[Cite as KNL Custom Homes, Inc. v. Dotsikas, 2016-Ohio-5117.]


STATE OF OHIO                   )                        IN THE COURT OF APPEALS
                                )ss:                     NINTH JUDICIAL DISTRICT
COUNTY OF SUMMIT                )

KNL CUSTOM HOMES, INC.                                   C.A. No.     27990

        Appellant

        v.                                               APPEAL FROM JUDGMENT
                                                         ENTERED IN THE
KONSTANTINOS DOTSIKAS, et al.                            COURT OF COMMON PLEAS
                                                         COUNTY OF SUMMIT, OHIO
        Appellees                                        CASE No.   CV 2014-08-3938

                                DECISION AND JOURNAL ENTRY

Dated: July 27, 2016



        HENSAL, Judge.

        {¶1}    KNL Custom Homes, Inc. appeals a judgment of the Summit County Court of

Common Pleas that granted summary judgment on its claims to Konstantinos and Paraskevi

Dotsikas. For the following reasons, this Court reverses.

                                                    I.

        {¶2}    According to KNL, in 2010 the Dotsikas hired it to make improvements to a

home they owned in Richfield. Although KNL completed the work, the Dotsikases failed to pay

it. KNL, therefore, sued them. KNL alleges that the parties eventually entered into an oral

settlement agreement. Under the terms of that agreement, KNL allegedly agreed to construct a

garage for the Dotsikases, which would help attract a buyer for the property. The Dotsikases

allegedly agreed that, once the property sold, they would pay KNL for all of the work. The

parties informed the trial court that they had settled the matter and so the trial court dismissed the

action with prejudice.
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       {¶3}    According to KNL, after the dismissal, it made a number of unsuccessful attempts

to contact the Dotsikases about constructing the garage. It later learned that the Dotsikases had

sold the property. KNL, therefore, brought a new action against the Dotsikases, alleging breach

of the settlement agreement contract, fraud in the inducement, tortious interference, equitable

estoppel, and unjust enrichment. The Dotsikases moved for summary judgment, arguing that

KNL’s claims were barred by res judicata. KNL also moved for summary judgment or, in the

alternative, to amend its complaint to add the title company that was involved in the sale of the

Dotsikases’ property. The trial court granted the Dotsikases’ motion for summary judgment and

denied KNL’s motions, concluding that KNL’s claims were barred by the dismissal that had

been entered in the first action. KNL has appealed, assigning two errors.

                                               II.

                                 ASSIGNMENT OF ERROR I

       THE TRIAL COURT ERRED BY GRANTING SUMMARY JUDGMENT ON
       ALL COUNTS IN FAVOR OF DOTSIKAS.

       {¶4}    KNL argues that the trial court incorrectly awarded summary judgment to the

Dotsikases because it concluded that KNL’s claims are barred by res judicata. Under Civil Rule

56(C), summary judgment is appropriate if:

       (1) [n]o 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
       the evidence that reasonable minds can come to but one conclusion, and viewing
       such evidence most strongly in favor of the party against whom the motion for
       summary judgment is made, that conclusion is adverse to that party.

Temple v. Wean United, Inc., 50 Ohio St.2d 317, 327 (1977). To succeed on a motion for

summary judgment, the movant bears the initial burden of demonstrating that there are no

genuine issues of material fact concerning an essential element of the opponent’s case. Dresher

v. Burt, 75 Ohio St.3d 280, 292 (1996). If the movant satisfies this burden, the nonmoving party
                                                  3


“must set forth specific facts showing that there is a genuine issue for trial.” Id. at 293, quoting

Civ.R. 56(E). This Court reviews an award of summary judgment de novo. Grafton v. Ohio

Edison Co., 77 Ohio St.3d 102, 105 (1996).

       {¶5}    Under the doctrine of res judicata, “[a] valid, final judgment rendered upon the

merits bars all subsequent actions based upon any claim arising out of the transaction or

occurrence that was the subject matter of the previous action.” Grava v. Parkman Twp., 73 Ohio

St.3d 379 (1995), syllabus. “In Ohio, ‘[t]he doctrine of res judicata encompasses the two related

concepts of claim preclusion, also known as res judicata or estoppel by judgment, and issue

preclusion, also known as collateral estoppel.’” State ex rel. Schachter v. Ohio Pub. Emps.

Retirement Bd., 121 Ohio St.3d 526, 2009-Ohio-1704, ¶ 27, quoting O’Nesti v. DeBartolo Realty

Corp., 113 Ohio St.3d 59, 2007-Ohio-1102, ¶ 6. “Claim preclusion prevents subsequent actions,

by the same parties or their privies, based upon any claim arising out of a transaction that was the

subject matter of a previous action.” Id., quoting O’Nesti at ¶ 6. “The previous action is

conclusive for all claims that were or that could have been litigated in the first action.” Id.

       {¶6}    Parties can enter into a settlement agreement either before the court or outside of

the court. If “the parties to an action voluntarily enter into a settlement agreement in the

presence of the trial court, the agreement is a binding contract and may be enforced.” Bolen v.

