Court Opinion

ID: 2696172
Source: CourtListenerOpinion
Date Created: 2014-08-04 15:35:35.290737+00
Date Added: 2024-06-11T09:56:00.611361
License: Public Domain

[Cite as Buchenroth v. Adkins, 2014-Ohio-257.]

                      IN THE COURT OF APPEALS OF OHIO
                          THIRD APPELLATE DISTRICT
                               LOGAN COUNTY

STEVEN L. BUCHENROTH,

        PLAINTIFF-APPELLANT,                           CASE NO. 8-13-17

        v.

CARL ADKINS,                                           OPINION

        DEFENDANT-APPELLEE.

                     Appeal from Bellefontaine Municipal Court
                         Trial Court No. 2013 CVG 00453

                      Judgment Reversed and Cause Remanded

                          Date of Decision: January 27, 2014

APPEARANCES:

        Jeffrey M. Schulman for Appellant
Case No. 8-13-17

SHAW, J.

       {¶1} Plaintiff-appellant Steven L. Buchenroth (“Buchenroth”) appeals the

August 29, 2013, judgment entry of the Bellefontaine Municipal Court that

awarded Buchenroth rent and damages in a Forcible Entry and Detainer action

against defendant-appellee Carl Adkins (“Adkins”), but denied Buchenroth the

lease agreement’s rate of interest.

       {¶2} The facts relevant to this appeal are as follows. On October 1, 2012,

Buchenroth and Adkins entered into a written lease agreement wherein Adkins

agreed to rent a residential property from Buchenroth for $525.00 per month.

(Doc. 3). The agreement provided, inter alia, that “[t]he tenant understands and

agrees that unpaid rent balances or damages awarded by a court shall bear interest

at the [rate] of 18% per annum.” (Id.) Along with signing the lease agreement,

Adkins initialed by the provision regarding interest. (Id.)

       {¶3} On June 5, 2013, Buchenroth filed a “Complaint for Forcible Entry

and Detainer and Rent” alleging that Adkins was in default for failing to pay rent

and late fees. (Doc. 1). A copy of the lease agreement was attached to the

complaint.

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Case No. 8-13-17

        {¶4} On June 27, 2013, a hearing was held wherein both Buchenroth and

Adkins appeared.1 (Doc. 15). As a result of the hearing, Adkins was ordered to

vacate Buchenroth’s property no later than midnight on July 7, 2013. (Id.)

        {¶5} On July 16, 2013, Buchenroth filed a “Motion for Damage Hearing,”

arguing that he was entitled to unpaid rent, late fees, damages, and interest (minus

Adkins’s security deposit). (Doc. 16).

        {¶6} On August 29, 2013, the trial court filed a judgment entry awarding

Buchenroth unpaid rent, damages, and late fees (minus the security deposit) in the

amount of $1,138.58, but denying Buchenroth’s claim for the contract rate of

interest. In the entry, the court stated, “[t]he Court finds that contract rate upon

default of 18% is punitive in nature and is therefore denied.”2 (Doc. 22).

        {¶7} It is from this judgment that Buchenroth appeals, asserting the

following assignment of error for our review.

                     ASSIGNMENT OF ERROR
        THE TRIAL COURT ERRED IN DENYING PLAINTIFF THE
        CONTRACT RATE OF INTEREST WHEN GRANTING
        JUDGMENT.

        {¶8} In his assignment of error, Buchenroth contends that the trial court

erred in denying his request for the lease agreement’s rate of interest when he was

granted judgment for rent, damages, and late fees.                    Specifically, Buchenroth

1
  No transcript of this hearing was produced.
2
  The record seems to imply that a hearing was held on Buchenroth’s motion as there was an entry filed
stating that there would be a hearing on August 15, 2013. However, if an oral hearing was held, no
transcript was produced, and the court’s final judgment entry does not mention the oral hearing.

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Case No. 8-13-17

argues that Adkins signed a lease agreement with a provision entitling Buchenroth

to 18% interest on a court judgment and that Adkins should be held to that

contracted rate of interest.

       {¶9} Initially, we would note that Adkins has failed to file a brief in this

case. Under App.R. 18(C), “[i]f an appellee fails to file the appellee's brief within

the time provided by this rule, * * * in determining the appeal, the court may

accept the appellant's statement of the facts and issues as correct and reverse the

judgment if appellant's brief reasonably appears to sustain such action.”

       {¶10} Revised Code 1343.03(A) governs the award of pre-judgment and

post judgment interest. It provides that a creditor is entitled to pre-judgment and

post-judgment interest at the statutory rate, “unless a written contract provides a

different rate of interest in relation to the money that becomes due and payable, in

which case the creditor is entitled to interest at the rate provided in that contract.”

R.C. 1343.03(A). Revised Code 1343.03(A) “‘automatically bestows a right to

statutory interest as a matter of law on a judgment, and does not leave any

discretion to the trial court to deny such interest.’” Ohio Valley Mall Co. v. Hoang,

7th Dist. No. 10 MA 71, 2010-Ohio-6510, ¶ 8, quoting Cafaro Northwest

Partnership v. White, 124 Ohio App.3d 605, 608 (7th Dist.1997).

