[Cite as Snowville Subdivision Joint Venture Phase I v. Home S. & L. of Youngstown, Ohio, 2012-Ohio-1342.]

Court of Appeals of Ohio

EIGHTH APPELLATE DISTRICT 

COUNTY OF CUYAHOGA

JOURNAL ENTRY AND OPINION 

No. 96675

SNOWVILLE SUBDIVISION JOINT VENTURE 

PHASE I, ET AL.

PLAINTIFFS-APPELLANTS 

vs. 

HOME SAVINGS AND LOAN 

OF YOUNGSTOWN, OHIO

DEFENDANT-APPELLEE 

JUDGMENT: 

AFFIRMED IN PART; REVERSED 

IN PART, AND REMANDED

Civil Appeal from the 

Cuyahoga County Court of Common Pleas 

Case No. CV-742470 

BEFORE: Celebrezze, P.J., Keough, J., and Kilbane, J. 

RELEASED AND JOURNALIZED: March 29, 2012 
ATTORNEYS FOR APPELLANTS

Anthony R. Vacanti 

David D. Drechsler 

John P. Slagter 

Buckingham, Doolittle & Burroughs, L.L.P. 

1375 East Ninth Street 

Suite 1700 

Cleveland, Ohio 44114 

ATTORNEYS FOR APPELLEE

Brad A. Sobolewski 

Francis Floriano Goins 

Ulmer & Berne, L.L.P. 

Skylight Office Tower 

1660 West 2nd Street 

Suite 1100 

Cleveland, Ohio 44113 

Thomas M. Gacse 

P.O. Box 1111 

Youngstown, Ohio 44501 
FRANK D. CELEBREZZE, JR., P.J.: 

{¶1} Appellants include Snowville Subdivision Joint Venture Phase I 

(“Snowville”), South Brecksville Development Company (“SBDC”), Queenswood 

Developers, Inc. (“Queenswood”), Infinity Development of Ohio, Ltd. (“Infinity”), 

Parkview Financial Group, LLC, Anne Ream, Thomas Ream, Paul Ream, Robert Ream, 

and Richard Puzzitiello. They seek reversal of the dismissal of their complaint against 

Home Savings and Loan of Youngstown, Ohio (“HSLY”). Appellants argue that the 

trial court failed to properly apply the Civ.R. 12(B)(6) standard to their complaint. After 

a thorough review of the record and law, we affirm in part and reverse in part the decision 

of the trial court. 

I. Factual and Procedural History 

{¶2} Snowville and SBDC, the “Signing Appellants,” entered into a construction 

loan agreement (“Loan Agreement”) with HSLY on November 21, 2006, to fund the 

development of the “Woodlands of Snowville Subdivision” project in Brecksville, Ohio. 

SBDC and the remaining appellants, except Puzzitiello, were guarantors of the loan. The 

entirely new subdivision would consist of 54 lots in Phase I and an additional 64 lots in a 

future Phase II plan. The Loan Agreement called for appellants to complete construction 

of the Phase I improvements within one year of the date of the agreement. The 
improvements included installation of utilities, roads, an off-site sanitary sewer facility, 

and any other improvements necessary to construct single family homes on the site. 

{¶3} By November 21, 2007, the improvements were not complete but appellants 

continued to develop the site. HSLY continued to authorize draws as work was 

completed up to the date of maturity of the loan on November 21, 2009. After the 

balance became due, HSLY sent a letter to Snowville in December informing them that 

they were in default and that it was requesting payment of the entire balance. HSLY also 

executed cognovit note provisions in the Loan Agreement and obtained judgments against 

the guaranteeing appellants in March 2010. 

{¶4} Prior to the maturity date of the loan, appellants attempted to exercise a 

one-year extension as set forth in the Loan Agreement. Section 4 of the agreement 

allowed for two one-year extensions of the maturity date upon written notice received 30 

days before the expiration of the loan accompanied by the payment of a fee equal to 

one-quarter percent of the outstanding balance. On October 19, 2009, appellants sent an 

extension notice to HSLY, but did not submit payment until November 12, 2009. The 

extension provision also required that appellants not be in default of the Loan Agreement 

at the time of the extension. 

