author: EILEEN T. GALLAGHER, P.J.: PATRICIA ANN BLACKMON, J., DISSENTING

text:
    Evangelos STAMATOPOULOS, et al., Plaintiffs-Appellees/Cross-Appellants v. ALL SEASONS CONTRACTING, et al., Defendants-Appellants/Cross-Appellees
    No. 103555
    Court of Appeals of Ohio, Eighth District, Cuyahoga County.
    RELEASED AND JOURNALIZED: February 1, 2018
    John M. Manos, John M. Manos Co., L.P.A., 739 East 140th Street, Cleveland, Ohio 44110, ATTORNEY FOR APPELLANTS.
    Mary Jane Trapp, Trasher Dinsmore & Dolan, L.P.A., 1111 Superior Avenue, Suite 412, Cleveland, Ohio 44114, ATTORNEY FOR APPELLEES.
    BEFORE: E.T. Gallagher, P.J., Blackmon, J., and Celebrezze, J.
    JOURNAL ENTRY AND OPINION
   EILEEN T. GALLAGHER, P.J.:

{¶ 1} Defendants-appellants, Mark Fourtounis ("Mark"), Global Outdoor Solutions, L.L.C. ("Global"), and Nikolas and Marika Fourtounis, individually, and as Trustees of the Nikolas and Marika Fourtounis Living Trust ("the Fourtounises") (collectively "appellants"), appeal from various orders of the trial court following a jury verdict rendered against plaintiffs-appellees Evangelos Stamatopoulos and Lightning Capital Holdings, L.L.C. ("appellees"). Appellants raise the following six assignments of error:

1. The trial court erred in dismissing with prejudice all claims that were not submitted to the jury.
2. The trial court erred in failing to award appellants reasonable attorney fees incurred to enforce the settlement agreement.
3. The trial court erred in failing to award appellants attorney fees when an unconstitutional seizure of their property was established and the property ordered returned.
4. The trial court erred in failing to include the provisions of the March 30, 2012 Erie Painting letter agreement in the judgment of specific performance.
5. The trial court erred in denying Global's motion for new trial on damages.
6. The trial court erred in denying appellants' motion to amend the pleadings to conform the evidence.

{¶ 2} Appellees have filed a cross-appeal, raising the following cross-assignments of error:

1. The trial court erred as a matter of law in holding and then instructing the jury that the seizure of property pursuant to a valid order of possession issued in the replevin action was unconstitutional, and it was plain error to decide this dispositive issue via ruling on an evidentiary motion in limine.
2. The trial court erred as a matter of law in instructing the jury that defendants were entitled to damages for the seizure of property belonging to plaintiffs and loss of use of one piece of the property pledged as collateral.
3. The trial court abused its discretion by entering a money judgment in favor of Nikolas and Marika Fourtounis and then ordering specific performance.
4. The trial court erred as a matter of law by directing a verdict in favor of appellants on Mr. Stamatopoulos' conversion claim for relief.
5. The verdict in favor of Nikolas and Marika Fourtounis is against the manifest weight of the evidence and was based in part upon plain error as a matter of law in admitting incompetent testimony as to the possible rental value of the Super Sucker by a witness who was neither the owner of the property or qualified as an expert witness.

{¶ 3} After careful review or the record and relevant case law, we reverse and remand the matter for further proceedings consistent with this opinion.

I. Procedural and Factual History

A. Business Relationship

{¶ 4} The record reflects that prior to the filing of this case, Mark operated contracting, painting, and landscaping companies known as All Seasons Contracting and Painting, Inc., All Seasons Contracting and Landscaping, Co., and All Seasons Contracting, Inc. (collectively "All Seasons"). During his operation of the All Seasons businesses, Mark purchased vehicles and specialized equipment for bridge painting, bridge resurfacing, and landscaping. Mark personally guaranteed the debt for these purchases, and Fifth Third Bank had a security interest in the assets. In 2010, the All Season companies began to struggle, and Fifth Third demanded immediate repayment on All Seasons' outstanding loan balance in the amount of $1,200,000. As a result of the demand, both All Seasons and Mark, personally, filed for bankruptcy.

{¶ 5} In the midst of his bankruptcy proceedings, Mark's personal friend, appellee Evangelos Stamatopoulos, agreed to purchase the assets of All Seasons for $220,000, and the bankruptcy court issued an order transferring possession of the equipment to Stamatopoulos free and clear from all other encumbrances.

{¶ 6} In order to pay the $220,000 for the equipment, Stamatopoulos pledged his New York City apartment as collateral. However, Stamatopoulos was not permitted to take out a second mortgage on the apartment and had to pay its outstanding balance of $31,452 before he could use it as collateral. The record reflects that Mark's parents, the Fourtounises, agreed to loan Stamatopoulos funds to satisfy his outstanding loan. The Fourtounises allege that they advanced "an additional $76,249 for funds to repair the equipment and an additional $39,440 to cover business expenses and interest on the purchase money loan."

{¶ 7} Lightning Capital Holdings was formed to take title of the assets after the bankruptcy sale closed. Stamatopoulos testified that he was the sole owner of Lighting Capital Holdings and that Mark's responsibilities with the company included locating all of the equipment that Stamatopoulos had purchased in the bankruptcy proceedings, preparing the equipment for use, and moving the equipment to a warehouse owned by Mark's brother. Mark, however, maintained that he was not an employee, but instead was Stamatopoulos's equal partner in Lighting Capital Holdings and the venture to purchase the All Seasons assets from Fifth Third Bank.

{¶ 8} After several months, the personal relationship between Mark and Stamatopoulos deteriorated. By March 2012, the parties severed their business arrangement and entered into a settlement agreement in an effort to resolve their "various financial and business dealings." In the settlement agreement the parties agreed to the following relevant provisions:

1. Concurrently with the execution of this Agreement, [appellees] shall execute and deliver a Cognovit Promissory Note to [the Fortounises] in the amount of $112,000, said amount due and payable on or before June 30, 2012. * * * Said cognovit promissory note obligation shall be secured by certain equipment owned by [appellees], to wit: a Volvo Truck, a so called "Super Sucker" * * *.
Said Super Sucker is hereby pledged as security for payment of the Cognovit Promissory Note by titling it to and placing it in the possession of [the Fourtounises.] In the event that [appellees] shall default upon the said cognovit promissory obligation, * * * [the Fourtounises] may take free and clear title to said Super Sucker and retain, use and/or dispose of it as they shall deem fit in full satisfaction of the note or may pursue other legal remedies available to them pursuant to Ohio law and in accordance with the terms of said cognovit promissory note.
* * *
2. As additional consideration to the amount set forth in the Cognovit Promissory Note referenced in paragraph 1 above, it is further agreed that [appellees] will transfer title to, free and clear of any and all claims and/or encumbrances, vehicles and/or equipment to [Mark] * * * as identified on the attached Exhibit B, incorporated herein.

{¶ 9} The terms of the cognovit note, signed by appellees on March 30, 2012, provided that during the pledge period, title to the Volvo vacuum truck would be held by the Fourtounises, but Stamatopoulos would be permitted to use the truck while it is pledged as collateral if he secured a bond to protect against "resulting value diminution." Following the execution of the settlement agreement and cognovit promissory note, Stamatopoulos moved his business operations to a new location, and Mark began operating Global, a landscaping company, with some of the equipment purchased in the bankruptcy sale.

{¶ 10} Thereafter, a dispute arose between the parties regarding the ownership of various pieces of business equipment. Appellants believed that the settlement agreement signed by Stamatopoulos addressed the disposition of the assets. However, Stamatopoulos argued he was forced to sign the agreement under duress.

