Hanlin-Rainaldi Construction Corp. v. Jeepers!, Inc., 2004 Ohio 6250 (OH 11/23/2004)
| Decision Date | 23 November 2004 |
| Docket Number | Case No. 03AP-851. |
| Citation | 2004 Ohio 6250 |
| Parties | Hanlin-Rainaldi Construction Corp., Plaintiff-Appellant, v. Jeepers!, Inc., Defendant-Appellee. |
| Court | Ohio Supreme Court |
Appeal From the Franklin County Court of Common Pleas, C.P.C. No. 02CVH-5622.
Bricker & Eckler, LLP, and James J. Hughes, III, for appellant.
Porter, Wright, Morris & Arthur, LLP, Jack R. Pigman, Jay A. Yurkiw and Bryan R. Faller, for appellee.
{¶1} Plaintiff-appellant, Hanlin-Rainaldi Construction Corporation ("Hanlin-Rainaldi"), appeals from a judgment of the Franklin County Court of Common Pleas that granted partial summary judgment in favor of defendant-appellee, Jeepers!, Inc. ("Jeepers"). For the following reasons, we affirm.
{¶2} Jeepers owns and operates indoor animated theme parks that are designed to serve families with children who are 12 years old or younger. Within these indoor animated theme parks are amusement park rides, soft play areas, skill games, and family dining.
{¶3} In August 1999, Jeepers and Concord Mills Limited Partnership ("Concord Mills") entered into a ten-year lease agreement with the intention that Jeepers would operate a business establishment at a leasehold in Concord Mills Mall in Concord, North Carolina. Under this agreement, after Jeepers satisfied conditions precedent, Concord Mills apparently agreed to pay Jeepers an allowance for construction improvements.
{¶4} In August 1999, Jeepers also entered into an agreement with Hanlin-Rainaldi, an Ohio corporation that Jeepers apparently had retained on several previous occasions for other construction projects. According to this agreement, Jeepers agreed to pay $1,100,000 to Hanlin-Rainaldi for upfitting the leasehold at Concord Mills Mall.
{¶5} Effective August 1999, Jeepers also contracted with Win & Associates, Inc. ("Win & Associates"), a general contractor in North Carolina. According to this agreement, Jeepers appointed Win & Associates to be the general contractor for the Concord Mills Mall project and directed them to use Hanlin-Rainaldi as the major prime contractor for the Concord Mills Mall project. The project agreement between Jeepers and Win & Associates also required, among other things, that Jeepers: (1) assign its agreement with Hanlin-Rainaldi to Win & Associates for the purpose of satisfying North Carolina licensing and permit requirements; (2) pay the contract sum as provided in its agreement with Hanlin-Rainaldi directly to Hanlin-Rainaldi; and (3) pay a management fee to Win & Associates.
{¶6} Jeepers, however, failed to pay Hanlin-Rainaldi for services rendered, thereby breaching its agreement with Hanlin-Rainaldi. To perfect its interest, Hainlin-Rainaldi filed a lien in North Carolina against the leasehold.
{¶7} In May 2000, desiring to settle any and all claims resulting from the construction project that the parties had against each other, Jeepers and Hanlin-Rainaldi entered into a settlement agreement,1 wherein Jeepers acknowledged it owed $708,084 to Hanlin-Rainaldi. Pursuant to this agreement, Jeepers promised to pay $440,000 upon execution of the agreement, with the remaining balance to be paid by: (1) a promissory note in the amount of $160,000 ("Note 1"); and (2) a cognovit note in the amount of $108,084. In exchange, Hanlin-Rainaldi agreed to release the lien against the leasehold at Concord Mills Mall.2
{¶8} Jeepers failed to pay the $440,000 that it promised to pay upon execution of the May 2000 settlement agreement. Thereafter, Hanlin-Rainaldi sued Jeepers, Concord Mills, and Win & Associates in a North Carolina court.
{¶9} Additionally, although Jeepers made payments towards satisfying its obligation under Note 1, which continued until 2002,3 Jeepers ultimately failed to totally satisfy its obligation under Note 1. Jeepers did, however, satisfy the cognovit note.
{¶10} In August 2001, Hanlin-Rainaldi, Jeepers, and Concord Mills entered into a settlement agreement to resolve disputed claims. Concurrent with the execution of this settlement agreement, Jeepers executed two promissory notes to Hanlin-Rainaldi in the amount of $165,000 ("Note 2") and $75,000 ("Note 3"), respectively. Additionally, concurrent with the execution of the second agreement, Concord Mills agreed to put $75,000 in escrow for the benefit of Jeepers to be disbursed to Hanlin-Rainaldi after it released its lien and dismissed its lawsuit. Hanlin-Rainaldi acknowledges that it received the $75,000 that was held in escrow; however, according to Hanlin-Rainaldi, Jeepers defaulted on Notes 2 and 3.
