{¶ 2} In December 1997, Mark and Klaus Hemsath, owners of Thermotech Industries, Inc. ("Thermotech"), an Ohio corporation, entered into a written agreement with Eric Fisk, in his capacity as representative of Fisk Alloy Wire, Inc., a New Jersey corporation, to build a furnace. The agreement required Fisk to make an initial down payment of $62,100, two installments of $62,100, and a final payment of $20,700, for a total purchase price of $207,000.
{¶ 3} In September 1998, after Fisk made the down payment and the first installment payment, totaling $124,200, Mark and Klaus informed Fisk that Thermotech was financially unable to complete the furnace. According to Mark's deposition testimony, Thermotech had spent Fisk's payments on operating funds while it completed a previous project. Fisk notified the Hemsaths that he intended to regain his payments for the misappropriation; however, upon the Hemsath's urgings, the parties met and attempted to resolve how best the furnace may still be completed. The result was another written agreement ("restated agreement"). It was signed November 2, 1998.
{¶ 4} The trial court found that the restated agreement incorporated the original agreement. The restated agreement increased the purchase price of the furnace to $234,000, by stating, "The maximum price of the furnace F.O.B. Thermotech is now $234,000 of which $124,200 has already been received by Thermotech. This leaves a maximum balance payable of $110,000 against which Fisk will be credited for any payments it makes pursuant to purchase orders for materials, supplies, and labor."
{¶ 5} The conditions in the restated agreement evidence Fisk's intention to reduce any risk of loss of future furnace payments. For instance, Thermotech was to complete purchase orders for materials, mark them "ship to Thermotech, bill to Fisk" and then forward the order to Fisk for authorized signature; no purchase order would be valid unless authorized by Fisk. The restated agreement also required Thermotech to tag all received materials as property of Fisk, with the order number; title to all materials was explicitly vested in Fisk.
{¶ 6} At issue here is the condition that Fisk receive the Hemsath's personal guarantees that any advanced monies in excess of the maximum purchase price would be repaid. Fisk explained by affidavit that, due to Thermotech's previous actions, Fisk insisted on the personal guaranties before he would allow the Hemsaths to continue on the project. The alternative was to seek a return of his previous payments, and the Hemsaths were made aware of his intention to do so if they did not complete the project on his terms. The paragraph containing the condition states:
{¶ 7} "Fisk Alloy Wire acknowledges that Thermotech may incur cost overruns in excess of the $110,000 remaining owing under the restated contract. Fisk agrees to advance such sums to or on thе behalf of Thermotech. As a condition to advancing any amount, Thermotech will issue a promissory note for that amount (or revised promissory note inclusive of previous advances). The promissory note shall bear interest at a rate of 10% per annum and shall be due six (6) months after the completion and delivery to Fisk of the furnace. Each promissory note(s) shall be personally guaranteed by the principals of Thermotech."
{¶ 8} Appellants assert that during the course of construction Fisk requested modifications and upgrades to the furnace, to increase its performance. Mark testified that during installation he spent a large amount of time on-site trouble-shooting the furnace. However, despite what appellants characterize as an expanded scope, Klaus testified, and the trial court found, that the parties still considerеd the restated agreement to be in force.
{¶ 9} Fisk was ultimately required to spend approximately $290,000 to complete the furnace, $57,195.51 in excess of the agreed-upon maximum purchase price of $234,000. Mark and Klaus each submitted their own reports as exhibits, opining that the actual value of the furnace as installed was $400,000; no other evidence of the furnace's actual value was submitted. In accordance with the restated agreement, in order to cover the payments in excess of the maximum purchase price, Fisk drafted two separate promissory notes, along with two corresponding guarantees.
{¶ 10} The first promissory note, for the amount of $26, 458.60, dated April 5, 1999, was signed by Mark Hemsath, in his capacity as vice-president of Thermotech, on behalf of Thermotech. A guarantee was executed in support of the promissory note, and was executed by both Mark and Klaus Hemsath on April 15, 1999, with no notation to distinguish their capacity from that of individuals.
{¶ 11} At some point after the first note and guaranty were signed but before the second note and guaranty were signed, Mark Hemsath filed for personal bankruptcy.