{¶5} HSLY and Snowville also executed a sanitary sewer construction agreement 

(“Sewer Agreement”) with the city of Brecksville (the “City”) in November 2009. 

HSLY acknowledged that it held funds in an escrow account for Snowville to draw upon 
to fund the construction of a sanitary sewer system for the development. The City agreed 

to contribute $400,000 to build the facility. 

{¶6} After HSLY obtained cognovit judgments, appellants brought suit against 

HSLY for breach of the Loan Agreement, breach of good faith, negligent 

misrepresentation, promissory estoppel, and breach of the Sewer Agreement. HSLY 

filed a motion to dismiss, arguing that appellants could show no set of facts entitling them 

to relief. On April 11, 2011, the trial court granted HSLY’s motion to dismiss, finding 

that appellants were in breach of the agreement since the 2007 completion date and had 

made no payments on the loan since the maturity date. Appellants then filed the instant 

appeal, listing one error for review: 

The trial court erred when it dismissed Appellants’ Complaint for failure to 

state a claim upon which relief may be granted under Rule 12(b)(6) [sic] 

despite Appellants adequately setting forth factual allegations that support 

the claims contained in the Complaint and despite the trial court’s 

obligation to presume the facts as alleged to be true. 
II. Law and Analysis 

A. Motion to Dismiss for Failure to State a Claim 

{¶7} A motion to dismiss for failure to state a claim upon which relief can be 

granted is procedural and tests the sufficiency of the complaint. State ex rel. Hanson v. 

Guernsey Cty. Bd. of Commrs., 65 Ohio St.3d 545, 605 N.E.2d 378 (1992). It is well 

settled that “when a party files a motion to dismiss for failure to state a claim, all factual 

allegations of the complaint must be taken as true and all reasonable inferences must be 

drawn in favor of the nonmoving party.” Byrd v. Faber, 57 Ohio St.3d 56, 60, 565 

N.E.2d 584 (1991). 

{¶8} While the factual allegations of the complaint are taken as true, 

“[u]nsupported conclusions of a complaint are not considered admitted * * * and are not 

sufficient to withstand a motion to dismiss.” State ex rel. Hickman v. Capots, 45 Ohio 

St.3d 324, 544 N.E.2d 639 (1989). In light of these guidelines, 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, 42 Ohio St.2d 242, 245, 327 

N.E.2d 753 (1975). 

{¶9} This analysis was shifted by recent Supreme Court decisions addressing the 

federal notice pleading standard in Fed.Civ.R. 8, upon which Ohio’s Civ.R. 8 pleading 

requirement is based. See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 

167 L.Ed.2d 929 (2007); Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 149, 173 
L.Ed.2d 868 (2009). The Court held that bald legal conclusions did not constitute a 

well-pled complaint. In order to survive a motion to dismiss, the complaint must offer 

factual support for the legal conclusions drawn within. Iqbal at 1949. These holdings 

are similar to the rule enunciated in Capots, cited above. But the shift lies in the level of 

certainty of the complaint. Based on the above Ohio case law, plaintiffs must only show 

some set of facts that would entitle them to relief. O’Brien at 245. 

{¶10} The Supreme Court has clarified the federal notice pleading standard — to 

survive a motion to dismiss, sufficient facts beyond a mere speculative level must be pled. 

Twombly at 555. A de novo standard of review applies to decisions on motions 

predicated on Civ.R. 12(B)(6). NorthPoint Properties v. Petticord, 179 Ohio App.3d 

342, 2008-Ohio-5996, 901 N.E.2d 869, ¶ 11 (8th Dist.). A de novo standard of review 

affords no deference to the trial court’s decision, and we independently review the record. 

