Court Opinion

ID: 4279455
Source: CourtListenerOpinion
Date Created: 2018-05-30 15:45:27.880946+00
Date Added: 2024-06-11T09:19:06.603434
License: Public Domain

[Cite as Willoughby Supply Co. v. Villhauer, 2018-Ohio-2077.]

                                   IN THE COURT OF APPEALS

                               ELEVENTH APPELLATE DISTRICT

                                        LAKE COUNTY, OHIO

WILLOUGHBY SUPPLY COMPANY,                              :       OPINION
INC.,
                                                        :
                 Plaintiff-Appellant,                           CASE NO. 2017-L-110
                                                        :
        - vs -
                                                        :
RYAN E. VILLHAUER, et al.,
                                                        :
                 Defendant-Appellee.
                                                        :

Civil Appeal from the Lake County Court of Common Pleas, Case No. 2016 CV
002202.

Judgment: Reversed and remanded.

Robert B. Weltman and Amanda R. Yurechko, Weltman, Weinberg & Reis Co., L.P.A.,
323 West Lakeside Avenue, Suite 200, Cleveland, OH 44113 (For Plaintiff-Appellant).

James T. Dixon and David Sporar, Brouse McDowell LPA, 600 Superior Avenue, East,
Suite 1600, Cleveland, OH 44114 (For Defendant-Appellee).

CYNTHIA WESTCOTT RICE, J.

        {¶1}     Appellant, Willoughby Supply Company, Inc. (“Willoughby Supply”),

appeals the judgment of the Lake County Court of Common Pleas granting the Civ.R.

12(B)(6) motion to dismiss filed by appellee, Ryan E. Villhauer (“Villhauer”). At issue is

whether the trial court erred in dismissing appellant’s claim on an account against

Villhauer. For the reasons that follow, we reverse and remand.
       {¶2}   The statement of facts that follows is derived from the complaint with its

attachments filed by Willoughby Supply. On or about August 8, 2014, “the Defendants,”

meaning Villhauer and his company Superior Structures of Ohio, L.L.C. (“Superior

Structures”), “made application for credit with [Willoughby Supply] by executing an

Application and Agreement,” a copy of which was attached to the complaint.

       {¶3}   On page 2 of the Application and Agreement, Villhauer stated he was the

“Owner/President” of Superior Structures. He also provided his personal information,

including his date of birth, driver’s license number, home address, cell phone number,

bank information, and credit accounts with other supply companies. He also stated he

was authorized to order and pick up material from Willoughby Supply.

       {¶4}   On page 3 of the Application and Agreement, in the signature section on

the line for “firm name,” Villhauer wrote “Superior Structures of Ohio.” He also signed

his name on behalf of Superior Structures as its “Owner/President” and dated it August

8, 2014.

       {¶5}   Directly beneath the section that Villhauer signed on behalf of Superior

Structures, Page 3 also contains a section providing for a personal guarantee. This

section stated in all capital letters and in a font size larger than other terms on the page:

       {¶6}   * * * THIS APPLICATION WILL NOT BE APPROVED IF
              PERSONAL GUARANTEE IS NOT SIGNED * * *

       {¶7}   IN CONSIDERATION OF THE EXTENSION OF CREDIT BY
              [WILLOUGHBY SUPPLY] TO [SUPERIOR STRUCTURES], AND
              AS A SUBSTANTIAL AND MATERIAL INDUCEMENT TO
              [WILLOUGHBY SUPPLY] TO GRANT SUCH CREDIT, THE
              UNDERSIGNED INDIVIDUAL [VILLHAUER] PERSONALLY
              GUARANTEES THE FULL AND PROMPT PAYMENT OF ALL
              AMOUNTS PAYABLE TO [WILLOUGHBY SUPPLY] FOR GOODS
              PURCHASED BY SAID ENTITY. (Emphasis in original.)

                                              2
       {¶8}    Directly beneath this language, Villhauer hand-wrote his name by printing

it on the “name” line and dated the personal guarantee August 8, 2014. However, he

left the line for his signature blank.

       {¶9}    The complaint alleged that Willoughby Supply granted credit to Villhauer

and Superior Structures, resulting in an unpaid balance due and owing as of July 31,

2016, in the amount of $28,832. A copy of the statement of account, dated August 29,

2016, attached to the complaint, shows that Superior Structures made multiple

purchases of materials from Willoughby Supply between July 2015 and July 2016.

       {¶10} The complaint alleged that Villhauer and Superior Structures failed and

refused to pay Willoughby Supply the balance due and owing, which, as of December

21, 2016, including interest, was $30,865.

