^^ ^3f ^.s r

IN THE OHIO SUPREME COURT

CASE N®. f,.. ti.4;;

HUNTINGTON NATIONAL BANK

Plaintiff-Appellant,

V.

JASAR RECYCLING, INC,

Defendant-Appellee.

APPEAL FROM TI-IE COLUMBIANA. COUNTY COURT OF APPEALS,SEVENTI-I APPELLATE DISTRICT

COURT OF APPEALS CASE NO: 11-CO-24

MEMORANDUM IN SUPPORT OF JURISDICTIONOf Appellant Huntington National Bank

Christopher Maruca (0070284)THE MARI rCA LAW FIRM, LLC201 East Commerce StreetSuite 316Youngstown, OI-I 44503330-743-0300330-743-0301Counsel for Appellee

:^'i':

Gregory E. O'Brien (003 7073)CAVITCH, FAMILO & DURKIN, CO., LPA.1300 East Ninth Street20th FloorCleveland, OH 44114216-621-7860Fax 216-621-3415gobrien@cavitch.comCounsel for Appellant

v?.f.; P^ t}^ "C0 i334 1;^ ^;^:.

%'s,^r%^'L {';f3 f:,3^.^^1i'.:E S,3i€ l

TABLE OF CONTENTS

PAGE

EXPLANATION OF PUBLIC OR GREAT GENERAL INTEREST ..........................,.,..............1

STA.TEMENT OF TIIE FACTS AND CASE ................................................................. ...........2

ARGUMENT IN SUPORT OF PROPOSITION OF LAW.................. . ......... . ............................... S

Propositions of Law:

1. A judgment against a debtor who seeks a stay of execution but doesnot post an adequate supersecieas bond or seek relief from theobligation of posting such bond is voluntarily satisfied when thecreditor garnishes the debtor's funds in the amount of the judgment.

CONCLUSION .................................................................... ................... ..... .. ..... . ...... 7

PROOF OF SERVICE...................... . .... . ....... ............ . ............... .. . ......... . ......................................... 8

APPENDIX ApoL

Sep. 30, 2013 Judgment Entry, Case No. 11-CO-24 denying reconsideration .. ............... A

Sep. 23, 2011 Judgment Entry, Case No. I 1-CO-24 denying dismissal. ... ............. ......... B

Feb. 8, 2013 Opinion, Case No. 11-CO 24 ... ...................................... ... .... ........ C

Feb. 8, 2013 Judgment Entry, Case No. 11-CO-24... ........................................................ D

I

I. WHY THIS CASE IS OF PUBLIC OR GREAT GENERAL INTEREST

Finality of judgments is a cornerstone policy concept in the Anglo-American

jurisprudential system. Without a bright line test to inform litigants and lower courts alike when

a case is over, losing parties are only encouraged to attempt to perpetuate litigation indefinitely.

A rule of law that allows dissatisfied losers in cases involving the payment of money to continue

to pursue appeals, even after the adverse judgment has been fully litigated and fully paid, is an

unwarranted drag on the efficiency of the civil justice system. And, an open ended approach that

encourages serial appeals is bad policy.

While there is no dispute that a losing party's "voluntary satisfaction" of a judgment

terminates the litigation and moots his or her right to appeal, there is uncertainty in Ohio law as

to when the satisfaction of a particular judgment is "voluntary" and when it is not. This is

especially true when determining "voluntariness" involves balancing the prevailing party's right

to employ lawful means to enforce an award of money damages (such as, e.g., garnishment

proceedings, etc.), and the losing party's right to stay such enforcement while the judgnlent is

appealed---by filing the requisite papers and providing security for eventual payment in the event

the appeal is unsuccessful.

In this particular case, the court of appeals determined that where the losing party files a

motion to stay, but doesn't file an adequate bond as security, the prevailing party's subsequent

satisfaction of the judgment by enforcement through garnishment is not "voluntary." The court

below reached this conclusion even though the losing party offered no explanation for its failure

to file a bond and souglit no relief from the requirement of filing a bond, despite clearly having

sufficient funds.

This rule, if not subject to further review in this Court, invites dissatisfied litigants to

prolong otherwise concluded litigation ad infinitum. The drafters of the civil rules required the

1

necessity of filing an adequate supersedeas boncl --in addition to merely moving for a stay of

execution---as a prerequisite to terminating the prevailing party's right to enforce its judgment

because they understood that the entry of a final judgment is a major landmark on the road to the

conclusion of the litigation---with satisfaction being the absolute finish line.

While permitting the loser to prolong the litigation by seeking judicial review is a

fundamental component of due process, doing so without risk or cost is to err to the other

extreme. Posting a bond not only provides the prevailing party with security for the eventual

payment of the judgment, it discourages halfhearted, speculative, or abusive appeals by requiring

the appellant to have "skin in the game."

A nile of law that permits the losing party to both stay enforcement and seek appeal of a

judgment, without requiring any security for delaying the winner's right to its award, sends the

wrong message. It is important to all litigants and to the fair working of our system of justice that

these rights and rules be clear and unambiguous.

While this Court has weighed in on the issue of determining the finality of "voluntarily"

satisfied judgments in the context of lawful enforcement proceedings in the past, it has not done

so in recent decades and it has never addressed the necessity of posting a supersedeas bond (or

attempting to post one, or seeking relief from the obligation to post one) as the lynchpin of

"voluntariness," even though Civ.R. 62(B) suggests that to be the case. This case presents that

opportunity and as such, it is one of public or great general interest.

II. STATEMENT OF THE FACTS AND CASE

Capco Polyiner Industries, Inc. ("Capco") was a plastics recycler. Loans from 1-luntington

National Bank ("Huntington^') to Capco were secured by Capco's inventory. Capco was winding

down its business and proposed to sell its remaining inventory to Jasar Recycling, Inc. ("Jasar"),

another plastics recycler. The contract between those parties specifically provided that Jasar

2

would tender the full sales price to Huntington to be applied to Capco's indebtedness. Jasar took

possession of the inventory but never paid Huntington or Capco.

