Court Opinion

ID: 9908327
Source: CourtListenerOpinion
Date Created: 2023-12-08 15:09:02.375187+00
Date Added: 2024-06-11T12:49:05.884077
License: Public Domain

[Cite as Quest Wellness Ohio, L.L.C. v. Samuels, 2023-Ohio-4450.]

             IN THE COURT OF APPEALS OF OHIO
                             SEVENTH APPELLATE DISTRICT
                                 MAHONING COUNTY

                              QUEST WELLNESS OHIO, LLC,

                                         Plaintiff-Appellee,

                                                     v.

                                    YOLANTA K. SAMUELS,

                                       Defendant-Appellant.

                       OPINION AND JUDGMENT ENTRY
                                        Case No. 23 MA 0013

                                    Civil Appeal from the
                       Court of Common Pleas of Mahoning County, Ohio
                                   Case No. 2021 CV 1346

                                         BEFORE:
                 Mark A. Hanni, Carol Ann Robb, David A. D’Apolito, Judges.

                                           JUDGMENT:
                                      Reversed and Remanded.

Atty. Steven E. Miller and Atty. Marissa R. Borschke, Crabbe, Brown & James, LLP, for
Plaintiff-Appellee and

Atty. Timothy J. Cunning, Scullin & Cunning, LLC, for Defendant-Appellant.

                                      Dated: December 7, 2023
                                                                                          –2–

HANNI, J.

       {¶1}   Defendant-Appellant Yolanta Samuels (Appellant) appeals the January 20,
2023 judgment of the Mahoning County Court of Common Pleas Court adopting a
magistrate’s decision. The court found that Plaintiff-Appellee, Quest Wellness Ohio, LLC
(Appellee), substantially complied with a notice of extension provision in a commercial
lease between Appellee and Appellant. The court declared that the lease was in full force
and effect in its second renewal option period and granted Appellee a permanent
injunction restraining Appellant from interfering with Appellee’s tenancy rights.
       {¶2}   For the following reasons, we find that the trial court lacked jurisdiction to
vacate its January 20, 2023 judgment and issue its March 22, 2023 judgment entry. We
further find that the trial court committed plain error by accepting the parties’ stipulations
as to the applicable law and applying substantial compliance to an unambiguous
commercial contract. Accordingly, Appellant’s first assignment of error has merit and
renders her second assignment of error moot.
       {¶3}   On November 17, 2017, Appellee and Appellant entered into an agreement
for Appellee to lease Appellant’s property and building to operate a medical marijuana
dispensary. The initial lease term was for three months while Appellee awaited State of
Ohio approval of its license to operate the dispensary.
       {¶4}   The lease agreement provided for three consecutive extension periods,
each lasting for three years. Section 2.2 of the lease provides in relevant part that:

       Provided that no default by Tenant exists under this Lease beyond
       applicable notice and cure periods at the time the applicable option to
       extend which is described below is exercised, Tenant shall have the right to
       extend the Initial Term for three (3) consecutive renewal periods of three (3)
       years each (each an “Extension Option”), each commencing on day after
       the expiration of the prior term, upon the same terms and conditions as are
       contained in this Lease. The Extension Options shall be exercised, if at all,
       by written notice to Landlord given not later than the last day of the Initial
       Term, with respect to the first Extension Option, and not later than thirty (30)

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       days before the end of the preceding Extension Option period, for the
       second and third Extension Options.

       {¶5}   Section 3.1 of the lease sets out the minimum rents for each extension
period, starting with a minimum rent of $3,000 per month for the initial term and the first
extension period, which constituted years 1-3 of the lease. Section 3.1 sets the minimum
monthly rent for the second option extension in years 4-6 at $3,250. The minimum
monthly rent for the third option extension in years 7-9 was $3,450.
       {¶6}   Section 10.1 of the lease sets forth when the landlord may terminate the
lease upon default by the tenant. It provides that the landlord may terminate the lease if
the tenant failed to pay a rent installment within 10 days of receiving written notice of late
rent payment. The landlord may also terminate the lease if the tenant fails to perform
under any other covenants in the lease within 30 days of receiving written notice by the
landlord. Section 17.9 of the lease stated that, “[t]ime shall be of the essence in the
performance of every term, covenant and condition of this Lease.”
       {¶7}   The parties extended the initial lease term to June 30, 2018 by amendment.
The amendment provided that the first extension term would begin immediately after the
initial term ended. Thus, the initial term ended on June 30, 2018, and the first three-year
extension term began on July 1, 2018 and ended on June 30, 2021. After the State
approved its dispensary application, Appellee began renovating the building to comply
with Ohio’s strict requirements to operate a dispensary.
       {¶8}   On June 5, 2018, Appellee’s general manager, Herb Washington, sent a
“Notice of Extension of Lease” to Appellant.          The notice stated that Appellee was
exercising its first extension option, beginning July 1, 2018 and ending June 30, 2021, as
per the lease and amendment.
       {¶9}   Disagreements arose after water began leaking into the building. Appellee
believed that the roof of the building was deteriorating and causing water to leak into the
public and computer security areas. Appellant believed that Appellee failed to change
the filters in the HVAC system located on top of the roof which caused the leaking or that
Appellee’s roofing contractor caused the leakage by making core cuts into the roof of the
building after inspecting the roof to add a canopy.

