Court Opinion

ID: 4690313
Source: CourtListenerOpinion
Date Created: 2021-05-26 17:11:35.845186+00
Date Added: 2024-06-11T08:04:59.425063
License: Public Domain

[Cite as U.S. Bank, N.A. v. Higbee Lancoms, L.P., 2021-Ohio-1799.]

                                 IN THE COURT OF APPEALS
                          FIRST APPELLATE DISTRICT OF OHIO
                                  HAMILTON COUNTY, OHIO

U.S. BANK, N.A., AS TRUSTEE, AS                     :      APPEAL NO. C-200247
SUCCESSOR IN INTEREST TO BANK                              TRIAL NO. A-1806448
OF AMERICA, N.A., AS TRUSTEE,                       :
SUCCESSOR    BY    MERGER    TO
LASALLE BANK, N.A., AS TRUSTEE                      :
FOR THE REGISTERED HOLDERS                                           O P I N I O N.
OF CD 2006-CD3, COMMERCIAL                          :
MORTGAGE          PASS-THROUGH
CERTIFICATES,                                       :

          Plaintiff-Appellee,                       :

    vs.                                             :

HIGBEE LANCOMS, LP,                                 :

          Defendant-Appellant.                      :

Civil Appeal From: Hamilton County Common Pleas Court

Judgment Appealed From Is: Affirmed

Date of Judgment Entry on Appeal: May 26, 2021

Taft Stettinius & Hollister LLP, Aaron M. Herzig, Nicholas J. Pieczonka, and
Michael L. Meyer, for Plaintiff-Appellee,

Ulmer & Berne LLP, Reuel D. Ash and Jesse R. Lipcius, for Defendant-Appellant.
                     OHIO FIRST DISTRICT COURT OF APPEALS

BOCK, Judge.

       {¶1}    Defendant-appellant Higbee Lancoms, LP, (“Higbee”) appeals the trial

court’s judgment, which held Higbee liable to plaintiff-appellee U.S. Bank National

Association (“the Bank”) for past rent, common-area maintenance charges (“CAM”),

taxes, carrying costs, and attorney’s fees totaling $831,902. For the reasons stated

herein, we affirm.

                              I.   Facts and Procedure

       {¶2}    Higbee operated a Dillard’s retail department store at 6290 Glenway

Avenue in Cincinnati (“the premises”) under a lease (“the lease”) which began in

1998 and expired on July 14, 2018. Under the lease, Higbee was obligated to pay

$56,250 per month in rent, along with taxes, CAM, and other operating expenses.

The lease required any changes in the terms to be in writing and signed by both

parties.

       {¶3}    After some transfers, Dillard’s Realty Associates, LLC, assumed

interest in the lease and the loan obligation. It defaulted and the Bank foreclosed on

the property. Michael Bergman was appointed as the receiver in the foreclosure.

                             A. The Proposed Agreement

       {¶4}    The parties began communicating via email in January 2018. In

February 2018, Bergman emailed Chris Johnson, a corporate representative of

Higbee, as follows: “Thanks for your time last week. Attached is a lease renewal

proposal that demonstrates our understanding of your needs and our desire to work

with you. After you have a chance to review, let’s set up some time to chat at your

convenience.” Johnson responded that Higbee was not interested in staying on the

premises if it had to pay rent.

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                    OHIO FIRST DISTRICT COURT OF APPEALS

       {¶5}   Johnson emailed Bergman in April 2018 stating that Higbee would

stay on the premises for a term of one year for $0 rent, with Higbee paying expenses.

Johnson added that he wanted to confirm these terms before sending them to

Higbee’s legal department to draft the agreement.

       {¶6}   Bergman emailed CIII (the umbrella organization over Bergman’s

company and special servicer of the Bank) Higbee’s proposed terms. CIII responded,

“Yes, let’s make the proposal.”

       {¶7}   Later in April 2018, Bergman emailed Johnson to tell him that he had

sent the proposal to the appropriate parties for approval.