The Trial Court Proceedings

Huntington sued Jasar alleging breach of contract and unjust enrichment. On July 1, 2011

the trial court entered summary judgment for Huntington on the breach of contract claim in the

amount of $99,335,16. On July 18, the trial court entered a second judgment against Jasar

awarding Huntington attorneys' fees of $7,767.50.

Execution on Judgment

On July 12, 2011 Htmtington executed on the original judgment by f ling an "Affidavit of

Garnishment of Property Other Than Personal Earnings." On the same day, the trial court issued

orders of garnishment to Jasar's bank. Jasar filed a request for hearing but later withdrew it. On

July 26, 2011, the bank deposited $99,335.16 with the Clerk of Court.

On July 28, Jasar appealed the summary judgment and attorney fee awards. Jasar also

requested the trial court to stay the judgment pending appeal, but did not file a bond or seek

relief from the requirement of filing a bond. On August 1, the trial court denied the motion for

stay citing the failure to seek a bond.

On August 3, on order of the trial court, the Clerk to release the $99,335.16 of garnished

funds to Huntington. Also on August 3, 2011, Huntington filed a second "Affidavit of

Garnishment" and the trial court issued a second order of garnishment to Jasar's bank in the

amount of $22,337.34, representing the attorney fee award, interest on both judgments, and

costs.

On August 17, 2011 Jasar's bank deposited with the Clerk of Court $22,337.34 from

Jasar's account. Jasar filed a second request for hearing, but withdrew that as well.

3

On September 2, 2011, the trial court issued an "Order of Distribution of Garnished

Funds" directing the Clerk to distribute the $22,337.34 to Huntington, which it did, fully

satisfying both judgments against Jasar.

Later on September 2, Huntington filed a satisfaction of judgment in the trial court and a

motion to dismiss in the Court of Appeals. In support of the latter, IIuntington argued that

because all judgments under review had been fully satisfied, the appeal was moot.

In opposition, Jasar offered the affidavit of its president in which it claimed for the first

time that it had attempted to obtain a bond, and that its lender refused to extend a letter of credit

required by the bonding company.

On September 23, the Court of Appeals denied Huntington's motion to dismiss the appeal

in a one sentence order that offered no insight into its reasoning.

Appellate Proceedings

On February 11, 2013 the Court of Appeals reversed summary judgment for Huntington

and remanded the case to the trial court. The Court of Appeals once again refused to dismiss the

appeal as moot, even though both judgments had been long satisfied, citing only its September

23, 2011 ruling as authority.

Huntington requested reconsideration and certification of a conflict to this Court, but the

Court of. Appeals denied both motions on September 30, 2013. With regard to Huntington's

request to certify a conflict, the Court articulated the legal issue before it as: '-does the

satisfaction of a judgment through garnishment proceedings always render an appeal moot?" 'I11e

Court did not attempt to address the issue. Instead it proceeded to distinguish the facts of the four

cases that Huntington had cited as being in conflict. However, even though the intermediate

court of appeals did not appear to give any weight to the affidavit of Jasar's president, the clear

message to the bench and bar was that posting an adequate supersedeas bond is not a prerequisite

4

to effectively staying the prevailing party's right to enforce its judgment, or at least to avoiding

the loss of the right to appeal on the basis of a"voltmtarily" satisfied judgment.

III ARGUMENT IN SUPPORT OF PROPOSITION OF LAW

Propositions of Law:

1. A judgment against a debtor who seeks a stay of execution but doesnot post an adequate supersedeas bond or seek relief from theobligation of posting such bond is voluntarily satisfied when thecreditor garnishes the debtor's funds in the amount of the judgment.

Once a judgment has been journalized, a party may commence proceedings to execute or

enforce that judgment unless a stay of proceedings, pursuant to Civ.R. 62, has been granted.

Piazza v. R. & S. Sarver, Inc., 17 Ohio App. 3d 177, 478 N.E.2d 256, 17 Ohio B. 308, 1984 Ohio

App. LEXIS 12463 (1984).

Civ.R. 62(B) provides:

When an appeal is taken the appellant may obtain a stay ofexecution of a judgment or any proceedings to enforce a judgmentby giving aii adequate supersedeas bond. The bond may be given ator after the time of filing the notice of appeal. The stay is effectivewhen t11e supersedeas bond is approved by the court.

The relief granted under Civ,R. 62(B) is not the granting of the stay, rather, it is the

setting of an amount of the supersedeas bond which must be posted in order to make the stay

effective. Buckles v. Buckles, 46 Ohio App. 3d. 118, 546 N.E.2d 965, 1988 Ohio App. LEXIS

1186 (1988). A partv who does not take steps to obtain a stay on appeal cannot complain when

the clerk pays out funds in accordance with the original judgment: (decided under forzner

analogous section) Reno v. Clark, 65 Ohio App. 3d 527, 584 N.E.2d 1231, 1989 Ohio App.

LEXIS 4552 ( 1989).

This Court has held that a satisfaction of judgment renders an appeal from such judgment

moot. Blodgett V. Blodgett (1990), 49 Ohio St. 3d 243, 245, 551 N.E.2d 1249. Where the court

5

rendering judgment has jurisdiction of the subject-matter of the action and of the parties, and

fraud has not intervened, and the judgment is voluntarily paid and satisfied, such payment puts

an end to the controversy, and takes away from the defendant the right to appeal or prosecute

error or even to move for vacation of judgment. Rauch v. Noble (1959), 169 Ohio St. 314, 316,

159 N.E.2d 451, quoting Lynch v. Lakewood City School Dist. 13cir o, f:^;dn. (1927), 116 Ohio St.

361, 156 N.E. 188, paragraph three of the syllabus.

