Holiday Properties Acq. v. Lowrie, Unpublished Decision (3-12-2003)
Holiday Properties Acq. v. Lowrie, Unpublished Decision (3-12-2003)
Opinion of the Court
This cause was heard upon the record in the trial court. Each error assigned has been reviewed and the following disposition is made: {¶ 1} Appellants, Scott Lowrie ("Lowrie") and U.S. Coaters (together "Appellants"), appeal from a judgment rendered in the Summit County Court of Common Pleas, in favor of Appellee, Holiday Properties Acquisition Corp. ("Appellee"). We affirm.
{¶ 3} In 1997, American Eco Holding Corporation ("American Eco") purchased Chempower and operated Chempower as a subsidiary. In September 1999, Chempower filed suit against Appellants, claiming misappropriation of trade secrets, breach of fiduciary duty, and tortious interference with business relations. Appellants counterclaimed for abuse of process.
{¶ 4} On August 4, 2000, American Eco filed for Chapter 11 protection in the United States Bankruptcy Court for the District of Delaware, which stayed the action in this case. Ultimately, the bankruptcy trustee approved the sale of some Chempower assets to Appellee, including the case at bar. The sale resulted in the case being reinstated, and Appellee filed for summary judgment on an amended complaint adding a count for breach of contract and deceptive trade practices. Appellants filed a motion to dismiss for lack of jurisdiction. On May, 9, 2001, the trial court granted Appellee summary judgment on the breach of contract claim and on all counts of Appellants' counterclaim, and granted partial summary judgment to Appellants on the misappropriation of trade secrets and deceptive trade practices claims. Appellants' motion to dismiss the remaining claims was denied.
{¶ 5} The case went to trial, with the jury finding for Appellee and the court ordering Lowrie to compensate Appellee the sum of $708,000 with interest, and ordering both Appellants to compensate Appellee the sum of $2,500,000. Appellee moved for an award of prejudgment interest, which was denied.
{¶ 6} Appellants timely appealed, presenting seven assignments of error. We rearrange the assignments of error and combine the third and fourth for ease of discussion. Appellee cross-appealed, raising one assignment of error.
{¶ 8} Appellants argue that the trial court erred in a May 9, 2001 order denying Appellants' motion to dismiss because Delaware law is applicable, and Delaware law disallows the assignment of Chempower's claim to Appellee. Further, Appellants state that even if Ohio law is applicable, the assignment is likewise illegal under Ohio law. Appellants' arguments are not well taken.
{¶ 9} It is axiomatic that an action must be prosecuted by the real party in interest. See Civ.R. 17(A); see, also, State ex rel.Dallman v. Court of Common Pleas (1973),
{¶ 10} Civ.R. 25 authorizes the substitution of parties in the event of certain stated contingencies. Civ.R. 25(C) provides, in relevant part, "In case of any transfer of interest, the action may be continued by or against the original party, unless the court upon motion directs the person to whom the interest is transferred to be substituted in the action or joined with the original party." Civ.R. 25(C) thus permits substitution by one who succeeds to an interest previously held by another. See, e.g., Maysom L.P. v. Mayfield, (1994),
{¶ 11} "A corporation may sue or be sued." R.C.
{¶ 12} When a debtor files in bankruptcy, any and all choses in action in which the debtor may have had an interest become an asset of the bankruptcy estate subject to the sole discretion and control of the bankruptcy trustee. Hayes v. Allison (Apr. 23, 1993), 2d Dist. No. 13481. Nonetheless, under the bankruptcy code, Section 363, Title 11, U.S. Code, actions concerning the assignment of claims must conform to applicable state laws. In re J.E. Marion, Inc. (Bankr.Ct.S.D.Tx. 1996),
{¶ 13} A chose in action is a right of action for money arising under contract, but also includes the right to recover pecuniary damages for torts inflicted upon person or property. Cincinnati v. Hafer (1892),
{¶ 14} We begin our discussion of this assignment of error by noting that, pursuant to Civ.R. 25, the trial court, upon motion, substituted Appellee for Chempower. The substitution makes Appellee the party in interest if the assignment of this claim from Chempower to Appellee is permissible under state law.
