Gunsorek v. Heartland Bank

• Decision Date: 31 December 1997
• Docket Number: No. 97APE03-393,97APE03-393
• Citation: 707 N.E.2d 557,124 Ohio App.3d 735
• Parties: GUNSOREK et al., Appellees, v. HEARTLAND BANK et al.; Benedict, Appellant. *
• Court: Ohio Court of Appeals

Page 735

124 Ohio App.3d 735

707 N.E.2d 557

GUNSOREK et al., Appellees, v. HEARTLAND BANK et al.; Benedict, Appellant. ^*

No. 97APE03-393.

Court of Appeals of Ohio,

Tenth District, Franklin County.

Decided Dec. 31, 1997.

Shayne & Greenwald Co., L.P.A., and Gary D. Greenwald, Columbus, for plaintiffs-appellees.

Luper, Sheriff & Neidenthal, Jack L. Stewart and Brigid E. Heid, Columbus, for defendant-appellant.

LAZARUS, Judge.

Defendant-appellant, Joseph W. Benedict appeals from a jury verdict in favor of plaintiffs-appellees, Larry F. Gunsorek and Robert S. Hart (together, plaintiffs or appellees), in the amount of $60,000 based upon a claim for breach of an oral partnership agreement. We find that appellees' claim for breach of a partnership agreement is barred by the Statute of Frauds and that the trial court should have entered summary judgment for appellants. As a result, we reverse.

In 1985, Benedict and his wife acquired real property located in Gahanna, Ohio, at the intersection of U.S. Route 62 and Hamilton Road. Thereafter, from October 1991 through September 1992, Benedict and his wife entered into a series of four real estate contracts for purposes of selling the property. The first two of these purchase contracts involved Gunsorek as the purchaser and were contingent on Gunsorek obtaining certain zoning approvals. Gunsorek failed to obtain the zoning approvals, and each contract lapsed under its terms. The second and third purchase contracts involved Gunsorek and Hart as purchasers and were contingent on Hart being able to sell business property in Florida. Hart failed to sell the Florida property within time limits established by each contract, and each purchase agreement lapsed under its terms.

Thereafter, in late 1992 and early 1993, Benedict, Gunsorek, and Hart began discussing the possibility of developing the property for use as a shopping center through a limited partnership arrangement. According to appellees, on March 11, 1993, the parties entered into an oral partnership agreement whereby Benedict, as a limited partner, would contribute the property and Gunsorek and Hart, as general partners, would provide all necessary construction financing and operating expenses. Thereafter, Benedict's attorney drafted draft Articles of Limited Partnership ("Articles"), a copy of which was presented to Gunsorek on May 23, 1993. The draft Articles, as presented to Gunsorek, were stamped "DRAFT" on each page and above each signature line. The Articles were never signed by any party. However, Gunsorek contends that he, on behalf of himself and Hart, told Benedict that the draft Articles reflected their oral agreement of March, that the draft Articles were acceptable, and that no revisions needed to be made.

Under the terms of the draft Articles, Benedict, as a limited partner, agreed to contribute the real property valued at $385,000 as his initial capital contribution to the partnership. Gunsorek and Hart, as the general partners, agreed to contribute funds necessary for the construction and completion of the building on the property and pay operating expenses of the partnership. For the first fifteen years of the partnership, Benedict would receive an annual payment of $25,666.67 from the net profits of the partnership and this amount would be charged against Benedict's capital account. Annual profits remaining after paying the expenses of the partnership, including the annual $25,666.67 payment to Benedict, would be distributed one-half to Benedict and one-half to Gunsorek and Hart. In addition, Benedict's obligation to contribute the property was contingent on the general partners having obtained the necessary financing, approvals, and permits necessary to commence construction of the building.

Thereafter, Benedict suggested that Gunsorek contact Heartland Bank regarding obtaining financing for the partnership, and on June 17, 1993, Gunsorek met with Tiney McComb of Heartland Bank. During this meeting, Gunsorek claims, he approached the bank for financing on behalf of the alleged partnership, but McComb claims that Gunsorek held himself out as the owner of the real property and attempted to sell the property directly to Heartland Bank. The parties agree, however, that at some point during this meeting, McComb, on behalf of Heartland Bank, offered to purchase the real property for $400,000. Immediately after this meeting, Gunsorek telephoned Benedict to discuss Heartland Bank's interest in purchasing the property. According to Benedict, Gunsorek then offered to purchase the property from Benedict for $350,000 and then resell it to Heartland at a $50,000 profit. Gunsorek denies that he made such an offer and claims that when he told Benedict about Heartland Bank's offer, Benedict responded, "I'm not going to sell this to you. We don't have a partnership. * * * I'm going to sell it to the bank." Thereafter, the Benedicts and Heartland Bank entered into a real estate purchase contract on August 10, 1993. The property was transferred to Heartland Bank by February 21, 1994.

