WILLOUGHBY SUPPLY COMPANY, INC., Plaintiff-Appellant, v. RYAN E. VILLHAUER, et al., Defendant-Appellee.
CASE NO. 2017-L-110
IN THE COURT OF APPEALS ELEVENTH APPELLATE DISTRICT LAKE COUNTY, OHIO
May 14, 2018
2018-Ohio-2077
CYNTHIA WESTCOTT RICE, J.
Civil Appeal from the Lake County Court of Common Pleas, Case No. 2016 CV 002202. Judgment: Reversed and remanded.
James T. Dixon and David Sporar, Brouse McDowell LPA, 600 Superior Avenue, East, Suite 1600, Clevеland, OH 44114 (For Defendant-Appellee).
CYNTHIA WESTCOTT RICE, J.
{¶1} Appellant, Willoughby Supply Company, Inc. (“Willoughby Supply“), appeals the judgment of the Lake County Court of Common Pleas granting the
{¶3} On page 2 of the Application and Agreement, Villhauer stated he was the “Owner/President” of Superior Structures. He also provided his personal informаtion, including his date of birth, driver‘s license number, home address, cell phone number, bank information, and credit accounts with other supply companies. He also stated he was authorized to order and pick up material from Willoughby Supply.
{¶4} On page 3 of the Application and Agreement, in the signature section on the line for “firm name,” Villhauer wrote “Superior Structures of Ohio.” He also signed his name on behalf of Superior Structures as its “Owner/President” and dated it August 8, 2014.
{¶5} Directly beneath the section that Villhauer signed on behalf of Superior Structures, Page 3 also contains a section providing for a personal guarantee. This section stated in all capital letters and in a font size larger than other terms on the page:
{¶6} * * * THIS APPLICATION WILL NOT BE APPROVED IF PERSONAL GUARANTEE IS NOT SIGNED * * *
{¶7} IN CONSIDERATION OF THE EXTENSION OF CREDIT BY [WILLOUGHBY SUPPLY] TO [SUPERIOR STRUCTURES], AND AS A SUBSTANTIAL AND MATERIAL INDUCEMENT TO [WILLOUGHBY SUPPLY] TO GRANT SUCH CREDIT, THE UNDERSIGNED INDIVIDUAL [VILLHAUER] PERSONALLY GUARANTEES THE FULL AND PROMPT PAYMENT OF ALL AMOUNTS PAYABLE TO [WILLOUGHBY SUPPLY] FOR GOODS PURCHASED BY SAID ENTITY. (Emphasis in original.)
{¶9} The complaint alleged that Willoughby Supply granted credit to Villhauer and Superior Structures, resulting in an unpaid balance due and owing as of July 31, 2016, in the amount of $28,832. A copy of the statement of account, dated August 29, 2016, attached to the complaint, shows that Superior Structures made multiрle purchases of materials from Willoughby Supply between July 2015 and July 2016.
{¶10} The complaint alleged that Villhauer and Superior Structures failed and refused to pay Willoughby Supply the balance due and owing, which, as of December 21, 2016, including interest, was $30,865.
{¶11} On December 29, 2016, Willoughby Supply filed its complaint against Villhauеr and Superior Structures. Instead of filing an answer, on April 7, 2017, Villhauer filed a motion to dismiss, arguing that he could not be held liable because he did not sign the personal guarantee. Willoughby Supply filed a brief in opposition. The trial court granted the motion, simply finding that “Villhauer did not sign the Application and Agreеment attached to Plaintiff‘s Complaint.”
{¶12} Villhauer failed to file an answer on behalf of Superior Structures and, as a result, Willoughby Supply filed a motion for default judgment against Superior Structures. The trial court granted the motion and entered default judgment in favor of Willoughby Supply and against Superior Structures, making the court‘s order granting Villhauer‘s motion to dismiss a final appealable order.
{¶14} “The trial court erred by granting defendant-appellee‘s motion to dismiss where, if the court wеre to presume the allegations of the complaint as true and make all reasonable inferences in favor of plaintiff-appellant, a cause of action does exist under which defendant-appellee could be found liable on the personal guarantee.”
{¶15} A motion to dismiss for failure to state a claim upon which relief can be granted is procedural in nature and tests the sufficiency of the complaint. State ex rel. Hanson v. Guernsey Cty. Bd. of Comm‘rs., 65 Ohio St.3d 545, 548 (1992). “[W]hen a party files a motion to dismiss for failure to state a claim, all the factual allegations of the complaint must be taken as true and all reasonable inferences must be drawn in favor of the non-moving party.” Byrd v. Faber, 57 Ohio St.3d 56, 60 (1991).
{¶16} Moreover, “‘[m]aterial incorporated in a complaint may be considered part of the complaint for purposes of determining a
{¶17} In order for a court to grant a motion to dismiss for failure to state a claim, it must appear “‘beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.‘” O‘Brien v. Univ. Community Tenants Union, Inc., 42 Ohio St.2d 242, 245 (1975), quoting Conley v. Gibson, 355 U.S. 41, 45 (1957). “[A]s long as there is a set of facts consistent with the plaintiff‘s complaint, which would allow the plaintiff to recover, the court may not grant a defendant‘s motion tо dismiss.‘”
{¶18} Further, under the rules of notice pleading,
{¶19} “Because it is so easy for the pleader to satisfy the standard of
{¶20} Here, the allegations of the complaint provide for relief on at least four possible legal theories.
