IN THE SUPREME COURT OF OHIO

MILLERSPORT HARDWARE, LTD.,

APPELLEE CASE NO.

V. On Appeal from the Fairfield County Court of Appeals, THE WEAVER HARDWARE: Fifth Appellate District CO., ET AL., Court of Appeals Case No. 08 CA 86 APPELLANT.

MEMORANDUM OF THE DEFENDANT-APPELLANT, WEAVER HARDWARE IN SUPPORT OF JURISDICTION

Eric Wittenberg (0038709) Daniel J. Fruth (0075309) Richard T. Ricketts (0038538) STEBELTON, ARANDA & SNIDER RICKETTS CO., L.P.A. P.O. Box 130 50 Hill Road, South Lancaster, OH 43130 Pickerington, OH 43147 Telephone: 740/ 654-4141 Telephone: 614/834-8247 Fax: 740/ 654-2521 Fax: 614/834-8238 Attorney for Defendant/Appellant Attorneys for Plaintiff/Appellee The Weaver Hardware Co. Millersport Hardware, Ltd. TABLE OF CONTENTS

Pa e s

EXPLANATION OF WHY THIS CASE PRESENTS A MATTER OF PUBLIC OR GREAT GENERAL INTEREST ...... 1

STATEMENT OF THE CASE AND FACTS...... 4

ARGUMENT IN SUPPORT OF PROPOSITIONS OF ::...... 9

Proposition of Law No. 1: Parol of oral representations made during the negotiation of a fully integrated written cannot be admitted into evidence to void the agreement by being used to support a fraud in the inducement claim where the alleged oral representation contradicts the terms of the written agreement ...... 9

CONCLUSION ...... 12

PROOF OF SERVICE ...... 13

11 APPENDIX AppX• Page

Opinion of the Fairfield County Court of Appeals, Fifth Appellate District; Appeal Case No. 08 CA 86 Filed on December 9, 2009 ...... A-1

Judgment Entry of the Fairfield County Court of Appeals, Fifth Appellate District; Appeal Case No. 08 CA 86 Filed on December 9, 2009 ...... A-15

III EXPLANATION OF WHY THIS CASE IS OF PUBLIC OR GREAT GENERAL INTEREST

This Court has long recognized the vital importance written agreements hold within our system of justice, and has for well over a century attempted to stress this policy to lower courts when reviewing challenges to such agreements. Perhaps one of the earliest and clearest statements of these principles is found in the aged case of

Potter v. Potter, 27 Ohio St. 84 (Ohio 1875), wherein this Court stated:

When the reformation of a written instrument is sought on the ground of , the presumption is so strongly in favor of the instrument, that the alleged mistake must be clearly made out by proofs entirely satisfactory, and nothing short of a clear and convincing state of fact, showing the mistake, will warrant the court to interfere with and reform the instrument. This principle rests upon the soundest reason and upon undisputed authority, and if not adhered to by the courts, or, when plainly disregarded, is not enforced by reviewing courts, the security and safety reposed in deliberately written instruments will be frittered away, and they will be left to all the uncertainty incident to the imperfect and 'slippery memory' of witnesses.

One hundred twenty-nine (129) years later, this Court found itself still being required to order lower courts to honor the integrity of written agreements over the "slippery memory" of witnesses. In Layne v. Progressive Preferred tns. Co., 104 Ohio St.3d 509

(2004), for instance, this Court held:

When two parties have made a contract and have expressed it in a writing to which they have both assented as the complete and accurate integration of that contract, evidence, whether parol or otherwise, of antecedent understandings and negotiations will not be admitted for the purpose of varying or contradicting the writing.

Layne, 104 Ohio St.3d at 511, citing Ed Schory & Sons v. Society Nati. Bank, 75 Ohio

St.3d 433, 440 ( 1996). Despite these clear statements of law, lower courts still, as in the case at bar, examine parol evidence of antecedent understandings and negotiations to vary or contradict the terms of fully integrated agreements. Eg,, Faivre v. DEX Corp.

1 Northeast, 182 Ohio App.3d 563 (Ohio App. 10 Dist.,2009). As a consequence, there exists no "safety or security" in a written agreement, and the integrity of written agreements has been "frittered away" and ceded to the self-serving and "slippery memory" of witnesses.

The present case presents a very good opportunity for this Court to make clear to lower courts that fully integrated written still must hold a high place in our legal system and business world. In the case at bar, for instance, the written contract at issue expressly disclaims the reliance by a buyer upon any representations of the seller regarding "the prospective profits or prospective volume of business which will materialize with respect to the Business subsequent to the Closing Date." Yet, the Fifth

District Court of Appeals has permitted the bare allegation by the buyer that the seller knew of a rumor that competition may be coming to the marketplace in the future, and failed to disclose it when asked, to circumvent the holding of Layne, supra. The Fifth

District Court of Appeals did so while acknowledging that the "prospective profit and prospective volume of business" disclaimer within the written agreement related to the oral representation allegedly made prior to contracting. In sum, the Layne holding, along with every written agreement in the State of Ohio, has been relegated to "paper tiger" status by the lower courts of Ohio.