Gilchrist v. Gonsor, 8th Dist. No. 88609, 2007-Ohio-3903, ¶ 16. 

i. Breach of Contract 

{¶11} Appellants argue that they sufficiently set forth a cause of action against 

HSLY for breach of contract as to the Loan Agreement. “[T]o prove a breach of 

contract, a plaintiff must establish the existence and terms of a contract, the plaintiff’s 

performance of the contract, the defendant’s breach of the contract, and damage or loss to 

the plaintiff.” Samadder v. DMF of Ohio, Inc., 154 Ohio App.3d 770, 2003-Ohio-5340, 

798 N.E.2d 1141, ¶ 27 (10th Dist.), citing Powell v. Grant Med. Ctr., 148 Ohio App.3d 1, 

2002-Ohio-443, 771 N.E.2d 874, ¶ 27 (10th Dist.). 
{¶12} In their complaint, appellants alleged that HSLY breached the contract 

because the maturity date of the loan was extended and, through acquiescence or waiver, 

HSLY agreed to extend the construction completion date. Appellants also allege that 

HSLY breached the Sewer Agreement because it no longer held funds for appellants to 

complete construction of a sanitary sewer system for one year from the date the Sewer 

Agreement was executed. 

{¶13} HSLY argues that a waiver provision contained in Section 14 of the Loan 

Agreement indicates that any waiver must be in writing to be effective and any action or 

inaction on its part did not waive any rights it had under the agreement. The Loan 

Agreement contains a traditional anti-waiver clause that states: 

No waiver of any Event of Default shall extend to or affect any subsequent 

Event of Default or shall impair any rights, remedies and/or powers 

available to lender. No single or partial exercise of any right, remedy or 

power shall preclude other or further exercise thereof by [HSLY]. 

The Loan Agreement also contains a waiver clause that requires appellants to obtain 

advance written permission should they fail to meet a condition. This provision states: 

Any of the acts that [the Signing Appellants are] required to do or 

prohibited from doing by any of the provisions of this Agreement may, 

notwithstanding such provisions, be omitted or done, as the case may be, 

only if [HSLY] by an instrument in writing, has given [HSLY’s] prior 

consent thereto. 

{¶14} This court has recently held that written waiver provisions are valid and 

enforceable in Ohio. “Ohio law is very clear that a contract that expressly provides that 

it may not be amended, modified, or waived except in writing executed by the parties is 

not subject to oral modification.” Kelley v. Ferraro, 188 Ohio App.3d 734, 
2010-Ohio-2771, 936 N.E.2d 986, ¶ 39 (8th Dist.), citing Freeman-McCown v. Cuyahoga 

Metro. Hous. Auth., 8th Dist. Nos. 77182 and 77380, 2000 WL 1594090 (Oct. 26, 2000); 

Rosepark Properties, Ltd. v. Buess, 167 Ohio App.3d 366, 2006-Ohio-3109, 855 N.E.2d 

140, ¶ 38 (10th Dist.); Chiaverini, Inc. v. Jacobs, 6th Dist. No. L-06-1360, 

2007-Ohio-2394, ¶ 24; Fultz & Thatcher v. Burrows Group Corp., 12th Dist. No. 

CA2005-11-126, 2006-Ohio-7041, ¶ 17. 

{¶15} However, even with such a written waiver provision, HSLY, through its 

actions, may waive a requirement under the agreement. Discussing no-oral-modification 

clauses, the Twelfth District reasoned, 

if such clauses are rigidly enforced, then a party could simply insert the 

clause into an agreement and would be magically protected in the future no 

matter what that party said or did. More simply, by including a 

no-oral-modification clause in a contract, a party could orally induce the 

opposing party in any way and then hide behind the clause as a defense. 

(Internal citations omitted.) Fields Excavating, Inc. v. McWane, Inc., 12th 

Dist. No. CA2008-12-114, 2009-Ohio-5925, ¶ 17, citing Beatty v. 

Guggenheim Exploration Co., 225 N.Y. 380, 381, 122 N.E. 378 (1919). 

HSLY may have acquiesced when the improvements were not completed in 2007 when 

making disbursements. According to appellants’ complaint, HSLY continued to make 

disbursements even though a condition precedent to any disbursement was that appellants 

not be in breach of the agreement. Based on these arguments and the facts alleged in 

appellants’ complaint, it is difficult to conclude that, as a matter of law, HSLY did not 

waive the requirement in the contract that improvements be completed by 2007. 

