Baynard et al v. Commonwealth Investments, Ltd. et al

Filing 32

ORDER granting in part and denying in part 27 Motion for Summary Judgment; granting in part and denying in part 21 Motion for Summary Judgment. Signed by Judge George C. Smith on 3/31/16. (lvw)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
ROBERT BAYNARD, et al.,
Plaintiffs,
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Case No.: 2:14-cv-1367
JUDGE SMITH
Magistrate Judge Jolson

COMMONWEALTH INVESTMENTS
LTD., et al.,
Defendants.

OPINION AND ORDER
This matter is before the Court on the parties’ cross-motions for summary judgment.
(See Docs. 21 and 27). The Motions have been fully briefed and are now ripe for review. For
the reasons that follow, the Court GRANTS in part and DENIES in part Plaintiffs’ Motion for
Summary Judgment and GRANTS in part and DENIES in part Defendants’ Motion for
Summary Judgment.
I.

BACKGROUND

Plaintiffs Robert Baynard, Nancy Wilkinson Newell, William A. Wilkinson, William
Landis, Jr., and Robert W. Schuetz, Jr.1 initiated this action against Defendants Commonwealth
Investments, Ltd. and Duquesne Properties, LLC for breach of contract and declaratory
judgment. The aforementioned Plaintiffs together own 23/36 interest in the parcel of land
located at 35 East Gay Street in downtown Columbus, Ohio (hereinafter “the Property”). The

1

Plaintiffs Henry S. Baynard, Jr., Richard Baynard, Jr., and Karen Rose were terminated following the
filing of the Amended Complaint on October 24, 2014. (See Doc. 7).

Property is currently leased by Commonwealth Investments who rents the office building (the
Commerce Building) located on this parcel of land. Commonwealth Investments rents the
building space out to various tenants for over $900,000 per year. (Doc. 7, Am. Compl. ¶ 1).
In 1919, Plaintiffs’ ancestor, Phillip Lang, leased the property to two developers,
Theodore Leonard, Jr. and Edmund Fox (hereinafter “the Lease”). The Lease term was 99 years
and was renewable at the end of that term. The amount owed under the Lease was $6,000.00 per
year, to be paid in quarterly installments of $1500.00, which was a reasonable amount for a
ground lease in 1919. However, to account for currency fluctuations, a gold clause was included
in the Lease which provided: “All of the above payments . . . are to be made and paid in gold
coin of the United States of America of the present standard of weight and fineness, but the
Lessees may pay the same in any current legal tender money. . ..” (See Doc. 7-1, 1919 Lease
attached as Ex. A to Am. Compl.).2
In June 1933, as a result of the Great Depression and President Roosevelt’s effort to
“overhaul . . . American monetary policy” Congress passed a Joint Resolution that rendered all
gold clauses unenforceable as “against public policy.” 216 Jamaica Ave., LLC v. S&R
Playhouse Realty Co., 540 F.3d 433 (6th Cir. 2008); Joint Resolution of June 15, 1933, ch. 48, §
1, 48 Stat. 112, 113. The 1933 Act barred the inclusion of a gold clause in “any obligation
hereafter incurred” and provided that any existing gold clauses could be “discharged upon
payment, dollar for dollar, in any coin or currency which at the time of payment is legal tender.”
Id. Then, in 1977, Congress amended the law to provide that all gold clause “obligations issued

2

In 1919, the value of gold was $20.67 per ounce. Today, gold is valued at more than $1,200 per
ounce. To date, the Lessee Commonwealth has continued to pay the $6,000 per year rent on the Lease.
(Doc. 7, Am. Compl. ¶ 7).

