Sullinger v. Reed

• Decision Date: 23 August 2021
• Docket Number: NO. 6-20-14,6-20-14
• Citation: 178 N.E.3d 29
• Parties: Doug SULLINGER, Plaintiff-Appellant, v. Doug REED, dba R & R Farms, et al., Defendants-Appellees.
• Court: Ohio Court of Appeals

178 N.E.3d 29

Doug SULLINGER, Plaintiff-Appellant,

v.Doug REED, dba R & R Farms, et al., Defendants-Appellees.

NO. 6-20-14

Court of Appeals of Ohio, Third District, Hardin County.

Date of Decision: August 23, 2021

Joseph B. Clark, for Appellant.

David R. Watkins, Bellefontaine, for Appellees, Doug and Kathy Reed, DBA R & R Farms.

WILLAMOWKSI, P.J.

{¶1} Plaintiff-appellant Douglas A. Sullinger ("Doug") appeals the judgment of the Hardin County Court of Common Pleas, alleging that the trial court erred in (1) finding that a valid lease agreement existed in this case; (2) finding that Doug was a third party beneficiary of this lease agreement; and (3) not granting Doug's motion to dismiss. For the reasons set forth below, the judgment of the trial court is affirmed.

Facts and Procedural History

{¶2} In 2016, Doug and his brother, Don J. Sullinger ("Don"), came into ownership of a property called the Silver Creek Farm ("Silver Creek"). Tr. 168. However, their mother, Joan A. Sullinger ("Joan"), still had a life estate in this property. Tr. 168. On March 21, 2017, Don, as attorney-in-fact for Joan, entered into a lease agreement ("2017 Lease") with Douglas R. Reed ("Reed") and his wife, Kathy Reed (collectively "the Reeds"). Doc. 1. Ex. A. The Reeds did business as R & R Farms. Tr. 21-22. Ex. A. Doc. 1.

{¶3} The 2017 Lease gave the Reeds the right to farm Silver Creek and contained the following provision:

The term of said lease is a continuing contract based on the life of Joan A. Sullinger starting with the crop year 2017. The lease terminates on December 31 of the then current crop year that Joan A. Sullinger passes away prior to July 1st of that year. Or, the lease terminates on December 31 of the following year that Joan A. Sullinger passes away after June 30th of the then current crop year. Or either party may terminate the lease by written notice delivered on or before November 1 of any year to be effective on December 31 of the following year.

Ex. A. Further, the Reeds were to make the rental payments due under the 2017 Lease on a quarterly basis. Ex. A. Tr. 23.

{¶4} In 2018, Reed spent roughly $6,400.00 to plant a cover crop at Silver Creek to "benefit the soil" for the 2019 season. Tr. 27-28. Ex. M. He also took soil samples from the fields to determine where nutrients may need to be applied. Tr. 40. Reed testified that the lease required him to take soil samples and that this cost him approximately $3,000.00. Tr. 42. Doc. 1. In 2018, Reed made the first three quarterly payments that were due under the 2017 Lease to Joan. Tr. 24-25.

{¶5} But on November 28, 2018, Joan passed away, "vesting the [Silver Creek] property equally in her two sons and remaindermen[, Don] and his brother Doug Sullinger, as tenant(s) in common[.]" Doc. 30, Ex. 2. See Tr. 169. In December of 2018, the final quarterly payment came due. Ex. A. In accordance with the terms of the 2017 Lease, Reed tendered half of the fourth quarterly payment to Don and tendered the other half to Doug. Tr. 25, 170. Ex. A. Both Doug and Don cashed the checks that Reed had issued. Tr. 26, 169.

{¶6} On December 12, 2018, Doug's attorney, Kimberly Savich ("Savich"), sent an email to Don that read as follows:

My condolences on the passing of your mother. Doug has asked me to handle the Silver Creek property for him. I understand that you will be taking the necessary steps to clear the property of the life estate designation. Please keep me apprised. Also, according to the lease that you entered into on behalf of the farm, the lease with Doug Reed will terminate after next planting season. As Doug has mentioned previously, he is unhappy that the land is tied up in a lease for another year after the life estate ends. He would like to know whether Mr. Reed intends to purchase the property or if you are interested in purchasing the property. Mr. Reed can send Doug's ½ of the quarterly payment to [Address Omitted].

Ex. B. On February 8, 2019, Savich emailed Reed the following statement:

Doug Sullinger has received the documents that you sent. Thank you for providing those to us quickly. * * *

As you are aware, Doug Sullinger disagrees with Don's interpretation of the farm lease. We believe that it terminated when the life estate terminated as neither Don through the POA, nor Joan Sullinger had the authority to extend the lease out past the life estate. Please advise us as to your intentions with regards to the 2019 crop season by Friday, February 15th[, 2019].

