Breech v. Liberty Mut. Fire Ins. Co. , 101 N.E.3d 1199 ( 2017 )

[Cite as Breech v. Liberty Mut. Fire Ins. Co., 2017-Ohio-9211.]
COURT OF APPEALS
STARK COUNTY, OHIO
FIFTH APPELLATE DISTRICT
LOIS BREECH : JUDGES:
:
: Hon. Patricia A. Delaney, P.J.
Plaintiff-Appellant : Hon. William B. Hoffman, J.
: Hon. Earle E. Wise, Jr., J.
-vs- :
: Case No. 2017CA00012
:
LIBERTY MUTUAL FIRE INSURANCE :
COMPANY, ET AL. :
:
:
Defendant-Appellee : OPINION
CHARACTER OF PROCEEDING: Appeal from the Stark County Court of
Common Pleas, Case No.
2016CV00348
JUDGMENT: REVERSED AND REMANDED
DATE OF JUDGMENT ENTRY: December 21, 2017
APPEARANCES:
For Plaintiff-Appellant: For Defendant-Appellee:
RAYMOND V. VASVARI, JR. JOHN G. FARNAN
1301 East Ninth Street MONICA L. FRANTZ
110 Erieview Tower 1301 East 9th Street, Suite 1900
Cleveland, OH 44114-1844 Cleveland, OH 44114-1862
Stark County, Case No. 2017CA00012 2
Delaney, P.J.
{¶1} Plaintiff-Appellant Lois Breech appeals the December 22, 2016 judgment
entry of the Stark County Court of Common Pleas.
FACTS AND PROCEDURAL HISTORY
{¶2} On April 27, 2014, a storm damaged the home of Plaintiff-Appellant Lois
Breech. Defendant Liberty Mutual Insurance Company insured her home.
{¶3} Charles Lusher, Breech’s grandson, was granted a power of attorney by
Breech. Lusher retained the services of Defendant Finnicum Adjusting Company, Inc. to
assist Breech in presenting a claim to Liberty Mutual.
{¶4} Lusher hired Defendant-Appellee First Response Restoration to put a tarp
on the roof of Breech’s home. While the tarp was on the roof, a dispute arose between
Breech’s representatives and Liberty Mutual as to the coverage for the property damage
and value.
{¶5} The parties were unable to resolve the claim for property damage to
Breech’s home. On April 22, 2015, Breech filed a complaint against Liberty Mutual in the
Hamilton County Court of Common Pleas. The complaint was removed to federal court
and dismissed. On February 12, 2016, Breech filed a complaint in the Stark County Court
of Common Pleas against Defendants Liberty Mutual, Stephen Johnson, Finnicum,
Steven Hillman, James Garrity, and First Response. Breech alleged First Response
negligently applied the roof tarp to her home. Breech claimed breach of contract and bad
faith against Liberty Mutual and employees. As to Finnicum and its employees, Breech
claimed breach of contract, fraud, negligence, breach of fiduciary duty, civil conspiracy,
and violations of the Fair Debt Collections Practices Act.
Stark County, Case No. 2017CA00012 3
{¶6} The trial court set the matter for mediation on August 25, 2016. In the Stark
County Court of Common Pleas, a court mediator conducts the mediation. Lusher and
counsel represented Breech at the mediation. Breech was unable to resolve her claims
against Liberty Mutual and Finnicum. As to First Response, the “Report of Mediation”
stated, “A mediation conference took place on the 25th day of August, 2016. The result
of the conference is as follows: 1. Case settled CONTINGENT on the following terms:
CONFIDENTIAL.”
{¶7} On October 17, 2016, First Response filed a Motion to Enforce the
Settlement Agreement. In the motion, First Response provided details of its
understanding of the settlement negotiations between Breech and First Response. First
Response stated that at the mediation, Breech agreed to settle her claims and release
First Response in exchange for a confidential amount of money to be paid by Crum &
Forster Insurance Company on behalf of its insured, First Response. The adjuster for
Crum & Forster participated in the mediation via telephone. After the mediation, counsel
for First Response emailed counsel for Breech a draft settlement release. Counsel for
Breech objected to the draft release because it failed to include a confidentiality clause.
