RECOMMENDED FOR PUBLICATION

Pursuant to Sixth Circuit I.O.P. 32.1(b)

File Name: 23a0015p.06

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

ELECTRONIC MERCHANT SYSTEMS LLC,

Plaintiff-Appellant,

v.

PETER GAAL,

Defendant-Appellee.

┐

│

│

│

│

│

│

│

┘

No. 22-3602

Appeal from the United States District Court for the Northern District of Ohio at Cleveland.

No. 1:20-cv-01898—Dan A. Polster, District Judge.

Decided and Filed: January 30, 2023

Before: GILMAN, McKEAGUE, and GRIFFIN, Circuit Judges.

_________________

COUNSEL

ON BRIEF: Egon P. Singerman, EGON P. SINGERMAN, ATTORNEY AT LAW, Solon, 

Ohio, Hunter G. Cavell, CAVELL LAW, LLC, Solon, Ohio, for Appellant. Alexander J. Durst, 

THE DURST LAW FIRM, Cincinnati, Ohio, for Appellee.

_________________

OPINION

_________________

McKEAGUE, Circuit Judge. Plaintiff Electronic Merchant Systems LLC (“EMS”) 

appeals the district court’s dismissal, for failure to state a claim, of its complaint against 

Defendant Peter Gaal for breach of guaranty, unjust enrichment, and fraud. EMS argues that the 

district court erred in considering outside information, not granting EMS leave to amend its 

complaint, and finding that Gaal is not liable under a guaranty provision that he signed for debt 

>
No. 22-3602 Electronic Merchant Sys. LLC v. Gaal Page 2

allegedly owed EMS by Gaal’s company, Procom America LLC. We AFFIRM in part and

REVERSE in part. 

I.

1. Facts

EMS, an Ohio-based corporation, offers payment processing services to other companies. 

In April 2014, it entered into a merchant agreement (the “2014 Agreement”) with non-party 

Procom, a business owned by Defendant Peter Gaal that sold historical tours. Under this 

agreement, EMS and an associated bank provided payment processing services to Procom, in 

return for which Procom paid fees to EMS. 

The 2014 Agreement—which was a form contract drafted by EMS—was executed by 

Gaal and another Procom officer, Nikoletta Montgomery, and contained a personal-guaranty 

provision signed by Gaal. The guaranty provision reads: 

The undersigned . . . in consideration of BANK and EMS entering into this 

Merchant Agreement (“Agreement”) with [Procom], hereby absolutely and 

unconditionally guarantee the full and prompt payment of any and all amounts 

owed to BANK and EMS and the performance of all MERCHANT’S obligations 

under this Agreement as may be subsequently amended from time to time, 

whether before or after termination or expiration of the Agreement. . . . This 

Guaranty is continuing, binding upon heirs and successors and may not be 

changed except in writing and signed by BANK and EMS.

R. 40-1 at PID 278. The 2014 Agreement also contains terms relating to “chargebacks,” which 

occurred when a Procom customer’s transaction was declined or canceled after EMS had already 

credited Procom’s account for the purchase. Under the agreement, EMS paid the money back to 

the Procom customer, then in turn charged Procom for that money plus a chargeback fee. 

On June 10, 2019, EMS and Procom executed a second agreement (the “2019 

Agreement”). This agreement was, like the first, a form contract drafted by EMS, and it 

addressed the same subject as the first contract but with slightly altered terms (beneficial to 

EMS). This contract contained an explicit integration clause, which reads: 

This Agreement, including the Application and any other documents executed in 

conjunction herewith, constitutes and expresses the entire agreement and 
No. 22-3602 Electronic Merchant Sys. LLC v. Gaal Page 3

understanding between [Procom], Bank and EMS with respect to the subject 

matter hereof and supersedes all prior and contemporaneous agreements and 

understandings, inducements, or conditions, by Bank, EMS or its sales 

representative, whether expressed or implied, oral or written.

