COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 68595 : AMERICAN SEAWAY FOODS, INC. : : : JOURNAL ENTRY Plaintiff-Appellee : : and -vs- : : OPINION KENNETH G. KNODEL, ET AL. : : : Defendants-Appellants : : : DATE OF ANNOUNCEMENT OF DECISION: DECEMBER 20, 1995 CHARACTER OF PROCEEDING: Civil appeal from Common Pleas Court Case No. CV-253554 JUDGMENT: AFFIRMED. DATE OF JOURNALIZATION: __________________________ APPEARANCES: For Plaintiff-Appellee: For Defendants-Appellants: JONATHON M. YARGER, ESQ. DAVID C. WEICK, ESQ. ELLEN MAGLICIC KRAMER, ESQ. WEICK GIBSON & LOWRY KOHRMAN JACKSON & KRANTZ 234 Portage Trail One Cleveland Center, 20th Floor Cuyahoga Falls, Ohio 44221 Cleveland, Ohio 44114 - 2 - KARPINSKI, J.: Defendants-appellants Ken Knodel ("Knodel") and Amken, Inc. dba Amherst Food Centre ("Amken") appeal from orders of the trial court granting summary judgment in favor of plaintiff-appellee American Seaway Foods, Inc. ("Seaway") in this action arising out of the sale of a grocery store business. On June 11, 1993, Seaway filed a complaint against Knodel and Amken, who were parties to this transaction. Seaway's complaint sought to recover on a $460,000 cognovit promissory note executed by Amken and Knodel and a personal guaranty executed by Knodel in connection with the purchase of the grocery store business. Following negotiations among the parties, Amken purchased the business from Seaway in March, 1992, and operated the business for approximately one year prior to surrendering the business back to Seaway in March, 1993. Seaway subsequently conducted a secured party sale of the grocery store business to another purchaser for $300,000 and filed this action to recover a deficiency judgment for the remaining balance due under the note and guaranty. Knodel and Amken filed a joint answer denying the allegation of Seaway's complaint and raising various affirmative defenses and counterclaims against Seaway for fraud concerning the sale. Knodel and Amken alleged that Seaway made false oral and written representations to them concerning the financial condition of the store prior to the sale to induce them to purchase the business. - 3 - Knodel and Amken also alleged that Seaway did not deliver store rental videotapes following the purchase of the store. Seaway filed three separate motions for summary judgment on its claims against Knodel and Amken. Seaway's first motion argued, inter alia, that it was entitled to judgment for the remaining $268,427.09 unpaid balance due on the note and guaranty because (1) Seaway did not make any misrepresentations in its financial forecasts, (2) the parol evidence rule precluded the introduction of the allegedly false grocery store financial forecasts, and (3) Seaway sold the grocery business in a commercially reasonable manner following the default. Knodel and Amken's brief in opposition to Seaway's motion for summary judgment argued that (1) the written financial forecast document telefaxed by Seaway contained untrue financial statements under the headings "current year to date" and "base year now," (2) the parol evidence rule did not prohibit the introduction of evidence to establish fraudulent inducement, (3) Seaway was not entitled to any deficiency judgment because they did not receive notice of its post-default proposed secured party private sale of the business until after the sale was completed, and (4) Seaway overstated the amount due by failing to provide accurate credits. Seaway filed a reply brief pursuant to leave of court. The trial court denied Seaway's first motion for summary judgment in an order, without opinion, journalized on March 18, 1994. Following additional review, the trial court reaffirmed - 4 - its denial of Seaway's first motion for summary judgment and explained its reasons in a six-page typewritten judgment entry journalized on June 15, 1994. The trial court reasoned that the telefaxed financial forecast did not support a defense or counterclaim for fraud, because the document either (1) did not constitute a representation of any kind, or (2) was not admissible under the parol evidence rule. The trial court denied summary judgment, however, because (1) Seaway did not seek summary judgment on the counterclaim for fraud, which raised additional issues concerning Seaway's failure to deliver the rental videotapes, and (2) the amount of the deficiency judgment was not undisputed because of the circumstances of the post- default secured party sale and Seaway's failure to account for videotapes. Seaway thereafter filed a "second motion for partial summary judgment" on all issues except for the amount of damages. Seaway argued that it was entitled to a deficiency judgment because it gave proper notice of its proposed secured party private sale of the business and conducted the resale in a commercially reasonable manner. Seaway argued it entered into an agreement to sell the business to a purchaser, but did not consummate the sale by transferring title to the assets until after providing notice of the proposed sale to Knodel and Amken. Knodel and Amken filed a one-page brief in opposition, arguing that Seaway was not entitled to a deficiency judgment, because the private sale occurred prior to Seaway's notice of the - 5 - proposed sale to them. Knodel and Amken argued the purchaser signed a promissory note for the purchase prior to the date they received notice of the proposed sale. Knodel and