author: MARY J. BOYLE, J.: PATRICIA ANN BLACKMON, J., CONCURRING IN PART AND DISSENTING IN PART:

text:
    CLIFTON STEEL COMPANY, Plaintiff-Appellee v. TRINITY EQUIPMENT COMPANY, Defendant-Appellant
    No. 105675
    Court of Appeals of Ohio, Eighth District, Cuyahoga County.
    RELEASED AND JOURNALIZED: June 7, 2018
    JOURNAL ENTRY AND OPINION
   MARY J. BOYLE, J.:

{¶ 1} Defendant-appellant, Trinity Equipment Company ("Trinity"), appeals the trial court's order granting plaintiff-appellee, Clifton Steel Company ("Clifton"), motion for preliminary injunction. Trinity raises the following assignments of error for our review:

1. The trial court erroneously interpreted the Agreement.
2. The trial court abused its discretion by finding, by clear and convincing evidence, that a preliminary injunction was warranted, thereby prohibiting Trinity from selling any product listed on Exhibit B to the Agreement to any entity identified on Exhibit A to the Agreement for one year after its termination.
3. The trial court erroneously denied Trinity's Motion to Dismiss Count I of Appellee's complaint pursuant to Civ.R. 12(B)(6).

{¶ 2} Finding no merit to Trinity's assignments of error, we affirm.

Procedural History and Factual Background

{¶ 3} Clifton is a steel manufacturer whose products include wear parts for the railroad industry. Railroad wear parts are replaced on a consistent basis "to protect wear within the [railroad] car itself." Trinity sells railroad parts and has acted as Clifton's sales agent since 1986. No written contract between the companies existed until May 4, 2012, when the parties entered into a Sales Agent Agreement ("the Agreement"). The Agreement provided that Clifton retained Trinity as its "authorized sales representative" for Clifton's railroad wear parts and set forth the terms of representation, compensation, and termination.

{¶ 4} Section 2 of the Agreement titled "Products and Customers," states that Clifton's "assigned customer base is defined as all companies listed on Exhibit A-Customer Listing." Section 2 defines Clifton's products as "listed on Exhibit B-Products Sold." Exhibit A lists approximately 380 "customers" and Exhibit B lists over 600 "products." Exhibits A and B are part of the record, although the parties dispute whether they were attached to the Agreement at the time of execution.

{¶ 5} As to termination, Section 5 of the Agreement, titled "Restriction on other representation during the term of this agreement and from competing on termination" states,

During the term of the agreement, Trinity shall not directly or indirectly engage in any business or in the sale of any other products that are competitive with Clifton, unless otherwise agreed upon in writing by Clifton.
* * *
Trinity agrees that for a period of twelve (12) months immediately following the termination of their sales representation pursuant to this Agreement, whether such termination is at the instance of Clifton due to a breach of this Agreement by Trinity, or on Trinity's own initiative, or mutually agreed upon by the parties hereto, Trinity shall not either, either directly or indirectly, as an employee, agent, officer, director, or shareholder of a corporation, or a member of a partnership, joint venture or other entity, or in any other capacity, engage in the sale or solicit the sale of, either on its own account or on the account of another, the products and services of Clifton Steel Company to Clifton's customers, businesses, or users.

{¶ 6} Put simply, the latter part of Section 5 of the Agreement states that for one year after termination of the Agreement, Trinity "shall not * * * engage in the sale or solicit the sale of * * * the products and services of Clifton Steel Company to Clifton's customers * * * ('the Termination Provision')."

{¶ 7} The Agreement states that the Termination Provision "[s]hall not apply if Trinity terminates this Agreement due to a default by Clifton or if Clifton terminates this Agreement without cause."

{¶ 8} It is undisputed that on October 20, 2015, Trinity terminated the Agreement; however, the parties dispute whether Trinity terminated it for cause. Before one year had passed after the Agreement's termination, Trinity did business with 13 of Clifton's customers. As a result, on April 27, 2016, Clifton filed a complaint alleging two counts of breach of contract. Count 1 alleged that Trinity's business dealings with Clifton's customers violated the Agreement's noncompete clause. Count 2 alleged that Trinity breached the Agreement by failing to pay invoices. Trinity moved to dismiss Count 1 of Clifton's complaint under Civ.R. 12(B)(6) arguing that the Termination Provision did not prohibit it from selling competitive products to Clifton's customers. The trial court denied Trinity's motion.

{¶ 9} Clifton also filed a motion for preliminary injunction. In its motion in opposition to Clifton's request for a preliminary injunction, Trinity argued that (1) the Agreement did not contain a noncompete clause, (2) even if the Termination Provision constituted a noncompete clause, it was not effective because Clifton defaulted by failing to perform its obligations under the Agreement, (3) the scope of the noncompete clause did not extend to all of the products and companies listed on Exhibits A and B because those exhibits were not attached to the Agreement at the time of execution, and (4) preliminary injunction was not warranted after an examination of the relevant factors. As to the language contained in the Termination Provision, Trinity argued that it is only prohibited from "becoming a secondary reseller of [Clifton's] products" for one year after the Agreement ended.

{¶ 10} In response, Clifton argued that the Termination Provision constitutes a noncompete clause and prohibits Trinity from selling "competitive products" for one year after the Agreement ended.

{¶ 11} On March 15, 2017, the court held a hearing on Clifton's motion for preliminary injunction. On March 22, 2017, the court issued an order granting Clifton's motion. In its order, the court stated,

This Court finds that [Clifton] has proven all of the elements necessary for a preliminary injunction by clear and convincing evidence. * * * [T]his Court determined that the non-compete provisions of the Sales Agent Agreement between the parties should be interpreted so as to prohibit Defendant Trinity Equipment * * * from selling to or soliciting any of Plaintiff's customers identified in Exhibit "A" to the Sales Agent Agreement with respect to any of the railroad wear parts identified in Exhibit "B" to the Sales Agent Agreement for a period of twelve (12) months following the termination of the Sales Agent Agreement.
* * *
This Court further finds that [Trinity's] contention that it should be excused from these non-compete obligations because of some default on behalf of [Clifton] with respect to the Sales Agent Agreement is not well taken. This Court further finds by clear and convincing evidence that [Clifton] has demonstrated that it will suffer irreparable injury if the injunctive relief is not granted.
* * *
This Court further finds that [Trinity] has not demonstrated that it will suffer any undue hardship as a result of the enforcement of this Agreement, and the public interest weighs in favor of enforcing contractual obligations between the parties.

{¶ 12} It is from this order that Trinity appeals.

Law and Analysis

A. Interpretation and Scope of the Agreement's Termination Provision

{¶ 13} In its first assignment of error, Trinity argues that the trial court erroneously interpreted the Agreement's Termination Provision as prohibiting it from selling competitive products, listed in Exhibit B, to Clifton's customers, listed in Exhibit A. Trinity also argues that the trial court erred when it rejected its argument that, because Clifton failed to perform its obligations under the Agreement, the Termination Provision does not apply.

{¶ 14} The parties agree that, according to the terms of the Agreement, Trinity was prohibited from selling "competitive products" while the Agreement was in force. The issue before us, however, concerns the language used in the Termination Provision, which prohibits Trinity from selling "the products and services of Clifton Steel Company to Clifton's customers" for one year after termination of the Agreement.

{¶ 15} In its journal entry granting the injunction, the trial court found that

the non-compete provisions of the Sales Agent Agreement between the parties should be interpreted so as to prohibit Defendant Trinity Equipment from selling to or soliciting any of Plaintiff's customers identified in Exhibit "A" to the Sales Agent Agreement with respect to any of the railroad wear parts identified in Exhibit "B" to the Sales Agent Agreement for a period of twelve (12) months following the termination of the Sales Agent Agreement.

{¶ 16} On appeal, Trinity argues that the Termination Provision should be read literally, holding that upon termination of the Agreement Trinity was prohibited from selling products manufactured by Clifton. Clifton, on the other hand, argues that if taken literally, the provision would be meaningless because Trinity would no longer be selling Clifton products after termination of the Agreement. Clifton argues that the provision should be read broadly "to include products and services of the same type and nature that Clifton was selling, but that were manufactured by other companies." To support this argument, Clifton relies on Exhibits A and B, which it describes as follows: "Exhibit A defined the universe of customers that Trinity was attempting to sell to on Clifton's behalf and Exhibit B defined the types of Clifton Steel products Trinity was attempting to sell to those customers."

{¶ 17} Our standard of review regarding contracts follows:

The construction of a written contract is a matter of law that we review de novo. Our primary role is to ascertain and give effect to the intent of the parties. We presume that the intent of the parties to a contract is within the language used in the written instrument. If we are able to determine the intent of the parties from the plain language of the agreement, then there is no need to interpret the contract.

(Citations omitted.) Saunders v. Mortensen , 101 Ohio St.3d 86, 2004-Ohio-24, 801 N.E.2d 452.

{¶ 18} "Contractual language is considered ambiguous where the meaning of the language cannot be determined from the four corners of the agreement, or where the language is susceptible to two or more reasonable interpretations." Co. Wrench v. Andy's Empire Constr., Inc. , 8th Dist. Cuyahoga No. 94959, 2010-Ohio-5790, 2010 WL 4867974, ¶ 19. When ambiguity is found, courts interpret the parties' intent, and thus, the meaning of the contract based on extrinsic evidence. Kelly v. Med. Life Ins. Co. , 31 Ohio St.3d 130, 132, 509 N.E.2d 411 (1987).

{¶ 19} Generally, in interpreting the parties' intent, contracts are to be construed against their drafters. Known as the doctrine of contra proferentum, this rule in construing contract terms against the drafter, however, "is a secondary rule of contract construction and is not applicable when a primary rule of contract construction clarifies the meaning of the contract." Michael A. Gerard, Inc. v. Haffke , 8th Dist. Cuyahoga No. 98488, 2013-Ohio-168, 2013 WL 267296, ¶ 14, citing Malcuit v. Equity Oil & Gas Funds, Inc. , 81 Ohio App.3d 236, 610 N.E.2d 1044 (9th Dist. 1992). In fact, "Ohio courts have generally resolved contract ambiguities against the drafter only where parties lacked equal bargaining power to select contract language." Id. ; see also T.A.P. on Tap, Inc. v. Sardis , 8th Dist. Cuyahoga No. 75755, 2000 WL 804644, *4 (June 22, 2000) ("[T]he doctrine is applied only when the contract is deemed ambiguous and parol evidence has not revealed the parties' intent. * * * Where contract terms are ambiguous, contra proferentum is not preferred as a tool of interpretation although it is most appropriately utilized in situations where the parties did not have equal bargaining positions."). Here, the court held a hearing on Clifton's motion for preliminary injunction, at which the following evidence was presented regarding the meaning of the Agreement and, in particular, the terms used in the Termination Provision.

{¶ 20} John Thomas testified that he is the president of Clifton and has been since 2014. Thomas was not Clifton's president when the Agreement was drafted, although he is familiar with Trinity and the Agreement.