Case No. 23 MA 0013
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       {¶10} In any event, on April 9, 2021, Appellant emailed Appellee’s counsel,
advising him that roof restoration was forthcoming and the restored roof would be
warranted against leaks for 18 years.       On April 14, 2021, Appellant again emailed
Appellee’s counsel, advising him that Appellee had failed to make rental payments from
February through April 2021 and failed to pay the first half of the property taxes. Appellant
stated that her email was notice of Appellee’s default and she advised that if Appellee did
not pay the rental payments, she would terminate the lease.
       {¶11} On April 15, 2021, Appellee’s counsel emailed Appellant. He inquired into
the roof restoration and requested a copy of the roof contract. He advised that Appellee
would pay all rent charges, and he requested that Appellant sign an estoppel certificate
in accordance with section 17.10 of the lease stating that the lease is in full force and
effect with no defaults. Appellee’s counsel further stated in the email that “[t]he lease is
also in the Second Option renewal Period effective March 1, 2021.”
       {¶12} Per joint trial stipulations, Appellee admitted that it was mistaken as to the
effective date of the second option extension period.
       {¶13} On April 16, 2021, Appellant emailed Appellee’s counsel, repeating that
Appellee was in default of rent payments. She further stated that:

       In this situation Tenant is still in Default and I will exercise my right to
       terminate the Lease. Unfortunately, the Lease is also not in the Second
       renewal period effective March 1st 2021.

       The First Option Extension (year 1-3) period started July 1.2018 and is
       ending on June 30.2021. The Extension Option shall be exercised if at all,
       by written notice to Landlord given not later than of thirty (30) days before
       the end of the proceeding Extension Option Period, for the Second
       Extension Options, Section 2.2 provided that no default by Tenant exists
       under this Lease.

       I hope, [sic] we can resolve this matter without conflict and also I am looking
       forward to hearing from you.

Case No. 23 MA 0013
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       {¶14} On May 3, 2021, Appellant emailed Appellee’s counsel, indicating that she
received a past due rent check from Appellee for April and May 2021, but it was $36 short.
She stated that she would not proceed with eviction if Appellee immediately paid the $36.
She advised that if she did not receive the $36, she would proceed with an eviction action.
She cautioned that if any future payments were not made when due, she would
immediately start eviction proceedings.
       {¶15} On June 2, 2021, Appellant notified Appellee’s counsel that Appellee failed
to provide proper notice of its intent to extend the lease for the second option extension
period and the lease would expire on June 30, 2021. She ordered Appellee to vacate the
property by June 30, 2021.
       {¶16} On June 14, 2021, Appellee’s counsel emailed Appellant to follow up on a
phone call they apparently had that day.       Appellee’s counsel confirmed Appellant’s
position that the lease terminated because Appellee did not give her a notice of intent to
extend. Counsel stated that Appellee believed that it had already extended the lease in
April and this was sufficient notice. Counsel noted that while Appellant was going to send
a new lease, he offered a compromise so that no disagreement would arise over the rent
amount. He suggested that Appellee pre-pay Appellant three months of rent in the
amount of $3,250 per month and start the extension date on June 1, 2021.
       {¶17} Per joint trial stipulations, the parties agreed that the June 14, 2021 email
accurately expressed Appellee’s intention to extend the lease agreement for the second
option period. The parties also agreed that Appellant refused to accept the June 14, 2021
email as proper notice of the intent to extend the lease agreement. The parties further
agreed that on June 17, 2021, Appellant offered to enter into a new lease with Appellee
for $10,000 per month.
       {¶18} On July 22, 2021, Appellant began eviction proceedings by sending
Appellee a Notice to Leave Premises.
       {¶19} On July 30, 2021, Appellee filed a verified complaint for a declaratory
judgment, breach of the covenant of quiet enjoyment, injunctive relief, and specific
performance. Appellee acknowledged that the second option extension period did not
actually begin until June 1, 2021. However, Appellee alleged that, “the notice from Quest
was sufficient to provide written notice of Quest’s intent to renew the lease for the Second

