[Cite as PNC Bank, N.A. v. Creative Cabinet Sys., Inc. , 2014-Ohio-3264.]

IN THE COURT OF APPEALS OF OHIO SECOND APPELLATE DISTRICT DARKE COUNTY PNC BANK, N.A. Plaintiff-Appellee

v. CREATIVE CABINET SYSTEMS, INC., et. al. Defendants-Appellees idX DAYTON, LLC Defendant -Appellant/Cross-Appellee JOHN SNYDER, Receiver Defendant -Appellee/Cross-Appellant : : : : : : : : : : : : : : : Appellate Case Nos. 2013-CA-14 Appellate Case Nos. 2013-CA-15 Trial Court Case No. 12-CV-134 (Civil Appeal from Darke County ( Common Pleas Court)

. . . . . . . . . . . O P I N I O N Rendered on the 25th day of July, 2014.

. . . . . . . . . . . ARTHUR R. HOLLENCAMP, Atty. Reg. #0020528, ROBERT H. HOLLENCAMP, Atty. Reg. #0084370, and GARY M. HRUSKA, Atty. Reg. #0000589, 130 West Second Street, Suite 2107, Dayton, Ohio 45402 Attorneys for Defendant-Appellee/Cro ss-Appellant, John Snyder, Receiver TAMI HART KIRBY, Atty. Reg. #0078473, 1 Sout h Main Street, Suite 1600, Dayton, Ohio 45402 Attorney for Defendant-Appellan t/Cross-Appellee, idX Dayton, LLC RICHARD E. GREENBERG, Atty. Reg. #002261, Green sfelder, Hemker & Gale, P.C., 10 South 2

 Broadway, Suite 2000, St. Louis, Missouri 63102 Attorney Pro Hac Vice for idX Dayton, LLC

. . . . . . . . . . . . . HALL, J. {¶ 1} idX Dayton, LLC, appeals from a trial court order giving escrowed funds temporarily to the Darke County Clerk of Courts . Because this order is not final under R.C. 2505.02, we lack jurisdiction to cons ider this appeal’s merits. I. BACKGROUND {¶ 2} Creative Cabinet Systems, Inc., bo rrowed around $4 million from two banks and gave the banks a security interest in all of its property. Creative Cabinet defaulted on the loan, and PNC Bank, the successor in interest to the two banks, filed an action against it to recover the just-under $4 million still owed. At PNC’s request, the tr ial court established a receivership for the preservation and eventual sa le of Creative Cabine t’s assets and appointed a receiver. The Receiver soon found a buyer–idX–and at the end of August 2012, they entered into an “Asset Purchase Agreement.” {¶ 3} The deal hit several snags, one of which was the anticipated $223,000 that
Creative Cabinet owed 13 states in which it did bus iness. According to th e Receiver, for about a year, Creative Cabinet collected sales taxes but, due to a lack of cash, did not remit the money to the states. idX worried that, as purchaser of Creative Cabinet assets, the states would hold it liable for the unpaid taxes. To address th is concern and others, on December 31, 2012, the Receiver and idX entered into an “Implementation Agreement for Asset Purchase Agreement.” Under this agreement, idX deposited into an escrow account $250,000 of the roughly $2 million asset purchase price to be used to pay any sales-tax obligations: 3