{¶ 21} Thomas described Exhibit A as "a customer base that Clifton Steel has been selling [railroad] parts to for a number of years." Thomas testified that Exhibit A listed approximately 383 business entities that Trinity and Clifton considered "customers" or "prospects." According to Thomas, a "prospect" is a "potential customer" or a "customer that you haven't done business with in a while."

{¶ 22} Thomas described Exhibit B as "a portfolio of products that * * * for the most part are sold throughout the history of our company into the railroad industry." According to Thomas, Clifton has been manufacturing railroad parts for over 45 years, and although Clifton does not actively sell all the parts on Exhibit B "at any one time, * * * a large portion of those have been sold over the years by Clifton Steel."

{¶ 23} Thomas stated that noncompete clauses are particularly important in the railroad wear parts industry because "it's an annuity and it's based on a relationship that once you have your foot in the door and they buy your product, they are more than likely to continue to buy your product." Thomas testified that "competitive products" means "something manufactured by a competitor." Thomas also testified that the words "competitor" or "competitive products" were not in the Termination Provision; however, according to Thomas, the Termination Provision meant "that the products listed on Exhibit B could not be sold to a customer in Exhibit A."

{¶ 24} Keith Massey testified that he is the president and owner of Trinity and has been since 2007. In May 2012, Massey signed the Agreement with Clifton, and on October 20, 2015, he terminated the Agreement. Massey testified that, since October 20, 2015, Trinity sold railroad wear parts manufactured by companies other than Clifton to 13 customers listed on Exhibit A. He also testified, however, that Trinity has "not sold one part of Clifton Steel's" since termination of the Agreement.

{¶ 25} According to Massey, when he signed the Agreement, he was not "provided" Exhibits A and B; rather, the exhibits "showed up at [his] attorney's [office] a day after termination of the agreement." Massey described Exhibit A as "a railroad wish list that basically includes the entire rail industry." Massey described Exhibit B as "an extensive list of wear plates, parts, that Clifton Steel had the potential to manufacture or sell." Massey testified that, during the term of the Agreement, Trinity sold "[l]ess than 20" of these products manufactured by Clifton.

{¶ 26} Massey's understanding of the Termination Provision is that "Trinity Equipment cannot sell the parts or services of Clifton Steel to Clifton's customers" upon termination of the Agreement. In his opinion, this is a "wholesale style clause," that should "prevent [Trinity] essentially from warehousing [Clifton's] products." Put another way, Trinity's argument is that the Termination Provision prevented Trinity from being a secondary marketer or warehouser of Clifton's products for 12 months after the Agreement was terminated. Asked if he thought that by signing the Agreement Trinity "would not be allowed to sell * * * products that are competitive to Clifton's products after terminating the agreement," Massey answered, "Absolutely not. * * * So during the term of the agreement, it was very clear that we could not sell competitive parts. We agreed to that. We did not do it."

{¶ 27} After the preliminary injunction hearing, the court found on the record that the "issue comes down to that interpretation of" the Termination Provision. "And it's clear that there is a differing opinion about what it means, what the intent of that paragraph was. * * * It's not clear what it means. The language is not clear." The court noted that Trinity argued that the language is plain, and the words "compete" or "competitive" are not there. Clifton, on the other hand, argued that the provision "has no meaning without the understanding that we believe the language conveys." The court found that "the evidence that's been presented thus far would tend to support [Clifton's] interpretation of what that language intended. It doesn't make sense any other way." The court found no evidence indicating that Clifton defaulted on the Agreement, because "performance issues" would be between Clifton and its buyers, not between Clifton and its selling agent, Trinity. Ultimately, the trial court found that the Termination Provision prohibited Trinity from selling parts listed on Exhibit B to customers listed on Exhibit A and granted the preliminary injunction.

{¶ 28} Upon review, we find that the language used in the termination provision is ambiguous, because it "is susceptible to two or more reasonable interpretations." Thus, we turn to the parties' intent. The title or heading of Section 5 of the Agreement is: "Restriction on other representation during the term of this agreement and from competing on termination ." (Emphasis added.) Additionally, the parties' understanding of the scope of this restriction resulted in two different interpretations. Nonetheless, it is evident from the record that the parties necessarily contemplated some type of prohibition on competition upon termination of the Agreement.

{¶ 29} The trial court concluded that the restriction should be based on Exhibits A and B, which were referenced in the Agreement, but not specifically in the Termination Provision. Although Massey testified that Trinity was not "provided" these exhibits when he executed the Agreement, he was at least aware of their existence because they are referenced in the document he signed. "A party to a contract is responsible for reading what he signs." Love v. Crestmont Cadillac , 8th Dist. Cuyahoga, 2017-Ohio-1555, 90 N.E.3d 123, ¶ 15. Further, even if Massey did not receive the exhibits on the day that the parties executed the Agreement, there is no evidence that Massey subsequently objected to the exhibits upon receiving them.

{¶ 30} After review of the evidence, we agree with the trial court's interpretation of the Agreement. "The purpose in allowing non-competition agreements is to foster commercial ethics and to protect the employer's legitimate interests by preventing unfair competition." Cynergies Consulting, Inc. v. Wheeler , 8th Dist. Cuyahoga No. 90225, 2008-Ohio-3362, 2008 WL 2623960, ¶ 18, quoting Westco Group, Inc. v. City Mattress , 2d Dist. Montgomery No. 12619, 1985 WL 144712 (Aug. 15, 1991). "[T]he Supreme Court of Ohio 'has long recognized the validity of agreements that restrict competition by an ex-employee if they contain reasonable geographical and temporal restrictions.' " Id. at ¶ 21, quoting Land Lake Emp. Group of Akron v. Columber , 101 Ohio St.3d 242, 2004-Ohio-786, 804 N.E.2d 27.

{¶ 31} The title of Section 5 as well as the reference to both Exhibits A and B in the Agreement lead us to conclude that the parties intended the Termination Provision to mean that Trinity could not sell any of the products listed on Exhibit B to any of the companies listed on Exhibit A for a period of one year following termination of the Agreement, which we find to be reasonable geographical and temporal restrictions.

{¶ 32} Accordingly, we overrule Trinity's first assignment of error.

B. Preliminary Injunction

{¶ 33} In its second assignment of error, Trinity argues that the trial court abused its discretion in granting Clifton's motion for a preliminary injunction.

{¶ 34} The primary goal of preliminary injunctive relief is to preserve the status quo pending final determination of the matter. Mears v. Zeppe's Franchise Dev. , 8th Dist. Cuyahoga No. 90312, 2009-Ohio-27, 2009 WL 42061, ¶ 23. We review rulings on motions for preliminary injunctions for an abuse of discretion. Crestmont Cadillac Corp. v. GMC , 8th Dist. Cuyahoga No. 83000, 2004-Ohio-488, 2004 WL 229127, ¶ 26-27. Under this standard, we must defer to the trial court's factual findings and may only reverse the trial court's decision if it is unreasonable, arbitrary, or unconscionable. "Essentially, 'abuse of discretion' describes a judgment neither comporting with the record, nor reason." In re S.E. , 8th Dist. Cuyahoga No. 96031, 2011-Ohio-2042, 2011 WL 1639545, ¶ 13, citing In re Wiley , 11th Dist. Lake No. 2007-P-0013, 2007-Ohio-7123, 2007 WL 4564407.

{¶ 35} The party seeking a preliminary injunction must show, by clear and convincing evidence, the following:

• A substantial likelihood of success on the merits of the underlying claim;
• Irreparable harm will be suffered if the injunction is not granted;
• Issuing the injunction will not harm third parties; and
• The public interest would be served by issuing the injunction.

KLN Logistics Corp. v. Norton , 174 Ohio App.3d 712, 2008-Ohio-212, 884 N.E.2d 631, ¶ 12 (8th Dist.).

{¶ 36} In finding that Clifton "has demonstrated that it is likely to succeed on the merits of its claims," the court construed the Termination Provision to prohibit Trinity from selling any product on Exhibit B to any customer on Exhibit A. The trial court then found, by clear and convincing evidence, "that since terminating the Agreement on October 20, 2015, [Trinity] has improperly done business with" various Clifton customers.

{¶ 37} The court also found that, "by clear and convincing evidence [Clifton] has demonstrated that it will suffer irreparable injury if the injunctive relief is not granted." As to the final two prongs of the preliminary injunction test, the court found that Trinity "has not demonstrated that it will suffer any undue hardship as a result of the enforcement of this Agreement, and the public interest weighs in favor of enforcing contractual obligations between the parties."

{¶ 38} After reviewing the record and the above-listed factors, we find that the court did not abuse its discretion in granting Clifton's motion for preliminary injunction.

{¶ 39} The record supports the trial court's finding related to the first factor considered for purposes of preliminary injunction, which is whether Clifton is likely to succeed on the merits. Here, Trinity terminated the Agreement and then immediately began doing business with at least 13 of the customers listed on Exhibit A in violation of the noncompete clause found in the Termination Provision. As such, we find the record shows that Clifton was likely to succeed on its breach of contract claim for Trinity's alleged violation of the noncompete clause.

{¶ 40} As to the second factor, the record supports the trial court's finding that Clifton "demonstrated that it will suffer irreparable injury if the injunctive relief[,] [which requests the enforcement of the noncompete clause encompassing the companies listed in Exhibit A,] is not granted." Clifton has a legitimate interest in protecting the long-standing relationships it had with its customers as well as those companies it tried to build relationships with through Trinity. See Mielcusny, Loosening the Rust Belt: Why Ohio Should Re-Examine Its Current Standard for Determining the Enforceability of Covenants Not to Compete Contained in Employment Agreements , 63 Cleve.St.L.Rev. 707, 714 (2015) ("The unfair competition that an employer seeks to avoid through the use of a non-compete could also stem from a failure to protect particular assets, such as customer bases[.]"). Trinity was the sole and exclusive seller of Clifton's products for almost 30 years, had direct contact with all of Clifton's customers, and was essentially the "face" of Clifton's products. As Clifton contends, enforcing the noncompete clause would give Clifton time to assemble its own sales work force, introduce that work force to its customers, create a new "face" for its products, build more direct relationships with its customers, and take over all of the operations that Trinity performed for it. Further, Clifton established that it already suffered irreparable harm that could be contributed to Trinity's violation of the Agreement. Clifton's president testified that since the termination of the Agreement between Clifton and Trinity, Clifton's railroad wear parts business has decreased "over 50 percent," including significant decreases for Clifton's two biggest customers, and estimated that those lost sales cost Clifton "hundreds of thousands of dollars."

{¶ 41} The record also supports the trial court's finding that enforcing the noncompete clause as to all of the companies on Exhibit A-including those that were not customers of Clifton-is also necessary to protect Clifton's interests. The record supports a finding that Trinity signed the Agreement, which prohibited it from selling to all of the companies listed on Exhibit A, regardless of whether they were current customers of Clifton. As a result, any sales Trinity made to any of those companies would violate the Agreement's terms, and the record supports the trial court's finding that Trinity did violate the Agreement's terms.