Case No. 23 MA 0013
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Option Renewal Period.” (Comp. at 5). Appellee also noted that Appellant accepted its
June 2021 rent payment.
       {¶20} Appellee averred that Appellant notified Appellee’s representative that
Appellee failed to give the required 30-day written notice to extend and it therefore had to
vacate the premises by June 30, 2021. Appellee alleged that Appellant threatened an
eviction action and offered a new lease agreement increasing rent to $10,000 per month.
Appellee stated that when it refused the offer, Appellant threatened to call the Ohio Board
of Pharmacy and get its medical marijuana license revoked.
       {¶21} Appellee sought a declaratory judgment that the lease was in full force and
effect in its second option extension period. Appellee alleged that Appellant breached
the covenant of quiet enjoyment by refusing to repair the roof and threatening eviction
unless it vacated the premises by July 31, 2021. Appellee also sought an injunction
against vacating the premises and requested specific performance of the lease.
       {¶22} On the same date of the filing of its complaint, Appellee also filed a motion
for a temporary restraining order and preliminary injunction. On August 3, 2021, the
parties stipulated to a temporary restraining order.
       {¶23} On February 2, 2022, the magistrate held an injunction hearing, where
testimony was provided by Mr. Washington, Appellee’s president, and Appellant. In
addition to written factual stipulations, the parties stipulated to the following:

       In light of the stipulations of fact, did the notifications which Quest provided
       to Mrs. Samuels during the period from April 15, 2021 through June 30 2021
       amount to “substantial compliance” with the Lease’s notification
       requirements for exercising the option to extend the lease into the next
       Renewal Period, July 1, 2021 to June 30, 2024? If so, should the injunction
       be granted?

       If the court finds that the notifications referenced in question No. 1 did not
       amount     to   “substantial   compliance”    with   the   lease’s   notification
       requirements, should the injunction nevertheless be granted or denied
       based upon equitable principles?

       {¶24} The stipulations also noted that:

Case No. 23 MA 0013
                                                                                          –7–

       The parties stipulate that the general rules governing this controversy can
       be stated as follows: The courts generally do not require a “hypertechnical”
       compliance with notice and options provisions of a lease, and will allow the
       option to be exercised if there has been “substantial compliance” with the
       notice provisions. See, e.g., McGowan v. DM Group IX 7 Ohio App.3d 349
       (10th Dist. 1982) and Claypool v. Dews, 2018-Ohio-5401 (7th Dist.).
       Additionally, if notification did not strictly conform with the lease, equitable
       relief may still be granted where such failure (1) results from accident, fraud,
       surprise, or honest mistake, and (2) has not prejudiced the lessor. Ward v.
       Washington Distributors, Inc. (1980), 67 Ohio App.2d 49, 53, 425 N.E.2d
       420. The landlord must also have changed position in reliance upon the
       late notice. Id.

       {¶25} On March 9, 2022, the magistrate granted Appellee’s motion for a
preliminary injunction and denied Appellant’s request to find that the lease terminated on
June 30, 2021. The magistrate found that Appellee met the elements for granting a
preliminary injunction. He found that Appellee was likely to succeed on the merits of its
claims because it substantially complied with the notice of extension provision in the lease
with the April 15, 2021 email. He held that the context behind the email showed that
Appellee intended to continue the tenancy.
       {¶26} The magistrate further noted that the parties had negotiated over the roof,
made progress for global resolution of their issues, and Appellee offered to repair the roof
at its own expense, which would have far exceeded the rent it owed. The magistrate also
found that Appellant’s notice to Appellee about the 18-year restored roof warranty
suggested that Appellant was performing this action for Appellee’s future benefit. The
magistrate further found that the June 14, 2021 email from Appellee’s counsel to
Appellant expressed Appellee’s intent to extend the lease.
       {¶27} The magistrate further found that the injunction was narrowly drawn
because it only required Appellant to continue the lease and maintain the status quo. He
also reasoned that because Appellant entered into no lease agreements with others for
the property, no third parties would be harmed by the injunction.

Case No. 23 MA 0013
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       {¶28} On July 7, 2022, Appellant, pro se, filed objections to the magistrate’s
decision.   She asserted that no factual basis existed for many facts found by the
magistrate, including the cost of renovations to the building, the process of altering the
building, and a finding that the roof of the building contained leaks that were not caused
by Appellee’s contractor. Appellant also asserted that the magistrate erred by finding that
Appellee withheld rent payments because of roof issues, since Appellee was often
delinquent in rent and other payments. Appellant stated that Appellee failed to comply
with the notice provision of the lease and repeatedly breached the lease by making
building renovations without permission, failing to timely provide proof of insurance,
making late rent payments, and delinquently reimbursing her for taxes and insurance.
       {¶29} On August 15, 2022, the trial court adopted the magistrate’s decision. The
court stated that it had conducted an independent review of the evidence. It found that
Appellee was likely to succeed on the merits of its claims because it substantially
complied with the lease’s notice provision through the April 15, 2021 email. The court
held that the only reasonable interpretation of that email was that Appellee intended to
continue its tenancy into the next term.
       {¶30} The court further held that the parties continued to negotiate over the roof,
made progress in resolving their issues, and Appellee offered to repair the roof at its own
cost, and these facts were against Appellee’s interest if it did not intend to extend the
lease. The court cited Appellant’s email to Appellee about the roof restoration and the
18-year warranty against leaks, which it held showed that Appellant was restoring the roof
for Appellee to continue as a tenant. The court also held that the June 15, 2021 email by
Appellee’s counsel to Appellant made it clear that Appellee’s intent in the April 15, 2021
email was to extend the lease.
       {¶31} The court further held that Appellee’s injunction was narrowly drawn
because it only required Appellant to continue the lease and maintain the status quo. The
court noted that Appellant had not entered into a lease agreement with anyone else for
the property and therefore no third parties would be harmed by the injunction.
       {¶32} The court granted Appellee’s preliminary injunction motion and denied
Appellant’s request to find that the lease terminated as of June 30, 2021. The court
ordered the case to be scheduled for a final pretrial and trial on the remaining issues.

