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Birmingham Associates LLC v. Strauss

Court of Appeals of Ohio, Eleventh District

September 30, 2013

BIRMINGHAM ASSOCIATES, LLC, et al., Plaintiffs-Appellees,
v.
MARC I. STRAUSS, et al., Defendants-Appellants.

Civil Appeal from the Geauga County Court of Common Pleas, Case No. 11M0498. Judgment: Affirmed in part and dismissed in part.

Daniel F. Lindner, Lindner, Sidoti, Jordan, For Plaintiffs-Appellees.

Marc I. Strauss, 2433 Michelle Court, Willoughby Hills, For Defendants-Appellants

OPINION

TIMOTHY P. CANNON, P.J.

(¶1} Defendants-appellants, Marc I. Strauss and Marc I. Strauss Children's Trust II, appeal the partial summary judgment of the Geauga County Court of Common Pleas in favor of plaintiffs-appellees, Birmingham Associates LLC, and MRM Land Company LLC, which determined liability but deferred the issue of damages for trial. Appellants additionally contend the trial court erred in dismissing their counterclaims without an "adequate" analysis. For the reasons that follow, the judgment of the trial court is affirmed in part, and the balance of the issues on appeal are dismissed for the reasons set forth herein.

(¶2}The birth of the underlying case was the decision of Mr. Strauss to purchase a golf course. Most of the relevant facts are undisputed. Mr. Strauss was the successful bidder at the auction of the Tanglewood National Golf Course. He had arranged financing through his discussions with Mark Tiefel and Warren Wolfson. They agreed to provide secured financing for the purchase through their company, Birmingham Associates LLC, in exchange for an ownership stake in the golf course. The trio formed MRM Land Company LLC ("MRM") for the purpose of owning and operating the golf course. Marc I. Strauss Children's Trust II (the "Trust") also joined MRM as a member. Birmingham Associates loaned MRM the principle sum of $833, 000 pursuant to the terms set forth in a promissory note drafted by Mr. Strauss, a licensed attorney in the state of Ohio. The loan was secured by, inter alia, Mr. Strauss' personal and trust membership units in MRM and a receiver deed.

(¶3} In November 2009, Mr. Strauss and the Trust defaulted on the loan, failing to make the requisite payments. Birmingham Associates made Mr. Strauss and the Trust another loan, which modified the terms of the pre-existing loan, providing notably increased interest rates. Mr. Strauss, the Trust, and MRM did not repay the principle balances or interest balances on either of the loans. Notices of default were sent, and Mr. Strauss acknowledged the default. Mr. Tiefel and Mr. Wolfson foreclosed on Mr. Strauss' ownership and management shares in MRM. Following the default, Birmingham Associates offered MRM-now owned solely by Mr. Tiefel and Mr. Wolfson-the deed to the parcel in lieu of foreclosure in return for debt forgiveness on Birmingham Associates' loan to MRM.

(¶4} On May 5, 2011, Birmingham Associates and MRM filed a three-count complaint against Mr. Strauss and the Trust seeking damages for breach of contract and MRM's right to contribution. Mr. Strauss and the Trust filed a counter-suit which declared accommodation status with regard to the obligation on the underlying note and alleged, inter alia, impairment of collateral and breach of fiduciary duty claims against Birmingham Associates, MRM, and Mr. Tiefel and Mr. Wolfson, individually.

(¶5} On June 15, 2012, Birmingham Associates and MRM filed a motion for partial summary judgment in their favor on all counts of their complaint, as well as on all counterclaims raised by Mr. Strauss and the Trust. The motion requested "partial" summary judgment in that the issue of damages would remain and would be set for trial.

(¶6} Mr. Strauss and the Trust filed a motion for summary judgment in favor of defendants on two counts of plaintiffs' complaint arguing, principally, that Mr. Strauss was merely an accommodation maker on the note.

(¶7} The trial court granted Birmingham Associates and MRM's partial motion for summary judgment while overruling Mr. Strauss and the Trust's motion. The trial court reasoned that, though neither the note nor the agreement concerning the loan contained words of accommodation, the parties' intent to hold Mr. Strauss personally liable was evidenced by the loan documents and correspondence. Specifically, the trial court found Birmingham Associates and MRM met their initial summary judgment burden by showing that Mr. Strauss was a maker whose breaches of contractual agreements caused damages. The trial court then found Mr. Strauss and the Trust to have partially met their rebuttal burden, showing a genuine issue of fact as to the measure of damages. The court entered judgment in favor of Birmingham Associates and MRM, and against Mr. Strauss and the Trust on the counterclaim.

(¶8} The trial court noted the matter would proceed to trial solely on the issue of damages and, in a nunc pro tunc entry solicited by Mr. Strauss, certified no just reason for delay.

(¶9} Mr. Strauss and the Trust now timely appeal and assert two assignments of error. Their first assignment of error states:

[1.] The trial court committed prejudicial error in granting plaintiff-appellees['] motion for summary judgment based upon its decision that since the Note and Agreement failed to contain words of accommodation defendant-appellants were found to be are [sic] ...

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