{¶ 42} Turning to the third factor, the record supports the trial court's order finding that Trinity did not "demonstrate[ ]

that it will suffer any undue hardship as a result of the enforcement of this Agreement [including Exhibit A]." The record shows that neither Trinity nor others would suffer undue hardship because the company sold products other than railroad wear parts and that Trinity would only have to lay off an employee or two if the trial court granted the injunction. Further, as the trial court aptly noted at the hearing, Trinity was aware of this potential harm when it "hedged" offers with outside companies and decided to terminate the Agreement with Clifton.

{¶ 43} Finally, as to the fourth factor, the record supports the trial court's finding that "the public interest weighs in favor of enforcing contractual obligations between the parties." "[P]ersons have a fundamental right to contract freely with the expectation that the terms of the contract will be enforced." Nottingdale Homeowners' Assn. v. Darby , 33 Ohio St.3d 32, 36, 514 N.E.2d 702 (1987). Further, "preserving the sanctity of contractual relations and preventing unfair competition have traditionally been in the public interest." Century Business Servs., Inc. v. Urban , 179 Ohio App.3d 111, 2008-Ohio-5744, 900 N.E.2d 1048, ¶ 17 (8th Dist.), citing UZ Engineered Prods. Co. v. Midwest Motor Supply Co., Inc. , 147 Ohio App.3d 382, 770 N.E.2d 1068 (10th Dist. 2001).

{¶ 44} Here, the parties voluntarily entered into the written Agreement on May 4, 2012. The parties had been operating without a written Agreement from 1986 to 2012. The parties agreed that Trinity would not sell products from Exhibit B to customers listed on Exhibit A for the 12-month period following the termination of the Agreement. After Trinity voluntarily terminated the Agreement on October 20, 2015, it immediately began selling competitive products to Clifton customers despite the noncompete clause in the Agreement. Therefore, contrary to Trinity's argument, enforcing the Agreement between the parties would actually serve public interest.

{¶ 45} In conclusion, the record shows that the trial court's order granting the preliminary injunction and finding that the noncompete clause's scope encompasses all of the companies listed in Exhibit A is reasonable and is not an abuse of discretion. Accordingly, we overrule Trinity's second assignment of error.

C. Motion to Dismiss

{¶ 46} In its third assignment of error, Trinity argues that the trial court erred in denying its motion to dismiss Count 1 of Clifton's complaint for breach of contract.

{¶ 47} Trinity filed a motion to dismiss Count 1 for breach of contract under Civ.R. 12(B)(6) for failure to state a claim upon which relief can be granted. Trinity's argument in support of dismissing this claim is the same argument it raises on appeal-that Trinity did not breach the plain reading of the Termination Provision. The court denied Trinity's motion to dismiss.

{¶ 48} "In general, a decision denying a motion to dismiss is not a final appealable order." Shane v. Tracy , 8th Dist. Cuyahoga No. 77025, 2000 WL 1222016 (Aug. 24, 2000). See also R.C. 2505.02. This court lacks subject matter jurisdiction to consider arguments relating to Trinity's third assigned error. Ohio Constitution, Article IV, Section 3 (B)(2). Accordingly, we overrule Trinity's third assignment of error.

{¶ 49} Judgment affirmed.

EILEEN A. GALLAGHER, A.J., CONCURS;

PATRICIA ANN BLACKMON, J., CONCURS IN PART AND DISSENTS IN PART (WITH SEPARATE OPINION).

PATRICIA ANN BLACKMON, J., CONCURRING IN PART AND DISSENTING IN PART:

{¶ 50} While I agree with the majority's opinion that the trial court properly granted Clifton's motion for preliminary injunction, I would respectfully find that the majority's conclusion regarding the interpretation of the Termination Provision, and thus the scope of the noncompete clause, is unreasonable. Consequently, I respectfully dissent.

{¶ 51} To determine whether the trial court's interpretation of the Termination Provision is reasonable, we turn to the scope of the noncompete clause. In granting the preliminary injunction, the court did not consider any factors specific to a noncompete clause, which "is enforceable only to the extent it (1) is necessary to protect the company's legitimate interest; (2) does not impose undue hardship on the employee; and (3) is not adverse to public interest." Jacono v. Invacare Corp ., 8th Dist. Cuyahoga No. 86605, 2006-Ohio-1596, 2006 WL 832451, ¶ 31. In determining whether restrictions imposed by a noncompete clause are reasonable, courts should consider the following factors:

the absence or presence of limitations as to time and space * * *[;] [w]hether the employee represents the sole contact with the customer; whether the employee is possessed with confidential information or trade secrets; whether the covenant seeks to eliminate competition which would be unfair to the employer or merely seeks to eliminate ordinary competition; whether the covenant seeks to stifle the inherent skill and experience of the employee; whether the benefit to the employer is disproportional to the detriment to the employee; whether the covenant operates as a bar to the employee's sole means of support; whether the employee's talent which the employer seeks to suppress was actually developed during the period of employment; and whether the forbidden employment is merely incidental to the main employment.

Extine v. Williamson Midwest, Inc. , 176 Ohio St. 403, 406, 200 N.E.2d 297 (1964), overruled in part on other grounds, Raimonde v. Van Vlerah , 42 Ohio St.2d 21, 325 N.E.2d 544 (1975).

{¶ 52} According to the record, there is evidence of the following.

{¶ 53} First, the Termination Provision is limited to 12 months, and it appears to be unlimited geographically within the United States. Second, Trinity was the sole or exclusive contact with Clifton's customers. Third, testimony in the record shows that Clifton's parts were "standardized" products that did not involve confidential information or trade secrets. Fourth, the court's interpretation seeks to eliminate all competition in the railroad wear parts industry. Fifth, it is unclear from the record whether the Termination Provision "seeks to stifle" Trinity's skills, although it appears that Trinity sold products other than railroad wear parts. There is no evidence in the record as to what extent the remaining four factors apply to the case at hand. Although the numbers in the record were admittedly not accurate or complete, Thomas testified that Clifton lost at least $500,000 in sales after Trinity terminated the Agreement. Whether these lost sales can be attributed to Trinity's actions and the exact amount of damages, if any, are facts to be determined at a future time.

{¶ 54} I would find that the trial court's interpretation of the Termination Provision's restrictions is more encompassing than reasonably necessary to protect Clifton. Furthermore, in my opinion, the restrictions impose an undue hardship on Trinity who, under the injunction as granted, is prohibited from selling parts that Clifton has not manufactured in recent history to companies with which Clifton has never done business. See Mid-West Presort Mailing Servs., Inc. v. Clark , 9th Dist. Summit No. 13215, 1988 WL 17825 (Feb. 10, 1988) ("Employers should not receive insulation from all competition * * *; rather, they should only receive protection from unfair competition"). In other words, I would find that an umbrella prohibition on all competition within the railroad wear parts industry (i.e., incorporating Exhibits A and B) is unreasonable. Rather, I would narrow the scope of the noncompete clause to prohibit Trinity from selling, for a 12-month period, any product it previously sold for Clifton to any customer to whom it previously sold to on behalf of Clifton during the term of the Agreement.

      The trial court granted Trinity's motion for stay of execution pending appeal. See journal entry dated April 28, 2017.


source: Caselaw Access Project

author: SADLER, J.

license: Public Domain

text:
    Ruth A. HUNTER et al., Plaintiffs-Appellants, v. RHINO SHIELD et al., Defendants-Appellees.
    No. 17AP-751
    Court of Appeals of Ohio, Tenth District, Franklin County.
    Rendered on June 19, 2018
    On brief: Law Offices of James P. Connors, and James P. Connors, Columbus, for appellants. Argued: James P. Connors.
    On brief: Sybert, Rhoad, Lackey & Swisher, LLC, and Dave Lackey, for appellee AmCoat Industries, Inc. Argued: Dave Lackey.
    DECISION
   SADLER, J.

{¶ 1} Plaintiffs-appellants, Ruth A. Hunter and David G. Hunter, appeal from the July 18, 2016 judgment entry of the Franklin County Court of Common Pleas granting the motion to dismiss filed by defendant-appellee AmCoat Industries, Inc., for lack of personal jurisdiction, denying appellants' motion for sanctions, and denying appellants' motions for default judgment and renewed supplemental motion for default judgment and sanctions as moot, and appeal from the April 25, 2017 judgment entry denying appellants' motion for reconsideration. For the following reasons, we affirm the judgment of the trial court.

I. FACTS AND PROCEDURAL HISTORY

{¶ 2} This case concerns whether appellants established that an Ohio trial court had personal jurisdiction over appellee AmCoat Industries, Inc., a Florida corporation, in order to litigate claims arising from an Indiana entity's allegedly faulty application of the Rhino Shield ceramic coating product on appellants' Ohio residence and subsequent failure to adequately make promised repairs.

{¶ 3} On December 31, 2012, appellants signed a contract for the application of a ceramic coating to their Ohio residence, along with preparation and repair work including pressure washing, caulking and sealing as necessary, filling in stucco cracks, and masking/shielding certain areas to prevent over-spraying. The header of the contract contains a "Rhino Shield" logo with "By Tri-State Coating, Inc." stated directly underneath the logo. (Sept. 4, 2014 Am. Compl., Ex. B at 1.) In the header, phone numbers are provided with 317 area codes and for 888-RHINO41, and website addresses are provided with names indicating Indiana, Kentucky, and Ohio. The sales representative is listed as Rudy Pallone, who provides a 614 area-code phone number. Appellant David Hunter signed the contract. The price agreed on in the contract is a total of $11,998 with a $1,200 down payment, a partial payment of $5,399, and $5,399 due on completion, with all checks made payable to "RhinoShield." (Sept. 4, 2014 Am. Compl., Ex. B at 1.) The body of the contract states the customer shall pay certain fees and costs should "Tri-State Coatings" file a legal action to collect amounts due, and cancellation and any other written notices should be sent to Tri-State Coating, Inc. ("Tri-State") at a particular Indianapolis address. (Sept. 4, 2014 Am. Compl., Ex. B at 1.) The contract continues:

Tri-State Coating Limited warranty: Tri-State Coating warrants the material is of the quality specified and will transfer to the Customer all manufacturer's written warranties. Tri-State Coating warrants workmanship for two (2) years after the date of completion and will remedy substantial defects without charge to the Customer, on written notice from Customer within such period. Tri-State Coating and Customer agree that all implied warranties including, without limitations, warranties of habitability, fitness for a particular purpose and merchant ability [sic] are hereby excluded and there are no warranties or representations which extend beyond those expressly set forth in this agreement.
Tri-State Coatings makes no warranties express or implied regarding any of the products or services except the express warranties provided herein. TRI-STATE COATING EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES EXCEPT AS PROVIDED HEREIN. WITHOUT LIMITING THE FOREGOING, THERE IS NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE WITH RESPECT TO THE GOODS OR SERVICES SOLD.
* * *
Entire Understanding: Tri-State Coating is not liable or bound by any warranties, guarantees, statement, or representations made by any broker, agent, employee, or other persons representing or proposing to represent to Tri-State Coating unless expressly set forth in the Agreement. It is understood and agrees [sic] that all prior understanding and agreement between the parties are merged in the Agreement, and that Agreement alone fully and completely constitute the Final Agreement. Any subsequent changes or modification hereto shall not be binding on either party unless in writing and signed by both parties hereto.

