Wakeman Oil Co. Inc. v. Citizens National Bank of Norwalk
| Decision Date | 13 September 1996 |
| Docket Number | 96-LW-3652,H-95-045 |
| Parties | Wakeman Oil Company Inc., et al., Appellants v. Citizens National Bank of Norwalk, Appellee Court of Appeals |
| Court | Ohio Court of Appeals |
Daniel Brady, for appellants.
Teresa Grigsby, Truman Greenwood, and Michael Katz, for appellee.
This case is before the court on appeal from a judgment of the Huron County Court of Common Pleas. Shortly after the commencement of this case, the trial court granted defendant-appellee's motion for a judgment on the pleadings with regard to three of plaintiffs-appellants' eleven claims. The court subsequently granted the summary judgment motion of defendant-appellee, Citizens National Bank of Norwalk ("CNB") and dismissed all of appellants' claims.
Plaintiffs-appellants are Wakeman Oil Company, Edwin M Coles, Lisa A. Coles, Coles Land Development, Inc., Coles Energy, Inc., Mickey Mart, Inc., C & S Leasing, Como Company and Coles Consolidated, Inc., (hereinafter collectively known as "Wakeman"). Wakeman asserts that the following errors occurred in the proceedings below:
In 1982, Edwin Coles exercised an option to purchase the stock of Wakeman, a business involved in the distribution of petroleum products and the operation of convenience stores. Coles immediately sought a source for financing his purchase. Upon the advice of his attorney, Jeff Laycock, Coles contacted Charles Koppelman, who was, at that time, President of CNB. Coles and Koppelman met several times before any funds were loaned to Coles/Wakeman. Laycock and Coles' accountant were present at most of these meetings.
Beginning in approximately 1983-1984, CNB entered into a series of written loan agreements financing Wakeman or one of the other business entities "owned"[1] by Edwin Coles and/or his wife, Lisa Coles. All of the loan agreements offered into evidence in this case contained the signatures of the "borrowers," Edwin Coles and/or Lisa Coles acting either in his or her individual capacity or as a corporate officer. Each loan agreement provides the named business entity with a "single advance" of a specified amount of money. Under the written terms of the agreement, the "borrower" agrees that, in receiving a "single advance," he or she has received all of the principal sum and that no further advances are contemplated under that particular note.
Three of the loans made to Wakeman were "participation" loans, that is, loans that CNB sold to other banks under a participation agreement. One such loan was sold to Mid-American National Bank and Trust.
In January 1990, Jerry Stover, Senior Vice-President of CNB, discovered that Wakeman's and Edwin Coles' checking accounts were overdrawn by a significant amount. Upon further analysis, Stover determined that the combination of the overdrafts[2] and the outstanding loans made to Wakeman caused CNB to exceed their legal lending limit, as defined in 12 U.S.C. 84. That is, CNB's loans to a single borrower, or related borrowers (Wakeman), exceeded CNB's established capital and surplus.
Upon discovering that its lending limit was exceeded, CNB informed Coles/Wakeman of the problem. CNB officers and Edwin Coles began seeking a participant bank or banks to which some of Wakeman's loans could be sold. Although CNB asked Coles/Wakeman to refrain from overdrafting their checking accounts, appellants continued to overdraft throughout 1990.
In February 1990, the Office of the Comptroller of Currency, United States Department of the Treasury ("OCC"), which oversees banking operations, audited CNB and discovered the "overline", i.e., the bank was in excess of its legal lending limit due to the Coles/Wakeman overdrafts and the participant loan with Mid-Am bank. The OCC included the participant loan because it found that, under the participant agreement between CNB and Mid-Am, CNB retained a credit risk in the transaction. CNB disagreed with this finding.
After a second audit in October 1990, the OCC again concluded that CNB was in violation of 12 U.S.C. 84 largely due to continued overdrafts on the Wakeman checking accounts. They again credited certain participant loans as contributing to the overline. At that point, it is undisputed that Wakeman was asked to remove its checking accounts from CNB. Nonetheless, on March 19, 1991, the OCC issued a Cease and Desist order that, among other things, precluded CNB from extending any credit to Wakeman until the violation of 12 U.S.C. 84 was corrected. CNB informed Wakeman of the federal order and asked Wakeman to move its loans, if possible, to other banks. At the time that Edwin Coles' deposition was taken in this case, Wakeman still had several outstanding loans with CNB.
