COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 78442 BAIN BUILDERS, ET AL. : : : JOURNAL ENTRY PLAINTIFFS-APPELLANTS : : AND v. : : OPINION HUNTINGTON NATIONAL BANK : : : DEFENDANT-APPELLEE : DATE OF ANNOUNCEMENT OF DECISION: JULY 5, 2001 CHARACTER OF PROCEEDING: Civil appeal from Common Pleas Court, No. CV-396901. JUDGMENT: AFFIRMED. DATE OF JOURNALIZATION: APPEARANCES: For Plaintiffs-Appellants: Daniel J. Ryan, Esq. 1370 Ontario Street Suite 2000 Cleveland, OH 44113 For Defendant-Appellee: Stephen M. Bales, Esq. Brian J. Green, Esq. Ziegler, Metzger & Miller, L.L.P. 2020 Huntington Building 925 Euclid Avenue Cleveland, OH 44115-1441 TIMOTHY E. McMONAGLE, P.J.: Plaintiffs-appellants, Bain Builders & Remodelers, Inc. and David Bain (collectively referred to as appellants ), appeal the decision of the Cuyahoga County Common Pleas Court that granted -2- summary judgment to defendant-appellee, Huntington National Bank on the former's complaint for breach of contract and negligence. For the reasons that follow, we affirm. A review of the record reveals that Bain Builders & Remodelers, Inc. ( Bain Builders ) contracted with a Joan Wenk ( Wenk ), president of Create-a-Center, Inc., for the construction of a commercial building in Strongsville, Ohio sometime in October 1993. David Bain ( Bain ), as president of Bain Builders, and Wenk, in her corporate capacity, were the parties to the standard form owner/contractor construction agreement, the terms of which provided for mandatory arbitration in the event any claim arose under the contract. Wenk obtained a construction loan from Huntington National Bank ( HNB ) to finance the cost of the building. Construction began as agreed with a goal of completion sometime in August 1994. Difficulties arose between Bain Builders and Wenk whereupon Wenk terminated the services of Bain Builders in early August 1994 and filed a claim for arbitration shortly thereafter. In its award dated April 3, 1995, the American Arbitration Association stated: 1. On [Wenk's] claims, the arbitrators find for [Bain Builders] and dismiss the [Wenk's] claims with prejudice. 2. On [Bain Builder's] request for damages, the arbitrators find for [Wenk] and dismiss any claims of [Bain Builders] with prejudice. *** 5. This award is in full settlement of all claims and counterclaims submitted to this arbitration. -3- Thereafter, on January 19, 1996, Bain, in his individual capacity, filed a complaint in the Cuyahoga County Common Pleas Court against HNB and Wenk, Case Number 301969, seeking damages for breach of contract.1 Bain voluntarily dismissed this case without prejudice on March 4, 1999 and refiled the instant action, Case Number 396901, on November 18, 1999 naming Bain Builders and Bain as plaintiffs and HNB as the sole defendant. Succinctly, appellants allege in this complaint that they are third-party beneficiariesunder the contract between HNB and Wenk and that HNB not only breached this contract but also negligently disbursed funds to the prejudice of appellants in that appellants failed to receive all the funds to which they are entitled. On June 3, 1997, in between the filing of the original and refiled complaint in the case sub judice, Bain Builders filed a complaint in the Cuyahoga County Common Pleas Court, Case Number 335462, seeking to reduce the arbitration award to judgment. In its opinion journalized February 12, 1998, the trial court opined: The parties are in agreement that the arbitration award is a final determination of the rights of the parties as to the dispute giving rise to that arbitration and this case. Therefore, plaintiff's motion for summary judgment must be granted. Consequently, the arbitration award of April 3, 1995, in American Arbitration Association Case Number 53 110 00137 94 is hereby reduced to judgment. 1It appears that this case was stayed in November 1996 pending bankruptcy proceedings. The stay was lifted in October 1997. -4- Bain Builders and Bain filed yet another complaint, Case Number 342836, in the same court on October 29, 1997 against Wenk2 seeking damages for breach of contract. In its entry journalized September 17, 1998 granting Wenk's motion to dismiss, the trial court opined that the allegations contained in this complaint were subject to the mandatory arbitration clause contained in the parties' construction agreement and were previously addressed in that forum or were time-barred under the terms of the agreement. This court upheld that decision in Bain v. Paciotti-Orr (Dec. 2, 1999), Cuyahoga App. No. 75384, unreported, 1999 Ohio App. Lexis 5698. In the case presently before this court, HNB moved for summary judgment on the basis that appellants' claims are subject to res judicataand/or collateral estoppel and that neither appellant had the capacity to sue. In its res judicata/collateral estoppel argument, HNB contends that the arbitration between Bain Builders and Wenk settled all claims between the parties and specifically found that Wenk was not liable to Bain Builders under the contract. It therefore follows, HNB argues, that if Wenk is not liable under the contract, neither could HNB be liable even if Bain Builders could be construed to be a third-party beneficiary. In its lack of capacity argument, HNB contends that Bain Builders' articles of incorporation were canceled on June 22, 1994 for failure to maintain a statutory agent and therefore Bain Builders