Ex. E. Reed testified that the documents referred to in this email contained the results of the soil samples that he paid to have taken on Silver Creek. Tr. 41. He sent these documents because Doug had requested these results earlier in 2019. Tr. 41, 178. Reed was not reimbursed for the expenses related to procuring these soil samples. Tr. 43, 179. On February 26, 2019, Savich sent Reed the following email:

On Friday, February 8 I emailed you regarding the Silver Creek Farm lease. In that email, I explained our position with regard to the termination of the lease and that we do not believe that the lease is in effect. I asked you to respond by Friday, February 15 with your intentions with respect to this planting season. You have yet to respond. Let me reiterate our position: You do not have the right to enter the Silver Creek property. You may not prepare the land for planting, plant, or take any other action to move forward with in the usage of that property for the 2019 crop year. Should you have any equipment or personal property left on the Silver Creek property, it must be removed by March 15, 2019. If we have not received a response indicating that you will not be taking actions to move forward with the 2019 crop year on the Silver Creek property by that date, be advised that we intend to file an injunction and will be enforcing our property rights to the fullest extent under the law. * * *

Ex. F. However, on March 1, 2019, Don sent the following email to Reed:

I am writing to you to invite you to continue farming the Silver Creek property for the 2019 crop year, and I intend to honor the lease agreement entered into with the Joan Sullinger Life Estate as it is currently written. As we both know, at the end of 2018 you invested significant time, capital, and energy in preparing the property for the 2019 season. The ability to realize a return on this investment is critical, for both you as a tenant and me as an owner of the property. Without showing a history of profitability on the property, the value of that property is diminished and will impact the final sale value.

My intentions were further illustrated by cashing the rental check that you sent at the end of 2018. By cashing the check, I acknowledged that the lease was valid after the ending of the Life Estate. I appreciate you remitting the lease payments in a timely manner.

Finally with regards to my Brother Doug, by attempting to enforce his interpretation of the lease with regards to termination he and his counsel are denying my right to earn rental income from the property. A clear indication of this is that they have not come forward with anyone willing to rent the property. Furthermore, to my knowledge he and his counsel have not provided you with any plan on reimbursement for the investment you have made into the 2019 season.

* * *

Don J. Sullinger, Sr.

Ex. C. On March 25, 2019, Reed tendered the first quarterly payment of the year to Don and Doug by issuing each of them checks for one half of the sum that was due. Tr. 43. Don negotiated this check and kept the funds, but Doug did not negotiate this check. Doc. 106. Reed testified that Doug also did not return this check to him. Tr. 46-47. See Tr. 173, 176-177.

{¶7} On April 9, 2019, the sheriff and Doug's counsel served Reed with a notice that directed the Reeds to leave the Silver Creek premises within three days. Doc. 1, Ex. B. Tr. 51-52. Reed testified that this notice came "right at planting season." Tr. 51-52. On April 16, 2019, Doug filed a complaint that named Don and the Reeds as defendants. Doc. 1. Doug raised several claims, including a request for a declaratory judgment that stated the 2017 Lease was no longer in effect. Doc. 1.

{¶8} On April 20, 2019, Reed sent an email to Savich, stating that he "intend[ed] to exercise [his] * * * right to farm the Silver Creek property as set forth in the rental agreement." Ex. F. However, Reed testified that he ultimately did not plant any crops at Silver Creek during the 2019 planting season because of the eviction notice that had been served on him at Doug's direction. Tr. 51-52. Doc. 106.

{¶9} On May 10, 2019, Don filed an answer and counterclaims, requesting a partition of Silver Creek and raising a claim for unjust enrichment. Doc. 14. On May 29, 2019, the Reeds filed an answer and counterclaim. Doc. 21. The Reeds requested damages for the expenses that they incurred in preparing Silver Creek for the 2019 planting season and for the lost profits that came from being unable to farm Silver Creek in 2019. Doc. 21. On July 29, 2019, Don filed a motion to dismiss Doug's complaint for failure to state a claim upon which relief could be granted. Doc. 16.

{¶10} On February 7, 2020, the trial court granted Don's motion to dismiss the claims raised in Doug's complaint. Doc. 75.^{1 ,2} After this order, only the counterclaims raised by Don and the Reeds remained. Doc. 75. On April 6, 2020, after reaching an agreement to resolve their disputes, Don and Doug filed a joint notice of voluntary dismissal with prejudice under which the parties agreed to dismiss the claims against each other. Doc. 93. At this point, only the counterclaims filed by the Reeds against Doug remained for trial.

{¶11} On May 13, 2020, Doug filed a motion to dismiss the Reeds’ counterclaims for failure to state a claim upon which relief could be granted. Doc. 99. Doug argued, in part, that the Reeds had failed to demonstrate a basis on which he could be held liable under the 2017 Lease. Doc. 99. On ...