{¶ 15} Appellants first claim that Delaware law applies, and Delaware law precludes this assignment of the claim. Appellants' authority is the bankruptcy purchase agreement between Chempower and Appellee. Section
{¶ 16} "As a general rule a non-party may not assert contract rights unless it is a third-party beneficiary under the contract or such standing is conferred by statute." Akron v. Castle Aviation Inc. (June 9, 1993), 9th Dist. No. 16057, at 4. Because the purchase agreement is between Chempower and Appellee, and Appellants are not a third-party beneficiary to the contract, Appellants do not have standing to assert rights accorded by the terms of the contract. Even if Appellants did have standing, it is questionable whether the choice of law provision would extend to this cause of action, because it is not based upon the interpretation or construction of the contract. Therefore Appellants' argument that Delaware law is applicable is not well taken.
{¶ 17} Regarding the argument that Ohio law bars the assignment at issue, Appellants cite, along with cases from other states, two cases decided in Ohio: Everhardt v. Everhardt (Feb. 6, 1987), 6th Dist. No. L-86-060, and In re Schmelzer (S.D.Ohio 1972),
{¶ 18} The most obvious problem with applying these cases as precedent here is the lack of a personal injury claim. No one in this case is asserting that a personal injury claim is assignable. This Court is reviewing a case adjudicating an alleged breach of fiduciary duty and tortious interference with business relations. We are left to determine if such are assignable under Ohio law.
{¶ 19} Survivor statutes are remedial and therefore liberally construed. Squire v. Guardian Trust Co. (C.P. 1945), 52 Ohio Law Abs. 207, 216. "Property" is a generic term embracing dominion or indefinite right of use, enjoyment, and disposition, which may be lawfully exercised over particular things or objects, animate or inanimate. Id. Injuries to property include a cause of action against a director of an institution for breach of duty. Id. at 217.
{¶ 20} This case is a cause of action for injury to property. In Ohio, pursuant to R.C.
{¶ 22} In the second assignment of error, Appellants argue that, because the claim is not assignable, only the bankruptcy trustee can pursue this claim, and jurisdiction is proper only in the bankruptcy court.
{¶ 23} We have already found that this claim was assignable; therefore, Appellants' second assignment of error is overruled.
{¶ 25} In his sixth assignment of error, Appellants state that Robert Rohr testified as an expert without the proper qualifications to do so. Further, Appellants claim that any references to expert testimony in the jury instructions applied only to Rohr, and since Rohr could not be an expert, the jury instructions were erroneous. This argument is not well taken.
{¶ 26} The admission or exclusion of evidence rests soundly within the trial court's discretion. State v. Sage (1987),
{¶ 27} Rohr is a Certified Public Accountant of inactive status and holds a Bachelor's degree in accounting and a Master's degree in finance. He is currently the President of Holiday Properties, and prior to that, he was the comptroller of Chempower. He also worked seven years as the comptroller of another company and as an accountant for a public accounting firm where he conducted small business audits. During his career, Rohr was involved in purchasing businesses; while at Chempower, he participated in four or five acquisitions. Rohr was intimately involved with the process of taking Chempower from a private to a public entity corporation.
{¶ 28} After a careful review of the foundation laid for Rohr's testimony as an expert, we conclude that the trial court did not abuse its discretion in admitting Rohr's testimony regarding damages. Because Rohr's testimony as an expert was permissible, the jury instructions regarding expert testimony are not erroneous. Appellants' third assignment of error is overruled.
{¶ 30} In this assignment of error, Appellants claim that Appellee's questions to Lowrie concerning the code of professional responsibility were irrelevant and resulted in a verdict which is the product of the jury's passion and prejudice, as well as excessive damages. Appellants state that, therefore, they are entitled to a new trial. We disagree.
{¶ 31} As previously noted, the admission or exclusion of evidence rests soundly within the trial court's discretion.
{¶ 32} It is a fundamental principle of appellate review that a court will not consider an error that an appellant was aware of, yet failed to bring to the attention of the trial court. See State v. Awan
(1986),
{¶ 33} When Lowrie was testifying, he stated that he was no longer an attorney for Chempower at the time he was starting U.S. Coaters. However, by his own admission, he had signed letters on Chempower's stationery with the title "of counsel" after he had changed job positions. The definition, acceptable uses, and implications of the title "of counsel" is explained in Disciplinary Rule 2-102(A)(4), and so Lowrie was asked to read that portion of the disciplinary rules aloud to the jury. Lowrie objected to having only a portion of the section read, asking specifically that the wording pertaining to law firms be included. The court sustained the objection and ordered that the whole section be recited, including the requested portion. The record shows no objection for relevance. Therefore, Lowrie has waived the relevance argument.