       {¶8}   Bergman emailed Johnson in early May 2018, stating in part: “Wanted

to let you know that ownership is working on moving the lease proposal forward -

hope to hear back from them in the coming days.”

       {¶9}   In late May 2018, Higbee’s counsel emailed Bergman with the first

draft of “a lease amendment for the Dillard’s store at West Town Center extending

the Initial Term of the Lease for one year * * *.” The parties continued sending

redlined drafts.

       {¶10} After the lease expired in July 2018, Bergman continued to invoice

Higbee for rent under the lease.

       {¶11} In an August 2018 email, Bergman informed Johnson that Higbee was

a holdover tenant and requested that Higbee pay past-due rent. Johnson responded,

“the deal we had was no rent for one year.”

       {¶12} In a September 2018 email, Bergman told Johnson that the one-year

rent abatement would begin when the parties signed the lease amendment and that

rent would continue to accrue until that time. Johnson told Bergman that Higbee

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                    OHIO FIRST DISTRICT COURT OF APPEALS

was relying on the terms they had discussed and back rent was not a part of those

discussions. Bergman again informed Johnson that he considered Higbee to be a

holdover tenant because there was no signed agreement.

       {¶13} In mid-September 2018, Higbee’s counsel sent a draft of the lease

amendment to Bergman for signature. In October 2018, Bergman sent Higbee a

demand letter requesting that it pay the past-due rent.

                                    B. The Lawsuit

       {¶14} Bergman sued Higbee, asserting that Higbee had not paid rent since

the expiration of the lease in July 2018, that it remained a holdover tenant, and that

negotiations to extend the lease had failed. Bergman demanded back rent along with

other relief. In June 2019, the trial court granted the Bank’s unopposed “Motion to

Substitute as Party Plaintiff.”

       {¶15} The Bank filed an amended complaint, seeking damages for past and

future rent for an alleged breach of a commercial-real-property lease. Higbee’s

counterclaim sought to estop the Bank from pursuing rent payments because the

Bank and Bergman had told Higbee that it could remain in the premises rent-free for

a year after the lease expired in exchange for Higbee paying CAM, taxes, and

insurance.

       {¶16} The trial court granted the Bank’s summary-judgment motion,

awarding $831,902. The trial court did not offer a rationale for its decision.

       {¶17} Higbee timely filed its notice of appeal.

                                  II. Standard of Review

       {¶18} We conduct a de novo review of summary-judgment decisions.

Holloman v. Permanent Gen. Assur. Corp., 1st Dist. Hamilton No. C-180692, 2019-

Ohio-5077, ¶ 8.
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                    OHIO FIRST DISTRICT COURT OF APPEALS

       {¶19} Under Civ.R. 56(C), summary judgment is proper when the moving

party establishes that “(1) no genuine issue of any material fact remains, (2) the

moving party is entitled to judgment as a matter of law, and (3) it appears from the

evidence that reasonable minds can come to but one conclusion, and construing the

evidence most strongly in favor of the nonmoving party, that conclusion is adverse to

the party against whom the motion for summary judgment is made.” Id. at ¶ 7.

                             III.   Assignment of Error

       {¶20} Higbee’s single assignment of error asserts that the trial court

erroneously granted the Bank summary judgment, arguing that (1) the parties had an

oral lease, which the Bank breached; (2) Higbee’s partial performance removed the

oral lease from the statute of frauds; and (3) regardless of whether a lease existed,

equitable estoppel prevents the Bank from pursuing rent payments.

       {¶21} For the following reasons, we find no merit in Higbee’s assignment of

error and affirm the trial court’s judgment.

                        A. There Was No New Oral Contract

       {¶22} Higbee asserts that the parties’ communications created a new oral

agreement in which Higbee would remain on the premises for one year, without any

rent, but paying for CAM, taxes, and insurance.