R. 40-2 at PID 291. The agreement contained a new guaranty provision, signed not by Gaal but 

by a different Procom employee, Debra Watkins. 

The COVID-19 pandemic hit Procom hard. Beginning in March 2020, many Procom 

customers canceled their credit card purchases with Procom, resulting in, EMS claims, over 

$10 million in chargebacks. Some of these chargebacks related to transactions occurring prior to 

June 10, 2019 (the execution date of the 2019 Agreement), and some related to transactions 

occurring after that date. Neither Procom nor Gaal has paid EMS the money for these 

chargebacks. 

Procom is currently involved in a Chapter 7 bankruptcy proceeding in the United States 

Bankruptcy Court for the Middle District of Florida. EMS filed a creditor’s proof of claim in 

this proceeding, the accuracy of which was attested to by EMS’s Chief Financial Officer under 

penalty of perjury. 

2. Procedural History 

On August 25, 2020, EMS instituted this action in the United States District Court for the 

Northern District of Ohio against Gaal,1 and the operative complaint alleges breach of guaranty, 

unjust enrichment, and fraud.2 Gaal moved to dismiss the complaint for lack of personal 

jurisdiction and failure to state a claim. The district court granted Gaal’s motion to dismiss for 

failure to state a claim, and declined to analyze the personal-jurisdiction issue. It first found that 

the 2019 Agreement superseded the 2014 agreement “in all material respects,” including 

replacing Gaal’s guaranty provision with a new guaranty provision signed by Watkins. R. 49 at 

PID 426. The court then concluded that all of the chargebacks in question—which the court 

1EMS also named Nikoletta Montgomery, a former Procom employee involved in the execution of the 

2014 Agreement, as a party to the suit, but later voluntarily dismissed her. 

2The district court dismissed EMS’s fraud and unjust-enrichment claims, because EMS failed to respond to 

Gaal’s arguments regarding those issues in its opposition to Gaal’s motion to dismiss. EMS does not challenge that 

determination on appeal. Thus, only the breach of guaranty claim remains.
No. 22-3602 Electronic Merchant Sys. LLC v. Gaal Page 4

found occurred after the execution of the 2019 Agreement, though some related to transactions 

which themselves occurred before that date—arose solely under the 2019 Agreement. Because 

Gaal signed the guaranty provision of only the 2014 Agreement, the court concluded that he was 

not liable for any of the chargeback debt. In performing this analysis, the court took judicial 

notice of EMS’s filing in the Procom bankruptcy proceeding and refused to consider an affidavit 

(proffered by EMS) by Daniel Moenich, an EMS employee (the “Moenich Affidavit”). 

EMS timely appealed. 

II.

EMS raises four issues on appeal: that the district court erred in (1) considering the 

bankruptcy filing and refusing to consider the Moenich Affidavit, (2) dismissing with prejudice 

rather than allowing EMS to amend its complaint, (3) finding that the 2019 Agreement replaced 

the 2014 Agreement rather than merely supplementing it, and (4) finding that all of the 

chargeback debt—including that relating to transactions which occurred prior to the execution of 

the 2019 Agreement—arose under the 2019 Agreement rather than under the 2014 Agreement. 

We affirm the district court on the first and third issues, decline to address the second, and 

reverse on the fourth, holding that, as alleged by EMS, any chargeback debt related to 

transactions occurring prior to the execution of the 2019 Agreement arose under the 2014 

Agreement. 

1. Standard of Review 

We review de novo a district court’s decision to dismiss under Rule 12(b)(6) for failure to 

state a claim. Lindke v. Tomlinson, 31 F.4th 487, 495 (6th Cir. 2022). “To survive a motion to 

dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to 

relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal 

quotation marks omitted). In analyzing a 12(b)(6) motion, the court must “construe the 

complaint in the light most favorable to the plaintiff and accept all allegations as true.” Taylor v 

City of Saginaw, 922 F.3d 328, 331 (6th Cir. 2019) (quoting Keys v. Humana, Inc., 684 F.3d 605, 

608 (6th Cir. 2012)). However, the court does not have to accept as true “unwarranted factual 

inferences.” Total Benefits Planning Agency, Inc. v. Anthem Blue Cross & Blue Shield, 552 F.3d 
No. 22-3602 Electronic Merchant Sys. LLC v. Gaal Page 5

430, 433 (6th Cir. 2008). The burden of demonstrating that the complaint fails to adequately 

state a claim falls on the defendant. Taylor, 922 F.3d at 331. 