{¶ 34} The next reference to the disciplinary rules was made when Lowrie was handed a copy to Disciplinary Rule 4-101 to read to himself. He testified that it pertained to the preservation of confidences and secrets of a client. He further testified that he felt he had satisfied that requirement while a corporate counsel to Chempower. The rule was not read to the jury, nor did the jury receive a copy of it. We find no abuse of discretion in allowing Lowrie to read it to himself, and then stating generally what it pertained to and stating his feelings that it was not breached while he was counsel at Chempower.
{¶ 35} In addition, any reference to either rule made in opening or closing arguments is not evidence, and the jury was so instructed. Appellants' seventh assignment of error is overruled.
{¶ 38} In his fourth assignment of error, Appellants argue there was insufficient evidence of damages to submit the issue to the jury. He also argues that the claims against him for breach of fiduciary duty cannot be supported by the evidence submitted to the jury. Likewise, Appellants state that the evidence cannot support the claim against Lowrie and U.S. Coaters for wrongful interference with a business relationship.
{¶ 39} In the third assignment of error, Appellants argue that their motions for directed verdict should have been granted at the close of the Appellee's case, and again at the close of evidence because there was no evidence presented that Lowrie's activities while employed by Chempower amounted to breach of fiduciary duty or breach of loyalty. Likewise, Appellants argue that their actions did not amount to tortious interference with business relations. In addition, Lowrie argues that he cannot be held personally responsible for acts of U.S. Coaters which are in competition with ACI. Lowrie also states that, for the same reasons, it was error to deny his motion for JNOV or, alternatively, a new trial. We disagree.
{¶ 40} As an initial matter, this court notes that the sufficiency and manifest weight of the evidence are legally distinct issues. Statev. Manges, 9th Dist. No. 01CA007850, 2002-Ohio-3193, at ¶ 23, citingState v. Thompkins (1997),
{¶ 42} "The court, reviewing the entire record, weighs the evidence and all reasonable inferences, considers the credibility of witnesses and determines whether in resolving conflicts in the evidence, the [jury/trier of fact] clearly lost its way and created such a manifest miscarriage of justice that the [judgment/conviction] must be reversed and a new trial ordered. The discretionary power to grant a new trial should be exercised only in the exceptional case in which the evidence weighs heavily against the [judgment/conviction]." State v. Martin
(1983),
{¶ 43} To prevail on a claim of breach of fiduciary duty, it is necessary to demonstrate the existence of a duty, a failure to observe the duty, and an injury resulting proximately therefrom. Massara v.Henery (Nov. 22, 2000), 9th Dist. No. 19646, at 5, appeal not allowed (2002),
{¶ 44} "The Ohio Supreme Court has written that tortious interference with business relationships occurs `when a person, without a privilege to do so, induces or otherwise purposely causes a third person not to enter into or continue a business relation with another, or not to perform a contract with another.'" Pappas v. United Parcel Service (Apr. 11, 2001), 9th Dist. No. 20226, at 8, quoting A B-Abell ElevatorCo. v. ColumbusCent. Ohio Bldg. Constr. Trades Council (1995),
{¶ 45} At trial there was testimony that Lowrie was corporate counsel to Appellee's predecessors in interest, and continued to present himself in that capacity after his resignation of the position and while he was working contrary to ACI and Chempower's interests. Witnesses included ACI and Chempower customers who testified that Lowrie contacted them to solicit their business away from ACI and Chempower while Lowrie was still employed by those companies. Further, there was testimony regarding Lowrie's activities on company time that were geared toward starting his own competing interest.
{¶ 46} The quantity and nature of the evidence presented is such that this court cannot say that the jury clearly lost its way and created such a manifest miscarriage of justice that the judgment must be reversed and a new trial ordered. Therefore, Appellants' argument that the judgment is against the manifest weight of the evidence fails.
{¶ 48} We review a trial court's ruling on a motion for directed verdict de novo because it presents us with a question of law. Schaferv. RMS Realty (2000),
{¶ 49} "Because sufficiency is required to take a case to the [trier of fact], a finding that a [judgment] is supported by the weight of the evidence must necessarily include a finding of sufficiency." (Emphasis omitted.) State v. Roberts (Sept. 17, 1997), 9th Dist. No. 96CA006462, at 4. Having already found that the judgment was not against the manifest weight of the evidence, we conclude that the sufficiency requirement is met. Consequently, the denial of Appellants' motion for a directed verdict was proper.
