COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NOS. 70514 & 70515 PATRICIA M. WHEELER : JOURNAL ENTRY : AND Plaintiff-appellee : OPINION : -vs- : : GREGORY JONES, ET AL. : : Defendants-appellants : DATE OF ANNOUNCEMENT OF DECISION: OCTOBER 2, 1997 CHARACTER OF PROCEEDING: Civil appeal from the Court of Common Pleas Case No. CP-CV-263209 JUDGMENT: AFFIRMED. DATE OF JOURNALIZATION: APPEARANCES: For Plaintiff-Appellee: For Defendants-Appellants: BRETT E. HORTON, ESQ. IRVING S. BERGRIN, ESQ. EARLE C. HORTON, ESQ. 950 Leader Building GRAVES & HORTON 526 Superior Avenue, East National City-East Sixth Building Cleveland, Ohio 44114 Suite 1000 1965 East Sixth Street AUSTIN CARR Cleveland, Ohio 44114 c/o Cavs Gund Arena Company 1 Center Court Cleveland, Ohio 44115-4001 2 DYKE, J.: Defendant Gregory Jones appeals from the judgment of the trial court entered in favor of plaintiff Patricia Wheeler in Wheeler's action seeking recovery for breach of a material representation and other causes of action. For the reasons set forth below, we affirm. The record reflects that in 1989, plaintiff Patricia Wheeler purchased property located at 1785 East 90th Street in Cleveland from defendant Angre Financial Corporation (hereafter referred to as Angre, or Angre Financial ). She then executed a combined note and security agreement with Fleet Finance, Inc. in the amount of $28,224.00 at 14.5% interest. The record further reveals that on February 3, 1993, Fleet Finance Inc. (hereafter referred to as "Fleet") filed a complaint against Wheeler alleging that she was in default and that Fleet had therefore accelerated the unpaid balance due on the note. Wheeler denied liability in the foreclosure action and apparently discussed with the trial court the possibility of filing a third party complaint against Gregory Jones and Austin Carr, with whom she had negotiated prior to obtaining the mortgage from Fleet. On May 18, 1993, the trial court ordered that any third party complaint was to be filed by May 28, 1993. Thereafter, on August 24, 1993, plaintiff filed a motion to file a third party complaint against Gregory Jones and Austin G. Carr, and alleged that if she were held liable for defaulting upon the note and security agreement, then such default resulted from her reliance upon the 3 representations of Jones and Carr that they would fulfill all obligations of the note. On September 13, 1993, the trial court issued an order which indicated that its previous order regarding the date of filing any third party complaint had not been observed, and it denied Wheeler leave to file her third party complaint. On June 28, 1993, Fleet obtained a judgment against Wheeler for $28,058.00. See Fleet Finance, Inc. v. Wheeler (September 13, 1993), Cuyahoga Common Pleas No. 246816, unreported. On December 28, 1993, plaintiff filed this action against defendants Gregory Jones, Angre Financial Corp., and Austin Carr. Within the first claim for relief set forth in her amended complaint, plaintiff alleged that she signed the purchase money note issued by Fleet Finance, Inc. in reliance upon representations and promises made by defendants that they would pay the note as it became due. Plaintiff further alleged that defendants received the money from the note, and failed to make the required installment payments, causing Fleet Financial to obtain a judgment against her. Plaintiff asserted that defendants had been unjustly enriched and should be estopped from denying their liability for her default upon the loan to Fleet. In her second claim for relief, plaintiff alleged that defendants' failure to fulfill their representations to her caused her to suffer damage to her reputation and credit, as well as emotional distress and anguish. Both defendants filed answers in which they denied liability and asserted counterclaims against plaintiff and cross-claims against one another. For their counterclaim against plaintiff, 4 defendants Jones and Angre Financial Corp. asserted that as a result of plaintiff's default upon the note, Jones was compelled to pay approximately $8,000.00 on the said loan in order to maintain [a] professional relationship with the loan company and that plaintiff breached an agreement to sell the property to these defendants in a land contract agreement. The trial court subsequently awarded summary judgment to defendants on plaintiff's claim for injury to her reputation and emotional distress. Defendant Angre Financial Corp. was subsequently dismissed from the action. The matter then proceeded