Ohio law governs this dispute, which provides that if the terms of a contract are “clear 

and unambiguous, then its interpretation is a matter of law for the court.” Wilkerson v. Am. 

Family Ins. Co., 997 F.3d 666, 668 (6th Cir. 2021) (citation and internal quotation marks 

omitted). Where a dispute is based on the interpretation of a contract, and the contract’s terms 

are clear, “there is no issue of fact to be determined,” Masco Corp. v. Wojcik, 795 F. App’x 424, 

427 (6th Cir. 2019), and thus dismissal on 12(b)(6) grounds might be appropriate, see Constr. 

Interior Sys., Inc. v. Marriott Family Rests., Inc., 984 F.2d 749, 754 (6th Cir. 1993); In re Fifth 

Third Early Access Cash Adv. Litig., 925 F.3d 265, 276 (6th Cir. 2019).

2. The District Court’s Consideration of Outside Information

EMS makes multiple arguments regarding the district court’s consideration of (or refusal 

to consider) information outside of the pleadings. Chiefly, EMS argues that the district erred 

(1) in taking judicial notice of EMS’s filing in Procom’s bankruptcy proceeding, without 

converting the motion to dismiss into a summary judgment motion and allowing EMS to present 

other evidence, and (2) in refusing to consider the Moenich Affidavit. Neither of these 

arguments is persuasive. 

Generally, in considering a motion to dismiss, the district court is confined to considering 

only the pleadings, or else it must convert the motion into one for summary judgment under Rule 

56. See Wysocki v. Int’l Bus. Mach. Corp., 607 F.3d 1102, 1104 (6th Cir. 2010). However, the 

court may, in undertaking a 12(b)(6) analysis, take judicial notice of “matters of public record, 

orders, items appearing in the record of the case, and exhibits attached to the complaint.” Golf 

Vill. North, LLC v. City of Powell, 14 F.4th 611, 617 (6th Cir. 2021) (quoting Meyers v. 

Cincinnati Bd. of Educ., 983 F.3d 873, 880 (6th Cir. 2020)). Courts may consider public records 

for the truth of the statements contained within them only when the “contents prove facts whose 

accuracy cannot reasonably be questioned.” Passa v. City of Columbus, 123 F. App’x 694, 697 

(6th Cir. 2005). We review challenges to a court’s decision-making regarding whether to take 

judicial notice of facts for abuse of discretion. See Price v. Jefferson County, 9 F. App’x 369, 
No. 22-3602 Electronic Merchant Sys. LLC v. Gaal Page 6

370 (6th Cir. 2001); Platt v. Bd. of Comm’rs on Grievs. & Discipline of the Ohio Supreme Court, 

894 F.3d 235, 245 (6th Cir. 2018). 

The district court took judicial notice of EMS’s filing in the bankruptcy proceeding “for 

the limited purpose of confirming when the chargebacks occurred.” R. 49 at PID 427. The court 

used the filing to conclude that all chargebacks occurred “in March 2020 or later.” Id. at PID 

428. This fact was, but is no longer, disputed. 

Relying on Rondigo, L.L.C. v. Twp. of Richmond, 641 F.3d 673, 680 (6th Cir. 2011), 

EMS argues that the district court erred in considering this information without “convert[ing] the 

Motion to Dismiss to a motion for summary judgment” because “the bankruptcy matter was not 

referred to in the Amended Complaint.” Appellant’s Br. at 10.3 That case states: 

If a court does consider material outside the pleadings, the motion to dismiss must 

be treated as a motion for summary judgment under Rule 56 and all parties must 

be given a reasonable opportunity to present all material pertinent to the motion. 

