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Summit County real estate dispute order reversed
TRACEY BLAIR
Legal News Reporter
Published: December 4, 2019
The 9th District Court of Appeals has reversed and remanded a Summit County trial court’s order in a dispute among six siblings regarding a family real estate and property management business.
Appellant-Defendant, SUMSS Property Management, LLC appealed a Summit County trial court’s April 18, 2018 order reiterating its prior denial of SUMSS’s motion to return the matter to the active docket and finding that the parties entered into a valid and enforceable settlement agreement on Dec. 6, 2017.
SUMSS was formed by the siblings’ father, Anthony Santomauro, in 2004. Following their father’s passing in 2014, each of the following siblings was a member with a one-sixth interests in the business: Marsha Santomauro, Lisa Madden, Brenda Elaine Loss, Andrea Renee Cowan, Craig Santomauro, and Christopher Santomauro.
Appellees-Plaintiffs, Marsha and Lisa, filed the suit in 2014, as members of SUMSS seeking judicial dissolution of the company. Marsha and Lisa alleged, inter alia, that Christopher, as manager of SUMSS, had mismanaged the company and breached his fiduciary duties, and alleged that such conduct made it impracticable to carry on the business of SUMSS.
In 2016, SUMSS filed a counterclaim against Lisa. In the counterclaim, SUMSS alleged that Lisa formed a limited liability company under the name Urban Imperial Building and Rental, LLC. SUMSS alleged that Lisa, as chief operating officer and general manager of Urban Imperial, engaged in direct and unfair competition with SUMSS, breached fiduciary duties to SUMSS, and unlawfully used SUMSS’s trade name “Urban Rental” in operating Urban Imperial to confuse the public and usurp SUMSS’s good will.
Rather than proceed to trial, the parties reached an agreement to resolve the case in December 2017. The settlement entry specified that titles to the 17 real estate properties in question shall be transferred by [SUMSS] by quit claim deed, “as-is” to Marsha and Lisa.
SUMSS later filed a motion to return the matter to the active docket and set aside the settlement agreement. In the motion, SUMSS disputed the existence of an enforceable settlement agreement, contending that there was no meeting of the minds as to all relevant terms and asserting defenses to the enforceability of the agreement.
After an evidentiary hearing in which SUMSS argued that managing member Christopher was too ill from bronchitis to understand the settlement, the trial court concluded the parties had entered into an enforceable settlement agreement.
Ninth District judges agreed with the trial court that SUMSS did not present sufficient evidence to demonstrate that Christopher lacked the mental capacity to authorize SUMSS’s attorneys to settle the matter.
However, the appellate panel agreed with SUMSS’ argument that the trial court erred when it altered terms and adopted a disputed term in its entry reflecting the settlement agreement.
“Our review of the record reveals that several terms stated on the record are not reflected in the
trial court’s April 18, 2018 order memorializing the terms of the agreement,” 9th District Judge Julie Schafer wrote for the court.
SUMSS argued that if the trial court deemed certain terms of the agreement immaterial and excluded them as “unenforceable provisions,” there may not be a meeting of the minds or a mutual benefit to both sides.
The trial court’s response was: “But here is what [SUMSS] get[s]. If the settlement would go through, 17 lots go to the plaintiffs and they get out of [SUMSS]. [SUMSS] never has to run the risk of being dissolved.”
In its March 28, 2019 journal entry holding that the parties entered an enforceable settlement agreement on Dec. 6, 2017, the trial court stated: “The [c]ourt would note that the main purpose of the settlement was to settle the litigation in front of it which concerned the petition by the plaintiffs to dissolve [SUMSS] pursuant to provisions of R.C. Chapter 1705. Other matters discussed on Dec. 6, 2017 were, while perhaps subjectively important to the parties, were not essential to that settlement from a legal analysis.”
Schaefer noted, “This is important because [SUMSS] argues that there were persons who would be affected by the settlement that were not parties to this litigation. Likewise, [SUMSS] also argues that there were certain issues discussed at the Dec. 6, 2017 hearing that were under the exclusive jurisdiction of the Summit County Probate Court. Both of those may be true but, in this [c]ourt’s view, they were not essential to the settlement agreement. Therefore, this [c]ourt can adopt the settlement agreement as to the transfer of the properties whose addresses were read into the record, the transfer of any security deposits to the plaintiffs and the transfer of the plaintiffs’ membership units back to SUMSS.
“Thus, the trial court determined—despite the parties’ negotiations and agreement on the record to include specific terms of the settlement—that certain terms were not “material” or “essential” in that they were related only to settlement, but not directly related to the issues underlying the case. Aside from the trial judge indicating his own interpretation and understanding of the core or essence of the agreement, the precise basis for the trial court’s conclusion is unclear. Although the trial court hints at a legal analysis regarding the essential terms of the settlement, there is no legal basis for including or disregarding terms placed on the record as terms of the parties’ settlement solely because the court did not consider them to be ‘essential’ terms of the settlement agreement.”
Appellate judges Donna J. Carr and Jennifer Hensal concurred. The case is cited Santomauro v. SUMSS Property Mgt., L.L.C., 2019-Ohio-4335.