       {¶23} For a contract to exist, the parties must consent to its terms, a meeting

of the minds must occur, and the terms of the contract must be definite and certain.

Roth v. Natl. City Bank, 1st Dist. Hamilton No. C-100216, 2010-Ohio-5812, ¶ 10.

       {¶24} In Vogel v. Albi, 1st Dist. Hamilton No. C-190746, 2020-Ohio-5242,

this court found that emails exchanged between the parties failed to demonstrate a

meeting of the minds. Id. at ¶ 2. The emails showed that the parties had negotiated

the sale of real property from Frank Albi and Third Street Associates, LLC,
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                    OHIO FIRST DISTRICT COURT OF APPEALS

(collectively, “Albi”) to Joe Vogel. Id. ¶ 4-10. An Albi representative stated in an

email that Vogel’s proposal was acceptable, but the deal would not be final until the

parties signed a written contract. Id. at ¶ 8. Vogel emailed Albi acknowledging that

he had not signed the contract, but implied that the parties should rely on Vogel’s

verbal commitment. Id. at ¶ 11. Albi sold the property to another buyer. Id. Vogel

sued for breach of contract. Id. at ¶ 12. This court found that the trial court properly

granted judgment in Albi’s favor because any acceptance of an offer by the seller was

contingent upon both parties signing a written contract. Id. at ¶ 2.

       {¶25} Like in Vogel, the trial court properly granted summary judgment. The

parties did not anticipate a new oral agreement. Instead, their communications show

that the parties anticipated amending or extending the lease. And that lease was clear

that no amendment could be final until the parties had signed an amended lease.

Bergman’s and Higbee’s emails show that their intention was to memorialize the

agreement in writing. The parties discussed a proposal and exchanged drafts for an

amended lease, but they did not finalize an agreement because they never signed an

amended lease.

       {¶26} For example, an April 2018 email from Johnson, Higbee’s corporate

representative, sought confirmation of the terms of the lease before it was turned

over to Higbee’s legal department to draft the lease. Further, an April 2018 email

from Bergman to Johnson stated that the proposal was being presented for approval

to the appropriate parties.

       {¶27} Moreover, the first draft of a post-July 14, 2018 lease term was drafted

by Higbee, with Higbee’s counsel stating that she was attaching, “a lease amendment

for the Dillard’s store at West Town Center extending the Initial Term of the Lease

for one year.” (Emphasis added.)
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                      OHIO FIRST DISTRICT COURT OF APPEALS

       {¶28} Finally, the parties’ email communications about the terms of the

contract began six months before the expiration of the lease and continued through

September 2018—long past the July 14, 2018 expiration of the lease—with exchanges

of drafts going back and forth between the parties. And Johnson testified in his

deposition that it was necessary to turn the matter over to Higbee’s legal department

because “they draft the leases and I don’t.”

       {¶29} The communications between Higbee and Bergman were dialogue

between two sophisticated businesses discussing a proposed deal, not a final one. As

negotiations began six months before the expiration of the lease, Higbee could have

ensured that the deal was final by the lease’s expiration date.

       {¶30} The parties’ communications show that they did not intend to create a

new oral contract.

                     B. Higbee’s Statute of Frauds Argument is Moot

       {¶31} Higbee argues that the doctrine of partial performance removes the

parties’ oral agreement from the operation of the statute of frauds, which would

require the parties’ lease to be in writing. But because we have determined that the

parties did not have an oral contract, we find this issue to be moot and decline to

consider Higbee’s argument. See State v. Smith, 1st Dist. Hamilton No. C-190558,

2021-Ohio-1389.