lacked 2The named defendant in this case was Joan Paciotti Orr, who was formerly or also known as Joan Wenk, the defendant in the instant case. -5- capacity to bring the instant action as did Bain individually because he was not a party to the agreement between Wenk and Bain Builders. Appellants opposed the motion and maintained that the arbitration proceeding did not address the issues between appellants and HNB and therefore was not subject to res judicata or collateral estoppel. Appellants did not address or otherwise oppose the argument raised by HNB to appellant's lack of capacity to sue. The trial court ultimately granted HNB's motion for summary judgment without opinion. Appellants are now before this court and assign six errors for our review, each essentially challenging the trial court's decision to grant HNB's motion for summary judgment. As such, we will discuss the assignments of error collectively to the extent practicable. In reviewing a motion for summary judgment, an appellate court conducts a denovo review of the trial court's decision. A court reviewing the granting of summary judgment must follow the standards set forth in Civ.R. 56(C) ***. Aglinsky v. Cleveland Builders Supply Co. (1990), 68 Ohio App.3d 810, 814. Civ.R. 56(C) provides that before summary judgment may be granted, it must be determined that: (1) no genuine issue as to any material fact remains to be litigated; (2) the moving party is entitled to judgment as a matter of law; and (3) it appears from such evidence that reasonable minds can come to but one conclusion and, reviewing such evidence most strongly in favor of the party against whom the -6- motion for summary judgment is made, that conclusion is adverse to the party. Temple v. Wean United, Inc. (1977), 50 Ohio St.2d 317, 327. I. Capacity to Sue A. As to Bain Builders In its motion for summary judgment, HNB argues that Bain Builders lacks the capacity to bring suit against it because its articles of corporation had been canceled before appellants instituted suit. Appellants offer no argument or evidence in opposition. The legal existence of a corporation begins with the filing of the articles of incorporation. R.C. 1701.04(E). It is this legal existence that gives the corporation the legal capacity to sue. R.C. 1701.13(A). In this case, Bain Builders' articles of incorporation were canceled on June 22, 1994 for failure to maintain a statutory agent. There was no evidence to suggest that Bain Builders applied for reinstatement as provided in R.C. 1701.07(N) or that it otherwise was legally incorporated at the time it filed suit. R.C. 1701.88(A) provides, in relevant part: When *** the articles of a corporation have been canceled, the corporation shall cease to carry on business and shall do only such acts as are required to wind up its affairs, or to obtain reinstatement of the articles in accordance with section 1701.07 *** of the Revised Code *** and for such purposes it shall continue as a corporation. The corporation's directors or their successors shall proceed as speedily as is practicable to a complete winding up of the -7- affairs of the corporation and, to the extent necessary or expedient to that end, shall exercise all the authority of the corporation. R.C. 1701.88(D). This authority includes, inter alia, carrying out the contracts of the corporation. Moreover, R.C. 1701.88(B) provides: Any claim existing or action or proceeding pending by or against the corporation or which would have accrued against it may be prosecuted to judgment, with right of appeal as in other cases *** . Thus, the corporation continues to exist for the purpose of winding up its affairs. Any lawsuit maintained by the corporation must be for that purpose or based on an existing claim or one that would have accrued against it. See Diversified Property Corp. v. Winters Natl. Bank & Trust Co. (1967), 13 Ohio App.2d 190, 193; see, also, St. Clair Builders, Inc. v. Aetna Cas. & Sur. Co. (1992), 81 Ohio App.3d 675, 680; Mack Constr. Dev. Corp. v. Austin (1989), 65 Ohio App.3d 402, 405-406. Consequently, it must be determined if Bain Builders' actions in bringing suit against HNB could be construed as incident to the winding up of the corporation. We think not. To reiterate, Bain Builders' articles of incorporation were canceled in June 1994. Without giving an opinion as to whether Bain Builders is a third-party beneficiary to Wenk's contract with HNB, there is no evidence to suggest that the legal action against HNB is in any way related to the winding up of its corporate affairs. To the contrary, it is an action on a contract. A contract for the construction of a commercial building. A contract -8- that was executed while Bain Builders was validly incorporated and only partially performed at the time the articles were canceled. While Bain Builders certainly had the authority to carry out the contract and complete construction of the building, any action for breach of that contract cannot be construed to be related to the winding up of its corporate affairs. See St. Clair Builders, Inc., 81 Ohio App.3d at 680 (lawsuit filed two years after articles canceled based on alleged wrongful conduct occurring after such cancellation was not undertaken for the sole purpose of winding up its business); Mack, 65 Ohio App.3d at 405-406 (complaint for breach of contract filed some five years after cancellation of corporate charter had