Court Opinion

ID: 4106419
Source: CourtListenerOpinion
Date Created: 2016-12-12 15:09:44.661692+00
Date Added: 2024-06-11T09:20:45.589103
License: Public Domain

[Cite as Smith v. E.S. Wagner Co., 2016-Ohio-8096.]

                      IN THE COURT OF APPEALS OF OHIO
                          THIRD APPELLATE DISTRICT
                              DEFIANCE COUNTY

ORVILLE SMITH, ET AL.,

        PLAINTIFFS-APPELLANTS/
        CROSS-APPELLEES,

        v.                                                   CASE NO. 4-16-05

E.S. WAGNER COMPANY,

        DEFENDANT-APPELLEE/
        CROSS-APPELLANT,
        -and-                                                OPINION

LEWIS J. WAGNER,

        DEFENDANT-APPELLEE.

                Appeal from Defiance County Common Pleas Court
                          Trial Court No. 13-CV-42475

                                     Judgment Affirmed

                         Date of Decision:        December 12, 2016

APPEARANCES:

        R. Kent Murphree and Stephen F. Hubbard for
                                 Appellants/Cross-Appellees

        Matthew D. Harper for Appellee/Cross-Appellant
Case No. 4-16-05

ROGERS, J.

       {¶1} Plaintiffs-Appellants-Cross-Appellees, Orville Smith (“Orville”) and

Julianne Smith (“Julianne”) (collectively “the Smiths”), appeal the judgment of the

Court of Common Pleas of Defiance County finding in favor of Defendant-

Appellee-Cross-Appellant, E.S. Wagner Company (“E.S. Wagner”), on the Smiths’

claims. On appeal, the Smiths argue that the trial court erred by ignoring the plain

language of the parties’ lease agreement. Additionally, they argue that the trial court

erred by applying the legal theory of accord and satisfaction in this case. E.S.

Wagner appeals the judgment of the Court of Common Pleas of Defiance County

finding in favor of the Smiths on their counterclaim. In its cross-appeal, E.S.

Wagner argues that the trial court erred by failing to award E.S. Wagner their

attorney fees as compensatory damages. For the reasons that follow, we affirm the

judgment of the trial court.

       {¶2} On July 18, 2013, the Smiths filed a complaint in the Court of Common

Pleas of Defiance County against E.S. Wagner and their statutory agent, Lewis

Wagner. In their complaint, the Smiths alleged that E.S. Wagner breached the terms

and conditions of a lease entered into by the parties. The Smiths claimed damages

exceeding $300,000. The Smiths attached a copy of the lease as an exhibit.

       {¶3} On September 17, 2013, E.S. Wagner filed its answer and counterclaim.

In their answer, E.S. Wagner denied breaching the lease and raised several

                                         -2-
Case No. 4-16-05

affirmative defenses, including the doctrine of accord and satisfaction. In their

counterclaim, E.S. Wagner alleged four separate grounds for relief: (1) breach of

contract; (2) promissory estoppel; (3) unjust enrichment; and (4) declaratory

judgment and specific performance. In addition to other supposed damages, E.S.

Wagner claimed they were entitled to its attorney fees. E.S. Wagner attached copies

of the lease, two Memoranda of Understanding (“MOU”), and a release of liability

as exhibits.

       {¶4} On October 2, 2013, the Smiths filed their response to E.S. Wagner’s

counterclaim. In their response, the Smiths denied any wrongdoing.

       {¶5} The Smiths filed a motion for leave to file an amended complaint on

April 7, 2014, which was granted by the trial court.

       {¶6} Later that day, the Smiths filed their amended complaint. In their

amended complaint, the Smiths added a separate count arguing that E.S. Wagner’s

breach of contract proximately caused additional and separate damages in excess of

$25,000. The Smiths attached a copy of the lease as an exhibit.

       {¶7} E.S. Wagner filed their answer to the amended complaint and

counterclaim on April 21, 2014. E.S. Wagner denied the allegations and raised the

same grounds for relief in their original counterclaim. E.S. Wagner attached the

same exhibits as they had in their original answer and counterclaim.

                                        -3-
Case No. 4-16-05

       {¶8} A bench trial was held on May 11, 2015 where the following testimony

was presented. Orville was the first witness to testify on behalf of the Smiths.

Orville testified that he was 83-years old and was a farmer for the past 60 years,

although he considered himself semi-retired at trial. He explained that he no longer

farmed his land and that he rented it to Andy Shininger who farms the land. Orville

stated that he rented approximately 450 acres and it was used to grow corn, beans,

and wheat. He added that he and his wife, Julianne, owned 73.416 acres located in

the southwest corner of section 22 of Noble Township. He testified that the land

abutted U.S. route 24 to the south.

       {¶9} Orville testified that he was approached by Mike Pfeiffer, a

representative from E.S. Wagner, who explained to him that E.S. Wagner, a

construction company, wished to rent a portion of the property located south of U.S.

24 as it wished to bid on a construction project involving U.S. 24.

