in the McCrory Building under a ground lease and sublease, while MRN, MFG, and 2063 contend they own the building.
The ground lease expired March 31, 2005; the sublease expired February 28, 2005, with a buyout option for the lessee under paragraph 20 of the sublease.
Paragraph 20 allowed the lessee to purchase the lessor’s interest for $100 if the lessor failed to give written notice by February 14, 2005; purchase had to occur by February 28, 2005 upon written election and payment of rents due.
The parties engaged in extensive negotiations and transactions from 1998–2005; MRN/MFG acquired the landowner–lessor and sublessee interests; appellants continued to receive rents under the sublease for a period.
In 2005, MRN/MFG/2063 asserted ownership and argued for equitable relief for failure to timely exercise the option; the trial court found equitable relief potentially applicable but reserved a ruling on ownership until trial.
A bench trial determined that 2063 was entitled to equitable relief and thus the sole owner of the building; the court granted amendment of pleadings on the trial date, allowed discovery, and ruled against the appellants on their partial summary judgment, finding genuine issues of material fact resolved in favor of 2063 through equity.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Did the trial court err in denying summary judgment to appellants?	KeyBank argued no enforceable option; questions of fact remained.	2063/MRN/MFG contended equitable relief and ownership should be confirmed.	No reversible error; issues of fact existed as to equitable relief.
Was the amendment of pleadings to include equitable relief proper on the day of trial?	Amendment was untimely and prejudicial to appellants.	Amendment was warranted; liberal policy toward amendments applies since equitable relief was central to the case.	The trial court did not abuse discretion; amendment proper.
Whether appellees were entitled to equitable relief to avoid forfeiture for late exercise of the option?	Failure to timely exercise option barred ownership; no equity.	Equitable relief justified due to honest mistake and substantial improvements; no prejudice to appellants.	-appellees entitled to equitable relief; they are the sole owners.
Did the court correctly apply the statute of frauds to bar a verbal transfer of ownership?	Statute of frauds requires writing; oral agreement cannot transfer ownership.	Oral agreement used to justify equitable relief, not as a transfer; no improper reliance.	Statute of frauds not violated; equity permits consideration of oral agreement for relief purposes.

Continental Ins. Co. v. Whittington, 71 Ohio St.3d 150 (1994) (mootness of denial of summary judgment if trial shows genuine issues; harmless error rule for equity decisions)
Ward v. Washington Dist., Inc., 67 Ohio App.2d 49 (1980) (equitable relief for late notice where failure due to honest mistake and no prejudice)
Vivi Retail, Inc. v. E&A N.E. Ltd. Partnership, 2008-Ohio-4705 (8th Dist. No. 90527) (equitable relief to avoid forfeiture where failure to renew occurs with honest mistake and no prejudice)