Baltes Commercial Realty v. HarrisonBaltes Commercial Realty v. Harrison
Rendered on the 6th day of November, 2009.
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LAURENCE A. LASKY, Atty. Reg. No. 0002959, 130 West Second Street, Suite 830, Dayton, Ohio 45402
Attorney for Plaintiffs-Appellees
WORRELL A. REID, Atty. Reg. No. 0059620, 6718 Loop Rd., No. 2, Centerville, Ohio 45459
Attorney for Defendants-Appellants
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FROELICH, J.
{¶ 1} Darryl Harrison appeals from a judgment of the Montgomery County Court of Common Pleas, which affirmed the magistrate‘s decision finding, after a trial, that Harrison and 4A Capital Group (“4A“) were jointly and severally liable to Yankee Business Centre Ltd. in the amount of $61,836.10. Harrison alleges that the court erred in finding
I
{¶ 2} On August 30, 2006, Yankee and 4A entered into a commercial lease whereby 4A would rent approximately 6,000 square feet of space located at 8150 Washington Village Drive within the building known as Yankee Business Centre. Baltes Commercial Realty is the managing agent for Yankee Business Centre and has an ownership interest in the property. According to the lease, 4A‘s rent during the first year was $5,500 pеr month. 4A also agreed to pay outstanding sums due from a Greenline Capital Funding lease in the amount of $1,287.93 per month. The lease was signed by Katherine Stanton for Yankee and by Harrison as President of 4A. Specifically, the signature lines showed:
“LESSOR: Yankee Business Centre, LTD.,
“an Ohio limited liability company
“Katherine Stanton [signature]
“By: Katherine Stanton [printed handwriting]
“Its: Property Manager [printed handwriting]
“LESSEE: 4A Capital Group, LLC, an Ohio
“limited liability company
“Daryl Harrison [signature] 4A Capital Group LLC [printed handwriting]
“By: Daryl Harrison [printed handwriting]
“Its: President 4A Capital Group LLC [printed handwriting]”
{¶ 3} On November 22, 2006, Yankee brought suit against Harrison and 4A,
{¶ 4} In their Answer, Harrison and 4A asserted as affirmative defenses that Harrison had been misjoined and that the complaint constituted “[s]lander of Defendant, Darryl Harrison‘s good name by calling him a ‘Guarantor’ which is fictitious, denoted his personal liability, and which was intended to ruin his credit in the financial industry.”
{¶ 5} In December 2006, a trial was held before a magistrate on Yankee‘s claim for a writ of restitution, after which the magistrate granted restitution of the property to Yankee. The case remained active due to Yankee‘s pending claim for damages.
{¶ 6} In January 2007, Harrison moved to dismiss the claim against him, arguing that he signed the lease as President of 4A, a limited liability company, that Yankee made no allegations against him regarding a guaranty, and that such a claim is not supported by the statute of frauds because there is no written guaranty agreement. He supported his motion with an affidavit, in which he stated that he signed the lease in his capacity as President of 4A and that it was not agrеed that he would be personally responsible for the payment of any debt which might arise pursuant to the lease. Yankee opposed Harrison‘s motion, arguing that the “corporate veil” may be pierced and dismissal at that juncture would be premature.
{¶ 7} Because Harrison had supported his motion with an affidavit, the magistrate
{¶ 8} On September 27, 2007, the magistrate granted summary judgment to Harrison, stating that no facts had been submitted to refute Harrison‘s affidavit. That day, which was the scheduled trial date, the magistrate held a hearing during which the guaranty was apparently presented and entered into evidence. The record does not include a transcript for this hearing, and the nature of the hearing is not clear from the recоrd.
{¶ 9} Yankee filed objections to the magistrate‘s ruling and moved for a new trial. It stated that a guaranty document was presented at the restitution trial, and the document should have been in the original trial documents that the court reviewed. In response, Harrison argued that the complaint did not put him on notice that his “personal guarantee” was an issue in the case, that Yankee did not request to pierce the corporate veil in its complaint, and that Yankee failed to state a claim against him. Treating Yankee‘s motion as a motion for reconsideration, the magistrate noted that the guaranty “has been misplaced and was not included in the Court‘s file.” Thus, in the interests of justice, the magistrate vacated its decision granting summary judgment to Harrison and stated that the motion would be reconsidered. Harrison objected to the magistrate‘s decision granting the motion for rеconsideration. The trial court overruled Harrison‘s objection. There is no indication in the record that the magistrate ever “re-ruled” on the motion for summary judgment prior to the trial on the merits.
