Court Opinion

ID: 4580553
Source: CourtListenerOpinion
Date Created: 2020-10-26 18:14:43.798568+00
Date Added: 2024-06-11T13:43:41.924299
License: Public Domain

[Cite as Payette Fin., Servs., L.L.C. v. Mtge. Electronic Registration Sys., Inc., 2020-Ohio-5055.]

                                      IN THE COURT OF APPEALS

                                  ELEVENTH APPELLATE DISTRICT

                                        PORTAGE COUNTY, OHIO

 PAYETTE FINANCIAL SERVICES, LLC,                           :           OPINION

                   Plaintiff,                               :           CASE NO. 2020-P-0010

          - vs -                                            :

 MORTGAGE ELECTRONIC                                        :
 REGISTRATION SYSTEMS, INC.,
 ACTING SOLELY AS NOMINEE FOR                               :
 MB FINANCIAL BANK, N.A., et al.,
                                                            :
                   Defendants-Third Party
                   Plaintiffs-Appellants/                   :
                   Cross-Appellees,
                                                            :
 DAVID GRAY, et al.,
                                                            :
                   Third Party Defendants-
                   Appellees/Cross-Appellants.              :

 Civil Appeal from the Portage County Court of Common Pleas, Case No. 2016 CV
 00969.

 Judgment: Affirmed.

 Kerin Lyn Kaminski and Kathleen A. Nitschke, Giffen & Kaminski, LLC, 1300 East Ninth
 Street, Suite 1600, Cleveland, Ohio 44114 (For Defendants-Third Party Plaintiffs-
 Appellants/Cross-Appellees).

 Jeffrey Mark Levinson, Levinson LLP, 55 Public Square, Suite 1750, Cleveland, Ohio
 44113 (For Third Party Defendants-Appellees/Cross-Appellants).

MARY JANE TRAPP, J.
       {¶1}   Cross-appellants, David and Shelly Gray (collectively, “the Grays”), appeal

from the judgments of the Portage County Court of Common Pleas, which adopted the

magistrate’s decision and overruled their objections, finding that while the Grays asserted

a “vague” affirmative defense of release in their answer to the Third Party Complaint, they

did not assert a “counterclaim of any kind” that “meets the requirements of the Ohio Rules

of Civil Procedure as a properly pleaded claim for damages” for breach of contract.

       {¶2}   In the Grays’ sole assignment of error, they argue that the trial court erred

in failing to find that they asserted a valid breach of contract claim via an affirmative

defense because the cross-appellees, Douglas and Kristine Ritzel (collectively, “the

Ritzels”), commenced and prosecuted third party claims against them in direct

contravention of the parties’ earlier mutual release, thus entitling the Grays to damages.

They further assert the trial court erred in failing to find the issue was tried by implied

consent pursuant to Civ.R. 15(B) after the Ritzels made a motion to amend their pleadings

to conform to the evidence.

       {¶3}   A review of the record and pertinent law reveals the Grays only asserted a

breach of the mutual release as an affirmative defense and did not file a counterclaim or

a motion for leave to amend. There is sparse testimony by Mr. Gray regarding the costs

they incurred from the underlying litigation as a result of the alleged breach. Further,

objections were made to this line of questioning, which were sustained. Moreover, to find

a breach of contract claim was impliedly tried by consent would cause a substantial

prejudice to the Ritzels.

       {¶4}   Thus, the judgment of the Portage County Court of Common Pleas is

affirmed.

                                            2
                              Substantive and Procedural Facts

       {¶5}   This case arises from a foreclosure action in which the Ritzels were the

defendants/third-party plaintiffs along with their lender and co-defendant/third-party

plaintiff, MB Financial Bank, N.A. (“MBFinancial”), and the Grays were third-party

defendants.

       {¶6}   In 2011, the Ritzels entered into a lease with an option to purchase with the

Grays for the subject residential property.      In 2015, the Ritzels signed a purchase

agreement for the property. At the time the purchase agreement was executed, three

mortgages encumbered the property – two held by Wells Fargo and a third originally held

by Lake National Bank. It was alleged that Payette Financial Services, LLC (“Payette”)

subsequently acquired a participation interest in that third note and mortgage (the

“Payette mortgage”).