       {¶10} Orville identified a copy of the original lease entered into between the

Smiths and E.S. Wagner. Under the lease, E.S. Wagner agreed to pay $2,500 a year

for three years to the Smiths in exchange for the use of five acres of the Smiths’

property.   Specifically, the property was “to be used for storage of material and

related items, plus the use of machinery and equipment and requisite personnel

required to facilitate construction activities involving The Ohio Department of

Transportation (ODOT) Project 008706.” Plaintiffs’ Ex. A, p. 1. At the expiration

                                        -4-
Case No. 4-16-05

of the lease, E.S. Wagner was required to “[s]urrender the premises * * * in as good

condition as the premises [we]re, reasonable wear and tear, and unavoidable

casualty excepted.” Id. The lease was signed on April 4, 2006 with an effective

date of April 1, 2006. Orville testified that neither he nor his wife drafted the lease.

         {¶11} Orville stated that no one from E.S. Wagner discussed the possibility

that the land would be used for a crushing yard prior to entering into the lease. He

added that he had no idea the effect a crushing yard would have on the property and

that he would not have entered into a lease with E.S. Wagner had he known that was

their intention.        He testified that he never talked with John Perry, another

representative from E.S. Wagner, that he never asked Perry if the land would be

farmable after the expiration of the lease, and that Perry never told him that the land

would no longer be farmable.

         {¶12} Orville identified a separate lease, entered into between the Smiths and

E.S. Wagner, for the use of one acre to be used by E.S. Wagner as a field office. He

added that this property/lease was not at issue in this case. He also identified a

borrow pit1 agreement entered into by all parties, which allowed E.S. Wagner to dig

for dirt to be used in its project. Again, this property/agreement was not at issue.

Finally, he identified an addendum to the original lease, which added another acre

1
  A borrow pit is “an excavated area where material (as earth) has been borrowed to be used as fill at another
location.” Webster’s Third New International Dictionary 257 (2002).

                                                     -5-
Case No. 4-16-05

to the lease. Similar to the original lease, Orville explained that neither he nor his

wife drafted these documents.

       {¶13} Orville described the condition of the property at the time of the

project winding down as being real messy. Specifically, he stated that there were

piles of stones and other material in the area. According to Orville, E.S. Wagner

wanted to bury the debris. In response to E.S. Wagner, Orville explained that he

told them to put it in a nearby ravine, located south of the crushing yard on the

Maumee River, and cover it up. He stated that E.S. Wagner moved debris to the

ravine, but after a big rainfall the debris was washed out and the ravine had to be

fixed. Orville explained that he spoke with John Wagner, a representative of E.S.

Wagner, who came and fixed the problem at the ravine.

       {¶14} Orville testified that there were still stone piles near the entrance to the

site of the crushing yard and that they were the result of E.S. Wagner’s use of the

property. He admitted that E.S. Wagner asked permission to leave the stones there.

       {¶15} Orville identified a copy of a MOU relating to the ravine (“Ravine

MOU”).     In the Ravine MOU, E.S. Wagner agreed to perform certain work

regarding the washout at the ravine. In exchange for this work, the Smiths agreed

to execute a written release of liability regarding the ravine in favor of E.S. Wagner.

Orville added that he and his wife eventually executed the release.

                                          -6-
Case No. 4-16-05

      {¶16} Orville identified a copy of a separate MOU relating to the six acres

from the two original leases (“Lease MOU”). The Lease MOU provided,

      WHEREAS, the parties to this Memorandum of Understanding
      executed a Business Property Lease dated April 4, 2006, and agreed
      to the terms and conditions contained therein between E.S. Wagner
      Company, hereinafter referred to as Lessee, and Orville and Julianne
      Smith, hereinafter referred to as Lessor; and

      WHEREAS, Lessee agreed to surrender the premises at the end of the
      term of the Lease; and

      WHEREAS, Lessor, in addition, orally agreed to allow Lessee to
      deposit fill material on the leased premises;

      NOW THEREFORE the parties to this Memorandum of
      Understanding agree as follows:

      1. That the terms and conditions of the Lease are hereby incorporated
         by reference into this instrument.
      2. Lessor authorizes Lessee to immediately enter upon the premises
         to facilitate the work described in Paragraph (3).
      3. Crushing Yard:

         A.   Mechanically rake down the former crushing yard area with
              the intent of removing unsuitable material (greater than
              approximately 1.5” in diameter) that may be lying on the land
              area surface.
         B.   Any unsuitable material that is removed from the former
              crushing yard will be taken to the washout/ravine area and
              placed within the washed out areas.
         C.   Upon the completion of the mechanical rake down, the
              former crushing yard area will be re-graded.
         D.   After the area is graded, Lessee will conduct a final walk
              around inspection to remove any remaining visible
              reinforcing steel.

                                       -7-
Case No. 4-16-05

       4. That upon completion of the work outlined herein Lessor will sign
          the unexecuted Release, marked Exhibit A, attached hereto and
          made a part hereof.

Plaintiffs’ Ex. F, p. 1. The Lease MOU was signed by all parties. Orville explained,

however, that neither he nor his wife ever signed the release of liability.