Counsel for First Response agreed to include confidentiality language. Breech did not
sign the release. Counsel for the parties spoke again and counsel for Breech requested
additional changes to the release. The changes included revised language as to the
release of Crum & Forster. Counsel for Breech stated his client would not agree to release
Crum & Forster from liability due to concerns that Crum & Forster insured another party,
currently unknown, involved in Breech’s cause of action. Counsel for First Response
offered to draft a release that would release Crum & Forster only in its capacity as the
Stark County, Case No. 2017CA00012 4
insurer to First Response. Counsel for Breech stated his client would not sign the release
document that included language releasing Crum & Forster of its liability.
{¶8} Breech responded on October 24, 2016. Breech argued that at mediation,
Breech agreed only to release First Response. Crum & Forster was not a party to the
action merely because it was the insurer of First Response.
{¶9} The trial court held an oral hearing on November 10, 2016. William Harter,
counsel for Liberty Mutual, testified first on behalf of First Response. He had no
knowledge of the terms of the alleged settlement agreement between Breech and First
Response. He testified that based on his experience in insurance defense work, it was
customary for the insurer to be released when the insurer pays a settlement on behalf of
the insured.
{¶10} John Farnan, counsel for First Response, testified over the objection of
Breech. Farnan was present at the mediation as counsel for First Response. He testified
that it was understood and accepted as common practice in litigation that the client and
the entity paying the money were released after a settlement. He recalled the negotiations
between counsel for Breech and himself:
So we spent hours, Mr. Seebohm and I, going back and forth
negotiating; and I tried to tailor it as narrowly as possible to accommodate
the concerns that he expressed as relayed by Mr. Lusher, her POA.
So for that reason we offered to limit it to this claim, this insured, on
this claim only.
Stark County, Case No. 2017CA00012 5
* * * We are only asking the Court to confirm that * * * he is releasing
First Response Restoration and the paying insurer in its capacity as the
insurer of this particular claim that we have been sued on. Nothing else.
I am willing to limit it to that and that’s it.
For that reason I am here because I couldn’t get that agreement.
(T. 23-25).
{¶11} Farnan was asked by counsel for Breech, “Did we at any time during the
[mediation] discuss Crum & Forster being released from this case?” Farnan answered,
“We did not discuss who was going to be released at all is my recollection. * * We also
didn’t discuss whose names were going to be on the release. * * * We didn’t discuss the
timing of the payment. All those things were understood between experienced counsel in
the case both from the Plaintiff’s side and the Defense side.” (T. 29-30).
{¶12} Neither Breech nor her power of attorney, Lusher, testified at the hearing.
{¶13} On November 18, 2016, the trial court issued a redacted judgment entry
(omitting the settlement amount) and a judgment entry filed under seal (including the
confidential settlement amount). In its judgment entry, the trial court granted the motion
to enforce the settlement. It acknowledged the parties disputed whether Crum & Forster
should be released. The trial court found the confidential mediation report did not contain
any details of the settlement agreement. It relied on the testimony of Farnan that the
mediation report was not a fully integrated contract, it did not contain all the terms
necessary to effectuate a settlement, and the parties anticipated a formal written release.
Breech did not present any contrary evidence as to what occurred at mediation; therefore,
the trial court found the parole evidence rule did not bar the consideration of Farnan’s
Stark County, Case No. 2017CA00012 6
testimony as to the terms of the settlement agreement. The trial court concluded that the
parties entered into a settlement agreement at mediation and the release of Crum &
Forster was one of the terms of the settlement agreement. In its judgment entry, the trial
court recited the terms of the settlement agreement, which included a release of Crum &
Forster. It ordered Crum & Forster pay Breech the settlement amount within ten days of
the judgment entry. The judgment entry did not contain Civ.R. 54(B) language.