       {¶7}   At closing, the Wells Fargo liens were satisfied from the sale proceeds

funded by MBFinancial. Neither the Ritzels nor MBFinancial discovered, nor did the

Grays disclose, the third mortgage prior to the closing of the sale of the property

       {¶8}   To further complicate matters, after the purchase agreement was executed,

but before closing, the relationship between the Ritzels and the Grays grew tumultuous –

culminating in the Grays filing an eviction action. The Grays alleged non-payment of

amounts due under the lease agreement, and the Ritzels filed a counterclaim for specific

performance and money damages.            The parties eventually signed a confidential

settlement agreement and mutual release – the subject of this appeal – and dismissed

the eviction action.

                                             3
       {¶9}   The Ritzels then completed the purchase, and the Grays delivered a

general warranty deed. Later, having been unable to collect against the Grays, Payette

brought its foreclosure action, asserting its lien against the Ritzels’ residence as first in

priority when it discovered the property had been sold to the Ritzels.

       {¶10} In the foreclosure action, MBFinancial and the Ritzels filed amended third-

party claims against the Grays for breach of warranty deed, fraudulent misrepresentation,

and unjust enrichment.      In turn, the Grays filed an amended answer denying the

allegations and raising various affirmative defenses, including a defense that “the claims

against the Grays contained in the Third-Party Complaint were released.” In their prayer

for relief, the Grays requested the court to “enter judgment in favor of the Grays on the

Third-Party Complaint as to each and every Count therein, assessing any costs of this

litigation against the Defendants and grant the Grays such further and additional relief as

is just.” There were no further amendments to the pleadings.

       {¶11} After a lengthy discovery phase, which included, by the parties’ stipulation,

the filing of the mutual release from the eviction action into the record of the foreclosure

action, a three-day trial was held before a magistrate.

                            Trial Testimony and the Grays’ Claims

       {¶12} Counsel for the Grays concluded his opening statement by stating: “At the

end of this case, the Grays, who are the parties least able to afford this expense, will ask

the Court for an award that the Defendants pay the costs the Grays incurred in this

meritless litigation due to their breach of the contract of the mutual release.”

       {¶13} Mr. Gray testified briefly as to the mutual release:

                                              4
       {¶14} “Q. So once you saw this mutual release in the closing documents, did you

expect to be done with the Ritzels forever?

       {¶15} “A. Absolutely.

       {¶16} “Q. Did you think we would be here today?

       {¶17} “A. No.

       {¶18} “Q. Would you please read aloud the mutual release paragraph of this

document found on Page 2 at 1.0, starting with mutual releases?

       {¶19} “A.    Mutual releases.       Each party, including their respective families,

assignees, agents, heirs, beneficiaries, fiduciaries, representatives, insurers, successors,

and assigns, exchange for the other party’s promises and covenants and for all other

good and valuable consideration, the sufficiency of which are acknowledged, irrevocably

and non-conditionally release, acquits, and forever discharges the other party from any

and all claims, demands, costs, expenses, and cause of action of any kind or description

whatsoever whether known or unknown, vested or contingent, legal or equitable, that

each has or might have against the other relating to or arising out of subject matter of

litigation to lease the purchase agreement, from the beginning of time until the date the

agreement is fully executed.

       {¶20} “Q. It’s pretty comprehensive; isn’t it?

       {¶21} “A. Yes.

       {¶22} “Q. There are no exceptions to the mutual promise of finality there that I

can see; do you?

       {¶23} “A. I think it all says it right there.

       {¶24} “Q. It covers all claims?

                                                5
       {¶25} “A. Yes.

       {¶26} “Q. Known or unknown?

       {¶27} “A. Correct.

       {¶28} “Q. It doesn’t say anywhere except for any type of claims; does it?

       {¶29} “A. No, it does not.

       {¶30} “Q. All is all; right?

       {¶31} “A. Correct.