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on or after the date of enactment” of the statute would be valid and enforceable. 31 U.S.C. § 463
(1976).
The developers of the Property constructed a building that still stands today. It is
currently known as the Commerce Building, but was formerly known as the Nitschke Building.
Over the years, the parties to the Lease have changed. The original Lessor, Lang, passed his
interest in the property down to his children, grandchildren, and great-grandchildren. The
original Lessees, Leonard and Fox, transferred their interest from business to business. The most
recent transfers occurred on May 31, 1990, when the Lessee at that time, the Nitschke Building
Limited Partnership (“Nitschke”), assigned its entire interest in the Lease to Commonwealth
Investments, an Ohio general partnership (hereinafter “1990 Assignment”). Then, in 1997,
Commonwealth Investments transferred that interest by way of a quitclaim deed to Defendant
Commonwealth Investments, Ltd., a limited partnership.3
In 2013, Plaintiffs and Commonwealth negotiated a Renewal of the Lease (“2013 Lease
Renewal”). The 2013 Lease Renewal extends the Lease for an additional term of 99 years and
incorporates by reference “[a]ll terms, provisions and conditions of the [1919] Lease,” and
provides that the original terms of the Lease had “full force and effect according to its original
terms, provisions and conditions” to the extent not “modified by this Renewal.” (See Doc. 7-4,
2013 Lease Renewal, attached as Ex. D to Am. Compl.). The 2013 Lease Renewal takes effect
on September 30, 2018, when the original Lease expires.

3

Defendant Duquesne Properties, LLC is the general partner of Defendant Commonwealth
Investments, Ltd., but will be referred to collectively as Defendants or Commonwealth.

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II.

STANDARD OF REVIEW

The standard governing summary judgment is set forth in Rule 56 of the Federal Rules of
Civil Procedure, which provides that “[t]he court shall grant summary judgment if the movant
shows that there is no genuine dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Here, the parties have filed cross-motions for summary judgment,
therefore, each part, as a movant, bears the burden of establishing that no genuine issue of
material fact exists and that they are entitled to judgment as a matter of law. The fact that one
party fails to satisfy that burden does not automatically indicate that the opposing party has
satisfied the burden and should be granted summary judgment on the other motion. In reviewing
cross-motions for summary judgment, courts should “evaluate each motion on its own merits and
view all facts and inferences in the light more favorable to the non-moving party.” Wiley v.
United States, 20 F.3d 222, 224 (6th Cir. 1994).
Summary judgment will not lie if the dispute about a material fact is genuine; “that is, if
the evidence is such that a reasonable jury could return a verdict for the nonmoving party.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Summary judgment is appropriate,
however, if the nonmoving party fails to make a showing sufficient to establish the existence of
an element essential to that party’s case and on which that party will bear the burden of proof at
trial. See Muncie Power Prods., Inc. v. United Techs. Auto., Inc., 328 F.3d 870, 873 (6th Cir.
2003) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)); see also Matsushita Elec.
Indust. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 588 (1986).
The Court will ultimately determine whether “the evidence presents a sufficient
disagreement to require submission to a jury or whether it is so one-sided that one party must

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prevail as a matter of law.” Liberty Lobby, 477 U.S. at 251–253. Moreover, the purpose of the
procedure is not to resolve factual issues, but to determine if there are genuine issues of fact to
be tried. Lashlee v. Sumner, 570 F.2d 107, 111 (6th Cir. 1978). The Court’s duty is to
determine only whether sufficient evidence has been presented to make the issue of fact a proper
question for the jury; it does not weigh the evidence, judge the credibility of witnesses, or
determine the truth of the matter. Liberty Lobby, 477 U.S. at 249; Weaver v. Shadoan, 340 F.3d
398, 405 (6th Cir. 2003).
In responding to a summary judgment motion, the nonmoving party “cannot rely on the
hope that the trier of fact will disbelieve the movant’s denial of a disputed fact, but must ‘present
affirmative evidence in order to defeat a properly supported motion for summary judgment.’”
Street v. J.C. Bradford & Co., 886 F.2d 1472, 1479 (6th Cir. 1989) (quoting Liberty Lobby, 477
U.S. at 257). The existence of a mere scintilla of evidence in support of the opposing party’s
position is insufficient; there must be evidence on which the jury could reasonably find for the
opposing party. Liberty Lobby, 477 U.S. at 252. The nonmoving party must present “significant
probative evidence” to demonstrate that “there is [more than] some metaphysical doubt as to the
material facts.” Moore v. Phillip Morris Cos., Inc., 8 F.3d 335, 340 (6th Cir. 1993). The Court
may, however, enter summary judgment if it concludes that a fair-minded jury could not return a
verdict in favor of the nonmoving party based on the presented evidence. Liberty Lobby, 477
U.S. at 251–252; see also Lansing Dairy, Inc. v. Espy, 39 F.3d 1339, 1347 (6th Cir. 1994).