{¶14} On December 8, 2016, First Response filed a motion requesting the trial
court dismiss Breech’s claims against First Response. In the motion, First Response
stated that Breech received a draft of the settlement agreement but Breech would not
sign the agreement. Breech also would not agree to dismiss First Response from the
action. In its motion, First Response states,
This refusal leaves First Response in the position of having fully funded a
settlement, but unable to get a signed release or dismissal. Given that the
terms of the release are specified in the Court’s order, and that order is an
interlocutory order, it cannot be appealed until the end of the case, when
the plaintiff’s claims against the other defendant, Liberty Mutual, are
resolved.
(Motion, Dec. 8, 2016). First Response stated it would honor the settlement if the trial
court would dismiss it from the action with prejudice.
{¶15} On December 22, 2016, the trial court issued a judgment entry dismissing
Breech’s claims against First Response. The judgment entry stated:
In a November 18, 2016 Judgment Entry, after an evidentiary hearing, the
Court found that plaintiff Lois Breech fully settled all of her claims against
Stark County, Case No. 2017CA00012 7
defendant First Response and the Court’s November 18, 2016 Order
specified the terms of the settlement. Since that time, no one disputes that
defendant First Response’s insurer, Crum & Forster, fully funded the
settlement that the Court found existed between Plaintiff Lois Breech and
defendant First Response. Accordingly, the Court finds defendant First
Response’s Motion well taken and hereby orders all of plaintiff Lois
Breech’s claims against defendant First Response are hereby dismissed,
“with prejudice”, with each such party to bear her/its own cost.
(Judgment Entry, Dec. 22, 2016).
{¶16} Breech filed a Notice of Appeal on January 23, 2017 stating she was
appealing the December 22, 2016 judgment entry. No other trial court order is referenced
in the notice of appeal.
{¶17} On January 31, 2017, Breech dismissed without prejudice her claims
against Liberty Mutual. Her claims against the remaining parties had been previously
dismissed.
ASSIGNMENTS OF ERROR
{¶18} Breech raises two Assignments of Error:
{¶19} “I. THE TRIAL COURT ERRED IN FINDING THAT THERE WAS A
MEETING OF THE MINDS BETWEEN THE PARTIES AS TO AN ESSENTIAL TERM OF
THE SETTLEMENT AGREEMENT – TO WIT, THE IDENTITIES OF THE NON-PARTIES
TO BE RELEASED – BECAUSE NEITHER THE CONFIDENTIAL MEDIATION
STATEMENT NOR THE PAROLE TESTIMONY OF DEFENSE COUNSEL
ESTABLISHED AN AGREEMENT AS TO THAT TERM, AND THE LATTER TESTIMONY
Stark County, Case No. 2017CA00012 8
TENDED TO NEGATE IT, RENDERING THE HOLDING OF THE TRIAL COURT
AGAINST THE MANIFEST WEIGHT OF THE EVIDENCE.
{¶20} “II. THE TRIAL COURT COMMITTED PLAIN ERROR IN ADMITTING THE
TESTIMONY OF COUNSEL FOR FIRST RESPONSE AS TO BOTH FACTS AND THE
STANDARDS AND PRACTICES OF INSURANCE DEFENSE COUNSEL IN
NEGOTIATING SETTLEMENT AGREEMENTS BECAUSE: A. THE TRIAL COURT
FAILED TO CONDUCT THE INQUIRY REQUIRED BEFORE PERMITTING AN
ATTORNEY TO TESTIFY FOR OR ON BEHALF OF HIS CLIENT MANDATED BY THE
OHIO SUPREME COURT IN MENTOR LAGOONS, INC. V. RUBIN, 31 OHIO ST.3D 256
(1987) AND; B. MR. FARNAN WAS NOT A NECESSARY WITNESS IN THE MEANING
OF OHIO PROF. COND. R. 3.7.”