{¶ 10} Trial on Yankee‘s damages claim was held before the magistrate on April 2, 2008. Before the presentation of testimony, Harrison‘s counsel asked the magistrate to
{¶ 11} During the trial, thе magistrate heard evidence from Stanton (the signatory for Yankee) about 4A‘s obligations under the lease and the company‘s default from October 2006 until July 2007, when the property was leased to new tenant. When Stanton was asked about the preparation of a guaranty, Harrison‘s counsel objected to testimony regarding the guaranty on the grounds that it was not pled in the complaint and he would have negotiated the case differеntly had he known it was an issue in the case. The magistrate overruled Harrison‘s counsel‘s objection and allowed Yankee‘s counsel to ask Stanton about the guaranty. Stanton identified a guaranty signed by Harrison and testified regarding the preparation and signing of that agreement. The guaranty was admitted into evidence over Harrison‘s counsel‘s objection.
{¶ 12} On April 25, 2008, the magistrate granted judgment for Yankee and against Harrison and 4A, and awarded dаmages, jointly and severally, in the amount of $62,836.10. As to Harrison, the magistrate stated: “[I]t is undisputed that Darryl Harrison read the guaranty, understood it and subsequently signed it with the intention of binding himself personally to the terms of the guarany. No testimony was offered to establish he was
{¶ 13} Harrison objected to the magistrate‘s decision, claiming that the Complaint did not allege any type of guaranty and did not put him on notice that his “personal guarantee” was an issue in the case. Harrison also asserted that the magistrate‘s decision treated him as a surety, not a guarantor, and that the guaranty was signed by Harrison in his corporate capacity.
{¶ 14} The trial court overruled Harrison‘s objections and adopted the magistrate‘s decision. With respect to the guaranty, the trial court found:
{¶ 15} “In the case at bar, Harrison argues that Plaintiffs’ Commercial Complaint in Forcible Entry and Detainer does not refer to the Guaranty and did not put Harrison on notice that Plaintiffs sought to hold him personally liable.
{¶ 16} “***
{¶ 17} “Harrison argues that he signed the guaranty in his capacity as president of
{¶ 18} Harrison appeals from the trial court‘s judgment, raising two assignments of error.
II
{¶ 19} Harrison‘s first assignment of error states:
{¶ 20} “THE DECISION, ORDER AND ENTRY OVERRULING DEFENDANT‘S OBJECTIONS TO MAGISTRATE‘S DEICISON; AFFIRMING MAGISTRATE‘S DECISION IS CONTRARY TO LAW BECAUSE THE COMPLAINT DID NOT GIVE DEFENDANT HARRISON SUFFICIENT NOTICE THAT HE WAS BEING SUED AS A GUARANTOR, AND THAT HE WOULD BE HELD PERSONALLY LIABLE FOR THE DEBTS OF THE LIMITED LIABILITY CORPORATION.”
{¶ 21} In his first assignment of error, Harrison claims that the trial court erred in granting judgment against him in his individual capacity, because the Complaint did not allege the existence of a guaranty, did not raise the guaranty as an issue in the case, and the guaranty was not attached to the Complaint. Harrison asserts that the Complaint alleged only breach of a lease agreement and not a claim based on a guaranty.
{¶ 22} As in the trial court, Yankee responds that the complaint sufficiently put Harrison on notice that it was pursuing him in his individual capacity based on the guaranty. Yankee notes that Harrison‘s Answer claims that Yankee slandered him by referring to him as a guarantor. Yankee further contends that Harrison was given notice of the claim basеd on the guaranty at various hearings before the magistrate.
{¶ 23}
{¶ 24} Yankee‘s Complaint alleges, in its entirety:
{¶ 25} ”COUNT ONE
{¶ 26} “1. Plaintiff is the landlord of the commercial premises located at 8150 Washington Village Drive and described below Defendant‘s name in the above caption, and Defendant presently operates a business therein. The Lease for said premises is attached hereto as Plaintiff‘s Exhibit 1.
{¶ 27} “2. Plaintiff [sic] has failed to pay the required rental for said premises and is now in arrears in the amount of FOURTEEN THOUSAND ONE HUNDRED FIFTY DOLLARS AND 86/100 ($14,150.86).
{¶ 28} “3. Defendant refuses to leave said premises and surrender possession thereof.