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III.

DISCUSSION

Plaintiffs, the lessors of the property, bring this breach of contract and declaratory
judgment action against Defendants, the lessees of the property. Defendants have cross-moved
for summary judgment arguing that they are entitled to summary judgment on Plaintiffs’ claims
because Plaintiffs cannot establish that any obligation to pay in gold was issued after 1977. The
parties are in agreement that the original gold clause in the 1919 Lease was rendered
unenforceable by the 1933 Joint Resolution declaring gold clauses to be against public policy.
However, in 1977, Congress amended the Gold Clause Statute to permit gold clauses in
subsequently issued obligations. The dispute between the parties is whether the 1990 assignment
of the Lease or the 2013 Lease Renewal constitute an obligation as intended under the Gold
Clause Statute, thereby reinstating the original gold clause from the 1919 Lease.
A.

Gold Clause Statute
A “gold clause” is a provision in a contract requiring “payment in gold or a particular

kind of currency, or in an amount of money measured thereby.” 31 U.S.C. § 463 (1976). The
1933 Joint Resolution banned such clauses from contracts to prevent creditors from enforcing
the clauses after the devaluation of the dollar and to ensure debt payments would not fluctuate
based on the value of the dollar. See Rudolph v. Steinhardt, 721 F.2d 1324, 1325–26 (11th Cir.
1983) (discussing the history of the gold clause). As discussed above, in 1977, the Gold Clause
Statute was amended to permit gold clauses in obligations issued after the effective date.
Therefore, a gold clause is valid and enforceable if contained in “an obligation issued after
October 27, 1977.” See 31 U.S.C. § 5118(d)(2) (“1977 Amendment”). The legislative history to
the 1977 Amendment reveals that the word “issued” was intended to mean “entered into.”

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Senator Jesse Helms was the author of the 1977 Amendment which he had originally introduced
as Senate Bill 79 on January 10, 1977. At that time, Senator Helms explained the meaning of the
bill’s language:
The text of my proposal is slightly different from that of the bill I have previously
introduced on this topic. My bill, if approved, will make enforceable, gold clause
contracts entered into after the enactment of the bill. It is intended to stand
neutral with regard to the enforceability of gold clause obligations issued in the
past.
123 Cong. Rec. 635 (1977); see also Rudolph, 721 F.2d at 1330.
The 1977 Amendment was ultimately passed by the Senate on October 11, 1977. There
was no debate of the Helms amendment; and only Senator Helms explained the meaning of the
bill. At the time, he introduced a letter from Henry Stockwell, Deputy General Counsel for the
Treasury Department. The letter announced the Treasury’s consent to the amendment and stated:
“Senator Helms’ amendment . . . would repeal the Joint Resolution with respect to obligations
entered into after the date of enactment of Section 4.” 123 Cong. Rec. 33, 219 (1977) (emphasis
supplied). The House passed the amendment on October 14, 1977, with no debate and only a
brief exhortation by Congressman Hansen. 123 Cong. Rec. 33, 770 (1977); see also Rudolph,
721 F.2d at 1330–31.
B.

Breach of Contract
Plaintiffs have moved for summary judgment on their breach of contract claim against

Defendants asserting that they have failed to pay the appropriate amount of rent due as obligated
under the Lease. The annual rent established in the 1919 Lease is $6,000 per year. To account
for inflation over the course of the 99-year Lease, a gold clause was included in the Lease. The
gold clause required that the annual rent be indexed to the price of gold. However, Defendants