However, a court may consider “exhibits attached [to the complaint], public 

records, items appearing in the record of the case and exhibits attached to a 

defendant’s motion to dismiss so long as they are referred to in the complaint and 

are central to the claims contained therein,” without converting the motion to one 

for summary judgment.

Rondigo, 641 F.3d at 680 (internal citation omitted) (quoting Bassett v. Nat’l Collegiate Athletic 

Ass’n, 528 F.3d 426, 430 (6th Cir. 2008)). EMS appears to allege that the phrase “so long as 

they are referred to in the complaint” modifies the entire list of items the district court may 

consider, and thus that it was improper for the district court to consider the bankruptcy filing 

because it was not referred to in EMS’s complaint. 

But it is clear to this Court that that phrase applies only to “exhibits attached to a 

defendant’s motion to dismiss,” not to public records or any other item in the list. Cf. Amini v. 

Oberlin College, 259 F.3d 493, 502 (6th Cir. 2001) (“In determining whether to grant a Rule 

12(b)(6) motion, the court primarily considers the allegations in the complaint, although matters 

of public record, orders, items appearing in the record of the case, and exhibits attached to the 

3EMS does not challenge the district court’s conclusion that the bankruptcy filing constitutes a public 

record. EMS also does not allege that the district court erred in considering the filing for the truth of its contents, 

nor does it dispute the facts contained within the filing. 
No. 22-3602 Electronic Merchant Sys. LLC v. Gaal Page 7

complaint, also may be taken into account. . . . This circuit has further held that documents that a 

defendant attaches to a motion to dismiss are considered part of the pleadings if they are 

referred to in the plaintiff’s complaint and are central to her claim.”) (cleaned up and emphasis 

added). Thus, it was not improper for the district court to consider the bankruptcy filing without 

converting the motion to dismiss into a motion for summary judgment. 

Regarding the Moenich affidavit, the district court stated: 

The Court has ultimately disregarded the . . . affidavit for its Rule 12(b)(6) 

analysis. EMS submitted this affidavit, in part, to provide facts about Procom’s 

chargeback debt, but none of this information is alleged in the first amended 

complaint. Thus, the Court will not consider the affidavit’s contents because Rule 

12(b)(6) review is limited [to] the complaint, attendant contracts, and public 

records. 

R. 49 at PID 427, n.4. EMS’s argument that the district court erred in refusing to consider the 

Moenich affidavit is unclear. The gist appears to be that because the district court allegedly 

should have converted the motion to dismiss into a motion for summary judgment, it “should 

have also allowed Appellant to provide Rule 56 evidence, including the Affidavit of Daniel 

Moenich.” Appellant’s Br. at 10. But EMS provides no specific argument as to why the district 

court’s refusal to consider the affidavit—which does not fall into any of the categories of 

information which the district court may consider in addition to the pleadings in reviewing a 

motion to dismiss, see Golf Vill. North, 14 F.4th at 617—was on its own improper. Under these 

circumstances, we cannot say that the district court abused its discretion in refusing to consider 

the affidavit. 

And even if the district court did err in considering the bankruptcy filing or refusing to 

consider the Moenich affidavit, any error was harmless because EMS points to no legitimate way 

in which the analysis of the motion to dismiss would differ if the bankruptcy filing had been 

excluded or the affidavit included. Cf. Bates v. Green Farms Condo Ass’n, 958 F.3d 470, 484 

(6th Cir. 2020) (“[E]rror will be treated as harmless if the dismissal can be justified without 

reference to any extraneous matters.” (quoting 5C CHARLES A. WRIGHT ET AL., Federal Practice 

and Procedure § 1364, at 63 (3d ed. Supp. 2019))); Federated Mut. Ins. Co. v. Coyle Mech. 

