[Cite as Spring Hill Townhomes v. Pounds , 2014-Ohio-1980.]

IN THE COURT OF APPEALS OF OHIO SECOND APPELLATE DISTRICT MONTGOMERY COUNTY

SPRING HILL TOWNHOMES : : Appellate Case No. 25887 Plaintiff-Appellant : : Trial Court Ca se No. 10-CVG-587 v. : : MELISSA POUNDS, et al. : (Civil Appeal from Miamisburg : ( Municipal Court) Defendants-Appellees : :

. . . . . . . . . . . O P I N I O N Rendered on the 9th day of May, 2014.

. . . . . . . . . . . JOSEPH R. MATEJKOVIC, Atty. Reg. #0056097, 8050 Beckett Center Drive, Suite 214, West Chester, Ohio 45069-5018 Attorney for Plaintiff-Appellant SCOTT A. ASHELMAN, Atty. Reg. #0074325, 120 West Second Street, Suite 703, Dayton, Ohio 45402-1604 Attorney for Defendants-Appellees

. . . . . . . . . . . . . HALL, J., {¶ 1} Section 5321.16 of the Revised Code is the statute in Ohio’s landlord-tenant law 2

 that governs security deposits. Division (B) of th e statute provides that when a rental agreement is terminated, a landlord may de duct from a tenant’s security de posit “past due rent” and “the amount of damages that the landl ord has suffered by reason of th e tenant’s noncompliance with

section 5321.05 of the Revised Code or the re ntal agreement.” R.C. 5321.16(B). Division (B) also provides that the landlord must then return th e remainder of the deposit (if any) to the tenant and must do so “within thirty days after termination of the rental agreement and delivery of possession.” Id . If the landlord fails to timely return the remainder, division (C) provides that the tenant may recover double da mages and “reasonable attorn eys fees.” R.C. 5321.16(C). {¶ 2} Plaintiff Spring Hill Townhomes faile d to timely return the remainder of

Defendant Melissa Pounds’s secu rity deposit. So the trial c ourt awarded her the amounts to which she was entitled, including $4,637.50 in reasona ble attorneys fees. Spring Hill contends that Pounds is not entitled to anything because it substantially comp lied with R.C. 5321.16(B). Spring Hill further contends that Pounds failed to present sufficient evidence to support the trial court’s attorney’s fees award. We conclude that substantial compliance with the statute is insufficient and that the evidence supporting the atto rney’s fees award is sufficient. Spring Hill

also contends that the trial c ourt should have permitte d it to amend its complaint by adding a $630 claim against Pounds based on the trial court’s finding that she breached an extra-rental-agreement contract with Spring Hill. With this contention, we agree. Therefore we modify the trial court’ s judgment and affirm.

I. FACTS {¶ 3} This is the second time that this case ha s been before us. The following facts are taken from our previous opinion:[Cite as Spring Hill Townhomes v. Pounds , 2014-Ohio-1980.] Spring Hill owns and operates a residential apartment property. In February of 2007, Melissa a nd James Pounds executed a Re ntal Agreement to rent an apartment from Spring Hill. They paid Spring Hill a security deposit of $599.00, the amount of their monthly rent. In September 2009, Melissa noticed an infestation of bed bugs in their apartment. She notified Spring Hill, which obtained the services of an exterminator. After four treatments, the bed bug problem was resolved. The exterminator billed Spring Hill $780.00 for its extermination services. Spring Hill notified the Defendants that they were responsible to reimburse Spring Hill for that amount. On November 6, 2009, th e parties entered into a “Repayment Agreement,” in which James and Melissa agreed to pay Spring Hill $111.42 each month until the $780.00 balance was paid in full. The Repayment Agreement further provided: “I/we understand that this agreement will be in default when one (1) payment is delinquent and that in the event of default, no future agreement will

be made and all monies will be due in full and an eviction action will be initiated.”

