Shanker v. Columbus Warehouse
| Decision Date | 06 June 2000 |
| Docket Number | 99AP-772,10 |
| Parties | Raman Shanker et al., Plaintiffs-Appellees/Cross-Appellants v. Columbus Warehouse Limited Partnership, Defendant, And K.A. Manoranjan, Defendant-Appellant/Cross-Appellee(REGULAR CALENDAR) IN THE COURT OF APPEALS OF OHIO TENTH APPELLATE DISTRICT Rendered on |
| Court | Ohio Court of Appeals |
APPEAL from the Franklin County Court of Common Pleas.
Fry, Waller & McCann Co., L.P.A., Barry A. Walker and L. Robert Thaxton, for appellees/cross-appellants.
Thompson, Hine & Flory, L.L.P., Scott A. Campbell and Paul Giorgianni, for appellant/cross-appellee.
Defendant-appellant and cross-appellee, K.A. Manoranjan, appeals from a judgment of the Franklin County Court of Common Pleas granting the summary judgment motion of plaintiffs-appellees and cross-appellants, Raman and Mena Shanker, and entering judgment in favor of plaintiffs in the net amount of $27,811.76 plus interest.
Defendant is a general partner of Columbus Warehouse Limited Partnership ("CWLP"). Sometime in 1991, plaintiffs loaned defendant money. To repay the loan, defendant assigned to plaintiffs a promissory note payable to defendant from CWLP. CWLP refused to honor the note at maturity. Accordingly, on March 15, 1995, plaintiffs filed an action seeking payment on the promissory note. On April 18, 1996, after extensive negotiations, a magistrate of the Franklin County Court of Common Pleas read into the record an agreement the parties had reached to settle the dispute. Pertinent to this appeal, and pursuant to the terms of the agreement, defendant promised to pay plaintiffs $40,000 and plaintiffs promised to fully release defendant.
After reaching the agreement, the parties entered into negotiations to draft settlement documents. On August 9, 1996, plaintiffs submitted to defendant a revised settlement agreement that included a term not present in the original oral settlement agreement. Defendant refused to accept the new term and on August 22, 1996, CWLP filed a motion to enforce the oral settlement agreement of April 18, 1996. An evidentiary hearing was held on CWLP's motion and the trial court decided that as of April 18, 1996, the parties had reached an enforceable oral agreement to settle the case. Plaintiffs appealed that decision, and this court affirmed. Shanker v. Columbus Warehouse Limited Partnership (Mar. 31, 1997) Franklin App. No. 96AP-1269, unreported.
Unfortunately, that did not end the litigation emanating from the parties' settlement. After this court's decision, defendant refused to pay plaintiffs the $40,000 he owed under the settlement agreement. By complaint filed April 13, 1998, plaintiffs initiated the present suit, alleging that defendant had breached the April 18, 1996 settlement agreement by, among other reasons, failing to make the $40,000 payment. Defendant filed an answer in which he asserted a counterclaim against plaintiffs, alleging that they breached the settlement agreement by continuing to litigate the matter.
Following cross-motions for summary judgment, the trial court ultimately decided that both parties had breached the settlement agreement, but not in any material manner. The trial court thus concluded the parties' non-performance of their respective obligations was not excused by the other's breach. The trial court found plaintiffs' damages were liquidated by the settlement agreement itself. The court further concluded defendant was entitled to reasonable attorney fees arising out of plaintiffs' breach, measured from the settlement agreement on April 18, 1996, until this court affirmed the agreement on March 31, 1997. The trial court simultaneously granted judgment in favor of CWLP on plaintiffs' claims against it. The trial court's judgment in that regard is not raised as error and CWLP is not a party to this appeal.
After a hearing, the trial court awarded defendant attorney fees as compensatory damages in the amount of $12,188.24. Contrary to the court's original decision, the award reflected attorney fees incurred between the time of the breach on August 9, 1996 and this court's decision on March 31, 1997. Thus, the trial court entered a final judgment in favor of plaintiff in the net amount of $27,811.76, plus interest, representing the $40,000 defendant owed plaintiffs, offset by the $12,188.24 in attorney fees the trial court granted defendant.
Defendant appeals, assigning the following errors:
I. THE TRIAL COURT ERRED IN ITS JANUARY 12, 1999 DECISION IN STATING THAT THE SHANKERS DISMISSED THE FIRST TRIAL COURT CASE.
II. THE TRIAL COURT ERRED IN NOT SUSTAINING MR. MANORANJAN'S JANUARY 22, 1999 MOTION FOR RECONSIDERATION.
III. THE TRIAL COURT ERRED IN ITS JANUARY 12, 1999 DECISION BY HOLDING THAT THE SHANKERS' BREACH WAS NOT MATERIAL AND THAT MR. MANORANJAN'S PERFORMANCE OF THE SETTLEMENT AGREEMENT WAS NOT EXCUSED.