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have continued to pay $6,000 per year based on the original term of the 1919 Lease. Plaintiffs
contend that Defendants would owe 290.25 ounces of gold each year pursuant to the gold clause.
And, at approximately $1200 per ounce, the rent would be approximately $348,300 per year on
the Lease. (See Doc. 7, Am. Compl. ¶¶ 7, 35).
Defendants have also moved for summary judgment on Plaintiff’s breach of contract
claim asserting that they have paid the rent owed under the Lease and Plaintiffs cannot establish
any obligation to pay pursuant to the gold clause of the original 1919 Lease.
For Plaintiffs to establish breach of contract, they need to establish that there was an
obligation issued after 1977 that reinstated the gold clause in the original Lease. Plaintiffs assert
that the original Lease is valid and binding, including the gold clause, for three reasons: (1) in
the 1990 Assignment, the former lessee Nitschke, transferred all of its interest in the Lease to
Commonwealth and that assignment constitutes an obligation within the meaning of the 1977
Amendment; (2) the 1990 Assignment was understood by all to effect a novation: a complete
substitution of Commonwealth for Nitschke; and (3) the 2013 Renewal of the Lease established
a new obligation between the parties that incorporated the terms of the prior Lease, including the
gold clause.
The issue before the Court is whether the 1990 Assignment or the 2013 Renewal
constitute an obligation issued after 1977 to restore the gold clause of the original Lease. 31
U.S.C. § 5118(d)(2) defined the term “obligation” as “any obligation . . . payable in United
States money.” As set forth above, the word “issued” is intended to mean “entered into.”
Rudolph v. Steinhardt, 721 F.2d 1324, 1330–31 (11th Cir. 1983). Defendants argue that they
would have had to enter into a “new obligation” to constitute an obligation issued after 1977.

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Defendants argue that the Lease was merely assigned and assumed in 1990 and that the Lease
was extended in 2013, therefore, no new obligation was created.
The Court will analyze first the 1990 Assignment, and if necessary, the 2013 Renewal, to
determine if either constitute an obligation entered into after 1977 that restore legal force to the
gold clause of the original Lease.
1.

1990 Assignment

In 1990, the lessee of the Property, Nitschke, entered into an agreement with
Commonwealth to assign its interest in the 35 East Gay Street Property. The 1990 Assignment
specifically states: “Assignor [Nitschke] hereby assigns to Assignee [Commonwealth] all of
Assignor’s right, title and interest in and to the Lease.” And “Assignee hereby accepts, assumes
and agrees to perform all of the lessees’ covenants and agreements under the Lease to be
performed from and after the date hereof.” (Doc. 7-3, 1990 Assignment, attached as Ex. C to the
Am. Compl.).
There is no dispute that a novation is created under Ohio law “where a previous valid
obligation is extinguished by a new valid contract, accomplished by substitution of parties or of
the undertaking, with the consent of all the parties, and based on valid consideration.” Williams
v. Ormsby, 966 N.E.2d 255, 259 (Ohio 2012) (emphasis added). And, a novation “need not be
express, but can be implied from the circumstances or a party’s conduct.” McGlothin v.
Huffman, 640 N.E.2d 598, 601 (Ohio Ct. App. 1994). Further, “[i]n Ohio, assignment of the
lessee’s interest in a lease does not relieve the assignor of its contractual obligations unless the
lessor substitutes the new lessee with the intent to form a new contract and surrender the old.”
Miller v. C.K.L., Inc., No. 84 CA 26, 1985 Ohio App. LEXIS 6915, at *4 (Ohio Ct. App. July 19,

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1985).
The dispute between the parties therefore turns on whether there was any intent to release
Nitschke from their obligations under the 1919 Lease. Plaintiffs argue that when
Commonwealth took over all the rights and obligations under the Lease from Nitschke, it
stepped into its place in the Lease and further, that they, as Lessors, consent to the substitution of
the parties. Plaintiffs began accepting the rent payments from Commonwealth and never sought
any further payments from Nitschke. Further, between 1919 and this Assignment in 1990, there
were numerous other assignments and Defendants do not represent that all of the previous
lessees are still responsible parties under the Lease and were never released. (See Doc. 7, Am.
Compl. ¶ 27). In fact, at the time of the 2013 Renewal, Defendant Commonwealth
“represent[ed] and warrant[ed] that it is the current Lessee under the Lease, that no other lessee
party or parties have any rights, obligations or interests under the Lease, and that it has full right
and authority to execute and deliver this Renewal.” (Doc. 7, Am. Compl. ¶ 31). Defendants,
however, assert that “Plaintiffs cannot prove that all parties agreed to a release of Nitschke when
there is no evidence that any party even requested or offered such a release.” (Doc. 27, Defs.’
Mot. for Summ. J. at 17) (emphasis in original).
Both parties reference the Sixth Circuit case of 216 Jamaica Ave., LLC v. S & R
Playhouse Realty Co., 540 F.3d 433 (6th Cir. 2008). In 216 Jamaica Ave., the Sixth Circuit held
that the gold clause in a 1912 lease was enforceable when the defendant-lessee assumed the lease
pursuant to a valid novation. Id. at 436–41. In 216 Jamaica Ave., the parcel of land subject to
the 1912 lease was located in downtown Cleveland, Ohio. The Court held that the gold clause
was revived by the 1982 Assignment. Id. The parties in that case, just like in the case at bar,