B. Complaint and Counterclaims are Initiated

{¶ 11} In Stamatopoulos v. All Seasons Contr., Inc. , 8th Dist. Cuyahoga No. 101439, 2015-Ohio-1141, 2015 WL 1375727, this court summarized the procedural history of this action as follows:

The record reflects that on June 27, 2012, appellees filed a complaint in Cuyahoga County Common Pleas Court seeking replevin, an order of possession, "and other relief" against the following parties: (1) All Seasons Contracting, Inc., (2) All Seasons Contracting and Painting, Inc., (3) All Seasons Contracting and Landscaping, (4) Mark Fourtounis, (5) Global, (6) "Doe Corporation," and (7) the Fourtounises.
Appellees presented seven claims: (1) "alter ego," (2) breach of contract, (3) fraudulent inducement, (4) conversion, (5) replevin, (6) unjust enrichment, and (7) trespass to chattel. Appellees also sought and obtained from the trial court, without posting a bond, an emergency order of possession of 44 specific pieces of machinery, together with "[a]ll other assets purchased by the Stamatopoulos Parties in the bankruptcy of Defendants All Seasons * * * which are reasonably identifiable and which have yet to be turned over * * *." The record reflects that only the Fourtounises received service of the complaint.
Nevertheless, all of the appellants filed in the trial court requests for a hearing and an emergency stay of the order of possession. The court conducted a hearing and ordered appellants to provide appellees with a list of the locations of the property at issue.
On November 9, 2012, the Fourtounises filed a separate action against appellees in the trial court seeking confession of judgment on a cognovit note. Shortly thereafter, these same appellants filed an answer to appellees' claims in the original case.
On November 21, 2012, Mark filed an answer and a counterclaim to appellees' claims in the original case. Mark averred in his answer that the All Seasons companies had been "liquidated by order of the U.S. Bankruptcy Court on June 13, 2011 and the corporate charters for each corporation [were] thereafter cancelled by the Ohio Secretary of State."
In his counterclaim, Mark sought an order from the trial court to enforce a settlement agreement. Mark averred that on March 30, 2012, appellee Stamatopoulos had entered into an agreement with appellants to resolve claims for "past due rent," and for "repayment of loans."
According to the terms of this agreement, which was attached to Mark's counterclaim as an exhibit, Stamatopoulos executed a "Cognovit Promissory Note made payable to Manolis Investments, LLC" and the Fourtounises in the amount of $112,000. As security for the note, Stamatopoulos would, inter alia, transfer both the title and the possession of a Volvo truck known as a "Super Sucker" to the Fourtounises. Mark claimed that appellees had failed to comply with the terms of the settlement agreement, and demanded that the trial court enforce it.
For some time, the cases proceeded separately. On May 30, 2013, the trial court consolidated the two cases. In July 2013, the Fourtounises amended their cognovit complaint against appellees. The Fourtounises set forth five claims in their amended complaint: (1) breach of the settlement agreement, (2) breach of the Note, (3) wrongful attachment, (4) violation of civil rights under color of state law, and (5) punitive damages.
On May 30, 2013, Global filed an answer to appellees' original complaint, together with a counterclaim. The counterclaim alleged six causes of action: (1) breach of the settlement agreement, (2) breach of the "Letter Agreement," (3) wrongful seizure of property, (4) violation of civil rights under state law, (5) malicious conduct intended to cause economic harm, and (6) malicious conduct intended to intimidate Global from pursuing its civil remedies.
After appellees filed an answer to the Fourtounises' amended complaint in the cognovit case, the trial court referred the cases to mediation. Mediation proved unsuccessful; therefore, the court resumed trial preparations. In July 2013, appellees filed answers to Mark's and Global's counterclaims. Appellees asserted the defense of duress.
The record reflects that the cases proceeded to a jury trial in February 2014, although the trial court's docket is silent as to the precise date. According to one of the trial court's journal entries, motions "were ruled on during trial; transcript will indicate rulings."
The jury's verdict forms supplied by the parties pursuant to App.R. 9(E) indicate that the jury found for the Fourtounises against appellees in the amount of $100,000 "on their counterclaim." Presumably, this was the Fourtounises' claim for "wrongful attachment," because the jury's answer to an interrogatory stated that the Fourtounises proved "by a preponderance of the evidence that they were damaged by [Stamatopoulos's] seizure of the Super Sucker." Although the jury made no specific findings on either Mark's or Global's counterclaims against appellees, when asked in an interrogatory whether Mark and Global proved they were damaged by appellees' seizure of their trucks and equipment, the jury answered, "No." The record does not reflect that the jury rendered any verdict on either appellees' claim for fraudulent inducement or appellees' defense of duress.
Despite this absence, on April 3, 2014, in response to appellants' March 5, 2014 "request for an entry of judgment," the trial court issued a journal entry that stated:
As a result of the jury's verdict finding that [appellees] failed to prove duress in the signing of the Settlement Agreement and Cognovit Note, the parties are hereby ordered to comply with the terms and conditions of the Settlement Agreement, signed by the parties on or about March 30, 2012 within 30 days of this journal entry. The court retains jurisdiction over all post-judgment motions. * * * Final. * * *.
On April 16, 2014, Global filed a motion for a new trial "on damages." On April 17, 2014, appellants filed a "motion for entry of final appealable judgment."
On May 1, 2014, the trial court issued another journal entry that stated:
Entry of 04/03/2014 is amended to include the following language: inasmuch as it was the clear intention of the parties and the jury was advised, that in the event that [appellees] did not prevail on their claim of duress in signing the Settlement Agreement, the Court would enforce the Settlement Agreement. In addition, the jury returned a verdict in favor of [the Fourtounises] for $100,000. It is so ordered. Final.
On May 14, 2014, the trial court issued a journal entry that denied Global's motion for a new trial on damages. The same journal entry stated that appellants' motions for entry of a final appealable judgment were "moot."

Id. at ¶ 4-18.

{¶ 12} The parties appealed, but this court dismissed for lack of a final, appealable order. See Stamatopoulos , 8th Dist. Cuyahoga No. 101439, 2015-Ohio-1141, 2015 WL 1375727. On remand, the trial court issued a two-page order on August 26, 2015, stating, in relevant part:

On February 21, 2015, the jury returned a verdict in favor of Nikolas and Marika Fourtounis and against Evangelos Stamatopoulos ("Lightning Capital Holdings") and awarded damages in the amount of $100,000. The jury further found that Global Outdoor Solutions did not prove by a preponderance of the evidence that it was damaged by Evangelos Stamatopoulos by the seizure of the trucks and equipment. Additionally, the jury found that Evangelos Stamatopoulos did not prove by clear and convincing evidence the affirmative defense of duress in signing the Cognovit Note and Settlement Agreement.
All parties prepared and agreed to the jury instructions, jury interrogatories and verdict forms that were submitted to the jury. Any claims not addressed by the agreed-to forms are dismissed with prejudice pursuant to Civ.R. 41(B)(1).
Pursuant to the agreed-to jury instructions, the jury was instructed, "If you find that plaintiffs failed to establish the duress defense by clear and convincing evidence, the Court will order the parties to perform the obligations imposed by the Settlement Agreement and Note ."
Therefore, based on the jury's verdict, this court hereby finds in favor of Nikolas and Marika Fourtounis and against Evangelos Stamatopoulos and Lightning Capital Holdings in the amount of $100,000. Additionally, pursuant to the agreed-to jury instructions, the parties are hereby ordered to comply with the Settlement Agreement and Cognovit Note attached hereto as Exhibit A and Exhibit B within 30 days of the date of this order.

{¶ 13} Following the final entry of judgment, Stamatopoulos filed a "notice of compliance" with the court's order of specific performance, asserting that he gave appellants a tender payment of the $100,000 judgment, and also executed titles, possession, and keys listed in Exhibit B of the parties' settlement agreement that were still in his possession. Stamatopoulos retained possession of the Volvo vacuum truck. In response, the Fourtounises' asked the court for a further order awarding title and possession of the Volvo vacuum truck pursuant to the terms of the Cognovit Note. Stamatopoulos opposed the motion and argued that all claims related to the Cognovit Note were not submitted to the jury and were dismissed by the court after the trial under Civ.R. 41(A)(1). The trial court denied the Fourtounises' motion as "moot."

{¶ 14} Appellants and appellees now appeal from various orders of the trial court.

II. Law and Analysis

{¶ 15} After careful consideration, we find this court is required to remand the matter to the trial court for clarification of its final entry of judgment with respect to the scope of the parties' rights and responsibilities following the jury's verdict. Specifically, this court is concerned with the unsettled confusion surrounding the trial court's reference to the Cognovit Note in its August 26, 2015 final entry of judgment. In the absence of clarity, this court is not in the position to consider the merits of the parties' assigned errors where the inconsistencies in the trial court's journal entries have created fundamental differences of opinion concerning the precise scope of damages and specific performance ordered in this case.

{¶ 16} As stated, this court dismissed the original appeal for a lack of a final, appealable order. While the trial court complied with the instructions of this court to clarify the status of undisposed claims, it appears the court's amended final entry contains additional language regarding the Cognovit Note that was not part of the trial court's prior orders.