Amken also complained about the circumstances under which the eventual purchaser operated the store prior to the sale under a temporary management agreement. Knodel and Amken submitted an affidavit from "Richard Foutty" stating that he "purchased" the business "through the use of a corporation on March 15, 1992." The trial court granted Seaway's second motion for partial summary judgment on all issues other than the amount of damages in an order journalized September 15, 1994. Seaway thereafter filed a "final motion for summary judgment" on the issue of damages pursuant to leave of the trial court on December 9, 1994. Seaway conceded for purposes of its final motion for summary judgment that Knodel and Amken should receive a credit for the $25,000 worth of rental videotapes. Knodel and Amken filed a brief in opposition and requested the trial court reconsider its prior ruling that the forecast document did not support their affirmative defense or counterclaim for fraud. The trial court granted final summary judgment for Seaway in the amount of $243,429.09 in an order journalized on January 19, 1995. Knodel and Amken timely appeal raising three assignments of error. This court shall address the second assignment of error first. Knodel and Amken's second assignment of error follows: THE LOWER COURT ERRED IN PROHIBITING PAROL EVIDENCE OF FRAUD. This second assignment of error lacks merit. - 6 - Knodel and Amken argue the trial court improperly excluded evidence under the parol evidence rule in this case. Knodel and Amken argue they were "fraudulently induced" to enter into the Asset Purchase Agreement by false oral and written statements concerning the financial condition of the store three or four days prior to the execution of the agreement. The Asset Purchase Agreement executed by the parties in this case contains a series of express representations and warranties. (Paragraphs 9 through 11.) However, none of these written representations or warranties concern the financial condition of the business. Moreover, the Agreement specifically provides in the final paragraph as follows: This Agreement contains the entire agreement between the parties and it supersedes any and all prior agreements (including oral agreements between the parties hereto) concerning the transactions contemplated by this Agreement. There are no representations, warranties or agreements between the parties hereto except as herein set forth. *** Knodel and Amken sought to introduce evidence of financial statements made during negotiations prior to the signing of this integrated written Asset Purchase Agreement to contradict these provisions of the agreement. However, as noted by the trial court, the parol evidence rule prohibits the introduction of evidence of prior or contemporaneous oral agreements which contradict or vary the terms of written agreements such as the Asset Purchase Agreement in this case. Yaroma v. Griffiths (May 18, 1995), Cuyahoga App. No. 67635, unreported; Busler v. D & H Mfg., Inc. (1992), 81 Ohio - 7 - App.3d 385, 390. Moreover, contrary to their argument, none of the evidence offered by Knodel and Amken supported their claim of fraudulent inducement to warrant admission of the proffered evidence in this case. Knodel and Amken argued that Seaway made false statements concerning the value of the business during negotiations on March 6 and 7, 1992, prior to the March 10, 1992, Asset Purchase Agreement. However, this generalized claim of "fraud" should not be confused with fraud in the inducement to enter into the agreement. Maust v. Bank One of Columbus, N.A. (1992), 83 Ohio App.3d 103, 107-108. Knodel and Amken did not offer any evidence that Seaway misrepresented either the content or terms of the Asset Purchase Agreement to induce them to enter into the agreement. The court in National City Bank, Akron v. Donaldson (1994), 95 Ohio App.3d 241, explained the reason that parol evidence is not admissible to vary or contradict the terms of an agreement, which the parties agree completely and accurately recites their entire agreement, as follows: A person of ordinary mind cannot say he was misled into signing a paper which was different from what he intended to sign when he could have known the truth by merely looking when he signed. *** If this were permitted, contracts would not be worth the paper on which they are written. If a person can read and is not prevented from reading what he signs, he alone is responsible for his omission to read what he signs. Id. at 245 (Citations omitted.) The alleged representations of the financial condition of the business concern the terms of the Asset Purchase Agreement and vary or contradict the express terms - 8 - of the written agreement which disclaim any such representations. It is well established that a party may not prove "fraudulent inducement" by citing a promise, written or oral, if that promise was subsequently and expressly disclaimed by the terms of an integrated executed agreement. Accordingly, Knodel and Amken's second assignment of error is overruled. Knodel and Amken's first assignment of error follows: THE LOWER COURT ERRED IN RULING THAT THE DOCUMENT TELEFAXED TO APPELLANTS WERE NOT REPRESENTATIONS. The first assignment of error is overruled as moot. Knodel and Amken argue the trial court improperly found that the financial forecast document did not contain "representations" upon which to base the claim that