       {¶11} On December 29, 2016, Willoughby Supply filed its complaint against

Villhauer and Superior Structures.       Instead of filing an answer, on April 7, 2017,

Villhauer filed a motion to dismiss, arguing that he could not be held liable because he

did not sign the personal guarantee. Willoughby Supply filed a brief in opposition. The

trial court granted the motion, simply finding that “Villhauer did not sign the Application

and Agreement attached to Plaintiff’s Complaint.”

       {¶12} Villhauer failed to file an answer on behalf of Superior Structures and, as a

result, Willoughby Supply filed a motion for default judgment against Superior

Structures. The trial court granted the motion and entered default judgment in favor of

Willoughby Supply and against Superior Structures, making the court’s order granting

Villhauer’s motion to dismiss a final appealable order.

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       {¶13} Willoughby Supply appeals the trial court’s judgment granting Villhauer’s

motion to dismiss, asserting the following for its sole assignment of error:

       {¶14} “The trial court erred by granting defendant-appellee’s motion to dismiss

where, if the court were to presume the allegations of the complaint as true and make

all reasonable inferences in favor of plaintiff-appellant, a cause of action does exist

under which defendant-appellee could be found liable on the personal guarantee.”

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

granted is procedural in nature and tests the sufficiency of the complaint. State ex rel.

Hanson v. Guernsey Cty. Bd. of Comm’rs., 65 Ohio St.3d 545, 548 (1992). “[W]hen a

party files a motion to dismiss for failure to state a claim, all the factual allegations of the

complaint must be taken as true and all reasonable inferences must be drawn in favor

of the non-moving party.” Byrd v. Faber, 57 Ohio St.3d 56, 60 (1991).

       {¶16} Moreover, “‘[m]aterial incorporated in a complaint may be considered part

of the complaint for purposes of determining a Civ.R. 12(B)(6) motion to dismiss.’”

Adlaka v. Giannini, 7th Dist. Mahoning No. 05 MA 105, 2006-Ohio-4611, ¶34, quoting

State ex rel. Crabtree v. Franklin Cty. Bd. of Health, 77 Ohio St.3d 247, 249, fn. 1

(1997).

       {¶17} In order for a court to grant a motion to dismiss for failure to state a claim,

it must appear “‘beyond doubt that the plaintiff can prove no set of facts in support of his

claim which would entitle him to relief.’” O’Brien v. Univ. Community Tenants Union,

Inc., 42 Ohio St.2d 242, 245 (1975), quoting Conley v. Gibson, 355 U.S. 41, 45 (1957).

“ʻ[A]s long as there is a set of facts consistent with the plaintiff’s complaint, which would

allow the plaintiff to recover, the court may not grant a defendant’s motion to dismiss.’”

                                               4
Cincinnati v. Beretta U.S.A. Corp., 95 Ohio St.3d 416, 2002-Ohio-2480, ¶5, quoting

York v. Ohio State Hwy. Patrol, 60 Ohio St.3d 143, 145 (1991). “‘A complaint should

not be dismissed for failure to state a claim merely because the allegations do not

support the legal theory on which the plaintiff relies. Instead, a trial court must examine

the complaint to determine if the allegations provide for relief on any possible theory.’”

(Emphasis added.) Firstmerit Corp. v. Convenient Food Mart, Inc., 11th Dist. Lake No.

2001-L-226, 2003-Ohio-1094, ¶7, quoting Fahnbulleh v. Strahan, 73 Ohio St.3d 666,

667 (1995).

        {¶18} Further, under the rules of notice pleading, Civ.R. 8(A) requires only a

short and plain statement of the claim that gives the defendant fair notice of the

plaintiff’s claim and the grounds on which it is based. Patrick v. Wertman, 113 Ohio

App.3d 713, 716 (3d Dist.1996).

        {¶19} “Because it is so easy for the pleader to satisfy the standard of Civ.R.

8(A),   few complaints     are   subject   to       dismissal.” Leichtman   v.   WLW   Jacor

Communications, Inc., 92 Ohio App.3d 232, 234 (1st Dist.1994). Finally, an appellate

court's review of a trial court’s ruling on a motion to dismiss is de novo. Byrd, supra.

        {¶20} Here, the allegations of the complaint provide for relief on at least four

possible legal theories.

        {¶21} I. THE COMPLAINT PROVIDES FOR RELIEF ON A THEORY THAT

VILLHAUER IS INDIVIDUALLY LIABLE.

        {¶22} First, Willoughby Supply alleged that both Villhauer and Superior

Structures applied for credit by executing the application; that Willoughby Supply

granted credit to both of them, resulting in an unpaid balance; and that they have failed

                                                5
and refused to repay the balance owned.             While Villhauer argues his purported

signature on the personal guarantee is insufficient to impose liability, the trial court was

required to determine if the complaint provided for relief “on any possible theory.” Thus,

as an alternative to the guarantee theory of liability, the allegations of the complaint

provide for relief on a theory of Villhauer’s individual liability on the account.