       {¶32} “Q. Unknown is unknown; right?

       {¶33} “A. Yes.

       {¶34} “Q. And yet in plain breach of that mutual promise of finality, we’re here

now; right?

       {¶35} “[Counsel for MBFinancial/the Ritzels]: Objection. Just leading all the way

through, but I got tired of objecting, but that’s just –

       {¶36} “The Magistrate: Sustained.

       {¶37} “[Counsel for the Grays]: Okay.

       {¶38} “Q. So it would be a legitimate question to ask why we’re here now in light

of this release?

       {¶39} “A. Yes.

       {¶40} “Q. Can you tell me how?

       {¶41} “A. It’s been ongoing for two years now. Emotionally, it’s like a big, black

cloud hanging over us. Financially, up to this trial it’s cost us $35,000.00 to deal with this.

It’s caused a lot of friction and undue distress on us as a family.

                                               6
       {¶42} “Q. Can you describe generally what the financial costs – or I’m sorry, give

me general categories of what the financial cost to you consists of?

       {¶43} “A. Missed work. I’ve had to miss obviously these last three days. I missed

a day for the deposition, hotel costs, flight costs, attorney fees.

       {¶44} “Q. Did you also have to buy transcripts?

       {¶45} “A. Yes. We had to buy transcripts. I think that’s – covers it.

       {¶46} “Q. All expenses incurred because of the Ritzels’ breach of the mutual

release; correct?

       {¶47} “[Counsel for MBFinancial/the Ritzels]: Objection.

       {¶48} “The Magistrate: Sustained.”

       {¶49} Toward the end of trial after the court ruled on admission of evidence,

MBFinancial and the Ritzels moved to amend the pleadings to conform to the admitted

evidence. The Grays did not object. Payette moved for a directed verdict, which was

overruled. At that point, Payette indicated to the court that it had no rebuttal and that it

would “like to make a similar motion to conform.” The magistrate responded that “the

motion to have it conform to the evidence has already been put on by the Defendants

[MBFinancial and Ritzels], so its conforming how it conforms. Okay.” Payette’s counsel

replied, “Okay,” and the Grays’ counsel said, “Prospectively as well.” The magistrate

responded, “All right. So that will be granted for all parties * * *.”

       {¶50} During closing arguments, both sides spoke briefly about the mutual

release. The Grays contended that the Ritzels had released all claims relating to the

purchase agreement in the mutual release and asked the court for “judgment in their favor

on each of the Defendant’s claims and also an award of the costs they incurred in this

                                               7
litigation on account of the Defendant’s clear breach of contract by proceeding in the face

of the mutual release, which again, they hid.”

      {¶51} In rebuttal, counsel for MBFinancial and the Ritzels stated that “Mr. Gray’s

counsel brought up that they should be able to get fees based on breach of contract, and

I think he means breach of the purchase agreement although I’m not quite sure. And so

to the extent that that’s what he is indeed seeking, I would then say that such fees can’t

be recovered, because there’s no contract to be breached. The purchase agreement

merged into the warranty deed, and so, therefore, there’s no way to enforce the purchase

agreement at this point.”

      {¶52} The magistrate issued her decision, finding, in relevant part that: the Ritzels

and the Grays entered into and executed a purchase agreement offer, receipt and

acceptance for the property, which was subsequently amended six times; the Grays

signed a seller pre-closing information form that did not disclose the Payette mortgage on

the property; the Grays and the Ritzels were having various disputes that culminated in

February of 2016 when the Grays filed an eviction action against the Ritzels; however,

the parties decided to proceed with a sale of the property and executed a purchase

agreement for the property in April of 2016; and the Grays signed an owner’s affidavit and

closing disclosure statements in connection with the sale of the property, none of which

disclosed the Payette mortgage.

      {¶53} The magistrate further found that the Grays then signed the ALTA

Settlement Statement showing payments to Wells Fargo and a Closing Disclosure that

failed to disclose the third mortgage. The magistrate found that on the same date, the

                                            8
Grays and the Ritzels “executed a Confidential Settlement Agreement and Mutual

Release, which resolved the eviction litigation between them.”

