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2
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,
5
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
7
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.
8
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 .
2
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,
5
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
7
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.
8
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 .
