Opinion
Civil Action 2:07-CV-37.
July 10, 2007
OPINION AND ORDER
With the consent of the parties, 28 U.S.C. § 636(c), this matter is before the Court on the motion of defendants to dismiss for failure to failure to state a claim upon which relief can be granted (" Defendants' Motion to Dismiss"). Doc. No. 11. For the reasons that follow, Defendants' Motion to Dismiss is DENIED.
I. STANDARD
Defendants move to dismiss all claims for failure to state a claim upon which relief can be granted pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. A motion to dismiss under Rule 12(b)(6) attacks the legal sufficiency of the complaint. Roth Steel Prod. v. Sharon Steel Co., 705 F.2d 134, 155 (6th Cir. 1983); see also Windsor v. The Tennessean, 719 F.2d 155, 158 (6th Cir. 1983) (court is limited to evaluation of whether complaint sets forth allegations sufficient to make out the elements of a cause of action). In determining whether dismissal on this basis is appropriate, the complaint must be construed in the light most favorable to the plaintiff, and all well-pleaded facts must be accepted as true. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974); Bower v. Federal Express Corp., 96 F.3d 200, 203 (6th Cir. 1996); Misch v. The Cmty. Mutual Ins. Co., 896 F. Supp. 734, 738 (S.D. Ohio 1994). A claim will be dismissed if "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957).
II. ALLEGATIONS OF THE COMPLAINT
Since the filing of the Complaint, counsel has entered an appearance on behalf of plaintiff. Doc. No. 20.
In a complaint filed by plaintiff while acting pro se, plaintiff alleges that, while an undergraduate at The Ohio State University, his grandfather, defendant Bernard Schottenstein, expressed his desire that plaintiff attend law school. Complaint ¶ 9. At the time, plaintiff was considering a career in property development but he and this defendant agreed that, "[i]n exchange for plaintiff attending the most prestigious law school possible," defendant would pay for entrance exams and provide financial assistance to plaintiff while he was in law school. Id. ¶¶ 9, 10.
Plaintiff was accepted at both The Ohio State University College of Law ("OSU") and The George Washington University Law School in Washington, D.C. ("GWU"). Id. ¶¶ 11, 12. Although the costs were higher at GWU, defendant Bernard Schottenstein perceived it to be the more prestigious law school and therefore offered to pay plaintiff's housing expenses in Washington. Id. ¶¶ 14, 15. Specifically, this defendant offered to pay $2,350 per month until approximately August 2005, when he would pay the remaining housing expenses in a lump sum. Id. ¶ 16. It was during the August 2005 time period that this defendant anticipated the closing of a lucrative business deal. Id. Plaintiff agreed to attend GWU on these terms. Id. ¶ 18. On March 15, 2005, defendant Bernard Schottenstein and plaintiff's wife signed a two year residential lease in Virginia, at $2,350 per month. Id. ¶ 19.
Due to an unforseen medical emergency, plaintiff deferred his entry into law school for one year. Id. ¶ 21. Defendant Bernard Schottenstein encouraged plaintiff to apply to even more prestigious law schools during the interim, with the assurance that this defendant would provide financial support. Id. ¶ 22.
In December 2005, defendant Bernard Schottenstein failed to pay the rent on plaintiff's residence. Id.¶ 24. Plaintiff's uncle, defendant Lawrence Schottenstein, notified plaintiff that defendant Bernard Schottenstein would no longer pay plaintiff's rent, nor would he pay plaintiff's law school tuition. Id. ¶ 26. Plaintiff contacted defendant Bernard Schottenstein who reaffirmed his commitment to plaintiff. Id. 27. This defendant paid plaintiff's rent for January and February 2006. Id. ¶ 28.
In February 2006, plaintiff was admitted to the University of Virginia School of Law ("UVa"). Id. ¶ 29. Because defendant Bernard Schottenstein perceived UVa to be an even more prestigious law school, plaintiff and this defendant agreed that plaintiff would attend UVa in fulfillment of his obligations under the contract. Id. ¶ 29. Defendant Bernard Schottenstein agreed to continue paying plaintiff's rent and to make certain tuition deposits. Id. ¶¶ 30-38. The business transaction from which the funds promised to plaintiff were to come had been postponed to September 2006, but defendant Bernard Schottenstein promised to meet all of his financial obligations to plaintiff at that time. Id. ¶ 36.