they were fraudulently induced to enter into the Asset Purchase Agreement. However, based on our disposition of the second assignment of error, this claim of error is moot. App.R. 12(A)(1)(c). Even if the document contains sufficient representations of fact as Knodel and Amken contend, the trial court properly excluded the document from evidence under the parol evidence rule. Accordingly, Knodel and Amken's first assignment of error is overruled. Knodel and Amken's third assignment of error follows: THE LOWER COURT ERRED IN RULING THAT THE SECURED PARTY SALE WAS "COMMERCIALLY REASONABLE." Knodel and Amken's third assignment of error lacks merit. - 9 - Knodel and Amken contend the trial court improperly determined that they received reasonable notice of the secured party private sale by Seaway following the default. Knodel and Amken argue the private sale occurred as early as March 12, 1993, prior to the certified mail notice they received on March 24, 1993. As a result, Knodel and Amken argue, Seaway was barred from recovering a deficiency judgment pursuant to R.C. 1309.47. R.C. 1309.47(C) establishes notice requirements concerning secured party sales following default and provides in pertinent part as follows: [Except under circumstances not present in this case,] reasonable notification of the time and place of any public sale or reasonable notification of the time after which any private sale or other intended disposition is to be made shall be sent by the secured party to the debtor if he has not signed after default a statement renouncing or modifying his right to notification of sale. (Emphasis added). Knodel and Amken contend Seaway did not comply with this statute, because they did not receive reasonable notice of the proposed sale before the sale occurred in this case. They argue that the "sale" occurred as early as March 12, 1993, when 1 entities affiliated with the ultimate purchaser, Richam, Inc., signed a promissory note in connection with the transaction. Seaway responds that the sale did not occur until April 1, 1993, when Seaway executed a Secured Party Bill of Sale transferring title to the business assets to Richam, Inc., the ultimate purchaser. 1 Foutty's Foods, Inc., Richard L. Foutty, Sr. and Richard L. Foutty, Jr. - 10 - Based on our review of the record, Knodel and Amken failed to show that the sale occurred before they received certified mail notice from Seaway on March 24, 1993. Knodel and Amken have curiously failed to submit a copy of the agreement to sell the business following the default. The Bill of Sale submitted by Seaway indicates that the sale was made to Richam, Inc. and fully consummated April 1, 1993. Knodel and Amken presented an affidavit of "Richard Foutty" to support their argument that Foutty purchased the business, through a corporation, one year earlier on March 15, 1992. This affidavit is clearly incorrect since it is undisputed that the grocery store business was owned by Amken from March, 1992 until surrendered to Seaway in March, 1993 following the default. Moreover, the fact that Foutty, unidentified as senior or junior, may have signed a promissory note in connection with the transaction on March 15, 1993, does not establish that the "sale" occurred on that date. Knodel and Amken also argue that the sale took place on March 18, 1993, when Seaway filed an affidavit of agricultural lien to protect its security interest while the store was being operated by Richard L. Foutty, Inc. under a management agreement pending ultimate sale. This argument ignores the fact that the ultimate sale was made to Richam, Inc. and that the filing of a lien to preserve a security interest against a third party operating the store indicates that no sale had yet occurred. - 11 - Negotiations in furtherance of a secured party sale of a business in a private sale necessarily occur prior to the ultimate sale. See RGA Enterprises, Inc. v. Claar & Minerd, Inc. (Sept. 7, 1995), Franklin App. No. 95APG02-182. Parties to the transaction may execute documents concerning the proposed transaction prior to the sale closing date. None of the documents presented by Knodel and Amken in this case involved the ultimate purchaser, Richam, Inc., or reflected a present or completed sale. Without any other evidence concerning the agreement, the date that title passed to the ultimate purchaser is sufficient to establish the date the sale occurred for purposes of the R.C. 1309.47(C) secured party private sale notice requirement. As a result, the trial court did not err by concluding the sale occurred on the April 1, 1993 date of the Bill of Sale, after Seaway provided reasonable notice to Knodel and Amken of the proposed sale. Accordingly, Knodel and Amken's third assignment of error is overruled. Judgment affirmed. - 12 - It is ordered that appellee recover of appellants its costs herein taxed. The court finds there were reasonable grounds for this appeal. It is ordered that a special mandate issue out of this court directing the common pleas 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. PORTER, P.J., and O'DONNELL, J., CONCUR. DIANE KARPINSKI JUDGE N.B. This entry is made pursuant to the third sentence of Rule 22(D), Ohio Rules of Appellate Procedure. This is an announcement of decision (see Rule 26). Ten (10) days from the date hereof this document will be stamped to indicate journalization, at which time it will become the judgment and .