{¶ 17} In an effort to clarify its final entry of judgment on remand, the trial court's August 26, 2015 final order provides, in relevant part:

Pursuant to the agreed-to jury instructions, the jury was instructed, "If you find that plaintiffs failed to establish the duress defense by clear and convincing evidence, the Court will order the parties to perform the obligations imposed by the Settlement Agreement and Note ."
Therefore, based on the jury's verdict, this court hereby finds in favor of Nikolas and Marika Fourtounis and against Evangelos Stamatopoulos and Lightning Capital Holdings in the amount of $100,000. Additionally, pursuant to the agreed to jury instructions, the parties are hereby ordered to comply with the Settlement Agreement and Cognovit Note attached hereto as Exhibit A and Exhibit B within 30 days of the date of this order.

(Emphasis added.)

{¶ 18} Thus, the clear language of the trial court's final entry of judgment states that the appellees are required to pay the Fourtounises $100,000, and comply with the terms of both the Settlement Agreement and the Cognovit Note. Conversely, the trial court's original entry of judgment, issued in April 2014, stated:

As a result of the jury's verdict finding that [Stamatopoulos] failed to prove duress in the signing of the Settlement Agreement and Cognovit Note, the parties are hereby ordered to comply with the terms and conditions of the Settlement Agreement , signed by the parties on or about March 30, 2012 within 30 days of this journal entry. The court retains jurisdiction over all post-judgment motions. * * * Final. * * *.

(Emphasis added.)

{¶ 19} In May 2014, the trial court issued an amended journal entry, stating:

Entry of 04/03/2014 is amended to include the following language: inasmuch as it was the clear intention of the parties and the jury was advised, that in the event that [appellees] did not prevail on their claim of duress in signing the Settlement Agreement , the Court would enforce the Settlement Agreement . In addition, the jury returned a verdict in favor of [the Fourtounis'] for $100,000. It is so ordered. Final.

(Emphasis added.)

{¶ 20} Unquestionably, the April 2014 entry of judgment and the May 2014 amended journal entry do not order the parties to comply with the terms and conditions of the Cognovit Note. The entries solely require enforcement of the Settlement Agreement. Thus, the trial court's August 2015 final entry of judgment constitutes a departure from the language used in the April 2014 and May 2014 judgment entries by expressly adding the obligation that Stamatopoulos comply with the terms and conditions of the Cognovit Note. This departure explains the basis of the parties' post-judgment motions and their vastly different interpretations in their appellate briefs concerning the breadth of the trial court's final entry of judgment.

{¶ 21} Having reviewed the record, we recognize that the inclusion of the Cognovit Note in the August 26, 2015 final entry of judgment was likely intentional and was not the result of clerical error. Pursuant to the language of Jury Instruction No. 11 and the jury's ultimate determination that the Settlement Agreement and Cognovit Note were not the product of duress, it appears the appellants are entitled to enforce both the Settlement Agreement and Cognovit Note as the entry currently provides. However, given the legal and monetary significance of the modification, we believe the trial court is required to explain and clarify the basis for adding the enforcement of the Cognovit Note. We believe clarity is necessary in order to provide the parties with the opportunity to adequately brief the issue on appeal.

{¶ 22} Accordingly, we find the matter must be remanded for the trial court to (1) clarify Stamatopoulos' obligations under the Settlement Agreement and Cognovit Note, or (2) correct the final entry of judgment to exclude the reference to Cognovit Note if it was mistakenly included. In addition, the court shall state whether or not appellees obligation to pay the damages in the amount of $100,000 is separate and apart from its obligations under the Settlement Agreement and Cognovit Note.

{¶ 23} The foregoing issues are of particular importance given the value of the Volvo vacuum truck. If there was judgment on the Cognovit Note, as the final entry of judgement suggests, appellees must comply with the terms of that instrument, wherein Stamatopoulos unconditionally promised to pay the Fourtounises the sum of $112,000 and pledged the Volvo vacuum truck as security. Arguably, appellees' failure to comply with the terms of the Cognovit Note entitles appellants to free and clear title of the Volvo vacuum truck, as the Cognovit Note states:

In the event [appellees] shall default upon this Cognovit Promissory Note obligation, [the Fourtounises] may take free and clear title to said Super Sucker and thereafter retain, use and/or dispose of it as they shall deem fit, in full satisfaction of this note obligation, or pursue other legal remedies available to the Creditor pursuant to Ohio law and in accordance with this promissory note.

{¶ 24} On remand, the trial court shall provide the parties with a detailed explanation of what actions the appellees must take in order to satisfy the jury's award of damages, its obligations under the Settlement Agreement, and, if appropriate, its obligations under the Cognovit Note. Specifically, the court must address the parties' competing claims to ownership of the Volvo vacuum truck. In our view, clarification on these issues will resolve much of the different interpretations of the court's order that are expressed (1) in appellants' proposed order of specific performance; (2) in appellees' notice of compliance with the trial court's final entry of judgment; and (3) throughout the parties' appellate briefs, including appellees' third cross-assignment of error, and appellants' response to the arguments raised therein.

{¶ 25} The obligations of the parties is integral to the majority of the assigned errors raised in appellants' appeal and appellees' cross-appeal. Accordingly, we believe it would be impractical to address any of the assigned errors until the trial court's final entry of judgment clearly defines the rights and responsibilities of the parties and explains the inconsistencies in its entries regarding the scope of specific performance and damages ordered in this case.

{¶ 26} Judgment reversed and remanded.

FRANK D. CELEBREZZE, JR., J., CONCURS;

PATRICIA ANN BLACKMON, J., DISSENTS WITH SEPARATE OPINION

PATRICIA ANN BLACKMON, J., DISSENTING

{¶ 27} I respectfully dissent. I would conclude that the trial court's existing entries are sufficient to demonstrate that the Volvo vacuum truck, which was originally purchased by Stamatopoulos, and was in his possession by the time of trial, was awarded to him. Following the trial, the parties appealed, but this court dismissed for lack of a final appealable order. See Stamatopoulos v. All Seasons Contr. , 8th Dist. Cuyahoga No. 101439, 2015-Ohio-1141, 2015 WL 1375727. On remand, the trial court issued a two-page order outlining the prior judgment then added the following provisions:

All parties prepared and agreed to the jury instructions, jury interrogatories and verdict forms that were submitted to the jury. Any claims not addressed by the agreed-to forms are dismissed with prejudice pursuant to Civ.R. 41(B)(1). * * *
Therefore, based on the jury's verdict, this court finds in favor of [Fourtounis] and against [Stamatopoulos] in the amount of $100,000.00. Additionally, pursuant to the agreed jury instructions, the parties are hereby ordered to comply with the Settlement Agreement and Cognovit Note attached hereto as Exhibit A and B within 30 days of the date of this order.

{¶ 28} Following the entry of this order, Stamatopoulos filed a "notice of compliance" with the court's order of specific performance, asserting that he gave Fourtounis a tender of payment of the $100,000 judgment, and also executed titles, possession, and keys to the vehicles listed in Exhibit B of the parties' Settlement Agreement that were still in his possession. Stamatopoulos retained the Volvo vacuum truck, which remained titled in his name. Fourtounis however, asked the court for a further order awarding title and possession of the Volvo vacuum truck to him, under the cognovit note. Stamatopoulos objected and argued that the cognovit judgment-related claims were not submitted to the jury and were dismissed by the court after trial under Civ.R. 41(B)(1). The trial court denied Fourtounis's motion as "moot." Accordingly, I would conclude that this item was properly identified by the trial court and awarded to Stamatopoulos; consequently, I dissent.

      Jury Instruction No. 11 reads, in relevant part:
      "If you find [Stamatopoulos] failed to establish the duress defense the Court will order the parties to perform the obligations imposed by the settlement agreement and note. "
      (Emphasis added.)

      On appeal, the Fourtounises state that they wish to enforce the terms of the cognovit note entitling them to free and clear title.

      Appellees have continuously argued that the payment of $100,000 to the appellants "fully satisfied the claims of [the Fourtounises] including those arising out or the Cognovit Note and Settlement Agreement and associated security interests." In contrast, appellants maintain that the trial court's final entry of judgment entitles them to damages in the amount of $100,000 for lost rental income, and specific performance of the Settlement Agreement and Cognovit Note, which entitled the Fourtounises to free and clear title of the Volvo vacuum truck.


source: Caselaw Access Project

author: Hoffman, J.

license: Public Domain

text:
    James H. COTTLE, Plaintiff-Appellant v. Lydia POURZANJANI, Defendant-Appellee
    No. 17CAF050030
    Court of Appeals of Ohio, Fifth District, Delaware County.
    DATE OF JUDGMENT ENTRY: February 2, 2018
    CRAIG P. TRENEFF, 155 Commerce Park Dr. Suite 5, Westerville, Ohio 43081, For Defendant-Appellee.
    DOUGLAS B. DOUGHERTY, 3010 Hayden Road, Columbus, Ohio 43235, For Plaintiff-Appellant.
    JUDGES: Hon. Patricia A. Delaney, P.J., Hon. William B. Hoffman, J., Hon. Earle E. Wise, Jr., J.
   Hoffman, J.