to trial to the court on February 26, 1996, on plaintiff's claim of unjust enrichment and estoppel. Plaintiff's evidence demonstrated that in 1989, defendant Carr, her longtime friend, approached her at a boutique which she managed and discussed real estate investment possibilities with her. Carr also informed plaintiff that he and defendant Jones were involved in the sale and rehabilitation of properties. Carr subsequently introduced plaintiff to Jones at defendants' business office. The parties discussed plaintiff's purchase of a single family dwelling which would then be renovated into a two family income producing property for plaintiff. Defendants showed her the subject property, located at 1785 East 90th Street. At this time, renovations were underway and renters occupied the dwelling. Jones indicated that the renters would remain there during the renovation and also assured plaintiff that he would collect their rental payments for her. Jones further indicated 5 that in order to complete the transaction, plaintiff would obtain financing, which would be paid back at $400 per month, and in return, plaintiff would receive $700 per month in rental income. According to plaintiff, Jones and Carr further represented that the renovations would be complete within ninety days and that they would make all loan payments during that time. Plaintiff testified that in reliance upon these representations, she formally purchased the subject property on September 18, 1989, for $42,000. Plaintiff completed the paperwork for a loan from Fleet in the amount of $29,400 from Fleet in the presence of the defendants.1 Defendants received all but $317 of the loan proceeds in order to undertake the rehabilitation. Thereafter, defendant Jones gave plaintiff the money for the October 1989 loan payment to Fleet. Defendants also made the November 1989 and December 1989 loan payments, or reimbursed Wheeler for her payment of the loan for these months. By September 1990, the house still had not been converted to a two family dwelling, however, and plaintiff became concerned. Defendants assured her that, although there had been some delays, the necessary work would be performed and they took plaintiff to obtain the requisite permits from the City of Cleveland. At this time, plaintiff learned that the city had issued numerous citations for housing violations, and plaintiff presented this information to 1Plaintiff further maintained that she was never informed that she was responsible for paying the remaining balance, $12,600, but she acknowledged that the settlement agreement for the purchase indicates that $12,600 was paid as an initial deposit in the matter. 6 defendants, maintaining that according to the express terms of her purchase agreement, all of the violations were to have been corrected by defendant by the time of purchase. The work was never performed, however, and in October 1990 the subject property was condemned by the city then subsequently razed. Plaintiff further testified that approximately nine months after she obtained the loan from Fleet, the account had become delinquent and Fleet initiated foreclosure proceedings. Thereafter, she insisted that Jones buy back the property from her and instructed her attorney to prepare a land contract purchase agreement. Jones paid $500 for legal fees and also agreed to pay her an additional $1,500 consideration. Jones subsequently failed to return plaintiff's telephone calls and never executed this document, proposing instead to make payments to render the Fleet account current. Plaintiff also presented the testimony of Theodore Sims. Sims related that he and defendant Carr had been friends since approximately 1971 and Carr introduced him to defendant Jones in order to discuss possible real estate investments. Sims and defendant Jones subsequently entered into an agreement regarding the purchase of property located at 1781 East 90th Street. Pursuant to the terms of this agreement, Sims obtained financing from Fleet Finance, which was to be used to fund Jones' renovation of the premises. Jones was also to make all loan payments during the renovation period, which he indicated would last from two to three months. Renovations were never completed, however. 