08/20/25

The Ohio Supreme Court has issued a landmark decision in Huntington Natl. Bank v. Schneider (2025-Ohio-2920), reversing a First District Court of Appeals ruling that threatened to upend decades of settled commercial lending practice. The Court held that lenders do not have an affirmative duty to disclose facts that may materially increase a guarantor’s or surety’s risk, unless a special relationship of trust or confidence exists between the parties.

This decision restores stability to Ohio’s lending environment, ensuring that contracts made at arm’s length will be enforced as written. The Court emphasized that Ohio law has long recognized the freedom of parties to structure agreements without imposing new, extracontractual disclosure obligations. By rejecting the “doctrine of increased risk” from the Restatement of Security, the Court protected the enforceability of guaranty agreements—an essential tool in commercial finance.

Case Background
The case stemmed from Huntington National Bank’s $77 million financing arrangement with entities connected to a health care enterprise. Raymond Schneider, a co-owner, signed a personal guaranty. After the borrowers defaulted, Schneider argued the bank failed to disclose financial risks tied to his business partner’s misconduct. The trial court ruled for the bank, but the First District reversed, adopting a new duty of disclosure for lenders.

The Supreme Court, in a majority opinion by Chief Justice Sharon Kennedy, rejected that approach, reinstating summary judgment for Huntington. Justice Jennifer Brunner concurred in part and dissented in part, suggesting disclosure duties might apply for unsophisticated investors, but the majority drew a firm line: absent fraud or a fiduciary relationship, banks owe no special disclosure duties in guaranty or surety agreements.

OBL’s Role and Amicus Brief
The Ohio Bankers League, alongside the American Bankers Association, the Ohio Credit Union League, and America’s Credit Unions, filed an amicus brief urging reversal. The brief warned that the First District’s ruling would retroactively transform standard guaranty agreements into suretyships, injecting uncertainty into thousands of existing contracts and curtailing credit availability across Ohio.

OBL emphasized that personal guaranties are vital for commercial lending—particularly for small businesses, startups, and development in underserved communities. Without enforceable guaranties, lenders face heightened risk, which would increase borrowing costs, restrict access to credit, and ultimately hinder economic growth.

Impact on Ohio Banking Industry
The Supreme Court’s decision is a significant victory for Ohio’s banking industry and the broader state economy. It reaffirms that:

·        Standard guaranty agreements remain enforceable as written.

·        Lenders and borrowers can continue to rely on established commercial lending practices.

·        Ohio remains a business-friendly state with predictable contract enforcement.

By avoiding the creation of new disclosure duties, the Court preserved the availability of credit while preventing additional compliance burdens on financial institutions.

Conclusion
The OBL is proud to have played a central role in protecting the integrity of commercial lending in Ohio. Our successful advocacy in this case demonstrates the importance of the banking industry speaking with one voice to ensure sound legal and economic policy. This ruling is not only a victory for banks but also for Ohio businesses and communities that rely on access to capital for growth and development.