Opinion
No. 109472
04-01-2021
MANG HUNG WONG, ET AL., Plaintiffs-Appellants, v. CCH DEVELOPMENT CORPORATION, Defendant-Appellee.
Appearances: Roosa Co., L.P.A., and James K. Roosa, for appellants. Calfee, Halter & Griswold, L.L.P., Christopher S. Williams, and Matthew A. Chiricosta, for appellee.
JOURNAL ENTRY AND OPINION JUDGMENT: AFFIRMED Civil Appeal from the Cuyahoga County Court of Common Pleas
Case No. CV-19-921919
Appearances:
Roosa Co., L.P.A., and James K. Roosa, for appellants. Calfee, Halter & Griswold, L.L.P., Christopher S. Williams, and Matthew A. Chiricosta, for appellee. LARRY A. JONES, SR., J.:
{¶ 1} Plaintiffs-appellants, Mang Hung Wong and Man Wa Wong (collectively "the Wongs"), appeal from the trial court's January 7, 2020 judgment granting the motion to dismiss of defendant-appellee, CCH Development Corporation ("CCH"). For the reasons that follow, we affirm.
Background
{¶ 2} This case revolves around the Wongs' sale of 11 parcels of real property located in Cleveland, Ohio to CCH in June 2018. The record demonstrates that the particulars of the sale were negotiated between the Wongs and Crescendo Development, L.L.C. ("Crescendo"), who was not then nor now a party to this case; Crescendo was CCH's representative for the purpose of this transaction, and it assigned its rights to the purchase agreement to CCH in May 2018.
{¶ 3} After the sale was executed, the Wongs sought to reform the deed to contain 10, rather than 11, parcels of property. When CCH refused, the Wongs brought the instant complaint for reformation. CCH filed a Civ.R. 12(B)(6) motion to dismiss, which the trial court granted. This appeal ensues, with the Wongs raising the following sole assignment of error for our review:
The Trial Court erred in granting Appellee's Motion to Dismiss on the grounds that Appellant[s] failed to allege in its Complaint for Reformation of a Contract that Appellee knew or should have known that Appellant[s] made a unilateral mistake of fact in construing the subject Contract and then took advantage of such mistake.
The Wongs' Complaint
{¶ 4} Attached to the Wongs' complaint was the original agreement executed by the parties that described ten parcels of real property that the Wongs were going to sell to CCH. The complaint alleged that in January 2018, Crescendo sent the Wongs a draft amendment to the agreement that extended the closing date and obligated Crescendo to pay the real estate taxes for the ten parcels during the extension period.
{¶ 5} The complaint further alleged that the draft amendment contained an error in the property tax calculation for the extension period, so the Wongs handwrote the correct amount on the document and, along with the corresponding tax statements, returned it to Crescendo. However, in addition to the ten statements relative to the ten parcels the parties had been negotiating about, the Wongs, by and through their attorney, sent an extra tax statement, for an 11th parcel they owned. The complaint alleged,
Due to an error in communication between Plaintiffs (whose primary language is Mandarin) and their counsel (whose primary language is English), Crescendo was erroneously advised that the Extra Parcel was a part of the transactions contemplated by the [parties' agreement] when, in fact, the Extra Parcel was not intended to be linked to the ten (10) contiguous parcels.Complaint, ¶ 7.
{¶ 6} After receiving the tax statement for the 11th parcel, Crescendo prepared another agreement, which included the 11th parcel; the sale price remained the same as it had been for the ten parcels, $1.343 million. In late June 2018, the parties executed the agreement, with the 11th parcel included. The Wongs contend that it was a mistake to include the 11th parcel, there was "no meeting of the minds," "no consideration," and they "did not intend the Extra Parcel as a gift to Defendant."