{¶ 12} The second promissory note, for the amount of $29,273.25, dated August 20, 1999, was signed by both Mark and Klaus Hemsath; however, unlike the first promissory note, no notation was made as to their signatory capacity. The note did state, however, that Thermotech was the promisor. The guarantee executed in support of this note stated that Thermotech was the guarantor, contrary to the terms of the restated agreement and inconsistent with the first note and guaranty. Fisk submitted by affidavit that this was a typographical error and that the parties intended the Hemsaths, as individuals, to be listed as the guarantors, in accordance with the restated agreement and the first guarantee. Both Mark and Klaus Hemsath signed the second guarantee. No notation was made as to the capacity in which they signed the second guarantee.1
{¶ 13} Thermotech did make some payment towards the notes. However, Thermotech defaulted when it closed, leaving a balance on the notes of $37,966.51 plus interest of $6,222.63 through September 30, 2003. When Fisk demanded payment of Mark and Klaus Hemsath they denied personal responsibility.
{¶ 14} Fisk filed a complaint seeking the unpaid balance of the notes, totaling $37,966.51 plus interest of $6,222.63 through September 30, 2003. Appellants filed a cross-complaint, seeking damages for, inter alia, breach of contract, fraud, and unjust enrichment. Appellants' claims rest on their assertions that the upgrades which Fisk requested and received created a new contract which should supercede the restated agreement, and that Fisk breached the new contract when it refused to pay Thermotech and the Hemsaths for the actual value of the furnace. Appellants sought the difference between the amount Fisk paid and the "actual value" of the furnace as damages, and Mark Hemsath sought additional damages for consulting work that he performed on site post-installation.
{¶ 15} After some discovery, both parties moved for summary judgment. The trial court granted appellee's motion in part and denied it in part and denied appellants' motion in full. Appellee's motion was denied to the extent that it held the first note to have been discharged by Mark's bankruptcy. Thus, the trial court's decision rendered Thermotech liable on the notes; Klaus Hemsath personally liable for the first note as a guarantor; and both Mark and Klaus Hemsath personally liable as guarantors for the second note.
{¶ 16} Appellants present 13 assignments of error for review:
{¶ 17} "Assignment of Error No. 1: The trial court erred by failing to grant summary judgment in favor of appellant Mark Hemsath on all claims against him given his bankruptcy.
{¶ 18} "Assignment of Error No. 2: The trial court erred upon its application of the summary judgment standard.
{¶ 19} "Assignment of Error No. 3: The trial court erred when construed [sic] the facts most favorable to the movant.
{¶ 20} "Assignment of Error No. 4: The trial court erred in granting summary judgment upon appellants' fraud counterclaim.
{¶ 21} "Assignment of Error No. 5: The trial court erred in holding that negligent misrepresentation requires that a `professional' provide false information as an element.
{¶ 22} "Assignment of Error No. 6: The trial court erred by granting summary judgment against appellants/defendants' counterclaim for negligent misrepresentation.
{¶ 23} "Assignment of Error No. 7: The trial court erred by applying a `clear and definite' standard to appellants/defendants' breaсh of contract claim.
{¶ 24} "Assignment of Error No. 8: The trial court erred by confusing the first, second, and third contractual periods.
{¶ 25} "Assignment of Error No. 9: The trial court erred in failing to apply the statute of limitations defense.
{¶ 26} "Assignment of Error No. 10: The trial court erred by granting summary judgment against the defendants' counterclaim for breach of contract.
{¶ 27} "Assignment of Error No. 11: The trial court erred by finding consideration for the restated agreement, notes and guaranties.
{¶ 28} "Assignment of Error No. 12: The trial court erred by granting summary judgment upon the defense of mutual mistake.
{¶ 29} "Assignment of Error No. 13: The trial court erred by including Mark Hemsath's post contract consulting work as part of the restated agreement."
{¶ 30} Appellee has cross-appealed, and sets forth one cross-assignment of error:
{¶ 31} "The trial court erred in finding that the claim against Mark based upon the first guarantee was discharged."