Supply Inc., 983 F.3d 307, 313 (7th Cir. 2020) (“[A] district court’s failure to convert a motion 
No. 22-3602 Electronic Merchant Sys. LLC v. Gaal Page 8

for judgment on the pleadings into a motion for summary judgment ‘will not necessarily mandate 

reversal unless the record discloses the existence of unresolved material fact issues, or the parties 

represent that they would have submitted specific controverted material factual issues to the trial 

court if they had been given the opportunity.’ . . . In other words, a district court’s failure to treat 

the motion as one for summary judgment does not require reversal if the error was harmless.” 

(citation omitted)).

EMS argues that, “[b]y disregarding the Affidavit of Daniel Moenich, in conjunction with 

reviewing the bankruptcy court records, the District Court did not allow Appellant to argue that 

the transactions occurring before the 2019 Agreement was signed, although charged back after 

the 2019 Agreement signature, fall under the 2014 Agreement.” Appellant’s Br. at 10. But this 

is simply untrue. The district court expressly addressed and rejected that exact argument, and 

EMS points to no additional facts within the Moenich Affidavit that would change the district 

court’s conclusion. As stated, it is no longer even contested that chargebacks occurred only after 

the execution of the 2019 Agreement, which was what the district court looked to the bankruptcy 

filing to prove, and what EMS attempted to incorrectly disprove with the Moenich Affidavit. 

And although EMS makes vague allegations in other sections of its brief that the affidavit 

contains evidence of EMS’s intent regarding the effect of the 2019 Agreement on the 2014 

Agreement, the district court concluded—correctly, as detailed below—that intent was irrelevant 

to the analysis because the 2019 Agreement is unambiguous. We therefore reject EMS’s 

argument that the district court committed reversible error in considering the bankruptcy filing 

and excluding the Moenich Affidavit. 

3. When Did the Chargeback Debt Accrue 

The plain language of Gaal’s guaranty applies solely to Procom’s obligations accrued 

under the 2014 Agreement, and not to any obligations which arose under the 2019 Agreement 

that superseded it; Gaal “guarantee[d] the full and prompt payment of any and all amounts owed 

to BANK and EMS and the performance of all MERCHANT’S obligations under this 

Agreement.” R. 40-1 at PID 278 (emphasis added). The issue thus becomes whether any of the 

chargeback debt that EMS seeks to recoup from Gaal accrued under the 2014 Agreement. EMS 

argues that the chargeback debt accrued when the original transactions that were charged back 
No. 22-3602 Electronic Merchant Sys. LLC v. Gaal Page 9

occurred, while Gaal argues (and the district court found) that the debt accrued when the 

chargebacks themselves occurred. We agree with EMS: any chargeback debt related to 

transactions which occurred prior to the execution of the 2019 Agreement constitutes an 

obligation arising under the 2014 Agreement, for which Gaal may be liable under his guaranty. 

The accrual date of chargebacks appears to be a question of first impression for Ohio and 

for this circuit. Neither party—nor the district court—has cited any on-point case. Courts in 

other circuits have dealt with a similar issue in the bankruptcy context—when a debt contingent 

on a future event, such as chargeback debt, accrues for bankruptcy purposes—and have 

concluded that “[a] debtor incurs a debt when he becomes legally obligated to pay it.” In re 

Southmark Corp., 62 F.3d 104, 106 (5th Cir. 1995); see also United States v. Gerth, 991 F.2d 

1428, 1433–34 (8th Cir. 1993) (“[D]ependency on a postpetition event does not prevent a debt 

from arising prepetition. . . . A debt can be absolutely owing prepetition even though that debt 

would never have come into existence except for postpetition events. . . . [A] contingency does

not change when a claim arises. . . .”); In re Griffin, 313 B.R. 757, 762 n.4 (Bankr. N.D. Ill. 

2004). Specifically, in the case of chargeback debt, the Fifth Circuit found that chargebacks that 

occurred after the filing of a bankruptcy petition, but which related to transactions that occurred 

prior to filing, “arose” before the filing for bankruptcy purposes. In re United Sciences of 

America, Inc., 893 F.2d 720, 724 (5th Cir. 1990). The court noted: “[the] right to payment, and 

hence [the debtor’s] debt to [the creditor], arose not later than when the charged back item was 

initially credited to [the debtor’s] account, regardless of when the issuing banks actually asserted 

their chargeback claims.” Id.