{¶ 1} Plaintiff-appellant James H. Cottle appeals the April 4, 2017 Judgment Entry entered by the Delaware County Court of Common Pleas, Domestic Relations Division, which overruled his objections to the magistrate's February 11, 2016 decision, and approved and adopted said decision as order of the court. Defendant-appellee is Lydia Pourzanjani.

STATEMENT OF THE FACTS AND CASE

{¶ 2} The parties were divorced via Agreed Judgment Entry-Decree of Divorce filed May 30, 2014. The Decree incorporated the parties' April 10, 2014 Separation Agreement, and April 11, 2014 Addendum. Pursuant to the Separation Agreement, Appellant was awarded his dental practice free and clear of any claims by Appellee. In addition, Appellant was ordered to pay spousal support to Appellee in the amount of $3,108.03/month for a period of 60 months. The trial court retained jurisdiction to modify the amount of the award, but not the duration.

{¶ 3} On August 31, 2015, following the sale of his dental practice and subsequent acceptance of full-time employment at The Ohio State University College of Dentistry ("Ohio State"), Appellant filed a motion to terminate or modify spousal support. Appellant's job change resulted in a 46.8% decrease in his salary. The net proceeds of the sale of Appellant's dental practice were approximately $315,000.

{¶ 4} The magistrate conducted a hearing on Appellant's motion. The following evidence was adduced at the hearing.

{¶ 5} When the parties married in 1997, Appellant was a dentist with an established private dental practice. Appellee did not contribute to Appellant's education or his professional career. In addition to his private dental practice, Appellant also taught part-time at Ohio State. Appellee was a dietician and worked full-time during the entire marriage.

{¶ 6} In 2008, Appellant began experiencing significant pain in his right hip, which ultimately led to a hip replacement in 2010. Several times a year during the course of the marriage, the parties discussed Appellant's selling his dental practice and teaching full-time. Appellee was supportive of the idea and encouraged Appellant to pursue a full-time teaching position.

{¶ 7} While the parties were negotiating their divorce, Appellant did not have any plans or intentions of retiring, selling his dental practice, or taking a position at Ohio State. Appellant was unaware of any full-time openings at Ohio State. At the time of the divorce, Appellant's income from his dental practice averaged $169,156.00/year over a period of three years. Appellant earned $8,603.00/year from his part-time teaching position at Ohio State. Appellee's income was $57,756.00/year. In calculating the spousal support award, the parties agreed Appellee would receive 43.8% of the total after-tax income. The spousal support award was calculated at $3,108.33/month.

{¶ 8} In the spring of 2014, following the parties' divorce, Appellant again began experiencing pain in his right hip. Appellant saw his surgeon, who informed Appellant the pain he was experiencing was due to the tissue around his hip implant, not the implant itself. Appellant explained dentists suffer a number of medical issues involving their necks, backs, arms, hand, and hips as a result of the manner in which they move their bodies while working on patients. Appellee acknowledged Appellant complained about pain in his hip following his surgery and prior to the commencement of the divorce negotiations. After the negotiations began, Appellant told Appellee he continued to experience the pain in his hip.

{¶ 9} In October, 2014, Appellant learned about a full-time teaching position at Ohio State. Appellant applied for the position in November, or December, 2014. Appellant could not maintain his dental practice and work full-time at Ohio State. On December 9, 2014, Appellant entered into a contract with Paragon, Inc. to sell his dental practice. Paragon provided Appellant with a Fair Market Value & Financial Analysis Report Summary, which was based upon the market value of the income stream and client base of the dental practice on December 19, 2014. Appellant signed an agreement to sell his practice on December 31, 2014. On February 17, 2015, Appellant received, and subsequently accepted, a written offer from to join the faculty at Ohio State on a full-time basis. The sale of Appellant's dental practice was finalized on April 17, 2015. Appellant began his employment with Ohio State on May 4, 2015.

{¶ 10} At the time of the magistrate's hearing, Appellant's salary was $94,395.00/year, a 46.8% decrease in income. Appellee's income increased approximately 3%, to $60,000/year.

{¶ 11} Via Decision filed February 11, 2016, the magistrate denied Appellant's motion to terminate or modify spousal support. Appellant filed objections to the magistrate's decision. Via Judgment Entry Sustaining Plaintiff's 4/15/16 Final Objections to the Magistrate's 2/11/16 Decision filed May 25, 2016, Judge Gormley found Appellant "ha[d] shown a sufficient change in circumstances to warrant a modification of the spousal-support award." May 25, 2016 Judgment Entry at 5. Judge Gormley ordered the case be returned to the magistrate for further proceedings. Id. Subsequent to Judge Gormley issuing his decision, the Delaware County Court of Common Pleas established a new Domestic Relations Division. Judge Randall D. Fuller became the judge for the new division.

{¶ 12} On his own initiative, Judge Fuller decided to review Judge Gormley's May 25, 2016 Judgment Entry. Via Judgment Entry filed April 4, 2017, Judge Fuller reconsidered Judge Gormley's ruling on Appellant's objections, as such was an interlocutory order, and denied Appellant's motion to terminate or modify spousal support.

{¶ 13} It is from this judgment entry Appellant appeals, raising the following assignments of error:

1. THE TRIAL COURT ERRED WHEN IT CONCLUDED THAT, TO ESTABLISH AN APPROPRIATE CHANGE IN CIRCUMSTANCES, A MOVANT MUST PROVE THAT THE CHANGE WAS NOT CONTEMPLATED, AND VOLUNTARY, AND NOT PURPOSEFUL.
2. THE TRIAL COURT ERRED WHEN IT FAILED TO CONCLUDE THAT JIM ESTABLISHED AN APPROPRIATE CHANGE IN CIRCUMSTANCES.

I, II

{¶ 14} Because Appellant's assignments of error are interrelated, we shall address them together. In his first assignment of error, Appellant contends the trial court erred in concluding he was required to prove his change in circumstances "was not contemplated, and voluntary, and not purposeful." In his second assignment of error, Appellant maintains the trial court erred in failing to find he had established an appropriate change in circumstances.

{¶ 15} An appellate court reviews the modification of spousal support under an abuse-of-discretion standard. Booth v. Booth (1989), 44 Ohio St.3d 142, 541 N.E.2d 1028. An abuse of discretion implies the trial court's attitude was unreasonable, arbitrary or unconscionable. Blakemore v. Blakemore (1983), 5 Ohio St.3d 217, 219, 450 N.E.2d 1140.

{¶ 16} "Modification of a spousal support award is appropriate only when there has been a substantial change in the circumstances of either party that was not contemplated at the time the existing award was made." Moore v. Moore (1997), 120 Ohio App.3d 488, 491, 698 N.E.2d 459, citing Leighner v. Leighner (1986), 33 Ohio App.3d 214, 215, 515 N.E.2d 625. See R.C. 3105.18(E).

{¶ 17} R.C. 3105.18 provides guidelines for the modification of spousal support as follows:

(E) If a continuing order for periodic payments of money as alimony is entered in a divorce or dissolution of marriage action that is determined on or after May 2, 1986, and before January 1, 1991, or if a continuing order for periodic payments of money as spousal support is entered in a divorce or dissolution of marriage action that is determined on or after January 1, 1991, the court that enters the decree of divorce or dissolution of marriage does not have jurisdiction to modify the amount or terms of the alimony or spousal support unless the court determines that the circumstances of either party have changed and unless one of the following applies:
(1) In the case of a divorce, the decree or a separation agreement of the parties to the divorce that is incorporated into the decree contains a provision specifically authorizing the court to modify the amount or terms of alimony or spousal support * * *
(F)(1) For purposes of divisions (D) and (E) of this section and subject to division (F)(2) of this section, a change in the circumstances of a party includes, but is not limited to, any increase or involuntary decrease in the party's wages, salary, bonuses, living expenses, or medical expenses, or other changed circumstances so long as both of the following apply:
(a) The change in circumstances is substantial and makes the existing award no longer reasonable and appropriate.
(b) The change in circumstances was not taken into account by the parties or the court as a basis for the existing award when it was established or last modified, whether or not the change in circumstances was forseeable.
(2) In determining whether to modify an existing order for spousal support, the court shall consider any purpose expressed in the initial order or award and enforce any voluntary agreement of the parties. Absent an agreement of the parties, the court shall not modify the continuing jurisdiction of the court as contained in the original decree. (Emphasis added.)

