Levengood v. Levengood, Unpublished Decision (6-7-2000)
Levengood v. Levengood, Unpublished Decision (6-7-2000)
Concurring Opinion
I concur in the majority's analysis and disposition of appellants' first, third, sixth, seventh, eighth, ninth, tenth, eleventh and twelfth assignments of error. I further concur in the majority's disposition of appellants' second and fourth assignments of error. However, unlike the majority, I find the dismissal of appellee Bruce Levengood's complaint violated Civ.R. 41(A)(1)(b) because appellants had appeared in the action via their motion to extend the time in which to file an answer. Nevertheless, I find such error to be harmless because the agreed judgment entry extended the time within which appellants could request arbitration and because appellants were subsequently granted leave to file their answer and cross-claims. Finally, I concur in the majority's disposition of appellants' fifth assignment of error. Even if Mitsubishi and Diamond had established the requisite minimum contracts in Ohio to confer jurisdiction under R.C. 2307.38.2 (as averred in the affidavits and testimony of Tim and Kreg Levengood), because appellants' claim against Mitsubishi and Diamond were based upon their subsidiary Transfuel's action and appellants' claims against Transfuel were properly dismissed for the reasons set forth in the majority opinion, any error committed by the trial court in failing to find it had jurisdiction over Mitsubishi and/or Diamond would be harmless.
Opinion of the Court
OPINION Appellants Ted Levengood, Tim Levengood Brian Levengood and Kreg Levengood appeal the decision of the Tuscarawas County Court of Common Pleas that ruled in favor of Appellees Transfuel, Inc. ("Transfuel"), Mitsubishi Corporation ("Mitsubishi") and Diamond Energy, Inc. ("Diamond"). The following facts are pertinent to this appeal. On May 31, 1992, the shareholders of Atwood Resources, Inc. ("Atwood"), which included Appellants Levengoods, executed a Shareholders Endorsement. The Shareholders Endorsement was the result of financial restructuring that occurred at Atwood in the spring of 1992. Also on this date, Appellee Transfuel and the common shareholders, including appellants, executed a Buy-Sell Agreement. Under the terms of the Buy-Sell Agreement, Transfuel paid approximately $7,000,000 for shares of preferred stock in Atwood. Under the Shareholders Endorsement, the common shareholders of Atwood, including appellants, agreed to indemnify Transfuel for any breach of the representations and warranties contained in the Buy-Sell Agreement. The Shareholders Endorsement also required appellants and other common shareholders to pledge their shares of common stock, in Atwood, as security for the payment of such indemnification. The Shareholders Endorsement named Appellee Bruce Levengood as shareholder representative. Appellee Bruce Levengood was responsible for accepting notice and communications from Transfuel and transmitting such materials and information to Transfuel from the common shareholders. The Shareholders Endorsement also contained a set-off against the common shareholders' certificates with respect to indemnifiable damages for which the common shareholders might be responsible pursuant to the Shareholders Endorsement. The Shareholders Endorsement also contained the procedure to be followed prior to the effectuation of a set-off. As it pertains to the indemnification process, pursuant to paragraph 2(d)(1) of the Shareholders Endorsement, Transfuel was required to give written notice of any claim for indemnification to Appellee Bruce Levengood. On November 22, 1993, Transfuel notified Appellee Levengood of its claim for indemnifiable damages for allegations of breach, by the shareholders, of the representations and warranties contained in the Buy-Sell Agreement. Under paragraph 2(d)(2) of the Shareholders Endorsement, a notice of contest, to Transfuel's claim for indemnifiable damages, had to be made no later than thirty days after Transfuel's notice of claim. Thus, appellants had until December 22, 1993, to notify Transfuel of their notice of contest. Appellants never gave such a notice. On December 15, 1993, counsel for Appellee Bruce Levengood notified Transfuel that his client did not wish to contest the set-off damages and that he had informed individual shareholders to contact