Intermediate appellate courts in Ohio have further recognized that a party is deemed to

have acted "voluntarily" in satisfying a judgment when such party fails to seek a stay order prior

to the judgment being satisfied. See, Hagood v. Gail (1995), 105 Ohio App. 3d 780, 790, 664

N.E.2d 1373, discretionary appeal not allowed in (1996), 74 Ohio St. 3d 1499, 659 N.E.2d

314; [***6] Harbour~town Properties, Inc. v. Citizens .F'ed.Bank, 1997 Ohio App. LEXIS 5127

(Nov. 10, 1997), Franklin App. No. 97APE03-328, unreported, citing Kelm v. Hess (1983), 8

Ohio App. 3d 448, 457 N.E,2d 911; LaFarciola v. Elbert, 1999 Ohio App. LI;XIS 5833 (Dec. 8,

1999), Lorain App. No, 98CA007134, unreported, discretionary appeal not allowed in (2000), 88

Ohio St. 3d 1492, 727 N.E.2d 599.

In this case, Huntingto.n obtained two separate judgments and two separate orders

garnishing Jasar's bank account in the amount of the respective judgments, plus interest and

costs. Jasar filed a notice of appeal and requested a stay of execution after the Court had issued

the order of garnishment with respect to the first judgment, but before the bank had deposited

Jasar's funds with the Clerk. However, Jasar never obtained an adequate supersedeas bond, or

attempted to obtain one, or requested to be relieved of the obligation of seeking such a bond prior

to both judgments being fully satisfied.

It was not until it opposed I-iuntington's motion to dismiss the appeal on the grounds that

the appeal was moot (as a result of the judgments having been satisfied) that Jasar submitted an

6

affidavit to the appellate court in which its president asserted for the first time that it had

attempted unsuccessfully to obtain a bond. The court below does not appear to have relied on

that affidavit in determining that the appeal was not moot. Yet, the clear import of its ruling is

that posting a bond is not required to stave off a finding of voluntary satisfaction when the

creditor lawfully garnishes the debtor's funds s in the amount of the judgment.

This outcome would appear to be contrary to both the letter and spirit of Civ.R. 62(B), as

well as the jurisprudence developed to date in Ohio on the issue of "voluntariness" of a satisfied

judgment as a prerequisite to satisfaction mooting further appeals. Yet, there is no direct

guidance available from this court. Because the issue arises frequently and applies across such a

broad spectrum of cases, the Seventh District Court of Appeals' perplexing handling of this case

is likely to be seized upon by similarly dissatisfied litigants, threatening disruption of the orderly

administration of justice and increasing the cost of finalizing litigation. Defznitive action from

this Court on this itnporta.nt issue will benefit both the litigants directly involved in this case as

well as those similarly situated across the state.

IV. CONCLUSION

For all of the foregoing reasons, Plaintiff-Appellant Huntington National Bank requests

the Court to exercise its discretionary jurisdiction to hear this appeal.

Respectfully submitted,

.

^Y Ei^BRIEN (0037073)for P a' tiff-Appellant,

7

CERTIFICATE OF SERVICE

I hereby certify that a copy of the foregoing Memorandum in Support of Jurisdiction has

been mailed this 1 lth day of November, 2013 to Christopher Maruca c/o the Maruca Law Firm,

LLC, 201 East Commerce Street, Suite 316, Youngstown, OH 44503, Counsel for Defendant-

Appellee.

s ^{ r .

RY 'BRIEN (0037073)tto ey fo Pl int%ff-Appellcrnt

H^ tingto N aonal Bank

8

STATE OF OHIO

COLUMBIANA COUNTY

THE HUNTINGTON NATIONAL

PLAINTIFF-APPELLEE,

VS

JASAR RECYCLING, INC.,

SEVENTH DISTRICT

CASE NO. 11 -CO-24

JUDGMENT ENTRY

})} SS:

IN THE COURT OF APPEALS OF OHIO

L A'^^y! P>•i . .

COURT OF +k)FEAL^

SEP 3 a P.013CCZtu#'dFYSULW i 4 7. LlilU

DEFENDANT-APPELLANT,

Plaintiff-appellee, The Huntington National Bank, has filed a motion for

reconsideration asking this court to reconsider our decision and judgment entry in which

we reversed the judgment of the Columbiana County Common Pleas Court and

remanded the case for further proceedings. See Huntington Naf. Bank v. Jasar, 7th

Dist. No. 11-CO-24, 2013-Oh'ro-426. It has also requested en banc consideration.

App.R, 26, which provides for the fifing of an application for reconsideration in this

court, includes no guidelines to be used in the determination of whether a decision is to

be reconsidered and changed. Matthews v. Matthews, 5 Ohio App.3d 140, 143, 450

N.E.2d 278 (1981). The test generally applied is whether the motion for reconsideration

calls to the attention of the court an obvious error in its decision or raises an issue for

our consideration that was either not at all or was not fully considered by us when it

should have been. Id. An application for reconsideration is not designed for use in

instances where a party simply disagrees with the conclusions reached and the logic

used by an appellate court. State v. Owens, 112 Ohio App.3d 334, 336, 678 N.E.2d

956 (1996). Rather, App.R. 26 provides a mechanism by which a party may prevent

miscarriages of justice that could arise when an appellate court makes an obvious error

or renders an unsupportable decision under the law. Id.

Huntington alleges that we should reconsider ourjudgment entry disposing of the

entire case along with a previous judgment of this court where we overruled

Huntington's Motion to Dismiss the Appeal as Moot. (September 23, 2011 Judgment

Entry). We entered the September 23, 2011 Judgment Entry after both parties

1

1^11111IIflllll[fl^i^^q1^11^llli{Ill^l ^^^^ 7^,08,aE

... , ^...: ...^^! ^ .. ^ ..-^.i : ^.. ^, . . ^..'•'.^1 ,:.-. .^:... ..:^^^.^. _ `. -^ ^ ^ ^ ... ....^.. ' ..

submitted briefs addressing whether this court had jurisdiction to hear the appeal and

whether Jasar's appeal was moot as a result of the payment in full of the underlying

judgment,

Huntington argues that our judgments contain obvious errors due to the fact that

it fuily executed upon the judgments and they were satisfied and released. It contends

that the execution and satisfaction of the judgments rendered the appeal moot.