       {¶54} The magistrate continued her findings by noting that pursuant to the Mutual

Release, the Grays and the Ritzels “released, acquitted and forever discharged any and

all claims, whether known or unknown, vested or contingent, legal or equitable, that each

party had or might have against the other relating to or arising out of the subject matters

of the eviction action, the Lease Agreement, or the Purchase Agreement, from the

beginning of time until the date the Mutual Release was fully executed on May 24, 2016.

On May 24, 2016, the Grays executed a General Warranty Deed in favor of the Ritzels.”

       {¶55} The magistrate also found that “MB Financial did not rely upon the Grays’

Owners Affidavit regarding the condition of the title to the Property, but relied upon the

defective title exam and title commitments. No evidence was presented that the Ritzels

justifiably relied upon any misrepresented statements by the Grays to induce reliance in

the purchase of the Property. No evidence was presented that the Grays intended to

mislead any party.”

       {¶56} The magistrate then ordered, as is pertinent to this appeal, that (1) “the

Grays were granted judgment against MB Financial on each of their claims”; (2) the

Ritzels were “granted judgment on their claim against Third-Party Defendants, Shelly

Gray and David Gray, for breach of warranty deed”; (3) the Grays were “granted judgment

against Third-Party Plaintiffs, Douglas Ritzel and Kristine Ritzel, on the remainder of

Third-Party Plaintiffs’ claims.”

       {¶57} Upon review, the trial court adopted the magistrate’s decision without

modifications. MBFinancial, the Ritzels, and the Grays subsequently filed objections. In

                                            9
their objections, the Grays argued they were entitled to a judgment in their favor and

against the Ritzels and MBFinancial for breach of contract and to a hearing to determine

damages incurred by the Grays as a result of the breach.

       {¶58} Based upon the court’s review of the pleadings, the trial transcript, the

various stipulations between the parties, the exhibits admitted into evidence, the

objections asserted by the parties, and the arguments submitted in opposition to the

objections, the court found the objections not well-taken.

       {¶59} More specifically, the court found that the Grays asserted in their objections

that MBFinancial and the Ritzels violated a Confidential Settlement Agreement and

Mutual Release in conjunction with an unrelated eviction action. They further argued that

the magistrate’s decision found “all of the requisite elements of the Grays’ breach of

contract claim.”

       {¶60} Upon review of the pleadings, the court found that the Grays did not file any

claim at any time against MBFinancial or the Ritzels for breach of contract or any other

claim for relief. In their amended answer, the Grays did assert an affirmative defense that

“[t]he claims against the Grays contained in the Third-Party Complaint were released” and

requested that the court “grant the Grays such further and additional relief as is just.”

       {¶61} The court concluded that “while the Grays may have asserted a valid (but

vague) affirmative defense, they clearly did not assert a viable claim that meets the

requirements of the Ohio Rules of Civil Procedure as a properly pleaded claim for

damages.”

       {¶62} The instant appeal followed, with MBFinancial, the Ritzels, and the Grays

all filing appeals of the trial court’s judgments adopting the magistrate’s decision and

                                             10
overruling their respective objections. MBFinancial’s and the Ritzels’ appeal against

Payette was subsequently dismissed.

      {¶63} The Grays now raise one assignment of error on appeal:

      {¶64} “The trial court erred as a matter of both fact and law in failing to find that

the Grays properly asserted a valid breach of claim on account of the Ritzels’

commencement and prosecution of the third-party claims against the Grays in violation

of the Mutual Release, entitling the Grays to damages therefor.”

                                      Standard of Review

      {¶65} On appeal, a trial court's overruling of objections and adoption of a

magistrate’s decision will not be overruled unless the trial court abused its discretion.

(Citations omitted.) Davis v. J & J Concrete, 11th Dist. Trumbull No. 2018-T-0074, 2019-

Ohio-1407, ¶18. The term “abuse of discretion” is one of art, “connoting judgment

exercised by a court which neither comports with reason, nor the record.” State v.