Case No. 23 MA 0013
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       {¶33} On November 8, 2022, Appellee filed a motion to consolidate the
preliminary injunction hearing with the trial on the merits. Appellee also filed a notice
dismissing its claims for breach of the covenant of quiet enjoyment and specific
performance.
       {¶34} On December 5, 2022, Appellant, pro se, filed a motion alleging that her
attorney did not represent her correctly and she had a significant amount of evidence to
present. She alleged that Appellee breached the lease agreement in numerous ways
and thus could not prevail on its claims. She also filed a motion for recusal of the
magistrate and trial court judge because she could no longer trust them.
       {¶35} On December 13, 2022, the magistrate issued a decision granting
Appellee’s motion to consolidate the preliminary injunction hearing with the trial on the
merits. He found that all relevant evidence was presented at the preliminary injunction
hearing to determine whether Appellee substantially complied with the notice of extension
provision of the lease. The magistrate referred to the testimony of Mr. Washington and
Appellant. He further stated that he had reviewed the lease agreement and the emails
between the parties.
       {¶36} The magistrate noted that Appellant intended to present evidence of new
claims two days before the hearing, but he struck it from the record. He explained that
Appellant had only one counterclaim and did not amend her counterclaim to include new
claims, so the new claims and related evidence could not be presented.
       {¶37} The magistrate granted Appellee’s motion to consolidate and declared the
lease between the parties in full force and effect in its second option extension period.
The magistrate awarded judgment in favor of Appellee by granting the permanent
injunction restraining Appellant from interfering with its tenancy rights. The magistrate’s
decision included a notice informing the parties that the parties had 14 days within which
to file written objections to the magistrate’s decision.
       {¶38} On December 15, 2022, the trial court judge denied Appellant’s motion to
recuse.
       {¶39} On December 22, 2022, Appellant filed a motion to extend her time for filing
objections. Appellee opposed Appellant’s motion.

Case No. 23 MA 0013
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       {¶40} On January 5, 2023, the court issued an order allowing Appellant to file
objections to the magistrate decision by January 17, 2023. Appellant filed objections on
January 18, 2023.
       {¶41} On January 20, 2023, the trial court adopted the magistrate’s decision. The
court granted Appellee’s motion to consolidate the preliminary injunction hearing with the
trial on the merits. The court declared that the lease between the parties was in full force
and effect in its second option extension period and awarded Appellee a permanent
injunction restricting Appellant from interfering with its tenancy rights.
       {¶42} On January 31, 2023, Appellant, through counsel, filed a notice of appeal
of the trial court’s January 20, 2023 judgment.
       {¶43} On February 1, 2023, the trial court vacated its January 20, 2023 judgment,
finding that it had mistakenly entered judgment without considering Appellant’s untimely
filed objections. The court found that the interest of justice required vacation of its prior
judgment, especially due to Appellant’s pro se status. The court ordered that a non-oral
hearing be scheduled on the objections.
       {¶44} On March 22, 2023, the trial court issued a judgment entry, again adopting
the magistrate’s decision, but noting that Appellant wanted to present evidence of new
claims two days before the hearing and filed exhibits on January 17, 2023 and objections
on January 18, 2023. The court struck the new claims as untimely and issued nearly the
same judgment as that issued on January 20, 2023.
       JURISDICTIONAL ISSUE
       {¶45} Although neither party raises the issue, we find that the trial court lacked
jurisdiction to vacate its January 20, 2023 judgment and issue its March 22, 2023
judgment. Appellant filed her notice of appeal on January 31, 2023. The trial court
vacated its January 20, 2023 judgment on February 1, 2023 and issued a subsequent
judgment on March 22, 2023.
       {¶46} The filing of a notice of appeal divests the trial court’s jurisdiction over the
subject matter of the appeal.       State ex rel. Electronic Classroom of Tomorrow v.
Cuyahoga Cty. Court of Common Pleas, 129 Ohio St.3d 30, 2011-Ohio-626, 950 N.E.2d
149, ¶ 13. “It is well settled that ‘once an appeal is perfected, the trial court is divested of
jurisdiction over matters that are inconsistent with the reviewing court's jurisdiction to