                                 C. Equitable Estoppel

       {¶32} “Equitable estoppel prevents relief when one party induces another to

believe certain facts exist and the other party changes [its] position in reasonable

reliance on those facts to [its] detriment.” Wright v. Mirza, 2017-Ohio-7183, 95

N.E.3d 1108, ¶ 13 (1st Dist.), quoting State ex rel. Chavis v. Sycamore City School

Dist. Bd. of Edn., 71 Ohio St.3d 26, 34, 641 N.E.2d 188 (1994).
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                    OHIO FIRST DISTRICT COURT OF APPEALS

       {¶33} To make a prima facie case of equitable estoppel, Higbee must show

(1) the Bank made a factual misrepresentation; (2) the misrepresentation was

misleading; (3) the Bank’s misrepresentation induced Higbee’s actual reliance that

was reasonable and in good faith; and (4) Higbee’s reliance caused detriment. Kunz

v. Reisenfeld, 1st Dist. Hamilton No. C-120179, 2012-Ohio-5460, ¶ 20. This court

requires parties seeking equitable estoppel to demonstrate actual or constructive

fraud. Id.

       {¶34} Higbee’s equitable-estoppel argument is not well taken because the

Bank made no factual misrepresentation and there was no showing of fraud. The

parties were in negotiations. Bergman was clear that any deal was contingent on

approval by the appropriate parties. The parties continued sending drafts back and

forth long after the lease expired. The parties’ communications show that they were

discussing a proposal—and nothing more. Equitable estoppel does not apply.

                                D. Holdover Tenancy

       {¶35} A tenant who remains in possession of leased property after a lease

term expires is a tenant at sufferance. Adams v. Relmax, 2018-Ohio-1751, 111 N.E.3d

758, ¶ 10 (8th Dist.). A holdover tenant is not relieved from its obligation to pay the

rent. B. & O. RR. Co. v. West, 57 Ohio St. 161, 49 N.E. 344 (1897).

       {¶36} If a tenant holds over and operates according to the expired contract’s

terms, the law implies a contract under those same terms. Kazmaier v. Fat Jacks,

LLC, 6th Dist. Wood Nos. WD–09–048 and WD–09–057, 2010-Ohio-3627, ¶ 18. To

determine the length of the term of a holdover tenancy, courts look to the expired

lease’s provision for rent payment. Id. An expired lease that provided for annual rent

creates a holdover tenancy from year to year, even if the payments were to be made

in monthly increments. Id.
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                    OHIO FIRST DISTRICT COURT OF APPEALS

       {¶37} Higbee argues that it was not a holdover tenant because the parties’

negotiations were for a new oral agreement. Therefore, Higbee argues, the purported

oral agreement was an entirely new agreement, not an extension of the lease. But as

described above, the parties’ communications show that Higbee was aware that the

parties contemplated extending its existing lease via a written lease amendment.

       {¶38} Therefore, as of July 15, 2018, Higbee was a holdover tenant. The

terms and conditions of the lease—which required Higbee to pay “annual base rent *

* * payable in equal monthly installments * * * during each and every calendar

month during the Initial Term and any Renewal Term”—created a year-to-year

holdover tenancy. Id. Despite Higbee leaving the premises in February 2019, all of

its obligations under the lease lasted until July 14, 2019.

                                  IV.     Conclusion

       {¶39} The record shows that Higbee and the Bank did not create a new oral

contract or extend/amend the lease. The parties engaged in lengthy negotiations, but

failed to agree to or sign a final written agreement. Therefore, the terms of the

agreement were never definite and there was no meeting of the minds.

       {¶40} The amount that the trial court ordered Higbee to pay is substantial.

But the law and the record support the Bank’s position that Higbee was a year-to-

year holdover tenant. As a result, it was obligated to meet all of the terms of the lease

for the remainder of the holdover term.

       {¶41} The trial court did not err in granting the Bank’s motion for summary

judgment. Higbee’s assignment of error is overruled and the trial court’s judgment is

affirmed.

                                                                    Judgment affirmed.

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                   OHIO FIRST DISTRICT COURT OF APPEALS

ZAYAS, P.J., and, BERGERON J., concur.

Please note:

       The court has recorded its entry on the date of the release of this opinion

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