This case presents the Court with the important opportunity to clarify the interplay between the in the context of a fully-integrated agreement and the fraud exception. Specifically, this Court can greatly advance the public interest by reaffirming the principle articulated in Galmish v. Cicchini, 90 Ohio St.3d 22, 29 (2000) that "a fraudulent inducement case is not made out simply by alleging that a statement

2 or agreement made prior to the contract is different from that which now appears in the written contract." Quoting Shanker, JUDICIAL MISUSES OF THE WORD FRAUD TO DEFEAT

THE PAROL EVIDENCE RULE AND THE (WITH SOME CHEERS AND JEERS

FOR THE OHIO SUPREME COURT), 23 AKRON L.REV. 1, 7 (1989). To the contrary,

"attempts to prove such contradictory assertions is exactly what the Parol Evidence

Rule was designed to prohibit." Id., 90 Ohio St.3d at 29.

It was said of the parol evidence rule over a century ago that °{f]ew things are

darker than this, or fuller of subtle difficulties." J. Thayer, A PRELIMINARY TREATISE ON

EVIDENCE AT 390 (1898), quoted in CALAMARI AND PERILLO ON CONTRACTS,

Fifth Ed., West (2003). Particularly in the context of the Gaimish rule, confusion

abounds. Compare Wall v. Planet Ford, Inc., 159 Ohio App.3d 840, (Ohio Ct. App. 2

Dist., 2005) (parol evidence excluded because contract contemplated other use for

funds) with Summa Health Sys. V. Viningre, 140 Ohio App.3d 780 (Ohio App. 9 Dist.,

2000) (ambiguity as to whether release was sufficiently broad opened door to admission

of parol evidence).

Finally, the case at bar permits this Court to clarify the extent to which an alleged

fraudulent statement must touch upon a subject matter expressly contained within the

four corners of an integrated agreement before it is barred by the rules of contract

integration and parol evidence. By so doing, this case can serve as a significant vehicle

to provide much needed guidance to the lower courts on a host of fundamental

contractual principles that have been routinely misapplied by them, to the detriment of

those who seek the security, predictability, and reliability of written agreements.

3 STATEMENT OF THE CASE AND FACTS

A. The Contractual Relationship

This case arises from an asset-sale that failed to close. Both Appellee,

Millersport Hardware, Ltd. (hereinafter, "Millersport") and Appellant, The Weaver

Hardware Co. (hereinafter, "Weaver Hardware") are Ohio corporations, licensed to conduct business in the State of Ohio. Brad Weaver (hereinafter, "Weaver") is the president of Weaver Hardware. Millersport entered into an Asset Purchase Agreement

("Agreement") with Weaver Hardware in late January, 2007 agreeing to purchase its assets for the total price of One Hundred Seventy Give Thousand Dollars ($175,000).

Millersport has conducted business in the northern Fairfield County area for well over a decade, and its ownership has remained constant. Weaver Hardware was a competing hardware store in the region, 7.4 miles away from Millersport.

Both Parties, while represented by counsel, executed the Agreement. The

Parties' Agreement contains the following relevant provisions:

7. REPRESENTATION AND WARRANTIES:

H. Except as provided in this Agreement, Buyer and Buyer's Guarantors have not been furnished or relied upon any written and/or verbal representation, guarantee or other statement made by Seller or by any representative of Seller's regarding the prospective profits or prospective volume of business which will materialize with respect to the Business subsequent to the Closing Date, and that all business, financial and other risks attributable to the ownership and operation of Business Assets and Business from and after the Closing Date shall be borne solely by Buyer. [Agreement., Pg. 6)

4 19. ENTIRE AGREEMENT; WAIVERS:

19.01 This Agreement supersedes all prior agreements and understandings between the Parties, written or oral, including the Letter of Intent, and may not be changed or terminated orally; no attempted change, termination or waiver of any of the provisions hereof shall be binding unless in writing and signed by the Party against whom the same is sought to be enforced. Furthermore, this Agreement represents the entire understanding of the Parties; neither Party is relying on contemporaneous statements or writings except as expressly contained herein. No waiver by either Party of any default, , or breach of warranty or covenant hereunder, whether intentional or not, extends to any prior or subsequent default, misrepresentation or breach of warranty or covenant hereunder or affects in any way any rights arising by virtue of any prior or subsequent such occurrence. [Trial Ex. 3, Agreement., Pg. 10]

Appellee never claimed its representatives did not understand, did not read, or did not see this language before executing the Agreement.

Solely by virtue of parol evidence, there exist several disputed facts surrounding

representations made during the negotiation of the Agreement. Appellees claim that

Millersport's owners, Jeff Mavis and Keith Sheets, asked Weaver if he was aware of any

other retail hardware businesses looking to come into the Baltimore, Ohio area.

According to Millersport, Weaver responded by saying, "I'm not aware of any." Mr.

Weaver vehemently denied the conversation transpiring in that manner, to wit: he was

not asked that question, and did not provide that answer. Rather, Weaver has stated

Keith Sheets asked him, "how much hardware-type merchandise do either one of the

two lumber yards in town carry?" Mr. Weaver responded by indicating that "Basil

Lumber carried some door hardware, bolts and caulking, and that it had been many

years since I have been to Baltimore Builders Supply, so I have no idea." Before Mr.

Weaver finished addressing Mr. Sheets' question, Jeff Mavis interjected and stated that

he had been to their store more recently than Mr. Weaver, and he noted that the store

5 carried very little hardware. Mr. Mavis further noted that what inventory Baltimore

Builders Supply did carry was dirty and appeared to have been in the store for a very long time. This dialogue, all of which is parol evidence, was the beginning and end of the questioning of Brad Weaver by Appellant about competition to his store.