{¶ 18} The burden of establishing the need for modification of spousal support rests with the party seeking modification. Cattaneo v. Needham, 5th Dist. Licking No. 2009CA00142, 2010-Ohio-4841, 2010 WL 3852049, citing Tremaine v. Tremaine (1996), 111 Ohio App.3d 703, 676 N.E.2d 1249.

{¶ 19} Appellant predicates his assignments of error on a reading of the April 4, 2017 Judgment Entry, which we find to be inaccurate. Appellant states the trial court concluded, in order to establish an appropriate change in circumstances, he, as the movant, was required to "prove the existence of a change that was not contemplated, not voluntary, and not purposeful." Brief of Appellant at 17. Appellant submits the trial court incorrectly analyzed the law, and erroneously found he had not established an appropriate change in circumstances.

{¶ 20} Appellant focuses on the following portion of the April 4, 2017 Judgment Entry, in which the trial court sets forth the law relative to the modification of spousal support:

A trial court lacks jurisdiction to modify a prior order of spousal support unless the decree expressly reserved jurisdiction to modify the award and the court finds that a substantial change in circumstances has occurred. See Ressler v. Ressler , 17 Ohio St.3d 17 [476 N.E.2d 1032] (1985) and Kumper v. Kumper , 2010-Ohio-3960 [2010 WL 3298753] (5th Dist.). Furthermore, "to constitute a basis for modifying spousal support, the change of circumstances must be material, not purposely brought about by the moving party, and not contemplated at the time the parties entered into the prior agreement or order."
Gemell [sic] v. Gemmell , 2007-Ohio-5546 [2007 WL 3026896] (5th Dist.). See also Walters v. Boney , 2009-Ohio-574 [2009 WL 321295] (5th Dist.). Id. at 2.

{¶ 21} The trial court proceeded to analyze the facts relative to the motion before it, and found Appellant's "change in circumstances was not only voluntary and purposely brought about by [Appellant], but the change was also contemplated by the parties." Id. at 3.

{¶ 22} Appellant argues the trial court incorrectly concluded he did not establish an appropriate change in circumstances because it found he did not prove the change was not contemplated, not voluntary, and not purposeful. Appellant explains the foreseeability analysis for determining whether a change constitutes an appropriate change in circumstances was abrogated by the 2012 amendments to R.C. 3105.18(F), and the trial court erred in undertaking such an analysis.

{¶ 23} We find the trial court was correct in finding Appellant's change in employment was not "involuntary" as Appellant intentionally reduced his annual income in order to pursue his "dream job". The trial court also correctly found the parties had contemplated the career change for Appellant during the course of the marriage. We further find, contrary to Appellant's position, the trial court did, in fact, find a change in circumstances. However, the trial court determined, after "considering the statutory factors of R.C. 3105.18(C) * * * that, despite [Appellant's] change in circumstances , the amount of $3,108.03 per month remains an appropriate a [sic] reasonable amount of spousal support." Id. at 4 (Emphasis added.)

{¶ 24} Upon consideration of the factors set forth in R.C. 3105.18(C), the trial court found Appellant's individual net worth had increased by 35% since the time of the divorce while Appellee's individual net worth had only increased by 1%. The trial court also found Appellant continued to maintain the standard of living established by the parties during their marriage, Appellee had not. Appellee withdrew $22,000.00, from her IRA in order to put a down payment on her home. The result was a decrease in her overall retirement assets. Appellant, on the other hand, increased his retirement assets by becoming a member of the State Teachers Retirement System through his employment with the dental school. Appellee's monthly living expenses exceeded Appellant's monthly living expenses due, in part, to her having to take out a mortgage on her new home. Appellant's 2014 tax returns reflect an adjusted income of $147,941, from his dental practice. Appellee's adjusted income for 2014, was $54,034. The trial court concluded because Appellant's change in circumstances was voluntary, "his prior income as a dentist in the amount of $147,941 per year should be imputed to him when determining a current appropriate and reasonable amount of spousal support." Id. at 5.

{¶ 25} The trial court also found the timing of the sale of Appellant's dental practice "very suspect" as he entered into an agreement to sell the practice on December 9, 2014, only seven months after the original divorce decree, but did not secure his position with Ohio State until February, 2015, and did not formally close on the sale of the dental practice until April 6, 2015. Appellant received net proceeds from the sale of his dental practice in the amount of $306,220.77. The trial court concluded Appellant had sufficient assets not only to support himself for the duration of the 60 month spousal support award, but also to pay the spousal support award previously agreed to by Appellant and ordered by the court.

{¶ 26} During the course of the divorce proceedings, the parties agreed Appellant's dental practice was his separate property. The trial court considered that asset when it ordered the original spousal support award. The fact Appellant subsequently liquidated the asset should not impact the trial court's decision to modify the award, and the trial court should not have considered the liquidation of the asset as a reason to, or not to, modify the award. We find the trial court improperly considered Appellant's separate property already valued and contemplated in determining the original award in its decision not to terminate or modify spousal support. However, because Appellant personally chose to liquidate an income generating asset, we find it was proper for the trial court to impute the income Appellant would have earned from the asset when determining whether to modify the amount of the award.

{¶ 27} Based upon the foregoing, we find the trial court did not abuse its discretion in not modifying Appellant's spousal support obligation.

{¶ 28} Appellant's first and second assignments are overruled.

{¶ 29} The judgment of the Delaware County Court of Common Pleas, Domestic Relations Division, is affirmed.

Delaney, P.J., and Wise, Earle, J., concur


author: SINGER, J.

text:
    ST. JAMES THERAPY CENTER, LTD., et al., Appellant v. OHIO VESTIBULAR & BALANCE CENTERS, INC., et al., Appellees
    No. L-17-1055
    Court of Appeals of Ohio, Sixth District, Lucas County.
    Decided: February 2, 2018
    John J. McHugh, III, Toledo, for appellant.
    Marvin A. Robon Maumee, and Zachary J. Murry, Toledo, for appellees.
    DECISION AND JUDGMENT
   SINGER, J.

{¶ 1} This case is before the court on the appeal of appellants, St. James Therapy Center, Ltd. ("St. James") and MWG, Inc. ("MWG"), from the February 10, 2017 judgment of the Lucas County Court of Common Pleas. For the reasons that follow, we affirm the trial court's judgment.

{¶ 2} St. James and MWG set forth the following assignments of error:

Assignment of Error No. 1: The trial court erred prejudicially in awarding attorneys' fees against appellants [St. James and MWG] upon an unsupported conclusion that they had engaged in a pattern of persistent frivolous and vexatious conduct.
Assignment of Error No. 2: The trial court erred prejudicially in awarding attorneys' fees against appellants [St. James and MWG] upon an unmerited conclusion that their failure to dismiss their complaint following entry of an interlocutory order in a related case constituted frivolous and vexatious conduct.

Facts

{¶ 3} The background facts underlying this case are found in our opinion, Ohio Vestibular & Balance Ctr., Inc. v. Wheeler , 2013-Ohio-4417, 999 N.E.2d 241 (6th Dist.). The facts which relate to this appeal follow.

The Related Case

{¶ 4} On September 14, 2007, a complaint was filed against, inter alia, St. James and MWG by Ohio Vestibular & Balance Center, Inc. ("OVB") and other parties in Lucas County Court of Common Pleas, being case No. CI0200706185 ("the related case"). Appellee, Barkan & Robon, Ltd., a law firm ("the firm"), represented OVB and the other parties in the related case. On February 14, 2011, a jury trial commenced. On March 1, 2011, while the trial was still underway, the firm entered into a security agreement with OVB, which granted the firm a security interest in OVB's assets. On that same day, the firm filed a UCC financing statement with the Ohio Secretary of State to perfect the lien on OVB's assets. On March 11, 2011, the jury rendered a verdict in favor of St. James and MWG. On April 18, 2011, the trial court entered judgment on the jury's verdict.

{¶ 5} On January 24, 2013, the court appointed a receiver over OVB's assets. On June 16, 2014, the receiver filed a report which provided six claims had been submitted. Those relevant claims included: St. James, which had a claim in the net amount of approximately $69,700; the firm, which had a claim for attorney fees and costs of $26,477.13; and, First Merit Bank ("First Merit"), which had a claim for $80,000.