Promptly following Purchaser’s receipt of evidence sufficient to Purchaser in its reasonable discretion that all sales taxes of Debt or have been paid in full or that the applicable states have waived any claims for sales taxes, and within 180 days, Purchaser shall instruct the Escrow Agent to disburse to Receiver $250,000, or
such lesser amount as remains in the Escrow Account as payment for sales tax, to the extent such Debtor’s and Receiver’s sales tax obligation have been satisfied or properly waived. Escrow Agent shall also disburse to Receiver partial amounts approved by Receiver and Purchaser to e ither fund payment of outstanding sales tax or reimburse Receiver for payment of sales tax. Any balance is payable to (1) pay sales tax, (2) Purchaser if there remain sales tax obligations not satisfied by the Receiver or waived by the applicable state authority or (3) Receiver if all sales tax obligations have been satisfied or wa ived by the applicable state authority. Implementation Agreement for Asset Purchase Agreement , 9(b). No escrow funds were disbursed during the specified period. And the only tax obliga tion satisfied by the R eceiver was to the State of Florida, to which the Receiver paid $23,000. {¶ 4} Soon after the 180-day window closed, th e Receiver and idX each filed a motion for release of the escrow funds . The Receiver asked the trial court for $23,000 as reimbursement for the Florida payment and asked the court to distribute the $227,000 balance to PNC Bank. The Receiver claimed that his obligation under the Implementation Agreement was satisfied because Florida was the only state to which Creative Cabinet owed sales tax. idX disagreed. idX claimed that sales-tax obligations to the other states remain so unde r the agreement it is entitled to the 4

 balance. (idX agreed to the reimbursement.) {¶ 5} An evidentiary hearing was held at which the Receiver presented the expert testimony of the accountant retained to help w ith the receivership. The accountant had analyzed Creative Cabinet’s tax obligations and had prepared and filed tax returns in each of the states to which tax was owed. The expert testified that only Florida was paid because, of the 14 states that Creative Cabinet owed, onl y to Florida did it owe sales tax. In the other states, said the expert, Creative Cabinet owed use taxes. The expert explained that , unlike unpaid sales tax, unpaid use tax is an unsecured, non-priority debt. So the use- tax states will get their money only if money is left over from the sale of Cr eative Cabinet’s asse ts after PNC Bank–the secured, priority creditor–is fully paid. This is doubtful, said the expert. {¶ 6} The trial court reimbursed the Receive r $23,000 but did not give the balance to either the Receiver or idX. The court found, “based on the undisputed testimony of [the expert], there are no further sales tax liabilities of Creative Cabinet (except Florida which will be paid as agreed).” Nunc Pro Tunc Judgment Entry - Cro ss Motions for Release of Funds, 3 (Oct. 4, 2013). Nevertheless, “in the interests of equity and in order to reduce the concern that idX Dayton will be subject to successor liability for sales taxes,” the court gave the balance to the Darke County Clerk of Courts to hold “pending further order of the Court.” Id . at 4. The entry says that the Clerk will hold the funds “for at least twelve (12) months (as later deter mined by the Court) to allow additional time to de termine if sales tax claims are even tually pursued against idX Dayton.” Id

. {¶ 7} idX appealed. II. ANALYSIS 5

 {¶ 8} idX assigns two errors to the trial court. The first alleges that the court misinterpreted the terms of the Implementation Ag reement, and the second alleges that the court erred by finding it undisputed that no sale s taxes are due. The Receiver assigns one cross-assignment of error, alleging that the trial court erred by ordering th e escrow funds be held by the Clerk for at least 12 months. While idX and the Receiver take it for granted that we have jurisdiction over this appeal, we ar e not convinced that th e appealed order is a “final order” under R.C. 2505.02. 1 If it is, it is an order of the type desc ribed in either division (B)(2) or division (B)(4) of the statute. A. R.C. 2505.02(B)(2) {¶ 9} R.C. 2505.02(B)(2) provides that an order is a “final order” if it is “[a]n order that affects a substantial right made in a special proceeding * * *.” A receivership is a “special proceeding.” Huntington Natl. Bank v. HPM Di v., Taylor’s Indus. Servs., L.L.C. , 10th Dist. Franklin No. 10AP-200, 2010-Ohio-6176, ¶ 16, n. 1. But “[u]nless the order affects a substantial right, it is not a final order.” (Citations omitted.) Eng. Excellence Inc. v. Northland
Assoc. L.L.C. , 10th Dist. Franklin No. 10AP-402, 2010-Oh io-6535, ¶ 12. The appealed order here does not affect a substantial right.

