Subsequent Lease Amendments Nullify Ambiguous Guaranty

What Happened: In 1993, a tenant signed a lease to operate a tanning salon at a strip mall. The agreement included a third-party guaranty. The lease was amended in 1994 and again in 1996. In each case, the guarantors signed the amendments. In 1999, the sides executed a third amendment making significant changes to the original 1993 lease, including moving the tanning salon to another location owned by the landlord. But this time, the guarantors didn’t sign and weren’t even mentioned in the amendment; nor would they sign or be mentioned in any of the many subsequent amendments.

After 25 years of having no contact with them, the landlord sued the guarantors to make good on the guaranty. The court ruled that the guarantors were no longer bound by the guaranty.

Ruling: The Ohio appeals court agreed and tossed the landlord’s appeal.

Reasoning: The guaranty agreement stated that “[t]he guaranty is limited to a maximum of [$33,150] for the lease dated November 8, 1993.” In addition, the original lease contained the following language: “Except as otherwise provided, no subsequent alterations, amendment, change or addition to this lease shall be binding upon landlord or tenant unless reduced to writing and signed by them” (emphasis added). Since there was no definition of “them,” the term was ambiguous and the court was free to interpret it against the landlord that drafted it. Result: The court construed “them” as “exclud[ing] anyone who did not sign the lease amendments either in their personal or representative capacity.”

“We find it untenable to bind an original signatory to nine lease amendments executed over a period of 25 years, when the signatory was neither a party to the lease amendments nor defined as a tenant,” the court concluded. 

• Kamms Plaza Shopping Ctr., LLC v. Nida Enters., 2024-Ohio-2068, 2024 Ohio App. LEXIS 1940