ANALYSIS
Jurisdiction
{¶21} Breech’s first Assignment of Error challenges the trial court’s decision to
find the parties entered into a settlement at mediation when the parties did not come to
an agreement as to the release of Crum & Forster from liability. Her second Assignment
of Error contends the trial court committed plain error when it allowed counsel for First
Response testify at the hearing on its motion to enforce the settlement agreement.
{¶22} Before we consider Breech’s Assignments of Error, we must first address
whether we have jurisdiction to consider these Assignments of Error. Breech’s arguments
both relate to the trial court’s judgment entry issued on November 18, 2016. First
Response argues that Breech’s Assignments of Error are not properly before this court
because Breech’s Notice of appeal does not indicate that she seeks to appeal from the
Stark County, Case No. 2017CA00012 9
trial court’s November 18, 2016 interlocutory order granting the motion to enforce the
settlement agreement.
{¶23} App.R. 3(A) states, “An appeal as of right shall be taken by filing a notice of
appeal with the clerk of the trial court within the time allowed by [App.R.] 4.” App.R. 3(D)
provides in pertinent part that the “notice of appeal shall specify the party or parties taking
the appeal; shall designate the judgment, order or part thereof appealed from; and shall
name the court to which the appeal is taken.” Ohio appellate courts have jurisdiction to
review only final appealable orders of lower courts within their districts. Pla v. Cleveland
State University, 10th Dist. Franklin No. 17AP-212, 2017-Ohio-8149, ¶ 10 citing Section
3(B)(2), Article IV, Ohio Constitution; R.C. 2501.02.
{¶24} In support of its argument that the November 18, 2016 judgment entry is
not properly before this court because Breech’s notice of appeal does not refer to the
judgment entry, First Response cites to previous decisions by this court where we
determined an appeal was not properly before the court pursuant to App.R. 3(D). For
example, in Smith v. Conley, 5th Dist. Stark No. 2004CA00068, 2004-Ohio-7057, rev’d
on other grounds, we held that where the notice of appeal referenced only the judgment
entry granting summary judgment in favor of appellee, under App.R. 3(D) the appellant
could not also argue the trial court erred when it granted appellee’s leave to plead and
denied appellant’s motion for default judgment. Id. at ¶ 15. In State v. Perez, 5th Dist.
Licking No. 03-CA-107, 2004-Ohio-3646, the defendant-appellant entered a plea of guilty
and was sentenced on April 4, 2003. The appellant filed a post-sentence motion to
withdraw his guilty plea and a petition for post-conviction relief. On November 25, 2003,
the trial court denied the motion to withdraw the plea and petition for post-conviction relief.
Stark County, Case No. 2017CA00012 10
On December 5, 2003, the appellant filed a notice of appeal of his conviction and
sentence. In his assignments of error, the appellant argued the trial court erred in denying
his post-sentence motion to withdraw his guilty plea and ineffective assistance of trial
counsel. Because the appellant did not file a notice of appeal of the November 25, 2003
judgment entry denying his motion to withdraw his guilty plea, we applied App.R. 3(D)
and found we were without jurisdiction to review the November 25, 2003 judgment entry.
Id. at ¶ 21-24.
{¶25} A review of Ohio case law, however, shows a different approach to the
appeal of interlocutory orders and the application of App.R. 3(D). It begins with Grover v.
Bartsch, 170 Ohio App.3d 188, 2006-Ohio-6115, 866 N.E.2d 547 (2nd Dist.). In Grover,
the appellee filed a motion to dismiss the appellant’s complaint for lack of personal
jurisdiction and as being outside the statute of limitations. The appellee simultaneously
filed a motion for protective order, which the trial court granted. The trial court later granted
the motion to dismiss and the appellant appealed. In their notice of appeal, the appellant
referenced only the judgment of dismissal. Id. at ¶ 9. In the appellant’s first assignment
of error, however, the appellant stated the trial court erred in granting the protective order.