The trial court in this case awarded two judgments in favor of Huntington.

Huntington received two garnishment orders, First Place Bank deposited funds from

Jasar's account with the clerk of courts. Jasar filed a motion for a stay of execution,

However, Jasar did not secure a bond. The trial court denied Jasar's request for a stay.

The trial court subsequently issued orders to distribute the garnished funds to

Huntington. Huntington filed a satisfaction of judgment. It then filed the Motion to

Dismiss the Appeal as Moot.

Huntington does not now raise an issue that was not considered or not fully

considered when it should have been. Nor does it call to our attention an obvious error.

Instead, Huntington makes the same arguments it raised in its Motion to Dismiss the

Appeal as Moot and in its appellate brief. Therefore, Huntington's motion for

reconsideration must be denied.

A party may file an application for en banc consideration. App.R. 26(A)(2)(b):

The application "must explain how the panel's decision conflicts with a prior panel's

decision on a dispositive issue and why consideration by the court en banc is necessary

to secure and maintain uniformity of the court's decisions." App.R. 26(A)(2)(b),

If a majority of an en banc court determines that two or more decisions of the

court on which they sit are in conflict, they may order that an appeal or other proceeding

be considered en banc. App,R. 26(A)(2)(a). The en banc court consists of all full-time

judges of the appellate district who have not recused themselves or otherwise been

disqualified from the case. App.R. 26(A)(2)(a).

Huntington asserts that our decision in this case conflicts with four of our other

cases. But each of the cases on which Huntington relies is distinguishable.

In McCarthy v. Lippitt, 7th Dist, No. 04-MC3-1, 2004-Ohio-5367, ¶ 35, we did state

2

that when the judgment on which the stay is based has been fully executed, the issue is

moot. The McCarthys argued on appeal that the trial court erred in denying what was

essentially a motion to stay the execution of the distribution of proceeds to the l,ippitts

from a judicial sale of property. We noted, however, that the record was unclear as to

when or if the judgment had been completely satisfied. Id. at ¶38. Thus, we gave

several alternative reasons for finding that the McCarthys' argument failed: (1) the

judgment was fully executed and the motion to stay was moot; (2) the trial court's

decision to deny the stay was not an abuse of discretion; and (3) the McCarthys' had

acquired full ownership of the property in question and had not demonstrated any

irreparable harm that could occur if a stay was not granted. lcl, at ¶'¶38, 39, 40. Thus,

the mootness issue was not dispositive. We did not find that we lacked jurisdiction to

hear the appeal.

In U.S. Bank 1Vat1. Assn. v. Marcino, 7th Dist. No, 09-JE-29, 2010-Ohio-6512,

Anthony appealed the trial court's grant of summary judgment arguing a genuine issue

of material fact existed as to whether U.S. Bank was a real party in interest to the

foreclosure action. We found Anthony's appeal to be moot "as the property in question

has been sold, the proceeds have been distributed, and Anthony did not request a stay

of the foreclosure judgment at any point." !d. at ¶1. Significantly, we noted: "Most

pertinent to our resolution of this appeal is Anthony's failure to request a stay of

proceedings." /rf. at T6. Thus, Marcino is not in conflict with the present case because

in this case Jasar did request a stay.

In Tinlin v. White, 7th Dist. No. 02AP0767, 2002-Ohio-6905, we dismissed the

appeal as moot when we found the appellants had reconstructed a fence in compliance

with the trial court's orders, thus satisfying the judgment appealed from. But there was

no mention whatsoever of a stay being requested in Tinlin. Consequently, it too is

distinguishable from the case at bar and, therefore, is not in conflict with this case.

Finally, Ross v. Olvsavsky, 7th Dist. No. 09-MA-191, 2011 -Ohio-1 655, was a

contempt case in which we held that the judgment creditor was not in contempt of court

for attempting to collect on a stayed judgment, We did cite McCarthy, 7th Dist: No. 04-

MCQ-1, for the proposition that when a judgment on which a stay is based has been fully

3

..._::... . ,. _..

executed, the issue becomes moot. Id. at T11. But as stated above, McCarthy is

distinguishable from the case at bar.

"Consideration en banc is not favored and will not be ordered unless necessary to

secure or maintain uniformity of decisions within the district on an issue that is

dispositive in the case in which the application is fied." App.R. 26(A)(2)(a). Because en

banc consideration is not favored and because the cases Huntington cites to are

distinguishable from the case at bar, Huntington's request for en banc consideration

must be denied.

For the reasons stated, Huntington's motions for reconsideration and en banc

consideration are hereby denied. DeGenaro, P.J. denies en banc and would grant

reconsideration.

4

Judge Mary DeG

j- ^ w

Judge Gene Donofrio

Rh

STATE OF OHIO ) IN THE COURT OF APPEALS OF OHIO

)COLUMBIANA COUNTY } SS: SEVENTH DISTRICT

THE HUNTINGTON NATIONAL t). 11 CO 24

PLA4NTIFF-APPELI.EE

^(S. E1UT ENTRY

JASAR RECY'CLING, INC.

DFFENDANT-APPELLANT

On consideration of appellee's September 2, 2011 Motion to Dismiss on the

grouncEs of mootness and appellant's September 12, 2011 response in opposition it is

ordered that the Motion to Dismiss is overruled.