       {¶23} II. THE COMPLAINT PROVIDES FOR RELIEF ON A THEORY THAT

VILLHAUER SIGNED THE GUARANTEE.

       {¶24} Second, while Villhauer argues he cannot be liable on the guarantee

because he did not sign it, it is not quite accurate to say he did not sign the guarantee.

In fact, he does not dispute he hand-wrote his printed name and dated the personal

guarantee. As a result, this case is very different from a case in which a purported

guarantor did not write his name on the guarantee in any way.

       {¶25} “A contract can only be interpreted if the provisions are ambiguous or

uncertain.” Career & Technical Assn. v. Auburn Vocational School Dist. Bd. of Edn.,

11th Dist. Lake No. 2013-L-010, 2014-Ohio-1572, ¶18.                  “Contract language is

ambiguous if it is susceptible to two or more reasonable interpretations.” Id. “The

determination of whether provisions in a contract are ambiguous is a legal issue that we

review de novo.” Id. Further, “if the contract language is capable of two reasonable

interpretations, there is an issue of fact [for the jury] as to the parties’ intent.” Id. “When

a contract term is ambiguous, the [jury] must examine parol or extrinsic evidence to

determine the parties’ intent.” Id. Villhauer concedes on appeal that a cursive signature

is not necessary to effectuate a binding signature.

                                               6
      {¶26} Considering Villhauer’s “printed signature” on the guarantee in light of the

instrument as a whole, the signature is ambiguous as to whether he intended to be

bound by the guarantee. In support of a finding that he intended to be bound, Villhauer

provided his personal information, bank information, and a list of his credit accounts with

other suppliers, apparently with a view to induce Willoughby Supply to provide credit to

Superior Structures.    In fact, the notice in the guarantee section stated that “the

undersigned individual,” i.e., Villhauer, “personally guarantees” the payment of all

amounts due as a “material inducement” to Willoughby Supply to grant credit to

Superior Structures.      Further, directly below the additional notice that “THIS

APPLICATION WILL NOT BE APPROVED IF PERSONAL GUARANTEE IS NOT

SIGNED,” Villhauer wrote his name on the space provided for his “name” and dated the

guarantee. He could have crossed out the personal guarantee section; left it blank; or

sought another supplier, but he chose not to. In light of the uncertainty and ambiguity

created by Villhauer’s printed signature on the guarantee, Willoughby Supply may

present parol evidence of his intent to be bound thereby and potentially prevail on a

guarantee theory.

      {¶27} III. THE COMPLAINT PROVIDES FOR RELIEF ON A RATIFICATION

THEORY.

      {¶28} Third, ratification also provides a possible theory of recovery. In a similar

case involving the same creditor, Willoughby Supply Company, Inc. v. Inghram, 11th

Dist. Lake No. 2014-L-055, 2015-Ohio-952, Inghram, the person against whom

Willoughby Supply sought to enforce the guarantee, denied the signature on the

personal guarantee was his. However, Willoughby Supply’s financial officer testified he

                                            7
contacted Inghram and he orally ratified the guarantee. This court stated that to prove

ratification, the proponent must show the principal engaged in conduct, with full

knowledge of the facts, which manifested his intent to ratify the unauthorized

transaction. Id. at ¶13. This court held there was competent, credible evidence that

Inghram ratified the guarantee. Id.

       {¶29} Here, even if Villhauer’s signature on the personal guarantee was

insufficient, by accepting more than $28,000 worth of supplies on credit during the

course of an entire year from Willoughby Supply, knowing it would not have approved

the credit application if Villhauer had not signed the guarantee, Willoughby Supply may

recover on a ratification theory.

       {¶30} IV. THE COMPLAINT PROVIDES FOR RELIEF UNDER THE “LEADING

OBJECT RULE.”

       {¶31} Fourth, Villhauer argued below that, because he did not sign the personal

guarantee, enforcement of the Application and Agreement against him is barred by the

statute of frauds. R.C. 1335.05 provides: “No action shall be brought whereby to charge

the defendant, upon a special promise, to answer for the debt * * * of another * * *

unless the agreement upon which such action is brought * * * is in writing and signed by

the party to be charged therewith * * *.”

       {¶32} Here, even if Villhauer did not sign the personal guarantee, the leading

object rule is an exception to the statute of frauds. In Inghram, supra, this court stated:

“The leading object rule provides that oral contracts by third parties guaranteeing

another’s debt are not within the Statute of Frauds, if the guarantor’s principal purpose

is to benefit his or her own business or pecuniary interests.” Id. at ¶8, citing Wilson

                                            8
Floors Co. v. Sciota Park Ltd., 54 Ohio St.2d 451, syllabus (1978). “The determination

of whether an oral promise to answer for another’s debt exists, and is outside the

Statute of Frauds, is a question of fact.” Id. at ¶22.

