Capital Real Estate Partners, L.L.C. v. Nelson , 2019 Ohio 2381 ( 2019 )

[Cite as Capital Real Estate Partners, L.L.C. v. Nelson, 2019-Ohio-2381.]
IN THE COURT OF APPEALS
TWELFTH APPELLATE DISTRICT OF OHIO
WARREN COUNTY
CAPITAL REAL ESTATE :
PARTNERS, LLC,
: CASE NO. CA2018-08-085
Appellee/Cross-Appellant, CA2018-08-094
:
OPINION
- vs - : 6/17/2019
:
SAMUEL NELSON, et al.,
:
Appellants/Cross-Appellees.
APPEAL FROM WARREN COUNTY COURT OF COMMON PLEAS
Case No. 16CV88133
Gregory A. Keyser, 6657 Hitching Post Lane, Cincinnati, Ohio 45230, for appellee/cross-
appellant
Rittgers & Rittgers, Ryan G. McGraw, Konrad Kircher, 12 East Warren Street, Lebanon, Ohio
45036 for appellants/cross-appellees
RINGLAND, J.
{¶ 1} Appellants/Cross-Appellees, Samuel and Ellen Nelson, appeal the decision of
the Warren County Court of Common Pleas granting summary judgment in favor of
Appellee/Cross-Appellant, Capital Real Estate Partners, LLC ("Capital"). Capital also
appeals the trial court's decision with respect to the payment of attorney fees. For the
reasons detailed below, we affirm.
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{¶ 2} Capital is engaged in the business of brokering sales and leases of commercial,
office, or industrial real estate. EK Prop, LLC, ("EK") previously owned property at 3751
Commercial Drive, Middletown, Ohio ("Property").
{¶ 3} During its ownership of the Property, EK entered into an exclusive Leasing
Listing Agreement with Capital. Pursuant to the Leasing Listing Agreement, EK agreed to
use Capital as its exclusive agent to market and broker the Property. The Leasing Listing
Agreement specified that EK agreed to pay Capital a six percent commission if there was a
sale of the Property. In addition to the sale commission, EK also agreed to pay Capital a
commission if the Property was leased. The written commission schedule provides that EK
pay six percent of the base rent for the first 60 months of the lease period and three percent
of the base rent for any remaining period longer than 60 months.
{¶ 4} In 2011, Capital secured a lease of the Property to Barrett Paving Materials,
Inc. and EK paid the agreed commission.
{¶ 5} In June 2015, EK sold the Property to the Nelsons. In so doing, Capital
brokered and closed the sale of the Property to the Nelsons for $1,350,000. As part of the
closing between the Nelsons and EK, the Nelsons signed a document titled "Contract to
Purchase Commercial-Industrial-Investment" ("Contract"). The Contract includes an
addendum, which provides in pertinent part:
Buyer acknowledges that the current tenant of the Property was
acquired via the exclusive leasing services of Capital Real Estate
Partners, LLC ("Broker") under the terms of a Leasing Listing
Agreement entered into between the Seller and Broker on or
about January 31, 2011. Under the terms of the Schedule of
Sales and Lease Commissions attached to and made a part of
the Leasing Listing Agreement, Seller or its successors or
assigns owes Broker for ongoing commissions due when/as/if
the current tenant of the Property subsequently renews its lease.
A copy of the Leasing Listing Agreement and the Schedule of
Sales and Lease Commissions are attached hereto as Exhibit A.
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Under the terms of that agreement, the obligations for ongoing
leasing commissions due to Broker for any and all subsequent
renewals are to be transferred from the Seller to a future buyer at
the time of closing. Buyer acknowledges these ongoing lease
commission payment obligations due to Broker should the tenant
renew its lease, and will execute any necessary documentation
at closing to memorialize the transfer of these commission
obligations from Seller to Buyer for Broker's benefit. Buyer's
commitments to honor these ongoing commission obligations
shall not merge with the deed; rather, these commission
payment obligations shall survive closing until the current
tenant's lease obligations (including any subsequent
amendments thereto) are expired.
{¶ 6} The Nelsons' signatures appear directly under the addendum. During the
period of time prior to closing, the Nelsons were represented by counsel, who also reviewed
the Contract and addendum. Following the sale, Capital was paid a sale commission
pursuant to the terms of the Agreement.
{¶ 7} Subsequently, the Nelsons renegotiated the lease with Barrett and executed a
lease renewal. Upon learning of the lease renewal, Capital sent an invoice to the Nelsons for
the commission owed by virtue of the Nelsons' assumption of the obligations provided in the
Contract addendum. The Nelsons refused to pay, asserting that they did not realize their
obligations under the Contract extended to paying Capital lease renewal commissions.
