LHPT Columbus, L.L.C. v. Capitol City Cardiology, Inc.
24 N.E.3d 712
Ohio Ct. App.2014Background
- CCC (Capitol City Cardiology) leased medical office space to 2021; shareholders did not sign personal guarantees. LHPT bought the building and became landlord in 2008.
- CCC dissolved in 2010; three physicians (Noble, Sheares, Patel) formed NSP Holdings, LLC and continued occupying the premises. CCC stopped paying after April 1, 2010; NSP paid rent to LHPT from May 2010–Jan 2011.
- CCC shareholders executed a Wind Up Agreement adopting a Plan of Liquidation that contemplated either assignment of CCC leases to each "axis" (group) or negotiation of new leases; an unsigned blank assignment form was attached; the Plan disclaimed third‑party beneficiaries.
- LHPT sued CCC, NSP, and others for breach of the lease (and other claims). At bench trial, the trial court found an assignment (equitable or by conduct), held CCC and NSP jointly liable, and awarded damages and some fees.
- On appeal, the Tenth District reviewed whether (1) the Wind Up Agreement effected an assignment under the statute of frauds, (2) NSP could be held liable by equitable assignment/part performance, and (3) NSP’s rent checks constituted a sufficient memorandum to satisfy the statute of frauds.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Wind Up Agreement/Plan of Liquidation assigned CCC's lease to NSP | LHPT: Plan/Wind Up contemplated assignment to the Columbus axis and the parties treated NSP as assignee | NSP: Plan only contemplated assignment or new lease; assignment required additional signed document (e.g., Exhibit 3C) which was never executed | Wind Up/Plan did not itself accomplish an assignment; first assignment of error sustained |
| Whether NSP is liable via equitable assignment / part performance | LHPT: NSP’s occupancy and rent payments, plus the Plan, show part performance and equitable assignment | NSP: Possession and payments consistent with an informal occupancy arrangement; no acts exclusively referable to an assignment | Part performance doctrine not satisfied; equitable/joint liability unsupportable; second assignment of error sustained in part and otherwise moot |
| Whether the rent checks constitute a signed memorandum satisfying the statute of frauds | LHPT: Checks identify landlord, tenant, premises, and rent — they and the lease together form a sufficient memorandum | NSP: Checks are not signed by the alleged assignor (CCC), mention no assignment, and do not show acceptance of entire unexpired lease term | Rent checks do not satisfy R.C. 1335.04/1335.05 as a memorandum of assignment; third assignment of error sustained |
| Whether LHPT was an intended third‑party beneficiary of the Plan/Wind Up | LHPT: enforcement justified because Plan contemplated assignment affecting landlords | NSP: Plan disclaims third‑party beneficiaries; LHPT is not a party | Plan and Wind Up unambiguously disclaim third‑party beneficiaries; LHPT is not an intended beneficiary |
Key Cases Cited
- Ed Schory & Sons, Inc. v. Breeden, 75 Ohio St.3d 433 (Ohio 1996) (discusses statute of frauds and its purpose)
- Olympic Holding Co., L.L.C. v. ACE Ltd., 122 Ohio St.3d 89 (Ohio 2009) (unenforceability of agreements failing statute of frauds)
- Gholson v. Savin, 137 Ohio St. 551 (Ohio 1941) (assignee becomes principal obligor while assignor remains surety)
- Abraham v. Akron Sausage Co., 34 Ohio App. 285 (Ohio Ct. App. 1927) (Ninth Dist.) (example invoking part performance: occupancy plus rent payments)