7 Sims subsequently complained to Jones, and Jones, through East 90th Street General Partnership, entered into a land contract purchase agreement with Sims for the purchase of the property. East 90thStreet General Partnership later paid $3,237.68 to Fleet which apparently forestalled the foreclosure for a time. Fleet ultimately foreclosed upon Sim's loan, however, and obtained a judgment against him. In addition, the building was razed by the city and Sims was unsuccessful in his efforts to obtain any recovery from East 90th Street General Partnership. Defendant Austin Carr testified that at all relevant times he was merely an employee of Angre Financial Corporation and was responsible for identifying people in the community who were interested in making real estate investments. He admitted that he introduced plaintiff to Jones, and he received $3,500 from the transaction. He denied ever telling plaintiff that she would not be obligated upon the mortgage until renovations were complete, but he stated that he was present when plaintiff was informed that Angre Financial would assume this responsibility. He acknowledged that after plaintiff obtained the loan, he personally reimbursed her for one of the payments, but he claimed that he did so at the command of Jones, his boss at Angre. Defendant Gregory Jones testified that he is a commercial loan originator. He is the sole shareholder and sole officer of Angre Financial Corporation which dealt primarily with Fleet Finance. Jones stated that after meeting plaintiff, he helped her obtain a second mortgage upon her Shaker Heights home even though she had 8 gone through bankruptcy. Jones claimed that after obtaining the second mortgage, plaintiff inquired about real estate investment opportunitiesand she eventually decided to purchase the East 90th Street property. Jones further testified that all of the details of this transaction were clearly set forth in the parties' purchase agreement and that there was never any understanding that he, Angre Financial Corporation, or Carr would be responsible for repaying the loan to Fleet. According to Jones, and defense witness Denny Dartagnon Wagner, plaintiff met privately with the title agent, asked numerous questions, and was extremely knowledgeable about the transaction. After the default upon the loan, Angre made some payments to Fleet, but Jones testified that it did so only to maintain a business relationship with Fleet. He further stated that these voluntary loan payments totaled $10,000 to $12,000 which he claimed thereby diminished plaintiff's claim for damages in the instant matter. Jones also maintained that he was responsible not for converting the dwelling to a two-family unit, but merely for correcting any housing violations. According to Jones, he had extensively renovated the subject property and only some exterior work remained uncompleted. He did not recall names of contractors who had performed renovations, however. Thereafter, the property was vandalized. It was subsequently condemned and razed by the city. In addition, the loan from Fleet became delinquent. Plaintiff was upset and Jones then offered to 9 purchase the property from plaintiff. He then paid plaintiff's attorney fees for drafting a land contract purchase agreement, and also gave her an additional $1,500 as consideration for the agreement. Jones testified, however, that plaintiff refused to execute this agreement. Also at this time, Jones attempted to obtain a grant from the city for constructing a new dwelling on the lot. With regard to Fleet's foreclosure action against plaintiff, Jones testified that he attempted to negotiate in order to stall Fleet out long enough that we could eventually attempt to make the thing work[.] (Tr. 302). Jones also maintained that the property which Theodore Sims purchased from him was completely renovated pursuant to the terms of their agreement but was subsequently vandalized. With regard to his liability herein, Jones admitted that Angre Financial Corporation has not paid all of its state franchise taxes and lost its charter. He stated, however, that $12,600 which was listed as plaintiff's down payment in this transaction was never paid, and that her indebtedness to Fleet was less than the $28,058 she claimed, because he voluntarily paid a great deal of the loan principal. The trial court subsequently found that the parties did have an agreement as alleged by plaintiff. (Tr. 625). It then entered judgment for plaintiff and awarded her $28,058.00 and also found in favor of plaintiff on defendants' counterclaims. In addition, the court found the cross-claims of both defendants to lack merit. 