IV. THE TRIAL COURT ERRED IN ITS MAY 19, 1999 DECISION BY NOT AWARDING MR. MANORANJAN DAMAGES FOR THE LEGAL FEES AND EXPENSES INCURRED BETWEEN APRIL 18 AND AUGUST 9, 1996.
V. THE TRIAL COURT ERRED IN ITS JUNE 29, 1999 JUDGMENT BY AWARDING THE SHANKERS PREJUDGMENT INTEREST ON $40,000.
Plaintiffs cross-appeal, assigning the following errors:
I. THE TRIAL COURT ERRED IN AWARDING ATTORNEY FEES TO K.A. MANORANJAN BECAUSE THE AWARD OF SUCH FEES IS PRECLUDED BY OHIO LAW.
II. ASSUMING ARGUENDO THAT THE AWARD OF ATTORNEY FEES TO MR. MANORANJAN WAS PROPER, THEN THE TRIAL COURT ERRED IN THE DENIAL OF DR. AND MRS. SHANKER'S REQUEST FOR ATTORNEY FEES INCURRED AS A RESULT OF THE BREACH OF THE SETTLEMENT AGREEMENT BY MR. MANORANJAN.
Defendant's first, second and third assignments of error all contend that plaintiffs did not voluntarily dismiss their first action and thus materially breached the parties' settlement agreement, excusing defendant's non-performance. Plaintiffs respond that the first action was dismissed, the method by which dismissal was achieved is not relevant, and any breach of the settlement agreement by plaintiffs' failing to voluntarily dismiss was not material. On September 4, 1996, a judgment entry of dismissal was filed which dismissed plaintiffs' first case.
Even if plaintiffs did not voluntarily dismiss the first case, and thus breached the agreement, defendant's non-performance is not excused unless plaintiffs' breach was material. Kersh v. Montgomery Developmental Ctr. (1987), 35 Ohio App.3d 61, 62; Software Clearing House, Inc. v. Intrak, Inc. (1990), 66 Ohio App.3d 163, 170. Therefore, we first address whether plaintiffs' breach was material.
The Restatement of Contracts sets forth five factors to consider in determining whether a breach is material:
(a) the extent to which the injured party will be deprived of the benefit which he reasonably expected;
(b) the extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived;
(c) the extent to which the party failing to perform or to offer to perform will suffer forfeiture;
(d) the likelihood that the party failing to perform or to offer to perform will cure his failure, taking account of all the circumstances including any reasonable assurances;
(e) the extent to which the behavior of the party failing to perform or to offer to perform comports with standards of good faith and fair dealing.
Restatement of the Law 2d, Contracts (1981) 237, Section 241; Duerler v. Community Mut. Ins. (Apr. 18, 1991), Franklin App. No. 90AP-1337, unreported (applying Restatement factors to determine materiality of breach); see, also, Ohio Compensation Services Co. v. Smith (May 10, 1991), Lucas App. No. L-90-104, unreported (applying Restatement factors to determine materiality of breach of settlement agreement).
Given those factors, the trial court properly concluded plaintiffs' breach was not material. The benefit defendant sought in entering into the settlement was an end to litigation and attorney fees. While defendant was temporarily minimally deprived of that benefit during litigation to determine the terms of the settlement agreement, the continuing litigation arises from his own failure to comply with the terms of the agreement. Secondly, defendant can be adequately compensated for the sustained deprivation by receiving an amount equal to the attorney fees he has incurred as the result of the litigation that continued despite the settlement agreement.
As to the third factor, defendant concedes plaintiffs will suffer a forfeiture if he is excused from performing: they will lose defendant's performance of his obligations under the settlement agreement. Defendant, by contrast, will suffer no such forfeiture by enforcement of the agreement. Rather, he simply will have to abide by the terms of the settlement agreement, including paying plaintiffs $40,000, but will receive at the same time the benefit he sought in the agreement: the end of the litigation. Indeed, defendant remains engaged in litigation only because he has refused to abide by the terms of the settlement agreement after this court's decision affirming the terms of that agreement, as nothing in that agreement prevented plaintiffs from bringing suit against defendant for failing to abide by the terms of the settlement. Fourthly, plaintiffs' failure to abide by the terms of the settlement agreement does not need to be cured because the first case has already been dismissed. Plaintiffs only initiated the present case because defendant failed to comply with the terms of the settlement agreement.
Finally, defendant contends plaintiffs have failed to perform in good faith. In affirming the trial court's conclusion that the settlement agreement was enforceable without plaintiffs' proposed term, this court labeled plaintiffs' insistence on the insertion of a new term in the settlement agreement as a "mistaken understanding." Specifically, plaintiffs requested that defendant waive any fees owed to any of defendant's corporate affiliates, apparently believing that when, in settlement, defe...
To continue reading
Request your trial