{¶ 6} On February 23, 2015, the trial court, in a Journal Entry, determined St. James' challenge to First Merit's security interest in OVB was not well-taken. The court, quoting First Merit's reply to St. James' objection to claims, set forth:

The loan between FirstMerit and [OVB] dated November 23, 2005, which also included a security interest and UCC Financing Statement, was in the original amount of * * * ($60,000.00), and was an interest only demand promissory note. * * *
The 2005 promissory note had a balance due FirstMerit on May 18, 2011 of * * * ($56,293.62), which amount was paid in full upon the execution of the May 18, 2011 * * * ($80,000) promissory note. * * *
In addition, FirstMerit entered into a Master Equipment Lease Agreement ("Lease") with [OVB] on December 21, 2005 and amended it on February 21, 2006. In connection with that Lease, FirstMerit filed a UCC Financing Statement * * * on March 29, 2006. Thereafter, on October 5, 2010, FirstMerit filed a continuation of that 2006 UCC Financing Statement * * *.
Accordingly * * * FirstMerit has had a continuous security interest in the assets of [OVB] since 2005."

The court also found "St. James is essentially an unsecured creditor with respect to [OVB's] personal assets * * *."

{¶ 7} On March 10, 2015, the firm filed a notice of newly discovered evidence and motion for reconsideration of the February 23, 2015 entry. On August 4, 2015, the motion for reconsideration was denied.

{¶ 8} On September 15, 2015, the court ordered the receiver to distribute OVB's remaining funds to First Merit.

The Instant Case

{¶ 9} On August 30, 2011, St. James and MWG filed their complaint in Lucas County Court of Common Pleas, case No. CI201105184 ("the instant case"), against the firm, OVB and another party. St. James and MWG alleged the granting of the security interest in OVB's assets violated Ohio Uniform Transfer Act, R.C. 1336.04(A)(1), as it was made with the intent to hinder, delay and defraud St. James and MWG as judgment creditors. St. James and MWG also alleged the transfer was made during trial, in anticipation of an unfavorable verdict. St. James and MWG further alleged the granting of the security interest in OVB's assets violated R.C. 1336.04(A)(2), as it was made without receiving an equivalent value in exchange for the transfer.

{¶ 10} The firm filed a motion to dismiss the complaint; the motion was denied. The case was stayed for period of time. On March 18, 2014, the firm answered the complaint and filed a counterclaim against St. James and MWG alleging St. James and MWG's conduct in filing their complaint against the firm was frivolous, vexatious and brought in bad faith. The firm made a claim against St. James and MWG pursuant to R.C. 2323.51 and 2323.52, seeking attorney fees. The case was again stayed. On July 22, 2016, the firm filed a motion for summary judgment on St. James and MWG's claims as well as its counterclaim. St. James and MWG did not oppose the motion.

{¶ 11} On November 29, 2016, the trial court granted the firm's motion for summary judgment and dismissed with prejudice all claims asserted by St. James and MWG. The court found, as to the counterclaim, that the evidence showed a pattern of vexatious and bad faith conduct by St. James and MWG, and St. James and MWG's complaint constituted the filing of a frivolous claim under R.C. 2323.51.

{¶ 12} On December 14, 2016, an assessment of damages hearing was held. Then, on February 10, 2017, the trial court issued its judgment. The court determined the logical time that St. James and MWG should have dismissed their claims was September 15, 2015, when, in the related case, the receiver was ordered to distribute OVB's remaining funds to First Merit. The court noted that St. James and MWG, however, continued to pursue their claims against the firm. The court held, based upon the firm's unchallenged fee statement, that the total amount of attorney fees incurred by the firm since September 15, 2015, was $6,760. The court ordered that the firm was entitled to attorney fees on its counterclaim in this amount from St. James and MWG. St. James and MWG appealed.

Assignments of Error

{¶ 13} St. James and MWG's assignments of error are interrelated and will be addressed together. The crux of St. James and MWG's argument is that there was no evidence of frivolous conduct. St. James and MWG contend the trial court erred in awarding attorneys' fees to the firm upon an unsupported conclusion that St. James and MWG engaged in a pattern of persistent frivolous and vexatious conduct. St. James and MWG argue their complaint was not frivolous when filed, and their decision not to dismiss the complaint was not evidence of persistent frivolous conduct.

{¶ 14} The firm counters the trial court's decision to order sanctions was supported by competent, credible and undisputed evidence, and the amount of the sanctions was also supported by competent, credible and undisputed evidence.

Standards

{¶ 15} We review a trial court's summary judgment decision on a de novo basis. Grafton v. Ohio Edison Co. , 77 Ohio St.3d 102, 105, 671 N.E.2d 241 (1996). Accordingly, we undertake our own independent examination of the record and make our own decision as to whether the moving parties are entitled to summary judgment. Dupler v. Mansfield Journal , 64 Ohio St.2d 116, 119-120, 413 N.E.2d 1187 (1980).

{¶ 16} Our review of a determination to impose sanctions pursuant to R.C. 2323.51 involves a mixed question of law and fact.

R & S Roofing Co. v. Mercer-North Am., Inc. , 6th Dist. Lucas No. L-13-1161, 2014-Ohio-1763, 2014 WL 1691367, ¶ 21. Legal conclusions will be considered de novo, whereas factual determinations will not be disturbed if supported by competent, credible evidence. Id. " 'Ultimately, the decision as to whether to impose sanctions under * * * R.C. 2323.51 rests in the sound discretion of the court and will not be reversed absent an abuse of that discretion. (Citation omitted.)' " Id. Thus, we will not reverse the trial court's judgment unless it is arbitrary, unconscionable or unreasonable. Blakemore v. Blakemore , 5 Ohio St.3d 217, 219, 450 N.E.2d 1140 (1983).

Analysis

{¶ 17} R.C. 2323.51(A)(2)(a) provides that frivolous conduct occurs under any of the following circumstances:

(i) It [conduct] obviously serves merely to harass or maliciously injure another party to the civil action or appeal or is for another improper purpose, including, but not limited to, causing unnecessary delay or a needless increase in the cost of litigation.
(ii) It [conduct] is not warranted under existing law, cannot be supported by a good faith argument for an extension, modification, or reversal of existing law, or cannot be supported by a good faith argument for the establishment of new law.
(iii) The conduct consists of allegations or other factual contentions that have no evidentiary support or, if specifically so identified, are not likely to have evidentiary support after a reasonable opportunity for further investigation or discovery.
(iv) The conduct consists of denials or factual contentions that are not warranted by the evidence or, if specifically so identified, are not reasonably based on a lack of information or belief.

{¶ 18} Here, a de novo review of the record shows the firm alleged in its motion for summary judgment that St. James and MWG's complaint was frivolous. Attached to the motion was evidence which included affidavits, as well as St. James and MWG's responses to requests for admissions. St. James and MWG did not oppose the motion, and as such, presented no evidence demonstrating that there was a genuine issue of material fact for trial. We conclude the evidence presented by the firm demonstrated there was no genuine issue of material fact and the firm was entitled to judgment as a matter of law on St. James and MWG's claims as well as its counterclaim. Accordingly, the trial court did not err in granting the firm's motion for summary judgment.

{¶ 19} As to the trial court's award of sanctions under R.C. 2323.51, a review of the record shows St. James and MWG may have had a viable claim against the firm when St. James and MWG filed their complaint on August 30, 2011, for violations of R.C. 1336.04, the fraudulent transfer act. Therefore, the complaint may not have been frivolous when filed. However, as the related case progressed, evidence emerged that established St. James and MWG's claims against the firm lacked evidentiary support to continue. Specifically, on February 23, 2015, the court in the related case rejected St. James' challenge to First Merit's security interest in OVB, and found St. James was, in effect, an unsecured creditor of OVB's personal assets. Then, on September 15, 2015, the court in the related case ordered the receiver to distribute OVB's remaining funds to First Merit. When the last of these decisions was rendered, it was apparent that St. James and MWG's claims against the firm lacked any evidentiary support to continue. Nevertheless, St. James and MWG did not dismiss their complaint. Instead, the firm conducted discovery and was required to file a motion for summary judgment on St. James and MWG's claims and its counterclaim.

