Opinion
A1300424
04-26-2013
GREAT WATER CAPITAL PARTNERS, LLC, Plaintiff v. DOWN-LITE INTERNATIONAL, INC., et al., Defendants
DECISION/ENTRY
Beth A. Myers, Judge.
This case is before the Court on Defendants' Motion to Dismiss. For the reasons discussed below, the motion is granted in part and denied in part.
STANDARD
In order to dismiss a complaint pursuant to Civ. R. 12(B)(6) for failure to state a claim upon which relief can be granted, " it must appear beyond doubt from the complaint that the plaintiff can prove no set of facts entitling him to recovery." O'Brien v. University Community Tenants Union, Inc ., 42 Ohio St.2d 242, 327 N.E.2d 753(1975), syllabus. When ruling on a motion to dismiss, the Court must accept all allegations of the Complaint as true and make all reasonable inferences in favor of the non-moving party. Vail v. Plain Dealer Publishing Co ., 72 Ohio St.3d 279, 280, 1995 Ohio 187, 649 N.E.2d 182, 184 (1995) (citing Mitchell v. Lawson Milk Co ., 40 Ohio St.3d 190, 192, 532 N.E.2d 753, 756) (1988).
DISCUSSION
This case involves a dispute arising out of Plaintiffs attempt to find a buyer for Defendant Down-Lite. Plaintiff claims that it spent time, effort and resources into bringing a purchaser/investor to Defendant. It claims Defendants never intended to consummate a deal, put up roadblocks and impediments to any transaction, and acted other than in good faith. Defendant claims it had no obligation other than those under the contract and the contract is clear and unambiguous -- it owes Plaintiff only if a deal is consummated.
Defendants seek dismissal of both causes of action: 1) breach of contract; and 2) fraud in the inducement. They also seek to dismiss any claims of personal liability for the individual Defendants.
1. Breach of Contract
With respect to payment, the contract provides:
6) Compensation. In consideration of our services pursuant to this Agreement, GWCP [Great Water] shall be entitled to received, and the Company agrees to pay GWCP [Great Water], the following compensation:a) Retainer Fee. The Company has already paid GWCP [Great Water] a cash fee equal to $25,000 and the Company may, in its sole discretion, pay GWCP [Great Water] such additional cash fees as it determines from time to time, which cash fees when paid shall be deemed part of the Retainer Fee and fully credited against any Transaction Fee or Investment Fee earned by GWCP [Great Water] (collectively all cash fees paid the " Retainer Fee").
b) Transaction Fee. If a Transaction is consummated with a Prospective Acquirer during the Term or thereafter to the extent provided herein, then the Company shall pay GWCP [Great Water], immediately upon such consummation, a cash fee equal to three percent (3.00%) of the first $20,000,000 of Total Consideration, plus four percent (4.00%) of the next $10,000,000 of Total Consideration, plus five percent (5.00%) of Total Consideration in excess of $30,000,000 (the " Transaction Fee").
c) Investment Fee. If an Investment is consummated with a Prospective Investor during the Term or thereafter to the extent provided herein, then the Company shall pay GWCP [Great Water], immediately upon such consummation, a cash fee equal to 6% for Equity Securities and 3% for Debt Securities of the Investment Amount(s) received by the Company, if an additional Investment is consummated with a Prospective Investor within 24 months following the initial closing of an Investment, the Company shall pay GWCP [Great Water], immediately upon each such consummation additional cash fee(s) equal to 4% for Equity Securities and 2% for Debt Securities, (Collectively, all fees owed in connection with an Investment are the " Investment Fees").
e) Fee Credit. The Retainer Fee, to the extent paid previously, shall be credited against any Transaction Fee or Investment Fee that becomes payable to GWCP [Great Water] by the Company.
f) Fee Obligation. GWCP [Great Water] shall be entitled to the fees set forth in this paragraph 5 with respect to any Transaction or Investment, (i) closed during the Term, or (ii) closed during the twelve (12) months following the date of termination of the Term (the " Twelve Month Period") provided that such Transaction is with a prospective Acquirer or Prospective Investor which has received an Information Memorandum during the Term in compliance with this Agreement and is identified in writing by GWCP [Great Water] to the Company at the end of the Term (a " Qualified Acquirer or " Qualified Investor"), or (iii) closed at any time following the Twelve Month Period provided that the Company entered into a definitive transaction agreement during the Twelve Month Period with a Qualified Acquirer or a definitive investment agreement during the Twelve Month Period with a Qualified Investor.
The Court finds the contract clear and unambiguous. Plaintiff is entitled to the additional compensation it seeks if, and only if, a transaction is consummated. It never was.
As to Plaintiff's claim of breach of good faith and fair dealing, there is implied in every contract such a duty. Littlejohn v. Parrish (1st Dist. 2005), 163 Ohio App.3d 456, 2005 Ohio 4850, 839 N.E.2d 49. This duty, however, does not create a separate cause of action; rather it is part of a contract claim. Joe Ann Tabor Revocable Trust v. WDR Properties, Inc . (11th Dist. 2010) 2010 Ohio 2049.
Here, Plaintiff concedes that payment was contingent on consummation. The contract is clear in this regard. The Court finds that the clear and unambiguous contract must be enforced as written.
Also, the individual Defendants are not parties to the contract. Therefore, any breach of contract claim against them must be dismissed.
2. Fraud in the Inducement
A fraud claim must be stated with particularity. Civ. Rule 9(B).
" Fraud in the inducement arises when a party is induced to enter into a contract or agreement through fraud or misrepresentation.... ." Cefaratti v. Cefaratti , 11th Dist. No. 2004-L-091, 2005 Ohio 6895, ¶ 28. " The fraud relates not to the nature or purport of the [contract], but to the facts inducing its execution... ." Haller v. Borror Corp ., 50 Ohio St.3d 10, 14, 552 N.E.2d 207 (1990). " [A] claim of fraudulent inducement asserts that a misrepresentation of facts outside of the contract ... induced a party to enter into the contract." Stalvey v. NVR, Inc ., N.D. Ohio Case No. 1:10-CV-1729 (Jan. 9, 2012) quoting ABM Farms, Inc. v. Woods , 81 Ohio St.3d 498, 1998 Ohio 612, 692 N.E.2d 574 (1998).
Taking the allegation of the Complaint as true, the Court finds Plaintiff has stated a cause of action for fraudulent inducement and has done so with particularity. This applies to all Defendants.
CONCLUSION
The Court grants Defendants' motion to dismiss Count 1 (breach of contract) and denies it as to Count 2 (fraudulent inducement).