{¶11} On May 20, 2002, Hanlin-Rainaldi sued Jeepers in the Franklin County Court of Common Pleas, asserting five causes of action, that Jeepers: (1) wrongfully withheld payment under Note 1 and was liable for all amounts due under this note; (2) wrongfully withheld payment under Note 2 and was liable for all amounts due under this note; (3) wrongfully withheld payment under Note 3 and was liable for all amounts due under this note; (4) materially breached the agreement of August 2001 and was liable for the balances due under Notes 2 and 3; and (5) had been unjustly enriched and was liable in an amount equal to the outstanding balances that were due under Notes 1, 2, and 3. Jeepers answered the complaint, wherein it admitted to executing the notes but generally denied other allegations in the complaint.
{¶12} Hanlin-Rainaldi later moved for summary judgment as to all claims. Jeepers opposed this motion.
{¶13} Later, Jeepers moved for summary judgment concerning Hanlin-Rainaldi's claims that arose under the August 2001 agreement and Notes 2 and 3, claiming that the agreement and Notes 2 and 3 were executed under economic duress. In the alternative Jeepers sought judgment relating to Note 1, claiming that the agreement discharged Jeepers of this debt. Hanlin-Rainaldi opposed Jeepers' motion for summary judgment.
{¶14} On April 1, 2003, the trial court rendered a decision, wherein it granted in part and denied in part Hanlin-Rainaldi's motion for summary judgment and granted Jeepers' motion for summary judgment; however, this decision was later vacated. Pursuant to Civ.R. 53 and local rule, the trial court later referred the matter to a magistrate for a mediation conference. After reaching an impasse, the matter was referred for further motion practice and trial preparation.
{¶15} On July 24, 2003, the trial court rendered judgment wherein it granted in part and denied in part both Hanlin-Rainaldi's and Jeepers' motions for summary judgment. In its judgment, the trial court found in favor of Hanlin-Rainaldi concerning its claims that Jeepers breached the August 2001 agreement and was liable to Hanlin-Rainaldi under Notes 2 and 3. However, the trial court found in favor of Jeepers as to Hanlin-Rainaldi's claims that Jeepers failed to satisfy its obligation under Note 1 and Jeepers was unjustly enriched. From this judgment, Hanlin-Rainaldi appeals and asserts a single assignment of error:
The trial court erred as a matter of law in applying the parol evidence rule to bar evidence of Appellee's subsequent conduct.
{¶16} In its reply brief, Hanlin-Rainaldi alternatively asserts:
The trial court erred as a matter of law by failing to consider evidence of Appellee's subsequent payments on the note to show intent and meaning, including whether such conduct constituted a modification or waiver of the terms of the release language in the settlement agreement.
{¶17} We will first address which substantive law and procedural law apply to this cause.
{¶18} The Supreme Court of Ohio has held:
The law of the state chosen by the parties to govern their contractual rights and duties will be applied unless either the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties' choice, or application of the law of the chosen state would be contrary to the fundamental policy of a state having a greater material interest in the issue than the chosen state and such state would be the state of the applicable law in the absence of a choice by the parties.
Schulke Radio Productions, Ltd. v. Midwestern Broadcasting Co. (1983), 6 Ohio St.3d 436, syllabus; see, also, Jarvis v. Ashland Oil, Inc. (1985), 17 Ohio St.3d 189, syllabus; Restatement of the Law 2d, Conflict of Laws (1971) 561, Section 187. Accord Torres v. McClain (2000), 140 N.C. App. 238, 241, quoting Behr v. Behr (1980), 46 N.C.App. 694, 696, 266 S.E.2d 393, citing Restatement of the Law 2d, Conflict of Laws (1971) 561, Section 187 ().
{¶19} Section 9f. of Hanlin-Rainaldi, Jeepers, and Concord Mills' August 2001 agreement provides that: "This Agreement shall be governed by the laws of the State of North Carolina." In this case, North Carolina is the locus of Jeepers' leasehold and the construction project, and we find it is the forum with the most significant contacts to the case. Accordingly, we conclude North Carolina has a substantial relationship to the settlement agreement, and there exists a reasonable basis for the parties' choice of law provision in their contract. Furthermore, based upon our review of the record, we cannot conclude that Ohio would have a greater material interest than North Carolina in the outcome of this case. Accordingly, we conclude North Carolina substantive law applies to the August 2001 agreement.
{¶20} Furthermore, because traditional choice of law principles provide that the law of the forum state governs on procedural matters, Keeton v. Hustler Magazine, Inc. (1984), 465 U.S. 770, 778, fn. 10, 104 S.Ct. 1473; Lawson v. Valve-Trol Co. (1991), 81 Ohio App.3d 1, 4,...
To continue reading
Request your trial