The appellee argued the appellant failed to raise the protective order in the notice of
appeal and was therefore barred from raising the matter on appeal. Id. The Second
District Court of Appeals found the appellee’s argument lacked merit. It held,
“Interlocutory orders, such as most discovery orders, are merged into the final judgment.
Thus, an appeal from the final judgment includes all interlocutory orders merged with it,
such as the trial court’s protective order.” Id.
Stark County, Case No. 2017CA00012 11
{¶26} The Tenth District Court of Appeals next examined the application of App.R.
3(D) to an interlocutory order in Beatley v. Knisley, 183 Ohio App.3d 356, 2009-Ohio-
2229, 971 N.E.2d 280 (10th Dist.), appeal not accepted. The appellants in Beatley
referred only to a July 18, 2008 judgment entry awarding damages in favor of the
appellees in their notice of appeal. In their first assignment of error, however, the
appellants challenged the March 19, 2008 entry granting summary judgment in favor of
appellees. The appellees argued the court should limit the appeal to the July 18, 2008
judgment because the appellants did not designate the March 19, 2008 judgment entry
as an order being appealed. The Tenth District declined to limit the appellant’s appeal. Id.
at ¶ 8. The court stated:
Pursuant to App.R. 3(D), a notice of appeal “shall designate the
judgment, order or part thereof appealed from.” However, this rule does not
require an appellant to separately identify each interlocutory order issued
prior to a final judgment. Shaffer v. OhioHealth Corp., 10th Dist. No. 04AP-
236, 2004-Ohio-6523, 2004 WL 2806417, ¶ 12; Kvinta v. Kvinta, 10th Dist.
No. 02AP-836, 2003-Ohio-2884, 2003 WL 21291049, ¶ 20. Interlocutory
orders merge into the final judgment, and thus an appeal from a final
judgment allows an appellant to challenge both the final judgment and any
interlocutory orders merged with it. Grover v. Bartsch, 170 Ohio App.3d
188, 2006-Ohio-6115, 866 N.E.2d 547, ¶ 9; Lingo v. Ohio Cent. RR.,
Inc., 10th Dist. No. 05AP-206, 2006-Ohio-2268, 2006 WL 1230679, ¶
17; Mtge. Electronic Registrations Sys. v. Mullins, 161 Ohio App.3d 12,
2005-Ohio-2303, 829 N.E.2d 326, ¶ 21.
Stark County, Case No. 2017CA00012 12
Here, the March 19, 2008 judgment entry granting Beatley summary
judgment was an interlocutory order because it failed to completely dispose
of Beatley's claim. See Parrett v. Univ. of Cincinnati Police Dept., 10th Dist.
No. 02AP-220, 2002-Ohio-5076, 2002 WL 31122980, ¶ 9 (“ ‘entry of
judgment by the trial court in favor of the plaintiff on the issue of liability
which leaves the amount of damages to be awarded unresolved until some
future time, does not constitute a final judgment which may then be treated
as an appealable order’ ”). As an interlocutory order, the March 19, 2008
judgment entry merged with the July 18, 2008 final judgment. Therefore,
defendants did not need to name the March 19, 2008 judgment entry in their
notice of appeal.
Id. at ¶ 9-10.
{¶27} The Fourth District Court of Appeals cited favorably to Beatley in Redmond
v. Big Sandy Furniture, Inc., 4th Dist. Lawrence No. 09CA13, 2009-Ohio-6824, ¶ 38. The
Ninth District Court of Appeals also relied upon Grover and Beatley in Aber v. Vilamoura,
Inc., 184 Ohio App.3d 658, 2009-Ohio-3364, 922 N.E.2d 236, ¶ 7 (9th Dist.) to find that
when a party appeals from a final judgment and challenges not only the final judgment,
but also interlocutory orders that were made during the trial court proceedings, it is
permissible under App.R. 3(D). The Eighth District Court of Appeals relied upon Aber to
hold that an appellant which did not identify in its notice of appeal the interlocutory
judgments denying a motion to exclude testimony and a motion for directed verdict could
still challenge those judgments because they merged into the final judgment. O’Connor
v. Fairview Hosp., 8th Dist. Cuyahoga No. 98721, 2013-Ohio-1794, ¶ 19.