{¶ 8} On January 7, 2015, Capital filed the instant action against the Nelsons,
alleging breach of contract for failure to pay the lease commission following Barrett's lease
renewal. Capital also brought claims for breach of contract and unjust enrichment against
EK. All parties moved for summary judgment. After considering the motions, the trial court
granted summary judgment in favor of Capital. The Nelsons now appeal, raising two
assignments of error for review. Capital also cross-appeals the trial court's decision with
respect to the denial of attorney fees.
{¶ 9} Assignment of Error No. 1:
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{¶ 10} THE TRIAL COURT ERRED WHEN IT GRANTED CRP'S MOTION FOR
SUMMARY JUDGMENT ON ITS CAUSE OF ACTION FOR BREACH OF CONTRACT.
{¶ 11} In their first assignment of error, the Nelsons argue the trial court erred by
granting summary judgment in favor of Capital. We find the Nelsons' claims to be without
merit.
{¶ 12} This court reviews summary judgment decisions de novo, which means we
review the trial court's judgment independently and without deference to the trial court's
determinations, using the same standard in our review that the trial court should have
employed. Ludwigsen v. Lakeside Plaza, L.L.C., 12th Dist. Madison No. CA2014-03-008,
2014-Ohio-5493, ¶ 8. Pursuant to Civ.R. 56(C), summary judgment is appropriate when (1)
there is no genuine issue of any material fact, (2) the moving party is entitled to judgment as
a matter of law, and (3) the evidence submitted can only lead reasonable minds to a
conclusion which is adverse to the nonmoving party. Zivich v. Mentor Soccer Club, Inc., 82
Ohio St. 3d 367, 369-70 (1998).
{¶ 13} To establish a claim for breach of contract, a plaintiff must prove (1) the
existence of a contract, (2) plaintiff fulfilled his or her contractual obligations, (3) defendant
failed to fulfill his or her contractual obligations, and (4) due to this failure plaintiff incurred
damages. Roberts v. McCoy, 12th Dist. Butler CA2016-04-071, 2017-Ohio-1329, ¶ 27.
{¶ 14} A meeting of the minds occurs where "a reasonable person would find that the
parties manifested a present intention to be bound to an agreement." Connor & Murphy, Ltd.
v. Applewood Village Homeowners' Assn., 12th Dist. Butler No. CA2007-09-213, 2009-Ohio-
1447, ¶ 52. "Parties to contracts are presumed to have read and understood them and * * *
a signatory is bound by a contract that he or she willingly signed." Preferred Capital, Inc. v.
Power Engineering Group, Inc., 112 Ohio St. 3d 429, 2007-Ohio-257, ¶ 10.
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{¶ 15} Ohio contract law recognizes the doctrine of incorporation by reference.
Volovetz v. Tremco Barrier Solutions, Inc., 10th Dist. Franklin No. 15AP-1056, 2016-Ohio-
7707, ¶ 26. When a document is incorporated into a contract by reference, that document
becomes part of the contract. Id. Mere reference to a document is insufficient to incorporate
it. Id. at ¶ 27. Rather, the contract language must clearly demonstrate that the parties
intended to incorporate all or part of the referenced document. Id. In other words:
the language used in a contract to incorporate extrinsic material
by reference must explicitly, or at least precisely, identify the
written material begin incorporated and must clearly
communicate that the purpose of the reference is to incorporate
the referenced material into the contract * * *.
Id., citing Northrop Grumman Info. Tech., Inc. v. United States, 535 F.3d 1339, 1345
(Fed.Cir.2008) (distinguishing instances where the parties merely acknowledge referenced
material is relevant to the contract). Whether a contract has incorporated another document
by reference presents a question of law for a court to determine. Id.
{¶ 16} The Nelsons do not dispute that their signatures appear on the Contract
addendum. Nevertheless, the Nelsons contend that the trial court erred by granting summary
judgment in favor of Capital because (1) the Contract should be construed against Capital as
the drafter of the document, (2) the addendum is not sufficiently incorporated into the
Contract, (3) there was no meeting of the minds, and (4) the addendum was not supported
by consideration. We have reviewed all of the Nelsons' arguments on appeal and find they
are without merit.
{¶ 17} In this case, the addendum begins by stating a number of acknowledgments.
Pursuant to the terms of the Contract, the Nelsons "acknowledge[d]" that Barrett's tenancy
was acquired via the exclusive listing services of Capital "under the terms of a Leasing Listing
Agreement entered into between [EK] and [Capital] on or about January 31, 2011." The
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addendum then references the Schedule of Sales and Lease Commissions that was
incorporated into the pertinent Leasing Listing Agreement.1 The addendum further states
that under the terms of the Leasing Listing Agreement, "the obligations for ongoing lease
commissions due to [Capital] for any and all subsequent renewals are to be transferred from
the Seller to a future buyer at the time of closing."
