978-1285770178 Case Printout Case CPC-03-08

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Decided March 31, 2006.

, J.

appeal from the Franklin County Municipal Court’s judgment whereby the trial

court ordered appellants to pay plaintiff-appellee, The Gray Printing Company,

damages in appellee’s claim for money owed on a printing services account.

rate of 6.00% per annum. * * *

*1 Appellee attached to the complaint a document that referenced Blushing

Brides, LLC and its address, and that denoted money paid and owed on the

printing services account. In the course of events, appellee dismissed the case

against Arnold Zacks due to Arnold Zacks’ death during the suit.

*1 {¶ 3} Ultimately, the parties tried the case with the judge as trier of fact. During

“there was no cause of action upon” the promissory note. (Tr. at 7.)

appellee’s behalf. According to Scott Gray, Blushing Brides, LLC contacted

appellee to establish a printing services account. Scott Gray identified at trial a

July 17, 2000 credit agreement. The credit agreement named Blushing Brides,

*1 By executing this application on the reverse side hereof, Purchaser agrees as

follows:

Purchaser in accordance with the terms thereof.

the terms of the Gray invoice shall be subject to a finance charge of 1.5% per

2006 WL 832587

THE GRAY PRINTING COMPANY, Plaintiff-Appellee,

BLUSHING BRIDES, LLC et al., Defendants-Appellants.

No. 05AP-646.

LLC and Louis and Arnold Zacks, alleging that they:

sum of $7,532.66 together with accrued interest in the amount of $790.93

through January 9, 2003, plus interest thereafter on the principal balance at the

opening statements, appellee’s counsel discussed appellants’ liability to appellee

and mentioned that a promissory note that Louis Zacks signed provided

in countering appellee’s counsel’s assertion on Louis Zacks’ individual liability,

appellants’ counsel mentioned during opening statements that appellee’s

Purchaser that all information supplied by Purchaser herein is true.” After the

Brides, LLC. Next, the agreement stated that:

month.

invoice when due, Purchaser shall have committed an event of default

“but longer than a period of 30 days. In many cases, it took [appellee] six months

to be paid in full for previous issues .” (Tr. at 16.) Scott Gray then identified a May

28, 2002 invoice for Blushing Bride LLC’s spring/summer 2002 magazine. The

invoice, addressed to Blushing Brides, LLC, denoted that appellee printed 15,000

magazines and that Blushing Brides, LLC owed $15,032.66 on the printing

2002 magazines to two different locations. Scott Gray also testified that, prior to

appellee printing the spring/summer 2002 issue:

*2 * * * We had not been paid in full * * * from the fall/winter of 2001 issue that we

produced in October. Since we were not paid in full for that issue, prior to us

putting ink on paper for this next issue, we demanded to be paid in full for the

dated May 22, 2002, and contained a promise to pay appellee $14,778 within 30

days at an interest rate of six percent per annum. Scott Gray testified that the

promissory note reflected the amount due on the May 28, 2002 invoice with the

exception of some shipping costs referenced in the invoice.

*2 {¶ 9} Next, according to Scott Gray, appellee received two more payments in

way for appellee to sell them.

*2 {¶ 11} On cross-examination, Scott Gray reiterated that, in regards to the

spring/summer 2002 issue, appellee “needed to be paid in full for the previous

issue, plus a certain amount up front, approximately $15,000 prior to [appellee]

shipping the first portion” of the spring/summer 2002 issue. (Tr. at 28.) Scott Gray

at 29.)

*3 {¶ 12} Louis Zacks testified to the following on appellants’ behalf. Louis Zacks

owns Blushing Brides, LLC, a publisher of wedding planning magazines. The

magazines have a retail value of $4.50 per magazine. In May 2002, the parties

agreed that Louis and Arnold Zacks would sign a promissory note to ensure

*3 {¶ 13} Louis Zacks further testified to the following. Appellants made

payments in August and October 2002, but appellee failed to ship any magazines

after appellants made the payments. Louis Zacks requested the additional

magazines with the payments, and Louis Zacks told appellee where the

magazines were to be shipped.

complaint “states only one cause of action, and that’s for an account.” (Tr. at 81.)