       {¶17} Orville testified that E.S. Wagner used a bobcat with a rake attachment

to go over the property and that this did not do much. He explained that E.S. Wagner

raked a little dirt over the property afterwards.

       {¶18} Orville stated that he expected the land to be farmable after the

expiration of the lease, but admitted that he thought the property might be in rougher

shape. Orville identified a quote for $17,560 from Powerscreen, which stated that

Powerscreen would provide a machine that would sort ground material into three

piles: dirt, large stones, and smaller stones. Orville also identified a quote for

$211,616 from Vernon Nagel, Inc. (“Nagel”) in exchange for Nagel picking up

ground material and putting it through Powerscreen’s machine. Orville explained

that this work was necessary if the land was to be returned to a farmable state.

Orville testified that the property was not farmed for the last five years.

       {¶19} On cross-examination, Orville identified a lease option (“the Option”),

dated March 1, 2006, signed by E.S. Wagner, Orville, and Julianne. The Option

granted E.S. Wagner an exclusive and irrevocable right and option to lease the five-

acre property in dispute. Under the terms of the Option, it stated that E.S. Wagner’s

                                          -8-
Case No. 4-16-05

“intended use of the premises includes the right to store equipment, material and

related items, (including the construction of a concrete crushing plant, to be sublet

to a contractor of [E.S. Wagner’s] choice) essential to facilitate construction

activities * * *.” Defendant’s Ex. 1. Orville stated that Pfeiffer might have told him

that E.S. Wagner would be using the property as a crushing yard, but stated that no

one explained to him what a crushing yard was.

           {¶20} The defense was granted permission to allow its first witness, Bruce

Dunzweiler, to testify out of order. Dunzweiler was declared an expert in real estate

appraisal without objection. Dunzweiler testified that he was hired to perform an

appraisal of the five acres in dispute. He explained the process by which he

performs an appraisal. He concluded that the fair market value of the five-acre

property was approximately $22,000 or $4,150 an acre.2

           {¶21} Upon a brief examination of the court, Dunzweiler clarified that his

conclusions were reached under the assumption that the land was usable farm

ground.

           {¶22} Andrew Shininger was the next witness to testify on behalf of the

Smiths. Shininger testified that he has been a farmer for 40 years. He stated that he

farmed approximately 800 acres for corn, beans, and wheat. He added that he also

was in the excavation business for approximately 25 to 30 years.

2
    The parcel of land was actually 5.3 acres.

                                                 -9-
Case No. 4-16-05

         {¶23} Shininger explained that he was hired by Orville to harvest Orville’s

crops around 25 to 30 years ago and had done so ever since. He stated that the

property in issue was farmable and had been farmed prior to the execution of the

lease. He explained that the soil was very fertile and was capable of producing

crops.

         {¶24} Shininger testified that the property was no longer farmable. He

described areas covered in concrete, rebar, and stone where no grass would grow.

Shininger stated that the people from E.S. Wagner merely covered up the property

with dirt, but did not actually remove the contaminants from the soil. He gave one

example where one of the workers ran over a rock in a Bobcat and, instead of

moving the rock, the worker got some dirt and laid it on top of the rock.

         {¶25} Scott Nagel (“Scott”) was the next witness to testify on behalf of the

Smiths. Scott testified that he worked for Nagel off and on for the past 25 years.

Scott stated that he served as Nagel’s Vice President since 2009. His duties included

management of the company in general.

         {¶26} Scott testified that he was contacted by Shininger in early 2013

regarding the property at issue. Scott explained that he visited the property, which

consisted of piles of stone and asphalt, concrete, weeds, and other things growing

out of the ground.

                                         -10-
Case No. 4-16-05

       {¶27} He gave his opinion about what needed to be done to return the land

to a farmable condition. Specifically, he explained that “it needs to have * * * at

least a foot or two of material taken up and either replaced with new or screened

out, you know the asphalt, the concrete chunks and put back down, you know.”

Trial Tr., p. 180. Scott identified a copy of the quote that he sent the Smiths to

perform the necessary work, which totaled approximately $211,000.

       {¶28} At the conclusion of his testimony, the Smiths rested.

       {¶29} John Wagner (“John”) was the next witness to testify on behalf of E.S.

Wagner. John testified that he was the Vice President at E.S. Wagner and had

worked for E.S. Wagner his whole life. He added that he was a licensed professional

engineer in Ohio.     John explained that E.S. Wagner was a heavy highway

construction company that typically takes on major roadway projects. He added

that he served as the project manager on the U.S. 24 project involved in this case.

       {¶30} John testified that they used the leased property in issue primarily as a

concrete recycling facility, also known as a crushing yard. He explained that they

removed the pavement from U.S. 24, which was broken up at the site, loaded it into

trucks, and hauled it to the crushing yard. He added that they stockpiled the material

there, hired a subcontractor to crush the material on site, and then used the recycled

material for the U.S. 24 project. In other words, John explained that the goal of a

crushing yard is to take large rocks and make them into smaller rocks.