B. Piaintiff-Appellee's Failure to Close and Corresponding Facts

In February 2007, after the Agreement had been executed but before closing,

Millersport learned that an Ace Hardware was in the process of opening a retail hardware store in Baltimore, Ohio. Mavis communicated this information to Weaver and informed him that Millersport did not intend to close the transaction. Millersport alleges that Weaver knew of the rumor that the Ace Hardware was coming to town, and failed to disclose it when asked about such rumors during negotiations. These alleged facts gave rise to the litigation below.

C. The Litigation Below

In May, 2007 Millersport filed its Complaint seeking a declaratory judgment of rights and obligations of the parties regarding the Agreement. The Complaint also sounded in negligent misrepresentation, fraudulent concealment, and fraudulent

inducement. Weaver answered and counter-claimed, alleging, among other things,

. In late 2007, dueling motions for summary judgment were filed. In

January 2008, the Court of Common Pleas, Fairfield County, rendered its decision

granting Weaver's and denying Millersport's motions for summary judgment.

Specifically, the trial court, properly applying Layne, supra, and Gaimish, supra,

found the series of alleged facts relating to the contract's negotiation to be barred by the

parol evidence rule and the rule of contract integration in light of the above-quoted

6 terms of the Agreement found at Sections 7(H) and 19.01. Further, the Court found that

Millersport had breached the Agreement by refusing to close the transaction.

Millersport filed a appeal in April 2008 that was dismissed as not being ripe.

Thereafter, the Trial Court held a trial on damages and found over $171,000 in damages, in addition to awarding Weaver Hardware interest and attorneys fees. The

parties stipulated to the amount of attorneys fees, reserving the question of their

propriety, and the Court issued its final, appealable order.

D. The Fifth District Opinion

The Fifth District Court, citing to Burr v. Stark County Board of Commissioners,

23 Ohio St.3d 69 (1986) for the elements of fraudulent inducement, determined that

summary judgment was inappropriate. The Court found that, "if the trier of fact believed

Millersport's allegation [that] the question about Ace Hardware's present intention was

asked and answered, it could conclude Brad Weaver's alleged response he did not

know of any business looking to come into the area is false." Millersport Hardware, Ltd.

v. The Weaver Hardware Co., Case No. 08-CA-86 (Ohio App. 5 Dist.), ¶ 27. The Court

went on to explain that reasonable minds could conclude that Weaver knew of the

coming competition, intentionally misrepresented the same, with the intent to deceive

and induce Millersport into the sale, and that Millersport reasonably relied on such

misrepresentation and was injured by it.

Explaining why it thought Millersport could circumvent the parol evidence rule,

the Court relied on this Court's decision in Rucker v. Everen Securities, Inc., 102 Ohio

St.3d 1247 (2004). In that case, this Court found that a claim of promissory

was not defeated by operation of the parol evidence rule because the promissory

7 estoppel claim was an equitable claim based on a showing of detrimental reliance. See

Rucker, 102 Ohio St.3d at 1248-49. It stood separate and apart, therefore, from the contract, and whether the contract was fully integrated or not was thus not dispositive.

The Court of Appeals below ultimately hinged its decision on the following, revealing language:

The trial court found parol evidence could not be introduced to contradict the integration clause. However, the language of the integration clause does not directly contradict the allegations made by Millersport except in the very broadest sense that all the negotiations centered on whether entering into the asset purchase agreement would be profitable. Brad Weaver did not make any representation, guarantee or other statement regarding the prospective profits or volume of business, and he was not required to volunteer any information. However, when directly asked, he withheld information which Mavis alleged would have been pertinent to Millersport's assessment of whether its proposed store would be profitable enough to justify the purchase of Weaver Hardware's assets.

Milfersporf Hardware, Ltd., supra, at ¶ 36. Based on the foregoing, the Court of

Appeals, as noted above, reversed the trial court, and has ordered to the trial court to

wade into the weeds of who said what, to whom, and when during the negotiation of this

fully integrated written agreement. This fact-intensive and expensive inquiry into oral

representations made prior to contracting, about matters which are already contained in

the final written instrument, is exactly what Layne, supra, Galimish, supra, the parol

evidence rule, and the rule of contract integration were designed to guard against.

8 ARGUMENT IN SUPPORT OF PROPOSITIONS OF LAW

Proposition of Law No. 1: Parol evidence of oral representations made during the negotiation of a fully integrated written contract cannot be admitted into evidence to void the agreement by being used to support a fraud in the inducement claim where the alleged oral representation contradicts the terms of the written agreement.

In Galmish v. Cicchini, supra, this Court articulated the following rule: "absent fraud, mistake or other invalidating cause, the parties' final written integration of their agreement may not be varied, contradicted or supplemented by evidence of prior or contemporaneous oral agreements, or prior written agreements." Galmish, supra at 27, quoting 11 Williston on contracts (4th Ed.1999) 569-570, Section 33:4. Importantly, the question "is not how the agreement is to be proved, because as a matter of law the writing is the agreement. Extrinsic evidence is excluded because it cannot serve to prove what the agreement was, this being determined as a matter of law to be the writing itself." Id,, quoting In re Gaines' (1940), 15 Cal.2d 255, 264-265, 100

P.2d 1055. Where there is a final, integrated archive of the understanding of the parties, "prior and contemporaneous negotiations, oral or written, are excluded; or, as it is sometimes said, the written memorial supersedes these prior or contemporaneous negotiations." ld.