(Sept. 4, 2014 Am. Compl., Ex. B at 2.) The December 31, 2012 contract further states that Tri-State will not be responsible for indirect or consequential damages, the buyer's remedy is limited to the price actually paid, and that "[a]ny questions, disputes, controversies, or litigation arising either directly or indirectly from [the December 31, 2012] contract" shall be submitted to arbitration conducted in Marion County, Indiana. (Sept. 4, 2014 Am. Compl., Ex. B at 2.) The contract footer states: "7745 E. 89th St. Indianapolis, IN 46256 indyrhinoshield@yahoo.com." (Sept. 4, 2014 Am. Compl., Ex. B at 2.)

{¶ 4} On February 6, 2014, appellants filed a complaint alleging violations of the Ohio Consumer Sales Practices Act ("CSPA"), negligent and/or false misrepresentation, breach of contract, and violations of the Ohio Home Sales Solicitation Act ("HSSA") arising from claimed problems with the project. Appellants cited failures of inspection, preparation and repair work, application of the coating, and clean up as well as subsequent failures to honor warranties and remedy those problems as promised. Appellants named as defendants "Rhino Shield" under a Columbus, Ohio address, "Tri-State Coatings and Repair LLC" under a West Chester, Ohio address, "Tri-State Coating, Inc." under an Indianapolis, Indiana address, "John D. Robertson," "Cleveland Coatings, Inc.," "Jim Williams," and "Rudy Pallone." (Feb. 6, 2014 Compl. at 1.) Tri-State answered and asserted a third-party complaint against Alexandre Dgebuadze, a contractor hired by Tri-State to perform services on appellants' home. (Mar. 11, 2014 Answer and Third-Party Compl. at 1.)

{¶ 5} On September 4, 2014, appellants moved for leave to file an amended complaint, and the trial court granted appellants' motion. In the amended complaint, appellants named several new defendants: "Rhino Shield" under an Indianapolis, Indiana address, "Aleksandre Dgebuadze," "Timeless Coatings LLC", "Rhino Shield Florida" under a Destin, Florida address, "Rhino Shield" under a Brighton, Michigan address, and appellee in the instant case, "AmCoat Industries, Inc." Regarding the nature of the complaint, appellants alleged the "case arises from an agreement for home exterior painting and repair services which the defendants, who are collectively and individually known as 'Rhino Shield,' agreed to perform for [appellant] David Hunter pursuant to written contract on December 31, 2012." (Sept. 4, 2014 Am. Compl. at 2.)

{¶ 6} Addressing jurisdiction and the parties, the amended complaint asserts in pertinent part that "[d]efendants are collectively and individually known as 'Rhino Shield' in one form or another, and are believed to be a loosely organized group of foreign and domestic corporations, limited liability companies, and/or individuals based in Indiana, Kentucky, Florida, Michigan, or perhaps some other state" and that " 'Rhino Shield' is now believed to also be known as AmCoat Industries Inc. and/or Rhino Shield Florida," entities allegedly licensed to conduct business in Michigan and not Ohio. (Sept. 4, 2014 Am. Compl. at 3.) Appellants assert that Rhino Shield conducts business nationwide through an extensive mass marketing strategy without revealing the true parent company, has "reformed information about how it conducts business, now claiming to be a nationwide network of 'distributors,' " and held itself out as Rhino Shield when contracting with consumers but actually had the services performed and product application done by subcontractors or others. (Sept. 4, 2014 Am. Compl. at 4.)

{¶ 7} The causes of action in the amended complaint remained the same as stated in the original complaint. In Counts 1 and 4, appellants allege the defendants violated two Ohio consumer protection statutes: the CSPA and the HSSA. In Count 2 of the amended complaint, appellants allege the defendants negligently and/or intentionally made misrepresentations to appellants on which they relied to their detriment. In Count 3, appellants allege the defendants breached the written contract of December 31, 2012 by failing to complete the agreement, failing to perform services and repair, and failing to honor warranties and guarantees, including the written warranty in the December 31, 2012 agreement (previously stated in this opinion) and a separate "25 Year Non-Prorated Transferable Limited Warranty" for the Rhino Shield ceramic coating. (Sept. 4, 2014 Am. Compl., Ex. E at 1.) The 25-year transferable warranty, which covers only the replacement of the coating material, bears the Rhino Shield name and logo with an Indianapolis address, indicates "Tri-State Coatings, Inc." as "[d]ealer," and states that it is "valid only when the Rhino Shield Ceramic Coat Material is applied * * * in accordance with the Manufacturer's approved methods." (Sept. 4, 2014 Am. Compl., Ex. E at 1.) Appellants demanded judgment against the defendants jointly and severally "where applicable," in an amount exceeding $25,000 for both compensatory and punitive damages, treble damages where appropriate, interest, attorney fees, costs of the action, and further relief as deemed just and appropriate. (Sept. 4, 2014 Am. Compl. at 22.)

{¶ 8} On January 13, 2015, appellee filed a notice of improper service, indicating that "[t]he proper service address for AmCoat is 4012 West Commons Drive, Unit 116, Destin, Florida 32541, which is the address listed with the Florida Department of State, Division of Corporation." (Jan. 13, 2015 Notice at 1.) Attached to the notice is an affidavit of AmCoat officer Steve Dominique, averring "AmCoat is a corporation organized and existing under the laws of the state of Florida" with a principal address at that Destin address as well as a print out of the state of Florida entity search for AmCoat. Appellee filed a second notice of improper service on January 26, 2015, noting the continued impropriety of service by ordinary mail under the circumstances. Appellants filed a motion for default judgment on February 10, 2015, and appellee filed a motion for sanctions against appellants and their attorney on February 12, 2015 for doing so.

{¶ 9} The case was temporarily stayed pending a decision on arbitration involving Tri-State. The case was reinstated to the court's active docket on November 10, 2015. The trial court then granted appellants' motion for default judgment against Dgebuadze on November 10, 2015 and denied Tri-State's motion for partial summary judgment on January 25, 2016.

{¶ 10} On April 7, 2016, appellee filed an amended motion to dismiss due to failure of appellants to obtain service within one year as required under Civ.R. 3(A). Appellee noted it entered an appearance solely for the purpose of moving the court to dismiss the case against it. On April 17, 2016, appellants filed a memorandum contra appellee's motion to dismiss, as well as a renewed supplemental motion for default judgment against appellee and for sanctions pursuant to R.C. 2323.51.

{¶ 11} Appellee filed a motion to dismiss for lack of jurisdiction and failure to state a claim on which relief can be granted on April 26, 2016. Appellee argued it distributes the product Rhino Shield to the Indiana corporation Tri-State, the allegations are based on conduct between Tri-State and appellants and appellee has had no participation in any of the transactions that form the basis of the allegations, appellants had not asserted any product liability claims, and appellee has no business transactions or contacts with the state of Ohio. Thus, appellee asserts that Ohio's long-arm jurisdiction rule and statute- Civ.R. 4.3 and R.C. 2307.382 -cannot be used to confer personal jurisdiction on appellee.

Appellee argued, in the alternative, that appellants had failed to state a claim against appellee on which relief can be granted pursuant to Civ.R. 12(B)(6). Appellee attached the dealership/supply agreement between Tri-State and appellee, information on appellee's registered trademark for the product Rhino Shield and state of Florida corporate registration information, Tri-State's certificate of incorporation and certificate of assumed business name of Rhino Shield, both in the state of Indiana, and the contract between Tri-State and appellants.

{¶ 12} Various additional motions and memoranda ensued. On April 29, 2016, appellants moved for partial summary judgment on "their claims for breaches of various written and verbal warranties * * * and related violations of the Ohio [CSPA] relative to the separate warranties provided by defendants Tri-State Coating, Inc., James Williams, Rudolph Pallone, and AmCoat Industries, Inc. arising from painting and repair services at [appellants'] home" and on their claims for breach of contract and related violations of the CSPA as to Tri-State, Williams, and Pallone. (Apr. 29, 2016 Pls.' Mot. for Partial Summ. Jgmt. (# 5) at 1.)

{¶ 13} On May 10, 2016, appellants filed a memorandum contra appellee's motion to dismiss. Within it, appellants argued that appellee is in default and, alternatively, appellee's other arguments lack merit. Specifically, appellants allege that appellee, a distributor who buys Rhino Shield from a manufacturer, "is actually 'Rhino Shield' " and "merely allows Messrs. Dominique and Williams and Pallone, and their shell entities, AmCoat and Tri-State and Cleveland Coatings, to conduct business on their behalves in Ohio." (May 10, 2016 Memo. Contra Mot. to Dismiss at 2-3.) Appellants point to Williams' deposition discussing that he began working with Dominique at AmCoat in 2002, running a branch of AmCoat in Indianapolis, until 2005 when Williams started a new "S" Corporation, Tri-State Coating, and purchased from AmCoat the exclusive rights to market Rhino Shield in three states. Williams later set up another entity, Cleveland Coatings, which filed a trade name registration for "Rhino Shield" in Ohio. Appellants also point to Dominique's deposition in a separate 2005 case filed by appellee in a federal district court in which Dominique discusses his history with Williams and a previous company and product and a 2002 Federal Trade Commission decision and order regarding the previous company. Appellants conclude that "[a]s is obvious from the foregoing, AmCoat has extensive connections and contacts with Ohio * * * [s]tarting with * * * Williams as its registered agent, AmCoat aka Rhino Shield has conducted business in Ohio since at least 2010 according to Jim Williams, and likely earlier * * *. There is simply no basis at law for AmCoat to argue that it has no contacts with Ohio or that a claim has not been sufficiently alleged against it in this case." (May 10, 2016 Memo. Contra Mot. to Dismiss at 15-16.)

{¶ 14} On May 13, 2016, appellee entered an appearance limited to the purpose of replying to appellants' memorandum contra and renewing its motion to dismiss for lack of personal jurisdiction and for failure to state a claim on which relief can be granted. Appellee argued that service was deficient, that appellants listed appellee as a party but failed to assert a basis for a cause of action against it, and that appellants' arguments regarding the entities all essentially being the same is an unsupported attempt at redirection to meaningless points which have no bearing on the identities of the separate defendants identified in the complaint. Appellee asserted appellants ignored the only legitimate issue: whether appellee had sufficient contacts with Ohio to permit the court to exercise personal jurisdiction over it and, specifically, how appellee might fit the criteria under Civ.R. 4.3 and/or R.C. 2307.382.

{¶ 15} On July 18, 2016, the trial court entered judgment granting appellee's motion to dismiss the amended complaint for lack of personal jurisdiction. The trial court noted that neither party cited to particular subsections of Civ.R. 4.3(A) or R.C. 2307.382 to support its argument. After reviewing Civ.R. 4.3(A) or R.C. 2307.382 and all the evidence and allegations before it, construing the evidence and pleadings in favor of appellants, the trial court found appellants had failed to make a prima facie showing of personal jurisdiction. Therefore, the trial court dismissed appellants' amended complaint as to appellee.

