Towne Dev. Group, Ltd. v. Hutsenpiller Contrs.
2013 Ohio 4326
Ohio Ct. App.2013Background
- Towne, Hutsenpiller Contractors, W.E. Hines, and Griffin formed HTHG Development Co., Ltd. in 2005 with 33.33% ownership for Towne and Hutsenpiller and approximately 16.67% for Hines and Griffin.
- The operating agreement required members to contribute pro rata for debts and set forth a procedure for indemnification when a member overpays a guaranty.
- HTHG obtained a $5.68 million loan in 2005; all four members signed limited guaranties; Towne and Hutsenpiller each guaranteed 33.33% of the loan, others 16.66–16.67%.
- The bank defaulted the loan in 2009; the loan was assigned to First Financial Bank. Towne settled with First Financial for $1.3 million and assigned most of its HTHG membership interests, preserving claims accruing before the assignment.
- Towne later sought contribution from Hutsenpiller Contractors and Mr. Hutsenpiller, arguing under the operating agreement they owed a share of the settlement; the trial court granted summary judgment for Hutsenpiller.
- The appellate court held that Towne was not entitled to contribution because the operating agreement grants contribution only when a payment is in excess of a member’s pro rata share of the total obligation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Towne may obtain contribution from Hutsenpiller under the operating agreement. | Towne argues the guaranty payments fall within 4.10(b) and that its $1.3M payment is an authorized guaranty. | Hutsenpiller contends contribution is only owed when payment exceeds pro rata share of the total obligation. | Towne is not entitled to contribution; payment did not exceed its pro rata share. |
Key Cases Cited
- Simmons v. Yingling, 2011-Ohio-4041 (12th Dist. Warren No. CA2010-11-117 (Ohio 2011)) (summary-judgment standard and de novo review in contract interpretation)
- Burgess v. Tackas, 125 Ohio App.3d 294 (8th Dist. 1998) (summary judgment standards; material factual disputes)
- Dresher v. Burt, 75 Ohio St.3d 280 (1996) (Dresher: burden on moving party in summary judgment)
- O'Bannon Meadows Homeowners Assn., Inc. v. O'Bannon Properties, L.L.C., 2013-Ohio-2395 (12th Dist. Clermont No. CA2012-10-073) (contract interpretation; intent of parties in operating agreement)
- Foster Wheeler Enviresponse, Inc. v. Franklin Cty. Convention Facilities Auth., 78 Ohio St.3d 353 (1997) (contract interpretation; plain language governs)
- Cooper v. Chateau Estate Homes, L.L.C., 2010-Ohio-5186 (12th Dist. Warren No. CA2012-07-061) (contract interpretation; unambiguous terms control)
- Williams v. McFarland Properties, L.L.C., 2008-Ohio-3594 (12th Dist.) (summary judgment standard and contract interpretation)