{¶ 51} Pursuant to Civ.R. 50(B), this Court reviews Appellants' motion for judgment notwithstanding the verdict de novo. Schafer,
{¶ 52} Appellee presented exhibits that showed calculations of lost profits from 1999 through 2001. Chempower's one-time comptroller and later chief financial officer testified how the calculations were derived. He also testified that Chempower and ACI had no competition until Lowrie formed U.S. Coaters. Further, he testified as to the amount of compensation Lowrie received at the time he was paid by ACI and Chempower while working at his own interests. Lowrie's calculations differed, but the damages awarded by the jury were reflective of Appellee's evidence. Therefore, there is substantial evidence upon which reasonable minds could come to different conclusions on the amount of damages, and the denial of the motion for a JNOV was proper.
{¶ 54} Civ.R. 59 allows a trial court to grant a new trial upon the motion of either party. Pursuant to Civ.R. 59(A), a new trial may be granted to all or any of the parties and on all or part of the issues upon the following grounds: (1) irregularity or abuse of discretion such that a fair trial was prevented; (2) misconduct on the part of the jury or the prevailing party; (3) accident or surprise that the wronged party could not have guarded against; (4) excessive or inadequate damages resulting from the influence of passion or prejudice; (5) disproportion in the amount of the recovery; (6) the judgment is against the manifest weight of the evidence; (7) the judgment is contrary to law; (8) there exists newly discovered evidence that the party could not have discovered and produced using reasonable diligence; or, (9) an error of law brought to the attention of the trial court.
{¶ 55} This Court reviews a trial court's ruling on a motion for a new trial for an abuse of discretion. Brooks v. Wilson (1994),
{¶ 56} Appellants do not explain under which theory they should be granted a new trial, nor do they point to evidence in support. If it were Appellants' intention to support a motion for a new trial with the same arguments presented for a JNOV, the arguments fail for the same reasons as stated in the section addressing the JNOV. This Court finds that the trial court did not abuse its discretion in denying Appellants' motion for a new trial.
{¶ 58} In the fifth assignment of error, Appellants assert that because Chempower received remuneration for its assets from its sale to American Eco, to grant recovery to Holiday Properties on this claim results in an unlawful double recovery.
{¶ 59} This court notes that Appellants have failed to set forth a single, legal authority to support the contention that the trial court erred in permitting recovery. Appellants have failed to provide citations to authorities in support of this assignment of error as required by App.R. 16(A)(7) and Loc.R. 7(A)(7). Appellants had the burden of affirmatively demonstrating error on appeal. See Angle v. W. Res. Mut.Ins. Co. (Sept. 16, 1998), 9th Dist. No. 2729-M, at 2; Frecska v.Frecska (Oct. 1, 1997), 9th Dist. No 96CA0086, at 4. It is not the obligation of an appellate court to search for authority to support an appellant's argument as to an alleged error. See Kremer v. Cox (1996),
{¶ 60} Accordingly, because Appellants have failed to set forth any legal error by the trial court in the fifth assignment of error, this court chooses to disregard it. Appellants' fifth assignment of error is overruled.
{¶ 62} In this sole assignment of error, Appellee argues that the trial court should have awarded prejudgment interest pursuant to R.C.
{¶ 63} R.C.
{¶ 64} "Interest on a judgment, decree, or order for the payment of money rendered in a civil action based on tortious conduct and not settled by agreement of the parties, shall be computed from the date the cause of action accrued to the date on which the money is paid if, upon motion of any party to the action, the court determines at a hearing held subsequent to the verdict or decision in the action that the party required to pay the money failed to make a good faith effort to settle the case and that the party to whom the money is to be paid did not fail to make a good faith effort to settle the case."
{¶ 65} An award of prejudgment interest is within the sound discretion of the trial court. Huffman v. Hair Surgeon, Inc. (1985),
{¶ 66} In the order denying the request for prejudgment interest, the trial court states that it considered the motion, the brief in opposition, the evidence presented at the oral hearing on the matter held on May 1, 2002, the balance of the findings, and the jury trial in reaching its decision. The trial court concluded by stating that it could not find that Appellants failed to make a good faith effort to settle the case and that the Appellee did make a good faith effort to settle the case. We do not find an abuse of discretion in the trial court's decision. Appellee's sole assignment of error is overruled.
CARR, J., BATCHELDER, J. CONCUR.
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