* * * Melissa and James made two payments pursuant to the Repayment Agreement, but then stopped making pa yments. In a letter dated February 29, 2010, Spring Hill notified Meli ssa and James that evicti on proceedings would be initiated unless further paym ents were received by Fe bruary 26, 2010. Melissa and James made no further payments. On March 26, 2010, Spring Hill commenced the underlying action for forcible entry and detainer and for m oney damages. The De fendants filed an 4

 answer and a counterclaim, alleging that Spring Hill failed to remit all or part of the $599.00 security deposit the Defendants pa id, and that Spring Hill failed to present them a timely and itemized statement of the charges against their security deposit that Spring Hill had made , as required by R.C. 5321.16(B). Defendants vacated their apartment on April 19, 2010, while the action was pending. They provided Spring Hill a forwarding address. On May 26, 2010, Spring Hill sent Defendants an invoice s howing a total of all charges due and owing Spring Hill. The notice stated that, after application of their $599.00 security deposit, a total of $868.79 remained due and owing Spring Hill for those charges, which included a net bala nce of $642.75 due and owing under the Repayment Agreement for the exterminator’s services. The matter was referred to a magistrate. Following an evidentiary hearing, the magistrate filed a decision finding that Defendants owe Spring Hill $630.00 under the Repayment Agreement, and that, in addition, Defendants owe $324.80 for pro rata unpaid rent and $25.00 and $42.00, respectively, for removing a carpet spot and for replacement of a bedroom door. The total of these charges is $1,021.80. The magistrate further found that Defe ndants paid Spring Hill a security deposit of $599.00, and that after applying that amount against the amount of $1,021.80 that Defendants owe Spring Hill, Defendants are indebted to Spring

Hill for the difference in the net amount of $422.80. The decision awarded Spring Hill a judgment in that amount, plus interest and costs.

Defendants filed time ly objections to the magist rate’s decision. The trial 5

 court overruled the objections and adopted the decision as the court’s judgment. Defendants filed a notice of appeal. Spring Hill Town Homes v. Pounds , 2012-Ohio-2800, 972 N.E.2d 1121, ¶ 2-10 (2d Dist.). {¶ 4} We agreed with the Pounds’ contenti on that the trial c ourt had erred by determining that the Repayment Agreement is incorporated into their lease. And we concluded that their failure to pay under the Repayment Agreement is not a viol ation of the Rental Agreement or a violation of thei r statutory tenant obligations, compare R.C. 5321.05 (listing those obligations). Consequently, “Spring Hill c ould not withhold the remainder of the security deposit and apply it to the outstanding ba lance owed on the Repayment Agreement.” Spring Hill at ¶ 31. “Rather,” we said, “Spring Hill was requi red to return the remainder of the security deposit within 30 days of the da te on which Melissa and James moved out of Spring Hill’s apartment, which Spring Hill failed to do.” Id . We also noted that “[n] ot having otherwise been the subject of a claim for relief pled in this ac tion, Spring Hill’s right to the balance due under the Rental [read Repayment] 1 Agreement is necessarily enfor ceable only in a separate action.” Id.

We reversed and remanded for th e trial court “to determine what amount, if any, Spring Hill owes to Melissa for its failure to timely return the remaining portion of Melissa’s security deposit, after deduction of the ot her charges which the trial cour t found are due and owing and to order relief accordingly.” Id . at ¶ 32.

1 This is an error in our opinion. The firs t sentence of the paragraph says that “Spr ing Hill could not withhold the remainder of the security deposit and apply it to the outstanding balance owed on the Repayment Agreement .” (Emphasis added.) Spring Hill at ¶ 31.[Cite as Spring Hill Townhomes v. Pounds , 2014-Ohio-1980.] {¶ 5} On remand, Melissa Pounds 2 filed a motion for a damages-and-attorney’s-fees hearing. For its part, Spring Hill filed a motion to amend its complaint by adding a claim for breach of the Repayment Agreement which the ma gistrate found was due to Spring Hill. On January 29, 2013, the trial court en tered judgment on unpaid rent and damages, “to reflect the finding of the Second District C ourt of Appeals.” Entry, Order, and Notice of Phone Conference (Jan. 29, 2013). This judgment awards Spring Hill–in addition to amounts for carpet-spot removal, bedroom-door replacemen t, and unpaid rent in April 2010–the $630 that Pounds owes under the Repayment Agreement. The judgment al so overrules Spring Hill’s motion to amend its complaint. Pounds immediately filed a motion for reconsideration and asked the court to vacate this judgment. She argued that, under our Spring Hill decision, Spring Hill was not permitted to withhold the $630, and she pointed out that the tria l court had not yet dete rmined how much she was entitled to for Spring Hill’s wrongful withholding.