{¶16} HSLY argues that its mere silence cannot be construed as a waiver, 

especially in light of the anti-waiver provisions. Under the Loan Agreement, a 
precondition to any disbursement of funds from Snowville’s loan account was that 

appellants not be in breach. HSLY made disbursements after 2007, indicating they were 

waiving the requirement for completion of improvements for loan disbursements. This is 

more than mere silence. However, its waiver in one instance does not act to relinquish 

its rights to enforce other contract provisions according to the anti-waiver provision. 

{¶17} The waiver must be clear and unequivocal if it contradicts a written contract 

provision. If it is, a written waiver provision, just like any other provision in a contract, 

can be waived by actions of the parties. Glenmoore Builders, Inc. v. Smith Family Trust, 

9th Dist. No. 24299, 2009-Ohio-3174, ¶ 41. Based on appellants’ complaint, HSLY did 

not enforce the completion date for the improvements or object when appellants 

continually failed to timely complete goals under the Loan Agreement. HSLY continued 

to make disbursements under the Loan Agreement. 

{¶18} Appellants also claim that an agreement entered into between them,1

 HSLY, 

and the City indicates that the completion date for the improvements was extended at 

least until November 2010. This Sewer Agreement states, in part: 

 1

 This agreement was signed by representatives of HSLY, the City, and Snowville through 

Queenswood and Infinity; and by Robert Ream and Richard Puzzitiello individually. 
[HSLY] agree[s] as follows: 

1. The disbursement of funds by [HSLY] from [Snowville’s] ACCOUNT 

with respect to the payment of any and all statements for labor and materials 

in connection with the aforesaid improvements of Phase I of the Woodlands 

of Snowville Subdivision and the improvement plans therefore, shall be 

made only upon receipt by [HSLY] of payment certificates from the Project 

Engineer, approved by [Snowville] and the Engineer of City, that said 

certificates reflect the reasonable cost and reasonable value of the 

completion of the development, as verified by [HSLY], to the date of each 

disbursement. Upon receipt of said payment certificate and upon its own 

verification, [HSLY] shall then make the appropriate disbursement of 

funds. 

{¶19} The agreement went on to give appellants until November 2010 to complete 

the sewer treatment facility, or the City could take over construction and receive 

compensation from an escrow account held by HSLY. Even if we assume that appellants 

are correct that the Sewer Agreement evidences a waiver of the completion date, they 

would still be in breach of the Loan Agreement because the maturity date occurred 

without appellants repaying the loan. 

{¶20} Appellants argue that the Sewer Agreement also extended the maturity date 

by at least a year because, within that agreement, the City and appellants agreed that 

installation of the sewer treatment facility would be completed within one year or the City 
could complete the project on its own and HSLY would pay the City for the cost of 

construction from appellants’ loan account. Appellants argue that this Sewer Agreement, 

entered into less than a month before HSLY sent appellants a notice of default, modified 

the maturity date of the loan. However, in the Sewer Agreement, HSLY never promised 

to provide funds to appellants for construction. If anyone had a claim against HSLY 

from the Sewer Agreement it would be the City if it had taken over construction, but the 

Sewer Agreement does not constitute a clear promise on the part of HSLY to continually 

advance funds to appellants outside the terms of the Loan Agreement. Therefore, the 

Sewer Agreement did not evidence a clear intent to extend the maturity date of the loan. 

{¶21} Appellants have also asserted that the loan was not due because they validly 

exercised a provision of the Loan Agreement allowing them to extend the maturity date 

for one year. Section 4 of the Loan Agreement states: 

Provided that at the time of such exercise, no Event of Default or Possible 

Default * * * then exists hereunder or under any other Loan Document, 

Borrower shall have two (2) options to extend the term of the Loan (each an 

“Extension Option”). Each extension option shall be for a period of an 

additional twelve (12) months thereafter. * * * Borrower shall exercise the 

first Extension Option by providing written notice of such exercise to 

[HSLY] no less than thirty (30) days prior to the Maturity Date. * * * 

Contemporaneously with the exercise of each Extension Option, Borrower 

will pay to [HSLY] an extension fee in an amount equal to one quarter of 

one percent (1/4%) of the outstanding principal balance of the Loan. 