Stark County, Case No. 2017CA00012 13
{¶28} In 2015, the Third District Court of Appeals relied upon Beatley to reject the
appellee’s argument to limit the appellant’s appeal based on App.R. 3(D). See Snapp v.
Castlebrook Builders, Inc., 2014-Ohio-163, 7 N.E.3d 574 (3rd Dist.). In Snapp, the court
allowed an appeal of an interlocutory order even though the appellant did not separately
designate and attach the interlocutory judgment entry to the notice of appeal of the final
judgment. In 2015, the Ohio Supreme Court referenced Grover for the proposition that
interlocutory orders are merged into the final result so that an appeal from the final
judgment includes all interlocutory orders merged with it. Navistar, Inc. v. Testa, 143 Ohio
St.3d 460, 2015-Ohio-3283, 39 N.E.3d 509, ¶ 38. The Tenth District again relied on
Beatley in 533 Short North LLC v. Zwerin, 10th Dist. Franklin No. 14AP-1016, 2015-Ohio-
4040, ¶ 52-53.
{¶29} Most recently, the Tenth District considered App.R. 3(D) in Pla v. Cleveland
State University, 10th Dist. Franklin No. 17AP-212, 2017-Ohio-8149. The court reaffirmed
its previous holdings that App.R. 3(D) does not require the appellant to separately identify
each interlocutory order issued prior to a final judgment. Id. at ¶ 12. It held when an
appellant appeals a final judgment, the appellant may challenge the final judgment and
all interlocutory orders merged with it. Id.
{¶30} Based on the case law from the Ohio Supreme Court and six of the twelve
appellate districts, we find it appropriate to hold that App.R. 3(D) does not require an
appellant to separately identify each interlocutory order issued prior to the final judgment
in its notice of appeal. An interlocutory order merges into the final judgment; thus, an
appeal from the final judgment allows an appellant to challenge both the final judgment
and the interlocutory orders merged with it. Further, this court’s holding in State v. Perez,
Stark County, Case No. 2017CA00012 14
5th Dist. Licking No. 03-CA-107, 2004-Ohio-3646, as to App.R. 3(D) can be distinguished
from the case law analyzing the application of App.R. 3(D) to interlocutory orders. In
Perez, the appellant appealed the denial of a post-sentence written motion to withdraw a
guilty plea, which is a final appealable judgment entry separate from a sentencing
judgment entry. State v. Gray, 5th Dist. Knox No. 17 AP 000004, 2017-Ohio-7969, ¶ 13.
{¶31} In the present case, there is no dispute between the parties that the
November 18, 2016 judgment entry granting the motion to enforce the settlement
agreement was an interlocutory order. There is also no dispute the December 22, 2016
judgment entry dismissing with prejudice First Response as a defendant was a final
appealable order. The interlocutory order therefore merged into the final judgment.
Further, when reviewing the December 22, 2016 judgment entry, the trial court stated it
granted the motion to dismiss based solely on its ruling in the November 18, 2016
judgment entry granting First Response’s motion to enforce the settlement agreement.
First Response was notified of the appeal and the scope of the appeal within the notice
of appeal and December 22, 2016 judgment entry.
{¶32} Based on the above case law and a review of the judgment entries, we find
First Response’s argument as to jurisdiction to be without merit. We have jurisdiction to
consider Breech’s appeal.
I. Meeting of the Minds
{¶33} Breech argues in her first Assignment of Error that the trial court erred when
it found First Response established the existence of a settlement agreement and the
release of Crum & Forster as a term of the agreement. We agree.