Plaintiff entered UVa on August 21, 2006. Id. ¶ 39. Defendant Bernard Schottenstein made only sporadic rent payments. Id. Ultimately, this defendant ceased rent payments altogether, made no tuition deposits and failed to make the lump sum payment allegedly due in September 2006. Id. ¶¶ 42-44.
On January 18, 2007, plaintiff filed this action, asserting claims against defendant Bernard Schottenstein of breach of contract, promissory estoppel, tortious interference and fraudulent misrepresentation and a claim of tortious interference against defendant Lawrence Schottenstein.
III. ANALYSIS
A. Breach of Contract Claim
The parties agree that Ohio law governs this claim. See also Bamerilease Capital Corp. v. Nearburg, 958 F.2d 150, 152 (6th Cir. 1992) (Ohio law requires that contracts be interpreted according to "the law of the place of the contract's making").
1. Contract Formation
In Defendants' Motion to Dismiss, defendants argue that "a valid contract was never formed between plaintiff and defendant [Bernard Schottenstein] in the matter before this Court because of a failure of consideration." Defendants' Motion to Dismiss at 4. This Court disagrees.
[The Ohio Supreme Court] has long recognized the rule that a contract is not binding unless supported by consideration. Judy v. Louderman, 48 Ohio St. 562 (1891), paragraph two of the syllabus. Consideration may consist of either a detriment to the promisee or a benefit to the promisor. Irwin v. Lombard Univ., 56 Ohio St. 9, 19 (1897). A benefit may consist of some right, interest, or profit accruing to the promisor, while a detriment may consist of some forbearance, loss, or responsibility given, suffered, or undertaken by the promisee. Id. at 20. See also, Brads v. First Baptist Church, 89 Ohio App.3d 328, 336 (1993); Nilavar v. Osborn, 127 Ohio App.3d 1, 15 (1998); Mooney v. Green, 4 Ohio App.3d 175, 177 (1982).Lake Land Emp. Group of Akron, LLC v. Columber, 101 Ohio St.3d 242, 247 (2004).
The Complaint alleges that plaintiff declined a substantial merit scholarship at OSU in order to attend GWU, which was more expensive; plaintiff also alleges that he moved to another state, where the living expenses are much higher. Plaintiff alleges that he undertook these responsibilities and financial burdens in consideration of a promise of financial support made to him by defendant Bernard Schottenstein. Further, plaintiff argues that this defendant realized some benefit from the agreement with plaintiff, in the form of a family member attending a prestigious law school. Thus, the Complaint has adequately pled a benefit to defendant Bernard Schottenstein and a detriment to plaintiff. At this juncture, that is sufficient to survive a motion to dismiss the breach of contract claim for want of consideration. See Conley, 355 U.S. at 45-46.
2. Statute of Frauds
Defendants also argue that, even if consideration has been adequately pled in the Complaint, the statute of frauds precludes recovery on the breach of contract claim. Defendants' Motion to Dismiss at 4. Ohio's statute of frauds provides in relevant part:
No action shall be brought whereby to charge the 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.
O. R.C. § 1335.05.
Defendants contend that the "alleged contract could not be performed within one year from the making thereof because law school takes three years to complete. Therefore, the failure of having the material terms of the alleged agreement to pay for law school reduced to writing precludes enforcement of the contract." Defendants' Motion to Dismiss at 5. Defendants appear to raise the same defense to the alleged promise to pay the two year residential lease.
Plaintiff, however, contends that the Complaint alleges a contract, the terms of which should have been performed within one year and which is therefore not governed by the statute of frauds. Specifically, plaintiff reasons, the parties agreed in March 2005 that plaintiff would move to Washington, D.C., and attend the most selective law school possible; in return defendant Bernard Schottenstein would pay plaintiff's rent in monthly installments until the anticipated closing of a financial transaction in August 2005, when the remaining living expenses and at least a portion of plaintiff's tuition would be paid in a lump sum. Complaint ¶¶ 14, 16. Plaintiff goes on to argue that "the failure of a contingency to occur or some kind of unforeseen frustration delaying performance does not place the contract under the statute of frauds." Plaintiff's Memorandum in Opposition at 10 (citing Sherman v. Haines, 73 Ohio St.3d 125 (1995)).