       {¶33} In Inghram, supra, this court applied the leading object rule in finding

Inghram’s oral guarantee was enforceable since he was the president and owner of the

debtor-company and he clearly benefited by being able to purchase from Willoughby

Supply materials on credit he needed to keep the company operating. Id. at ¶23, 31.

Each of these circumstances is present here. Thus, the leading object rule provides

another possible theory of recovery for Willoughby Supply.

       {¶34} We accordingly conclude, the trial court erred in dismissing the complaint.

Willoughby Supply’s sole assignment of error has merit.

       {¶35} For the reasons stated in the opinion of this court, it is the judgment and

order of this court that the judgment of the Lake County Court of Common Pleas is

reversed, and this matter is remanded to the trial court for further proceedings

consistent with the opinion.

TIMOTHY P. CANNON, J., concurs,

DIANE V. GRENDELL, J., dissents with a Dissenting Opinion.

                               ________________________

DIANE V. GRENDELL, J., dissents with a Dissenting Opinion.

       {¶36} I respectfully dissent and would affirm the decision of the trial court.

                                              9
        {¶37} While a complaint should not be dismissed “if the allegations provide for

relief on any possible theory,” no such theory exists to provide Willoughby Supply relief.

Fahnbulleh v. Strahan, 73 Ohio St.3d 666, 667, 653 N.E.2d 1186 (1995).

        {¶38} Willoughby Supply seeks to hold Villhauer personally liable under a

guarantee which Villhauer did not sign personally.                   Villhauer’s signature on the

guarantee is unambiguously and unequivocally executed in his capacity as the

owner/president of “Superior Structures of Ohio.”

        {¶39} Under Ohio law, as well as that of other jurisdictions, such a guarantee is

not enforceable as a matter of law: “[i]f the form of the signature shows unambiguously

that the signature is made on behalf of the represented person who is identified in the

instrument, the representative is not liable on the instrument.”                 R.C. 1303.42(B)(1);

compare Livonia Bldg. Materials Co. v. Harrison Constr. Co., 742 N.W.2d 140, 146

(Mich.App.2007) (“where individual responsibility is demanded the nearly universal

practice is that the officer signs twice–once as an officer and again as an individual”)

(citation omitted).1

        {¶40} It is argued that Villhauer could nevertheless be held personally liable

under an exception to the statute of frauds, such as the “leading object rule.”                  Wilson

Floors Co. v. Sciota Park, Ltd., 54 Ohio St.2d 451, 377 N.E.2d 514 (1978), syllabus

(“[w]hen the leading [object] of the promisor is not to answer for another’s debt but to

subserve some pecuniary or business purpose of his own involving a benefit to himself,

1. The majority, supra at ¶ 29, improperly suggests that Villhauer may have ratified the guarantee “by
accepting more than $28,000 worth of supplies on credit during the course of an entire year from
Willoughby Supply.” Unless we are willing to give Willoughby Supply the benefit of any possible facts, the
supplies were sold on credit to Superior Structures of Ohio and not to Villhauer personally. At most,
Villhauer’s potential liability is that of a guarantor of the debt.

                                                   10
his promise is not within the statute of frauds, although the original debtor may remain

liable”). There are problems with this position.

         {¶41} Willoughby Supply alleged in the Complaint that Villhauer executed the

credit application and agreement. This allegation is flatly contradicted by the actual

Application and Agreement attached to the Complaint.               By attaching the credit

Application and Agreement, the sufficiency of Willoughby Supply’s Complaint must be

considered in light of the fact that Villhauer did not sign the Application in his personal

capacity. See Civ.R. 10(C) (“[a] copy of any written instrument attached to a pleading is

a part of the pleading for all purposes”); Radtke v. Chester Twp., 2015-Ohio-4016, 44

N.E.3d 295, ¶ 18 (11th Dist.).        Willoughby Supply failed to allege any basis for

Villhauer’s personal liability other than his execution of the credit Application. As the

trial court must accept that the Application was not executed by Villhauer, there is no

basis for holding him personally liable. Gross v. Fizet, 7th Dist. Mahoning No. 98-CA-

68, 1999 WL 225417, *6 (Mar. 31, 1999) (where the party to be held liable signed the

note “only in his representative capacity (i.e., as president of the corporation)[,] [t]o find

that [the party] orally agreed to personally guarantee this note would conflict with the

intention of [the party] as clearly expressed in the written agreement”).

         {¶42} Accordingly, I respectfully dissent and would affirm judgment of the lower

court.

                                             11