{¶22} Appellants attached documentation to their complaint indicating they sent an 

extension notice on October 19, 2009, and that they submitted the required payment on 

November 12, 2009, which was processed and accepted by HSLY on November 16, 
2009. Based on the facts pled, and accepting their accuracy, appellants have established 

they may have validly extended the maturity date of the loan. If HSLY accepted the 

payment, it could waive the requirement within the extension clause stating that no 

condition of default exist at the time of the extension. “[W]aiver of a contract term can 

occur when a party conducts itself in a manner inconsistent with an intention to insist on 

that term.” Vivi Retail, Inc. v. E & A N.E. Ltd. Partnership, 8th Dist. No. 90527, 

2008-Ohio-4705, ¶ 30, citing Convenient Food Mart Inc. v. Atwell, 11th Dist. No. 

2003-L-174, 2005-Ohio-704. 

{¶23} HSLY argues that it did not accept the payment and refused to extend the 

maturity date. However, that argument relies on evidence outside of the complaint. The 

court could have converted the motion to dismiss to one for summary judgment to rely on 

this evidence of refusal to extend the maturity date, but from the face of the complaint it 

appears that HSLY accepted payment of the fee it required to extend the loan for one 

year. Appellants have put forth a set of facts supported by evidence indicating the 

maturity date of the loan was extended. 

{¶24} Based on appellants’ arguments in their complaint that they validly 

exercised an option to extend the maturity date of the Loan Agreement and that HSLY 

waived the completion date of the improvements, the trial court erred in dismissing 

appellants’ claim for breach of the Loan Agreement. They have sufficiently plead such a 

claim in order to survive a motion to dismiss for failure to state a claim. 
ii. Good Faith and Fair Dealing 

{¶25} Appellants also allege in their complaint that HSLY owed them a duty to 

operate in good faith and that HSLY breached that duty by calling the loan due. 

{¶26} Ohio’s codification of the Uniform Commercial Code (“UCC”) includes a 

duty to act in good faith. R.C. 1301.304, formerly R.C. 1301.09, states, “[e]very 

contract or duty within [the UCC] imposes an obligation of good faith in its performance 

and enforcement.” R.C. 1301.201 defines good faith as “honesty in fact and the 

observance of reasonable commercial standards of fair dealing.” A breach of a duty to act 

in good faith requires this court to “determine whether any alleged acts were 

‘commercially unjustifiable.’” Needham v. The Provident Bank, 110 Ohio App.3d 817, 

831, 675 N.E.2d 514 (8th Dist.1996). However, Ohio courts have repeatedly held that “a 

lender does not act in ‘bad faith’ when it decides to enforce its contract rights.” Id. at 

831-832, citing Metro. Life Ins. Co. v. Triskett Illinois, Inc., 97 Ohio App.3d 228, 646 

N.E.2d 528 (1st Dist.1994); Gaul v. Olympia Fitness Ctr., Inc., 88 Ohio App.3d 310, 623 

N.E.2d 1281 (8th Dist.1993); Bennco Liquidating Co. v. Ameritrust, 86 Ohio App.3d 646, 

621 N.E.2d 760 (8th Dist.1993); First Fed. S. & L. Assn. of Akron v. Cheton & Rabe, 57 

Ohio App.3d 137, 567 N.E.2d 298 (9th Dist.1989); Third Natl. Bank & Trust Co. v. 

Sinder, 2d Dist. No. 9995, 1987 WL 12965 (June 18, 1987). 

{¶27} HSLY was operating under the provisions of the Loan Agreement when it 

called the loan due. Appellants claim that HSLY owes them some heightened duty 

outside the four corners of the contract because HSLY is their banker. However, the 
contract specifically provides that “[HSLY] shall not have any fiduciary responsibilities 

to [appellants]. [HSLY] undertakes no responsibility to [appellants] to review or inform 

[them] of any matter in connection with any phase of [their] business or operations.” 