Case No. 23 MA 0013
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reverse, modify, or affirm the judgment.’” State ex rel. Allenbaugh v. Sezon, 171 Ohio
St.3d 573, 2023-Ohio-1754, 218 N.E.3d 935, ¶ 16, quoting State ex rel. Electronic
Classroom of Tomorrow v. Cuyahoga Cty. Court of Common Pleas, 129 Ohio St.3d 30,
2011-Ohio-626, 950 N.E.2d 149, ¶ 13 (quoting State ex rel. Rock v. School Emps.
Retirement Bd., 96 Ohio St.3d 206, 2002-Ohio-3957, 772 N.E.2d 1197, ¶ 8). The court
of appeals may properly vacate a trial court’s order when the trial court issues the order
without having jurisdiction to do so. In re N.W.F., 2019-Ohio-3956, 147 N.E.3d 86, ¶ 12
(7th Dist.), citing Cincinnati School Dist. Bd. of Ed. v. Hamilton Co. Bd. of Revision, 87
Ohio St.3d 363, 368, 721 N.E.2d 40 (2000).
       {¶47} A trial court retains jurisdiction to issue judgments in aid of the appeal and
to address collateral matters pending appeal, such as contempt or sanctions under Civ.
R. 11, Civ. R. 36, or Civ. R. 37. LEXISNEXIS v. Murrell, 2d Dist. Montgomery No. 29018,
2021-Ohio-3527, ¶ 6, quoting In re S.J., 106 Ohio St.3d 11, 2005-Ohio-3215, 829 N.E.2d
1207, ¶ 9 (citing State ex rel. Special Prosecutors v. Judges, Court of Common Pleas, 55
Ohio St.2d 94, 97, 378 N.E.2d 162 (1978) and Painter & Pollis, Ohio Appellate Practice,
Section 1:19 (Oct. 2020)).
       {¶48} Here, the court issued its order to vacate on February 1, 2023, one day after
Appellant filed her notice of appeal. Accordingly, the trial court lacked jurisdiction to issue
an order vacating the January 20, 2023 judgment and issue the March 22, 2023 judgment.
       {¶49} The parties addressed only the January 20, 2023 judgment in their appellate
briefs, even though the briefs were filed after the March 22, 2023 judgment. Further, both
parties agree in their briefs that plain error is the proper standard of appellate review
because untimely objections were filed.
       {¶50} Thus, we find that the trial court lacked jurisdiction to vacate its January 20,
2023 order and issue the March 22, 2023 judgment. We vacate this judgment.
       {¶51} Appellant presents two assignments of error in appealing the court’s
January 20, 2023 judgment. Her first assignment of error asserts:

       The Trial Court Committed Plain Error When It Used The Substantial
       Compliance Doctrine.

Case No. 23 MA 0013
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       {¶52} We agree that the trial court erred by applying the substantial compliance
doctrine in this case. Appellant asserts that the trial court erred by applying the substantial
compliance doctrine to the extension provision in the lease because substantial
compliance applies to matters of contract performance, not contract formation. She cites
Lake Ridge Academy v. Carney, 66 Ohio St.3d 376, 379, 613 N.E.2d 183 (1993), Ritchie
v. Cordray, 10 Ohio App.3d 213, 215, 461 N.E.2d 235 (10th Dist. 1983), and Yocom v.
Battig, 9th Dist. Wayne No. 1868, 1983 WL 2272 in support. Appellant contends that an
option can be accepted only in the manner provided for in the contract and it may not be
exercised beyond the time provided therein. She asserts that the April 15, 2021 email
from Appellee’s counsel was not notice of an intent to extend the lease as required by the
lease terms, and the June 14, 2021 email, while intended to constitute notice, was given
to her 14 days after the expiration of the time within which to extend.
       {¶53} Appellant further asserts that substantial compliance does not apply
because Appellee committed a material breach by failing to give timely notice of its intent
to extend the lease. She cites Warren Concrete & Supply, Inc. v. Strohmeyer Contracting,
Inc., 11th Dist. Trumbull No. 2010-T-0004, 2010-Ohio-5395, Morton Bldgs., Inc. v. Correct
Custom Drywall, Inc., 10th Dist. Franklin No. 06AP-851, 2007-Ohio-2788, and Urology
Servs. Inc. v. Greene, 8th Dist. Cuyahoga No. 50205, 1986 WL 2937, (Mar. 6, 1986), and
asserts that time is of the essence in an option contract and any delay beyond the time
specified in the contract constitutes a material breach.
       {¶54} Appellant also contends that substantial compliance is an equitable doctrine
and equity does not permit relief to a lessee who fails to provide written notice of renewal
in the absence of fraud, mistake or accident, and unaffected conduct of the lessor. She
cites Ahmed v. Scott, 65 Ohio App.2d 271, 277, 418 N.E.2d 406 (6th Dist. Lucas 1979)
and CitiMortgage, Inc. v. Brown, 2015-Ohio-5347, 45 N.E.3d 258 (1st Dist.). Appellant
asserts that there is no allegation of misconduct, and equity does not relieve Appellee
from its negligence.
       {¶55} Appellant also argues that the trial court rewrote the lease by applying the
substantial compliance doctrine and allowing a lease extension on terms different from
those in the lease. She contends that the lease is a commercial lease which prioritizes
the freedom of contract and the enforceability of the justifiable expectations of the parties,