I. THE COMPLAINT PROVIDES FOR RELIEF ON A THEORY THAT VILLHAUER IS INDIVIDUALLY LIABLE.
{¶22} First, Willoughby Supply alleged that both Villhauer and Superior Structures applied for credit by executing the application; that Willoughby Supply granted credit to both of them, resulting in an unpaid balance; and that they have failed
II. THE COMPLAINT PROVIDES FOR RELIEF ON A THEORY THAT VILLHAUER SIGNED THE GUARANTEE.
{¶24} Second, while Villhauer argues he cannot be liable on the guarantee because he did not sign it, it is not quite accurate to say he did not sign the guarantee. In fact, he does not dispute he hand-wrote his printed name and dated the personal guarantee. As a result, this case is very different from a case in which a purported guarantor did not write his name on the guarantee in any way.
{¶25} “A contract can only be interpreted if the provisions are ambiguous or uncertain.” Career & Technical Assn. v. Auburn Vocational School Dist. Bd. of Edn., 11th Dist. Lake No. 2013-L-010, 2014-Ohio-1572, ¶18. “Contract language is ambiguous if it is susceptible to two or more reasonable interpretations.” Id. “The determination of whether provisions in a contract are ambiguous is a legal issue that we review de novo.” Id. Further, “if the contract language is capable of two reasonable interpretations, there is an issue of fact [for the jury] as to the parties’ intent.” Id. “When a contract term is ambiguous, the [jury] must examine parol or extrinsic evidence to determine the parties’ intent.” Id. Villhauer concedes on appeal that a cursive signature is not necessary to effectuate a binding signature.
III. THE COMPLAINT PROVIDES FOR RELIEF ON A RATIFICATION THEORY.
{¶28} Third, ratification also provides a possible theory of recovery. In a similar case involving the same creditor, Willoughby Supply Company, Inc. v. Inghram, 11th Dist. Lake No. 2014-L-055, 2015-Ohio-952, Inghram, the person against whom Willoughby Supply sought to enforсe the guarantee, denied the signature on the personal guarantee was his. However, Willoughby Supply‘s financial officer testified he
{¶29} Here, even if Villhauer‘s signature on the personal guarantee was insufficient, by accepting more than $28,000 worth of supplies on credit during the course of an entire year from Willoughby Supply, knowing it would not have approved the credit application if Villhauer had not signed the guarantee, Willoughby Supply may recover on a ratification theory.
IV. THE COMPLAINT PROVIDES FOR RELIEF UNDER THE “LEADING OBJECT RULE.”
{¶31} Fourth, Villhauer argued below that, beсause he did not sign the personal guarantee, enforcement of the Application and Agreement against him is barred by the statute of frauds.
{¶32} Here, even if Villhauer did not sign the personal guarantee, the leading object rule is an exception to the statute of frauds. In Inghram, supra, this court stated: “The leading object rule provides that oral contracts by third parties guaranteeing another‘s debt are not within the Statute of Frauds, if the guarantor‘s principal purpose is to benefit his or her own business or pecuniary interests.” Id. at ¶8, citing Wilson Floors Co. v. Sciota Park Ltd., 54 Ohio St.2d 451, syllabus (1978). “The determination of whether an oral promise to answer for another‘s debt exists, and is outside the Statute of Frauds, is a question of fact.” Id. at ¶22.
{¶34} We accordingly conclude, the trial court erred in dismissing the complaint. Willoughby Supply‘s sole assignment of error has merit.
{¶35} For the reasons stated in the opinion of this court, it is the judgment and order of this court that the judgment of the Lake County Court of Common Pleas is reversed, and this matter is remanded to the trial court for further proceedings consistent with the opinion.
TIMOTHY P. CANNON, J., concurs,
DIANE V. GRENDELL, J., dissents with a Dissenting Opinion.
WILLOUGHBY SUPPLY COMPANY, INC., Plaintiff-Appellant, v. RYAN E. VILLHAUER, et al., Defendant-Aрpellee.
CASE NO. 2017-L-110
IN THE COURT OF APPEALS ELEVENTH APPELLATE DISTRICT LAKE COUNTY, OHIO
2018-Ohio-2077
DIANE V. GRENDELL, J.
DIANE V. GRENDELL, J., dissents with a Dissenting Opinion.
{¶36} I respectfully dissent and would affirm the decision of the trial court.
{¶38} Willoughby Supply seeks to hold Villhauer personally liable under a guarantee which Villhauer did not sign personally. Villhauer‘s signature on the guarantee is unambiguously and unequivocally executed in his capacity as the owner/president of “Superior Structures of Ohio.”
{¶39} Under Ohio law, as well as that of other jurisdictions, such a guarantee is not enforceable as a matter of law: “[i]f the form of the signature shows unambiguously that the signature is made on behalf of the represented person who is identified in the instrument, the representative is not liable on the instrument.”
{¶40} It is argued that Villhauer could nevertheless be held personally liable under an exception to the statute of frauds, such as the “leading object rule.” Wilson Floors Co. v. Sciota Park, Ltd., 54 Ohio St.2d 451, 377 N.E.2d 514 (1978), syllabus (“[w]hen the leading [object] of the promisor is not to answer for another‘s debt but to subsеrve some pecuniary or business purpose of his own involving a benefit to himself,
{¶41} Willoughby Supply alleged in the Complaint that Villhauer executed the credit application and аgreement. This allegation is flatly contradicted by the actual Application and Agreement attached to the Complaint. By attaching the credit Application and Agreement, the sufficiency of Willoughby Supply‘s Complaint must be considered in light of the fact that Villhauer did not sign the Applicatiоn in his personal capacity. See
{¶42} Accordingly, I respectfully dissent and would affirm judgment of the lower court.