{¶ 20} The Ohio Supreme Court has observed, "[w]hen a trial court has determined that reasonable inquiry by a party's counsel of record should reveal the inadequacy of a claim, a finding that the counsel of record has engaged in frivolous conduct is justified, as is an award * * * to any party adversely affected by the frivolous conduct." Ron Scheiderer & Assocs. v. London, 81 Ohio St.3d 94, 97-98, 689 N.E.2d 552 (1998).

{¶ 21} Here, St. James and MWG's failure to dismiss the complaint on their own volition after the September 15, 2015 order in the related case served to extend the time that the lawsuit remained pending. In addition, St. James and MWG's failure to dismiss the complaint caused the firm to incur the unnecessary time and expenses associated with conducting discovery as well as drafting the unopposed motion for summary judgment. We find St. James and MWG's continuous failure to dismiss the complaint constituted a pattern of frivolous conduct. We further find this frivolous conduct adversely affected the firm. Accordingly, we conclude the trial court did not abuse its discretion in awarding to the firm sanctions for St. James and MWG's frivolous conduct. It follows that St. James and MWG's assignments of error are not well-taken.

{¶ 22} The judgment of the Lucas County Court of Common Pleas is affirmed. Appellants, St. James Therapy Center, Ltd. and MWG, Inc., are ordered to pay the costs of this appeal, pursuant to App.R. 24, and the clerk is ordered to serve all parties with notice of this decision.

Judgment affirmed.

Thomas J. Osowik, J.

James D. Jensen, J.

CONCUR.


author: CALLAHAN, Judge.

text:
    David PETROSKEY, et al., Appellants v. Thomas MARTIN, et al., Appellees
    No. 17CA011098
    Court of Appeals of Ohio, Ninth District, Lorain County.
    Dated: February 5, 2018
    JONATHAN E. ROSENBAUM, Attorney at Law, for Appellants.
    DAVID J. PASZ, Attorney at Law, for Appellees.
    DECISION AND JOURNAL ENTRY
   CALLAHAN, Judge.

{¶ 1} David and Jasmine Petroskey appeal from a judgment of the Lorain County Common Pleas Court granting summary judgment to Thomas and Dee Martin. This Court affirms.

I.

{¶ 2} In August 2013, David Petroskey, as buyer, and Dee Martin, as seller, entered into a purchase agreement for 5555 Laura Lane in Lorain ("the Home"). Jasmine Petroskey is David Petroskey's wife, and Dr. Thomas Martin is Dee Martin's husband. Prior to the sale, the Home had been titled solely in Dee Martin's name. The record does not reflect how the Petroskeys titled the Home.

{¶ 3} In April 2013, Mrs. Martin, with the assistance of Dr. Martin, had completed an Ohio Residential Property Disclosure Form ("Disclosure Form"). The Disclosure Form asked, "Do you know of any previous or current water leakage, water accumulation, excess moisture or other defects to the property, including but not limited to any area below grade, basement or crawl space?" Mrs. Martin checked the "No" box following this question. The Disclosure Form also asked, "Do you know of any previous or current leaks or other material problems with the roof or rain gutters? * * * If 'Yes,' please describe and indicate any repairs completed (but no longer than the past 5 years)." Mrs. Martin checked the "No" box on this question as well. In her deposition, Mrs. Martin testified that, at the time she completed the Disclosure Form, she "thought it was about seven years" since they had the roof replaced and that had been done for "cosmetic reasons."

{¶ 4} In September 2013, Mr. Petroskey had the home inspected. The inspection report noted various water issues and concerns about the roof. For instance, the crawl space had "[e]vidence of past or present water leakage" and "[e]levated moisture" at the time of the inspection. In addition, "wet areas [were] noted at [the] time of the inspection on the south[, and] the buyer mentioned that[,] when he [ ] was walking through the home[,] he noted wet areas on the north side of the crawlspace." (Emphasis deleted.) The inspector also noted that the property's grading was a "[f]lat [i]mproper soil slope towards [the] foundation."

{¶ 5} Further, the inspector found "[e]vidence of past water leakage" around the skylights and "[e]vidence of past or present water staining" on the ceilings in all bedrooms in the home, the family room, and the master bathroom. He found a "mold like substance [ ] in the main attic specifically near the lower north soffits" and that the "[s]heathing show[ed] evidence of past or present water stains." (Emphasis deleted.) The inspector observed "[e]vidence of repairs on the roof" and opined that "the roof may [ ] be less th[a]n 7 years old." He further observed that there was loose and damaged trim wood where it was in contact with the roof and damaged wood fascia "from past or present leaks."

{¶ 6} The inspector recommended that Mr. Petroskey "[i]nquire with the seller regarding [the] history of [the roof] repairs and any potential warranties" and "inquire with the owner as to the scope of the repairs noted on the roof and flashing." He also "recommend[ed] * * * increas[ed] ventilation of the roof." (Emphasis deleted.) Finally, the inspector stated multiple times in his report that "[a] qualified roofing contractor is recommended to evaluate and estimate repairs."

{¶ 7} Following the inspection, Mr. Petroskey developed a list of items that concerned him. That list included some, but not all, of the items identified by the inspector. In October 2013, Mr. Petroskey and Mrs. Martin amended their purchase agreement. The amendment removed the general home inspection contingency and reduced the sale price. Mr. Petroskey testified that he went through the Home "[m]aybe half a dozen" times before finalizing the purchase.

{¶ 8} In November 2013, the Petroskeys moved in to the Home. At that time, they were provided a folder containing documents related to various improvements that the Martins had done to the Home. Within that folder were invoices for roof work from June 2008.

{¶ 9} According to the Petroskeys, they experienced "ice damming" on the roof, leaking skylights, and a leaking roof soon after moving in to the Home. In addition, "the front yard did not drain properly and [ ] water entered the crawlspace and collected on the floor."

{¶ 10} The Petroskeys sued alleging that Dr. and Mrs. Martin (1) "misrepresented that the roof did not have 'previous or current leaks or other material problems' " and (2) "misrepresented that there were no 'current or previous water leakage, water accumulation, excess moisture, or other defects in [ ] the property including but not limited to any area below grade, basement or crawl space.' "

{¶ 11} The Martins moved for summary judgment. The Petroskeys opposed the motion. The trial court granted summary judgment to the Martins finding that (1) the evidence did not "establish that the [Martins] incorrectly filled the form out knowing it was false or * * * 'with such utter disregard and recklessness as to whether it [was] true or false that knowledge may be inferred' " and (2) there was "no justifiable reliance by the [Petroskeys]." (Emphasis deleted.)

{¶ 12} The Petroskeys appeal, raising one assignment of error.

II.

ASSIGNMENT OF ERROR

THE TRIAL COURT ERRED WHEN IT GRANTED SELLER's MOTION FOR SUMMARY JUDG[ ]MENT BECAUSE IT FAILED TO VIEW THE EVIDENCE IN A LIGHT "MOST STRONGLY" FAVORABLE TO BUYER AND WEIGHED THE EVIDENCE.

{¶ 13} In their sole assignment of error, the Petroskeys argue, "The trial court weighed the evidence before it [to] conclude[ ] that 'the testimony before the court fails to establish that the [Martins] incorrectly filled the form out knowing it was false or * * * 'with such utter disregard and recklessness as to whether it [was] true or false that knowledge may be inferred.' ' "

{¶ 14} Initially, this Court notes that the Petroskeys concede that the inspection report "may have placed" them on notice regarding the crawl space. The Petroskeys then set forth their argument based on the roof. This Court will likewise limit its analysis to the roof.

{¶ 15} This Court reviews an award of summary judgment de novo. Grafton v. Ohio Edison Co. , 77 Ohio St.3d 102, 105, 671 N.E.2d 241 (1996). This Court uses the same standard that the trial court applies under Civ.R. 56(C), viewing the evidence in the light most favorable to the non-moving party and resolving any doubt in favor of the non-moving party. See Viock v. Stowe-Woodward Co. , 13 Ohio App.3d 7, 12, 467 N.E.2d 1378 (6th Dist.1983). Pursuant to Civ.R. 56(C), summary judgment is proper if:

(1) No genuine issue as to any material fact remains to be litigated; (2) the moving party is entitled to judgment as a matter of law; and (3) it appears from the evidence that reasonable minds can come to but one conclusion, and viewing such evidence most strongly in favor of the party against whom the motion for summary judgment is made, that conclusion is adverse to that party.

Temple v. Wean United, Inc. , 50 Ohio St.2d 317, 327, 364 N.E.2d 267 (1977).