We find the logic of these cases persuasive in this context. Under the 2014 Agreement, 

once EMS credited Procom with the purchase amounts (ostensibly when or soon after the 

purchases were made), Procom assumed a legal obligation to pay back that amount if any 

chargebacks later occurred. As the 2014 Agreement states: 

[A]n authorized sale does not constitute a guarantee of payment, only available 

credit, and may be subject to dispute or chargeback . . . EMS shall have the right 

to debit the Merchant’s Designated Account, incoming transactions or any other 

funds of the Merchant in . . . EMS’s direct or indirect control by reason of . . . 

EMS’s security interest granted by Merchant . . . for the face amount of any 

transaction and to chargeback such transaction . . . . 
No. 22-3602 Electronic Merchant Sys. LLC v. Gaal Page 10

R. 40-1 at PID 280 (emphasis added). EMS thus had a right to repayment when the transactions 

were made and Procom’s account was credited by EMS, even if that right to repayment was 

contingent upon a future event (the chargebacks). Cf. United Sciences, 893 F.2d at 724. The 

chargeback debt for any transactions made while the 2014 Agreement was in effect thus 

constitutes an obligation arising under the 2014 Agreement, even if the actual chargebacks 

occurred after the 2019 Agreement superseded the 2014 Agreement.4 The district court therefore 

erred in holding to the contrary. 

4. The Effect of the 2019 Agreement 

Having concluded that EMS adequately stated forth a claim of relief under the 2014 

Agreement, and given that Gaal is a signatory only to the 2014 Agreement and its guaranty 

provision, we must finally determine the effect of the 2019 Agreement on the 2014 Agreement—

i.e., whether and to what extent the 2019 Agreement abrogated the 2014 Agreement. There are 

multiple possibilities here: (1) that the 2019 Agreement merely supplemented the 2014 

Agreement (including Gaal’s guaranty provision), leaving Gaal’s obligations under the 2014 

Agreement completely unaffected by the 2019 Agreement, as EMS argues;5(2) that the 2019 

Agreement terminated the 2014 Agreement, cutting off Gaal’s liability under the guaranty 

provision after the execution of the 2019 Agreement, but preserving his liability for obligations 

accrued before that date; or (3) that the 2019 Agreement constituted a novation, completely 

eliminating Gaal’s liability for debts accrued before and after the execution of the 2019 

Agreement.

4The district court and Gaal place weight on the fact that EMS allegedly sought a $45 fee per chargeback in 

bankruptcy court for the transactions, despite the fact that supposedly only the 2019 Agreement contemplates a 

$45 chargeback fee, with the 2014 Agreement allegedly capping chargeback fees at $25. But EMS argues that the 

2014 Agreement contemplates a $45 chargeback fee. The 2014 Agreement mentions a $45 chargeback fee and a 

$25 chargeback fee in separate locations. Thus, EMS seeking a $45 chargeback fee in the separate bankruptcy 

proceeding is not, at this stage, concrete evidence that EMS believes that the chargebacks arose under the 2019 

Agreement. 

5Gaal alleges that EMS has “forfeited and waived any argument that the 2019 agreement was not a 

novation” by “fail[ing] to raise any meaningful objection below and . . . fail[ing] to identify or brief the issue on 

appeal.” Appellee’s Br. at 24–25. However, EMS argued before the district court and in its briefs before this Court 

that “[t]he 2019 Agreement supplemented the 2014 Agreement, and was a mere formality,” Appellant’s Br. at 16, 

clearly arguing in substance if not in name that the 2019 Agreement was not a novation.
No. 22-3602 Electronic Merchant Sys. LLC v. Gaal Page 11

First: termination.6In interpreting a contract under Ohio law, “[i]f the contract terms are 

not ambiguous, courts apply the plain language of the contract.” New Lansing Gardens Hous. 