1 The issue is not discussed in the briefs. We notified both idX an d the Receiver that they should be prepared to discuss this jurisdictional issue at oral arguments, where the issue was discussed. {¶ 10} “The concept of a substantial right involve s the notion of a legal right that will be enforced and protected by law.” (Citations omitted.) Kierland Crossing, L.L.C. v. Ruth’s Chris Steak House, Inc. , 10th Dist. Franklin No. 11AP-627, 2011-Ohio-5626, ¶ 8; see also R.C. 2505.02(A)(1). Here, the appealed order undoubtedly concerns a substantial right–“[t]he right to 6

 enforcement and performance of a cont ract involves a substantial right,” id ; see also Niehaus v. Columbus Maennerchor , 10th Dist. Franklin No. 07AP-1024, 2008-Ohio-4067, ¶ 19 (“The parties’ rights to enforcement and performance of the purchase contract involved substantial rights.”). But the appealed order does not “ affect [] a substantial right,” (Emphasis added.) R.C. 2505.02(B)(2). “An order affects a substantial ri ght for the purposes of R.C. 2505.02(B)(2) only if an immediate appeal is necessary to protect the right effectively.” Wilhelm-Kissinger v. Kissinger , 129 Ohio St.3d 90, 2011-Ohio-2317, 950 N.E.2d 516, ¶ 7, citing Bell v. Mt. Sinai Med. Ctr. , 67 Ohio St.3d 60, 63, 616 N.E.2d 181 (1993). To show that an order affects a substantial right, “appellants must demonstrate that in the absence of immediate review of the order they will be denied effective relief in the future.” Bell at 63. Neither idX nor the Receiver has done this here. {¶ 11} idX and the Receiver each c ontends that it is entitled to the escrow funds. But the appealed order does not prevent the rightful pa rty from getting the funds. The escrow funds have not yet been definitively allocated–the order doe s not actually award the funds to anyone. In Leonard v. Georgesv ille Ctr., L.L.C. , 10th Dist. Franklin No. 13AP-441, 2013-Ohio-5713, the Tenth District concluded that a similar order did not affect a substantial right: Here, appellants c ontend that the proposed listing price submitted by the receiver is too low, and therefore, the receiver will not obtain fair value for the property. Appellants argue that their right to receive fair value for the property is the substantial right at issue in this app eal. Although we agree that appellants have a substantial right to receive fair value for their property, the order at issue does not affect that substantial right because appellants are not foreclosed from 7