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were divided over “whether the owner at that time agreed to release the prior lessee (Halle Bros.
Co.) from its obligations under the lease and to substitute the new lessee (S&R) in its place.” Id.
at 436-37. In 216 Jamaica Ave., the lease in question set forth the rules “by which the owner
agrees in advance to permit the substitution of a new lessee under the contract for the old
lessee--the central benchmark of a novation.” Id. at 437, citing Hunter v. BPS Guard Servs.,
Inc., 654 N.E.2d 405, 411 (Ohio Ct. App. 1995); Miller v. C.K.L., Inc., No. 84-CA-26, 1985
Ohio App. LEXIS 6915, 1985 WL 9401, at *2 (Ohio Ct. App. July 19, 1985); Restatement (2d)
of Contracts § 280 cmt. d (1979).
In the case at bar, there are no specific rules for substitution of a lessee, however, the
Lease does not prohibit an assignment and actually anticipates future assignments as the Lease
states that it shall “run with the land, and shall extend to and be mutually binding upon the
respective Lessor and Lessees and their heirs, executors, administrators, successors and assigns.”
(See Doc. 7-1, 1919 Lease). Defendants, however, do not believe that the
assignment/substitution is sufficient and rely on the observation by the Sixth Circuit in 216
Jamaica Ave. that “[n]o doubt, an assignment under Ohio law by itself normally would not
establish that a novation occurred.” Id. at 437. Further, the Sixth Circuit recognized that
A lessee might sublet a property and still remain obligated under the original
lease, acting in effect as a surety or guarantor of the underlying lease obligations.
See House of LaRose Cleveland, Inc. v. Lakeshore Power Boats, Inc., No. 60904,
1992 Ohio App. LEXIS 3186, 1992 WL 140074, at *4 (Ohio Ct. App. June 18,
1992). That is not a novation.
Id. at 437. But the circumstances in the case at bar illustrate that Nitschke is no longer a
responsible party/Lessee on the original Lease. The Sixth Circuit recognized in 216 Jamaica
Ave. that “ever since 1982, all parties to the agreement have accepted the validity of the

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assignment that occurred that year and why, in accordance with the underlying agreement, no
one takes the position that S&R’s predecessor in interest remains on the hook for the lease
payments or for any other obligation under the lease.” Id. at 438. Just as in this case, since
1990, all parties have accepted the validity of the assignment. Further, in accordance with the
express terms of the 1990 Assignment, Commonwealth “assume[d] and agree[d] to perform all
of the lessees’ covenants and agreements under the Lease to be performed from and after the
date hereof.” (Doc. 7-3, 1990 Assignment). Therefore, Commonwealth agreed to take on all of
the Lessee’s obligations under the original Lease, including the gold clause. And, Plaintiffs
accepted the substitution of Commonwealth for Nitschke.
The Court therefore finds a valid novation in the 1990 Assignment as Defendant
Commonwealth was substituted for Nitschke under the 1919 Lease. The gold clause of the
original 1919 Lease is therefore reinstated. Having found the gold clause reinstated, it is not
necessary to address whether the 2013 Renewal constituted a novation. The Court is concerned
that despite now arguing that the 1990 Assignment reinstated the gold clause, Plaintiff did not
raise this issue until filing this lawsuit in 2014, 24 years later and after the parties negotiated a
renewal of the Lease in 2013. The Court is unaware of the exact rent for comparable plots of
land in downtown Columbus, but just as the Court in 216 Jamaica Ave. recognized, “one can
certainly assume that it is more valuable than it was in 1912 without having to accept the truth of
216 Jamaica’s assertion that it is worth more than 75 times what S&R currently pays for it.” 540
F.3d at 441. With respect to this issue, Defendants assert the defenses of laches, waiver, and the
statute of limitations. Specifically, Defendants argue that Plaintiffs have waived the right to
demand the increased payments of rent under the Lease by accepting, without objection,