                                        -11-
Case No. 4-16-05

       {¶31} John stated that the crushing process results in a layer of residue that

ends up on the ground. He added that regulations regarding the use of recycled

material be free of or only include a small percentage of dirt. Thus, he explained

that they had to put a layer of aggregate, which he said consisted of the ground up

concrete/pavement, over the crushing yard site. He stated a layer of crushed

material will always be left behind as a result. He added that another eventual result

was ground compaction from heavy equipment.

       {¶32} John stated that he had conversations with Orville while the crushing

yard was in operation. He could not recall Orville raising any concerns about the

crushing yard or the effects of operating a crushing yard on his property. John

described how they would have cleaned up the site after finishing the project. He

explained,

       In general, any remaining materials that were not used in the project,
       and didn’t become property of the owner, and I’m talking about pipe
       and pre-cast drainage structures and things that may have been
       stacked there on site for use of the project, would have been loaded
       and hauled off-site. And the equipment that was remaining would
       have been removed from the site. The site would have been leveled,
       in which means dressed, so that it would drain properly and then
       depending on what, you know - - the borrow pit would have been a
       little bit different, it would have been a little bit of a different situation,
       but in terms of the crushing facility itself it’s pretty basic, you know,
       restorative process. It’s essentially that.

Id. at p. 215-216.

                                            -12-
Case No. 4-16-05

       {¶33} John testified that he returned to the property in the spring of 2011

after Orville and Shininger mentioned how unhappy they were with the condition

of the property. He explained that Orville was unhappy about an erosion problem

in the ravine that was caused by E.S. Wagner’s disposal of material. Orville was

also unhappy about the general condition of the rest of the property. John stated

that he examined the property and admitted that they had performed substandard

work on the ravine and agreed to restore that portion, but the rest of the property

looked fine.

       {¶34} John explained that he believed the cleanup performed by E.S. Wagner

relating to the property in general was adequate. According to John, the property

was draining properly, was dressed, and contained aggregate material, which was

expected from the operation of a crushing yard. He explained that dressed meant

that the site was smoothed over with either a bull dozer or motor grader, which

would result in proper drainage.

       {¶35} John testified about each step E.S. Wagner agreed to perform to restore

the property further under the Lease MOU. First, E.S. Wagner brought in a skid

steer with an attachment to sift through the surface to remove any objects with a

diameter of one and a half inches or greater. Then, E.S. Wagner would take any

unsuitable material to the ravine or otherwise properly dispose of the material. After

the rake down was completed, they would re-grade the crushing yard. Finally, E.S.

                                        -13-
Case No. 4-16-05

Wagner would perform a walkthrough inspection with Orville to remove any visible

reinforcing steel that was left behind. He estimated that this additional cleanup cost

E.S. Wagner less than $5,000. He added that they completed all the work that was

contained in the Lease MOU.

       {¶36} John stated that E.S. Wagner performed additional work at the request

of Orville that was not contained in the Lease MOU. This work consisted of

spreading topsoil over the property and dressing it.

       {¶37} On cross-examination, John stated that a skid steer, also known as a

Bobcat, was used to scrape the top inch or so of the ground for stones. However,

John explained that this corresponded with what E.S. Wagner agreed to do under

the Lease MOU.

       {¶38} On examination by the court, John indicated that Pfeiffer drafted the

two MOUs. John also confirmed that the lease for the additional land for office

space stated that E.S. Wagner would return that piece of property in a condition

substantially different than it was at the time of delivery to E.S. Wagner.

       {¶39} John Perry was the next witness to testify on behalf of E.S. Wagner.

Perry stated that he worked for Beaver Excavating out of Canton as a job

superintendent. He testified that he used to be employed by E.S. Wagner in the

same position and other positions for 21 years.         He added that he was the

superintendent on the U.S. 24 job.

                                        -14-
Case No. 4-16-05

       {¶40} Perry testified that he discussed the effect a crushing yard would have

on the Smiths’ property with Orville. He initially could not remember when he had

this conversation, but added that he told Orville that the land would never be able

to produce the same amount of crops as before the lease was executed. He later

stated that this conversation must have happened after the Smiths signed the lease.

He testified that he had never seen the lease and that Pfeiffer was the one responsible

for drafting all of E.S. Wagner’s documents. According to Perry, Orville indicated

that he agreed with Perry that the land would not be in a farmable condition due to

the impact of the crushing yard.

       {¶41} Perry testified about the cleanup he and the rest of his team did at the

Smiths’ property. Specifically, “[they] hauled material off and * * * hauled all the

excess concrete that didn’t get crushed into a ravine south of that that was washing

out real bad [they] just put in there for erosion protection. We hauled topsoil - - we

moved topsoil around. We did quite a bit of work to try to get him sign off on it.”

Id. at p. 280. He added that Orville agreed to let a portion of the property remain

unaltered for the most part because Orville was going to use it to store farm

equipment.