Appeal continues,

I-

ExH

LLI

^ <<

00^07 844 t04

.fE

LJCj uvL..4.s

STATE OF OHIO, COLUMBIANA COUNTY

IN THE COURT OF APPEALS

SEVENTH DISTRICT

HUNTINGTON NATIONAL BANK, }}}PLAINTIFF-APPELLEE,)

V. ) CASE NO, 11-CO-24)

JASAR RECYCLING, INC., ) OPINION^

DEFENDANT-APPELLANT.

CHARACTER OF PROCEEDINGS: Civil Appeal from Court of CommonPleas of Columbiana County, OhioCase No. 08CV705

JUDGMENT: Reversed and Remanded

APPEARANC-E S:For Plaintiff-Appellee

I For Defendant-Appellant

JUDGES:

Hon. Gene DonofrioHon. Cheryl L. WaiteHon. Mary DeGenaro

Atty. Jerry M. BryanAtty. Jerry R. Krzys6 Federal Plaza CentralSuite 1300Youngstown, Ohio 44503

Atty. Christopher A. MarucaAtty. Daniel P. Osman8630 Seviile Drive201 East Commerce StreetSuite 316Youngstown, Ohio 44503

Dated: February 8, 2013

, , ^ . ... . .

- I M

D®NCfFRiC3, J.

{11} Defendant-appeilant, Jasar Recycling, Inc., appeals from Columbiana

County Common Pleas Court judgments granting summary judgment in favor of

plaintiff-appeClee, The Huntington National Bank, and granting Huntington attorney's

fees.

{$21 Jasar is engaged in the plastics recycling business. Capco Polymer

Industries, lnc. was likewise engaged in the plastics recycling business. Capco

operated its recycling business at 44054 Heck Road in Co(urnbiana (the building).

When Capco's business began to fail, it started winding down its operations in

August 2007.

{¶3} In October 2007, after Capco shut down its business operations, the

owner of the Heck Road building leased the building to Elite Polymer, another

plastics recycling company. Capco's remaining inventory stayed at the buildin:g.

{14} In the course of Capco's business, it obtained financing from

Huntington. To secure the financing, Capco granted a security interest in its

inventory to Huntington.

{$a} In December 2007, Capco offered to sell its remaining inventory to

Jasar. On December 6, 2007, Jasar's owner, Edward McNee, signed an Agreement

(the Agreement) to purchase Capco's remaining inventory. According to the

Agreement, Jasar was to pay Huntington for the inventory. Also, Jasar was to

remove the entire inventory by Decernber 31, 2007, and to make payment directly to

Huntington within ten business days from the date the inventory was removed. Jasar

did not remove any inventory from the building before December 31, 2007.

{16} According to McNee, Capco decided to sell the inventory to other

buyers and informed him that the Agreement had expired. Also according to McNee,

Capoo contacted him in January 2003, and made a new offer to sell its remaining

inventory to Jasar. Jasar agreed to purchase the inventory and move it from the

buiiding. McNee stated that Huntington was not a party to this agreement nor was it

a third-party beneficiary because Jasar did not agree to pay Huntington this time but

_... . . . .... . . . _.. . , .. _. . _ _

" G -

instead agreed to pay Capco,

{17} On January 18, 19, and 20, 2008, Jasar removed all inventory from

inside of the building but did not remove any inventory from outside of the building.

Jasar removed four truckloads of inventory from outside of the building sometime

between January 2008 and March 2008.. It left some inventory outside of the

building.

{1j8} According to McNee, after removing some of the inventory, Jasar

realized that the inventory was °contarninatod" and was not the same quality or

quantity that Capco had represenfed. Jasar wanted to return the inventory but

Capco refused.

(¶9}} Jasar did not pay Capco for the inventory. Likewise, it did not pay

Huntington.

{11O} On July 11, 2008, Huntington filed a compiaint as a third-party

beneficiary to the Agreement against Jasar alleging breach of contract and unjust

enrichrnent and seeking damages.

(111) On March 6, 2009, Huntington served discovery requests on Jasar,

{112} Over a year later, on May 12, 2010, Huntington filed a motion to

compel, requesting the trial court to order Jasar to respond to the discovery requests:

The trial court granted Huntington's motion and ordered Jasar to respond to the

discovery requests,

{¶13} On June 1, 2010, Jasar provided discovery responses to Huntington.

However, Huntington was not satisfied with the responses. Therefore, it filed a

contempt motion claiming that Jasar only responded to 6 of 21 interrogatories.

{114} A magistrate granted Huntington's motion and ordered Jasar to provide

full responses to the remaining interrogatories and requests for production. Jasar did

not file objections to the magistrate's decision.

{¶15} On July 26, 2010, Jasar provided Huntington with supplemental

responses to the discovery requests.

{%16} On July 29, 2016, Huntington deposed McNee. At the depcsition, Jasar

........ . ..... j ^

-3-

produced 13 pages of documents that it had inadvertently withheEd from Huntington.

Additionally, it came to light that Jasar had not examined potentially relevant emails

or "pick-up slips." Consequently, Jasar's counsel agreed to provide additional

discovery information to Huntington.

{¶17} On September 1, 2010, Huntington fifed its second contempt motion,

asserting that Jasar had failed to provide the additional agreed upon discovery. After

a hearing on the mafter, the magistrate issued a decision finding Jasar to be in

contempt once again. The magistrate found that Jasar had willfully failed to provide

certain requested documents and information to Huntington. The magistrate then

awarded sanctions that included: (1) a finding that a contract existed between Capco

and Jasar; (2) a finding that Huntington is a third-party beneficiary of the contract; (3)

an order barririg Jasar from presenting evidence supporting affirmative defenses; and

(4) an award of attorney fees and costs for failure to comply with discovery. The trial

court adopted the magistrate's decision over Jasar's objections.

(¶18) Next, Huntington filed a motion for summary judgment. It relied in part

on the magistrate's discovery sanctions but also argued that summary judgment was

appropriate even if the discovery sanctions were disregarded.