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payments of $6,000 per year as tendered by the Lessee. Further, Defendants assert that laches
prevents Plaintiffs from enforcing the gold clause 24 years after it was revived. And, finally,
Defendants argue that Plaintiffs’ claims are barred by the statute of limitations because under
Ohio law, an action on a written contract must be brought within eight years. Ohio Rev. Code
§ 2305.06.
Plaintiffs respond that none of these defenses have any merit. Plaintiffs argue that they
were under no duty to demand the rent in the amount under the Lease and therefore their silence
does not amount to waiver. Next, Plaintiffs counter that Defendants have failed to establish the
defense of laches because they have not shown how they have been prejudiced from Plaintiffs’
delay in asserting their claims. Finally, Plaintiffs assert that the statute of limitations in Ohio for
actions based on a written contract was fifteen years until 2012, therefore, they can recover on
the past due rent going back to August 1999. The Court will discuss each of these defenses in
turn.
a.

Waiver

Waiver is the voluntary relinquishment of a known right. State ex rel. Wallace v. State
Med. Bd. of Ohio, 89 Ohio St. 3d 431, 435, 732 N.E.2d 960 (Ohio 2000). To establish waiver in
Ohio, Defendants must demonstrate that Plaintiffs had: (1) an existing right, benefit or
advantage; (2) actual or constructive knowledge of the existence of such right, benefit or
advantage; and (3) an intention to relinquish this right. Weaver v. Weaver, 36 Ohio App. 3d 210,
212, 522 N.E.2d 574 (Ohio Ct. App. 1987). Where one does not have a duty to speak, “mere
silence” will not amount to a relinquishment. White Co. v. Canton Transp. Co., 131 Ohio St.
190, 198, 2 N.E.2d 501 (Ohio 1936). Relinquishment can be either by “express words or by