{¶ 16} Since the trial court found lack of personal jurisdiction dispositive, it did not rule on appellee's motion regarding Civ.R. 12(B)(6) and found appellants' February 10, 2015 and April 17, 2016 motions for default judgment, appellee's April 7, 2016 motions to dismiss, and Rhino Shield's April 27, 2016 motion to strike to be moot. The trial court additionally denied appellee's February 12, 2015 motion for sanctions but decided to strike appellants' seven pending motions for summary judgment on the docket while allowing appellants leave to file one consolidated summary judgment motion within 30 days of the date of the entry.

{¶ 17} Appellants filed a motion to reconsider on July 21, 2016, this time arguing that appellee is subject to specific personal jurisdiction under Civ.R. 4.3(A)(1), (2), (3), and (4), and further arguing personal jurisdiction over appellee is reasonable and comports with due process. Appellants additionally reference the existence of general personal jurisdiction over appellee without providing a specific argument to support that contention. Appellants attached the dealership/supply agreement and amendments between appellee and Tri-State, Ohio Secretary of State certificates as to the foreign/designated appointment of agent and foreign license/for profit assumed name of "Rhino Shield (Tri-State Coating, Inc.)" including Tri-State's incorporation status in Indiana, and Tri-State's certificate of existence as a for-profit corporation in Indiana. (July 21, 2016 Mot. for Recons., Ex. B at 1.) Appellee filed a memorandum contra arguing it has no agents in the state of Ohio, did not act directly within the state of Ohio to cause any of the events to occur out of which the claims arose, and simply delivered exterior coating to Tri-State. Therefore, appellee argued no causal link exists between appellee's activities and the causes of action to establish personal jurisdiction, and subjecting appellee to jurisdiction in these circumstances offends due process. On April 25, 2017, the trial court denied appellants' motion for reconsideration, stating it had "previously reviewed and considered all subsections of Civ.R. 4.3(A) and R.C. 2307.382 before determining that [appellants] had failed to make a prima facie showing of jurisdiction in this case," and "[u]pon thorough review of the parties' filings, the Court does not find any basis to reconsider that decision." (Emphasis sic.) (Apr. 25, 2017 Trial Ct. Decision at 2.)

{¶ 18} On September 22, 2017, appellants filed a notice, pursuant to Civ.R 41(A)(1)(a), of the voluntary dismissal of the action without prejudice as to "the remaining defendants Rhino Shield, James H. Williams, Rudolph J. Pallone, and Tri-State Coating, Inc." (Sept. 22, 2017 Notice of Dismissal at 1.)

{¶ 19} Appellants filed a timely appeal to this court.

II. ASSIGNMENTS OF ERROR

{¶ 20} Appellants present four assignments of error:

1. The trial court erred by denying plaintiffs' motion for default judgment against defendant AmCoat Industries, Inc. as "moot."
2. The trial court erred by denying plaintiffs' renewed supplemental motion for default judgment and sanctions against defendant AmCoat Industries, Inc. as "moot."
3. The trial court erred by granting defendant AmCoat Industries, Inc.'s motion to dismiss for lack of jurisdiction.
4. The trial court erred by denying plaintiffs' motion for reconsideration of its decision dismissing AmCoat for lack of jurisdiction.

III. STANDARD OF REVIEW

{¶ 21} "Personal jurisdiction is a question of law that appellate courts review de novo." Kauffman Racing Equip., L.L.C. v. Roberts , 126 Ohio St.3d 81, 2010-Ohio-2551, 930 N.E.2d 784, ¶ 27. On a defendant's motion to dismiss, the plaintiff bears the burden of establishing the trial court has personal jurisdiction over the defendant. Id. , citing Fallang v. Hickey , 40 Ohio St.3d 106, 107, 532 N.E.2d 117 (1988). If the court determines a Civ.R. 12(B)(2) motion to dismiss without an evidentiary hearing, "the plaintiff need only establish a prima facie showing of personal jurisdiction, which requires sufficient evidence to allow reasonable minds to conclude that the trial court has personal jurisdiction." Austin Miller Am. Antiques, Inc. v. Cavallaro , 10th Dist. No. 11AP-400, 2011-Ohio-6670, 2011 WL 6835024, ¶ 7. In resolving the motion, the court must view the allegations in the pleadings and the evidence in the light most favorable to the plaintiff and make all reasonable inferences in the plaintiff's favor. Kauffman Racing at ¶ 27, citing Goldstein v. Christiansen , 70 Ohio St.3d 232, 236, 638 N.E.2d 541 (1994).

IV. DISCUSSION

A. Third and Fourth Assignments of Error

{¶ 22} Because the third and fourth assignments of error are dispositive of this appeal, we address them first. In both the third and fourth assignments of error, appellants challenge the trial court's decision to grant appellee's motion to dismiss for lack of personal jurisdiction over appellee.

{¶ 23} As a preliminary issue, appellants argue in their reply brief, for the first time, that appellee waived personal jurisdiction in this case either by only contesting service in its first appearance or through its subsequent filings generally. However, even a de novo standard of review does not supersede the settled practice of not addressing issues raised for the first time on appeal. Tucker v. Leadership Academy for Math , 10th Dist. No. 14AP-100, 2014-Ohio-3307, 2014 WL 3740486, ¶ 20. Furthermore, "[a]ppellate courts generally will not consider a new issue presented for the first time in a reply brief." State v. Quarterman , 140 Ohio St.3d 464, 2014-Ohio-4034, 19 N.E.3d 900, ¶ 18. Therefore, because appellants did not raise this argument to the trial court or in their appellate brief, they have waived the argument, and we decline to consider it for the first time on appeal.

{¶ 24} In Ohio, the determination whether a trial court has personal jurisdiction over an out-of-state defendant requires a two-step inquiry. Fraley v. Estate of Oeding , 138 Ohio St.3d 250, 2014-Ohio-452, 6 N.E.3d 9, ¶ 12. As stated in Fraley :

First, the court must determine whether the defendant's conduct falls within Ohio's long-arm statute or the applicable civil rule. Kentucky Oaks Mall Co. v. Mitchell's Formal Wear, Inc. , 53 Ohio St.3d 73, 75, 559 N.E.2d 477 (1990). If it does, then the court must consider whether the assertion of jurisdiction over the nonresident defendant would deprive the defendant of due process of law under the Fourteenth Amendment to the United States Constitution. Id.

Id. Kauffman Racing at ¶ 45 ("Ohio's long-arm statute is not coterminous with due process.").

{¶ 25} In the first step, a court must determine whether Ohio's long-arm statute, R.C. 2307.382, or complementary service rule, Civ.R. 4.3(A), confer personal jurisdiction. Simmons v. Budde , 10th Dist., 2015-Ohio-3780, 38 N.E.3d 960, ¶ 15, citing Kauffman Racing at ¶ 35 ("The requirements for out-of-state service of process to effectuate personal jurisdiction on nonresident defendants 'mirror' the long-arm statute under these sections."). On appeal, appellants contend that appellee is subject to Ohio's long-arm statute under Civ.R. 4.3(A)(1), (2), (3), and (4). In pertinent part, Civ.R. 4.3(A) states:

When service permitted. Service of process may be made outside of this state, as provided in this rule, in any action in this state, upon a person who, at the time of service of process, is a nonresident of this state or is a resident of this state who is absent from this state. "Person" includes an individual, an individual's executor, administrator, or other personal representative, or a corporation, partnership, association, or any other legal or commercial entity, who, acting directly or by an agent, has caused an event to occur out of which the claim that is the subject of the complaint arose, from the person's:
(1) Transacting any business in this state;
(2) Contracting to supply services or goods in this state;
(3) Causing tortious injury by an act or omission in this state, including, but not limited to, actions arising out of the ownership, operation, or use of a motor vehicle or aircraft in this state;
(4) Causing tortious injury in this state by an act or omission outside this state if the person regularly does or solicits business, engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered in this state.

{¶ 26} At the outset, we note that in initially opposing appellee's motion to dismiss, appellants failed to present any argument to the trial court regarding Ohio's long-arm statute and civil rule and instead emphasized a general theory that the defendants named were collectively "Rhino Shield" and have "extensive contacts with Ohio." (Appellants' May 10, 2016 Memo. Contra Appellee's Am. Mot. to Dismiss at 3.) Appellants waited until their motion for reconsideration to the trial court to make the long-arm statute arguments for the first time. Ordinarily, a motion for reconsideration " 'may not raise new issues not previously raised, Columbus v. Hodge , 37 Ohio App.3d 68, 523 N.E.2d 515 (Franklin 1987).' " Fenton v. Time Warner Entertainment Co. , 2d Dist. No. 19755, 2003-Ohio-6317, 2003 WL 22781322, ¶ 2, quoting Whiteside, Ohio Appellate Practice , Author's Comment, at 700 (2003 Ed.); In re Estate of Traylor , 7th Dist. No. 03 MA 253, 2005-Ohio-1348, 2005 WL 678626, ¶ 8. See generally State v. Brown , 7th Dist. No. 13 MA 172, 2014-Ohio-5824, 2014 WL 7475170, ¶ 45-47 ; Pitts v. Ohio Dept. of Transp. , 67 Ohio St.2d 378, 423 N.E.2d 1105 (1981) (discussing applicability of motions for reconsideration in the trial court despite the lack of a civil rule governing the practice). Faced with the new arguments, the trial court did not find any basis to reconsider its decision since it had already reviewed and considered all subsections of Civ.R. 4.3(A) and R.C. 2307.382 before determining appellants had failed to make a prima facie showing of jurisdiction. Considering the trial court did not address the new arguments posed by appellants as a basis for reconsideration, and in light of appellants' burden of establishing the trial court has personal jurisdiction over appellee, appellants' initial failure to present arguments under Ohio's long-arm statute alone justifies finding in favor of appellee.

{¶ 27} However, even if appellants properly raised Ohio's long-arm statute and civil rule in their motion for reconsideration in the trial court, appellants have not demonstrated reversible error in this case. Appellants argue that Civ.R. 4.3(A)(1) applies because appellee "transact[s] any business in this state" under the broad definition of this phrase adopted by Ohio courts by virtue of (1) its dealership/supply agreement with Tri-State which enables Tri-State to sell Rhino Shield services to Ohio consumers, and (2) by virtue of the 25-year written warranty. Appellants argue Civ.R. 4.3(A)(2) applies because, through its dealership/supply agreement with Tri-State, appellee "has an agreement with Tri-State to supply its coating product 'Rhino Shield' in Ohio," such agreement requires Tri-State to use a standard warranty agreement, and, according to appellants, appellee "uses a contracted agent to supply both its product and product warranty in Ohio to Ohio consumers." (Appellants' Brief at 42, 46.) Appellants argue Civ.R. 4.3(A)(4) applies because appellee caused tortious injury in Ohio by an act or omission outside Ohio by refusing to honor its own written warranty provided directly to appellants, along with the fact that appellee derives substantial revenue from its products used, sold, and consumed in this state. Appellants provide no argument in support of Civ.R. 4.3(A)(3).