Transfuel directly if they wished to contest the set off. On December 23, 1993, having received no notices of contest from any shareholder, Transfuel notified Appellee Bruce Levengood that it exercised its right to set off its damages against Atwood stock pursuant to the terms of the Shareholders Endorsement. In order to protect himself from any claims of malfeasance by appellants, Appellee Bruce Levengood, individually and as the shareholders' representative, filed a declaratory judgment action, in the Tuscarawas County Common Pleas Court, seeking a declaration and determination of the rights and duties of the parties under the Shareholders Endorsement and a judicial determination that he acted in a proper fiduciary relationship to the common shareholders. After the filing of this lawsuit, Transfuel agreed to create a new right to arbitration. Thereafter, Appellee Bruce Levengood and Transfuel entered into a settlement agreement on February 9, 1994. Upon entering into this settlement agreement, Appellee Bruce Levengood voluntarily dismissed his complaint, without prejudice, against all defendants. Under the terms of the settlement agreement, the shareholders that had previously waived their right to contest set off could individually demand arbitration by notifying Transfuel, by February 17, 1994, of the arbitrator they selected. All Atwood shareholders were given written notice of the agreed entry and notice of dismissal. They were also informed of the extended period in which they could trigger the arbitration provision of the Shareholders Endorsement. No shareholder invoked the new and expanded arbitration procedure. Instead, appellants filed several appeals with this court, all of which were dismissed for lack of a final appealable order. Upon remand, the trial court conducted a hearing on December 21, 1994, at which all parties were represented. The trial court granted all original defendants leave until March 9, 1995, to file an answer, cross-claims or other relevant motions. In March 1995, appellants filed an answer to Appellee Bruce Levengood's dismissed complaint and cross-claims. The trial court subsequently addressed issues relating to disqualification of counsel. Following the trial court's ruling on disqualification of counsel, more appeals ensued. These appeals were also dismissed for lack of a final appealable order. Upon remand and sanctions by the Ohio Supreme Court, the parties conducted discovery. Prior to trial, Transfuel raised the issue of bifurcation in order to first determine the rights of the parties as a declaratory judgment proceeding. The trial court found bifurcation appropriate. The bifurcated trial of this matter commenced on September 14, 1998. On October 6, 1998, the trial court entered its findings of fact and conclusions of law. The trial court found in favor of appellees on the basis that appellants did not pursue arbitration, in Texas, as required by the Shareholders Endorsement Agreement. The trial court also found Appellee Bruce Levengood, in his capacity as shareholder representative, did not breach any fiduciary duties to the shareholders. Appellants timely filed a notice of appeal and set forth the following assignments of error for our consideration:
I. THE COURT BELOW COMMITTED PREJUDICIAL ERROR WHEN IT MISAPPLIED THE DOCTRINE OF WAIVER/ESTOPPEL IN THE DECLARATORY JUDGMENT ACTION, AGAINST THE NON-BREACHING PARTY.
II. THE TRIAL COURT ABUSED ITS DISCRETION AND COMMITTED PREJUDICIAL ERROR WHEN IT APPROVED A SETTLEMENT AND JUDGMENT ENTRY ORDER OF DISMISSAL ON 2/9/94, WHICH WAS OUTSIDE THE COURT'S SCOPE OF AUTHORITY, DONE WITHOUT PRIOR NOTICE TO THE APPELLANTS, WHICH VIOLATED CIVIL RULE 41, AND UNLAWFULLY OPERATED TO QUIET APPELLANTS' CONTRACTUAL RIGHTS.
III. THE TRIAL COURT ABUSED ITS DISCRETION AND COMMITTED PREJUDICIAL ERROR IN DISMISSING THE COUNTERCLAIMS AND CROSS CLAIMS OF APPELLANTS' (SIC) IN ITS JUDGMENT ENTRY DATED 10/06/98.
IV. THE TRIAL COURT COMMITTED PREJUDICIAL ERROR IN FAILING TO VACATE THE FEBRUARY 9, 1994 JUDGMENT AND/OR SETTLEMENT ENTRY, WHEN IN FACT, THE TRIAL COURT HAD PERSONAL KNOWLEDGE AND KNEW THAT APPELLANTS WERE REPRESENTED BY COUNSEL AND HAD FILED A MOTION FOR AN EXTENSION OF TIME, BUT THE TRIAL COURT SIGNED THE JUDGMENT ENTRY WITHOUT NOTIFYING COUNSEL OF RECORD FOR APPELLANTS, NOR REQUESTING THEIR PRESENCE AT THE SETTLEMENT ENTRY SIGNING.