Further, “the relationship between a creditor and debtor is not a fiduciary one, but is one 

governed by freedom of contract.” Needham at 828, 675 N.E.2d 514, citing Stone v. 

Davis, 66 Ohio St.2d 74, 78, 419 N.E.2d 1094 (1981). 

{¶28} All of appellants’ allegations of breach of a duty of good faith are actually 

arguments going to a breach of the Loan Agreement. HSLY acted to enforce its rights 

under the Loan Agreement. As other Ohio courts have found, that is not akin to a breach 

of good faith. Triskett, 97 Ohio App.3d 228, 646 N.E.2d 528; Gaul, 88 Ohio App.3d 

310, 623 N.E.2d 1281. No actions taken by HSLY were commercially unreasonable. 

“Firms that have negotiated contracts are entitled to enforce them to the letter, even to the 

great discomfort of their trading partners, without being mulcted for lack of ‘good faith.’” 

Kham & Nate’s Shoes No. 2, Inc. v. First Bank of Whiting, 908 F.2d 1351, 1357 (7th 

Cir.1990). 

{¶29} While appellants have set forth sufficient facts for a breach of contract 

action, they have failed to state a claim for breach of a duty of good faith. From the 

scant record, it appears that HSLY provided appellants with as much leeway as possible 

to complete the project until, in its eyes, the loan became due. 

iii. Negligent Misrepresentation 
{¶30} The Ohio Supreme Court has stated the elements of a claim for negligent 

misrepresentation: 

“One who, in the course of his business, profession or employment, or in 

any other transaction in which he has a pecuniary interest, supplies false 

information for the guidance of others in their business transactions, is 

subject to liability for pecuniary loss caused to them by their justifiable 

reliance upon the information, if he fails to exercise reasonable care or 

competence in obtaining or communicating the information.” (Emphasis 

sic.) Delman v. Cleveland Hts., 41 Ohio St.3d 1, 4, 534 N.E.2d 835 

(1989), quoting 3 Restatement of the Law 2d, Torts 126-127, Section 

552(1) (1965). 

{¶31} “A negligent misrepresentation does not lie for omissions; there must be 

some affirmative false statement.” Manno v. St. Felicitas Elementary School, 161 Ohio 

App.3d 715, 2005-Ohio-3132, 831 N.E.2d 1071, ¶ 34 (8th Dist.), citing Leal v. Holtvogt, 

123 Ohio App.3d 51, 62, 702 N.E.2d 1246 (2d Dist.1998), citing Textron Fin. Corp. v. 

Nationwide Mut. Ins. Co., 115 Ohio App.3d 137, 149, 684 N.E.2d 1261 (9th Dist.1996). 

Here, HSLY did not supply false information. 

{¶32} In the Sewer Agreement, HSLY acknowledged that it held over $3 million 

in a loan account for Snowville. It did not affirmatively state that this money would be 

available if appellants breached the Loan Agreement. The statements made in the Sewer 

Agreement were true at the time they were made. This was before the loan reached its 

natural maturity date, and appellants did not secure a clear and unequivocal extension of 

that date in the Sewer Agreement. No untrue statement was made in this case. 

Therefore, the trial court did not err in granting HSLY’s motion to dismiss the negligent 

misrepresentation claim. 
III. Conclusion 

{¶33} A motion to dismiss requires that no plausible claim be stated in the 

complaint entitling the plaintiff to relief. There are issues that, if borne out in the course 

of this litigation, could result in appellants obtaining judgment against HSLY. 

Therefore, the trial court erred in dismissing appellants’ claim for breach of contract 

against HSLY. 

{¶34} This cause is affirmed in part, reversed in part, and remanded to the lower 

court for further proceedings consistent with this opinion. 

It is ordered that appellants and appellee share the costs herein taxed. 

The court finds there were reasonable grounds for this appeal. 

A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of 

the Rules of Appellate Procedure. 

FRANK D. CELEBREZZE, JR., PRESIDING JUDGE 

KATHLEEN ANN KEOUGH, J., and 

MARY EILEEN KILBANE, J., CONCUR