[Cite as Huntington Natl. Bank v. D&G Ents., Inc., 2013-Ohio-1117.]

STATE OF OHIO, MAHONING COUNTY 

IN THE COURT OF APPEALS 

SEVENTH DISTRICT 

HUNTINGTON NATIONAL BANK, 

 PLAINTIFF-APPELLEE, 

V. 

D&G ENTERPRISES, INC., et al., 

 DEFENDANTS-APPELLANTS. 

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 CASE NO. 12 MA 15 

OPINION 

CHARACTER OF PROCEEDINGS: Civil Appeal from Court of Common 

Pleas of Mahoning County, Ohio 

Case No. 11CV2398 

JUDGMENT: Affirmed 

APPEARANCES: 

For Plaintiff-Appellee Atty. Jerry M. Bryan 

Atty. Joseph A. Pope 

6 Federal Plaza Central, Suite 1300 

Youngstown, Ohio 44503 

For Defendants-Appellants Atty. Troy J. Doucet 

Atty. Audra Lepi Tidball 

4200 Regent St., Suite 200 

Columbus, Ohio 43219 

JUDGES: 

Hon. Gene Donofrio 

Hon. Cheryl L. Waite 

Hon. Mary DeGenaro 

 

 

 Dated: March 20, 2013 
[Cite as Huntington Natl. Bank v. D&G Ents., Inc., 2013-Ohio-1117.]

{¶1} Defendants-appellants, Teri Pahon and Arlene Griffis, appeal from a 

Mahoning County Common Pleas Court judgment denying their motion for relief from 

judgment and denying their request for attorney fees. 

{¶2} Appellants are the executive officers of D&G Enterprises (D&G). Sky 

Bank extended two loans to D&G in 2006 and 2007. Plaintiff-appellee, The 

Huntington National Bank, is Sky Bank’s successor in interest. 

{¶3} Note No. 34 was issued from Sky Bank to D&G on November 16, 2006, 

in the amount of $50,000 (the first loan). Appellants signed a personal guarantee 

that accompanied Note No. 34 and also included a confession of judgment provision. 

On March 12, 2007, the parties signed a modification of the first loan. The 

modification increased the loan to $100,000 and decreased the interest rate from 9.5 

percent to 9.0 percent. Appellants once again signed a personal guarantee. Then 

on August 17, 2007, the parties signed another modification of the first loan. This 

modification increased the loan to $150,000 and decreased the interest rate to 8.5 

percent. A new personal guarantee was not included with this modification. 

{¶4} Note No. 67 was issued from Sky Bank to D&G on March 12, 2007, in 

the amount of $230,000 (the second loan). Appellants again signed a personal 

guarantee that accompanied Note No. 67 and included a confession of judgment 

provision. On June 16, 2008, the parties signed a modification of the second loan. 

The modification increased the loan to $305,297 and changed the interest rate. A 

new personal guarantee was not included with the modification. 

{¶5} On July 21, 2011, appellee filed a two-count cognovit complaint against 

appellants and D&G demanding judgment (1) on Note No. 34 in the sum of 

$100,197.48, plus interest and (2) on Note No. 67 in the sum of $258,023.16, plus 

interest (Case No. 11-CV-2398). 

{¶6} That same day, counsel for appellants, appointed pursuant to the 

warrant of attorney provisions of the Notes and the guarantees, confessed judgment 

in favor of appellee. The trial court then entered judgment against appellants and 

D&G for the amounts set out in the complaint. 

{¶7} Approximately a month later, appellee filed a motion to vacate the 

judgment entry as to Note No. 67 only, without prejudice. In the motion, appellee 
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stated that it was discovered that Note No. 67, dated March 12, 2007, had been 

rewritten on June 16, 2008, as evidenced by a promissory note in the original amount 

of $305,297.00. Appellee stated that while judgment was entered for the correct 

amount due on Note No. 67, judgment was not entered on the current promissory 

note. Subsequently, the trial court put on an order vacating the judgment as to Note 

No. 67. 

{¶8} Appellee filed a new cognovit complaint on August 31, 2011, 

demanding judgment on Note No. 67, this time attaching the more recent promissory 

note (Case No. 11-CV-2927). Judgment was again confessed in favor of appellee. 

The trial court entered judgment against appellants and D&G that day. 