{119} The trial court granted summary judgment in Huntington's favor, The

court cited the magistrate's decision regarding discovery sanctions wherein the

magistrate determined that the Agreement was a valid contract to which Huntington

was a third-party beneficiary, The- court also went on to independently find that there

were no genuine issues of material fact and that Huntington was entitled to judgment

as a matter of law. The court found that the Agreement was a clear, unambiguous

contract and that Huntington was a third-party beneficiary of the contract. It went on

to find that under the terms of the Agreement, Jasar was obligated to purchase and

remove all of Capco's inventory from inside and outside the building and to pay

Huntington for the inventory, which it failed to do. The court further found that

Huntington produced credible evidence that it was damaged in the amount of

$99,335,16 and that Jasar produced no credible evidence to create a material issue

-q_

of fact with regard to damages. Thus, the court awarded Huntington $99,335.16, plus

interest.

{120} The trial court then conducted a hearing on the amount of attorney fees

and costs awardable as sanctions. The court awarded Huntington $7,767.50, plus

interest, for reasonable attorney fees.

{121} Jasar filed a timely notice of appeal on July 28, 2011.

{1122} Initially, it should be noted Huntington argues in its brief that we must

dismiss this appeal as moot because the judgment has already been satisfied

through garnishments. But Huntington raised the identical issue with this court in its

Septeniber 2, 2011 motion to dismiss. In a September 23, 2011 judgment entry, we

overruled Huntington's motion to dismiss and stated that the appeal was tocontinue.

Thus, we need not further address Huntington's argument that this appeal is moot.

{¶23} Jasar raises two assignments of error, the first of which states:

THE TRIAL COURT ABUSED iTS DISCRETION IN ORDERING

A DISCOVERY SANCTION PROHIBITING JASAR FROM

ASSERTING AFFIRMATIVE DEFENSES, FINDING THAT A

CONTRACT EXISTED BETWEEN JASAR AND CAPCtJ IN WHICH

HUNTINGTON WAS A THIRD PARTY BENEFICIARY, AND HAVING

JASAR PAY HUNTINGTON'S ATTORNEY'S FEES.

(1241 Jasar argues that the sanctions imposed for the discovery violation

were too severe, It asserts that the magistrate who imposed the sanctions had no

experience prior to this case in dealing with civil cases. Instead, Jasar asserts that

the magistrate's experience was limited soleiy to domestic relations cases. It

contends that the magistrate's sanctions were unreasonable and arbitrary in light of

the fact that the magistrate was to impose the least severe sanction.

{T251 Jasar contends that by imposing as a s^nction a finding that a contract

existed between Jasar and Capco of which Huntington is a third-party beneficiary and

by prohibiting Jasar from asserting any affirmative defenses, the trial court essentially

_5..

granted Huntington a default judgment.

{T26} Jasar goes on to assert that the record does not establish a willful

disregard of the discovery rules or bad faith. It claims that it fully complied with

Huntington's discovery requests before the magistrate held the September 22, 2010

hearing on the second contempt motion. Thus, Jasar argues the magistrate should

have imposed the least severe sanction.

{1127} Among the discovery documents provided to Huntington, Jasar states,

was a copy of an email revoking the Agreement. Jasar states that it provided this

email to Huntington before July 29, 2010. By imposing the severe sanctions that it

did, Jasar argues that the trial court excluded this probative evidence,

{T28} A trial court has broad discretion to impose sanctions against a party

who violates the discovery rules, and this court will not reverse the trial court's

determination on this issue absent an abuse of discretion. Nakoff v. Fairvlew Gen.

1-losp., 75 Ohio St.3d 254, 256, 662 N.E.2d 1 (1996). Abuse of discretion connotes

more than an error of law or of judgment; it implies that the court's attitude is

unreasonable, arbitrary, or unconscionable. Btakemore v. Blakemore, 5 Ohio St.3d

217, 219, 450 N.E.2d 1140 (1983). When ruling on discovery violations and

sanctions, the trial court should examine,

the history of the case; all the facts and circumstances surrounding the

noncompliance, including the number of opportunities and the length of

time within which the faulting party had to comply with the discovery or

the order to comply; what efforts, if any, were made to comply; the

ability or inability of the faulting party to comply; and such other factors

as may be appropriate.

Russo V. Goodyear Tire & Rubber Co., 36 Ohio App.3d 175, 178, 521 N.E.2d 1116

(1987). Upon review and examining those factors the trial court should consider, if

the appellate court finds that the degree of the sanction is disproportionate to the

seriousness of the discovery violation, then it may find that the trial court abused its

,.6_

discretion. ld, at 179.

{¶29} Civ.R. 37(B)(2) provides:

(2) If any party or an officer, director, or managing agent of a

party or a person designated under Rule 30(B)(5) or Rule 31(A) to

testify on behalf of a party faiis to obey an order to provide or permit

discovery, * * * the court in which the action is pending may make such

orders in regard to the failure as are just, and among others the

following:

(a) An order that the matters regarding which the order was

made or any other designated facts shall be taken to be established for

the purposes of the action in accordance with the claim of the party

obtaining the order;

(b) An order refusing to allow the disobedient party to support or

oppose designated claims or defenses, or prohibiting him from

introducing designated matters in evidence;**^

In lieu of any of the foregoing orders or in addition thereto, the

court shaii t`dquire the party failing to obey the order or the attorney

advising him or both to pay the reasonable expenses, including

attorney's fees, caused by the failure, unless the court expressly finds

that the failure was substantially justified or that other circumstances

make an award of expenses unjust.

(T30) Pursuant to Ohio public policy, the trial court, when possible, should

impose the least severe sanction that effectively removes the prejudice caused by

the sanctioned party's wrongdoing. Lvukinas v. Roto-Rooter Servs. Co., 167 Ohio

App.3d 559, 855 N,E.2d 1272, 2006-0hio-3172, ¶16 (1st Dist.), quoting

Trartsarnerica 1r1s. Group v. Maytag, 99 Ohio App.3d 203, 207, 650 N.E.2d 169

(1994).