10 Both Jones and Carr filed notices of appeal from the trial court's judgment, and the appeals were consolidated for review by this court. Appellant Carr has not submitted a brief to this court, however. Therefore, pursuant to App.R. 18(C), and Loc. R. 13(A) of the Local Rules of the Eighth Appellate Judicial District, his appeal of the judgment is hereby dismissed, and the review of this matter shall address the two assignments of error raised by appellant Jones. The first assignment of error advanced by Jones states: THE TRIAL COURT ERRED AS A MATTER OF LAW, AND TO THE PREJUDICE OF DEFENDANT-APPELLANT, GREGORY JONES, JR., IN ENTERING JUDGMENT FOR APPELLEE IN THE AMOUNT OF $28,058.00 WITH INTEREST AT A RATE OF 10% PER ANNUM FROM MAY 15, 1992, AS THE APPLICATION OF THE DOCTRINE OF RES JUDICATA BARRED THIS LAWSUIT. Within this assignment of error, Jones asserts that Wheeler's alleged claims against him had accrued when Fleet filed its foreclosure action and she attempted to file a third party complaint against him but ultimately was not permitted to do so. Thus, Jones maintains that res judicata bars the present action. The doctrine of res judicata encompasses both estoppel by judgment and collateral estoppel. State ex rel Scripps Howard Broadcasting Co. V. Cuyahoga County Court of Common Pleas, Juv. Division (1995), 73 Ohio St.3d 19, 24. Estoppel by judgment prevents a party from re-litigating the same cause of action after a final judgment has been rendered on the merits as to that party. Id.Collateral estoppel prevents parties or their privies from re- litigating facts and issues in a subsequent suit that were fully 11 litigated in a previous suit. Id. The supreme court has noted: In recent years, this court has not limited the application of the doctrine of res judicata to bar only those subsequent actions involving the same legal theory of recovery as a previous action. In Natl. Amusements, Inc. v. Springdale (1990), 53 Ohio St.3d 60, 62, 558 N.E. 2d 1178, 1180, we stated: It has long been the law of Ohio that `an existing final judgment or decree between the parties to litigation is conclusive as to all claims which were or might have been litigated in a first lawsuit.' (emphasis sic) (quoting Rogers v. Whitehall [1986], 25 Ohio St.3d 67, 69, 25 OBR 89, 90, 494 N.E.2d 1387, 1388). We also declared that [t]he doctrine of res judicata requires a plaintiff to present every ground for relief in the first action, or be forever barred for asserting it. Id. (Emphasis added.) Grava v. Parkman Twp. (1995), 73 Ohio St.3d 379, 382. Thus, it is well-settled that strangers to such judgment or decree will not be affected thereby. Bank One, Akron, N.A. v. Atwater Enterprises, Inc. (1994), 96 Ohio App.3d 59, 64. Finally, res judicata bars a party from asserting claims which he had against any opposing party which involve the same transaction and were compulsory counterclaims pursuant to Civ.R. 13(A) in that earlier action. See Geauga Truck & Implement Co. V. Juskiewicz (1984), 9 Ohio St.3d 12, 14. Applying the foregoing, we note, as a threshold matter, that Jones did not assert this affirmative defense within his answer as required by Civ.R. 8(C), and defendants never moved to dismiss this matter by application of that doctrine. Further, examining the issue of whether plaintiff's claims might have been litigated in the prior action, it is clear that Fleet's previous action for foreclosure necessarily concerned the 12 legal determination of the existence of a mortgage lien, the ascertainment of the extent of such lien, and the subjection to sale of the property pledged for its satisfaction. Bank One Dayton, N.A. v. Ellington, (1995), 105 Ohio App.3d 13, 16. Defenses to a foreclosure include defects in the instrument, id., estoppel and waiver, Metropolitan Life Ins. Co. V. Triskett Illinois, Inc. (1994), 97 Ohio App.3d 228, 234-235 and legal and equitable matters associated with the note and foreclosure. City Loan & Savings Co. v. Howard (1984), 16 Ohio App.3d 185, 187. Actions based upon an implied right to indemnity moreover, are, in general, collateral to the underlying claim and a separate cause of action. Stengel v. Columbus (1991), 74 Ohio App.3d 608, 612. As a general rule, an action based on an implied right of indemnity does not accrue until the party seeking indemnity actually suffers a loss. Id., at 613. Thus, we note that the issue litigated in the prior action was Fleet's claim for foreclosure which involved a determination of the existence of a mortgage lien upon the subject property and whether the subject property should be subjected to sale. See Bank One Dayton, N.A. v. Ellington, supra. The instant action, however, concerned