Underwood, 11th Dist. Lake No. 2008-L-113, 2009-Ohio-2089, ¶30, citing State v.

Ferranto, 112 Ohio St. 667, 676-78 (1925). Stated differently, an abuse of discretion is

the trial court’s “failure to exercise sound, reasonable, and legal decision-making.” State

v. Beechler, 2d Dist. Clark No. 09-CA-54, 2010-Ohio-1900, ¶62, quoting Black Law's

Dictionary 11 (8th Ed.Rev.2004).

                          Did the Grays Present a Claim for Relief?

      {¶66} The Grays assert that the trial court erred in finding that they did not assert

a breach of contract claim at trial because they established, without objection, all of the

elements necessary to establish such a claim. They further contend that to find they did

not assert a claim for breach of contract by way of a pleading ignores and is contrary to

                                            11
the plain provisions of Civ.R. 15(B), which allows amendments of pleadings to conform

to the evidence and trial of a claim not raised in the pleadings by implied consent. Thus,

they assert that we should reverse for the trial court to hold a hearing on the issue of

damages resulting from the Ritzels’ breach.

          {¶67} At the outset, we note that the Grays raise the second contention in their

assignment of error (trial by implied consent) for the first time on appeal. This argument

was not raised in the Grays’ objections to the Magistrate’s Decision.             A party may

not raise a claimed error on appeal unless that party has properly objected to that factual

finding or legal conclusion in his or her objections to the magistrate's decision. Civ.R.

53(D)(3)(b)(iv); Stauffer v. Stauffer, 11th Dist. Geauga No. 2008-G-2860, 2009-Ohio-998,

¶21, citing Loss v. Claxton, 11th Dist. Portage No. 2003-P-0128, 2005-Ohio-347, ¶71.

          {¶68} It is a well-established rule of appellate review that a court will not consider

issues that an appellant fails to raise initially at the trial court. Warmuth v. Sailors, 11th

Dist. Lake No. 2007-L-198, 2008-Ohio-3065, ¶36, citing Lippy v. Society Natl. Bank, 88

Ohio App.3d 33, 40 (11th Dist.1993) (appellant cannot raise an argument on appeal for

the first time when there was no indication that the argument was brought to the trial

court’s attention and considered below); MKB Leasing Corp. v. Sagowitz, 4th Dist.

Washington No. 02CA3, 2002-Ohio-5749, ¶24; McKenzie v. Spangler, 6th Dist. Lucas

No. L-96-236, 1997 WL 243578, *2 (May 9, 1997) (an issue is not ripe for appellate review

unless it was presented to the trial court and the court made a definitive ruling on the

issue).

          {¶69} “The well-settled rule which requires the parties to adhere on appeal to the

theory upon which they presented the case in the trial court, operates to limit the scope

                                                12
of the review * * * the case, on appeal, must be reviewed and decided on the theory on

which it was tried in the court below * * *.” Webb v. Grimm, 116 Ohio App. 63, 74 (2d

Dist.1961), quoting 3 American Jurisprudence, Section 830, at 372.

       {¶70} Moreover, the Grays failed to support their claimed error with arguments

and failed to cite any legal authority as required by App.R. 16(A)(7) and Loc.R. 16(C)(4).

An appellant's brief must include argument and law, “containing the contentions of

appellant with respect to each assignment of error presented for review * * *, with citations

to the authorities, statutes, and parts of the record on which appellant relies.” S. Russell

v. Upchurch, 11th Dist. Geauga Nos. 2001-G-2395 & 2001-G-2396, 2003-Ohio-2099, ¶9,

citing App.R. 16(A)(7)6. Therefore, this court may disregard appellant's assignments of

error pursuant to App.R. 12(A)(2). Id. at ¶11; see also Karnofel v. Superior Waterproofing,

Inc., 11th Dist. Trumbull No. 2018-T-0055, 2019-Ohio-1409, ¶39.

       {¶71} Had it been raised below, however, we would still find the claimed error to

be without merit.