{¶ 28} Appellee counters the single reference to appellee within the amended complaint states that " 'Rhino Shield' is now believed to also be known as AmCoat Industries," an entity not licensed to do business in Ohio. (Sept. 4, 2014 Am. Compl. at 3.) Appellee argues that its only contact with the state of Ohio is through the supply of the Rhino Shield product to Tri-State, an Indiana corporation. Appellee notes that appellants made "vague references" in their brief suggesting appellee provided defective coating but contends that appellants made no product liability or defect claims made in the amended complaint, and there are no clear allegations as to the basis of their claims against appellee in their filings with the trial court. (Appellee's Brief at 12.) Finally, appellee contends it is not a party to any written warranty, appellants made no request and appellee did not fail to honor the warranty, and appellants' claimed damages have nothing to do with the supply or product. As a result, appellee suggests there is no "nexus" between appellee's supply of the Rhino Shield product to Tri-State and appellants' causes of action. (Appellee's Brief at 12.)

{¶ 29} We agree with appellee, because at the outset, "[t]he burden of affirmatively demonstrating error on appeal rests with the [appellant]." Miller v. Johnson & Angelo , 10th Dist. No. 01AP-1210, 2002-Ohio-3681, 2002 WL 1578737, ¶ 2 ; see also App.R. 9 and 16(A)(7). Pursuant to App.R. 16(A)(7), "[t]he appellant shall include in its brief, under the headings and in the order indicated, all of the following: * * * (7) [a]n argument containing the contentions of the appellant with respect to each assignment of error presented for review and the reasons in support of the contentions, with citations to the authorities, statutes, and parts of the record on which appellant relies. " (Emphasis added.) "It is not the duty of this court to search the record for evidence to support an appellant's argument as to alleged error." Abraham v. BP Exploration & Oil, Inc. , 10th Dist., 149 Ohio App.3d 471, 2002-Ohio-4392, 778 N.E.2d 48, ¶ 32.

{¶ 30} Here, appellant has not provided any argument or legal support for Civ.R. 4.3(A)(3). Furthermore, regarding Civ.R. 4.3(A)(4), appellants have not provided a legal definition of "tortious injury" or argument as to why a failure to honor a warranty in this case meets such a definition and have not provided any other legal support on this section of the civil rule. We decline to find appellants have not met their burden of demonstrating error on appeal in this regard. Miller , 2002-Ohio-3681 ; App.R. 16(A)(7).

{¶ 31} Regarding Civ.R. 4.3(A)(1) and (2), even if we were to find, for sake of argument, that appellants demonstrated appellee transacted business in this state or contracted to supply services or goods in this state, appellants have not demonstrated a connection between these acts and the claims giving rise to the complaint to support reversal in this case.

{¶ 32} In Ohio, personal jurisdiction over an out-of-state defendant may be properly exercised where there is a causal connection between the defendant's act as enumerated in the statute and/or rule and the causes of action asserted against him or her. Civ.R. 4.3(A) ; R.C. 2307.382(C) ("When jurisdiction over a person is based solely upon this section, only a cause of action arising from acts enumerated in this section may be asserted against him."); Simmons at ¶ 16, 19, 21.

{¶ 33} First, as noted by appellee, it is unclear what causes of action appellants assert against appellee. In appellants' own words, this "case arises from an agreement for home exterior painting and repair services which the defendants, who are collectively and individually known as 'Rhino Shield,' agreed to perform for [appellant] David Hunter pursuant to written contract on December 31, 2012." (Sept. 4, 2014 Am. Compl. at 2.) Appellants' only reference to appellee in the amended complaint is to note that they believe appellee is now Rhino Shield. Complicating things further, appellants dismissed "Rhino Shield" as a defendant. (Sept. 22, 2017 Notice of Dismissal at 1.) Although appellants essentially contend Tri-State, the company who appellants directly contracted with to do the work on their house and promised to repair the work, is one in the same as appellee, information provided by appellants themselves, such as the dealership agreement and certificate of incorporation, specifically state otherwise.

{¶ 34} Second, the bulk of the amended complaint is related to allegations of faulty application of the coating product, including applying the coating product in incorrect and varying thicknesses and damages resulting from over-spray and the subsequent failure to repair the work as promised. A cause of action regarding the product being defective is not stated in the amended complaint, and the factual allegation regarding the paint chipping and peeling is stated in relation to the faulty and inconsistent application of the product. For example, the complaint states "[t]he coating was also not applied at the proper mil thickness and continues to peel, split, crack, blister, and break." (Sept. 4, 2014 Am. Compl. at 13.)

{¶ 35} Third, several problems bog down appellants' assertions of personal jurisdiction by way of alleged causes of action related to the 25-year transferrable warranty. The warranty, which is attached to the amended complaint, does not include appellee's name, specifically states it is only valid when the material is applied in accordance with the manufacturer's approved methods (which appellants allege did not happen), and does not extend beyond the replacement of the coating material, which is not sought by appellants in their suit. Moreover, there is no allegation that appellants demanded appellee replace the coating material pursuant to the warranty and that appellee subsequently refused to do so.

{¶ 36} Overall, reviewing the allegations in the pleadings and the evidence in the light most favorable to appellants and making all reasonable inferences in appellants' favor, we find appellants have not met their burden to demonstrate a causal connection between appellee's alleged activities under Civ.R. 4.3(A)(1) and (2) and the claims asserted against appellee to support personal jurisdiction over appellee in this case.

{¶ 37} Finally, although appellants mention general jurisdiction and cite to Helicopteros Nacionales de Colombia v. Hall , 466 U.S. 408, 414, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984), and Internatl. Shoe Co. v. Washington , 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), appellants failed to provide support for the applicability of general jurisdiction under Ohio law and failed to explain within its motions to the trial court and to this court how a general jurisdiction theory applies to the facts of this case. (Appellants' Brief at 40.) Therefore, appellants have not met their burden in demonstrating error on appeal in this regard. Miller , 2002-Ohio-3681 ; App.R. 16(A)(7).

{¶ 38} Accordingly, appellants' third and fourth assignments of error are overruled.

B. First and Second Assignments of Error

{¶ 39} Under the first and second assignments of error, appellants contend the trial court erred by denying appellants' motion for default judgment against appellee (and appellants' renewed supplemental motion for default judgment and sanctions) as moot. We disagree.

{¶ 40} A trial court's denial of a motion for default judgment is ordinarily reviewed on appeal for an abuse of discretion. However, dismissals on the basis of mootness present questions of law, which a court of appeals reviews de novo. Tucker at ¶ 7 ; Heartland of Portsmouth, OH, LLC v. McHugh Fuller Law Group, PLLC , 4th Dist., 2017-Ohio-666, 85 N.E.3d 191, ¶ 15.

{¶ 41} Appellants specifically contend appellee was clearly in default and filed false/fraudulent affidavits related to issues of improper service, appellants had a right to have their motion for default judgment heard and decided, the trial court erred by allowing appellee to file an untimely motion to dismiss out of rule and without leave from the court, and this court must reverse and grant default judgment and sanctions as a matter of law. Appellants cite to Miller v. Lint , 62 Ohio St.2d 209, 404 N.E.2d 752 (1980), and PSE Credit Union, Inc. v. Wells , 8th Dist., 2016-Ohio-7780, 73 N.E.3d 1118, ¶ 14, in support of their argument.

{¶ 42} In Miller , 62 Ohio St.2d 209, 404 N.E.2d 752, after service of summons and a copy of a complaint was made on the defendant and the defendant filed an untimely answer, the plaintiff sought a default judgment. The trial court granted leave to file the answer, and the appellate court overruled the plaintiff's allegation the trial court erred in allowing the late answer. The Supreme Court of Ohio reversed the judgment allowing the defendant to file the answer out of rule without regard to civil procedure rules. In PSE Credit Union , a plaintiff never filed an answer to the defendant's cross-claims prior to filing a Civ.R. 12(B)(6) motion to dismiss for failure to state a claim on which relief can be granted. The trial court granted the motion to dismiss. The appellate court reversed, noting that "[a]lthough a party may raise the defense of failure to state a claim upon which relief can be granted up to and including trial, it must do so in accordance with the civil rules." Id. at ¶ 17.

{¶ 43} Both Miller , 62 Ohio St.2d 209, 404 N.E.2d 752, and PSE Credit Union do not involve issues of personal jurisdiction and, as such, are readily distinguishable from this case. Appellants' legal argument is generally premised on rules and cases in which service of process of the complaint had been established and issues of personal jurisdiction are not involved. Personal jurisdiction affects the very authority of a court to enter judgment. Don Ash Properties v. Dunno , 10th Dist. No. 03AP-375, 2003-Ohio-5893, 2003 WL 22480323, ¶ 8 ("A judgment entered without personal jurisdiction is void."); Maryhew v. Yova , 11 Ohio St.3d 154, 156, 464 N.E.2d 538 (1984) (reversing default judgment in favor of plaintiff where personal jurisdiction over out-of-state corporate office was not established).

{¶ 44} Here, the trial court correctly found it lacked personal jurisdiction over appellee under Civ.R. 4.3(A) and R.C. 2307.382(C). As such, it lacked authority to issue judgment against appellee. Considering all the above, appellants have not met their burden in affirmatively demonstrating error on appeal. Miller , 2002-Ohio-3681 ; App.R. 16(A).

{¶ 45} Accordingly, appellants' first and second assignments of error are overruled.

V. CONCLUSION

{¶ 46} Having overruled appellants' four assignments of error, we affirm the judgment of the Franklin County Court of Common Pleas.

Judgment affirmed.

BRUNNER and HORTON, JJ., concur.

      We note that the contract for the application of the ceramic coating references both "Tri-State Coatings" and "Tri-State Coating."

      On March 5, 2017, the trial court issued a decision and entry denying a motion for an order staying the case pending arbitration filed by Tri-State. Tri-State appealed, and this court affirmed the trial court judgment regarding arbitration in Hunter v. Shield , 10th Dist. No. 15AP-172, 2015-Ohio-4603, 2015 WL 6779395. In Hunter v. Shield , we noted that "[a]ppellees did not obtain service of the summons and complaint on the other six defendants [listed in the original complaint], and they are not part of this appeal." Id. at ¶ 2, fn. 1

      On the same day, appellee filed an amended motion to dismiss to correct a typographical error.

      We note that appellants' argument in their original brief to this court takes the opposite approach: that appellee was in default. We further note that appellants neither make nor support with legal authority an argument specific to Civ.R. 12(B)(6) motions in their reply.