LP v. Columbus Metro. Hous. Auth., 46 F.4th 514, 521 (6th Cir. 2022). Where a contract’s terms 

are unambiguous, extrinsic evidence is not admissible to clarify or supplement the terms, and 

evidence of subjective intent of the parties is irrelevant. See Wilkerson, 997 F.3d at 668 (“If, 

however, the contract is facially ambiguous, the court may resort to evidence outside the contract 

to determine its meaning.”); Susany v. Guerrieri, 48 N.E.3d 637, 644 (Ohio App. Ct. 2016) 

(“[T]he parties’ subjective intent at the time of contracting is irrelevant in ascertaining whether 

the language is ambiguous”); Westfield Ins. Co. v. Galatis, 100 Ohio St. 3d 216, 219 (Ohio 

2003). A subsequent contract between parties may supersede terms in a preceding contract only 

where “the subsequent agreement specifically evidences an intent to do so.” Jackson v. 

Sunnyside Toyota, Inc., Ohio App. 3d 370, 377 (Ohio App. Ct. 2008) (quoting Trinova Corp. v. 

Pilkington Bros., 70 Ohio St.3d 271, 276–77 (Ohio 1994)). 

We agree with the district court that the 2019 Agreement terminated the 2014 Agreement 

such that Gaal incurred no liability under his guaranty provision for debts accruing under the 

2019 Agreement. The 2019 Agreement—which was a form contract drafted by EMS—explicitly 

states: 

This Agreement, including the Application and any other documents executed in 

conjunction herewith, constitutes and expresses the entire agreement and 

understanding between [Procom], Bank and EMS with respect to the subject 

matter hereof and supersedes all prior and contemporaneous agreements and 

understandings, inducements, or conditions, by Bank, EMS or its sales 

representative, whether expressed or implied, oral or written.

R. 40-2 at PID 291 (emphasis added). This language clearly and unambiguously provides that 

the terms of the 2019 Agreement replace the terms of the 2014 Agreement, terminating the 2014 

Agreement. No extrinsic evidence is needed or admissible to interpret these unambiguous terms. 

6EMS argues that the question of whether the 2014 Agreement was terminated is a factual dispute 

inappropriate for resolution at the 12(b)(6) stage. However, as stated previously, where, as here, contract language 

is unambiguous—and thus extrinsic evidence inadmissible—interpretation of that contract is a legal question for the 

court, suitable for 12(b)(6) analysis. See Constr. Interior, 984 F.2d at 754; Fifth Third, 925 F.3d at 276. 
No. 22-3602 Electronic Merchant Sys. LLC v. Gaal Page 12

The 2019 guaranty provision—which was signed by a different EMS employee, Watkins—

therefore terminated and replaced the 2014 guaranty provision that Gaal signed. 

Not once in its briefs does EMS even attempt to argue that the language in the 2019 

Agreement was ambiguous, offer an alternative reading of its language, or explain why EMS’s 

alleged intent is not reflected in the terms of the contract that it itself drafted. The chief case that 

EMS cites in support of its position, Chapman Drug Co. v. Brewer, 390 F.Supp.264, 266, (E.D. 

Tenn. 1974), is not binding on this Court and is also inapposite. In that case, the defendant 

operated pharmacies under a certain corporation, and had signed a guaranty agreement with the 

plaintiff regarding debts owed to the plaintiff by the corporation. Id. at 265. The defendant later 

advised the plaintiff that the pharmacies had begun operating under a different corporation. Id.

Later, when money was owed to the plaintiff for purchases for the pharmacies, the plaintiff sued 

the defendant, arguing that the guaranty still applied and that he was liable for the debt. Id. The 

court concluded that the defendant was still liable for the debt under the guaranty because the 

guaranty was never clearly revoked, and because it was “evident from the record that despite the 

name changes and shift in corporate forms, plaintiff looked to defendant as guarantor of the 

transactions and that this was the intent of the parties when the original agreement was signed.” 