       {¶42} Perry explained that as the cleanup progressed it was Shininger and

not Orville who was not happy with the work.            Perry stated that Shininger

complained that there were still too many rocks present that would hurt his farm

                                         -15-
Case No. 4-16-05

equipment. Perry testified that to make Shininger happy he had someone go over

the property with a Rome disc, which was used to turn over the soil to reveal any

buried rocks. He added that this equipment would dig six inches into the ground.

           {¶43} On cross-examination, Perry stated that they used several pieces of

heavy equipment during the cleanup phase, including haul trucks, 740’s,3 dozers,

two excavators, and others. Perry explained that he was transferred to South Bend,

Indiana for approximately two weeks, but returned to the Smiths’ property after that

period. Perry clarified that this cleanup was the initial cleanup and predated either

MOU.

           {¶44} Perry testified that he was fired by E.S. Wagner for what he believed

was using too many vacation days.

           {¶45} On examination by the court, Perry confirmed that Beaver Excavating

was a competitor of E.S. Wagner’s. He added that in all of his years of experience

he had never spent more time or money on a cleanup than he did on the Smiths’

property. He concluded that the only thing that could possibly be done to improve

the property other than what was done was to remove the top four feet of the ground,

bring in new dirt, and then put a foot of topsoil on top.

           {¶46} Upon re-direct-examination, Perry explained that using a Bobcat to

clean up the property was an extreme measure. He stated that a Bobcat is typically

3
    He later clarified that a 740 is a dump truck

                                                    -16-
Case No. 4-16-05

used to pick up small rocks and added that it would take a long time to remove all

the small rocks off of a five-acre piece of land.

       {¶47} On re-cross-examination, Perry looked at the photographs showing the

property’s condition in 2013 and 2014 and stated that the condition was not

acceptable cleanup and restoration of the property. He explained that the large rocks

in the photographs were most likely placed there and were never grabbed.

       {¶48} On re-direct-examination, Perry testified that the condition of the

property when he finished cleanup did not resemble the condition of the property

depicted in the photographs. It was his opinion that someone else had either legally

or illegally dumped their rocks in there.

       {¶49} Michael Pfeiffer was the next witness to testify on behalf of E.S.

Wagner. Pfeiffer testified that he led the Business Development section at E.S.

Wagner for the past 14 years. He explained that his duties included searching for

business opportunities, both public and private, and that he was responsible for the

lease agreements that are required for their projects.

       {¶50} Pfeiffer stated that the Smiths’ property was leased for three reasons:

(1) a laydown area; (2) a crushing yard; and (3) equipment storage. He explained

that he first approached Orville about the property sometime in late fall of 2005. He

added that they initially discussed a potential site for a borrow pit.

                                         -17-
Case No. 4-16-05

       {¶51} Pfeiffer identified a copy of the Option, which was put together for the

Smiths’ “to lease [their] property there for [E.S. Wagner’s] crushing yard.” Id. at p.

320. Pfeiffer testified that he explained to Orville what E.S. Wagner was planning

to do with the property if E.S. Wagner got the project during their negotiations,

which included the crushing yard. Pfeiffer stated that Orville asked about what

would be crushed at the crushing yard, but did not ask about the ultimate effect the

crushing yard would have. He continued, “* * *. But I told [Orville], okay, that

this crushing operation is going to change the ground.         You won’t get your

production, your farming production that you normally would with this operation.”

Id. at p. 322.

       {¶52} Pfeiffer explained that when it came time to sign the lease he went

over each line of the lease with both Orville and Julianne individually. He told

Orville, “Orville, understand something, the property is going to change. It’s not

going to be the farm ground that you currently have, the production is going to go

down.” Id. at p. 325. Pfeiffer stated that his father, who was an attorney, drafted

the documents.

       {¶53} Pfeiffer identified a copy of handwritten notes that he claimed were

written by Orville and given to him by Orville. He explained that Orville had come

up with a list of things that Orville wanted E.S. Wagner to do to the property before

handing the property back to Orville. One of the items included an admission from

                                        -18-
Case No. 4-16-05

Orville that he knew the condition of the property was going to change but wanted

E.S. Wagner to cleanup the property so that it could be farmable again. Pfeiffer

added that he told Orville again about the fact that the land was going to be used as

a crushing yard and that the farm ground would never be the same again.

       {¶54} Pfeiffer testified about the Lease MOU and how E.S. Wagner went

about cleaning up the property after the parties signed the Lease MOU. Pfeiffer

proclaimed that E.S. Wagner completed its end of the bargain, but neither Orville

nor Julianne ever signed the release. He explained that Orville asked to have

additional work performed on the property, which included having drainage tile

replaced, topsoil brought in and spread on the area, etc. He stated that Orville

indicated that Orville would sign the release if E.S. Wagner did these things.

However, Pfeiffer testified that Orville refused to sign the release even after E.S.

Wagner performed the extra work.

       {¶55} At the conclusion of Pfeiffer’s testimony and the admission of E.S.

Wagner’s exhibits, the defense rested.