Thus, in countering appellee’s counsel’s earlier argument that the May 22, 2002

promissory note evinces Louis Zacks’ personal liability in appellee’s action,

appellants’ counsel also argued that “there’s been no attempt to amend the

complaint to add any other causes of action pertaining to a promissory note[.]”

its decision in court, the trial court mentioned that “the promissory note * * *

makes [Louis Zacks] personally liable in this case.” (Tr. at 87.)

*3 {¶ 17} Pursuant to appellants’ request, the trial court also issued findings of

fact and conclusions of law. In the findings of fact and conclusions of law, the trial

court reiterated that:

*3 3. * * * [A]n invoice dated May 28, 2002, evidenced a balance due from

[appellants] * * *.

*4 * * *

*4 6. [Appellee’s] Complaint contends that the amount of $7,532.66 is the

$7,500.00. The interest rate of 6.0% for Louis R. Zacks is derived from the

Promissory Note which provides for interest at 6.0% per annum and modifies the

agreement [in the July 2000 credit agreement that] Louis R. Zacks entered into of

paying 1.5% per month * * *.

*4 Lastly, the trial court reemphasized:*4 9. The initial [July 2000 credit

*4 {¶ 18} In the judgment entry, the trial court stated:

*4 * * * [T]he Court grants judgment in favor of [appellee] against [Blushing

Brides, LLC], in the amount of $7,532.66 plus interest at the rate of 1.5% per

annum from October 14, 2002. The Court further orders that [appellee] shall have

a judgment against Louis R. Zacks individually in the amount of $7,278.42 plus

damages in appellee’s action. We agree.

*4 {¶ 21} Initially, we recognize that appellee filed a complaint on an account for

printing services. An account is an “unsettled claim or demand by one person

against another, based upon a transaction creating a debtor and creditor

relation[ship] between the parties[.]” . “[T]he cause of action exists only as to the

detailing the account, in accordance with . Oxford Sys. Integration, Inc. at ¶ 13.

The document referenced Blushing Brides, LLC and made no mention of Louis

Zacks having personal liability on the account. As such, the document, by itself,

order of a court for, or are personally liable to satisfy in any other manner, a debt,

obligation, or liability of the company solely by reason of being a member or

manager of the limited liability company.

*5 Thus, under , Louis Zacks’ status in the limited liability company does not, by

itself, make him personally liable on the printing services account.

*5 {¶ 25} The trial court utilized the credit agreement, in part, to conclude that

Louis Zacks is personally liable on the printing services account. In reviewing the

credit agreement, we note that, if a contract is clear and unambiguous, a trial

court’s interpretation of the contract is a matter of law that we review de novo and

without deference to the trial court’s decision. .

liable upon a contract depends upon the form of the promise and the form of the

signature.” (Emphasis added.) . Here, the “form of the promise and the form of

the signature” in the credit agreement established that Louis Zacks did not incur

personal liability on the account when he signed the credit agreement in his

individual capacity and on behalf of Blushing Brides, LLC. Rather, the credit

*6 {¶ 27} Appellee also argues that testimony about the credit agreement

established the parties’ intention for Louis Zacks to incur personal liability on the

account. However, in examining the credit agreement, we note that, under the

parol evidence rule, a court is not to utilize “contemporaneous negotiations,

understandings, promises, representations, or the like” when interpreting an

“contemporaneous” understandings on Louis Zacks’ personal liability when the

parties entered into the credit agreement. See . Regardless, we note that

testimony about the credit agreement did not establish the parties’ intention for

Louis Zacks to be personally liable on the account. Although Louis Zacks and

Scott Gray confirmed that Louis Zacks signed the credit agreement individually

conclude that Louis Zacks is personally liable on the printing services account.