{¶ 16} The party moving for summary judgment bears the initial burden of informing the trial court of the basis for its motion and identifying those portions of the record which demonstrate the absence of a genuine issue of material fact. Dresher v. Burt , 75 Ohio St.3d 280, 292, 662 N.E.2d 264 (1996). Specifically, the moving party must support the motion by pointing to some evidence of the type listed in Civ.R. 56(C). Id. at 292-293, 662 N.E.2d 264. If the moving party satisfies this burden, then the non-moving party has the reciprocal burden to demonstrate a genuine issue for trial remains. Id. at 293, 662 N.E.2d 264. The non-moving party may not rest upon the mere allegations or denials in their pleadings, but must point to or submit evidence of the type specified in Civ.R. 56(C). Id. at 293, 662 N.E.2d 264 ; Civ.R. 56(E).

{¶ 17} While Ohio has a residential property disclosure statute, common law claims and defenses, including fraud and caveat emptor, still apply. R.C. 5302.30(J) ; Hearty v. First Merit Bank, N.A. , 9th Dist. Summit No. 19273, 1999 WL 1068447, *3 (Nov. 24, 1999). "Under the defense of caveat emptor, a seller will prevail against the injured buyer where (1) the defect to the premises was open to observation or [discoverable] upon reasonable inspection, (2) the buyer had unimpeded access to inspect the premises and (3) there was no fraud." Id. at *3, citing Layman v. Binns , 35 Ohio St.3d 176, 519 N.E.2d 642 (1988), syllabus. Accord Ponder v. Culp , 9th Dist. Summit No. 28184, 2017-Ohio-168, 2017 WL 192609, ¶ 11. A buyer must demonstrate all of the following elements for a fraud claim:

1) a representation, or in a situation where there was a duty to disclose, a concealment of fact; 2) which fact is material to the transaction; 3) made falsely, with knowledge of its falsity, or with such utter disregard and recklessness as to whether it is true or false that knowledge may be inferred; 4) with the intent of misleading another into relying upon it; 5) justifiable reliance on the misrepresentation; and 6) a resulting injury proximately caused by the reliance.

Garvey v. Clevidence , 9th Dist. Summit No. 22143, 2004-Ohio-6536, 2004 WL 2806339, ¶ 12.

{¶ 18} The Petroskeys do not dispute that the purchase agreement contained an " 'as is' " clause, nor do they dispute that they and their inspector had unimpeded access to inspect the home. They contend, however, that the defect with the roof was latent and that the Martins engaged in fraud.

{¶ 19} The Petroskeys argue that any repairs that the Martins had done to the roof were covered by shingles and "there is no mention of the severe ice damming problem in the King Home Inspection report demonstrating that any such defects were latent." The Ohio Supreme Court and this Court have drawn a distinction between the defect and the cause of the defect. The Ohio Supreme Court has found that, when determining whether a defect was "open to observation," the issue is not the "cause of the defect or the remedial effectiveness of [a repair]." Layman at 177-178, 519 N.E.2d 642 (buyer argued he merely saw a "symptom" of the defect). Similarly, this Court has stated that "the cause of the defect, the underlying problem, does not have to be open and obvious. If the defects are open and obvious * * *, the buyer is on notice to make further inquiry as to the underlying condition." Hearty at *3.

{¶ 20} Here, the Petroskeys contend that "[t]he roof suffered from ice damming that created leaks." In his deposition, Mr. Petroskey characterized the "ice damming" as "the root cause of the problem."

Although the home inspector did not identify the cause of the "leaks" as "ice damming," he did notify the Petroskeys of "[e]vidence of" "past water leakage[,]" "past or present water staining[,]" and damage "from past or present leaks" in various locations throughout the Home. Thus, the defect was not latent and the Petroskeys were "on notice to make further inquiry as to the underlying problem." See Hearty at *3.

{¶ 21} As to their fraud claim, the Petroskeys challenge the trial court's conclusion that the evidence did not "establish that the [Martins] incorrectly filled the form out knowing it was false or * * * 'with such utter disregard and recklessness as to whether it [was] true or false that knowledge may be inferred.' " (Emphasis deleted.) The trial court also found "no justifiable reliance by the [Petroskeys]." Assuming, without deciding, that the trial court erred with respect to the knowledge prong, this Court must affirm its judgment if it was correct as to the justifiable reliance prong. See Broida v. McGlumphy , 9th Dist. Summit No. 20975, 2002-Ohio-4738, 2002 WL 31015563, ¶ 15 (the absence of any element is fatal to recovery under fraud claim).

{¶ 22} The Petroskeys argue that they were entitled to rely on the representations made in the Disclosure Form. They further contend that neither the inspection report nor the amended purchase agreement demonstrate that they "were aware that the [H]ome needs a $49,700.00 complete reconstruction of the roof" as later estimated by their contractor. Again, the Petroskeys miss the issue. The issue is not whether they were aware of the cause or magnitude of the defect. The issue is whether they were on notice of the defect, thereby, making their reliance on the earlier Disclosure Form unjustified.

{¶ 23} Buyers cannot justifiably rely on alleged misrepresentations in a disclosure form if they are later put on notice of the potential defect. See Ponder , 2017-Ohio-168, 2017 WL 192609, at ¶ 14-15. "[A] buyer who has obtained a negative home inspection cannot rely on statements made by a seller prior to the home inspection." Riccardi v. Levine , 8th Dist. Cuyahoga No. 76215, 2000 WL 573188, *3 (May 11, 2000). Rather, "[o]nce alerted to a possible defect, * * * the buyer has a duty to either [ ] (1) make further inquiry of the owner, who is under a duty not to engage in fraud, or (2) seek the advice of someone with sufficient knowledge to appraise the defect." (Internal citation omitted.) Tipton v. Nuzum , 84 Ohio App.3d 33, 38, 616 N.E.2d 265 (9th Dist.1992).

{¶ 24} The inspection report put the Petroskeys on notice of the possible leaking issues with the roof. For instance, the inspector noted that he found "[e]vidence of past or present water staining" on the ceilings in multiple rooms in the Home. In addition, he observed loose and damaged trim wood where it was in contact with the roof and damaged wood fascia "from past or present leaks." The inspector further found a "mold like substance [ ] in the main attic specifically near the lower north soffits." (Emphasis deleted.) It is noteworthy that Mr. Petroskey identified the location where they first experienced the roof leaking after purchasing the home as "just below where [the inspector] found mold in the attic."

{¶ 25} The inspection report also noted that roof repairs had been made and urged Mr. Petroskey to inquire further of the Martins. The inspector found "[e]vidence of repairs on the roof at various locations." He advised Mr. Petroskey to "[i]nquire with the seller regarding [the] history of [the] repairs and any potential warranties" and to inquire "as to the scope of the repairs." Mr. Petroskey admitted in his deposition that, although he "knew [the roof] had been replaced recently," he did not ask to see "anything regarding the installation" such as "any invoices" or "warranty information."

{¶ 26} Further, the inspector also recommended multiple times that Mr. Petroskey consult a qualified roofing contractor to evaluate the roof and estimate what repairs were needed. Nonetheless, Mr. Petroskey amended the purchase agreement and went forward with the purchase of the Home prior to fully investigating this expense. The roofing estimate that the Petroskeys presented in opposition to the motion for summary judgment is dated August 15, 2014, approximately nine months after the purchase of the Home.

{¶ 27} Having received an inspection report that was inconsistent with the Disclosure Form, the Petroskeys were not justified in relying on the earlier statements contained in the Disclosure Form. See Hearty, 1999 WL 1068447 at *4 (no justifiable reliance when buyer had evidence of roof problems that were inconsistent with the seller's disclosure statement). Rather, at that point, it was their duty to make "further inquiry of the owner" or to seek the advice of a qualified roofing contractor. See Tipton , 84 Ohio App.3d at 38, 616 N.E.2d 265.

{¶ 28} The Petroskeys' sole assignment of error is overruled.

III.

{¶ 29} Having overruled the Petroskeys' sole assignment of error, this Court affirms the judgment of the Lorain County Common Pleas Court.

Judgment affirmed.

SCHAFER, P.J.

CARR, J.

CONCUR.

      The Martins contend that this estimate was not properly submitted to the trial court under Civ.R. 56. When ruling on a summary judgment motion, a court may consider documents not expressly mentioned in Civ.R. 56(C) if they are incorporated in an affidavit. Taylor v. Uhl , 9th Dist. Lorain No. 13CA010441, 2014-Ohio-3090, 2014 WL 3440603, ¶ 18, fn. 3. Mr. Petroskey authenticated and incorporated the estimate in his affidavit. Therefore, it was properly before the court.