On September 20, 1995, appellees filed an amended complaint asserting claims for breach of fiduciary duty, tortious interference with a fiduciary duty, and breach of a partnership agreement against appellant. On March 6, 1996, Benedict filed a motion for summary judgment on the grounds that appellees' claims were barred by the Statute of Frauds. On May 17, 1996, the trial court denied this motion, and a jury trial was held on February 10 through 21, 1997. At the end of appellees' case in chief, appellant moved for directed verdict again based upon the Statute of Frauds, but the trial court denied this motion. The jury returned a verdict for appellees in the amount of $60,000 on their claim for breach of an oral partnership agreement. On March 17, 1997, the trial court entered judgment based upon the jury verdict. Appellant timely appealed and asserts the following three assignments of error:

"I. The trial court erred as a matter of law in denying Defendant Benedict's motion for summary judgment and his motion for a directed verdict because the Statute of Frauds bars Appellees' claim for breach of an oral partnership agreement.

"II. The trial court erred in denying Defendant's motion for a directed verdict because a limited partnership had not been formed under the requirements of R.C. Section 1782.08.

"III. The trial court erred in failing to strike the testimony of plaintiff's expert witness, Terrell Oetzel, on the grounds that his testimony as to lost profits was highly speculative."

In his first assignment of error, appellant contends that the trial court should have granted summary judgment and/or a directed verdict on appellee's claim for breach of a partnership agreement on the ground that it is barred by the Statute of Frauds. In particular, appellant contends that the Statute of Frauds bars the action because the alleged oral partnership agreement involved the transfer of an interest in real property owned by one of the partners prior to the formation of the alleged partnership. Appellees, on the other hand, contend that the element of partnership takes the agreement outside of the Statute of Frauds and that appellant waived his right to appeal the denial of his motion for a directed motion because he failed to renew his motion at the close of all the evidence. Because we hold that summary judgment should have been granted in this case, we sustain appellant's assignment of error without reaching the issue of whether appellant waived his right to appeal the denial of his motion for directed verdict.

Summary judgment pursuant to Civ.R. 56 is appropriate only where no genuine issues of material fact remain to be litigated, the moving party is entitled to judgment as a matter of law and, viewing the evidence most strongly in favor of the nonmoving party, reasonable minds can come to but one conclusion, which is adverse to the nonmoving party. Tokles & Son, Inc. v. Midwestern Indemn. Co. (1992), 65 Ohio St.3d 621, 629, 605 N.E.2d 936, 942-943, citing Harless v. Willis Day Warehousing Co. (1978), 54 Ohio St.2d 64, 65-66, 8 O.O.3d 73, 73-74, 375 N.E.2d 46, 46-48. Appellate review of summary judgments is de novo. Koos v. Cent. Ohio Cellular, Inc. (1994), 94 Ohio App.3d 579, 588, 641 N.E.2d 265, 271-272; Midwest Specialties, Inc. v. Firestone Tire & Rubber Co. (1988), 42 Ohio App.3d 6, 8, 536 N.E.2d 411, 413-414.

Here, appellant moved for summary judgment based upon the affirmative defense of the Statute of Frauds. Appellant contended that even if an oral partnership agreement had been formed, enforcement of the agreement was barred because the requirements of the Statute of Frauds had not been satisfied. As evidence, appellant attached a copy of the unsigned draft Articles to his motion. In opposition, appellees contended, as they do on appeal, that the element of partnership takes the oral agreement out of the Statute of Frauds. Appellees also claimed, in opposition to the summary judgment motion and at trial, that the draft Articles reflected the terms of the oral agreement. Viewing the evidence most strongly in favor of the appellees, it must be assumed that an oral partnership agreement was formed and that the terms of the agreement were those contained in the draft Articles. Thus, whether summary judgment should have been granted depends upon whether the alleged oral agreement, as reflected in the draft Articles, falls within the Statute of Frauds as a matter of law. See Horvath v. Nationwide Mut. Fire Ins. Co. (1996), 108 Ohio App.3d 732, 735, 671 N.E.2d 638, 639 ("While error denying a motion for summary judgment is rendered moot or harmless where a subsequent trial on the same issue demonstrates that there were genuine issues of fact supporting a judgment for the party opposing the motion, the error is not harmless where the denial is predicated upon a pure question of law.").

Ohio's Statute of Frauds is...