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conduct which renders impossible a performance by the other party, or which seems to dispense
with complete performance at a time when the obligor might fully perform.” Id. The party
asserting waiver must show “a clear, unequivocal, decisive act by the other party of such a
purpose it amounts to an estoppel on that party’s part.” Chubb v. Ohio Bureau of Workers’
Comp., 81 Ohio St. 3d 275, 279, 690 N.E.2d 1267 (Ohio 1998).
Defendants rely on Fay Corp. v. Bat Holdings I, Inc., 682 F. Supp. 1116, 1121 (W.D.
Wash. 1988), in support of their argument that Plaintiffs have waived their right to demand
payment in gold. Though Fay Corp. applies Washington state law, it provides valuable guidance
on the resuscitation of a gold clause through a novation and the defense of waiver. The Court
stated:
It is clear to the Court that neither BAT I nor Fay knew with any certainty that the
1982 transfer of the leasehold revived the gold clause. If BAT I had known of the
legal consequences, it likely would not have accepted the assignment. If Fay had
known, it would have given notice of default pursuant to the lease or commenced
suit. Fay, however, was considering several avenues of litigation during the
period in question. Fay held back on litigating, trading an uncertain legal outcome
in order to accomplish its objective through negotiation. Moreover, Fay is
charged with constructive notice with this Court’s determination that a novation
revived the gold clause.
Thus this Court concludes that Fay waives its right to rent escalation pursuant to
the gold clause from the date of novation to the date the lawsuit was filed. Fay is
presumed to have known of the revival of its gold clause rights from the date
BAT I assumed the lease. Fay sat on its rights during that period as it attempted
to negotiate more favorable terms with BAT I under equitable principles.
Id. The same circumstances seem to have occurred in the case at bar. If Plaintiffs had known
with certainty that the 1990 novation had revived the gold clause, they could have notified
Defendants that they were in default of the payment terms of the Lease, or initiated litigation
prior to 2014. And, had Defendants known that the 1990 Assignment would revive the gold
clause, they may not have accepted the assignment, or negotiated more favorable terms. Rather,
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Defendants continued to tender the payment of $6,000 per year to Plaintiffs and Plaintiffs
continued to accept that as payment in full under the terms of the Lease.
In the context of landlord tenant law in Ohio, the acceptance of late rent “constitutes a
waiver of strict compliance with a lease and estops the landlord from enforcing any forfeiture
provisions in the lease.” Columbus Metropolitan Housing Authority v. Jackson, 1982 Ohio App.
LEXIS 13156 (Ohio Ct. App. 1982); see also Finkbeiner v. Lutz, 337 N.E.2d 655, 657 (Ohio Ct.
App. 1975); Lauch v. Monning, 239 N.E.2d 675, 676–677 (Ohio Ct. App. 1968) (“A course of
dealing in accepting overdue rent had been established between the parties whereby [the lessor]
had waived any right to claim forfeiture for late payment of the rent installments without giving
[the lessee] advance notice of his intention to require strict compliance with the terms of the
lease. That is the well settled law of Ohio.”). Therefore, “once a course of dealing in accepting
late rent payments has been established, if a landlord enforces strict compliance with the lease
terms, then he must give the tenant notice of such intent.” Id. Similarly, in the case at bar,
Plaintiffs continued to accept the amount of money tendered by Defendants as rent under the
Lease and never demanded any additional amount from Defendants. Therefore, Plaintiffs
waived their right to demand higher payments under the Lease by accepting, without objection,
payments in the amount tendered. However, this waiver only bars Plaintiffs’ claims on the
increased amount of rent up until the filing of this lawsuit on August 27, 2014.
b.

Laches

Laches is the “negligent and unintentional failure to protect one’s rights.” Chirco v.
Crosswinds Cmtys., Inc., 474 F.3d 227, 231 (6th Cir. 2007) (quoting Elvis Presley Enters., Inc. v.
Elvisly Yours, Inc., 936 F.2d 889, 894 (6th Cir. 1991)). “A party asserting laches must show: (1)

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lack of diligence by the party against whom the defense is asserted, and (2) prejudice to the party
asserting it.” Id. (quoting Herman Miller, Inc. v. Palazzetti Imports and Exports, Inc., 270 F.3d
298, 320 (6th Cir. 2001)). The Court believes that laches may also be an applicable defense to
Plaintiffs’ claims, however, as Plaintiffs correctly point out, Defendants failed to set forth any
prejudice to them as a result of Plaintiffs waiting until 2014 to bring these claims until their
combined reply and surreply briefs. (See Doc. 27, Defs.’ Mot. at 27; Doc. 29, Defs.’ Reply at
13–14). Defendants assert that they are unable to discover relevant information about
predecessors of the Lease which materially prejudice its ability to defend this case. Having
addressed Plaintiffs’ claims and finding that waiver is applicable, the Court does not find it
necessary to further address the laches defense or the statute of limitations argument.
IV.

CONCLUSION

Based on the foregoing, the Court GRANTS in part and DENIES in part Plaintiffs’
Motion for Summary Judgment and GRANTS in part and DENIES in part Defendants’
Motion for Summary Judgment. The Court finds that the gold clause of the original 1919 Lease
was reinstated when the parties entered into the 1990 Assignment. But with respect to rent owed
on the Lease pursuant to the gold clause, the Court finds that Plaintiffs waived any right to
collect prior to the filing of this lawsuit. Final judgment shall therefore be entered in favor of
Plaintiffs for outstanding rent owed since August 27, 2014.

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The Clerk shall remove Documents 21 and 27 from the Court’s pending motions list.
The Clerk shall remove this case from the Court’s pending cases list.
IT IS SO ORDERED.
/s/ George C. Smith
GEORGE C. SMITH, JUDGE
UNITED STATES DISTRICT COURT

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