       {¶56} On rebuttal, Orville testified on behalf of the Smiths. Orville testified

that he and Pfeiffer never discussed that the property was going to be used as a

crushing yard prior to signing the lease. He indicated that he was not aware of

anyone moving any material on the property after E.S. Wagner returned the

                                         -19-
Case No. 4-16-05

property. He added that he did not see any evidence that suggested E.S. Wagner

used a disc during cleanup.

       {¶57} After Orville testified, the Smiths rested, and the court ordered written

closing arguments to be filed with the court.

       {¶58} Both parties filed their written closing arguments on June 2, 2015.

       {¶59} By way of entry filed on November 12, 2015, the trial court found in

favor of E.S. Wagner on the Smiths’ complaint and in favor of the Smiths on E.S.

Wagner’s counterclaim.        In its entry, the court found that the Lease MOU

constituted an accord and satisfaction. It reasoned that following the expiration of

the lease there was a substantial disagreement between the parties as to whether E.S.

Wagner had returned the property in accordance with the lease. Then, the parties

entered into the Lease MOU where E.S. Wagner agreed to perform work in

exchange for a signed release of liability. The court found that E.S. Wagner

performed that work and was entitled to a release. The court noted that it found

Perry’s testimony highly persuasive given his apparent lack of bias. The court also

stated that the judgment could be supported by a finding that the condition of the

premises constituted ordinary wear and tear in the context of a crushing yard and

that Perry’s testimony would further support that conclusion. Regarding attorney

fees, the court concluded that attorney fees were never a part of the Lease MOU

and, therefore, did not award them to E.S. Wagner.

                                        -20-
Case No. 4-16-05

      {¶60} On November 25, 2015, the Smiths filed a request for findings of fact

and conclusions of law.

      {¶61} The court filed its findings of fact and conclusions of law on February

9, 2016.

      {¶62} It is from this judgment that both parties appeal, presenting the

following assignments of error for our review.

                     The Smiths’ First Assignment of Error

      THE TRIAL COURT ERRED BY IGNORING THE LEASE IN
      FAVOR OF THE MEMORANDUM OF UNDERSTANDING,
      AND THEREFORE FAILING TO CONSIDER WHAT
      CONSTITUTES “REASONABLE WEAR AND TEAR” TO
      THE PROPERTY.

                    The Smiths’ Second Assignment of Error

      THE TRIAL COURT ERRED AS A MATTER OF LAW IN ITS
      APPLICATION OF THE LEGAL THEORY OF ACCORD AND
      SATISFACTION.

                   E.S. Wagner’s Cross-Assignment of Error

      THE TRIAL COURT ERRED IN NOT GRANTING
      JUDGMENT TO ESW ON ITS COUNTERCLAIM FOR THE
      SMITHS’ BREACH OF THE MEMORANDUM OF
      UNDERSTANDING RESOLVING THE PARTIES’ DISPUTE
      SURROUNDING REMEDIATION OF THE CRUSHING
      YARD.

      {¶63} Due to the nature of the Smiths’ assignments of error, we elect to

address them out of order.

                                       -21-
Case No. 4-16-05

                     The Smiths’ Second Assignment of Error

       {¶64} In their second assignment of error, the Smiths argue that the trial court

erred by applying the doctrine of accord and satisfaction to this case. Specifically,

the Smiths argue that the Lease MOU was not supported by new consideration,

which is required for an accord and satisfaction. We disagree.

       {¶65} “An accord and satisfaction is a method of discharging a contract or

settling a cause of action arising either from a contract or tort, by substituting for

such contract or cause of action an agreement for the satisfaction thereof an

execution of such substituted agreement.” Kirk Williams Co., Inc. v. Six Industries,

Inc., 11 Ohio App.3d 152, 153 (2d Dist.1983), citing Chillicothe Hosp. v. Garrett,

26 Ohio App.2d 277 (1st Dist.1971). Further, “An accord is a contract under which

an obligee promises to accept a stated performance in satisfaction of the obligor’s

existing duty.     Performance of the accord discharges the original duty.”

Restatement of the Law 2d, Contracts, Section 281(1), at 381-382 (1981).

       When an accord and satisfaction is pled by the defendant as an
       affirmative defense, the court’s analysis must be divided into three
       distinct inquiries. First, the defendant must show that the parties went
       through a process of offer and acceptance – an accord. Second, the
       accord must have been carried out – a satisfaction. Third, if there was
       an accord and satisfaction, it must have been supported by
       consideration.

       Two essential safeguards built into the doctrine of accord and
       satisfaction protect creditors or injured parties from overreaching
       debtors or tortfeasors: (1) there must be a good-faith dispute about the

                                         -22-
Case No. 4-16-05

       debt, and (2) the creditor must have reasonable notice that the check
       is intended to be in full satisfaction of the debt.

Allen v. R.G. Indus. Supply, 66 Ohio St.3d 229 (1993), paragraphs one and two of

the syllabus.

       {¶66} Like any other contract, an accord must be supported by consideration.

