The owners of small or closely-held business enterprises should be cautious when making personal guarantees of payment to their suppliers.  That was the lesson in an opinion issued by the Ohio Fifth District Court of Appeals on March 12, 2012 in Countywide Petroleum Co. v. El-Ghazal Gasoline Servs., Inc., 2012-Ohio-1009.  In its decision, the Court determined that the doctrine of “promissory estoppel” permitted a supplier of goods to recover damages from a business owner when that owner had personally promised to pay for those goods.

In Countywide, the plaintiff was a wholesale supplier of gasoline.  The Defendant was the sole owner of an LLC, “EGS”, which operated a gas station located in Massillon, Ohio.  The parties entered into a business relationship, during which EGS submitted credit applications to the Plaintiff in which the Defendant and his wife personally guaranteed EGS’s account.

During an audit of the parties’ accounts, it was determined that the Plaintiff was owed approximately $82,000 for the delivery of gasoline that EGS had not paid for.  The Plaintiff asserted that in addition to its contract with EGS, it could recover damages from Defendant personally because he had personally promised to pay the invoices.  To support its position, the Plaintiff relied upon an affidavit filed by the Defendant during the trial.  In his affidavit, the Defendant argued that a cognovit note entered into between the parties during the course of their business relationship was invalid because it had not been properly completed.  However, the Defendant also admitted in the same affidavit that he had originally agreed to “pay each invoice within 30 days” of receiving it.  The Plaintiff asserted that it expected the Defendant to be personally responsible for the payment of the invoices, which is why it continued to do business with him.

The Court decided that the principles of the doctrine of promissory estoppel applied to the Defendant’s promise and ruled that he could be held personally liable for the unpaid invoices.  Promissory estoppel is a doctrine that attempts to prevent harm to parties which reasonably rely upon another party’s false promises.  To establish a claim for promissory estoppel, a Plaintiff must show:

1. A promise that is clear and unambiguous in its terms;
2. The party to whom the promise is made (the Plaintiff) must rely on that promise;
3. The Plaintiff’s reliance must be reasonable and foreseeable by the Defendant; and
4. The Plaintiff must be injured by the reliance.

Countywide, 2012-Ohio-1009, ¶ 26.  The Court determined that, despite the fact that the Defendant’s business was a limited liability company, because the Defendant had personally promised to pay the invoices, he was personally liable for the Plaintiff’s damages under the promissory estoppel doctrine because his promise was “reasonably relied upon” by the Plaintiff to its detriment. Id, ¶31.

If you are a business owner, the lesson that you need to take away from the Fifth District’s decision in Countywide is that you must be extremely careful when negotiating business arrangements with your suppliers or other parties you enter into contracts with.  If, in an effort to get a deal done or to make sure that you continue to receive supplies on a timely basis, you promise that you will personally pay for any shortfalls that your business may run into, you may be forced to fulfill to that promise later even if you otherwise would be protected from liability because of the structure of your business.

The Defendant in Countywide was the owner of a limited liability company, meaning that he had substantial protections from the liabilities and debts of the company that he owned.  However, because he admitted that he had personally guaranteed to pay the Plaintiff for any invoices which his company could not pay, the Court required him to live up to that promise because it believed that the Plaintiff had relied upon that promise and was injured as a result.  This may lead to some hard decisions; because suppliers and lenders frequently require personal guarantees to work with small businesses, you may not have any other options, but you should at least be aware of the possible consequences to your personal bank account.

The temptation to enter into a deal with the Plaintiff caused the Defendant in Countywide to step beyond the protections offered by his company’s limited liability and led him to make a promise that he ended up regretting.  Learn a lesson from the Defendant’s mistake – think carefully before you make a personal guarantee just to get a particular deal done and, if you do make a guarantee, understand the potential consequences of doing so.

We all have our favorite legal show—whether it’s Law and Order, Judge Joe Brown, or my personal favorite, the Three Stooges classic “Disorder in the Court”—and just about everyone knows (or thinks they know) a little about how the legal system works.  In some of those shows, the people arguing the cases aren’t lawyers; they’re just regular people arguing their own cases in front of a judge without the help of an attorney.  What these people have to do usually isn’t very hard; in fact, you’ve probably even said to yourself, “I could do a better job than he could!”  Maybe you’ve even considered representing yourself in a legal issue—after all, who needs a high-priced attorney when you can go it alone?