CCH's Motion to Dismiss
{¶ 7} In lieu of an answer, CCH filed a Civ.R. 12(B)(6) motion to dismiss for failure to state a claim upon which relief can be granted. In support of its motion, CCH attached as an exhibit an email chain between the Wongs' lawyer and a Crescendo representative. The exhibit demonstrated that, in response to the Wongs' lawyer bringing the 11th parcel into play, Crescendo's representative responded as follows: "Thanks, Jim — my apologies. I'll resend the Amendment updates to reflect the correct [tax calculation] total [for the extension period] and incorporate the missing parcel." The Wongs' attorney responded "Thanks."
{¶ 8} A few days later, Crescendo emailed the revised agreement to the Wongs' attorney with the following message:
Jim — attached is a revised Amendment per below. Buyer is traveling so in the interest of time please have your client execute and I'll have Buyer countersign as soon as he returns on Tuesday. In the meantime, we'll begin processing the deposit for timely payment to the county. Any questions let me know.
{¶ 9} The Wongs' attorney's response was, "[w]e are ok with just switching out the correction page and keeping the Sellers' signatures that I provided last week. If you agree, there is no need to re-sign." Crescendo's representative agreed, emailing, "Jim — works for us. I've attached a reconstructed, fully executed First Amendment for your records. I'll deliver to Title and advise when the Real Estate Tax Payment has been deposited."
{¶ 10} On these facts, CCH contended that there was no mutual mistake, the deal was effectuated as intended and, therefore, the Wongs' complaint must be dismissed. In granting CCH's motion, the trial court found that the Wongs' complaint alleged reformation based on a unilateral mistake. The court noted that Ohio courts generally do not reform contracts when a party makes a unilateral mistake. The court further noted that the limited exception to that rule is if the mistake happened because of a drafting error by one party and the other party knew of the error and took advantage of it. The court found that the Wongs' complaint failed to state a claim upon which relief could be granted.
Law and Analysis
{¶ 11} Civ.R. 12(B)(6) authorizes the dismissal of a complaint if it fails to state a claim upon which relief can be granted. Marchetti v. Blankenburg, 12th Dist. Butler No. CA2010-09-232, 2011-Ohio-2212, ¶ 9. "In order to prevail on a Civ.R. 12(B)(6) motion, 'it must appear beyond doubt from the complaint that the plaintiff can prove no set of facts entitling relief.'" Id., quoting DeMell v. The Cleveland Clinic Found., 8th Dist. Cuyahoga No. 88505, 2007-Ohio-2924, ¶ 7. In ruling on a motion pursuant to Civ.R. 12(B)(6), the trial court must presume that all factual allegations in the complaint are true and draw all reasonable inferences in favor of the nonmoving party. Mitchell v. Lawson Milk Co., 40 Ohio St.3d 190, 192, 532 N.E.2d 753 (1988). "A trial court's order granting a motion to dismiss pursuant to Civ.R. 12(B)(6) is subject to de novo review on appeal." BAC Home Loans Servicing, L.P. v. Kolenich, 194 Ohio App.3d 777, 2011-Ohio-3345, 958 N.E.2d 194, ¶ 35 (12th Dist.). This court must independently review the complaint to determine the appropriateness of the trial court's dismissal. Id.
{¶ 12} As mentioned, CCH attached matters outside of the pleadings to its motion, that is, the email exchange between Crescendo's representative and the Wongs' attorney regarding the 11th parcel. In resolving a Civ.R. 12(B)(6) motion, a court is confined to the averments contained in the complaint. Aust v. Ohio State Dental Bd., 136 Ohio App.3d 677, 681, 737 N.E.2d 605 (10th Dist.2000), citing State ex rel. Alford v. Willoughby, 58 Ohio St.2d 221, 223, 390 N.E.2d 782 (1979). Civ.R. 12(B) permits the trial court to treat a motion to dismiss as a motion for summary judgment, and consider matters outside the pleadings, if all parties are given reasonable opportunity to present Civ.R. 56 materials. See also State ex rel. V. Cos. v. Marshall, 81 Ohio St.3d 467, 470, 692 N.E.2d 198 (1998).
{¶ 13} The trial court did not convert CCH's motion to a motion for summary judgment, and its judgment does not make any reference to the matters outside of the pleadings. Rather, the court focused squarely on the complaint. Thus, we review under the standard for a motion to dismiss for failure to state a claim, and we disregard the email chain as the trial court apparently did.