{¶9} On September 9, 2011, appellants filed a Civ.R. 60(B) motion for relief 

from judgment in Case No. 11-CV-2398. They asserted that the judgment against 

them was erroneous because the guarantees appellee relied on in obtaining its 

judgment were no longer valid. Appellants argued that they were no longer liable for 

the obligation on Note No. 34 by virtue of a novation. 

{¶10} On October 21, 2011, appellants filed a Civ.R. 60(B), motion for relief 

from judgment in Case No. 11-CV-2927. They asserted that they were entitled to 

relief from the judgment in this case due to a novation, judicial estoppel, a pending 

case involving the same note, and a deviation from the proper procedure in 

confessing judgment. Additionally, appellants filed a motion for attorney fees alleging 

that appellee acted frivolously in filing its complaint in Case No. 11-CV-2927 when 

Case No. 11-CV-2398 was still pending. They also moved the court to consolidate 

Case No. 11-CV-2927 with Case No. 11-CV-2398. 

{¶11} The trial court consolidated the two cases. And on January 3, 2012, the 

court denied both of appellants’ motions for relief from judgment. In so ruling, it found 

that the modifications of the loan documents were not novations, judicial estoppel did 

not apply, and appellee was permitted to file the second complaint. 

{¶12} Appellants filed a timely notice of appeal on January 27, 2011. This 

court sent the case back to the trial court to rule on appellants’ motion for attorney’s 

fees. The trial court then entered a judgment denying appellants’ request for 
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attorney’s fees. 

{¶13} Appellants now raise two assignments of error, the first of which states: 

 THE COURT ERRED IN DENYING DEFENDANTSAPPELLANTS RELIEF FROM A COGNOVIT JUDGMENT. 

{¶14} Appellants argue here that the trial court should have granted their 

motion for relief from judgment. They contend that they presented sufficient facts to 

show the meritorious defense of novation. Appellants assert that they were only 

required to allege operative facts constituting a novation. They were not required to 

affirmatively prove a novation occurred. Appellants assert that the trial court wrongly 

determined the merits of the case instead of simply determining whether they had 

presented facts to suggest a meritorious defense. 

{¶15} As to Note No. 34, appellants point out that while they signed personal 

guarantees on the original loan and the first replacement loan, they did not sign 

personal guarantees on the final replacement loan. They further argue that terms of 

each subsequent loan wholly replaced all of the language in the previous loan and 

did not simply modify the terms. 

{¶16} As to Note No. 67, appellants point out that while they signed a 

personal guarantee on the original loan, they did not sign a personal guarantee on 

the replacement loan. And again they argue that the terms of the second loan wholly 

replaced the terms of the first loan. 

{¶17} As to both loans, appellants argue that the new agreements increased 

the amounts of the loans and changed the interest rates. 

{¶18} When reviewing a decision granting or denying Civ.R. 60(B) relief, 

appellate courts apply an abuse of discretion standard. State ex rel. Russo v. Deters, 

80 Ohio St.3d 152, 153, 684 N.E.2d 1237 (1997). Abuse of discretion is more than 

an error of law or judgment; it implies that the trial court's attitude was unreasonable, 

arbitrary, or unconscionable. Blakemore v. Blakemore, 5 Ohio St.3d 217, 219, 450 

N.E.2d 1140 (1983). 

{¶19} Cognovit judgments present special circumstances. Civ.R. 60(B)(5) 
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warrants relief from a judgment taken upon a cognovit note, without prior notice, 

when the movant (1) establishes a meritorious defense, (2) in a timely manner. 

Meyers v. McGuire, 80 Ohio App.3d 644, 646, 610 N.E.2d 542 (9th Dist.1992). A trial 

court abuses its discretion when, despite the existence of a valid defense, it overrules 

a timely motion to vacate a judgment entered without prior notice upon confession 

pursuant to a warrant of attorney. Id. at 647. 

{¶20} By executing a cognovit provision in a note and allowing a confession of 

judgment, the note’s maker waives his or her rights to notice and a prejudgment 

hearing. D.H. Overmyer Co., Inc. of Ohio v. Frick Co., 405 U.S. 174, 176-177, 92 

S.Ct. 775, 31 L.Ed.2d 124 (1972). For this reason, courts liberally permit collateral 

attacks on cognovit judgments. Meyers, 80 Ohio App.3d 644. The movant’s burden 

is somewhat lessened when the judgment was taken by confession on warrant of 

attorney without prior notice. Society Natl. Bank v. Val Halla Athletic Club & 

Recreation Ctr., Inc., 63 Ohio App.3d 413, 418, 579 N.E.2d 234 (9th Dist.1989). 

