Court Opinion

ID: 6700049
Source: CourtListenerOpinion
Date Created: 2022-07-20 22:06:42.87906+00
Date Added: 2024-06-11T16:01:23.367758
License: Public Domain

Diane V. Grendell, Judge,
dissenting.
{¶ 61} I dissent from the majority’s opinion and judgment with respect to the second assignment of error, in that it reverses the award of attorney fees to Thomson to the extent those fees were incurred in connection with the forbearance agreement. In all other respects, I concur in the majority’s judgment.
{¶ 62} Section 12(e) of the Promissory Note at issue provides: “Maker [Resource Recovery International] shall pay to Payee [Thomson], upon demand, any and all expenses, including legal expenses and reasonable attorneys’ fees, incurred or paid by Payee in enforcing this Note, whether or not any legal proceeding is commenced hereunder, together with interest therein at the Default Rate from the date paid or incurred by Payee until such expenses are paid by Maker.”
{¶ 63} In the present case, Resource Recovery defaulted under the note to Thomson in 2004. Accordingly, Thomson was entitled to accelerate the total amount due under the note. Rather than accelerating the debt, Thomson believed that he had entered into an oral forbearance agreement with Resource Recovery, whereby he would forbear demanding the whole amount owed in exchange for partial payment and the transfer of certain properties and equipment located in Fayette County, Pennsylvania. At the time that Somerset Synfuel filed the interpleader action in January 2006, the property had not been transferred to Thomson, nor had Thomson taken legal action against Resource Recovery under the note.
{¶ 64} According to Section 12(e) of the note, Thomson is entitled to “any and all expenses * * * incurred or paid by Payee in enforcing this Note.” The expenses incurred by Thomson in connection with the forbearance agreement were incurred for no other purpose than to secure enforcement of the note, while *381avoiding the expenses of formal legal action. Thus, Thomson is entitled to these fees.
{¶ 65} The majority holds that Thomson is not entitled to these attorney fees on the grounds that the “forbearance agreement was an attempted settlement intended to replace the parties’ original obligations under the note” and therefore “constituted a new contract.” The majority’s position lacks both a legal and factual foundation. The alleged forbearance agreement did not constitute a new contract.
{¶ 66} By definition, an agreement to forbear from accelerating the debt under a note does not constitute a new agreement. In order to create a new contract, “ ‘there must be * * * a mutual agreement between the creditor and his debtor which is intended to extinguish the old obligation by substituting a new one therefore.’ ” Natl. City Bank v. William Troy & Partners, Inc. (Dec. 14, 1995), 8th Dist. No. 68367, 1995 WL 739610, *2, quoting Fed. Land Bank of Louisville v. Taggart (1987), 31 Ohio St.3d 8, 14, 31 OBR 6, 508 N.E.2d 152. Accordingly, an agreement like the one alleged by Thomson does not give rise to a novation, accord and satisfaction, or any other similar construction. Id.
{¶ 67} There is a complete lack of evidence in the record before us of any agreement intended to extinguish the balance of the note and substitute a new obligation. This point is illustrated by Thomson’s hearing testimony:
{¶ 68} “Attorney: Was it your understanding that the note which provided for the payment of money to you for principal and accrued interest was joined together with what we’re calling the forbearance agreement?
{¶ 69} “Thomson: Once I wrote the default letter, at that point there had to be a resolution. In the forbearance agreement was a resolution of the default is the way I understood it.
{¶ 70} “Attorney: So was it in your mind, did you regard it as a separate agreement or as part of the note?
{¶ 71} “Thomson: No. * * * I wrote the forbearance agreement according to the terms of the note. And the forbearance agreement I believe was a resolution of the default for the note, which I would assume the forbearance agreement would be part of the note..
{¶ 72} “ * * *
{¶ 73} “Attorney: And it is fair to say then that in your dealings regarding Resource Recovery you regarded their failure to transfer the equipment and transfer the property as default under the note?
{¶ 74} “Thomson: The default had occurred. It hadn’t been cured, yes.
*382{¶ 75} “Attorney: But was it, was what you described as a default of the forbearance agreement, do you also see that as a default under the note?
{¶ 76} “Thomson: The default on the note occurred in ’04. The cure for the default was the forbearance agreement. The forbearance agreement was never complete, so the original default still existed.”
{¶ 77} Edward Kane, testifying on behalf of Resource Recovery, merely denied the existence or even the discussion of any forbearance agreement:
{¶ 78} “Retrospectively, since all of this has come out, I remember [Thomson] saying at one time, “You know I have a right to collect everything.” And I said, “Go ahead. You’re not going to get anything more than what you’re supposed to get.” That was it. That is all I ever heard. I never heard the word “forbearance.” * * * Anything that would have to do with the note, which is the controlling document, would have to be in writing. There’s nothing in writing, because there was nothing.”