On February 19, 1993, Wakeman filed a complaint against CNB. Wakeman set forth the following claims: (1) breach of written contract; (2) breach of duty of good faith; (3) breach of oral contract under which CNB promised to continue financing and services to Wakeman and Wakeman promised to retain CNB as their "sole lead bank;" (4) breach of duty of good faith in relationship to the oral contract; (5) breach of fiduciary duty; (6) economic duress; (7) fraud; (8) breach of an oral agreement under which CNB promised to, upon a decrease in the prime interest rate, re-write Wakeman's various loans; (9) tortious breach of duty of good faith; (10) negligent misrepresentation; and (11) infliction of emotional distress.
CNB answered the complaint and asserted several counterclaims which were later voluntarily dismissed, without prejudice. Both Wakeman and CNB attached several of the written loan agreements entered into by these parties to their complaint and answer/counterclaim.
On September 10, 1993, CNB filed a motion for a judgment on the pleadings, pursuant to Civ.R. 12(C). The trial court granted this motion, in part, and dismissed Counts 6 (economic duress), 8 (breach of an oral agreement to re-write loans) and 9 (tortious breach of a duty of good faith).
In February 1995, CNB filed a motion for summary judgment on the remaining claims in Wakeman's complaint. The motion was supported by depositions and documents discussed in those depositions, affidavits and answers to interrogatories. Wakeman filed a memorandum in opposition apparently[3] relying solely on the materials offered in support of CNB's motion for summary judgment.
The trial court granted CNB's motion for summary judgment on Wakeman's remaining claims on the basis that no genuine issue of material fact was created on the essential elements of the same.
In their first assignment of error, Wakeman contends the trial court erred in granting CNB's motion for a judgment on the pleadings on Count 8 and 9 of their complaint.
Subsequent to the filing of the pleadings in a case, a defendant may file a Civ.R. 12(C) motion for judgment on the pleadings in order to assert that the plaintiff failed to state a claim upon which relief can be granted. Burnside v. Leimbach (1991), 71 Ohio App.3d 399, 402. A motion for judgment on the pleadings is also characterized as a belated Civ.R. 12(B)(6) motion for failure to state a claim upon which relief can be granted. Nelson v. Pleasant (1991), 73 Ohio App.3d 479, 482. Thus, the same standard of review is applied to both motions. Id. The court must limit its inquiry to the material factual allegations contained in the complaint and accept those allegations and all reasonable inferences as true. Lin v. Gatehouse Constr. Co. (1992), 84 Ohio App.3d 96, 99. If, after review, the allegations in the complaint are such that the plaintiff could prove no set of facts which would entitle him to relief, the moving party is entitled to judgment as a matter of law. Id.
In the case under consideration, Wakeman's eighth count reads: "Defendant has breached its oral agreement by refusing to rewrite the Plaintiffs [sic] various loans even though the prime interest rate has decreased." The factual allegations in the complaint supporting this claim are found in Paragraphs 7(c), 8, 9, 10, 17 and 22. These paragraphs allege: (1) until 1991, Koppelman and other bank employees orally promised, on many occasions, to re-write and re-structure Wakeman's loans if the prime interest rate dropped, if Wakeman needed additional funds or if Wakeman "needed more time to pay."; (2) as consideration for this promise, Wakeman agreed to "do nearly all" its banking at CNB; (3) CNB kept its promise for eight years; and (4) on March 7, 1991, "without any warning," CNB refused to ever re-write, re-negotiate or re-structure loans for Wakeman.
In its answer, CNB denied all of the allegations in the relevant paragraphs and raised the affirmative defenses of the Statute of Frauds, the doctrine of impossibility of performance and the parol evidence rule. It based its motion for a judgment on the pleadings on the parol evidence rule and the Statute of Frauds. The trial court, in granting CNB's motion, did not state the grounds for its decision. We shall therefore assume that the dismissal was premised on either one or both of these grounds.
The parol evidence rule precludes the introduction of evidence of conversations or declarations that occur prior to or contemporaneous with a written contract and which attempt to vary or contradict the terms of said contract. AmeriTrust Co. v. Murray (1984), 20 Ohio App.3d 333, 335. The parol evidence rule is not a rule of evidence, but is a rule of substantive contract law employed as an aid to judicial interpretation. Ed Schory & Sons, Inc. v....
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