This is not at all, as Appellees would suggest, to vitiate Galmish's principle that

"fraud cannot be merged," such that the parol evidence rule would be used "as a shield to prevent the proof of fraud," or that a scheming party could integrate his deceit into the memorialized agreement and enforce it by the same. See Galmish, supra 90 Ohio

St.3d at 28, quoting Annotation (1928), 56 A.L.R. 13, 34-36. To the contrary,

Appellant's position, where the Fifth District erred, is merely for Courts to enforce the

9 equally important function of the parol evidence rule: to quickly extinguish baseless fraud claims, the content of which have been legitimately bargained for and integrated into the writing.

To that end, it is often said that "the parol evidence rule may not be avoided by a fraudulent inducement claim which alleges that the inducement to sign the writing was a

promise, the terms of which are directly contradicted by the signed writing." Galmish, supra, 90 Ohio St.3d at 29, quoting Marion Production Credit Ass'n v. Cochran, 40 Ohio

St.3d 265, (1988), paragraph three of the syllabus; see also Drew v. Christopher Const.

Co., 140 Ohio St. 1(1942), paragraph two of the syllabus (admitted evidence may not

"contradict or vary the terms of the written contract of purchase"); Wall v. Planet Ford,

Inc., supra, 159 Ohio App.3d at 850; Stegawski v. Cleveland Anesthesia Group, Inc., 37

Ohio App.3d 78 (Ohio App. 8 Dist., 1987) (parol evidence presented may not "add to the

contract, not vary or contradict the existing terms."). Thus, "a fraudulent inducement

case is not made out simply by alleging that a statement or agreement made prior to the

contract is different from that which now appears in the written contract. Quite to the

contrary, attempts to prove such contradictory assertions is exactly what the Parol

Evidence Rule was designed to prohibit." Galmish, supra, 90 Ohio St.3d at 29, quoting

Shankers, JUDICIAL MISUSES OF THE WORD FRAUD TO DEFEAT THE PAROL EVIDENCE RULE

AND THE STATUTE OF FRAUDS (WITH SOME CHEERS AND JEERS FOR THE OHIO SUPREME

COURT) (1989), 23 AKRON L.REV. 1, 7. If, therefore, the possibility of competition coming

to the Baltimore area was such a material term, Millersport should have, and could

have, included it in the language of the contract. Alternatively, Millersport could have

10 refused to disclaim the receipt of, and reliance upon, any representations or warranties

regarding the future profitability of the Weaver store. It chose not to do so.

An example offered by the Second District Court of Appeals is illustrative. In

Wall, supra, the Court noted the following:

An example of a proper claim of fraudulent inducement that would not run afoul of the parole evidence rule would be a situation in which a pest controller signs a homeowner to a contract for extensive termite-control measures, following an inspection of the premises, upon a misrepresentation that the house is infected with termites when, in fact, there is no termite infestation. The alleged oral misrepresentation is not at variance with the terms of the contract. The parties are in complete agreement as to the terms of the contract to which they agreed-certain services are be performed in exchange for the payment of money. But the contract, the terms of which are not in dispute, was induced by the seller's fraudulent representation that the house was infested with termites, when it wasn't.

Wall, supra, 159 Ohio App.3d at 850-51. Unlike the example offered in Wall, the

alleged misrepresentation in the instant action distinctly contradicts the terms of the

contract, to wit: Millersport alleges Weaver fraudulently withheld information relating to

volume of business and profits, when the contract expressly states that Millersport is not

relying on any representations or warranties regarding volume of business or profits.

If the allegation were, to utilize the Wall logic, that Weaver had misrepresented

his ownership interest in the assets, such that he had nothing to sell or his interest was

heavily encumbered, or that he orally promised to use the proceeds from the sale to pay

off encumbrances and did not, Millersport would have stated a cognizable claim. As it

stands, Millersport did not want to pay the price for its failure to perform its own due

diligence. Rather, it preferred to ask Weaver what the future held, and then sue him

pursuant to a fraud in the inducement theory if Weaver's alleged prediction proved

inaccurate. The parol evidence showed that the rumor of an Ace Hardware store was

11 demonstrably available to any inquiries. All of this should have been irrelevant to the lower courts, however, because Weaver made no representations or warranties regarding profits or volume of business as expressly set forth in the written agreement.

Nevertheless, Millersport brought suit precisely because it theorized that a lower volume of business and lesser profits were in the future based upon competition.

According to the lower court, on the one hand, the reason Weaver's alleged misrepresentation did not contradict the writing within the four corners of the document was because "he was not required to volunteer any information" regarding volume of business or profits, but on the other hand, the reason the materiality prong of the fraudulent inducement claim is met is because the alleged misrepresentation touched directly on Millersport's future volume of business and profits. Put simply, this scenario is precisely what the contracting parties sought to avoid when they expressly disclaimed, in sections 7(H) and 19.01 of the Agreement, representations and warranties regarding volume of business and profits.

Unless this Court adopts the proposition of law set forth herein, reaffirms Layne, supra, and Galmish, supra, this confusion and misapplication of the law will jeopardize the certainty of contracts and, more importantly, the economic transactions underlying them throughout the State of Ohio.