       {¶11} Thus, according to the statute, and the caselaw interpreting it,

Buchenroth was entitled to receive interest; however, it remains for us to

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Case No. 8-13-17

determine whether the statutory interest rate should apply or the contract’s interest

rate.

        {¶12} In order for the contractual rate to apply in this case over the

statutory rate of interest: “‘(1) there must be a written contract between the

parties; and (2) that contract must provide a rate of interest with respect to money

that becomes due and payable. For there to be a written contract, there must be a

writing to which both parties have assented.’” Hoang, supra, at ¶ 10, quoting

Hobart Bros. Co. v. Welding Supply Serv., Inc., 21 Ohio App.3d 142, 144 (10th

Dist.1985).

        {¶13} In this case, there was a lease agreement between the parties, which

also contained a specific rate of interest (18%). The lease agreement was signed

by both parties, and it was initialed by Adkins beside the agreed rate of interest in

the event of a judgment. Thus the lease agreement would satisfy the requirements

of R.C. 1343.03(A) to apply the contracted rate.

        {¶14} Nevertheless, the trial court did not award the contracted rate of

interest, finding it to be “punitive in nature.” Despite the trial court’s finding that

the rate was “punitive,” multiple cases from various Ohio Appellate Courts

(including our own) have found the interest rate of 18% (or even slightly higher)

to be acceptable under R.C. 1343.03(A) provided there was a similar written

contractual agreement stating the agreed rate. Ohio Valley Mall Co. v. Hoang, 7th

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Case No. 8-13-17

Dist. Mahoning No. 10 MA 71, 2010-Ohio-6510, ¶ 13 (commercial lease

agreement wherein an 18% interest rate and was ordered enforced); Heffner

Investments, Ltd. v. Piper, 3d Dist. Mercer No. 10-07-09, 2008-Ohio-2495, ¶¶ 62-

70 (finding that commercial lease agreement interest rate of 2% monthly, or 24%

annually was enforceable); Ohio Valley Mall Co. v. Fashion Gallery, Inc., 129

Ohio App.3d 700, 704, (7th Dist.1998) (commercial lease agreement with interest

rate of 18% enforced by the court); Cafaro Northwest Partnership v. White, 124

Ohio App.3d 605, 608, (7th Dist.1997) (enforcing 18% interest rate in commercial

lease agreement); P. & W.F., Inc. v. C.S.U. Pizza, Inc., 91 Ohio App.3d 724, 729-

30, (8th Dist.1993) (finding trial court should have enforced written commercial

lease agreed rate of 12%, which was greater than the statutory rate); See also

Realty Income Corp. v. Garb-Ko, Inc., 10th Dist. No. 13AP-35, 2013-Ohio-4932,

¶¶ 34-39 (finding plain error where court awarded interest but applied statutory

rate of interest over agreed-upon leased term); CitiFinancial, Inc. v. Bihn, 6th Dist.

Lucas No. L-11-1114, 2011-Ohio-5941, ¶ 11 (interest rate stated on a note was

19.39% and the court found that rate of interest should have been awarded to the

appellant); John Soliday Financial Group, L.L.C. v. Starcher, 5th Dist. Richland

No. 2008CA0331, 2009-Ohio-2565, ¶ 13 (enforcing a contracted interest rate of

24.95%).

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Case No. 8-13-17

       {¶15} We would note that the majority of the cases we have cited dealt with

interest rates on commercial leases rather than residential leases. In Meadowbrook

Dev. Corp. v. Roberts, 8th Dist. No. 79747, 2001-Ohio-4176, the Eighth District

Court of Appeals declined to extend the reasoning of the cases regarding

commercial leases to residential leases. In doing so, the Eighth District held,

“While nothing * * * expressly permits or prohibits a lease provision that charges

a specific rate of interest, we are not convinced that such an omission sanctions a

rate of interest in excess of the statutory amount merely because the term is

contained in a lease agreement executed between parties of unequal bargaining

ability.” On the other hand, in Takats v. Groth, 12th Dist. No. CA93-06-106, 1993

WL 500241 (Dec. 6, 1993), the Twelfth District Court of Appeals implied that it

would apply a mutually agreed upon rate to residential leases if it was contained in

the contract and assented to by the parties.

       {¶16} Notwithstanding the decision of the Eighth District in Meadowbrook,

we find that the parties in this case should be held to the agreed upon rates in their

contract, provided the appropriate requirements are met as stated in R.C.

1343.03(A). As there are no provisions in the Landlord Tenant Act (R.C. Chapter

5321) or in R.C. 1343.03(A) that would either preclude the trial court from

enforcing the contracted rate of interest or that would authorize the trial court to

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Case No. 8-13-17

ignore the terms of the contract, we must conclude that the trial court should have

applied the rates as bargained for in the lease agreement.

       {¶17} Accordingly, we find that the trial court erred by not allowing

interest at the rate provided for in the contract.           Therefore, Buchenroth’s

assignment of error is sustained.

       {¶18} For the foregoing reasons, Buchenroth’s assignment of error is

sustained and the judgment of the Bellefontaine Municipal Court is reversed and

remanded for further proceedings consistent with this opinion.

                                                             Judgment Reversed and
                                                                  Cause Remanded

WILLAMOWSKI, P.J. and ROGERS, J., concur.

/jlr

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