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as determined by the contract terms. Appellant asserts that the court substituted its
judgment for the lease terms by applying substantial compliance to excuse Appellee’s
breach. She cites Fifth Third Bank W. Ohio v. Carroll Bldg. Co., 180 Ohio App.3d 490,
495, 2009-Ohio-57, 905 N.E.2d 1284 (2d Dist.) and requests that we join the Second
District Court of Appeals in holding that:

       [t]he fact that [the tenants] may have intended to maintain their interest in
       the lease long-term did not negate [their] obligation to exercise the renewal
       option, even if the [landlord] was aware of these intentions. If [the tenants]
       wanted to maintain the lease long-term, they needed to renew the lease in
       accordance with the contract terms.

       {¶56} Appellee counters that Ohio courts, like many others, hold that a breach
must be material to justify forfeiture, regardless of lease language. Appellee contends
that courts have applied the substantial compliance doctrine to slight departures and
omissions in renewal provisions in both commercial and residential lease agreements.
They cite McGowan v. DM Group IX, 7 Ohio App.3d 349, 455 N.E.2d 1052 (10th Dist.
1982), Lesh v. Moloney, 10th Dist. Franklin No. 11AP-353, 2011-Ohio-6565 and Ashland
Global Holdings, Inc. v. SuperAsh Remainderman L.P., Franklin C.P. No. 22CV-2398,
(Sept. 27, 2022) as examples. Appellee asserts that SuperAsh, supra, is directly on point,
as the tenant there provided late notice of extension and the court found that it was
inadvertent and the result of an honest mistake.          The court ruled that substantial
compliance was demonstrated of the intent to extend.
       {¶57} Appellee asserts that the two emails sent by its counsel to Appellant
demonstrated substantial compliance with the lease’s notice provision and those emails,
coupled with the nearly $1 million it spent to modify and renovate the building, evidenced
its intent to extend the lease term. Appellee also refers to its offer to pay for the roofing
repairs itself as establishing its intent to extend the lease term.
       {¶58} Appellee cites State ex rel. Preston v. Ferguson, 170 Ohio St.3d 450, 457,
166 N.E.2d 365, 457-458 (1960), where the Supreme Court of Ohio held that a contract
with an option to extend an original agreement is a present grant that extends the term of
the original agreement if the option is exercised. Appellee concludes that an extension

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operates not to form a new contract, but to extend the original agreement, which remains
the governing instrument.
        {¶59} Appellee differentiates the cases cited by Appellant. Appellee contends that
Ritchie v. Cordray, 10 Ohio App.3d 213, 461 N.E.2d 325 (10th Dist. 1983), involved a real
estate option contract where the plaintiffs paid the defendants for the “exclusive right and
option to purchase” the defendants’ real property and required written notice by the
plaintiffs to the defendants by a specified date and time. Appellee explained that the
Tenth District held that a buyer must strictly comply with the time, manner, and place of
acceptance because the option contract is an agreement to keep an offer opened for a
particular time and limits an offeror from revoking the offer prior to that time period.
        {¶60} Appellee asserts that Lake Ridge Academy v. Carney, 66 Ohio St.3d 376,
613 N.E.2d 183 (1993), differs from the instant case as it concerned a reservation
agreement, or an enrollment contract for school tuition and the court itself indicated that
such cases raise unique issues.
        {¶61} Appellee contends that Yocom v. Battig, 9th Dist. Wayne No. 1868, 1983
WL 2272, (Dec. 28, 1983), involved the right to revoke the exercise of an option to extend
a commercial lease after the option to renew was already exercised. Appellee reasons
that the instant case involves whether substantial compliance with a renewal provision
suffices to exercise the renewal period.
        {¶62} Appellee also contends that its notification to Appellant of the extension of
the second renewal option is not a material breach. Appellee cites Ohio cases and
Section 241 of the Restatement of the Law 2d, Contracts (1981)1, as the appropriate
framework in determining whether a breach is material in the landlord-tenant context.