      We note that, even had appellee received service of the complaint, they were not technically served under Civ.R. 4.3. Civ.R. 4.3(A) expressly only permits out-of-state service of process as provided in that rule, in other words, when the court has personal jurisdiction over the out-of-state defendant. Civ.R. 4.3(A) ("When service permitted. Service of process may be made outside of this state, as provided in this rule, in any action in this state, upon a person who, at the time of service of process, is a nonresident of this state [under a set of enumerated circumstances]."); Simmons at ¶ 22, citing Green v. Huntley , 10th Dist. No. 09AP-652, 2010-Ohio-1024, 2010 WL 926016, ¶ 18, fn. 1.


author: BROWN, P.J.

text:
    Clifford L. BOGGS, Plaintiff-Appellant, v. Craig DENMEAD et al., Defendants-Appellees.
    No. 17AP-199
    Court of Appeals of Ohio, Tenth District, Franklin County.
    Rendered on June 21, 2018
    On brief: Stewart & DeChant, LLC, and Scott E. Stewart, Cleveland, for appellant. Argued: Scott E. Stewart.
    On brief: Reminger Co., L.P.A., Melvin J. Davis, and Allison R. Thomas, Columbus, for appellees. Argued: Allison R. Thomas.
    DECISION
   BROWN, P.J.

{¶ 1} This is an appeal by plaintiff-appellant, Clifford L. Boggs, from a judgment of the Franklin County Court of Common Pleas overruling his objections to a magistrate's decision and granting the motion to dismiss filed by defendants-appellees, Craig Denmead (individually "Denmead") and Denmead Law Office.

{¶ 2} On November 2, 2012, appellant filed a complaint against appellees alleging legal malpractice. On November 20, 2012, appellant filed a motion for leave to file an amended complaint, which the trial court granted by entry filed November 27, 2012.

{¶ 3} On December 1, 2013, appellees filed a motion to dismiss the complaint and amended complaint, pursuant to Civ.R. 12(B), asserting insufficiency of service of process, insufficiency of process, and lack of personal jurisdiction. Attached to the motion was the affidavit of Denmead, who averred he had never received certified or express mail service of the summons and complaint filed in Franklin C.P. No. 12CV-13858. On December 10, 2013, appellant filed a brief in response to appellees' motion to dismiss.

{¶ 4} On December 5, 2014, a magistrate of the trial court conducted an evidentiary hearing on the motion to dismiss. During the hearing, Denmead testified on behalf of appellees, while appellant presented the testimony of Joyce Beauman, manager of the clerk's office for the Franklin County Court of Common Pleas, General Division. Appellant also called Denmead to testify on cross-examination.

{¶ 5} On February 6, 2015, the magistrate issued a decision which included the following findings of fact. Appellee Denmead is an Ohio licensed attorney "doing business as Denmead Law Office." In November 2012, the Denmead Law Office was located at 17 South High Street, Suite 620, Columbus, Ohio, 43215. Denmead is a sole practitioner, and in November 2012 "he did not employ any staff, nor did he share office space with any other attorney, or anyone else." Denmead was also "the only person who had access to Suite 620 on November 24, 2012."

{¶ 6} Prior to the filing of the instant action, "Denmead was contacted in writing by an attorney representing Clifford Boggs," requesting a copy of a file "related to a potential malpractice lawsuit." Denmead "notified his malpractice insurance carrier," and the carrier retained counsel for Denmead.

{¶ 7} On November 2, 2012, appellant requested certified mail service of the complaint filed against both appellees. Thereafter, the complaint and summonses "were sent to Craig Denmead and Denmead Law Office at 17 South High Street, Suite 620, Columbus, Ohio 43215."

{¶ 8} On November 20, 2012, appellant filed a motion for leave to file an amended complaint. Appellant mailed a copy of his motion "to Craig Denmead and Denmead Law Office at 17 S. High Street, Suite 620, Columbus, Ohio 43215." On November 27, 2012, the trial court granted appellant's motion for leave to file his amended complaint instanter. On that same date, "the Franklin County Clerk of Courts filed 'return receipts' for the Complaint and summonses issued to [appellees] Craig Denmead and Denmead Law Office." Both certified mail envelopes "were delivered on November 24, 2012 at 10:03 A.M. in Columbus, Ohio 43216, giving a customer service reference number for the Boggs' Complaint on both [appellees]."

{¶ 9} The parties "agree[d] that the signatures and address on the November 24, 2012 signed receipt are illegible." In his affidavit, "Denmead stated that neither he, nor an agent or an employee, signed or received the certified mail," nor does he "know or recognize the signatures or names of the person(s) on the return receipts."

{¶ 10} On November 28, 2012, attorneys Michael Romanelli and Nicole Koppitch entered their appearances on behalf of appellees. On November 29, 2012, the envelopes with the original complaint were returned to the Franklin County Clerk of Courts; the envelopes were stamped as unclaimed after previously showing receipt. One envelope was addressed to "Craig Denmead, Suite 620, 17 South High Street, Columbus, Ohio 43215," and bore the tracking number "9171 9009 0300 1007 4706 75" the other envelope was addressed to "Denmead Law Office, Suite 620, 7 South High Street, Columbus, Ohio 43215," and bore the tracking number "9171 9009 0300 1007 4706 68." Both of the tracking numbers matched "the respective summonses on certified mail sent November 7, 2012."

{¶ 11} On November 29, 2012, the Franklin County Clerk of Courts issued a "conflict of service notice." The magistrate noted that appellant "made no subsequent attempts to obtain service via certified or express mail."

{¶ 12} Denmead testified that he "received 'pink' slip notices at 17 S. High Street, Suite 620, Columbus, Ohio 43215 on November 8 and 23, 2012, indicating that he had certified mail." Denmead "was given the option of either requesting that it be redelivered, or picking up the certified mail at the United States Post Office, located at 850 Twin Rivers Drive." The post office is located in the 43216 zip code area, "but serves the downtown Columbus, Ohio area, including the delivery of mail to 17 S. High Street, Suite 620[,] Columbus, Ohio, which is located in the 43215 zip code area."

{¶ 13} According to the testimony of Denmead, "sometime during the first week of December 2012, prompted by the pink slip notices he received from the United States Post Office, he went to the Twin Rivers Drive post office to claim his certified mail." At that time, Denmead "learned that the certified mail had been returned to the original sender."

{¶ 14} On December 12, 2012, appellant requested ordinary mail service of the amended complaint and summonses sent to Denmead and Denmead Law Office at 17 South High Street, Suite 620, Columbus, Ohio 43215. The magistrate found no evidence indicating "the ordinary mail containing the Amended Complaint and summonses" was returned to the clerk of courts, and the magistrate noted testimony by Denmead that "he did receive the Amended Complaint."

{¶ 15} In the magistrate's conclusions of law addressing the issue of service of process of the original complaint and summons, the magistrate found "the evidence demonstrates that the unopened envelopes were subsequently returned to the clerk's office as 'unclaimed.' " The magistrate also noted Denmead's testimony that "Denmead Law Office was not open on Saturday, November 24, 2012, and that he is the only person who has access to his office, and does not have any employees." Based on the testimony and exhibits introduced at the hearing, the magistrate determined that "the evidence demonstrates [appellees] were not properly served" with the original complaint.

{¶ 16} Regarding the amended complaint, the magistrate noted that appellant "never attempted to serve his Amended Complaint and summons by certified or express mail." Rather, the evidence established appellant "attempted to serve the Amended Complaint via ordinary mail." Citing the provisions of Civ.R. 4.6, the magistrate held that "absent proof that certified or express mail service of the Amended Complaint and summons was either refused or unclaimed, ordinary mail service was not a proper method of service of process." Finding that the evidence demonstrated "neither the original Complaint nor the Amended Complaint have been served pursuant to the Ohio Civil Rules of Procedure on either [appellee] within the one year time period," the magistrate concluded the trial court lacked jurisdiction over appellees.

{¶ 17} Appellant filed objections to the magistrate's decision, challenging the magistrate's findings related to Denmead's failure to receive the certified mail service of the original complaint, as well as the magistrate's conclusion that ordinary mail service of the amended complaint was not proper service under the circumstances. Appellant argued the amended complaint related back to the original complaint, pursuant to Civ.R. 15(C), and that the amended complaint was properly served via ordinary mail after the original complaint was returned unclaimed.

{¶ 18} On March 7, 2017, the trial court filed a decision and entry in which it adopted the magistrate's decision, holding the magistrate properly determined appellant failed to accomplish service of either the original or amended complaint within the period required by Civ.R. 3(A). The trial court therefore granted appellees' motion to dismiss for lack of jurisdiction.

{¶ 19} On appeal, appellant sets forth the following three assignments of error for this court's review:

[I.] The Court erred in finding that the Amended Complaint did not relate back in time to the original Complaint and allow service of process by ordinary mail which Appellees received under Civ.R. 4.6, after service of the original Complaint was confirmed as received, and then a conflict notice issued stating it was unclaimed.
[II.] Appellee did not rebut the presumption of service with sufficient evidence that service was not completed by certified mail.
[III.] Appellee had adequate notice under the Rules of Civil Procedure to obtain proper service and as a result civil jurisdiction upon the Appellee.

{¶ 20} Appellant's assignments of error are interrelated and will be considered together. Under these assignments of error, appellant argues: (1) the trial court erred in finding the amended complaint did not relate back in time to the original complaint and allow service of process by ordinary mail, (2) appellees did not rebut the presumption of service by certified mail, and (3) appellees had adequate notice under the rules of Civil Procedure to obtain proper service.

{¶ 21} At issue on appeal is the propriety of the trial court's decision overruling appellant's objections to the magistrate's decision and granting appellees' motion to dismiss for lack of jurisdiction due to a failure to obtain service of either the original or amended complaint within one year of filing. In order to render a valid personal judgment, a trial court must have personal jurisdiction over the defendant. Maryhew v. Yova , 11 Ohio St.3d 154, 156, 464 N.E.2d 538 (1984). A "[l]ack of jurisdiction over the person, insufficiency of process and insufficiency of service of process are affirmative defenses." Confidential Servs., Inc. v. Dewey, 10th Dist. No. 98AP-905, 1999 WL 224431 (Apr. 15, 1999), citing Civ.R. 12(B)(2), (4) and (5). An appellate court's "standard of review of a dismissal due to the lack of personal jurisdiction is de novo." Shah v. Simpson, 10th Dist. No. 13AP-24, 2014-Ohio-675, 2014 WL 748498, ¶ 9, citing Kauffman Racing Equip., L.L.C. v. Roberts , 126 Ohio St.3d 81, 2010-Ohio-2551, 930 N.E.2d 784.

{¶ 22} Civ.R. 3(A) states in part that "[a] civil action is commenced by filing a complaint with the court, if service is obtained within one year from such filing upon a named defendant." Thus, under the provisions of Civ.R. 3(A), "an action is not deemed to be 'commenced' unless service of process is obtained within one year from the date of the filing of the action." Saunders v. Choi, 12 Ohio St.3d 247, 250, 466 N.E.2d 889 (1984). Further, "[i]f service is not perfected under Civ.R. 3(A) within a year of filing the complaint, dismissal of the complaint is appropriate." McAbee v. Merryman, 7th Dist. No. 13 JE 3, 2013-Ohio-5291, 2013 WL 6254332, ¶ 16.