Let’s be clear, though: watching Judge Judy once a week or having “TiVoed” a few episodes of Boston Legal does not make you qualified to argue your case in front of a judge or jury—the real-life legal system is not like what you see on television.  There are many factors to take into consideration before deciding to make the (potentially life-altering) decision to represent oneself in court.  In this article and those that follow, I’ll give some tips and point out some potential problems to anyone considering acting as their own lawyer in handling a legal issue.

A person who represents himself or herself in a court of law or another legal capacity is said to be acting pro se (pronounced “pro say”).  Pro se is a Latin term—and get used to Latin if you decide to represent yourself, since many of the legal terms still in use today derive from Latin—defined as “for oneself; on one’s own behalf; without a lawyer” (see Black’s Law Dictionary, 8^th Ed., p. 1258).  People choose to act pro se in legal proceedings for a variety of reasons: they may wish to avoid the expense of hiring an attorney, the issues involved in the case may be simple enough to handle on their own, they may want to control their own case directly, and so on.

There are certainly situations in which it may make sense to act as your own attorney, such as certain legal matters that may be simple enough to handle on your own.  In Small Claims courts, for example, the amounts being disputed are frequently fairly small, while hiring an attorney can cost hundreds of dollars per hour!  If you’ve been sued for a small amount (a few hundred dollars, for example) it may not make sense to pay an attorney—your costs are going to outweigh any potential benefit.  On the other hand, remember that in the legal world there is no such thing as a “one size fits all” approach.  For example, if you’re only being sued for a few hundred dollars but losing the case means that you’ll miss a house payment or a credit card payment, choosing to represent yourself when you have other legal options may not be the best idea.  Remember that even seemingly simple situations can have far-reaching consequences.

Although I’m a bit biased, being an attorney myself and getting to see the advantages and disadvantages of hiring a lawyer from an up-close perspective, I’m a firm believer that at least in situations where a legal action (such as a lawsuit or criminal charge) is pending or may be filed in the future, it is wise to hire an attorney or at the very least to talk with one to get an opinion on whether legal services are needed.

Don’t EVER make the decision to represent yourself without carefully considering the potential outcome of that decision.  If you choose to represent yourself, the odds are that no matter how good your legal position may be (or how good you think it may be), you will be at a serious disadvantage in most situations.  Opposing parties who have hired lawyers will have access to trained professionals who understand the complex and challenging court system, who know how to try cases, who understand judges and juries, and who have access to research and resources that you may not even be aware of.  Even worse, legal professionals—whether they are opposing attorneys, court personnel, or even judges—will assume that you don’t have an understanding of “the way things work.”  They may view you as a burden on their time and energy and anticipate that you will struggle with doing things the “right way,” even if those assumptions are wrong.  While you technically have access to an equal playing field when it comes to representing yourself in a court of law, the reality is that the legal system tends to favor parties who hire attorneys.  You will need to be prepared to face these hurdles if you are to be successful in representing yourself.

My goal in this article and those that follow is not to provide you with a perfect plan in which you are guaranteed success if you represent yourself—there are no guarantees in the law. Every person’s situation is different, and every legal decision is the result of a lot of different factors; what works for one person might not be effective in another person’s case.  So, instead of looking for a foolproof strategy, please use this information as a resource to learn some steps you’ll need to take if you decide to act as your own lawyer.

Remember, no single approach to resolving a legal action is foolproof.  While you can’t guarantee success or even a good likelihood of success, you can improve your chances by using common sense and being well prepared.  Representing yourself in a legal matter is an intimidating thing to do, so you should only make the decision to do so if you’ve carefully considered your options and are prepared for the results.  Consider talking to an attorney to see whether hiring one will even be necessary; many attorneys will offer an initial consultation for this purpose without charging a fee.

Although the articles in this series will be written with those in mind who are actively involved in a legal matter, the concepts they will discuss can be applied to almost any aspect of the law.  If you’ve made it this far and you feel that representing yourself is the best course of action, hopefully the rest of the articles in this series can provide some useful guidance. 