CONCLUSION

Ohio citizens and businesses literally cannot afford to have the integrity of written agreements undermined. Already, in a transaction that was supposed to be for

$175,000, a far cry from a substantially-sized deal by business standards, the seller alone has been forced to pay approximately $75,000 in attorneys fees defending the

12 integrity of his written contract, only to be placed back at square one in this litigation by the Court of Appeals, based upon its desire to have the trial court examine parol evidence of alleged representations made prior to formation of the written agreement, contrary to the mandates of Layne, supra and Galmish, supra. This Court can guide the trial courts and courts of appeals in this state by reaffirming long-standing principles and resolving growing confusion and misapplication of the fraud exception to the parol evidence rule. For the reasons set forth above, Appellant respectfully requests that this

Honorable Court accept jurisdiction to hear its appeal.

Respectfully submitted, STEBELTON, ARANDA & SNIDER, LPA

By: Daniel J. Fruth, Esq. Ohio Supreme Court No. 0075309 Attorney for Defendant/Appellant

CERTIFICATE OF SERVICE

The undersigned does hereby certify that a true and accurate copy of the foregoing was served via regular U.S. mail, postage prepaid, on this ^g day of January, 2010 upon Attorneys for Plaintiff/Appellee, Richard T. Ricketts and Eric Wittenberg, Ricketts Co., L.P.A., 50 Hill Road South, Pickerington, OH 43147.

DANIEL J. FRUTH (0075309) Attorney for Defendant/Appellant

P:1Clients\10xxx110920.2\Pleadings\Supreme CourB2010 01 20 Supreme Court Jurisdictional Brief.doc

13 ^•^^^^+e^'•1^Q 1^ ORIGINAL C'?^r^K ^3 Rgs, -tt ^1--► 8$ COURT OF APPEALS FAIRFIELD COUNTY, OHIO r+:?1-:C-9 r,^; 7: 32 FIFTH APPELLATE DISTRICT

JUDGES: CI.FF:fi MILLERSPORT HARDWARE, LTD Hon. Sheila G. Farmer, P.J. A!:' ;: ± 7 i.:. Hon. W. Scott Gwin, J. Plaintiff-Appellant Hon. William B. Hoffman, J.

-vs- Case No. 08-CA-86 THE WEAVER }iARDWARE CO;; ET AL OPINION Defendant-Appellee

CHARACTER OF PROCEEDING: Civil appeal from the Fairfield County Court of Common Pleas, Case No. 07-CV-00543

JUDGMENT: Reversed and Remanded

DATE OF JUDGMENT ENTRY:

APPEARANCES:

For Plaintiff-Appellant For Defendant-Appellee

CHARLES H. LEASE DANIEL J.FRUTH RICHARD T. RICKETTS Stebelton, Aranda & Snider 50 Hill Road, South Box 130 Pickerington, OH 43147 Lancaster, OH 43130 Fairfield County, Case No. 08-CA-86 2

Gwin, J.

(11) Plaintiff-appellant Millersport Hardware, Ltd. appeals a summary judgment of the Court of Common Pleas of Fairtield County, Ohio, entered in favor of defendant- appellee the Weaver Hardware Company on its claim for breach of contract. Millersport also appeals the court's subsequent award of damages arising from the breach.

Millersport assigns three errors to the trial court:

(¶2) "I. THE TRIAL COURT ERRED WHEN GRANTING SUMMARY

JUDGMENT AS TO WEAVER HARDWARE, INC.'S DECLARATORY JUDGMENT

CLAIM WHEN GENUINE ISSUES OF MATERIAL FACT REMAINED.

{¶3} T. THE TRIAL COURT ERRED WHEN DENYING SUMMARY

JUDGMENT TO MILLERSPORT HARDWARE, LTD. WHEN NO GENUINE ISSUES OF

MATERIAL FACT REMAINED.

{14} "III. THE TRIAL COURT ERRED IN AWARDING DAMAGES TO

WEAVER HARDWARE, INC."

(¶5) In the trial court's judgment entry of January 23, 2008, it outlined the undisputed facts, in granting partial summary judgment on Millersport's motion for summary judgment on its claim for fraudulent inducement and(or mutual unilateral mistake (rescission) and/or declaratory judgment and on Weaver Hardware's motion for partial summary judgment. In late January 2007, Millersport, entered into an asset purchase agreement with Weaver Hardware Company, located in Baltimore, Ohio, and with defendant Brad Weaver, as President of Weaver Hardware. Brad Weaver is not a party to this appeal. Fairfield County, Case No. 08-CA-86 3

{¶6} After the agreement had been executed by the parties, Millersport refused to close on the transaction because it learned Ace Hardware would be opening a store in Baltimore, Ohio, creating competition for Millersport's planned store.

{¶7} The contract between the parties stated in pertinent part:

"REPRESENTATIONS AND WARRANTIES

{108} "H. Except as provided in this Agreement, Buyer and Buyer's Guarantors have not been furnished or relied upon any written andlor verbal representation, guarantee or other statement made by Seller or by any representation of Seller's regarding the prospective profits or prospective volume of business which will materialize with respect to the Business subsequent to the Closing Date, and that all business, financial and other risks attributable to the ownership and operation of

Business Assets and Business from and after the Closing Date shall be borne solely by the Buyer.

{¶9} *"'

"ENTIRE AGREEMENT; WAIVERS

{¶10} "19.01 Ttiis Agreement supersedes all prior agreements and understandings between the Parties, written or oral, including the Letter of Intent, and may not be changed or terminated orally; no attempted change, termination or waiver of any of the provisions hereof shall be binding unless in writing and signed by the Party against whom the same is sought to be enforced. Furthermore, this Agreement represents the entire understanding of the Parties; neither Party is relying on contemporaneous statements or writings except as expressly contained herein. No waiver by either Party of any default, misrepresentation, or breach of warranty or

A-3 Fairfield County, Case No, 08-CA-86 4 covenant hereunder, whether intentional or not, extends to any prior or subsequent default, misrepresentation or breach of warranty or covenar t hereunder or affects in any way any rights arising by virtue of any prior or subsequent occurrence."