. ., .. .......... . . .. ... .. ..... . .. . .. . ... , .......... . . . . _.... . . . _ . _ .

-7-

{¶31} At his July 29, 2010 deposition, McNee stated that in response to

Huntington's first set of interrogatories and request for documents, he printed a list

from an email. (McNee dep. 81-82). He stated that he also provided his attorney

with numerous documents including relevant emails and bills of lading. (McNee dep.

83, ex. 5). Huntington's counsel put on the record that he just received these

documents that day because Jasar's counsei had them in a file he did not realize that

he had. (McNee dep. 83-84). , Huntington's counsel noted that Jasar's counsel did

not intentionally withhold the documents, (McNee dep. 83-84).

{¶32} Huntington's counsel also asked McNee to provide copies of other

emails, some addresses, and pickup slips withaut having to make a formal discovery

request and McNee agreed. (McNee dep, 100-101, 103, 109). McNee admitted that

in response to the discovery requests, he did not examine the pickup slips for the

loads Jasar picked up from Capco. (McNee dep. 125-126). He also admitted that he

I did not search his emails for exchanges between Jasar and Capco or Jasar and

Huntington. (McNee dep. 139).

{133} At the conclusion of the deposition, counsel for both parties put an

agreement on the record that Jasar would provide additional information to

Huntington without the need for another discovery request. (McNee dep. 152). This

information included emails between Jasar and Capco, contact information for any

employees that were involved in the transportation of inventory from Capco to Jasar,

contact information for Brenda Hoschar, pickup slips for January 18, 19, and 20, and

an address for D&G's warehouse in Sebring. (McNee dep. 152-153).

{T34} At the September 22, 2010 hearing on the motion to compel, it came to

light that since Huntington had filed the second motion for sanctioris, Jasar had

provided Huntington with most, if not all, of the requested discovery information. a(Sept. 22, 2010, Tr. 4-5). Huntington's counsel could not point to anything specific

tihat was missing from discovery except that there were possibly some emails that

McNee could not locate, (Sept. 22, 2010, Tr. 5-6). Thus, while Jasar may not have

immediately provided all information to Huntington, as of the September 22, 2010

_..:. ..... _ , ....., .. .. . . ^ ^

_g-

hearing, Jasar had complied with the discovery requests.

{135} Additionally, at the hea(ng, the magistrate noted that in his usual

handling of discovery sanctions, when parties did not comply, he normally prohibited

them from using the evidence and prohibited them from using any documents that

were requested in their defense. (Sept. 22, 2010, Tr. 8).

1136) Because the exclusion of reliable and probative evidence is a severe

sanction the trial court should only invoke it when it is clearly necessary to enforce

willful noncomp€iance or to prevent unfair surprise. Nickey v. Brown, 7 Ohio App.3d

32, 34, 454 N.E.2d 177 (1992).

{137} In this case, the magistrate and the trial court unnecessarily imposed

the most severe sanctions on Jasar, While Jasar clearly did not comply with the

discovery requests in a timely manner and caused Huntington to file two motions to

comply, Jasar eventually did comply. By the time of the hearing on the second

motion to compel, Huntington could not point to anything that Jasar had not yet

provided except that there was a possibility that there could be more emails between

McNee and Capco. Furthermore, the magistrate stated at the hearing that normally in

this type of situation, he would disallow evidence that was not disclosed. Instead, in

this case, he imposed much more severe penalties by entering findings that a

contract existed between Capco and Jasar and that Huntington was a ttrird-party

beneficiary of the contract in addition to putting on an order barring Jasar from

^ presenting evidence supporting any affrmative defenses,

(138) Under these circumstances, the discovery sanctions constituted an

abuse of discretion. The court needlessly imposed the most severe sanctions

possib€e. The court entered findings that a contract existed between ,Iasar and

Capco and that Huntington was a third-party beneficiary to that contract. And the

court prohibited Jasar from presenting any affirmative defenses. In imposing these

sanotiQns, the court essentially entered judgment for Huntington. Accordingly,

Jasar's first assignment of error has merit.

^139} Jasar's second assignment of error states:

-9-

THE TRIAL COURT ERRED IN GRANTING HUNTINGTON'S

MOTION FOR SUMMARY JUDGMENT.

(140} Here, Jasar contends summary judgment was not appropriate. It

asserts the trial court ignored portions of McNee's deposition that created a genuine

issue of material fact. Jasar points to testimony by McNee that Capco cancelled the

Agreement because it wanted to sell its inventory to other customers and later

entered into a new agreement with Jasar to sell its remaining intrentory. Under the

alleged new agreement, Jasar was to pay Capco directly and Huntington was not a

third-party beneficiary. Jasar argues that construing these facts in its favor creates a

genuine issue of material fact to preclude summary judgment.

{141} Alternatively, Jasar argues that if this court determines that the

Agreement was in force and legally binding, summary judgment was still not proper

because there exists a factual dispute regarding Capco's performance under the

Agreement and whether Jasar accepted the inventory. It contends the inventory it

eventually removed from the building was not the same quality or quantity as Capco

had represented. Jasar states it tried to return the inventory, but Capco refused.

{142} In reviewing a trial court's decision on a summary judgment motion,

appellate courts apply a de novo standard of review. Cole v. Am. lndustries &

Resources Corp., 128 Ohio App.3d 546, 552, 715 N.E.2d 1179 (1998). Thus, we

shall apply the same test as the trial court in determining whether summary judgment

was proper. Civ.R. 56(C) provides that the trial court shall render summary judgment

if no genuine issue of material fact exists and when construing the evidence most

strong{y in favor of the nonmoving party, reasonable minds can only conclude that

the moving party is entitled to judgment as a matter of law, State ex ret. Parsons v.