{¶ 18} As to the Nelsons' obligations therein, the addendum includes the provision that
they "acknowledge[d] the[] ongoing lease commission payment obligations due to [Capital]
should the tenant renew its lease" and "will execute any necessary documentation at closing
to memorialize the transfer of these commission obligations from Seller to Buyer for Broker's
benefit."
{¶ 19} For reasons more pertinent to Capital's cross-appeal, we note that the
addendum does not explicitly or precisely state that the Leasing Listing Agreement was fully
incorporated into the addendum. The addendum merely references those documents.
Nevertheless, by the language employed in the addendum, it is clear that the Nelsons agreed
to pay lease commission obligations to Capital. We further find, and agree with the trial
court, that the referenced commission obligations relate to the commission schedule
contained in the Leasing Listing Agreement. As a result, we find Capital met its burden in
establishing the terms of the contract and the Nelsons breached by failing to pay the lease
commission upon Barrett's renewal. Though this court construes ambiguity against the
drafter, there is no ambiguity that supports the Nelsons' arguments as to their liability for
lease commission payments.
{¶ 20} Finally, we reject the Nelsons' claim that the Contract was not supported by
1. Since the addendum states that the Schedule of Sales and Lease Commissions was incorporated into the
Leasing Listing Agreement, we will refer only to the Leasing Listing Agreement.
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consideration. Contrary to the Nelsons' argument, the Contract clearly involved the sale of a
valuable property in exchange for money. The terms in the addendum were negotiated terms
contained in the Contract. The Nelsons entered into a valid contract and breached that
agreement, causing Capital to incur damages in the form of the outstanding lease
commission. Based on these facts, we agree that summary judgment was appropriately
granted in favor of Capital. As a result, the Nelsons' first assignment of error is overruled.
{¶ 21} Assignment of Error No. 2:
{¶ 22} IN THE UNLIKELY EVENT THE TRIAL COURT'S GRANTING OF SUMMARY
JUDGMENT TO CRP IS AFFIRMED, THE TRIAL COURT STILL ERRED IN THE TOTAL
AMOUNT OF ITS AWARD TO CRP.
{¶ 23} In their second assignment of error, the Nelsons, for the first time, allege that
Capital waived its right to the collection of any additional lease commissions by application of
the doctrines of waiver and accord and satisfaction. However, we have thoroughly reviewed
the record and determine this argument was never raised or presented below. As this court
has previously stated, "[i]t is axiomatic that a party cannot raise new issues or legal theories
for the first time on appeal and failure to raise an issue before the trial court results in waiver
of that issue for appellate purposes." BAC Home Loans Servicing, LP. v. Mullins, 12th Dist.
Preble No. CA2013-12-015, 2014-Ohio-4761, ¶ 33. As a result, we overrule the Nelsons
second assignment of error.
{¶ 24} Cross-Assignment of Error:
{¶ 25} THE TRIAL COURT ERRED WHEN IT FAILED TO AWARD INTEREST AN
[sic] ATTORNEY FEES PROVIDED BY THE PARTIES' WRITTEN CONTRACT FOR REAL
ESTATE COMMISSIONS.
{¶ 26} In its cross-assignment of error, Capital argues the trial court erred by denying
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attorney fees and interest. We find Capital's argument to be without merit.
{¶ 27} As noted above, Ohio contract law recognizes the doctrine of incorporation by
reference. Volovetz, 2016-Ohio-7707 at ¶ 26. However "mere reference" to a document is
insufficient unless the contract language clearly demonstrates that the parties intended to
incorporate all or part of the referenced document. Id. at ¶ 27.
{¶ 28} In this case, as stated above, the plain language of the addendum provides that
the Nelsons agreed to assume the obligation of paying lease commissions upon renewal.
The addendum further provides that the commission schedule is set forth in the Leasing
Listing Agreement. However, the addendum makes no reference to the payment of attorney
fees or interest and the contract language does not clearly demonstrate that the parties
intended to fully incorporate the terms set forth in the Leasing Listing Agreement. Rather, as
correctly found by the trial court, "it is not at all clear * * * that the contract provision can
reasonably be interpreted to include all of the ancillary terms of the separate agreement,
including attorney's fees and interest." As a result, we find Capital's cross-assignment of
error to be without merit and therefore overruled.
Judgment affirmed.
HENDRICKSON, P.J., and M. POWELL, J., concur.
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