{¶ 14} "The purpose of reformation is to cause an instrument to express the intent of the parties as to the contents thereof, i.e., to establish the actual agreement of the parties." Delfino v. Paul Davies Chevrolet, Inc., 2 Ohio St.2d 282, 286, 209 N.E.2d 194 (1965). Reformation, therefore, may only establish the content of a contract as intended by the parties; it may not create a new agreement between the parties. Id.; Faivre v. DEX Corp. Northeast, 182 Ohio App.3d 563, 2009-Ohio-2660, 913 N.E.2d 1029, ¶ 21 (10th Dist.). Consequently, a party seeking reformation must show that the contracting parties understood their agreement to contain the same terms as the proposed post-reformation contract. Faivre at id. A court may not reform a contract unless the proponent of reformation establishes the existence and terms of an underlying agreement, which the court can instate in writing through reformation. Id.; Greenfield v. Aetna Cas. & Sur. Co., 75 Ohio App. 122, 128, 61 N.E.2d 226 (12th Dist.1944) ("[B]efore reformation may be had, it is essential to show that a definite intention on which the minds of the parties had met preexisted the instrument in question and that the mistake or fraud ensued in its execution.").
{¶ 15} Generally, the only grounds for reformation of a written instrument are fraud and mutual mistake. Baltimore & O. R.R. Co. v. Bing, 89 Ohio St. 92, 105 N.E. 142 (1913). There is no allegation of fraud in this matter and the Wongs' complaint alleges that the mistake was a unilateral one:
Due to an error in communication between Plaintiffs (whose primary language is Mandarin) and their counsel (whose primary language is English), Crescendo was erroneously advised that the Extra Parcel was a part of the transactions contemplated by the [parties' agreement] when, in fact, the Extra Parcel was not intended to be linked to the ten (10) contiguous parcels.Complaint, ¶ 7.
{¶ 16} A court will not generally reform a contract in the case of a unilateral mistake. Faivre at ¶ 19. Faivre makes it clear that reformation of a contract cannot be used to bind a party to something to which it never agreed. Id. at ¶ 22. The Tenth District found the trial court erred in reforming a severance agreement because it bound the appellant to a contractual term that he never accepted. "In essence, the trial court created a new contract that reflected only [the appellee's] intent." Id.
{¶ 17} However, when a unilateral mistake occurred
due to a drafting error by one party and the other party knew of the error and took advantage of it, the trial court may reform the contract. * * * Reformation is appropriate if one party believes a contract correctly integrates the agreement and the other party is aware that it does not, even though the mistake was not mutual.425 Beecher, L.L.C. v. Unizan Bank, Natl. Assn., 186 Ohio App.3d 214, 2010-Ohio-412, 927 N.E.2d 46, ¶ 44 (10th Dist.), quoting Galehouse Constr. Co., Inc. v. Winkler, 128 Ohio App.3d 300, 303, 714 N.E.2d 954 (9th Dist.1998). See also Dalton v. Smith, 5th Dist. Richland No. 2008CA0072, 2009-Ohio-2906, ¶ 58; Gerace-Flick v. Westfield Natl. Ins. Co., 7th Dist. Columbiana No. 01 CO 45, 2002-Ohio-5222, ¶ 93.
{¶ 18} There is no allegation in the Wongs' complaint that CCH knew of a drafting error and took advantage of it. Rather, they allege that the miscommunication or mistake occurred between them and their lawyer. Thus, construing all factual allegations in the complaint as true and drawing all reasonable inferences in favor of the Wongs, their complaint failed to state a claim upon which relief could be granted. The trial court properly dismissed their complaint and the sole assignment of error is overruled.
{¶ 19} Judgment affirmed.
It is ordered that appellee recover from appellants costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to said court to carry this judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure. /s/_________
LARRY A. JONES, SR., JUDGE MARY J. BOYLE, A.J., and
MICHELLE J. SHEEHAN, J., CONCUR