How you communicate affects liability

While handwritten changes of the terms of a legal instrument can eliminate personal liability, sending a fax or making phone sales calls may impose huge penalties

BY RUSSELL O'ROURKE

This new column covering Ohio construction law will run every other month.
Handwritten changes
can eliminate liability
Ohio Carpenters’ Fringe Benefit Fund v. Krulak: Roger Krulak, as president of Construction Source Inc., signed a cognovit note promising to make payments to OCFBF totaling almost $51,000. The original intent of the document prepared by OCFBF was to make both Krulak and Construction Source liable for the debt. Before signing the note, Krulak made several changes to the document, each intended to provide that Krulak was signing the note in his corporate capacity as president of the company and not individually.
After making approximately $6,000 in payments, no further payments were made. OCFBF obtained a cognovit judgment against Construction Source and Krulak. The court later granted Krulak’s Motion for Relief from Judgment, relieving him of personal liability under the note.
The 8th District Court of Appeals for Cuyahoga County affirmed the trial court decision because the changes Krulak made before signing made it clear that he did not intend to be personally liable, citing the 1905 Ohio Supreme Court case of Aungst v. Creque.
Faxing or phone sales calls may impose huge penalties
Under the right (or wrong) circumstances, sending an unauthorized fax or making a telephone call to someone might snare your company into litigation with statutorily imposed penalties far outweighing any actual damage to the recipient. There have been several recent cases dealing with issues created by the National Do Not Call List, Telephone Consumer Protection Act of 1991 and the Junk Fax Protection Act of 2005. Penalties can exponentially multiply under the Ohio Consumer Sales Practices Act by allowing the assessment of attorneys’ fees if the offending fax or call is made to a “consumer,” as defined in the statute, rather than to a business. Many attorneys for plaintiffs have tried to turn cases into class action cases when they find unauthorized faxes to numerous recipients.
In the case of Bransky v. Hamid Shahrokhi dba Nutrition Solutions, the 8th District Court for Cuyahoga County found that the Lyndhurst Municipal Court award of $500 damages for three faxes was inadequate. Federal law provides for $500 per violation, which, if the Court determined was “willful,” can be increased up to three times. State law provides an additional $200 per violation and permits the Court to award attorneys’ fees.
In Charvat v. Ryan, the Ohio Supreme Court held that the term “willful” means “that the defendant knew that it acted or failed to act in a manner that violated the statute, not that the defendant knew that the conduct itself constituted a violation of the law.” Ryan, a dentist, was told by the Ohio Attorney General’s office that “all he had to do was download and honor the federal do-not-call list” in a telemarketing campaign. Ryan’s first violation was to use automated dialing equipment. When Charvat, apparently not on the D-N-C list, demanded a copy of Ryan’s D-N-C policy, Ryan failed to respond, his second violation.
The issue of using “willful” as the standard to determine if the damage amount can be tripled appears to mean that if the violation was not willful, perhaps even accidental, it is still a violation which could support a claim.
Because someone has published a fax number or is on a bidders’ list does not mean you are authorized to send a fax to that person. To view a copy of the statutes visit www.ORourke-Law.com. For a list of recent filings showing fax claim cases in Northeast Ohio counties visit www.ConstructionCreditNews.com.