{¶ 32} The moving party beаrs the initial burden of informing the trial court of the basis for the motion and identifying those portions of the record that demonstrate the absence of a genuine issue of fact as to an essential element of one or more of the non-moving party's claims. Dresher v. Burt (1996),
{¶ 33} Once this burden has been satisfied, the non-moving party has the burden, as set forth at Civ.R. 56(E), to offer specific facts showing a genuine issue for trial. Id at 292. Civ.R. 56(E) provides: "When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or deniаls of his pleadings, but his response, by affidavit or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If he does not so respond, summary judgment, if appropriate, shall be entered against him." See, also, Dresher, supra, at 293.
{¶ 34} The trial court was obliged to consider whether appellee demonstrated that appellants could not establish their claims as a matter of law, all the while, construing the facts and the inferences therefrom in a light most favorable to the non-moving party. Upon review of a grant or denial of summary judgment, the appellate court employs the same standard. Engelv. Corrigan (1983),
{¶ 35} Appellants have not raised error with respect to the validity of the trial court's judgment finding that the promissory notes are valid and binding as to Thermotech, and they have not separately raised error with respect to the validity of the guarantees. Appellants' assignments only raise error with respect to their defenses to the notes and guarantees and with respect to their counterclaims.
{¶ 36} In their eleventh assignment of error, appellants assert that no consideration supported the restated agreement, the promissory notes, or the guarantees. Appellants argue that no consideration exists because the Hemsaths did not receive any payment or personal gain from the amounts Fisk advanced, because the furnace was undervalued and all monies received paid for furnace materials and other labor charges.
{¶ 37} It is axiomatic in contract law that courts are nоt required to inquire into the adequacy of the consideration; the existence of some benefit or detriment to the promisor or promise is sufficient. Ford v. Tandy Transp., Inc. (1993)
{¶ 38} Appellants contend that "no consideration can be found for Mark Hemsath signing the second guaranty after all his debts, including both promissory notes, were discharged in bankruptcy." Mark's bankruptcy filing is irrelevant to whether his promise to repay sums advanced by Fisk constitutes consideration for the notes. Moreover, Mark and Klaus were required to personally guarantee the promissory notes by the restated agreement, which was supported by consideration. See Medina Supply Co. v.Corrado (1996),
{¶ 39} Next, appellants argue in their ninth assignment of error that Fisk's action to enforce the promissory notes should be barred by the limitations clause of the original agreement, which states, "Any action for the breach of contract arising from this proposal must commence within one year after discovery, but in no event longer than two years after Preliminary Acceptance, by the Purchaser." Appellants argue that, since the original agreement was incorporated into the restated agreement, and since execution of the promissory notes was a condition of the restated agreement, the limitations clause should apply to Fisk's action to recover sums due for the promissory notes.
{¶ 40} It is axiomatic that a promissory note, even though its execution may be a condition of another contract, constitutes a separate enforceable contract. Metropolitan Life Ins. V.Triskett Illinois, Inc. (1994),
{¶ 41} Appellants' seventh, eighth, and tenth assignments of error challenge the trial court's rejection of their breach of contract claim. Appellants contend that, after the restated agreement was signed and during installation of the furnace, Fisk's requested upgrades created a new, oral contract which should govern instead of the restated contract. Alternatively, appellants argue that the restated agreement was later orally modified when Fisk requested the subsequent upgrades. Appellants allege the existence of the following subsequent oral terms: that Fisk would no longer be bound by the restated agreement's maximum purchase price; that Fisk would pay the actual value of the furnace it received (allegedly $400,000); and that appellants would be relieved of the restated agreement's condition of executing promissory notes and personal guarantees in exchange for Fisk's advances in excess of the maximum purchase price. Aрpellants have advanced no specific oral statements by Fisk or its representatives evidencing new terms created subsequent to the restated agreement, aside from modifications to the furnace's specifications.
{¶ 42} The trial court held that by arguing that terms of a new, oral contract supercede the express terms of the restated agreement, appellants were arguing that a novation occurred. See, generally, Grant-Holub Co. v. Goodman (1926),
{¶ 43} On appeal, appellants stated, "Kindly note that the appellants did not plead a novation but instead plead [sic] a breach of contract claim in the alternative to the unjust enrichment claim. * * * Whatever you call that, the `third period' of the relationship, if indeed it is considered a new contract, a quasi contract, or a novation * * *." In their eighth assignment of error, appellants argue that the restated agreement was "either replaced, modified, or amended when an order for a difference furnace was placed (the state of the art hydrogen burning furnace." In their tenth assignment of error, appellants state that, at the least, both parties dispute the nature of their contractual relationship, pointing to the purported "third period" of oral agreements in support.2
{¶ 44} R.C.