Stark County, Case No. 2017CA00012 15
{¶34} A settlement agreement is a particularized form of a contract. Hinds v.
Muskingum Cty., 5th Dist. Muskingum No. CT2016-0063, 2017-Ohio-8212, ¶ 17 citing
Noroski v. Fallet, 2 Ohio St.3d 77, 79, 442 N.E.2d 1302 (1982). It is a “contract designed
to terminate a claim by preventing or ending litigation, and * * * such agreements are valid
and enforceable by either party.” Continental W. Condominium Unit Owners Assn. v.
Howard E. Ferguson, Inc., 74 Ohio St.3d 501, 502, 1996–Ohio–158, 660 N.E.2d 431. If
a contract encompasses the essential terms of the agreement, it is binding and
enforceable. Mr. Mark Corp. v. Rush, Inc., 11 Ohio App.3d 167, 169, 464 N.E.2d 586 (8th
Dist.1983). “If less essential terms are omitted from an agreement, they may be resolved
by ‘later agreement or judicial resolution.’” Id. “’If the court can determine that the parties
intended to be bound, it may fashion those less essential terms that were omitted in order
to reach a fair and just result.’ Imbrogno v. MIMRx.COM, Inc., 10th Dist. No. 03AP-345,
2003-Ohio-6108 [2003 WL 22707792].” (Additional citations omitted.) Reed Elsevier, Inc.
v. Carter, 2nd Dist. Montgomery No. 27483, 2017-Ohio-7513, 2017 WL 3971649, ¶ 15
quoting Ruffian, L.L.C. v. Hayes, 10th Dist. Franklin No. 09AP-948, 2011-Ohio-831, ¶ 17.
{¶35} The Ohio Supreme Court has stated the issue of “whether the parties
intended to be bound * * * is a question of fact properly resolved by the trier of
fact.” Oglebay Norton Co. v. Armco, Inc., 52 Ohio St.3d 232, 235, 556 N.E.2d 515 (1990).
The parties must have a “distinct and common intention that is communicated by each
party to the other.” Champion Gym & Fitness, Inc. v. Crotty, 178 Ohio App.3d 739, 744,
2008–Ohio–5642, 900 N.E.2d 231, ¶ 12.
{¶36} A trial court has the authority to conduct a hearing to determine whether or
not a verbal settlement agreement has been reached. Klever v. Stow, 13 Ohio App.3d 1,
Stark County, Case No. 2017CA00012 16
468 N.E.2d 81 (9th Dist.1983). “When the parties agree to a settlement offer,
this agreement cannot be repudiated by either party, and the court has the authority to
sign a journal entry reflecting the agreement and to enforce the settlement.” Id. at 4.
However, where the meaning of the terms of a settlement agreement is in dispute, or
where there is a dispute contesting the existence of a settlement agreement, a trial court
must conduct an evidentiary hearing prior to entering judgment. Rulli v. Fan Co., 79 Ohio
St.3d 374, 377, 1997–Ohio–380, 683 N.E.2d 337.
{¶37} In the November 18, 2016 judgment entry granting the motion to enforce
the settlement, the trial court stated the sole disputed term of the settlement agreement
was whether the language of the release should release Crum & Forster.
{¶38} The August 25, 2016 report of meditation did not contain any terms of the
alleged settlement agreement between Breech and First Response. Farnan, counsel for
First Response, presented testimony at the evidentiary hearing from himself and counsel
for Liberty Mutual that it was common practice in a settlement agreement for the insurer
to be released when the insurer pays a settlement on behalf of the insured. Farnan
testified the insurance adjuster for Crum & Forster participated in the mediation by
telephone. The terms of the release of First Response or Crum & Forster, however, were
not discussed at the mediation.