2 Spring Hill brought this action against both Melissa and James Po unds. It appears from the record that in November 2011 James’s debts were discharged in bankruptcy. Although it does not appear that he was formally dismissed from this action, it is clear t hat the action focuses on Melissa. {¶ 6} Later, Pounds filed a motion reques ting attorney’s fees of $15,522.50. To the motion, she attached a billing statement prepared by her attorney. The statement briefly describes each task that the attorney completed in the case and states the date on which it was completed and the time that it took to complete. In all, the statement shows that, between February 23, 2010, and February 26, 2013, Pounds’s attorney spent 88.7 hours on the case and charged an hourly rate of $175. Spring Hill opposed the motion and an ev identiary hearing was held. Pounds presented the testimony of an expert who said that the tasks, times, and rate on the billing statement are all

reasonable in this case. Pounds did not seek to admit the billing statement into evidence. When 7

 Spring Hill’s turn came, it moved to dismiss the attorney’s fees motion. Spring Hill argued that Pounds had failed to present sufficient evid ence of the requested amount–no testimony from Pounds that she was actually billed the amount reque sted and no testimony from her attorney that the items listed on the billing statement were r easonable and necessary and reflect what he actually did. Spring Hill further argued that the billing statement contained mostly inadmissible hearsay and that Pounds failed to establish the business-records hearsay exception. After the court said that it would not dismiss the motion, Spring Hill presented the testimony of its own expert. The expert testified that “a fee of $3,500.00 to $5,000.00 would not be out of line at all for doing that work [the work in this case].” (Tr. 75-76). After the hearing, Pounds’s attorney filed an affidavit averring that the billing statem ent is “a true and accurate record of Counsel’s time spent and actions take n” and “a true and accurate record of Counsel’s hourly billing rate for the matter.” Affidavit, ¶ 3, 4. {¶ 7} On August 1, 2013, the trial court sustai ned Pounds’s motion for reconsideration, vacated the January 29 judgment, and entered final judgment for Pounds in the amount of $5,176.90. The court found that Spring Hill was entitled to withhold $391.80 from the $599 security deposit ($25 for carpet-spot remova l, $42 for bedroom-door replacement, and $324.80 for unpaid rent in April 2010) and that, ther efore, Spring Hill wrongly withheld $207.20. The

court awarded Pounds court co sts of $125 and double damages of $414.40. Concerning attorney’s fees, the court accepted the $175 hourly rate but f ound, “[a]fter considera tion of all relevant factors, including a thorough and careful review of Defendant’s Exhibit A [as the billing statement is labeled],” that 26.5 hours was a r easonable number of hours to spend on the case. Decision and Entry of Judgment, 6 (Aug. 1, 2013). So the court awarded Pounds reasonable attorney’s fees of $4,637.50. 8

 {¶ 8} Spring Hill appealed.

II. ANALYSIS {¶ 9} Spring Hill presents three assignments of error for review. The first alleges that the trial court erred by holding that it wrongly withheld part of the security deposit. The second alleges that the court erred by or dering Spring Hill to pay Pounds’s attorney’s fees. And the third alleges that the court erred by vacating the January 29, 2013 judgment and also erred by not permitting Spring Hill to amend its complaint. A. Wrongful Withholding {¶ 10} The amount of a security deposit that is wrongly withheld is “the amount found owing from the landlord to the tenant over a nd above any deduction th at the landlord may lawfully make.” Vardeman v. Llewellyn , 17 Ohio St.3d 24, 29, 476 N.E.2d 1038 (1985). Spring Hill argues, in the first assignment of error, that the trial court erred by holding that it wrongly withheld part of Pounds’s security deposit. It contends that when a tenant and landlord are litigating the amounts that the la ndlord has deducted, a nd the court decides that a particular amount was deducted unlawfully, th e landlord substantially comp lies with R.C. 5321.16(B) if it returns this amount within 30 days of the court’ s decision. Spring Hill’s contention assumes that substantial compliance is sufficient to a void the penalties in R.C. 5321.16(C). On this circumstance, it is not. {¶ 11} If a landlord wrongly withholds part of a tenant’s security de posit, “the award of damages provided in R.C. 5321.16(C) is mandatory.” Klemas v. Flynn , 66 Ohio St.3d 249, 251, 611 N.E.2d 810 (1993), citing Smith v. Padgett , 32 Ohio St.3d 344, 513 N.E.2d 737 (1987), 9