V. THE TRIAL COURT ABUSED ITS DISCRETION AND COMMITTED PREJUDICIAL ERROR IN DISMISSING CROSS-CLAIMS OF APPELLANTS TIM, TED, KREG, AND BRIAN LEVENGOOD AGAINST MITSUBISHI, INC., AND DIAMOND ENERGY, CORP., WITH PREJUDICE TO REFILING, ON GROUNDS OF LACK OF JURISDICTION WHEN, IN FACT, THE PARTIES DISMISSED HAD ENTERED GENERAL APPEARANCES IN SAID CAUSE, HAD SATISFIED THE REQUIREMENTS OF O.R.C.2307.38.2, AND HAD MET THE "MINIMUM CONTRACT" (SIC) THRESHOLD TEST FOR PURPOSES OF ESTABLISHING JURISDICTION.
VI. THE TRIAL COURT COMMITTED PREJUDICIAL ERROR IN DISMISSING COUNTERCLAIMS AGAINST BRUCE LEVENGOOD IN ITS APRIL 6, 1995 JUDGMENT, WHO WAS THE ORIGINAL PLAINTIFF IN SAID CAUSE, IN VIOLATION OF DUE PROCESS AND EQUAL PROTECTION RIGHTS THAT WERE DUE THESE APPELLANTS THROUGHOUT THESE PROCEEDINGS AND TO WHICH THEY WERE DENIED AT EVERY STAGE OF THESE PROCEEDINGS.
VII. THE TRIAL COURT ABUSED ITS DISCRETION AND COMMITTED PREJUDICIAL ERROR WHEN IT FAILED TO MAKE A RECORD (SIC) THE FEBRUARY 9, 1994 PROCEEDING, WHICH DEPRIVED APPELLANTS OF DUE PROCESS, AND IMPAIRED JUDICIAL IMPARTIALITY INSOFAR AS THE TRIAL JUDGE BECAME A FIRST HAND WITNESS TO THE EVENTS ON FEBRUARY 9, 1994; AND FINALLY, OPERATES TO IMPAIR EFFECTIVE APPELLATE REVIEW.
VIII. THE TRIAL COURT ABUSED ITS DISCRETION AND COMMITTED PREJUDICIAL ERROR IN FAILING TO LAWFULLY CONSTRUE THE SHAREHOLDERS ENDORSEMENT DOCUMENT AGAINST THE PREPARER THEREOF, TO WIT: APPELLEES, AND IN FURTHER TRANSFERRING THE BURDEN OF PROOF TO APPELLANTS WHEN THE EVIDENCE IS UNCONTROVERTED, APPELLANTS DID NOT PREPARE SAID DOCUMENT.
IX. THE TRIAL COURT ABUSED ITS DISCRETION AND COMMITTED ERRORS OF LAW IN CREATING NEW TERMS AND CONDITIONS IN THE SHAREHOLDERS ENDORSEMENT DOCUMENT, WHICH TERMS AND CONDITIONS WERE IN VIOLATION OF SAID SHAREHOLDERS ENDORSEMENT AGREEMENT AND SHAREHOLDERS VOTE, WHICH THE TRIAL COURT HAD NO AUTHORITY TO MODIFY OR CHANGE.