Young, 8 Ohio App.3d 36, 37 (10th Dist. 1982). If the agreement, however, is “extrajudicial, in

that the trial judge is advised of the settlement agreement but does not know the content thereof,

then the settlement agreement can be enforced only if the parties are found to have entered into a

binding contract.” Boster v. C & M Servs., Inc., 93 Ohio App.3d 523, 525 (10th Dist. 1994). In

this case, KNL and the Dotsikases did not reach an agreement before the trial court and the terms

of their alleged agreement were not incorporated into the trial court’s judgment entry of
                                                 4


dismissal in KNL’s prior case. In order to enforce the settlement agreement, therefore, KNL had

to either file a new action for breach of contract or move to vacate the dismissal in the prior case.

Lamp v. Richard Goettle, Inc., 1st Dist. Hamilton No. C-040461, 2005-Ohio-1877, ¶ 10.

       {¶7}    If parties enter into a valid settlement agreement, res judicata does not bar them

from bringing a subsequent action “asserting any deficiencies in the performance of that

contract.” Technical Constr. Specialties, Inc. v. New Era Builders, Inc., 9th Dist. Summit No.

25776, 2012-Ohio-1328, ¶ 16; Morana v. Foley, 8th Dist. Cuyahoga No. 102572, 2015-Ohio-

5254, ¶ 19 (“A claim that a party breached a settlement agreement is not barred by res

judicata.”). The settlement agreement constitutes a “subsequent contract” that is independent

from the alleged breach of the original contract that was the subject of the initial lawsuit. New

Era Builders, Inc. at ¶ 15.

       {¶8}    KNL’s current breach of contract claim arises out of the Dotsikases’ alleged

breach of the settlement agreement not the parties’ original improvement contract. KNL’s fraud

claim also arises out of the alleged settlement agreement and not the facts underlying the original

lawsuit. KNL’s tortious interference and equitable estoppel claims also involve facts pertaining

to the alleged settlement agreement instead of the facts underlying its original lawsuit. The only

count in KNL’s complaint that may relate back to the original lawsuit is its unjust enrichment

claim, but it is not clear because the record does not contain a copy of the complaint from that

action. See American Mfrs. Mut. Ins. Co. v. Midland Ross Corp., 11th Dist. Portage No. 90-P-

2202, 1991 WL 147418, *5 (Aug. 2, 1991) (“[If] res judicata is raised by the pleadings but

neither a record of the prior judgment, nor the pleadings are offered in evidence, there is no

probative evidence from which a determination of res judicata can be made by the trial court.”).
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         {¶9}   Upon review of the record, we conclude that the trial court incorrectly granted

summary judgment to the Dotsikases because it incorrectly concluded that KNL’s claims are

barred by res judicata. KNL’s first assignment of error is sustained.

                                  ASSIGNMENT OF ERROR II

         THE TRIAL COURT ERRED BY DENYING KNL’S MOTION FOR
         SUMMARY JUDGMENT, TO AMEND THE COMPLAINT AND ADD A
         PARTY DEFENDANT AFTER DISCOVERY.

         {¶10} Although KNL’s second assignment of error refers to its motion for summary

judgment, the argument it develops in its brief only pertains to its motion to amend its complaint.

KNL also concedes that the terms of the alleged settlement agreement are “disputed[.]”

Accordingly, we will only address whether the trial court correctly denied KNL’s motion to

amend.

         {¶11} “The decision to grant or deny a motion to amend a complaint lies in the

discretion of the trial court and will not be reversed absent an abuse of discretion.” Wallner v.

Thorne, 189 Ohio App.3d 161, 2010-Ohio-2146, ¶ 10 (9th Dist.). Upon review of the trial

court’s judgment, however, it does not appear that the court exercised discretion when it denied

the motion to amend.      Instead, it appears that the court denied KNL’s motion because it

mistakenly thought that KNL’s claims were barred by res judicata. On remand, the trial court is

directed to re-examine whether KNL should be permitted to amend its complaint. See Mundy v.

Roy, 2d Dist. Clark No. 2005-CA-28, 2006-Ohio-993, ¶ 35 (remanding issue to allow trial court

to exercise its discretion, which it had incorrectly determined was precluded). KNL’s second

assignment of error is sustained in part and overruled in part.
                                                   6


                                                III.

       {¶12} The trial court incorrectly determined that KNL’s claims are barred under the

doctrine of res judicata. The judgment of the Summit County Court of Common Pleas is

reversed, and this matter is remanded for the court to reconsider KNL’s motion to amend and

other proceedings consistent with this decision.

                                                                              Judgment reversed,
                                                                             and cause remanded.




       There were reasonable grounds for this appeal.

       We order that a special mandate issue out of this Court, directing the Court of Common

Pleas, County of Summit, State of Ohio, to carry this judgment into execution. A certified copy

of this journal entry shall constitute the mandate, pursuant to App.R. 27.

       Immediately upon the filing hereof, this document shall constitute the journal entry of

judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the

period for review shall begin to run. App.R. 22(C). The Clerk of the Court of Appeals is

instructed to mail a notice of entry of this judgment to the parties and to make a notation of the

mailing in the docket, pursuant to App.R. 30.

       Costs taxed to Appellees.




                                                       JENNIFER HENSAL
                                                       FOR THE COURT
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MOORE, P. J.
WHITMORE, J.
CONCUR.


APPEARANCES:

ARCHIE W. SKIDMORE, Attorney at Law, for Appellant.

MARK FUSCO, Attorney at Law, for Appellees.