{¶ 23} Civ.R. 4.1"outlines the methods for obtaining service of process within this state, including service via certified mail." TCC Mgt. v. Clapp , 10th Dist. No. 05AP-42, 2005-Ohio-4357, 2005 WL 2008677, ¶ 11. Civ.R. 4.1(A) states in part:

(1)(a) Evidenced by return receipt signed by any person, service of any process shall be by United States certified or express mail unless otherwise permitted by these rules. The clerk shall deliver a copy of the process and complaint or other document to be served to the United States Postal Service for mailing at the address set forth in the caption or at the address set forth in written instructions furnished to the clerk as certified or express mail return receipt requested, with instructions to the delivering postal employee to show to whom delivered, date of delivery, and address where delivered.
* * *
(2) The clerk shall forthwith enter on the appearance docket the fact of delivery to the United States Postal Service for mailing or the fact of delivery to a specified commercial carrier service for delivery, and make a similar entry when the return receipt is received. If the return shows failure of delivery, the clerk shall forthwith notify the attorney of record or * * * the party at whose instance process was issued and enter the fact and method of notification on the appearance docket. The clerk shall file the return receipt or returned envelope in the records of the action.

{¶ 24} In accordance with Civ.R. 4.1(A), "service of process via certified mail is evidenced by a return receipt signed by any person." Clapp at ¶ 11. When service of process is attempted by certified mail, "a signed receipt returned to the sender establishes a prima facie case of delivery to the addressee." Id. In instances where a plaintiff "follows the civil rules governing service of process, a rebuttable presumption of proper service arises." Chuang Dev. LLC v. Raina , 10th Dist., 2017-Ohio-3000, 91 N.E.3d 230, ¶ 31. A defendant, however, "can rebut the presumption of proper service with sufficient evidence that service was not accomplished." Id. at ¶ 32.

{¶ 25} Civ.R. 4.6(D)"addresses the failure of certified mail situations of 'service refused' or 'service unclaimed.' " Denittis v. Aaron Constr., Inc. , 8th Dist. No. 2011-G-3031, 2012-Ohio-6213, 2012 WL 6738472, ¶ 37. Civ.R. 4.6(D) states in part as follows:

If a United States certified or express mail envelope attempting service within or outside the state is returned with an endorsement stating that the envelope was unclaimed, the clerk shall forthwith notify the attorney of record * * * and enter the fact and method of notification on the appearance docket. If the attorney, or serving party, after notification by the clerk, files with the clerk a written request for ordinary mail service, the clerk shall send by United States ordinary mail a copy of the summons and complaint or other document to be served to the defendant at the address set forth in the caption, or at the address set forth in written instructions furnished to the clerk. * * * The clerk shall endorse this answer date upon the summons which is sent by ordinary mail. Service shall be deemed complete when the fact of mailing is entered of record, provided that the ordinary mail envelope is not returned by the postal authorities with an endorsement showing failure of delivery. If the ordinary mail envelope is returned undelivered, the clerk shall forthwith notify the attorney, or serving party.

{¶ 26} Thus, Civ.R. 4.6(D)"provides for service by ordinary mail when the certified mail is 'unclaimed.' " Olezewski v. Niam , 2d Dist. No. 13936, 1993 WL 372234 (Sept. 22, 1993). See also Cent. Ohio Sheet Metal, Inc. v. Walker , 10th Dist. No. 03AP-951, 2004-Ohio-2816, 2004 WL 1196134, ¶ 8, citing Pittsburgh Hilton v. Reiss , 22 Ohio App.3d 134, 135, 489 N.E.2d 1066 (9th Dist.1985) ("Service of process by ordinary mail under Civ.R. 4.6(D) is proper after a certified mail delivery to appellant's address is returned marked 'unclaimed.' ").

{¶ 27} As noted, following the evidentiary hearing on the motion to dismiss, the magistrate determined appellant failed to properly serve appellees with either the original complaint or the amended complaint. We initially consider arguments by appellant with respect to the filing of the original complaint.

{¶ 28} In his objections to the magistrate's decision, appellant asserted the signed return receipts created a presumption of service notwithstanding the return of the service envelopes. The trial court disagreed, and further found that "[e]ven assuming, arguendo, that the signed return receipts created a presumption of service," appellees rebutted the presumption of service by certified mail "with sufficient evidence that service was not completed."

{¶ 29} As previously noted, the facts as developed at the evidentiary hearing indicate appellant attempted to serve the original complaint by certified mail. During the hearing, Denmead testified that he was a sole practitioner with no employees, and that his office was not open on the date the receipts were signed (i.e., on November 24, 2012 which, the trial court noted, was the Saturday following Thanksgiving). The signatures on the receipts were illegible, and Denmead testified that neither he nor any agent of his signed or received the certified mail. The envelopes with the original complaint were returned to the clerk of courts, and both envelopes were stamped "UNCLAIMED." The clerk's office subsequently issued a "conflict of service" notice. Noting that appellant never attempted service of the original complaint by ordinary mail, pursuant to Civ.R. 4.6(D), after the certified mail envelope was returned unclaimed, the trial court determined that the magistrate properly found appellant did not obtain proper service on appellees.

{¶ 30} In further finding that appellees effectively rebutted any presumption that may have arisen from the signed return receipts, the trial court cited evidence which included: (1) the returned service envelopes marked "unclaimed," (2) Denmead's testimony that he was a solo practitioner with no employees, and he had sole access to his office, (3) testimony that Denmead's office was not open on the date the receipts were signed (i.e., on the Saturday following Thanksgiving), and (4) the hearing testimony and affidavit of Denmead stating he did not receive nor sign the receipts, and that he did not recognize the receipt signatures.

{¶ 31} In general, "[i]n determining whether a defendant has sufficiently rebutted the presumption of valid service, a trial court may assess the credibility and competency of the submitted evidence demonstrating non-service." Bowling v. Grange Mut. Cas. Co., 10th Dist. No. 05AP-51, 2005-Ohio-5924, 2005 WL 2981247, ¶ 33. Here, both the magistrate and trial court found credible Denmead's testimony and supporting evidence that he did not receive the certified mail. On review, we find no error by the trial court in concluding that appellees sufficiently rebutted the presumption of valid service by certified mail. Further, as the record reflects no attempt to serve the original complaint by ordinary mail, we find no error with the trial court's determination that appellant did not obtain proper service of the original complaint within one year of the filing.

{¶ 32} With respect to the amended complaint, the record indicates, as found by the magistrate, that appellant undertook service of the amended complaint via ordinary mail. The magistrate, noting that Civ.R. 4.6"provides the only circumstances under which ordinary mail service is proper in lieu of certified or express mail," held that in the absence of "proof that certified or express mail service of the Amended Complaint and summons was either refused or unclaimed, ordinary mail service was not a proper method of service of process." The magistrate further cited this court's decision in Schafer v. Sunsports Surf Co., 10th Dist. No. 06AP-370, 2006-Ohio-6002, 2006 WL 3291160, ¶ 14, for the proposition that the filing of an amended complaint is equivalent to a refiling of an action, and that a refiled complaint must be served pursuant to Civ.R. 3(A).

{¶ 33} In his objections to the magistrate's decision, appellant argued (and similarly argues on appeal) that the amended complaint "related back" to the original complaint, for purposes of service pursuant to Civ.R. 15(C). The trial court rejected appellant's argument, noting appellant failed to "cite to any [case law] that applies Civ.R. 15(C) to hold that an amended pleading relates back to an original pleading for purposes of service under Civ.R. 4." The trial court further observed that " Civ.R. 15(C) relates to the statute of limitations, not to methods of service."

{¶ 34} We find no error with the trial court's determination. Civ.R. 15(C) states in part: "Whenever the claim or defense asserted in the amended pleading arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading, the amendment relates back to the date of the original pleading." In general, the relation back concept of Civ.R. 15(C)"provides, '[i]f plaintiff files his complaint, and if the applicable statute of limitations runs, and if plaintiff amends his complaint[,] * * * the amendment relates back to the time of the original filing of the action." LaNeve v. Atlas Recycling, 119 Ohio St.3d 324, 2008-Ohio-3921, 894 N.E.2d 25, ¶ 11, quoting Civ.R. 15 Staff Notes (1970). Accordingly, "[b]ecause of relation back, the intervening statute of limitations does not interfere with the opportunity to amend." Id.

{¶ 35} As noted, pursuant to Civ.R. 3(A), a civil action is commenced only upon obtaining service within one year of the filing of the complaint, and we have previously found no error by the trial court in its determination that appellant failed to obtain proper service of the original complaint. Here, where the record indicates the original complaint was never properly served, we further find no error by the trial court in rejecting appellant's claim that the amended complaint somehow related back to the original complaint for purposes of perfecting service. See , e.g. , Ent. Group Planning v. State Farm Ins. Cos., 11th Dist. No. 98-T-0077, 1999 WL 1073641 (Oct. 22, 1999) (noting that " Civ.R. 15(C) does not dispense with the requirements of Civ.R. 3(A) or otherwise extend the time period from which to complete service of process as to the original pleading," and therefore rejecting application of Civ.R. 15(C) where appellants "never complied with the one year service requirements of Civ.R. 3(A)"). See also Martz v. Field Dev. Group, 9th Dist. No. 21801, 2004-Ohio-4066, 2004 WL 1737004, ¶ 11, 12 (noting that " Civ.R. 3 requires service upon parties brought into an action through a Civ.R. 15(C) and (D) amendment," and further observing "[t]he 'relation back' feature" of Civ.R. 15"applies solely to the statute of limitations," and that "personal service does not 'relate back' when" the correct parties are not properly served). Accordingly, the trial court did not err in adopting the magistrate's determination that appellant failed to obtain proper service of the original and amended complaint within one year of filing, thereby depriving the trial court of jurisdiction over appellees.

{¶ 36} Appellant argues, nonetheless, that appellees had adequate notice under the Civil Rules to obtain proper service. Under Ohio law, however, the " 'failure of proper service is not a minor, hypertechnical violation of the rules.' " McAbee at ¶ 16, quoting Cleveland v. Ohio Civil Rights Comm., 43 Ohio App.3d 153, 157, 540 N.E.2d 278 (8th Dist.1988). Rather, in the absence of proper service of process, "a trial court lacks jurisdiction to enter a judgment against that defendant." Id. Further, the Supreme Court of Ohio has held that "actual knowledge of a lawsuit's filing and lack of prejudice resulting from the use of a legally insufficient method of service do not excuse a plaintiff's failure to comply with the Civil Rules." LaNeve at ¶ 22. Rather, "[t]he Civil Rules are a mechanism that governs the conduct of all parties equally." Id. at ¶ 23.

{¶ 37} On review, we conclude the trial court did not err in overruling appellant's objections to the magistrate decision and granting appellees' motion to dismiss for lack of jurisdiction. Accordingly, appellant's first, second and third assignments of error are not well-taken and are overruled.

{¶ 38} Based on the foregoing, appellant's three assignments of error are overruled and the judgment of the Franklin County Court of Common Pleas is hereby affirmed.

Judgment affirmed.

SADLER and BRUNNER, JJ., concur.