Merit Decision: Resuming a Romantic Relationship Is Not Consideration for a Contract. Williams v. Ormsby.

 On February 23, 2012 the Supreme Court of Ohio decided the case of Williams v. Ormsby, 2012-Ohio-690.  The issue was whether “merely resuming a romantic relationship by moving into a home with another can serve as consideration for a contract,” and the answer from a 6-1 Court* (I think that’s the right count; Justice Pfeifer concurred in the syllabus, but dissented as to the opinion and the judgment; Justice O’Donnell concurred in judgment only) was a most emphatic no. Justice Lanzinger authored the opinion, which I immediately emailed to my contracts colleagues, because the opinion goes through every old saw in the contracts playbook—a contract is a promise the law will enforce, the elements of a contract are offer, acceptance, consideration, capacity, and manifestation of mutual assent, the law will not inquire into the adequacy of consideration, a novation is the substitution of a third party for one of the original parties to the contract, and the third party assumes the original benefits and burdens, consideration is what distinguishes a contract from a gift—whew! If you need any basic cites for a contract case, go to this case first. 

This was the case hawked as raising the ominous specter of palimony in Ohio.  But the Court clearly dispelled that notion in distinguishing a case from New Jersey, which does—“ “[P]alimony is not recognized by Ohio statute or common law, and Ohio does not permit a division of assets or property based on cohabitation,” wrote Justice Lanzinger. Justice Stratton had made mention of this at oral argument.

The best way to start the analysis of this decision is with this comment from Justice Pfeifer’s dissent—“The case is so fact specific and so riven with bizarre, if irrelevant details, however, that it provides no meaningful guidance to the bench and bar.”  He thought the case should have been dismissed as improvidently allowed. 

I’m going to distill the facts considerably.

Amber Williams and Frederick Ormsby evidently were once in love. In May of 2004 Frederick moved into Amber’s house and in fairly short order paid off her entire mortgage. In return, Amber gave him a deed to the house.  By early 2005 things had deteriorated.  The parties called off their marriage plans.  In March of 2005 they signed a contract to lay out their respective interests in the property.  They agreed that the house should be sold. The first $324,000 of the net proceeds would be paid to Frederick to reimburse him for what he had already paid, and anything over that amount would go to Amber.  The enforceability of this agreement was not before the Court, although in analyzing this case, particularly the novation argument, the Court concluded that the March 25 contract was supported by consideration and was enforceable.

The parties soon decided to try and reconcile.  Amber refused to move back into the house unless Frederick granted her an undivided half interest in it.  Frederick agreed and in June of 2005, they drew up a contract that made them “equal partners” in the property and entitled to equal shares in the event that they split up again. Amber moved back in.  A couple of years later they permanently called it quits.  They went to court and sued each other.  The trial court found that the March 2005 agreement was valid but the June 2005 contract was not.  The Ninth District Court of Appeals reversed.

Frederick argued to the Supreme Court that the only consideration for the June 2005 agreement was resuming a romantic relationship, and that wasn’t good enough.  Amber argued that the March 2005 agreement was novated by the June agreement, which was supported by consideration. 

Short version—the Court agreed with Frederick.  The high court spent most of the decision distinguishing or rejecting as not persuasive the cases on which the appellate court had relied. The key point is that love and affection are not consideration for a contract (reminder—a court will not inquire into the adequacy of consideration). 

“[T]he evidence demonstrates that the only consideration offered by Amber for the June 2005 agreement was her resumption of a romantic relationship with Frederick. There is no detriment to Amber in the June 2005 document, only benefit. Essentially, this agreement amounts to a gratuitous promise by Frederick to give Amber an interest in property based solely on the consideration of her love and affection. Therefore, the June 2005 document is not an enforceable contract because it fails for want of consideration,” wrote Lanzinger.

The Court also rejected Amber’s argument about a novation, because a novation is only effective where a previous obligation is extinguished by a valid new contract.  Since the June 2005 contract failed for want of consideration, it could not be the basis of a novation.

In his dissent, Justice Pfeifer would find that there was consideration for the June 2005 contract, but still ultimately would dismiss the case as improvidently allowed.

Syllabus

Merely moving into a home with another while engaging in a romantic relationship is not consideration for the formation of a contract.

Concluding Observations

I don’t think it was ever likely that the Court would accept as syllabus law that merely resuming a romantic relationship could be consideration for a contract. But the Court was much more critical of the Court of Appeals decision than I anticipated. And the specter of palimony argument went nowhere.

*I see that the Columbus Dispatch referred to this as a unanimous decision.  Technically that is correct becasue Justice Pfeifer concurred in the syllabus, but in substance, he really dissented.

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