As noted above, appellee initiated an action on the printing services account.

However, in its decision, the trial court took the promissory note into

consideration and concluded that the promissory note “reaffirmed [Louis Zacks’]

personal liability” on the account.

22, 2002 promissory note was based on separate and distinct consideration than

the printing services account, which had already existed from July 2000. See,

also, (recognizing that past consideration does not support a contract). In this

regard, the promissory note is irrelevant to the parties’ intentions on the printing

services account and, likewise, on Louis Zacks’ personal liability on the printing

printing services account, it would have been necessary for the parties to meet

the requirements for novation. A novation “is created where a previous valid

obligation is extinguished by a new valid contract, accomplished by substitution

of parties or of the undertaking, with the consent of all the parties, and based on

valid consideration.” . Here, the promissory note made no indications of

effectively rendered judgment on the promissory note when it calculated Louis

Zacks’ liability from money owed on the promissory note and when it calculated

Louis Zacks’ liability from the six per cent per annum interest rate in the

note. Gordon at ¶ 10.

*7 {¶ 35} Likewise, we conclude that the parties did not trigger , which states

that, “[w]hen issues not raised by the pleadings are tried by express or implied

consent of the parties, they shall be treated in all respects as if they had been

raised in the pleadings.” Here, the parties did not try a cause of action on the

*7 {¶ 36} Consequently, we hold that the trial court erred by concluding that

Louis Zacks was personally liable for damages to appellee on the printing

services account. In concluding as such, we find moot appellants’ next claim that

the trial court erroneously ordered Blushing Brides, LLC to pay $7,532.66 plus

interest in addition to Louis Zacks paying another $7,278.42 plus interest, despite

*8 {¶ 37} Appellants assert that, in May 2002, the parties modified the printing

services account such that appellee would release magazines in proportion to

the amount of payments that appellants made. Appellants claim that appellee

breached the modified agreement by not shipping the requisite amount of

magazines after appellants made payments in August and October 2002. In

*8 {¶ 38} “Subsequent acts and agreements may modify the terms of a contract,

and, unless otherwise specified, neither consideration nor a writing is necessary.”

. However, the record does not establish that the parties modified the printing

services account in the spring of 2002 in the manner that appellants suggest.

Rather, as Louis Zacks himself testified, in the spring of 2002, the parties agreed

for appellee to print 15,000 magazines all at one time for one price, and,

pursuant to the May 28, 2002 invoice that reaffirmed obligations in the credit

agreement, Blushing Brides, LLC was to pay the unpaid balance on all of the

printed magazines within 30 days of the invoice. As Scott Gray testified, Blushing

Brides, LLC failed to pay in full the balance on the printing services account in

accordance with documents detailing the terms of the account. Thus, Blushing

Brides, LLC’s actions constituted a breach of the printing services account,

thereby subjecting Blushing Brides, LLC to liability. .

*8 {¶ 39} We next address appellants’ contention that appellee is not entitled to

regardless of intent, appellee ultimately retained the magazines, and we address

appellants’ argument that appellee was obliged to sell the magazines.

*8 {¶ 40} “ ‘It is a cardinal rule of contracts that an injured party is under a duty to

mitigate its damages and may not recover those damages which it could have

reasonably avoided.” ’ . Here, appellants argue that appellee could have avoided

the printing company. As a result, we conclude that it would have been

“unreasonable or impracticable” to oblige appellee, a magazine printer, to sell the

retained magazines, and mitigation principles did not apply to reduce appellee’s

monetary damages due to appellee retaining the magazines.

*9 {¶ 42} In summary, we conclude that the trial court erred by concluding that

appellants’ single assignment of error in part, overrule the assignment of error in

part, and find moot the assignment of error in part. Accordingly, the judgment of

the Franklin County Municipal Court is affirmed in part and reversed in part, and

this cause is remanded to that court for further proceedings in accordance with

law, consistent with this opinion.

*9 Judgment affirmed in part and reversed in part; cause remanded .