Lucas v. Reywal Co. Ltd. Partnership
118 N.E.3d 505
Ohio Ct. App.2019Background
- Reywal Co. (a limited partnership) executed a binding purchase agreement on June 24, 2013 to sell 28 acres (Sawmill Road Property) to LRC for $5,000,000. Closing was delayed by detachment litigation.
- Plaintiffs (limited partners) sued for dissolution and requested a receivership; William Newman (general partner) was a defendant. Kenneth Gamble was appointed Receiver on May 30, 2014.
- The partners settled most claims in February 2017; the purchase agreement remained the sole disputed asset in the receivership.
- The Receiver sought court guidance after receiving a higher third-party offer (~$900,000 more) but fearing liability for breaching the existing contract; LRC intervened and continued to perform under the contract (made a deposit).
- At a June 7, 2017 hearing, counsel for Newman reported the third-party offer had been rescinded; the trial court directed the Receiver to proceed with the preexisting purchase agreement.
- Newman appealed, arguing the trial court should have applied R.C. 2735.04(D)(1)(a) and made statutory findings before authorizing the sale.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court erred by ordering the Receiver to proceed with LRC's purchase agreement without first determining the sale met R.C. 2735.04(D)(1)(a) (i.e., was fair, reasonable, and maximized return) | Newman: court had to apply R.C. 2735.04(D)(1)(a) and take evidence to determine the sale method would maximize return to the receivership | LRC/Receiver: statute does not govern enforcement of a fully executed pre-receivership purchase agreement; retroactive application is barred and the court acted within its discretion to enforce the contract | Court held R.C. 2735.04(D)(1)(a) did not nullify a binding pre-receivership contract; retroactive application would impair contracts; trial court did not abuse discretion in ordering the Receiver to proceed and the judgment was affirmed |
Key Cases Cited
- Gen. Acc. Ins. Co. v. Ins. Co. of N. Am., 44 Ohio St.3d 17 (Ohio 1989) (Civ.R. 54(B) language does not affect finality when remaining issues are moot)
- Aetna Life Ins. Co. v. Schilling, 67 Ohio St.3d 164 (Ohio 1993) (statutes cannot be applied retroactively to nullify preexisting contractual rights)
- Ross v. Farmers Ins. Group of Cos., 82 Ohio St.3d 281 (Ohio 1998) (rights and duties under a contract are governed by law in effect when contract was made; later statutes cannot alter binding terms)
- McGee v. C & S Lounge, 108 Ohio App.3d 656 (Ohio Ct. App. 1996) (abuse-of-discretion standard explained)