 paragraph three of the syllabus. Spring Hill’s substantial-compliance argument suggests that to a R.C. 5321.16 claim bad faith is an element and good fa ith a defense. This is not so. “There is no requirement that the landlord act in bad faith. * * * [And] a showin g of good faith is no defense.” Buck v. Georgian Manor Investments , 8th Dist. Cuyahoga No. 67170, 1995 WL 143813, *4 (Mar. 30, 1995). The Ohio Suprem e Court has said the same. See, e.g., Padgett at 349 (“R.C. 5321.16(B) and (C) do not require bad faith on the part of the landlord.”); Klemas at 251 (“There is no requirement that a conscious , deliberate, or intentional attempt to cause harm be proved in order to recover statutory double damages pursuant to R.C. 5321.16(C) .”). As the Tenth District has pointed out, “[o]ne of the purposes of R.C. 5321.16(C) is to remove any obligation of the tenant to prove bad faith or improper motive on the part of th e landlord. Thus, the landlord’s motive in failing to make a time ly refund of a security depos it as required by R.C. 5321.16(B) does not affect his liability for the statutory pe nalty provided by R.C. 5321.16(C) if the security deposit is not time ly refunded.” Forquer v. Colony Club , 26 Ohio App.3d 178, 180, 499 N.E.2d 7 (10th Dist.1985). The landlord’s ar gument might have more mer it if the dispute was over an amount withheld for an item that was specifically authorized by statute. Here, the amount

withheld was unauthorized. {¶ 12} The trial court correctly held that Spri ng Hill wrongly withheld part of Pounds’s security deposit. {¶ 13} The first assignment of error is overruled. B. “Reasonable Attorneys Fees” {¶ 14} The second assignment of e rror alleges that the trial c ourt erred when it “ordered plaintiff/appellant to pay defe ndant/appellee’s attorney’s fees.” Brief of Plaintiff/Appellant Spring Hill Townhomes, 16. This is not what th e court ordered. The tria l court awarded Pounds 10

 the attorney’s fees to which R.C. 5321.16(C) entitle d her. And the fees provided in this section

are not actual attorney’s fees but reasonable attorney’s fees. {¶ 15} Spring Hill contends that the trial court could not award any attorney’s fees because Pounds failed to present her own testimony about the f ees and failed to present her attorney’s testimony about them. This testimony was not required here. No party has a burden to prove anything concerning R.C. 5321.16(C) attorn ey’s fees. Division (C) entitles the tenant to “reasonable attorneys fees.” The only question is th e amount that is reasona ble in the particular case–the question on which the parties may presen t evidence. Pounds was not required, therefore, to present any evidence about the attorney’s fees that she actually paid or the work that her attorney did. {¶ 16} Spring Hill further contends that the trial court could not admit the billing statement because Pounds failed to satisfy the business-records hearsay exception. A court must answer the reasonable-amount questi on based on all of the evidence. Padgett , 32 Ohio St.3d at 349, 513 N.E.2d 737. So the court “must take sufficient evidence on the issue, by testimony, deposition, affidavit or otherwise * * *.” Oakwood Mgt. Co. v. Young , 10th Dist. Franklin No. 92AP-207, 1992 WL 324338, *4 (Oct. 27, 1992). An evidentiary hearing is needed only when the

evidence conflicts. Id . Here, because the billing statement was attached to Pounds’ attorney’s fees motion, it was already properly part of the eviden ce before the hearing. It was because Spring Hill disputed the reasonableness of the amount s upported by the billing statement that the hearing was held. The billing statement does not contain hearsay. “‘Hearsay’ is a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the