X. THE TRIAL COURT ABUSED ITS DISCRETION AND VIOLATED THE STATUTORY AND CONSTITUTIONAL RIGHTS OF THESE APPELLANTS, WHEN IT SET FOR HEARING THE TRIAL OF THIS MATTER AS A JURY TRIAL; THEN ON THE DATE SCHEDULED FOR JURY TRIAL ISSUED ORDERS INDICATING IT WOULD PROCEED WITHOUT A JURY, ONLY ON A DECLARATORY JUDGMENT ACTION, WITHOUT PRIOR NOTIFICATION TO COUNSEL FOR APPELLANTS, THIS APPARENTLY HAVING BEEN DONE AT THE INSTANCE OF APPELLEE, TRANSFUEL, EVEN THOUGH THE COURT EARLIER OVERRULED TRANSFUEL'S MOTION FOR SUMMARY JUDGMENT ON BRUCE LEVENGOOD'S COMPLAINT FOR DECLARATORY JUDGMENT.
XI. THAT THE TRIAL COURT ABUSED ITS DISCRETION AND COMMITTED PREJUDICIAL ERROR REGARDING THE DECLARATORY JUDGMENT PROCEEDINGS, BY INTERRUPTING APPELLANTS' COUNSEL ON NUMEROUS OCCASIONS DURING HIS DIRECT AND CROSS EXAMINATION OF VARIOUS WITNESSES, IN A COVERT ATTEMPT TO IMPUGN THE CONDUCT OF APPELLANTS SO AS TO DEFLECT ATTENTION AWAY FROM THE PLAIN MEANING OF THE CORRESPONDENCE BETWEEN BRUCE LEVENGOOD ND (SIC) ANTHONY CLARK AS WELL AS THE PLAIN MEANING OF THE SHAREHOLDER'S (SIC) ENDORSEMENT.
XII. THE TRIAL COURT COMMITTED PREJUDICIAL ERROR AND ABUSED ITS DISCRETION IN ITS FACT FINDING IN THE OCTOBER 6, 1998 JUDGMENT ENTRY, ON CRUCIAL FACT ISSUES WHICH WERE NOT SUPPORTED BY THE RECORD OR THE DOCUMENTARY EVIDENCE PRESENTED AND ADMITTED.
Appellants argue that under the above rule a dismissal by order of a court must be predicated with prior service of a motion to dismiss. Appellants claim that because Appellee Levengood never filed a motion to dismiss, they were denied their opportunity to meaningfully participate in the trial court proceedings prior to dismissal. In making this argument and relying on section (A)(2), appellants ignore the fact that at the time this matter was dismissed, they had not filed a responsive pleading. The only document filed by appellants was a motion asking the trial court for an extension of time to file an answer to Appellee Bruce Levengood's complaint for declaratory judgment. Appellants filed this motion on February 1, 1994, and the trial court did not rule on it prior to the dismissal. However, because appellants' motion for an extension of time is not a responsive pleading, we find section (A)(2) of Civ.R. 41 does not apply in the case sub judice as appellants had not yet filed their counterclaim when Appellee Bruce Levengood dismissed his complaint. See Maryhew v. Yova (1984),
Under the above rule and the facts of this case, Appellee Bruce Levengood could have filed a notice of dismissal on February 9, 1994. The notice of dismissal would not require the signatures of the other parties named in the lawsuit. However, instead of filing a notice of dismissal, appellant entered into an "agreed entry and order of dismissal." The entry contains the following language: "Given the fact that Transfuel has agreed to resolve this issue with this Agreed Entry, the parties further agree that this matter shall be dismissed as to all defendants, * * *." Agreed Entry and Order of Dismissal, Feb. 9, 1994, at 5. The trial court as well as the attorneys representing Appellee Bruce Levengood and Appellee Transfuel signed the entry. We conclude the trial court properly permitted the dismissal of Appellee Bruce Levengood's complaint. The dismissal was not outside the scope of the trial court's authority and appellants were not entitled to notice prior to dismissal. Appellants also maintain the trial court erred when it found, in its judgment entry issued on October 6, 1998, that the language contained in the agreed entry and order of dismissal extended appellants' right to arbitrate under the Shareholders Endorsement. Appellants argue the judgment entry did not extend any rights and actually destroyed valuable rights. Appellants make this allegation but set forth no examples of how the language contained in the agreed entry and order of dismissal destroyed their rights. Upon our review of the language contained in the agreed entry and order of dismissal, we find appellants' right to arbitrate was extended. The agreed entry gave appellants a second opportunity to arbitrate this matter. Under the terms of the agreed entry, appellants had until February 17, 1994, to invoke the arbitration provisions of the Shareholders Endorsement. This gave appellants four days beyond the time period contained in the Shareholders Endorsement for the shareholders to name an arbitrator. Further, all shareholders, including appellants, were given written notice of the agreed entry by overnight mail. Appellants' Second and Fourth Assignments of Error are overruled.