{¶11} Millersport supported its claim of fraud in the inducement with an affidavit from Jeff Mavis, one of the principals of Millersport Hardware. Another Millersport representative involved in the negotiations, Keith Sheets, is not a party to this appeal.

Mavis' affidavit states in late December, 2006 or early January, 2007, during the negotiation of the asset purchase, Mavis asked Weaver whether any existing businesses in the area sold hardware items, and if Weaver was aware of any other retail hardware businesses and/or competition looking to come into the Baltimore, Ohio area in the near future. Mavis alleges Weaver stated he was not aware of any. Mavis states there were no other retail hardware stores in the Baltimore, Ohio area, and

Millersport would not have entered into an agreement to purchase the assets of Weaver

Hardware if it had known that any other retail hardware business and/or competition was looking to come into the area iri ttie near future.

(¶12) The record also contains a depositiori and an affidavit from Russell

Jenkins, a direct seller representative for Househasson Hardware Company for various hardware stores in the central Ohio area, including Weaver Hardware. In tiis affidavit

Jenkins states that in mid-November, 2006, he discussed with Brad Weaver a rumor that Baltimore Builders Supply was interested in starting a hardware store. Thereafter, he made a sales call to Baltimore Building Supply and the owner informed him they were considering building an Ace Hardware store of 12,000 square feet. 1=airfield County, Case No, 08-CA-86 5

{¶13} Jenkins discussed the matter with his regional sales manager and they agreed it would not happen because the Baltimore market could not support it. Jenkins relayed this information to Brad Weaver, including what the owner of Baltimore Building

Supply had told him, as well as Jenkins's belief and his manager's belief that the store would not be built.

{¶14} In his deposition, Jenkins elaborated on the subject, and indicated the owner of Baltimore Builders' Supply had done a full fledged demographic study of the area, and showed him a blue print of the projected 10,000 square foot store and an outline of where they were going to be laying stakes for construction. The deal had not been finalized, but the parties were in solid discussions, and the owner of Baltimore

Builders' Supply believed the deal would go through.

(115) Jenkins testified in his deposition that the rumors were apparently true,

and he had communicated this to Brad Weaver. Jenkins denied telling Brad Weaver it would not happen, stating he had been in the business too long to make such a

projection. {¶16} Mavis' affidavit alleged Brad Weaver was in a hurry to close on the deal

and insisted the sale of the assets be wholly maintained on a confidentiai basis. Mavis

alleged Weaver told both Mavis and Sheets that Weaver did not want either of them to

contact anyone, including Weaver Hardware's vendors, employees, or bank, prior to the

closing. {¶17) After the contract was signed, but before the closing, Mavis was told, and

then observed for himself, a large banner announcing that Ace Hardware, a large

franchised retail hardware business, was coming to Baltimore, Ohio. Ttiereafter, Mavis

A-5 Fairfield County, Case No. 08-CA-88 6 and Brad Weaver discussed the matter. Mavis alleges he informed Weaver this was a substantial and material fact previously unknown to Millersport, and the competition would put it at a substantial competitive disadvantage. Mavis alleged Weaver agreed it was a material fact relating to the agreement and the transaction. Weaver denied making the statement.

{118} In its first of error, Millersport argues the trial court erred in granting summary judgment to Weaver Hardware because there were genuine issues of material fact.

{119} Civ. R. 56 states in pertinent part:

{¶20} "Summary judgment shall be rendered forthwith if ttie pleadings,

depositions, answers to interrogatories, written admissions, affidavits, transcripts of

evidence, and written stipulations of fact, if any, timely filed in the action, show that there is no genuine issue as to ariy material fact and that the moving party is entitled to judgment as a matter of law. No evidence or stipulation may be corisidered except as

stated in this rule. A summary judgment shall not be rendered unless it appears from

the evidence or stipulation, and only from the evidence or stipulation, that reasonable

minds can come to but one conclusion and that conclusion is adverse to the party

against whom the motion for summary judgment is made, that party being entitled to

have the evidence or stipulation construed most strongly in the party's favor. A summary

judgment, interlocutory in character, may be rendered on the issue of liability alorie

although there is a genuine issue as to the amount of damages." Fairfield County, Case No. 08-CA-86 7

(121} A trial court should not enter a summary judgment if it appears a material fact is genuinely disputed, nor if, construing the allegations most favorably towards the non-moving party, reasonable minds could draw different conclusions from the undisputed facts, Houndshell v. American States Insurance Company (1981), 67 Ohio

St. 2d 427. The court may not resolve ambiguities in the evidence presented, Inland

Refuse Transfer Company v. Browning-Ferris Industries of Ohio, Inc. (1984), 15 Ohio

St. 3d 321. A fact is material if it affects the outcome of the case under the applicable substantive law, Russell v. Interim Personnel, Inc. (1999), 135 Ohio App. 3d 301.