truth of the matter asse rted.” Evid.R. 801(C). But Pounds did not offer the “statements” in the billing statement to prove the truth of the matters that they assert. That is, Pounds did not offer 11

 the billing statement to prove, for example, that on February 23, 2010, her attorney met with her for one hour or that for this hour he charged he r $175. Instead, she offered this statement and the others, and the testimony of her expert, to prove what “reasonable attorneys fees” are in this

case. 3 Compare Hannah v. Sibcy Cline Realtors , 147 Ohio App.3d 198, 211, 769 N.E.2d 876 (1st Dist.2001) (letter was not hearsay because “[t] he trial court used the letter not to determine factual issues, but to aid it in determining how a real estate agent or broker should respond to a buyer’s request for racial info rmation concerning a neighborhood,” where the letter was from the Department of Housing and Urban Development and contained an opinion on the legality of a buyer’s agent accommodating a buyer who indicated a preference for housing on a racial basis, and the action was for breach of contract by a real estate agent who failed to disclose the ethnic composition of a neighborhood).

3 Spring Hill also contends that Pounds improperly tried to sa tisfy the business-records hearsay exception for the billing statem ent by submitting an affidavit from her attorn ey after the hearing. Because we conclude that the billing statement does not contain hearsay, this issue is moot. {¶ 17} Spring Hill contends that Pounds’s re quest for attorney’s fees is improper because the billing statement does not distinguish between the time spent on the security-deposit-return issue and the time spent on other things, like applying for the attorney’s fees award. Spring Hill contends that “reasonable attorneys fees” must relate solely to the cost of litigating the security-deposit-return issue and that “the cost of pursuing the [attorney’s] fee award is * * * not properly part of a de posit-refund fee request ,” citing in support Alexander v. LJF Management, Inc. , 1st Dist. Hamilton No. C- 100618, 2011-Ohio-2532. Brief of Plaintiff/Appellant Spring Hill Townhomes, 22. Alexander does not stand for this general proposition. What Alexander says is that “a trial court calculating a fee award pursuant to R.C. 12

 5321.16 is not required to consider the time a tenant spends drafting an application for attorney fees.” (Emphasis added.) Alexander at ¶ 19. It follows that a court may consider this time, in its

discretion. The Alexander court concluded that the trial court in that case abused its discretion by considering this time. We do not conclude that about the trial court in this case. The billing statement here does identify the ta sks connected with the attorney’s fees application. But it is not clear from the trial court’s written decision whether the court considered this time. Even if it did, Spring Hill fails to convince us that doing so was an abuse of discretion. {¶ 18} Lastly, Spring Hill contends that the atto rney’s fees award is disproportionate to the amount in dispute. A court calculates reasona ble attorney’s fees by first calculating the “lodestar,” “the number of hours reasonably expended on the case times an hourly fee.” Bittner v. Tri-County Toyota, Inc. , 58 Ohio St.3d 143, 145, 569 N.E.2d 464 (1991). In this calculation, the court must exclude “any hours that were unreas onably expended, e.g., hour s that were redundant, unnecessary or excessive in relationshi p to the work done.” (Citation omitted.) Miller v. Grimsley , 197 Ohio App.3d 167, 2011-Ohio-6049, 966 N.E.2d 932, ¶ 14 (10th Dist.). Then the court may modify the lodestar by appl ying the factors listed in Prof.Cond.R. 1.5, Bittner at 145,

one of which is “the amount involved and the results obtained,” Prof .Cond.R. 1.5(a)(4). Still, “‘[a] “reasonable” fee must be related to th e work reasonably expended on the case and not merely to the amount of the judgment awarded.’” Miller at ¶ 16, quoting Roth Produce Co. v. Scartz , 10th Dist. Franklin No. 01AP-480, 2001 WL 1654555 (Dec. 27, 2001). {¶ 19} Here, Pounds requested attorney’s f ees of $15,522.50. The trial court considered the relevant factors, including those in Pr of.Cond.R. 1.5, and found, in this case, that $175 per hour is a reasonable billing rate and 26.5 hours is a reasonable number to expend, for a total of $4,637.50. “‘[W]here a court is empowered to award atto rney fees by statute, the amount of such 13