1 That section provides:

In determining whether a failure to render or to offer performance is material, the following circumstances
are significant:
(a) the extent to which the injured party will be deprived of the benefit which he reasonably expected;
(b) the extent to which the injured party can be adequately compensated for the part of that benefit of which
he will be deprived;
(c) the extent to which the party failing to perform or to offer to perform will suffer forfeiture;
(d) the likelihood that the party failing to perform or to offer to perform will cure his failure, taking account of
all the circumstances including any reasonable assurances;
(e) the extent to which the behavior of the party failing to perform or to offer to perform comports with
standards of good faith and fair dealing.

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Appellee asserts that the notice of renewal provision in the lease agreement is not a
material term because failing to provide such notice does not defeat the fundamental
purpose of the agreement. Appellee contends that the fundamental purpose of the lease
is for Appellee to operate its medical marijuana dispensary while paying Appellant rent
for occupying her premises.
       {¶63} Appellee further contends that forfeitures are not favored in the law and
equity may help one who makes an innocent, unintended error under a lease, especially
here, when it spent nearly $1 million improving the property and Appellant suffered no
prejudice from late notice. Appellee asserts that it is not asking the court to rewrite the
lease and the trial court did not do so. Rather, Appellee maintains, the trial court merely
applied substantial compliance to find that its slight 14-day delay in notice resulted from
an honest mistake in thinking that its prior attempt to exercise the second option extension
constituted effective notice.
       {¶64} In reply, Appellant contends that the option to extend the lease in Section
2.2 is an option contract. Citing Plikerd v. Mongeluzzo, 73 Ohio App.3d 115, 122, 596
N.E.2d 601 (3d Dist. 1992), Appellant asserts that an option contract contains two
elements: “(1) the offer to buy, sell, or perform some other act which does not become a
contract until accepted; and (2) the binding agreement to leave the offer open for the
specified time.” Appellant reasons that the lease is an option contract because Appellee
had the right to extend it and Appellant could not revoke that right. Appellant concludes
that Appellee could only exercise the option in the manner specified in the contract and
thus substantial compliance does not apply. Appellant cites residential and commercial
lease cases where option contracts have been determined by the courts.
       {¶65} Plain error is the proper standard of appellate review here. A failure to file
objections or timely objections to a magistrate’s decision forfeits all arguments on appeal
except for claims of plain error. In re Estate of Stotz v. Stotz, 6th Dist. Sandusky No. S-
22-014, 2023-Ohio-663. Civ. R. 53(D)(3)(b)(iv) provides that “[e]xcept for a claim of plain
error, a party shall not assign as error on appeal the court’s adoption of any factual finding
or legal conclusion…unless the party has objected to that finding or conclusion as
required by Civ.R. 53(D)(3)(b).” Both parties agree that plain error is the proper standard

Case No. 23 MA 0013
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of review as Appellant failed to file timely objections. See Appellant’s Br. at 8; Appellee’s
Br. at 8.
       {¶66} Admittedly, plain error is disfavored in civil cases. Plain error occurs only
when “there is an obvious deviation from a legal rule that affected the defendant's
substantial rights by influencing the outcome of the proceedings.” In re A.D., 7th Dist.
Jefferson Nos. 22 JE 0016, 22 JE 0017, 2023-Ohio-276, ¶ 55, quoting In re T.J.W., 7th
Dist. Jefferson Nos. 13 JE 12, 13 JE 13, 13 JE 14, 2014-Ohio-4419. A court should find
plain error in the “extremely rare case involving exceptional circumstance where error, to
which no objection was made at the trial court, seriously affects the basic fairness,
integrity, or public reputation of the judicial process, thereby challenging the legitimacy of
the underlying judicial process itself.” In re A.D., supra at ¶ 55, quoting Kirin v. Kirin, 7th
Dist. Mahoning No. 08 MA 243, 2011-Ohio-663, ¶ 19 (quoting Goldfuss v. Davidson, 79
Ohio St.3d 116, 679 N.E.2d 1099 (1997)).
       {¶67} We find plain error in this case.        The trial court accepted the parties’
stipulations of law. However, “parties cannot concede or stipulate as to matters of law,
only issues of fact.” Kocher v. Ascent Resources-Utica, L.L.C., 7th Dist. Jefferson Nos.
22 JE 0012, 22 JE 0014, 2023-Ohio-3592, ¶ 55, --N.E.3d--, citing Crow v. Nationwide
Mut. Ins. Co., 159 Ohio App.3d 417, 2004-Ohio-7117, 824 N.E.2d 127 (5th Dist.) (citing
Diversified Capping Equip., Inc. v. Clinton Pattern Works Inc., 6th Dist. Wood App. No.
WD-01-035, 2002 WL 537998, (Apr. 12, 2002). The parties’ joint stipulations concerning
substantial compliance and equitable application concerned matters of law. The court
accepted the stipulations and ruled solely based on substantial compliance. However,
this was not the appropriate or applicable standard to apply in this case.
       {¶68} The parties cited to McGowan, supra, and Claypool, supra, for the
stipulation that hypertechnical compliance with a lease term requiring written notice to
vacate the premises was unnecessary. However, both of those cases concern residential
leases. McGowan, supra, at 350; Claypool, supra, at ¶ 2. The parties here had a written
commercial lease.
       {¶69} There are instances where courts have applied the substantial compliance
doctrine to commercial leases where tenants failed to provide written notice of the intent
to extend a lease. As Appellee notes, Ashland v. SuperAsh, C.P. Franklin No. 22CV-