Ftemming, 68 Ohio St.3d 509, 511, 628 N.E.2d 1377 (1994). A"materia! fact"

depends on the substantive law of the claim being litigated. Hoyt, Inc. v: Gordorr &

Assoc., Inc., 104 Ohio App.3d 598, 603, 662 N.E.2d 1088 (1995), citing Anderson v.

Liberty Lobby, Inc., 477 U.S. 242, 247-248, 106 S.Ct. 2505 (1986).

(^43) To prevail in a breach of contract case, the plaintiff must prove the

_ . . ^ , .

-10

existence of a contract, the plaintiffis performance under the contract, the defendant's

breach, and damages. Doner v. Snapp„ 98 C7hio App.3d 597, 600, 649 N.E.2d 42

(1994).

{144} A third-party beneficiary may recover damages from a breach of

contract if that third party was intended to be a beneficiary of the contract. G.R.P.L.

Ents., Inc. v. Sethi, 7th Dist. No. 09-MA-205, 2010-ahio-6513, %11. To be an

intended third-party beneficiary, the parties must have entered into the contract

directly or primarily for the benefit of the third party. Id. at V12.

{T45} The Agreement provided:

Jasar Recycling, Inc. agrees to purchase the complete inventory

of CAPCO Polymer Industries, inc.

The materials are to be sold "as is" with no warranty. **^ The

inventory is thought to be 1,200,000 pounds, this is a close

approximation. Jasar agrees to purchase the entire inventory without

exception. The agreed price is $0.04 per pound for all the materials

outside the building, and all the materiats inside the building are at

$0.10 per pound.

The monies due will be paid to Huntington Bank cIQ Ms. Jodi

Pagnaneiii. The weight wil( be determined by getting certified light and

heavy scale weights for every load * * *. The monies will be paid to

Huntington Bank within 10 business days from the date they are picked

up at the Heck Rd. location. The entire inventory inust be moved out of

this location by 12-31-07. Jasar agrees to pay, as stated above, for

CAPCO's entire inventory, without exceptiort, these monies are to be

paid in fuii to Huntington Bank without deduction or credit taken.

(McNee dep., Ex. 2). The Agreement was signed by McNee on December 6, 2007.

The Agreement was not singed by representatives of Capco or of Huntingtan.

{146} The Agreement sets forth clear terms and also clearly identifies

, . _.....- ^ -

-I 1-

Huntington as an intended third-party beneficiary. However, at his deposition McNee

stated that Capco terminated the Agreement. (McNee dep. 55-56, 62-63, 101).

Jasar provided Huntington with a copy of an email from Capco's owner Doug Green

to McNee dated January 16, 2008. (McNee dep. 83w84. Ex. 5). In his email, Green

wrote:

Our Agreement ended on 12-31-07. You did not take 1 load in the time

allotted by the bank to move the entire invento3°y. Because of this,

CAPCO's old inventory will be re-bid per Jodi at the bank.

(Emphasis added; McNee dep. Ex. 6). McNee testified that Capco then offered its

inventory to other buyers and sold some of its inventQry. (McNee dep. 53). McNee

then stated that he entered into a hew agreement with Capco. (McNee dep. 55-56,

58, 85).

{$47} McNee's statements and Green's email create a genuine issue of

material fact as to whether the Agreement was actually in place, whether Capco may

have breached the Agreement by selling inventory to other buyers, and whether

Capco and Jasar entered into a new agroement. The Agreement stated that Jasar

was to pay- the money to Huntington "clo Jodi Pagnaneiii." In Green's email, he

stated that "per Jodi at the bank" Capco was going to rebid its inventory. This gives

rise to the inference that Huntington, through its representative, assented to

terminating the Agreement and even that it may have been Huntington's decision to

rescind the Agreement. Hence, McNee's statements along with the em;ai6 from

Green to McNee are sufficient to create a genuine issue of material fact.

{148} We should mention that Capco argues that Jasar waived the affirmative

defense that the Agreement was rescinded because Jasar failed to raise it in its

answer. But Jasar did raise as affirmative defenses that (1) Huntington, through the

conduct of its agents and employees, waived any rights it may have regarding

Jasar's acts or omissions and that (2) Huntington voluntarily exposed itself to the

matters involved in the complaint. These defenses would include rescission.

_.. . ...._.. ,. . .. _ ,

_12_

{149} Based on the preceding discussion, summary judgment was improper.

{150} Accordingly, Jasar's second assignment of error has merit.

{151} For the reasons stated above, the trial court's judgments imposing

discovery sanctions and awarding summary judgment in Huntington's favor are

reversed artd the matter is remanded for further proceedings. Upon remand, the trial

court may impose less severe discovery sanctions if it finds that such sanctions were

warranted.

Waite, .J., concurs .

DeGenaro, i'•'.J., concurs.

APPROVED:

4GeneDrio, J e

STATE OF OHIO

COLUMB1ANA COUNTY

))} SS:

HUNTINGTON NATIONAL BANK,

PLA4NTI FF-AF'PELLEE,

V.

JASAR RECYCLING, INC.,

DEFENDANT-APF'ELLANT.

CASE NO. 11-CQ-24

JUDGMENT ENTRY

For the reasons stated in the opinion, rendered herein, appellant's two

assignments of error have merit and are sustained. It is the final judgment and order of

this Court that the judgment of the Common Pleas Court, Columbiana County, Ohio., is

reversed and this cause is remanded to the trial court for further proceedings according

to law and consistent with this Court's opinion. Upon remand, the trial court may impose

less severe discovery sanctions if it finds that such sanctions were warranted.

Costs taxed against appellee.

fJJ

EXHIBIT

IN THE COURT OF APPEALS OF OHIO

SEVENTH DISTRICT

1^^^. _