{¶ 45} The commercial code requires contracts for thе sale of goods over $500 to comply with the statute of frauds, R.C.
{¶ 46} Appellants urge us to consider unspecified oral statements as parol evidence. The commercial code contains a codified parol evidence rule, R.C.
{¶ 47} "(A) by course of dealing or usage of trade as provided in section
{¶ 48} "(B) by evidence of consistent additional terms unless the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement." R.C
{¶ 49} The legislative notes to R.C.
{¶ 50} Appellants attached a copy of the original agreement to their motion in opposition to summary judgment, which contains two pages headed "Terms and Conditions of Contract: Warranty." At the end of the section, in capital letters, it states the following:
{¶ 51} "No express warranties and no implied warranties whether of merchantability or fitness for any particular use, or otherwise (except as to title), other than those expressly set forth above which are made expressly in lieu of all other warranties, shall apply to products sold by seller, and nowaiver, alteration, or modification of the foregoing conditionsshall be valid unless made in writing and signed by an executiveofficer of the seller.
{¶ 52} "The seller's salesmen may have made oral statements about the merchandise described in this contract. Such statements do not constitute warranties, shall not be relied on by buyer, and are not part of the contract for sale. The entire contractis embodied in this writing. This writing constitutes the finalexpression of the parties' agreement, and it is a complete andexclusive statement of the terms of that agreement." (Emphasis added.)4
{¶ 53} The Warranty's merger clause was honored when the parties executed the restated agreement, and was incorporated by reference. See discussion, supra. Now, appellants have made no mention of the merger clause during this litigation, have in fact attempted to hide it in their appellate brief, and, after having made payments toward the notes, and after Thermotech's default, argue that: 1) Fisk implicitly consented to paying a higher price when he asked for upgrades to the furnace, and 2) Fisk orally promised to relieve them of the liability of the promissory notes. At bottom, appellants ask that the written language of the original agreement and the restated agreement be ignored in favor of "quasi-contractual principles" or "equity."
{¶ 54} The language of R.C.
{¶ 55} Thus, although courts must presume that the parties expressed their intentions in the language chosen for a written contract, Shifrin v. Forest City Ent., Inc. (1992),
{¶ 56} Assuming for the sake of illustration that, during the course of the furnace's construction, Fisk did agree to pay costs incurred above and beyond the restated agreement's maximum purchase price, startling questions remain: Why did Thermotech sign the promissory notes for the overages, which were documented costs incurred through purchase orders for the furnace, and why did the Hemsaths agree to guaranty the notes? Assuming that the Hemsaths performed work on the furnace which expanded the scope of the restated agreement, why did they never demand payment from Fisk?
{¶ 57} When asked these specific questions in deposition, Klaus testified that he did not want to sign the guarantees, but that he felt as if he had to. He felt that, although the restated agreement's condition was for the principles of Thermotech to guaranty the notes, his resignation as an officer on August 30, 1998, rendered him not liable. He acknowledged that he did continue to be a shareholder until Thermotech closed. He acknowledged his understanding that the restated agreement was made in consideration of the fact that Thermotech could not financially perform the original agreement, and that Fisk would have to provide it with financial assistance; he acknowledged sending a letter to Fisk enclosing the signed restated agreement on November 16, 1998; he admitted that he wanted tо complete the project, and agreed to the terms in order to do it; he recounted making objections over the guaranties at the time; he did, however, admit to signing the restated agreement as a Thermotech principal.