{¶ 29} ”COUNT TWO
{¶ 30} “4. Plaintiff restates all the allegations above herein.
{¶ 31} “5. Plaintiff asks for a money judgment in the amount claimed above of $14,150.86 plus back reasonable rental value and damages and all other rent and damages and repair costs up to and including the time the Defendant vacates the premises.
{¶ 32} ”WHEREFORE, Plaintiff prays for restitution of said premises; for reasonable rental value and repair costs at the conclusion of the case.
{¶ 33} “If you are depositing rent with the Clerk of this Court, you shall continue to deposit such rent until the time of the court hearing. The failure to continue to deposit such rent may result in your eviction. You may request a trial by jury. You have the right to seek legal assistance. If you cannot afford a lawyer, you may contact your local Legal Aid or legal services office. If nоne is available, you may contact your local Bar Association.
{¶ 34} “This is an attempt to collect a debt. Any information given will be used for that purpose.
{¶ 35} “[Attorney signature and address]
{¶ 36} “The amount stated in the Complaint is presumed to be correct unless an Answer is filed within thirty (30) days.”
{¶ 37} Nothing in the body of Yankee‘s Complaint suggests that Harrison had been sued in his individual capacity. The Complaint refers to “Defendant” in the singular, not to Defendants, and alleges that Defendant operаtes a business at 8150 Washington Village Drive pursuant to a lease agreement, which was attached to the Complaint. The lease indicated that it was entered into by and between Yankee and 4A; Harrison signed the lease
{¶ 38} Nor can Yankee rely on the caption of its Complaint to assert that it has stated a claim against Harrison. The caption identifies the defendants as “DARRYL HARRISON AND DARRYL HARRISON d/b/a 4A CAPITAL GROUP, LLC AND ALL OTHERS, 8150 Washington Village Drive, Dayton, OH 45459, Guarantor/Defendant(s).” Although Harrison is named separately (along with “all others“) and the group is identified as “guarantor/defendant(s),” the caption of the Complaint does not control the nature of the claims. Morris v. Children‘s Hosp. Med. Ctr. (1991), 73 Ohio App.3d 437, 440-41. “It is, instead, the substance of the pleading that determines its operative effect.” Id. In the absence of any allegations in the body of the Complaint that Harrison was being sued in an individual capacity as a guarantor of 4A‘s debt, Harrison was not put on notice by the Complaint that Yankee was raising that claim against him.
{¶ 39} Yankee emphasizes that its claim against Harrison based on the guaranty was raised numerous times before the trial court and, thus, Harrison had actual knowledge of Yankee‘s intent to raise that issue.
{¶ 40}
{¶ 41} “When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the
{¶ 42} In order for an objecting party to prevent the amendmеnt of a pleading under
{¶ 43} A trial court‘s decision on whether to allow the amendment of a pleading is reviewed for an abuse of discretion. State ex rel. Askew v. Goldhart (1996), 75 Ohio St.3d 608, 610. An abuse of discretion connotes more than a mere error of law or judgment; it implies an attitude on the part of the trial court that is arbitrary, capricious, or unconscionable. Blakemore v. Blakemore (1983), 5 Ohio St.3d 217, 219.
{¶ 44} At the April 2, 2008, trial, Harrison‘s counsel objected to testimony regarding the guaranty, stating:
{¶ 45} “Your Honor, this Complaint is about a breach of a Lease. It looks like maybe six – five paragraphs – Attorney Lasky is trying to introduce a Guaranty. Pursuant to the Rulеs of Civil Procedure, one, the Guaranty had to be attached to the Complaint to put my client on notice.
{¶ 46} “Also, suretyship has to be pled specifically. There is absolutely nothing said on the Complaint about a Guaranty. And if in the beginning I knew that a Guaranty was at issue, I would have taken a very different view in regards to how we should negotiate this case. But because it wasn‘t attached and we had absolutely no notice, you know, it would be unfair to intrоduce a Guaranty at this stage.”
{¶ 47} Yankee‘s counsel responded that the Complaint identified the defendants as “Darryl Harrison and Darryl Harrison, dba 4A Capital Group, LLC.” He asserted that the issue of the guaranty had been raised in prior hearings, including the original restitution hearing.