Kirk Williams at p. 154. “In the case of an unliquidated or disputed demand the

consideration rests in part upon the settlement of the dispute. A claim is an

‘unliquidated demand,’ as the term is used in connection with an accord and

satisfaction, if there is a bona fide dispute as to its existence or amount.” Id., citing

Morris Skilken & Co. v. Watkins Furniture Co., 176 N.E.2d 256 (8th Dist.1961).

“If there is not an actual dispute between the parties, there cannot be an accord and

satisfaction.”   (Emphasis sic.) Allen at 232, citing West Penn Power Co. v.

Nationwide Mut. Ins. Co., 209 Pa. Super. 509, 512 (1967). On the other hand, “A

liquidated claim is one that can be determined with exactness from the agreement

between the parties or by arithmetical process or by the application of definite rules

of law.” Huo Chin Yin v. Amino Prods. Co., 141 Ohio St. 21, 29 (1943), citing State

v. Massachusetts Bonding & Ins. Co., 40 Del. 274, 9 A.2d 77 (1939).

       {¶67} Finally, “ ‘When reviewing a civil appeal from a bench trial, we apply

a manifest weight standard of review.’ ” Lump v. Larson, 3d Dist. Logan No. 8-14-

14, 2015-Ohio-469, ¶ 9, quoting San Allen, Inc. v. Buehrer, 8th Dist. Cuyahoga No.

99786, 2014-Ohio-2071, ¶ 89, citing Revilo Tyluka, L.L.C. v. Simon Roofing &

                                          -23-
Case No. 4-16-05

Sheet Metal Corp., 193 Ohio App.3d 535, 2011-Ohio-1922, ¶ 5 (8th Dist.).

Judgments supported by some competent, credible evidence going to all the

essential elements of the case will not be reversed by a reviewing court as being

against the manifest weight of the evidence. C. E. Morris Co. v. Foley Const.

Co., 54 Ohio St.2d 279, 280 (1978). “[W]hen reviewing a judgment under a

manifest-weight-of-the-evidence standard, a court has an obligation to presume that

the findings of the trier of fact are correct.” State v. Wilson, 113 Ohio St.3d 382,

2007-Ohio-2202, ¶ 24. Mere disagreement over the credibility of witnesses or

evidence is not sufficient reason to reverse a judgment. Seasons Coal Co. v. City of

Cleveland, 10 Ohio St.3d 77, 81 (1984). However, questions of law are reviewed

de novo. Sayre v. Furgeson, 3d Dist. Shelby No. 17-15-16, 2016-Ohio-3500, ¶ 12,

citing Warner v. Thomas, 3d Dist. Shelby No. 17-14-04, 2014-Ohio-3544, ¶ 8.

       {¶68} In this case, the trial court found that a good faith, bona fide dispute

existed as to E.S. Wagner’s obligation under the lease. The terms provided that

upon the expiration of the lease that E.S. Wagner would return the property in a

condition “as good * * * as the premises [we]re, reasonable wear and tear, and

unavoidable casualty excepted.” Plaintiffs’ Ex. A., p. 1. E.S. Wagner believed that

it had gone far beyond what was required, but the Smiths believed that E.S. Wagner

had to return the property to its original, farmable, condition. There was ample

testimony presented to support the trial court’s conclusion. After failing to solve

                                        -24-
Case No. 4-16-05

the dispute informally, the parties entered into the Lease MOU, which, as the trial

court found, was a separate contract. It is also clear from the record that the claim

was unliquidated in nature since there was no way to quantify what constituted the

condition of the property.

       {¶69} The court found that the Lease MOU constituted the accord. Both

parties signed the document, where E.S. Wagner promised to perform certain

additional work concerning the property in exchange for the Smiths’ promise to sign

a release of any potential liability in favor of E.S. Wagner. These facts are also

supported by the testimony of both parties to the Lease MOU.

       {¶70} The Smiths argue, however, that the Lease MOU was not supported

by consideration. There was clearly consideration provided by the Smiths in the

way of agreeing to give up any legal rights that may have been violated by E.S.

Wagner. See Kirk Williams, 11 Ohio App.3d at 154. They contend that E.S.

Wagner’s promise to provide additional work on the property was not new

consideration. Rather, they claim that the additional work was something that E.S.

Wagner was legally required to do under the original lease, and, thus, it did not

constitute new consideration. As stated supra, there was a bona fide dispute about

whether E.S. Wagner had performed its obligations under the contract. Further, the

court found that the additional work E.S. Wagner performed was consideration.

This was supported by the evidence presented to the trial court.

                                        -25-
Case No. 4-16-05

         {¶71} Having found that both parties entered into an accord to settle the

dispute, the court found that E.S. Wagner performed the work it promised to do in

the accord. This conclusion is supported by the testimony of several witnesses,

including Perry, who the court found most credible given his status as a disinterested

person that was fired by E.S. Wagner. Thus, E.S. Wagner’s work constituted the

satisfaction of the agreement. The Smiths, in turn, were required to sign the release,

which they failed to do in this case.4

         {¶72} Having found that the trial court’s conclusion of an accord and

satisfaction was correct, we overrule the Smiths’ second assignment of error.