a separate agreement, as plaintiff alleged that she obtained the loan issued by Fleet Finance, Inc. in reliance upon the representations and promises of the defendants and whether they were unjustly enriched by their conduct. Within this matter, therefore, plaintiff did not set forth allegations which would insulate her from liability to Fleet, but rather, she asserted a 13 claim for indemnification upon her acknowledged liability to Fleet. Thus, the instant matter did not accrue until after plaintiff was determined to be liable to Fleet, and it was a permissive cross- claim rather than a compulsory counterclaim which could have precluded future litigation. Moreover, it is beyond dispute that this matter involves different parties than those of the earlier action as the trial court in Fleet Finance, Inc. v. Wheeler, supra, specifically ruled that Jones and Carr would not be named in that action. Thus, the basic elements of res judicata are not present and we are unable to conclude that the trial court erred in rendering a judgement in this matter. Accord Hughes v. Minor (1984), 15 Ohio App.3d 141, (a prior foreclosure action against a corporation did not bar a subsequent action by a creditor of the corporation to enforce an action against an officer of the corporation to obtain additional financing). In accordance with the foregoing, we conclude that the first assignment of error is without merit. The second assignment of error advanced by Jones states: THE TRIAL COURT ERRED AS A MATTER OF LAW, AND TO THE PREJUDICE OF DEFENDANT-APPELLANT, GREGORY JONES, JR., IN ENTERING JUDGMENT FOR APPELLEE, AS THE STATUTE OF FRAUDS BARRED THE APPELLEES CLAIM FOR PAYMENT ON A FIFTEEN YEAR NOTE, WHICH WAS NOT PERFORMED WITHIN ONE YEAR. Within this assignment of error, defendants assert that plaintiff's claim are barred by the statute of frauds. R.C. 1335.05 sets forth the statute of frauds in Ohio and 14 provides in relevant part as follows: No action shall be brought whereby to charge defendant, *** upon an agreement that is not to be performed within one year from the making thereof; unless the agreement upon which such action is brought, or some memorandum or note thereof, is in writing and signed by the party to be charged therewith or some other person thereunto by him or her lawfully authorized. *** If, however, there is a possibility in law and fact that full performance such as the parties intended may be completed before the expiration of a year, then the promise is not within the statute of frauds. Ford v. Tandy Transportation, Inc. (1993), 86 Ohio App.3d 364, 382; Bryan v. Looker (1994), 94 Ohio App.3d 228, 234. It is also well-settled that an agreement is not subject to the statute of frauds where there has been partial performance such that the party relying on the agreement changes his position to his detriment thereby making it impractical or impossible to return the parties to their original status. Saydell v. Geppetto's Pizza & Ribs Franchise Systems, Inc. (1994), 100 Ohio App.3d 111, 121. In this case, the evidence demonstrated that although Wheeler did obtain a fifteen year note with Fleet Finance, thereby subjecting plaintiff's transaction with Fleet to the statute of frauds, her agreement with defendants was that the subject property would be renovated within ninety days, or well under the one year period designated within R.C. 1335.05. In addition, Wheeler undeniably relied upon these representations and performed her responsibilities under this agreement by executing the note with Fleet Finance and tendering the proceeds to defendants for the renovations, and thereby making it impractical or impossible to 15 return the parties to their original status. Under these circumstances, we do not find the statute of frauds to be a viable defense. The second assignment of error is without merit. Judgment affirmed. 16 It is ordered that appellee recover of appellants her 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 ROCCO, J., CONCUR. ANN DYKE JUDGE N.B. This entry is an announcement of the court's decision. See App. R. 22(B), 22(D) and 26(A); Loc.App.R. 27. This decision will be journalized and will become the judgment and order of the court pursuant to App. R. 22(E) unless a motion for reconsideration with supporting brief, per App.R. 26(A), is filed within ten (10) days of the announcement of the court's decision. The time period for review by the Supreme Court of Ohio shall begin to run upon the journalization of this court's announcement of decision by the .