{¶ 48} Although Yankee did not expressly ask to amend its complaint to include a claim against Harrison as guarantor, that motion was implicit in Yankee‘s argument that Harrison had been аware of its claim against him individually based on the guaranty and that proceeding on the guaranty issue would not prejudice him. By permitting Yankee to introduce evidence on the guaranty issue, the magistrate allowed Yankee to amend its pleading, in accordance with
{¶ 49} We conclude that the magistrate did not abuse her discretion when she permitted Yankeе to try a claim against Harrison individually based on the guaranty. In its
{¶ 50} The first assignment of error is overruled.
III
{¶ 51} Harrison‘s second assignment of error states:
{¶ 52} “THE DECISION, ORDER AND ENTRY OVERRULING DEFENDANT‘S OBJECTIONS TO MAGISTRATE‘S DECISION; AFFIRMING MAGISTRATE‘S DECISION IS CONTRARY TO LAW BECAUSE THE GUARANTY WAS NOT SIGNED IN ACCORDANCE WITH THE OHIO STATUTE OF FRAUDS, AND WAS THUS INEFFECTIVE TO HOLD DEFENDANT HARRISON PERSONALLY LIABLE.”
{¶ 53} In his second assignment of error, Harrison asserts that the trial court erred in
{¶ 54} “Generally, a party signing a contract as a corporate officer is not individually liable. However, if a corporate officer executes an agreement in a way that indicates personal liability, then that officer is personally liable regardless of his intention. Whether a corporate officer is personally liable upon a contract depends upon the form of the promise and the form of the signature.” Spicer v. James (1985), 21 Ohio App.3d 222, 223 (internal citations omitted).
{¶ 55} When an officer of a company signs his or her namе along with the name of her corporate title, “the general rule of interpretation governing this kind of signature is that such words as ‘president’ are merely descriptive of the character or capacity of the person signing the document,” and the individual signing the guaranty cannot deny personal liability if the language of the guaranty is clear and unambiguous. Westgate Village Shopping Ctr. v. Parker, Lucas App. No. L-08-1017, 2008-Ohio-2571, at ¶8, quoting S-S-C Co. v. Hobby Ctr. (Dec. 4, 1992), Lucas App. No. L-92-049; Wells Fargo Bank, N.A. v. WSW Franchising, Inc., Franklin App. No. 09AP-26, 2009-Ohio-3845.
{¶ 56} “The signature itself represents a clear indication that the signator is acting as аn agent if: (1) the name of the principal is disclosed, (2) the signature is preceded by words
{¶ 57} The guaranty signed by Harrison obligated him, as follows:
{¶ 58} “NOW, THEREFORE, in consideration of the lease to Lessee [4A] of the Premises described in the Lease and for other good and valuаble consideration, the Guarantor does hereby guarantee to Lessor [Yankee], its successors and assigns, the due, regular, and punctual payment by Lessee of the rentals and all other sums payable by Lessee as specified in the Lease and does further guarantee that Lessee shall faithfully perform and fulfill all the agreements and obligations provided for in the Lease at the time and in the manner therein agreed.”
{¶ 59} The guaranty was signed by “Daryl Harrison, President,” as the guarantor. It further provided that, if “Guarantor should leave 4A Capital Group, LLC for any reason, then a substitute Guarantor must be provided within five (5) days to Lessor to sign a new lease guaranty.”
{¶ 60} Although Harrison signed the guaranty agreement with the title, President, his signature does not indicate that he signed the guaranty on behalf of 4A. Rather, the agreement identifies Harrison, not 4A, as the guarantor, and the inclusion of “President” does not mean that he was acting as 4A‘s agent. The guaranty‘s language stating a substitute guarantor must be provided should Harrison leave 4A does not require a finding that Harrison was not personally liable. Rather, that language merely indicates that
{¶ 61} Finally, we note that the trial court did not improperly hold Harrison liable as a surety, rather than as a guarantor. Yankee was not required to pursue 4A before proceeding against Harrison, the guarantor. Campco Distributors, Inc. v. Fries (1987), 42 Ohio App.3d 200, 201 (stating “creditor need not pursue and exhaust the principal before proceeding against the guarantor“).
{¶ 62} The second assignment of error is overruled.
IV
{¶ 63} The judgment of the trial court will be affirmed.
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FAIN, J. and WOLFF, J., concur.
(Hon. William H. Wolff, Jr., retired from the Court of Appeals, sitting by assignment of the Chief Justice of the Supreme Court of Ohio).
Copies mailed to:
Laurence A. Lasky
Worrell A. Reid
Hon. Barbara P. Gorman