(A) Recording Devices Proceedings before any court and discovery proceedings may be recorded by stenographic means, phonogramic means, photographic means, audio electronic recording devices, or video recording systems. * * *. (Emphasis added.)
The rule clearly does not require every proceeding to be recorded. Further, the Staff Notes to Sup.R. 11 provides that "[i]n civil matters, there is no obligation to record the proceedings before the court. However, the court must provide a means of recording the proceedings in a civil matter upon the request of a party." Appellants do not contend that a record was requested, by a party attending this proceeding, and the trial court refused to record the proceedings. Appellants merely allege that the trial court should have made a record on its own initiative. However, this is not required under Sup.R. 11 and the trial court did not err when it failed to record the proceedings of February 9, 1994. Appellants' Seventh Assignment of Error is overruled.
Clearly, Appellee Levengood took steps, above and beyond what was required in the Shareholders Endorsement, to protect appellants' right to arbitrate. Although Appellee Levengood took steps that were not required of him according to the terms of the Shareholders Endorsement, his actions in no way hindered appellants' right to arbitrate this matter or prevented them from pursuing arbitration in this matter. Finding of fact fourteen addresses the steps Appellee Transfuel took to protect appellants' arbitration rights. Appellee Transfuel agreed to allow appellants to proceed with arbitration outside the time parameters of the Shareholders Endorsement. The trial court found, in conclusion of law three, that Appellee Levengood confirmed, by letter, that Appellee Transfuel was giving appellants a right to arbitrate pursuant to the Shareholders Endorsement. In finding of fact seventeen, the trial court found that Appellee Levengood filed a complaint seeking a declaration and determination that he acted in a proper fiduciary relationship to the common shareholders. Again, although the terms of the Shareholders Endorsement concerning the time limit to invoke arbitration proceedings were changed by Appellee Transfuel, the change benefitted appellants by extending the time period within which to invoke arbitration proceedings. In findings of fact fifteen, twenty-one and twenty-two, the trial court found that appellants failed to invoke their right to arbitrate. Appellants do not contend that they even attempted to invoke their right to arbitrate. Thus, we conclude the trial court did not err by failing to construe the Shareholders Endorsement against Appellee Transfuel. Appellants maintain, in their Ninth Assignment of Error, that the trial court erred when it created new terms and conditions, in the Shareholders Endorsement, as said terms were in violation of the endorsement. Appellants argue the changes to the Shareholders Endorsement favored Appellee Transfuel. In support of this assignment of error, appellants cite to findings of fact eleven, twelve, thirteen, fourteen, fifteen, sixteen and seventeen. Appellants also cite conclusions of law two, three, four, five, six, seven and eight. We have already addressed findings of fact eleven, twelve, fourteen, fifteen and seventeen in appellants' Eighth Assignment of Error. In finding of fact thirteen, the trial court determined that Appellee Transfuel did not consider Appellee Levengood's letter dated December 15, 1993, to constitute a valid notice of contest under the Shareholders Endorsement because it did not identify any individual shareholder who wished to contest Appellee Transfuel's claims of indemnifiable damages. However, in finding of fact fourteen, the trial court found that Appellee Transfuel agreed to allow the shareholders to pursue arbitration outside the time parameters established in the Shareholders Endorsement. The court further determined, in finding of fact sixteen, that the reference to arbitration contained in the letter from Appellee Levengood required appellants to advise Appellee Transfuel of the identity of the designated arbitrator on or before February 13, 1994, pursuant to the terms of the Shareholders Endorsement. We do not conclude these findings of fact demonstrate that the trial court construed the Shareholders Endorsement in such a way as to favor Appellee Transfuel. The changes made to the endorsement concerned dates. As noted above, as a result of the changes to the endorsement, appellants were provided even more time to invoke their right to arbitrate. Although the time period was extended, appellants were still required to follow the procedures contained in the Shareholders Endorsement. Specifically, appellants were required to designate an arbitrator by February 13, 1994. Appellants failed to do so and we do not find the trial court had to interpret the Shareholders Endorsement in such a way as to reach this conclusion. Appellants also challenge conclusions of law two through eight. In these conclusions of law, the trial court made the following determinations:
1. The letter dated December 15, 1993, was a valid notice of contest.
2. Appellee Levengood did not, in his capacity as shareholder representative, breach any fiduciary duty to the common shareholders.
3. The notice of contest period was enlarged to February 17, 1994.
4. This enlargement of time was a reasonable, appropriate and legal modification of the Shareholders Endorsement by Appellee Levengood.
5. The agreed entry and order of dismissal dated February 9, 1994, was a lawful extension of the time period within which appellants were required to name an arbitrator and was within the scope of the duties of the shareholder representative.
6. Appellants waived the right to invoke arbitration.
7. Appellants failure to invoke arbitration constitutes a legal waiver of their right to dispute the claims made for indemnifiable damages by Appellee Transfuel.
8. Appellants are estopped from pursuing their monetary damage crossclaims against Appellee Transfuel.
On review of the record, we find the evidence presented at trial supports the trial court's conclusions of law. In their Twelfth Assignment of Error, appellants contend the trial court abused its discretion in its fact finding concerning critical issues which were not supported by the record or documentary evidence. The only findings of fact appellants cite in support of this assignment of error, that we have not already addressed in Assignments of Error Eight and Nine, are findings of fact eighteen and nineteen. Finding of fact eighteen refers to litigation commenced, by Appellee Transfuel, in the district court of Harris County, Texas. The lawsuit, in Texas, sought to enforce the exclusive jurisdiction provision of the Shareholders Endorsement. In finding of fact nineteen, the trial court addressed the judgment entry of dismissal dated February 9, 1994. The court concluded that the terms of the dismissal entry provided the appellants with the further opportunity to invoke their right to arbitrate. The trial court also concluded the appellants were given written notice, by overnight mail, of the agreed entry and order of dismissal and the extended time period which they could trigger to invoke their right to arbitrate. As with the other findings of fact and conclusions of law, we find the record supports the trial court's findings and conclusions. Thus, the trial court's findings of fact and conclusions of law are not against the manifest weight of the evidence. Appellants' Eighth, Ninth and Twelfth Assignments of Error are overruled.
R.C.
When a proceeding under section
2721.01 to2721.15 , inclusive, of the Revised Code, involves the determination of an issue of fact, such issues may be tried and determined in the same manner as issues of fact are tried and determined in other civil action in the court in which the proceeding is pending.
R.C.
Issues of law must be tried by the court, unless referred as provided in the Rules of Civil Procedure. Issues of fact arising in actions for the recovery of money only, or specific real or personal property, shall be tried by a jury, unless a jury trial is waived, or unless all parties consent to a reference under the Rules of Civil Procedure. * * *
We find the trial court did not err when it bifurcated the trial of this matter in order to first address the declaratory judgment action. The issues contained in the declaratory judgment action concerned the interpretation of the Shareholders Endorsement and whether Appellee Bruce Levengood, as the shareholder representative, breached his fiduciary duty. This required the trial court to interpret the language of the Shareholders Endorsement, which is a question of law. See Alexander v. Buckeye Line Pipe Co. (1978),
Further, Evid.R. 614(B) states that the court may interrogate witnesses in an impartial manner no matter who calls them. Accordingly, we do not find that the trial judge erred in questioning the witnesses during appellants' counsel's direct and cross-examination. Appellants' Eleventh Assignment of Error is overruled.
For the foregoing reasons, the judgment of the Court of Common Pleas, Tuscarawas County, Ohio, is hereby affirmed.
GWIN, P.J., concurs. HOFFMAN, J., concurs separately.
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