 fees is within the sound discretion of the trial c ourt. Unless the amount of fees determined is so high or so low as to shock the conscience, an appellate court will not interfere.’” Bittner at 146, quoting Brooks v. Hurst Buick- Pontiac-Olds-GMC, Inc. , 23 Ohio App.3d 85, 91, 491 N.E.2d 345 (12th Dist. 1985). The trial court’ s attorney’s fees award here does not shock our conscience, particularly given that Spring Hill’s own expert testified that attorney’s fees of up to $5,000

would be reasonable in this case. {¶ 20} The second assignment of error is overruled.

C. Vacating the January 29, 2013 Judgment and Amending the Complaint {¶ 21} The third assignment of error alleges that the trial court erred by vacating the January 29, 2013 judgment and also erred by not permitting Spring Hill to amend its complaint. We do not agree that the vacation is error. Bu t we do agree that the trial court should have permitted the amendment. {¶ 22} “Interlocutory orders are subject to motions for reconsideration whereas judgments and final orders are not.” Pitts v. Ohio Dept. of Transp. , 67 Ohio St.2d 378, 379 n. 1, 423 N.E.2d 1105 (1981). The judgment was an inte rlocutory order subject to revision–which

includes vacation–because it does not contain Civ.R . 54(B) language and when it was entered Pounds’s R.C. 5321.16(C) award ha d not yet been determined. Compare Civ.R. 54(B) (saying that such a judgment “is subj ect to revision at any time”). {¶ 23} As to the amendment of the complaint, Spring Hill’s motion to amend seeks to add a breach-of-contract claim ag ainst Pounds for the $630 that the trial court had already found she owed Spring Hill under the Repayment Agreem ent. The trial court overruled the motion in the January 29 judgment presumably because th at judgment awarded Spring Hill this amount. 14

 Civ.R. 15(B) pertinently provides that “[w]hen issu es not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to

conform to the evidence and to raise these issu es may be made upon motion of any party at any time, even after judgment.” Here, the issues pertinent to the breach claim had been tried by the implied consent of the parties, and the court found that “[Pounds] owe[s] Spring Hill $630.00 under the Repayment Agreement,” Spring Hill at ¶ 8. The court should have permitted the amendment. We note however, that a deter mination that Pounds owes Spring Hill $630.00 for the side agreement does not absolve Spring H ill from its mandatory duty to timely refund the balance of the security deposit. {¶ 24} The third assignment of error is ove rruled in part and sustained in part.

III. CONCLUSION {¶ 25} Under Civ.R. 15(B), Spring Hill’s breach claim may be treated as having been raised in its complaint, and judgment in the amount of $630 should be entered for Spring Hill. This judgment should be set off against th e $5,176.90 judgment for Pounds. Doing so does not apply the security deposit to the amount ow ed under the Repayment Agreement–which we rejected in Spring Hill . Rather, the “‘ancient and well established’” practice of setoff merely “‘set[s] off one judgment against another, be tween the same parties, and due, in the same rights.’” Montalto v. Yeckley , 143 Ohio St. 181, 182-183, 54 N.E.2d 421 (1944), quoting Holmes

v. Robinson , 4 Ohio 90 (1829); see also Berardi’s Fresh Roast, Inc. v. PMD Ents., Inc. , 8th Dist. Cuyahoga No. 93920, 2010-Ohio-5124, ¶ 32 (recognizin g the legitimacy of the practice and citing Montalto ). 15

 {¶ 26} Rather than remand, we exercise our App.R. 12(B) authority to modify the appealed judgment. Judgment is entered for Sp ring Hill on its breach claim in the amount of $630. Setting off this judgment against the $5,176.90 judgment for Pounds, final judgment is entered for Pounds in the amount of $4,546.90. {¶ 27} The appealed judgment is affirmed as modified.

. . . . . . . . . . . . .

FAIN, and DONOVAN, JJ., concur.

Copies mailed to: Joseph R. Matejkovic Scott A Ashelman Hon. Robert W. Rettich, III