Finally, and most importantly, remember that no article can provide a substitute for legal advice specifically tailored to your situation from a licensed attorney.  Consult a lawyer if you have any questions about the legal issues you are facing.

Adam is an associate attorney at Rohrbachers Cron Manahan Trimble & Zimmerman Co., L.P.A.  This article is intended to be the first in a multi-part series providing practical tips for pro se parties representing themselves in a legal action.

Since the recession began in 2008, The City of Toledo has experienced a level of suspected arson fires that are unprecedented in recent memory.  The prolonged recession has created a climate where “desperate people are doing desperate things.”  Homes are being destroyed, lives are being lost, and the risks of injury to occupants and firefighters are ever present.  The summer of 2011 is the second summer in a row that the city has had a significant increase the number of fires labeled “suspicious” by the Toledo Fire Department. 

There are a number of reasons why arson fires are set (i.e.  domestic issues, revenge, and thrill seeking), however, during these difficult economic times, setting fires for the purpose of procuring insurance benefits is the primary motivation.  While arson fires have been set in various areas of Toledo’s central city, the fires are primarily in areas of depressed property valuations. 

In order to establish that an individual intentionally set a fire, in ether a civil or criminal case, the prosecution or the insurance company must prove that someone had the opportunity and the means to have set the fire.  While not necessary as a matter of law, it is also important that the individual have some motivation to have set the fire.  Financial motivation (i.e.  the collection of insurance proceeds) is a strong indicator. 

In making a determination of whether the individual had the opportunity and the means to set an incendiary fire, an inspection of the scene by a certified fire investigator, following proper guidelines established by the Nation Fire Protection Association (NFPA), is critical in making that determination.  As City of Toledo Deputy Fire Chief Phil Cervantes told the Toledo (Ohio) Blade newspaper, “I’m sure there are a lot more out there that are arsons that we can’t determine,” he said.  “I just don’t have what I need to definitively say it’s an arson fire.  I know it is from experience.  I know what I’m looking at or what I’m reading is an arson fire, but if the house fell down or we had to tear it down, we’ve got to list it as ‘undetermined’.

Toledo Firefighters order a structure to be torn down when they believe the structure poses a risk to public safety and/or to the safety of firefighters.  This has become a source of frustration for insurance companies who are called; sometimes days after the fact, and must ask an expert to make a determination of the origin and cause of the fire and the security of the dwelling after the fire is extinguished.  Often, if the arsonist has properly performed his criminal act, the structure is an inferno by the time firefighters arrive and it is unstable and eventually torn down in the interest of safety.  The scene, as a result, is compromised, and often, critical evidence is lost.  While both the Toledo Fire Department and the insurance carrier have a stake in determining whether an incendiary fire occurred, many times, efforts to balance the interests of safety against making a determination of the origin and cause of the fire have been unsuccessful.  The Toledo Fire Department has erred on the side of safety on every occasion.  While public safety is their primary goal, an unintended result is that the suspected arsonist is often unable to be prosecuted or to have his insurance claim properly evaluated because the scene has been destroyed.  This situation makes it difficult for an expert to make an origin and cause determination.

Let’s hope that a solution can be found and a balance struck between these two oftentimes competing yet laudable goals. 

Powers of Attorney need to have language in them regarding disability or they will not be effective after the grantor of the power becomes disabled.

Section 1337.09(A) of the Ohio Revised Code states in part,

Whenever a principal designates another as attorney in fact by a power of attorney in writing and the writing contains the words “This power of attorney shall not be affected by disability of the principal,” “this power of attorney shall not be affected by disability of the principal or lapse of time,” or words of similar import, the authority of the attorney in fact is exercisable by the attorney in fact as provided in the written instrument notwithstanding the later disability, incapacity, or adjudged incompetency of the principal…

In a recent matter handled in our office, our review of a power of attorney, prepared (not by our office)  out of state, failed to contain the above language.  The result requires a guardianship to be established to take care of the principal.  Going through the formality of the guardianship is much more expensive and time consuming than having a properly drafted power of attorney.  If you have a question contact our office to review the document.