Case No. 23 MA 0013
                                                                                      – 17 –

2398, 2022 WL 19489239, (Sept. 27, 2022), is such a case. The Tenth District recently
affirmed the trial court’s holding in this case. Ashland Global Holdings Inc. v. SuperAsh
Remainderman Ltd. Partnership, 10th Dist. Franklin No. 22AP-638, 2023-Ohio-3556.
       {¶70} However, the court in this case based its determination on incorrect legal
stipulations of the parties and failed to determine if substantial compliance or other
equitable measures should even apply. The court completely bypassed whether the
commercial lease in this case was clear and unambiguous and therefore required strict
compliance. Section 2.2 of the lease is clear that Appellee was required to provide written
notice to Appellant of its intent to extend into the second option period not later than 30
days before the end of the first extension option term.
       {¶71} On April 16, 2021, one day after receiving the email from Appellee’s
counsel, Appellant informed counsel that he was mistaken that they were in the second
option renewal period. She informed him of the proper beginning and ending period of
the first extension period, and notified him that his email was insufficient to constitute
proper notice. She referred him to Section 2.2 of the lease providing for proper notice.
Appellee took no action until June 14, 2021.
       {¶72} In Kenney v. Chesapeake, 2015-Ohio-1278, 31 N.E.3d 136, ¶ 20 (7th Dist.),
we acknowledged that:

       A contract containing an option to extend an agreement constitutes a
       present grant which, if the option is exercised, operates to extend the term
       of the original agreement. [Preston v. Ferguson, 170 Ohio St. 450, 457-458,
       166 N.E.2d 365 (1960)]. At that time, the contract “becomes one for both
       the original and the extended term.” Id.

       {¶73} We further recognized that “the provision of actual notice regarding the
exercise of the option is generally valid unless violative of a contractual provision.”
Kenney, supra, at ¶ 68. We held that “[i]n an option contract, a party may exercise its
option only in the manner provided in the contract.” (Emphasis original). Lake Ridge
Academy v. Carney, 66 Ohio St.3d 376, 380, 613 N.E.2d 183 (1993). Id.
       {¶74} Since the trial court limited its decision to inapplicable equitable principles
based on the parties’ legal stipulations, we find plain error.

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                                                                                         – 18 –

       {¶75} Accordingly, Appellant’s first assignment of error is sustained.
       {¶76} In her second assignment of error, Appellant asserts:

       The Trial Court Committed Plain Error When It Held That Appellee
       Substantially Complied With the Extension Provision Of The Lease.

       {¶77} Appellant contends that the uncontroverted facts show that Appellee did not
substantially comply with the lease, even if the trial court properly applied that doctrine.
She asserts that Appellee never gave her notice that it wanted to extend the lease for the
second renewal period, even after she immediately informed him of his mistake as to the
date and cited him to the proper notice provision in the lease. Appellant concludes that
the trial court lacked any evidence for its finding that “the April 15, 2021 email left no doubt
that it was [Appellee’s] intention to continue its tenancy into the next term.”
       {¶78} We overrule this assignment of error as moot based on our sustaining
Appellant’s first assignment of error.
       {¶79} For the reasons stated above, the trial court’s decision is reversed and this
matter is remanded for further proceedings consistent with this Opinion.

Robb, J., concurs.

D’Apolito, P.J., concurs.

Case No. 23 MA 0013
[Cite as Quest Wellness Ohio, L.L.C. v. Samuels, 2023-Ohio-4450.]

        For the reasons stated in the Opinion rendered herein, the first assignment of error
is sustained, the second assignment of error is moot, and it is the final judgment and order
of this Court that the judgment of the Court of Court of Common Pleas of Mahoning
County, Ohio, is reversed. We hereby remand this matter to the trial court for further
proceedings according to law and consistent with this Court’s Opinion. Costs to be taxed
against the Appellee.
        A certified copy of this opinion and judgment entry shall constitute the mandate in
this case pursuant to Rule 27 of the Rules of Appellate Procedure. It is ordered that a
certified copy be sent by the clerk to the trial court to carry this judgment into execution.

                                       NOTICE TO COUNSEL

        This document constitutes a final judgment entry.