{¶ 58} Regarding the changes in scope during the furnace's construction, Klaus asserted that industry practice was to "push" the technological advancements further by modifying projects requirements mid-stream, and that purchasing agreements are written generally to accommodate the "constant influx and demand by the customer of making certain changes." He then explained, "unfortunately, those changes are, as a rule, not very well documented. The reason is that the vendor believes he can do a favor to the customer, keep him as a good customer, and the customer doesn't want to have it documented bеcause I [sic] do not want to have after-the-fact demands for payment." He stated that the changes in the scope of the furnace's construction were not changes of the restated agreement, but that they were in addition to it. However, when asked whether the change in scope would not have justified a refusal to sign the promissory notes and the guaranties, he said that the changes to the furnace did not enter into his consideration, and he still felt obligated to comply with the terms of the restated purchasing agreement by signing the notes and guaranties.
{¶ 59} Klaus did dispute his signatures and the validity of the guarantees in his deposition; however, we address the failure to properly raise this argument on appeal, infra. For the breach of contract issues, the above suffices to show that Klaus was not of the understanding that oral agreements subsequent to the rеstated agreement superceded or replaced the restated agreement's terms of a maximum price that Fisk would pay and the condition that promissory notes and guarantees be executed in repayment of excess costs. By signing the restated agreement, the parties' course of performance was consistent with the original agreement's merger clause; further, the execution of the promissory notes and the guarantees demonstrates a course of performance consistent with the understanding that the restated agreement continued to govern, despite the change in scope. If the change in scope was thought to have caused a modification of the maximum purchase price, the Hemsaths, to be consistent with the original agreement authored by Thermotech, would have insisted upon Fisk's written agreemеnt to the change in price.
{¶ 60} Mark also testified to his understanding that the restated agreement governed and that the "third period" of the furnace's construction and installation did not modify the restated agreement's terms of the maximum price or the condition that notes and guaranties be executed. Most significantly, in a letter dated September 30, 1998, a few days prior to executing the restated agreement but after Thermotech informed Fisk that it was financially unable to complete the furnace, Mark wrote Fisk as follows:
{¶ 61} "In light that this furnace may become more expensive than the $110,000 previously discussed, I would like to offer that, should we require any additional funding, that Thermotech issue a Promissory Note in exchange for any extra dollars required. We fully intend to produce the furnace for the $110,000 but you and we need to be covered in the event of possible overruns. * * * Klaus and I will continue on unpaid for a couple of months to assist the cash flow picture. We look forward to your reply and finishing the furnace." By return letter dated October 23, 1998, Fisk wrote: "In sum, we want this rescue effort to succeed and we accept and appreciate your offer for the promissory note for any cost overruns above $110,000. We will draft that note in advance." On April 15, 1999, after receiving Fisk's detailed invoice showing amounts paid for materials in excess of $110,000, and the first note and guaranty, Mark wrote Fisk: "Enclosed are the signed note and guaranty. I have marked these up to reflect as I think they should be structured (A note from Thermotech and a guaranty by Klaus and myself). The liability is Thermotech's." Thus, Mark, and by extension, Thermotech, had full knowledge before the restated agreement as to the import and conditions of its terms, fully accepted those conditions during and subsequent to construction, and never raised the existence of oral modifications to the maximum purchase price or their liability for costs in excess of the price. In short, any supposed oral modification was not acted upon by the parties, and so is not considered as parol evidence to the contract. See Smaldino v. Larsick, supra.
{¶ 62} Thus, assuming that Fisk's requested upgrades caused a modification of the terms, appellants subsequently acted in accordance with the restated agreement by not only signing the promissory notes on behalf of Thermotech, but also by executing the guarantees. In the final analysis, the Hemsaths' actions subsequent to the modifications made to the furnace reaffirmed the conditions in the restated agreement; their actions contradict the existence of oral agreements to increase the purchase price, to releаse Thermotech from repaying Fisk for costs in excess, or to release themselves from their promise of guaranteeing the notes. Appellants' seventh, eighth, and tenth assignments of error are therefore not well-taken.
{¶ 63} In their twelfth assignment of error, appellants assert that the defense of mutual mistake regarding the restated agreement should have relieved them from liability. This assertion hinges upon appellants' breach of contract claims, discussed supra. Here, appellants argue that, because they were under the mistaken idea that the subsequent oral agreement governed, the restated agreement should be rescinded.
{¶ 64} "[M]anifested mutual assent rather than actual mental assent is the essential element in the formation of contracts, that a mistaken idea of one or both parties in regard to the making of an offer and acceptance will not generally prevent the formation of a contract. 2 Lord, Williston on Contracts (4 Ed. 1991) 682-684, Section 6:57." Ford v. Tandy Transp., Inc.