       {¶72} The trial court found that “while the Grays may have asserted a valid (but

vague) affirmative defense, they clearly did not assert a viable claim that meets the

requirements of the Ohio Rules of Civil Procedure as a properly pleaded claim for

damages.” We agree.

       {¶73} Civ.R. 8(A), “claims for relief,” states, in pertinent part, that “[a] pleading that

sets forth a claim for relief, whether an original claim, counterclaim, cross-claim, or third-

party claim, shall contain (1) a short and plain statement of the claim showing that the

party is entitled to relief, and (2) a demand for judgment for the relief to which the party

claims to be entitled. If the party seeks more than twenty-five thousand dollars, the party

                                              13
shall so state in the pleading but shall not specify in the demand for judgment the amount

of recovery sought, unless the claim is based upon an instrument required to be attached

pursuant to Civ. R. 10.”

       {¶74} In addition, Civ.R. 13(A) provides that “[a] pleading shall state as a

counterclaim any claim which at the time of serving the pleading the pleader has against

the opposing party, if it arises out of the transaction or occurrence that is the subject

matter of the opposing party’s claim * * *.” (Emphasis added.)

       {¶75} There is no dispute that the Grays did not set forth a counterclaim for money

damages for the alleged breach of the settlement agreement and release. This failure

would appear to resolve the issue inasmuch as it has been waived and the Grays cannot

now assert it on appeal. See Poppe Law Office v. Orick, 3d Dist. Mercer No. 10-13-07,

2013-Ohio-5662, ¶30.

       {¶76} The Grays appear to be arguing that an affirmative defense of release was

transformed into a counterclaim via Civ.R. 15(B), which allows for the amendment of

pleadings to conform to evidence presented at trial, and rescues them from waiver when

their claim for breach of the settlement agreement and release was tried by implied

consent of the parties.

       {¶77} Civ. R. 15(B) provides:

       {¶78} “When issues not raised by the pleadings are tried by express or implied

consent of the parties, they shall be treated in all respects as if they had been raised in

the pleadings. Such amendment of the pleadings as may be necessary to cause them to

conform to the evidence and to raise these issues may be made upon motion of any party

at any time, even after judgment. Failure to amend as provided herein does not affect

                                            14
the result of the trial of these issues. If evidence is objected at the trial on the ground that

it is not within the issues made by the pleadings, the court may allow the pleadings to be

amended and shall do so freely when the presentation of the merits of the action will be

subserved thereby and the objecting party fails to satisfy the court that the admission of

such evidence would prejudice him in maintaining his action or defense upon the merits.

The court may grant a continuance to enable the objecting party to meet such evidence.”

       {¶79} An affirmative defense, however, cannot simply be transformed into a

counterclaim. The difference between a defense and a counterclaim is that “the latter is

affirmative in nature, and asserts a separate cause of action, while the former serves to

preclude recovery by asserting facts that defeat the plaintiff's right to recovery.” (Citation

omitted.) BAC Home Loans Servicing, L.P. v. Hall, 12th Dist. Warren No. CA2009-10-

135, 2010-Ohio-3472, ¶18. An affirmative defense generally refers to that which is offered

to defeat an action by “denying, justifying, or confessing and avoiding the plaintiff's cause

of action.   It goes to the plaintiff's right and generally would not be considered an

independent claim existing against the plaintiff.” (Citation omitted.) Id.

       {¶80} Civ.R. 8(C) provides that “[w]hen a party has mistakenly designated a

defense as a counterclaim or a counterclaim as a defense, the court, if justice so requires,

shall treat the pleading as if there had been a proper designation.” This provision,

however, was intended to permit trial courts to remedy clerical errors made in designating

affirmative defenses and counterclaims and was not intended as a means by which a

party could correct a substantive error in a pleading after the time for amendment to the

pleading had passed. BAC Home Loans Servicing at ¶19, citing Am. Outdoor Advertising

                                              15
Co., LLC v. P & S Hotel Group, Ltd., 10th Dist. Franklin No. 09-AP-221, 2009-Ohio-4662,

¶26.