Id. at 266. Here, despite EMS’s contentions that the 2019 Agreement was a mere formality, the 

language of the 2019 Agreement clearly revoked the terms of the 2014 Agreement, and explicitly 

instated a new guarantor. Thus, the logic of Chapman does not apply. 

Next: novation. Just because the 2019 Agreement superseded and terminated the 2014 

Agreement does not automatically mean that the 2019 Agreement also extinguished Gaal’s 

liability under the 2014 Agreement for debts already accrued under that agreement. Mere 

termination or expiration of an agreement alone does not automatically terminate obligations 

already accrued. See CBS Personnel Servs., LLC v. Canadian Am. Trans, Inc., 290 F. Supp. 2d 

879, 884 (S.D. Ohio 2003) (finding that the personal guaranty in an earlier agreement was 

superseded by a subsequent agreement, but that the new agreement “did not extinguish any past 

liabilities accrued pursuant to prior agreement,” and that the guarantor was liable only for debts 

“accrued pursuant to [the] prior agreement . . . during the period when the guaranty he signed 

was in effect”); R.L.R. Inv., LLC v. Wilmington Horsemens Group, LLC, 2014-Ohio-4757, at *25 
No. 22-3602 Electronic Merchant Sys. LLC v. Gaal Page 13

(Ohio App. Ct. 2014) (finding that the termination of a guaranty clause “did not affect liabilities 

incurred prior to the termination”); Steele v. Goyner, 1 Ohio App. 331, 333–34 (Ohio App. Ct. 

1913) (finding that a second guaranty did not extinguish liabilities incurred by the defendant 

under a previous guaranty before the second guaranty took effect); cf. Millennium 

Petrochemicals, Inc. v. Brown & Root Holdings, Inc., 390 F.3d 336, 340 (5th Cir. 2004) 

(discussing agreement amongst the Fourth and Ninth circuits that “rights that have vested or 

accrued under a contract prior to the termination of the contract, are not automatically 

extinguished upon termination” and noting that it cannot locate “any cases from other circuits 

which hold otherwise”). To extinguish liabilities already accrued, then, more than an agreement 

to terminate is needed: there must be an intentional agreement between the parties to eliminate 

accrued obligations. Wells Fargo Bank, N.A. v. Perkins, 2011-Ohio-3790, at *22 (Ohio App. Ct. 

2011) (“Whatever the form of the subsequent agreement discharging the prior contractual 

obligation, it is only enforceable if there is a meeting of the minds as to its essential elements.”).

The district court did not address whether the 2019 Agreement was a novation, 

concluding only that the 2019 Agreement terminated the 2014 Agreement—and Gaal’s 

liability—moving forward. Indeed, it was not necessary for the district court to reach the 

question of Gaal’s liability under the 2014 Agreement, considering the court concluded that all 

the chargeback debt accrued under the 2019 Agreement, making Gaal not liable for any of it 

regardless. Because we are “a court of review, not first view,” Taylor, 11 F.4th at 489 (citation 

omitted), we leave this issue to the district court to address in the first instance.

* * *

We thus reverse the district court’s dismissal of EMS’s breach-of-guaranty claim against 

Gaal under Fed. R. Civ. P. 12(b)(6). However, Gaal asserted below—and preserved on appeal—

a lack-of-personal-jurisdiction defense that the district court declined to reach as unnecessary. 

Because neither party briefed the issue before this Court, we remand to the district court to also 

decide the personal-jurisdiction issue in the first instance. And, because we reverse the district 

court’s dismissal of the breach-of-guaranty claim, we need not address whether the district court 

erred in dismissing the cause of action with prejudice.
No. 22-3602 Electronic Merchant Sys. LLC v. Gaal Page 14

V. CONCLUSION

In sum, we REVERSE the district court’s dismissal of Appellant’s breach-of-guaranty 

claim, and REMAND for further proceedings consistent with this opinion.