(1993)
{¶ 65} The trial court held that the defense of mutual mistake must fail because appellants were unable to point to any mistake that was mutual, citing the restatement of contracts: "Relief is only appropriate in situations where a mistake ofboth parties has such a material effect on the agreed exchange of performances as to upset the very basis for the contract." See also, Reilly v. Richards (1994),
{¶ 66} Appellants' fourth assignment of error asserts fraud by actually citing a case. However, their arguments are again premised on an oral contract or modifications which should govern instead of the restated agreement with which they acted in conformity. The only additional argument offered in support is a mischaracterization of Schmidt v. Bank of Commerce (1914),
{¶ 67} Dovetailing from the fraud claim, appellants assert that Fisk negligently misrepresented something — precisely what, is unclear. Appellants cite Delman v. City of Cleveland Heights
(1989),
{¶ 68} Appellants' thirteenth assignment concerns Mark Hemsath's counterclaim for $10,000 owed him for his on-site consulting services. Mark testified Fisk incurred this debt to him when 1) he performed several weeks of on-site work installing and troubleshooting the furnace, and 2) he performed more on-site consulting for Fisk in 2002, after Fisk contacted him for help with the furnace. He admitted that he had no documentation in support of his claim, and he admitted that he had never invoiced Fisk for any amounts it owed. The trial court found that unjust enrichment did not apply because "unjust enrichment is the theory for damages when an express contract does not exist, but the trial court finds a quasi-contract," citing Angles v. West, 4th Dist. No. 04CA8,
{¶ 69} "A claim for unjust enrichment arises out of a contract implied in law, or quasi-contract. Hummel v. Hummel
(1938),
{¶ 70} Mark Hemsath argues that the trial court should have included only the post-installation consulting work in the restated agreement, and that it failed to consider that his consulting work in 2002 was not part of that agreement, and so was not covered by a contract. Be that as it may, and notwithstanding Mark's assertion that Fisk produced no evidence to disprove his claim, Mark has not advanced evidence beyond his own assertions that he performed the work. As Dresher, supra, made clear, summary judgment does not require that the moving party support its motion with affirmative evidence disproving the non-moving party's claim. Fisk carried its summary judgment burden by demonstrating the absence of evidence in support of his claim,5 and Mark has not carried his corresponding burden. The thirteenth assignment of error is not well-taken.
{¶ 71} We jointly consider appellants' first assignment of errоr and appellee's cross assignment of error. The trial court correctly found that Mark's Chapter 7 no asset bankruptcy discharged his liability on the first guarantee. Appellee is correct in that, generally, unlisted debts are excepted from discharge pursuant to
{¶ 72} Upon review, and for reasons detailed on the merits, supra, we find appellants' second and third assignments of error challenging the trial court's application of the summary judgment standard not well-taken. We decline to address appellants' sparse arguments relating to the notations and signatures upon the guarantees (devoid of citation to law) because of appellants' failure to comply with the appellate rules by arguing the issue separately in its brief. "The burden of affirmatively demonstrating error on appeal rests with the party asserting error. App.R. 9(B); App.R. 16(A)(7). App.R. 12(B) provides that an appellate court is required to determine the merits of an appeal on the assignments of error, which should designate thespecific rulings that an appellant challenges." Baker v.Tarsha, 6th Dist. No. L-04-1040,
{¶ 73} For the foregoing reasons, the judgment of the Lucas County Court of Common Pleas is affirmed. Appellants are ordered to pay the costs of this appeal pursuant to App.R. 24. Judgment for the clerk's expense incurred in preparation of the record, fees allowed by law, and the fee for filing the appeal is awarded to Lucas County.
JUDGMENT AFFIRMED.
A certified copy of this entry shall constitute the mandatе pursuant to App.R. 27. See, also, 6th Dist.Loc.App.R. 4, amended 1/1/98.
Pietrykowski, J., Skow, J., Parish, J., Concur.
Notes
Appellants have characterized Fisk's actions as "dirty pool." No further statement illustrating this hypocrisy should be necessary.