{¶21} A novation can be a meritorious defense on a cognovit judgment where 

sufficient operative facts alleging a novation are present. Cadillac Music Corp. v. 

Kristosik, 8th Dist. Nos. 92677, 92678, 2009-Ohio-5830, ¶16. 

{¶22} Novation requires an agreement between the creditor and his debtor 

that is meant to extinguish the old obligation by substituting a new party, a new 

obligation, or both. Fed. Land Bank of Louisville v. Taggart, 31 Ohio St.3d 8, 14, 508 

N.E.2d 152 (1987). The party asserting a novation must make a positive showing of 

such as a novation is never presumed. St. Elizabeth Hosp. Medical Center. v. 

Moliterno, 7th Dist. No. 89 C.A. 185 (Dec. 11, 1991). 

{¶23} In the present case, we must look to the terms of the various 

modifications and guarantees. 

{¶24} Both the first and second amendments to Note No. 34 contained the 

following language: 

CONTINUING VALIDITY. Except as expressly changed by this 

Agreement, the terms of the original obligation or obligations, including 
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all agreements evidenced or securing the obligation(s), remain 

unchanged and in full force and effect. * * * It is the intention of Lender 

to retain as liable parties all makers and endorsers of the original 

obligation(s), including accommodation parties, unless a party is 

expressly released by Lender in writing. 

(Emphasis added.) This language clearly indicates the parties’ intention that the 

personal guarantees signed by appellants were to remain in full force and effect 

despite the fact that the parties altered the terms of the loan. 

{¶25} The amendment to Note No. 67 did not contain the same provision as 

the one set out for Note No. 34. However, as to both Notes, there was no novation 

because the alteration of the loan amount and interest rate did not extinguish the old 

obligation. 

{¶26} In Society Nat. Bank v. Edmunds Management Co., 8th Dist. No. 

65280, 1994 WL 317831 (June 30, 1994), the appellate court upheld a confessed 

judgment against the guarantor even though the loan had been revised to increase 

the principal amount, change the interest rate, and reduce the monthly payments. 

And in Turtle Enterprises v. Liebowitz, 8th Dist. No. 59126, 1991 WL 204980 (Oct. 

10, 1991), the court found that the modification of the repayment terms did not 

constitute a novation because the modification merely modified the repayments terms 

and did not demonstrate an intention by the parties to substitute or discharge any 

parties liable for the debt. 

{¶27} “Mere modification of an original contract will not suffice in establishing 

novation. Anything that still remains in effect of the original obligation prevents 

novation unless the contrary is particularly expressed or shown by the evidence.” 

(Emphasis sic.) Parkway Business Plaza Ltd. Partnership v. Custom Zone, Inc., 8th 

Dist. No.87434, 2006-Ohio-5255, ¶22, quoting Braun v. Danter, 10th Dist. No. 74AP606, 1975 WL 181364 (May 20, 1975). In this case, there is no particular expression 

by the parties to create a novation or to not honor the terms of the original loans 

including the personal guarantees. 
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{¶28} Moreover, the personal guarantees themselves, to both Note No. 34 

and Note No. 67, expressly secure D&G’s indebtedness: 

The word “Indebtedness” as used in this Guaranty means all of the 

principal amount outstanding from time to time and at any one or more 

times, accrued unpaid interest thereon * * * arising from any and all 

debts, liabilities and obligations of every nature or form, now existing or 

hereafter arising or acquired, that Borrower individually or collectively or 

interchangeably with others, owes or will owe Lender. “Indebtedness” 

includes, without limitation, loans, advances, debts * * * other 

obligations, and liabilities of Borrower, and any present or future 

judgments against Borrower, future advances, loans or transactions 

that renew, extend, modify, refinance, consolidate, or substitute these 

debts, liabilities and obligations whether: * * * due or to become due by 

their terms or acceleration * * * primary or secondary in nature or arising 

from guaranty or surety * * * originated by Lender or another or others * 

* * and originated then reduced or extinguished and then afterwards 

increased or reinstated. 

(Emphasis added.) These guarantees specifically contemplate that the loan may be 

modified or replaced and that the guarantees will still apply. 

{¶29} Based on the above, the trial court did not abuse its discretion in finding 

that appellants failed to present a meritorious defense to the judgments against them. 

{¶30} Accordingly, appellants’ first assignment of error is without merit. 