no relation to any windup of corporate affairs); Kiraly v. Bonanno (Oct. 29, 1997), Summit App. No. 18250, unreported, 1997 Ohio App. Lexis 4753 (corporation added as plaintiff in amended complaint three years after corporation dissolved was not bringing suit for the sole purpose of winding up affairs of corporation); Jasin v. Wolfgang Doerschlag Architect (Dec. 14, 1984), Lucas App. No. L-84-185, unreported, 1984 Ohio App. Lexis 11859 (suit instituted two years after articles of incorporation canceled was not for purpose of winding up affairs and appellants took no action toward reinstating corporate status). Indeed, R.C. 1701.88(B) states specifically that any claim or action pending by or against the corporation or which would have accrued against it may be prosecuted to judgment. No action was pending by or against the corporation at the time the articles were canceled nor is the instant action one that was brought against -9- Bain Builders after cancellation. To the contrary, Bain Builders instituted this suit more than eighteen months after its articles were canceled. There is no evidence to suggest that Bain Builders took any steps to reinstate its corporate status in the interval between the cancellation of its articles and the filing and refiling of the instant case. Consequently, Bain Builders had no standing to institute the present lawsuit. No genuine issue of material fact therefore exists that would preclude the granting of summary judgment against Bain Builders. B. As to Bain Individually Bain individually does not have standing to sue HNB. Only a party to a contract or an intended third-party beneficiary may bring an action on a contract. Thornton v. Windsor House, Inc. (1991), 57 Ohio St. 3d 158, 161. Here, Bain was not a party to the contract between Wenk and HNB. Likewise, Bain cannot be said to be a third-party beneficiary of the contract between Wenk and HNB. In order for Bain to be considered a third-party beneficiary, it must appear that the parties to the contract intended Bain to receive a benefit under their agreement in order for Bain to succeed on his claim. Laverick v. Children's Hosp. Medical Ctr. of Akron (1988), 43 Ohio App. 3d 201, 204. A third party who simply receives a benefit from an agreement, without more, is only an incidental beneficiary and may not sue under the contract. Visintine & Co. v. New York, Chicago & St. Louis Rd. Co. (1959), 169 Ohio St. 505, 507. -10- In Hill v. Sonitrol of Southwestern Ohio, Inc. (1988), 36 Ohio St. 3d 36, 40, the Ohio Supreme Court adopted Section 302 of the Restatement of the Law 2d, Contracts, (1981), 439-440, establishing principles governing intended and incidental beneficiaries. Section 302 states: (1) Unless otherwise agreed between promisor and promisee, a beneficiary of a promise is an intended beneficiary if recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties and either (a) the performance of the promise will satisfy an obligation of the promisee to pay money to the beneficiary; or (b) the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance. (2) An incidental beneficiary is a beneficiary who is not an intended beneficiary. Assuming without deciding that Bain individually succeeded to the interests of Bain Builders, Bain at most would be considered an incidental beneficiary because there is nothing to suggest that Bain was meant to benefit from the contract between Wenk and HNB. The sole purpose of the contract was to provide a source of funding for Wenk to construct the building that was the subject of the contract between Bain Builders and Wenk. Certainly the provision of these funds indirectly benefitted Bain if indeed he could be considered a successor in interest to Bain Builders. The intent of the contract, however, was to benefit Wenk by providing the necessary funds for construction. Merely because Bain derived some incidental benefit from Wenk's contract with HNB does not transform -11- him into a third-party beneficiary. Performance of a contract will often benefit a third person. But unless the third person is an intended beneficiary as here defined, no duty to him is created. Id. Because Bain was not a party to the contract nor could he be considered a third-party beneficiary, Bain lacked standing to bring suit against HNB. There being no genuine issue of material fact as to Bain's capacity to bring suit against HNB, summary judgment was appropriately granted against Bain individually. II. Res Judicata/Collateral Estoppel HNB likewise sought judgment in its favor as a matter of law on the basis that appellants' claims were barred by the doctrines of res judicata and/or collateral estoppel. Since we found that summary judgment was appropriate because there was no genuine issue of material fact as to appellants' standing to bring suit, we need not address whether summary judgment could have been appropriate under any other theory. Appellants' assignments of error are not well taken and are overruled. Judgment affirmed. -12- It is ordered that appellee recover of appellants 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. TIMOTHY E. McMONAGLE PRESIDING JUDGE MICHAEL J. CORRIGAN, J. and JAMES J. SWEENEY, J., CONCUR. N.B. This entry is an announcement of the court's decision. See App.R. 22(D) and 26(A); Loc.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 clerk per App.R. 22(E). See, also, S.Ct. Prac.R. II, Section 2(A)(1). .