{¶22} When reviewing a trial court's decision to grant summary judgment, an appellate court applies the same standard used by the trial court, Smiddy v. The

Wedding Party, Inc. (1987), 30 Ohio St. 3d 35. This means we review the matter de novo, Doe v. Shaffer, 90 Ohio St.3d 388, 2000-Ohio-186. {1123} The party moving for summary judgment bears ttie initial burden of informing the trial court of the basis of the motion and identifying the portioris of the record which demonstrate the absence of a genuine issue of fact on a material element of the non-moving party's claim. Drescher v: Burt (1996), 75 Ohio St. 3d 280. Once the moving party meets its initial burden, the burden shifts to the non-moving party to set forth specific facts demonstrating a genuine issue of material fact does exist, Id. The non-moving party may not rest upon the allegations and denials in the pleadings, but instead must submit some evidentiary material showing a genuine dispute over material facts, Henkle v. Henkle (1991), 75 Ohio App. 3d 732. (¶24) In its judgment entry granting summary judgment in favor of Weaver, the court set out the elements of fraudulent inducement: (1) an actual or implied

A-r Fairfield County, Case No. 08-CA-86 8 misrepresentation or concealment of a matter of fact which relates to the present or past, and which is material to the transaction; (2) knowledge of the falsity or such disregard and recklessness towards the truth or falsity of the represeritation that knowledge may be inferred; (3) intent to mislead another into relying on the representation; (4) actual justified reliance on the representation; and (4) injury proximately caused by the reliance. Judgment Entry of January 23, 2008, at pages 5-6, citing Schtuter v. PSL, Inc. (February 3, 1998), Richland App. No. 96-CA-111; Burr v.

Stark County Board of Commissioners (1986), 23 Ohio St. 3d 69; and Freidland v.

Lipman (1980), 68 Ohio App. 2d 255.

{¶26} The court found promises or representations concerriing the future cannot serve as a basis for a claim of fraud, and the actual or implied misrepresentation or concealment of a matter of fact must relate to the present or past and must be material to the transaction. The court found any alleged misrepresentation related to future events, 1

{126} The trial court found Millersport's parol evidence in support of its claim of fraudulent inducement was barred because of the language of the written contract, particularly the representation and warranty section and the integration clause quoted supra. The court quoted Wall v. Planet Ford, Inc., 159 Ohio App. 3d 840, 825 N.E. 2d

686, 2005-Ohio-1207, in which the Second District Court of Appeals found the parol exclusion evidence rule rnay not be avoided using a fraudulent inducement claim which alleges the inducement to sign the writing was a promise, the terms of which are directly contradicted by the signed writing. A fraudulent inducement case is not made out simply by alleging that a staterxrent or agreement made prior to the contract is different

A-8 Fairfield County, Case No. 08-CA-86 9 from what now appears in written contract. Contradictory assertions are exactly what the parol evidence rule was designed to prohibit. Judgment Entry of January 23, 2008, at 6.

{¶27} The court found reasonable minds could come to but one conclusion on

Millersport's claim for fraudulent inducement. We disagree. Construing Millersport's allegations most favorably against Weaver Hardware, we find reasonable minds could conclude Millersport had set forth evidence on each element of fraudulent inducement.

As to the first element, an actual or implied misrepresentation or concealment of a matter of fact which relates to the present or past and is material to the transaction, we find Brad Weaver's statement did not pertain to the future, but rather referred to the intent of any businesses presently " looking to come into" the Baltimore, Ohio area". If the trier of fact believed Millersport's allegation the question about Ace Hardware's present intention was asked and answered, then it could conclude Brad Weaver's alleged response he did not know of any business looking to come into the area is false.

{128} A trier of fact could find knowing whether a potential competitor was presently exploring the possibility of opening a store would be a material issue in the transaction. Mavis states Millersport would not have entered into the agreement to purchase Weaver Hardware's assets if it had known it would be competing with an Ace

Hardware Store.

{129} With regard to the ttiird element, intent to mislead another, Mavis alleges

Brad Weaver's request that the negotiations be held confidential until after the closing was an attempt to keep Mavis and Sheets from having any contact with persons who might be in a position to give them information concerning Ace Hardware.

A-9 Fairfield County, Case No. 08-CA-86 10

{¶30} In its judgment entry of September 2, 2008, the trial court found Weaver had attempted to sell the hardware business through three primary methods. First,

Weaver listed the hardware through True-Value, which had an internal listing for True-

Value stores nationally through printed advertisement and on its website. True-Value also had a co-op program to help its store owners mediate the terms of salesfpurchase of any of the stores it has listed through its service. When this method did not produce any purchase offers or leads, Weaver then adopted a regional approach to marketing, informing regional sales representatives that his store was for sale and asking them to spread the word as they made their sales calls. Although Weaver got two leads, they failed to produce a sale. Thereafter, Weaver made cold telephone calls to local hardware stores, informing them his store was for sale. One of the hardware stores he contacted was Millersport.

(¶31} While there are any number of sound business reasons to keep negotiations confidential until the deal is finalized, one inference to be drawn from the facts is that because it was common knowledge Weaver Hardware was for sale, the reason Weaver wanted Millersport's purchase of the assets confidential was to prevent

Mavis and Sheets from gathering any inforrnation about the proposed Ace Hardware store.

{132} Mavis alleges he relied on the representation because Brad Weaver had the only hardware store in the Baltimore area. Whether or not the reliance was justified under the facts of the case is a question of fact for the trier of fact, and not appropriate for determination on summary judgment. Rucker v. Everen Securities, Inc.,

102 Ohio St.3d 1247, 2004 -Ohio- 3719, 811 N.E.2d 1141, at paragraph 7.

A-1 0 Fairfield County, Case No. 08-CA-86 11

{¶33} In Rucker, the Supreme Court examined a situation where the Cuyahoga

County Court of Appeals found the parol evidence rule barred claims of promissory estoppel because the contract in question contained an integration clause. The court 's reasoning is instructive:

{134} "An integration clause is nothing more than the contract's embodiment of the parol evidence rule, i.e., that matters occurring prior to or contemporaneous wittr the signing of a contract are merged into and superseded by the contract. Galmish v.

