## Facts

- Ron Spangler and his brother Jim Spangler started a tool-and-die business and later incorporated it as Spangler Superior Tool Mfg., Inc., with Jim holding a majority interest and Ron holding the remaining minority interest.
- Ron struggled with alcoholism for decades. By the early 1990s, his condition allegedly worsened and affected his work performance.
- In 2001 Ron was diagnosed with prostate cancer, took leave, and returned to work allegedly addicted to Vicodin and alcohol.
- Jim fired Ron in 2006. Jim testified he resented that Ron continued to receive benefits from the business while contributing little.
- Jim formed a separate company with his wife, Jerelyn Spangler, and moved work from the original business to the new company (identified in the litigation as Rapid Machine Inc.).
- In 2014 Ron was diagnosed with terminal cancer. Ron’s daughter, Ronda, testified that Ron was self-medicating with drugs and alcohol, showed signs of cognitive decline, and needed help handling daily tasks and finances.
- Over time Jim had made many offers to buy Ron’s shares; Ron declined until 2015. In June 2015 Ron signed a buyout agreement drafted by Jerelyn, without telling his children.
- Jim and Jerelyn testified Ron looked unusually well and sober at signing, though they knew about his history of substance abuse.
- The economic terms allegedly paid Ron only a small fraction of the value of his ownership interest and were structured in a way that reduced the income Ron otherwise would have received before his death (including rental-related income tied to the business property).
- Months later Ronda learned of the transaction. She testified that Ron believed the papers merely increased his rental income and that Jim told him to keep the documents from his children.
- After Ronda explained the agreement’s effect, Ron became upset and sued Jim, Jerelyn, and Rapid Machine Inc., seeking to avoid the contract based on incapacity, unconscionability, and fraud-related theories.
- Ron died in 2016, and Ronda Tulloch, as personal representative of Ron’s estate, continued the case. Defendants moved for summary judgment.

## Issues

1. Whether the record created a genuine dispute of material fact that Ron lacked capacity to contract when he signed the 2015 buyout agreement.
2. Whether a reasonable jury could find the buyout agreement unconscionable under Ohio law, based on both the bargaining circumstances and the fairness of the terms.
3. Whether defendants were entitled to summary judgment on the estate’s fraud-by-nondisclosure (silent fraud) claim.
4. Whether defendants were entitled to summary judgment on a contract theory premised on “patent ambiguity” in the agreement’s language.

## Decision

- The court granted defendants’ motion for summary judgment in part and denied it in part.
- Summary judgment was denied on incapacity because the evidence about Ron’s condition and understanding at the time of signing was conflicting and credibility dependent.
- Summary judgment was denied on unconscionability because the estate produced evidence supporting both procedural concerns (including Ron’s health and alleged confusion, lack of independent counsel, and drafting by Jerelyn) and substantively lopsided terms (including the disparity between value and price).
- Summary judgment was granted for defendants on the silent-fraud claim because the estate failed to establish the required elements, including a legally recognized duty to disclose sufficient to support nondisclosure liability on this record.
- Summary judgment was granted for defendants on the patent-ambiguity theory; the court rejected using obvious (patent) ambiguity as an independent basis to invalidate the agreement and applied standard contract-construction rules, including construing ambiguity against the drafter where appropriate.

## Legal Principles

- Under Ohio law, contractual capacity depends on whether, at the time of contracting, the person could reasonably understand the nature and effect of the transaction; where the evidence conflicts, capacity is ordinarily a fact question.
- Unconscionability under Ohio law examines both procedural factors (the bargaining setting, meaningful choice, and possible oppression or surprise) and substantive factors (whether the terms are unreasonably one-sided); evidence on both can defeat summary judgment.
- On summary judgment, the court must view the evidence in the nonmovant’s favor and may not decide credibility disputes, including competing accounts of a party’s lucidity and comprehension during contract execution.
- Silent fraud (fraud by nondisclosure) requires proof of the elements of fraud, including a duty to disclose; without evidence supporting that duty and the remaining elements, the claim fails as a matter of law.
- In interpreting written contracts under Ohio law, ambiguity is generally construed against the drafting party; ambiguity alone does not automatically void an agreement.

## Conclusion

In *Spangler v. Spangler*, the Northern District of Ohio held that the estate presented triable fact disputes about whether Ron Spangler had capacity to sign a 2015 insider buyout and whether the deal was unconscionable given the alleged impairment, lack of counsel, and extreme value disparity, but the court entered summary judgment for defendants on silent fraud and on a claim resting on patent ambiguity in the contract language.


Spangler v. Spangler, 451 F. Supp. 3d 813 (2020)