For over a century, the "not to be performed within one year" provision of the Statute of Frauds, in Ohio and elsewhere, has been given a literal and narrow construction. The provision applies only to agreements which, by their terms, cannot be fully performed within a year, and not to agreements which may possibly be performed within a year. Thus, where the time for performance under an agreement is indefinite, or is dependent upon a contingency which may or may not happen within a year, the agreement does not fall within the Statute of Frauds.Haines, supra, 73 Ohio St.3d at 127 (citations omitted). As alleged in the Complaint, the terms of the contract were to be fully performed within six months, i.e., from the time that the parties entered into the contract in March 2005 to the anticipated lump sum payment in August 2005. Such a contract does not fall within the "not to be performed within one year provision" of the statute of frauds. The fact that the parties may have agreed that defendant Bernard Schottenstein's performance was dependent, in part, on the success of a business deal that was to occur in August 2005 does nothing to change this characterization. See id.
Accordingly, defendants' motion to dismiss plaintiff's breach of contract claim is without merit.
B. Promissory Estoppel
Defendants also argue that plaintiff's promissory estoppel claim must fail as a matter of law because the Complaint has not sufficiently pled detrimental reliance. Defendants' Motion to Dismiss at 5. See also Mers v. Dispatch Printing Co., 19 Ohio St. 3d 100 (1985) (promissory estoppel requires, inter alia, justifiable reliance on the part of the promisee). This Court disagrees.
Plaintiff pleads that, as a consequence of his reliance on the assurances of defendant Bernard Schottenstein, plaintiff leased a residence that he could not afford, declined a substantial scholarship at OSU and incurred substantial debt at UVa, all of which forced plaintiff to liquidate his savings, sell his personal possessions, and incur debt. See generally Complaint. At this juncture, the Complaint has sufficiently alleged facts in support of a claim of promissory estoppel.
C. Fraudulent Misrepresentation
Defendants argue that plaintiff's claim of fraudulent misrepresentation must be dismissed because the Complaint fails to allege that defendant Bernard Schottenstein made a misrepresentation of fact. Defendants' Motion to Dismiss at 6-7. See also Scotts Co. v. Cent. Garden Pet Co., 403 F.3d 781, 789 (6th Cir. 2005) (citing Williams v. Aetna Fin. Co., 83 Ohio St. 3d 464 (Ohio 1998)) (fraudulent misrepresentation requires, inter alia, a representation or, where there is a duty to disclose, concealment of a fact). Specifically, defendants contend:
As a general rule, fraud cannot be predicated upon statements which are promissory in their nature when made, and which relate to future actions or conduct, since a representation that something will be done in the future or a promise to do it, from its nature cannot be true or false at the time it was made, and thus cannot be fairly viewed as a representation of fact.Defendants' Motion to Dismiss at 6.
In opposition, plaintiff refers to allegations that defendant Bernard Schottenstein misrepresented facts regarding the present nature of his assets. Plaintiff's Memorandum in Opposition at 14 (citing Complaint ¶ 58)).
". . . Defendant Bernard Schottenstein's [sic] tortuously [sic] and with cruel indifference to the consequences of his statements, misrepresented facts and made false statements material to his promises in order to mislead and induce the Plaintiff into a series of actions." Complaint, ¶ 58. That paragraph also refers to specific conversations between plaintiff and defendant Bernard Schottenstein.
On a motion to dismiss under Rule 12(b)(6), the Court cannot consider whether plaintiff can ultimately establish each element of this cause of action. See Windsor, 719 F.2d at 158. Instead the Court is limited to an evaluation of whether the Complaint sets forth allegations sufficient to make out the elements of a cause of action for fraudulent misrepresentation. In this instance, the Court concludes that the Complaint has met this standard.
D. Tortious Interference with Contract
Finally, defendants argue that, because no valid contract between plaintiff and defendant Bernard Schottenstein existed, there can be no claim for tortious interference with a contract. Defendants' Motion to Dismiss at 6. Because, for the reasons stated supra, the Court concludes that the Complaint has sufficiently alleged the existence of a valid contract, this argument must fail. WHEREUPON, Defendants' Motion to Dismiss, Doc. No. 11, is DENIED. A continued preliminary pretrial conference will be scheduled forthwith. Counsel for the parties are ORDERED to file a supplemental Rule 26(f) report prior to that conference.