Cicchini (2000), 90 Ohio St.3d 22, 27-28, 734 N.E.2d 782. "'The parol evidence rule is a rule of substantive law which, when applicable, defines the limits of a contract.' " Id. at

27, 734 N.E.2d 782, quoting Charles A. 8urfon, Inc. v. Durkee (1952), 158 Ohio St. 313,

324, 49 0,0.174, 109 N.E.2d 265, paragraph one of the syllabus. Yet a claim based on promissory estoppel does not contravene the parol evidence rule. Promissory estoppel is an equitable doctrine for enforcing the right to rely on promises. "" Karnes v. Doctors f-(osp, (1990), 51 Ohio St.3d 139, 142, 555 N.E.2d 280. It is based on the principles of , equity, and conscience. Eric Mills Holmes, The Four Phases of Promissory

Estoppel (1996), 20 Seattle U.L,Rev. 45, 64. The doctrine may be invoked in various ways. {¶35} "One use is as an affirmative theory of recovery. Id. at 63. Urrder such a theory, the plaintiff asserts an independent claim for damages based on detrimental reliance. Id. at 67-68. Courts confronting such a claim focus on "a promissory commitment centering on the promisee's right to rely, and the promisor's duty to prevent

(or not cause) harmful reliance which was reasonably foreseeable by the promisor." Id. at 68. "The right to rely arises from promissory statements, assurances, and

A-11 Fairfield County, Case No. 08-CA-86 12 representations that show sufficient commitment to induce reasonable reliance in another." ld. Whether the reliance is objectively reasonable and foreseeable is a jury question. Id. Thus, the integration clause in the agreement holds no significance for the promissory estoppel claim. Instead, what is involved is a separate enforceable promise and not a variation or modification of the agreement. Id. Therefore, the subsequent execution of an integration clause does not preclude a claim based on detrimental reliance that occurred before the execution of that clause." Rucker, supra, paragraphs

6-7.

{136} The trial court found parol evidence could not be introduced to contradict the integration clause. However, the language of the integration clause does not directly contradict the allegations made by Millersport except in the very broadest sense that all the negotiations centered on whether entering into the asset purchase agreement would

be profitable. Brad Weaver did not make any representation, guarantee or other statement regarding the prospective profits or volume of business, and he was not required to volunteer any information. However, when directly asked, he withheld information which Mavis alleged would have been pertinent to Millersport's assessment of whether its proposed store would be profitable enough to justify the purchase of

Weaver Hardware's assets.

{¶37} The evidence Millersport seeks to introduce does not attempt to change or modify any provision of the contract. As in Rucker, Millersport's claim of detrimental reliance based on Brad Weaver's alleged previous statements is not barred by the parol evidence rule. Fairfield County, Case No. 08-CA-86 13

{138} In conclusion, we find reasonable minds could differ regarding whether

Brad Weaver misrepresented a fact material to the transaction, i.e., that there was a business looking to come into the Baltimore area, which would have raised a red flag with Sheets and Mavis. Accordingly, we conclude the trial court erred in granting summary judgment in favor of Weaver Hardware on Millersport's clairn of fraud in the inducement.

{¶39} The first assignment of error is sustained.

11

{¶40} in its second assignment of error, Millersport argues the trial court erred in not granting summary judgment in favor of Millersport. However, an order denying summary judgment to a party is not a final appealable order, see Manley v. Marsrco,

116 Ohio St. 3d 85, 2007-Ohio-5543, 876 N.E. 2d 910.

(¶41) We find we have no jurisdiction over this issue, and accordingly the second assignment of error is dismissed.

III

{¶42} In its third assignment of error, Millersport argues the trial court erred in awarding damages to Weaver Hardware. Because we find summary judgrnent was inappropriate, the issue of damages is premature.

{743} The third assignment of error is dismissed. Fairfield County, Case No. O8-CA-$6 14

{144} For the foregoing reasons, the judgment of the Court of Common Pleas of

Fairfield County, Ohio, is reversed, and the cause is remanded to the court for further proceedings in accord with law and consistent with this opinion.

By Gwin, J.,

F'arrner, P. J.,

Hoffman, J,, concur

ARMER

WSG:clw 1123 IN THE COURT OF APPEALS FOR FAIRFIELD COUNTK^IiI

FIFTH APPELLATE DISTRICT 2DOg D::C -9 A ^ 7: 32

DEBC^,r`^-,t;` : i'.LLEY MILLERSPORT HARDWARE, LTD CLEft'r '''_ ; ii'JRTS fAf!?ryi=t.U ': -. OHIO Plaintiff-Appellant

-vs- JUDGMENT ENTRY

THE WEAVER HARDWARE CO., ET AL

Defendant-Appellee CASE NO. 08-CA-86

For the reasons stated in our accompanying Memorandum-Opinion, the judgment of the Court of Common Pleas of Fairfield County, Ohio, is reversed, and the cause is remar ded to the court for further proceedings in accord with law and consistent with this opinion. Costs to appellee.

cJ •

HON. W. SCOTT GWIN