Bank One, Cleveland, Na v. Grantham, Inc., Et At.
| Decision Date | 30 September 1991 |
| Docket Number | 90-G-1555 and 90-G-1556,91-LW-3095 |
| Parties | BANK ONE, CLEVELAND, NA, Plaintiff-Appellant v. GRANTHAM, INC., et at., Defendants-Appellees CASE NOS. 90-G-1555 and 90-G-1556 |
| Court | Ohio Court of Appeals |
Civil Appeal from the Court of Common Pleas Case Nos. 88 M 887 and 88 M 504
ATTY THOMAS R. LUCCHESI, ATTY. H. STEPHEN MADSEN, Baker & Hostetler, 3200 National City Center, Cleveland, Ohio 44114 (For Plaintiff-Appellant)
ATTY WALTER J. MCNAMARA, ATTY. EUGENE A. LUCCI, McNamara, Lucci, & Loxterman, 7200 Center Street, Mentor, Ohio 44060 (For Defendant-Appellee)
Before HON. JUDITH A. CHRISTLEY, P.J., HON. JOSEPH E. MAHONEY, J., HON. ROBERT A. NADER, J.
Appellee, Grantham, Inc., is a plastic injection molding company, established in 1966, by appellees, John and Norma Grantham. In 1980 and 1981 appellant, Bank One, became the principle lending institution for the corporation. (Appellant was originally known as Lake National Bank prior to Bank One acquiring ownership.) This was the result of a refinancing of the corporate and personal debt of appellees through four promissory notes.
The first loan was a seven year term loan for the amount of one million dollars, which called for quarterly interest payments in the amount of $31,250, with an interest rate of 1 1/2 percent above the bank's prime commercial rate. This loan was secured by the equipment, inventory, and account receivables of the corporation, as well as the personal guarantees of the Granthams. The loan had several covenants which required, among others; timely payments, no new debt, and that current assets be maintained in an amount equalling at least the amount of current liabilities. The term loan also had as one of its events of default a cross-default clause, which made the note payable immediately if any other indebtedness were to be in default.
There were also three "demand-notes" involved in the refinancing plan. A $200,000 note from the Granthams personally, secured by a second mortgage on the Granthams' home, and two $150,000 lines of credit, demand notes from the corporation, secured by the Corporation's equipment, inventory, and accounts receivable. All three notes were payable on demand, required quarterly interest payments of one and one-half percent above the bank's prime commercial rate, and contained insecurity and cross-default clauses, which stated:
"*** [I]f at any time in the sole opinion of the Bank the responsibility of (the Granthams) shall become impaired or unsatisfactory to the Bank-this note and all other obligations, direct or contingent, of such maker, endorser or guarantor hereof due Bank shall become due and payable immediately, without demand or notice and if any other obligation at any time owing to the Bank from any maker, endorser or guarantor hereof be not paid when due this note and all other obligations, direct or contingent, of such maker, endorser or guarantor hereof due Bank shall become due and payable immediately without demand or notice.
The two $150,000 corporate lines of credit had the additional requirement that the balance be reduced to zero for a period of thirty days for each calendar year.
During the period from 1980-1984, the corporation experienced a decline in sales which substantialIy reduced its profit margin. The corporation reported a net loss in 1983 and 1984. During this period, Mr. Robert Clark, the vice-president of Bank One, replaced John Masco as the account officer responsible for overseeing the repayment of these loans. In attempting to re-establish the bank's confidence in the appellees' ability to repay the loans, approximately twenty meetings were conducted by the parties to this cause.
Various attempts to refinance the debt were made at these meetings, with the bank rejecting these proposals. (Three such proposals are at the center of this litigation.) The bank, deeming itself to be insecure, demanded repayment of the notes by December 15, 1984, in a letter dated November 6, 1984. Negotiations between the parties continued until August 7, 1985, when the bank notified the appellees that it intended to sell the collateral on August 21, 1985. Appellees filed for personal and corporate bankruptcy protection under Chapter 11 on August 19, 1985, which was converted to Chapter 7 in November 1987.
In separate actions instituted on June 27, 1988 and November 15, 1988, Bank One commenced foreclosure actions against the corporation and the Granthams, respectively. Appellees filed identical counterclaims sounding in violation of implied covenant of good faith, breach of fiduciary duty, tortious interference with contractual relations, fraud, negligent and intentional infliction of emotional distress, and defamation. These actions were consolidated by the trial court.
A five-day hearing commenced on October 23, 1989. It was agreed that evidence would be presented first on appellant's complaint and then upon appellees' counterclaim. At the end of the appellees' presentation of evidence as to appellant's claim, appellant moved for a directed verdict, and the trial court reserved its decision until the close of all evidence. At the conclusion of the evidential intake, appellant renewed its motion as to its claim and made a similar motion as to appellees' counterclaim.
The trial court granted the motion as to appellant's claims and as to most of the counterclaims of the appellees. However, the issues of breach of good faith and interference with contractual relations were submitted to the jury. The jury returned a verdict in favor of appellees. Appellant then filed a motion for judgment notwithstanding the verdict and a motion for new trial. Both of appellant's motions were denied, and appellant timely filed its notice of appeal raising the following assignments of error:
Appellees timely cross-appealed, and then filed a notice of dismissal of the cross-appeal on July 18, 1990. By the judgment of August 10, 1990, this court journalized the dismissal of the cross-appeal, and the redesignation of the claimed errors as cross-assignments of error. Those cross-assignments of error are as follows:
The filing of cross-assignments of error is governed by R.C. 2505.22, which states:
This code section is interpreted in Parton v. Weilnau (1959), 169 Ohio St. 145, 171, which states:
"In other words, it may be said that an assignment of error by appellee, where such appellee has not filed any notice of appeal from the judgment of the lower court, may be used by the appellee as a shield to protect the judgment of the lower court but may not be used by the appellee as a sword to destroy or modify that judgment."
See, Duracote Corp. v. Goodyear (1983), 2 Ohio St. 3d 160.
Appellees contend that these cross-assignments are used only to support the judgment of the trial court in the event this court finds appellant's assignments of error meritorious. However, the issues raised by appellees are unrelated to the claimed errors raised by appellant. Instead of a shield to protect the trial court's decision as to appellant's claimed errors, appellees' cross-assignments seek to overturn unrelated decisions by the trial court. Appellees must protect the judgment in their favor with the shield of an appellate affirmance on appellant's claimed errors, rather than the sword of a reversal of other court determinations.
In its first assignment of error, appellant argues that the trial court erred in denying its motions for directed verdict and judgment notwithstanding the verdict on appellees' counterclaim of breach of good faith.
While the two motions are labeled quite differently, they present the same issue on review. Osler v. City of Lorain (1986), 28 Ohio St. 3d 345, 347, states:
To continue reading
Request your trial