 challenging the fairness of any future sa le price. Although an order approving a receiver’s final report and a pproving the definitive depositi on of assets is a final appealable order, an interim order setting values or otherwise covering ongoing administration of the assets is not. Because appellant is not foreclosed from contesting the fairness of any future sale price, the order at issue does not affect a substantial right. (Citation omitted.) Leonard at ¶ 10-11 (concluding that it lack ed jurisdiction and dismissing the appeal). The Ninth District has concluded that an order is not final that does not actually award any assets and anticipates further action. In Champaign National Bank v. Preferred Capital, Inc. , 9th Dist. Summit No. 24180, 2009-Ohio-6699, the a ppellant, a creditor of the defendant, appealed an order that directed the receiver “to pay outstanding expenses and wind up the receivership in the best interest of the secured creditors.” Champaign National Bank at ¶ 1. The court concluded that this order was not final b ecause it did not award any assets and the entry anticipated further action: “On the face of the judgment, the [trial] court anticipates further action by the Receiver, in winding up the receivership and distributing the remaining assets * * *. The judgment appealed from does not actually award any assets to any party. In the entry, the court indicates if the receivership becomes insolvent th is will require further ac tion by the parties and the court.” Id . at ¶ 18; see also Whipps v. Ryan , 10th Dist. Franklin No. 12AP-509, 2013-Ohio-4334, ¶ 28 (“‘While an order approving a receiver’s final report and approving the definitive disposition of assets is a final appealable order, an interim report setting values or otherwise covering ongoing adminis tration of the assets is not.’ [Whipps v. Ryan , 10th Dist. Franklin No. 10AP-167, 2011-Ohio-3300,] ¶ 9.”).[Cite as PNC Bank, N.A. v. Creative Cabinet Sys., Inc. , 2014-Ohio-3264.] {¶ 12} The appealed order here does not affect a substantial right, so it does not satisfy the “final order” definition in R.C. 2505.02(B)(2). B. R.C. 2505.02(B)(4) {¶ 13} R.C. 2505.02(B)(4) also describes this type of order as being a “final order”: “An order that grants or denies a pr ovisional remedy and to which both of the following apply: (a) The order in effect determines the action with re spect to the provisional remedy and prevents a judgment in the action in favor of the appealing party with respect to the provisional remedy. (b) The appealing party would not be afforded a m eaningful or effective remedy by an appeal following final judgment as to all proceedings, issues, claims, and partie s in the action.” R.C. 2505.02(B)(4). The Ohio Supreme C ourt has explained that “[t]hi s division of the final order statute recognizes that, in spite of courts’ inte rest in avoiding piecemeal litigation, occasions may arise in which a party seeking to appeal from an interlocutory order would have no adequate remedy from the effects of that order on appeal from final judgment. In some instances, ‘[t]he proverbial bell cannot be unr ung and an appeal after final judg ment on the merits will not rectify the damage’ suffered by the appealing party.” (Citations omitted.) State v. Muncie , 91 Ohio St.3d 440, 451, 746 N.E.2d 1092 (2001). This isn’t one of those occasions. {¶ 14} The appealed order here me rely maintains the status quo. It does not conclusively determine entitlement to the escrow funds, so there is no need for “swift and decisive action” to preserve the funds. See Boedeker v. Rogers , 140 Ohio App.3d 11, 17, 746 N.E.2d 625 (8th Dist.2000) (“Preserving resources from impending dissipation demands swift and decisive action; the opportunity to avert such waste must be seiz ed or may be lost for good.”). The Eleventh District came to the same c onclusion about a similar order concerning held funds. In Dudek v. Lesnick , 11th Dist. Trumbull No. 2010-T-0058, 2010-Oh io-3251, the trial court granted the 9

 appellee’s motion to place funds in escrow, after finding that otherwise the appellee would be irreparably harmed. The court al so ordered the appellants to deposit $215,700 with their attorney, to be held in the attorney’s trust account. And th e court’s entry stated that the funds could be removed only by order of the cour t. On appeal, the appellants argued that the entry satisfied the provisional-remedy definition of “final order” in R.C. 2505.02(B )(4)(b) because “it deprive[d] them of the use of their $215,700.” Dudek at ¶ 18. But the Eleventh District disagreed: “The appealed entry merely maintains the status quo pending the trial court proceedings. Appellants will have a meaningful and effective remedy by way of an appeal once a final judgment is reached as to all claims and parties when the case is decided and/or dismissed.” Id

. {¶ 15} We also note that to the extent that the trial court has concluded that only the taxes to Florida are truly sales taxes that would pa ss through to the purchaser of the assets, or that PNC may be entitled to the residue if no new sales ta x liability surfaces, those conclusions are interlocutory. An appeal following final judg ment will give idX and the Receiver a sufficient remedy, so the appealed order doe s not satisfy the “final order” definition in R.C. 2505.02(B)(4). {¶ 16} Because the appealed order is not a “fin al order,” we do not have jurisdiction to consider the merits of this appeal. This appeal therefore is dismissed.

. . . . . . . . . . . . .
FROELICH, P.J., and WELBAUM, J., concur.

Copies mailed to: Arthur R. Hollencamp Robert H. Hollencamp Gary M. Hruska 10

 Tami Hart Kirby Richard E. Greenberg Ronald Gold Stephen Bernat David Pierce Kenneth Flacks Scott Rudnick Lawrence Burick Daniel Riegle Robert Shiffler Hon. Jonathan P. Hein