{¶ 79} Finally, counsel for Resource Recovery made it indisputably clear, in an exchange with the trial judge, that the alleged forbearance agreement did not modify or supersede the underlying note:
{¶ 80} “The Court: The forbearance note [sic], he’s used the word an amendment to it, but the promissory note itself still carried whatever validity that it did.
{¶ 81} “Counsel: Yes.
{¶ 82} “The Court: It’s just that they agreed for whatever compensation not to enforce that at that time. Am I wrong on that?
{¶ 83} “Counsel: I am in total agreement with your words * * * yes, I have never, other than claiming that the agreement does not exist, we have never claimed that it altered the note provision.”
{¶ 84} Given this record, there is simply no basis for the majority’s conclusion that the forbearance agreement constituted a new contract and that therefore, Thomson may not be awarded attorney fees in connection with it.
{¶ 85} The ancillary significance of the forbearance agreement is also evidenced by the course of the present litigation. Neither Somerset Synfuel’s interpleader nor Resource Recovery’s cross-claims mentioned the forbearance agreement. Thomson alleged the existence of the agreement in his cross-claim; however, none of Thomson’s claims were based solely on this agreement. Rather, Thomson consistently sought damages for Resource Recovery’s “failfure] to honor the Release, the Pay Order, the Note, the Security Agreement, and the Forbearance Agreement.”
*383{¶ 86} The majority also cites Thomson’s failure to prevail in the enforcement of the forbearance agreement as a reason for denying attorney fees in this regard. No authority is cited in support of this position.
{¶ 87} The provision of the note authorizing the recovery of attorney fees does not contain any such limitation, but speaks broadly of “any and all expenses,” regardless of whether legal action even occurs. If formal legal action is not required for the recovery of attorney fees, it is difficult to infer the conclusion that Thomson is entitled to fees only where legal action has been successfully prosecuted. Cf. J.B.H. Properties, Inc. v. N.E.S. Corp., 11th Dist. No. 2007-L-024, 2007-Ohio-7116, 2007 WL 4564392, at ¶ 11 (where the agreement limited the recovery of attorney fees to the “substantially prevailing party”).
{¶ 88} Moreover, Thomson’s “failure” was merely one part of his claim. Under the law of Ohio and this district, Thomson is the “prevailing party” in this matter and, therefore, entitled to the full amount of attorney fees deemed reasonable by the trial court. Ohio courts typically construe the prevailing party in an action as the “party who has obtained some relief in an action, even if that party has not sustained all of his or her claims” and “the party who prevails ‘as to the substantial part of the litigation.’ ” Kleeman v. Carriage Trace, Inc., 2d Dist. No. 21873, 2007-Ohio-4209, 2007 WL 2343756, at ¶ 100, quoting First Commodity Traders, Inc. v. Heinold Commodities, Inc. (C.A.7, 1985), 766 F.2d 1007, 1015. This standard had been previously used by this court when construing the issue of whether a party is entitled to fees. J.B.H. Properties, 2007-Ohio-7116, 2007 WL 4564392, at ¶ 18 (a party that “received some relief on the merits of its claims” was entitled to attorney fees), and ¶ 27 (“[T]he issue is who has won? In this case, the answer is simple. The jury returned a verdict in JBH’s favor. Therefore, JBH is the prevailing party”). (Trapp, J., concurring.)
{¶ 89} The majority acknowledges the practical difficulties of determining what portion of the fees were expended in attempting to enforce the forbearance agreement. The records documenting the efforts of Thomson’s attorneys in this matter are not issue-specific. They speak in terms of “correspondence,” “emails,” “documents,” “discovery,” and “conference.” They do not reveal which aspects of the case were being considered. As noted above in regard to Thomson’s cross-claim, the issue of the forbearance agreement is inextricably joined with the central claim' based on the note itself. There will be more than considerable difficulty in the task facing the trial court on remand.
{¶ 90} Assuming, arguendo, that such a determination is possible, Resource Recovery should have pursued it during the hearings held on the reasonableness of the attorney fees claimed by Thomson. Because Resource Recovery was disputing the existence of the forbearance agreement and the issue remained open, it should have presented its case as to what percentage of the attorney fees *384were attributable to work on the forbearance issue. The failure to do so constitutes a waiver of this issue on appeal.
{¶ 91} For the foregoing reasons, I would affirm the award of attorney fees to Thomson in its entirety.