       {¶81} The transcript reveals that toward the end of trial, MBFinancial and the

Ritzels moved the court to amend the pleadings to conform to the evidence, which the

magistrate granted without objection. Payette then indicated to the court that it would

“like to make a similar motion to conform.” The magistrate responded that “the motion to

have it conform to the evidence has already been put on by the Defendants [MBFinancial

and Ritzels], so its conforming how it conforms. Okay.” Payette’s counsel replied, “Okay,”

and the Grays’ counsel said, “Prospectively as well.” The magistrate responded, “All right.

So that will be granted for all parties * * *.”

       {¶82} We must agree with the Ritzels that the statement, “[p]rospectively as well”

was “nebulous,” at best and certainly not a motion to amend. But it would appear from

the magistrate’s response that she was going to accept all pleadings to have been

amended to conform to the evidence presented at trial.

       {¶83} Such conformation, however, does not change the fact that the Grays did

not seek affirmative relief under the release (as opposed to using the release as an

affirmative defense to the Ritzels’ claims against them), and there is nothing in this record

on the part of the court or MBFinancial and the Ritzels that suggests an affirmative claim

for damages relating to the release was tried by implied consent.

       {¶84} In State ex rel. Evans v. Bainbridge Twp. Trustees, 5 Ohio St.3d 41 (1983),

the Supreme Court of Ohio explained that “[a]n implied amendment of the pleadings will

not be permitted, however, where it results in substantial prejudice to a party. * * * Various

factors to be considered in determining whether the parties impliedly consented to litigate

                                                  16
an issue include: whether they recognized that an unpleaded issue entered the case * *

*; whether the opposing party had a fair opportunity to address the tendered issue or

would offer additional evidence if the case were to be retried on a different theory * * *;

and whether the witnesses were subjected to extensive cross-examination on the issue *

* *.” (Citations omitted.) Id. at 45-46.

       {¶85} Under Civ.R. 15(B), implied consent is not established merely because

evidence bearing directly on an unpleaded issue is introduced without objection. Rather,

it must appear that the parties understood the evidence was aimed at the unpleaded

issue. Id. at 46, citing MBI Motor Company, Inc. v. Lotus/East, Inc., 506 F.2d 709, 711

(6th Cir.1974).

       {¶86} A review of the hearing transcript reveals that the only evidence on this

issue was the mutual release agreement itself, which was submitted by stipulation of all

the parties, and Mr. Gray’s brief testimony, which touched upon the mutual release and

that the underlying litigation was costing at least $35,000.

       {¶87} Counsel for MBFinancial and the Ritzels made three objections, all of which

were sustained. Further, during closing arguments, counsel for MBFinancial and the

Ritzels expressed confusion over the Grays’ argument, questioning whether they were

talking about the real estate purchase agreement or the mutual release. The magistrate’s

decision is also silent as to the issue. In the magistrate’s findings, the mutual release is

only referenced in conjunction with the confidential settlement agreement and the fact

that it “resolved the eviction litigation between them [the Ritzels and the Grays].”

       {¶88} Thus, there is nothing in the record from which it can be inferred that the

Ritzels or the court regarded the issue as one being tried, impliedly or explicitly. It also

                                            17
appears that MBFinancial and the Ritzels would have cross-examined Mr. Gray and/or

offered rebuttal evidence and witnesses on the issue, particularly, damages. Instead they

simply objected to the line of questioning, which the court sustained.

      {¶89} “[T]he implication of Civ.R. 15(B) is that a trial court may not base its

decision upon an issue which was tried inadvertently. Whether an unpleaded issue is

tried by implied consent is to be determined by the trial court, whose finding will not be

disturbed, absent showing of an abuse of discretion.” Evans at 46, citing Chesapeake &

Ohio Railway Co. v. Newman, 243 F.2d 804 (6th Cir.1957).

      {¶90} For the foregoing reasons, we find the Grays’ assignment of error not well

taken and affirm the judgment of the Portage County Court of Common Pleas.

CYNTHIA WESTCOTT RICE, J., concurs,

THOMAS R. WRIGHT, J., concurs in judgment only.

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