                             The Smiths’ First Assignment of Error

         {¶73} Given our resolution of the Smiths’ second assignment of error, the

Smiths’ first assignment of error is rendered moot and need not be considered.

App.R. 12(A)(1)(c).

                           E.S. Wagner’s Cross-Assignment of Error

         {¶74} In E.S. Wagner’s sole assignment of error, they argue that the trial

court erred by failing to award E.S. Wagner their attorney fees as compensatory

damages. We disagree.

4
  Our conclusion that the trial court’s finding of an accord and satisfaction renders the Smiths’ argument that
the Lease MOU was not a superseding agreement moot as satisfaction of the accord discharged E.S. Wagner’s
obligations under the lease and the Lease MOU.

                                                    -26-
Case No. 4-16-05

       {¶75} “Ohio has long adhered to the ‘American Rule’ with respect to the

recovery of attorney fees: a prevailing party in a civil action may not recover

attorney fees as part of the costs of litigation.” Wilborn v. Bank One Corp., 121

Ohio St.3d 546, 2009-Ohio-306, ¶ 7. Exceptions to the rule allow for recovery

“when a statute or an enforceable contract specifically provides for the losing party

to pay the prevailing party's attorney fees, * * * or when the prevailing party

demonstrates bad faith on the part of the unsuccessful litigant * * *.” Id.

       {¶76} One exception to the American Rule is when attorney fees are

categorized as compensatory damages rather than costs of litigation due to a breach

of a settlement agreement. See Tejada-Hercules v. State Auto Ins. Co., 10th Dist.

Franklin No. 08AP-150, 2008-Ohio-5066, ¶ 9, citing Shanker v. Columbus

Warehouse Ltd. Partnership, 2000 WL 726786 (June 6, 2000).                    In those

circumstances, the attorney fees are incurred as damages directly resulting from the

party’s breach of the settlement agreement. Id.

       {¶77} In this case, E.S. Wagner argues that they are entitled to their attorney

fees because the fees were a direct result of the Smiths’ breach of the Lease MOU

and rely primarily on Shanker. Upon first glance, the facts seem to support E.S.

Wagner’s argument. There was a dispute between the parties, which could have

resulted in a lawsuit filed by the Smiths. In an attempt to settle the dispute and

prevent any possible litigation, E.S. Wagner drafted a document, the Lease MOU.

                                        -27-
Case No. 4-16-05

Under the terms of the Lease MOU, E.S. Wagner promised to perform certain work

to the property in dispute. In exchange, the Smiths promised to sign and execute a

written release of liability in favor of E.S. Wagner. Both parties signed the Lease

MOU. The court found, and the evidence presented at trial supports the court’s

finding, that E.S. Wagner completed the work contained in the Lease MOU.

Therefore, the court found that the Smiths were in breach of the Lease MOU for

failing to sign and execute the written release of liability.

       {¶78} Again, the record is clear that the Smiths breached the terms of the

Lease MOU by failing to sign and execute the written release. However, this does

not necessitate a finding that E.S. Wagner was entitled to their attorney fees as

compensatory damages resulting from the Smiths’ breach.

       {¶79} The language of the Lease MOU is unambiguous. Under the Lease

MOU, “upon completion of the work outlined herein [the Smiths] will sign the

unexecuted Release * * *.” Plaintiffs’ Ex. F, p. 1. Accordingly, the Smiths’

obligation under the Lease MOU was the promise to sign and execute a separate

document. The Lease MOU does not release E.S. Wagner of liability. Rather, it is

the unexecuted written release that removes any liability from E.S. Wagner. The

Smiths have yet to sign that document. As of now, the Smiths never agreed to give

up any potential right to file a lawsuit. Therefore, this case is distinguishable from

                                          -28-
Case No. 4-16-05

Shanker and the like because there was never a signed agreement to end litigation,

either pre or post-filing of the action.

         {¶80} The outcome of this case would be different had the Smiths signed the

written release and then filed their case. In that instance, the Smiths would have

breached the written release and not the Lease MOU, bringing it within the purview

of Shanker. In this case, however, E.S. Wagner contended that the Smiths were in

violation of the Lease MOU and requested a judgment

         directing that [the Smiths] execute and deliver the release required by
         the Memorandum of Understanding relating to the ‘crushing yard’
         area to [E.S. Wagner] and, if [the Smiths] nonetheless refuse to do so,
         directing the act to be done at [the Smiths’] cost by some other person
         appointed by the Court and/or deeming such execution and delivery
         to have occurred as a matter of law * * *.

(Docket No. 15, p. 10). Given the Smiths’ breach of the Lease MOU, E.S. Wagner

was entitled to this judgment, but not its attorney fees.

         {¶81} Accordingly, we overrule E.S. Wagner’s cross-assignment of error.

         {¶82} Having found no error prejudicial to either the appellants or cross-

appellant, in the particulars assigned and argued, we affirm the judgment of the trial

court.

                                                                  Judgment Affirmed

PRESTON and WILLAMOWSKI, J.J., concur.

/jlr

                                           -29-