{¶31} Appellants’ second assignment of error states: 

 THE COURT ERRED IN DENYING DEFENDANTSAPPELLANTS’ MOTION FOR ATTORNEY’S FEES DUE TO 

PLAINTIFF-APPELLEE’S FRIVOLOUS CONDUCT. 

{¶32} In this assignment of error, appellants contend that the trial court should 

have granted their motion for attorney fees. They assert that appellee engaged in 
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frivolous conduct by filing Case No. 2927. Doing so, appellants argue, caused 

unnecessary delay, wasted judicial resources, and increased litigation costs. They 

contend that because Case No. 2927 involved a cognovit judgment, they were 

unaware of it until after their counsel had already filed motions and an answer in 

Case No. 2398 on the very subject of Case No. 2927 (Note No. 67). Appellants 

assert that filing Case No. 2927 maliciously injured them by frustrating their ability to 

file an answer in Case No. 2398 where the cognovit judgment was already vacated 

and resulted in appellee obtaining a second cognovit judgment without their 

knowledge despite the fact that they had retained counsel and were actively engaged 

in defending Case No. 2398. They further point out that appellee obtained a cognovit 

judgment and garnishment order before their counsel became aware of Case No. 

2927. They contend that appellee’s conduct in doing so was particularly egregious 

because it knew appellants were contesting the judgment as to both Note Nos. 34 

and 67. At the least, appellants assert, the trial court should have held a hearing on 

the motion. 

{¶33} The standard of review on the issue of attorney fees is abuse of 

discretion. Motorists Mut. Ins. Co. v. Brandenburg, 72 Ohio St.3d 157, 160, 648 

N.E.2d 488 (1995). It is well-settled law that if there is no statutory provision for 

attorney fees, the prevailing party is not entitled to fees under the American rule 

unless the party against whom the fees are to be assessed is found to have acted in 

bad faith, vexatiously, wantonly, obdurately, or for oppressive reasons. Sharp v. 

Norfolk & W. Ry. Co., 72 Ohio St.3d 307, 314, 649 N.E.2d 1219 (1995), citing Sorin 

v. Warrensville Hts. School Dist. Bd. of Edn., 46 Ohio St.2d 177, 181, 347 N.E.2d 527 

(1976). 

{¶34} In this case, there is a statutory provision for attorney fees. R.C. 

2323.51(B)(1) permits the trial court to award reasonable attorney fees to a party 

“adversely affected by frivolous conduct.” “Frivolous conduct” includes conduct that 

“obviously serves merely to harass or maliciously injure another party to the civil 

action or appeal or is for another improper purpose, including, but not limited to, 

causing unnecessary delay or a needless increase in the cost of litigation.” R.C. 
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2323.51(A)(2)(a)(i). 

{¶35} As to R.C. 2323.51, the trial court found that nothing required appellee 

to bring its Note No. 67 claim in Case No. 2398. The court reasoned that appellee 

held two separate sets of loan documents pertaining to two separate and distinct 

loans. As such, appellee was free to file two separate complaints. The court went on 

to note that once it vacated its judgment entry as to Note No. 67 without prejudice, 

appellee was free to assert this claim in a separate action as if for the first time. 

Additionally, the court stated that even if appellee wanted to, it had no way to re-file 

or amend its complaint in Case No. 2398 because the case was closed by virtue of 

the final judgment entry entered, which remained final as to Note No. 34. 

{¶36} Although R.C. 2323.51 requires a trial court to hold a hearing before it 

grants a motion for attorney fees, the court is not required to hold a hearing when it 

determines, upon consideration of the motion and in its discretion, that the motion 

lacks merit. Bigelow v. Nguyen, 7th Dist. No. 08-CO-48, 2009-Ohio-3325, ¶24, citing 

Papadelis v. Makris, 8th Dist. No. 84046, 2004-Ohio-4093, ¶12. 

{¶37} In this case, the trial court did not abuse its discretion in denying 

appellants’ motion for attorney fees without holding a hearing. Firstly, the trial court 

was not required to hold a hearing. Secondly, the court gave a detailed, wellreasoned explanation as to why appellee did not violate R.C. 2323.51. And as the 

court found, Case No. 2398 was closed as it applied to Note No. 67. Appellee had 

no choice but to file a new complaint to assert its claim on that Note. 

{¶38} Accordingly, appellants’ second assignment of error is without merit. 

{¶39} For the reasons stated above, the trial court’s judgment is hereby 

affirmed. 

Waite. J., concurs. 

DeGenaro, P.J., concurs.