{¶39} It was after mediation that the dispute arose as to the release of Crum &
Forster. Farnan recalled the negotiations between counsel for Breech and himself as to
the release of Crum & Forster:
Stark County, Case No. 2017CA00012 17
So we spent hours, Mr. Seebohm and I, going back and forth
negotiating; and I tried to tailor it as narrowly as possible to accommodate
the concerns that he expressed as relayed by Mr. Lusher, her POA.
So for that reason we offered to limit it to this claim, this insured, on
this claim only.
***
For that reason I am here because I couldn’t get that agreement.
(T. 23-25).
{¶40} In its judgment entry enforcing the settlement agreement, the trial court
found First Response submitted evidence that the release of its insurer, Crum & Forster,
was one of the terms of the settlement agreement and therefore enforceable. We do not
disagree with trial court’s statement that a release is a term of an agreement. Case law,
however, requires a narrower characterization of a term of an agreement and the trial
court’s authority to enforce it. If a contract encompasses the essential terms of the
agreement, it is binding and enforceable. If less essential terms are omitted from an
agreement, they may be resolved by later agreement or judicial resolution. If the court
can determine that the parties intended to be bound, it may fashion those less essential
terms that were omitted in order to reach a fair and just result.
{¶41} “A release, or compromise agreement, is a particular kind of contract, and,
like other contracts, requires a definite offer and an acceptance thereof. 15 Ohio
Jurisprudence 3d 517, Compromise, Accord, and Release, Section 4. A release must be
the result of a meeting of the parties' minds in order to be binding. See 30 Ohio
Jurisprudence 2d 801, Insurance, Section 875.” Noroski v. Fallet, 2 Ohio St.3d 77, 79,
Stark County, Case No. 2017CA00012 18
442 N.E.2d 1302, 1304 (1982). In this case, the limited evidence demonstrates the
essential terms of this settlement agreement were the payment of money to end litigation
and release of First Response and Crum & Forster from further litigation. The evidence
shows there was no meeting of the minds as to the release of Crum & Forster from further
litigation. First Response admitted it could not reach an agreement with Breech as to this
term of the settlement agreement. While there was testimony that the release of the
insurer is common practice, that it is common practice does not make the release of the
insurer a less essential term of this agreement. Because the release was an essential
term of the settlement agreement to which the parties could not agree, we find the trial
court erred when it fashioned the release of Crum & Forster in the November 18, 2016
judgment entry granting the motion to enforce the settlement agreement.
{¶42} Breech’s first Assignment of Error is sustained.
II. Attorney Testimony
{¶43} Breech argues in her second Assignment of Error that the trial court erred
in allowing the testimony of counsel for First Response at the evidentiary hearing.
{¶44} Based on our decision in the first Assignment of Error, we find this argument
to be moot.
Stark County, Case No. 2017CA00012 19
CONCLUSION
{¶45} The December 22, 2016 and November 18, 2016 judgments of the Stark
County Court of Common Pleas are reversed and remanded to the trial court for further
proceedings consistent with this opinion and law.
By: Delaney, P.J., and
Wise, Earle, J. concur,
Hoffman, J., concurs in part and dissents in part.
Stark County, Case No. 2017CA00012 20
Hoffman, J., concurring in part and dissenting in part
{¶46} I concur in the majority’s analysis and decision regarding this Court’s
jurisdiction to review Appellant’s assignments of error. However, I respectfully dissent
from the majority’s decision to sustain Appellant’s first assignment of error and to reverse
the trial court’s decision.
{¶47} Given the unrefuted testimony of Attorney Farnan concerning the accepted,
common practice of releasing the entity paying money on behalf of its insurer, in addition
to the party being released, I would find the failure of the agreement to specifically discuss
the release of Crum & Forster is a “less essential term” of the settlement agreement. The
trial court properly determined the parties intended to be bound by the agreement and the
trial court was free to fashion the release terms to restrict the scope of the release of
Crum & Forster in accordance with the acknowledgment set forth by Attorney Farnan at
the hearing.1
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HON. WILLIAM B. HOFFMAN
1
I would also overrule Appellant’s second assignment of error.