[Cite as Walsh v. Smith, 2014-Ohio-1451.]

 IN THE COURT OF APPEALS FOR MONTGOMERY COUNTY, OHIO 

JOHN T. WALSH : 

Plaintiff-Appellee : C.A. CASE NO. 25879 

v. : T.C. NO. 12CV8182 

TERRY L. SMITH, et al. : (Civil appeal from 

 Common Pleas Court) 

Defendants-Appellants : 

 : 

 . . . . . . . . . . 

O P I N I O N

Rendered on the 4th day of April , 2014. 

 . . . . . . . . . . 

RALPH A. SKILKEN, JR., Atty. Reg. No. 0006334, 10 W. Second Street, Suite 1100, 

Dayton, Ohio 45402 

Attorney for Plaintiff-Appellee 

GARY J. LEPPLA, Atty. Reg. No. 0017172 and PHILIP J. LEPPLA, Atty. Reg. No. 

0089075, 2100 S. Patterson Blvd., Dayton, Ohio 45409 

Attorneys for Defendants-Appellants 

 . . . . . . . . . . 

FROELICH, P.J. 

{¶ 1} Terry L. Smith and Jackass Flats, LLC appeal from an order of the 
2

Montgomery County Court of Common Pleas, granting John T. Walsh’s motion for the 

appointment of a receiver. 1

 For the following reasons, the trial court’s order will be 

affirmed. 

{¶ 2} Smith and Walsh jointly purchased the real property located at 6024 Rip Rap 

Road in Dayton; the property includes a house and a barn, which was remodeled to function 

as a bar and restaurant. The bar/restaurant on the property is operated by Jackass Flats, 

LLC, of which Smith and Walsh are both 50% members. The original concept for the 

business was an Australian-themed restaurant; it is currently operated as a “biker bar.” For 

several years, Smith has operated the business and Walsh has had limited involvement. 

{¶ 3} In November 2012, Walsh brought suit against Smith and Jackass Flats, 

LLC, asserting claims against Smith for breach of contract, promissory estoppel/unjust 

enrichment, tortious bad faith, fraud, and conversion. Walsh also claimed that he was 

entitled to judicial dissolution of Jackass Flats, LLC, and the appointment of a receiver. In 

August 2013, Walsh filed a motion for dissolution of the limited liability company and for 

appointment of a receiver. A hearing on the motion for a receiver was held on August 21 

and 22. On August 27, 2013, the trial court granted the motion for a receiver and appointed 

Matthew Sorg, an attorney, as the receiver. 

{¶ 4} Smith and Jackass Flats appeal from the trial court’s decision, raising three 

assignments of error. We will address their assignments in an order that facilitates our 

analysis. 

 1 In his appellate brief, Walsh asks this court to conduct a hearing to determine whether there were reasonable 

grounds for this appeal and for the two motions to stay the proceedings in the trial court. We find this appeal and the motions to 

stay to be reasonable. Walsh’s motion is denied. 
[Cite as Walsh v. Smith, 2014-Ohio-1451.]

I. Appointment of a Receiver

{¶ 5} Smith and Jackass Flats’s first and third assignments of error raise similar 

issues. They claim (1) that “[t]he trial court erred in appointing a receiver, notably in the 

absence of clear and convincing evidence of risk of irreparable loss or injury,” and (2) that 

“[t]he decision reached by the trial court in appointing a receiver constitutes an abuse of 

discretion.” 

{¶ 6} The authority to appoint a receiver is “an extraordinary, drastic and 

sometimes harsh power which equity possesses.” Crawford v. Hawes, 2d Dist. 

Montgomery No. 23209, 2010-Ohio-952, ¶ 33, quoting Hoiles v. Watkins, 117 Ohio St. 165, 

174, 157 N.E. 557 (1927). Due to the extreme nature of the remedy, the movant must 

demonstrate the need for a receiver by clear and convincing evidence. Id., citing Malloy v. 

Malloy Color Lab, Inc., 63 Ohio App.3d 434, 437, 579 N.E.2d 248 (10th Dist.1989). 

{¶ 7} The decision to appoint a receiver is within the trial court’s sound 

discretion. Id.; State ex rel. Celebrezze v. Gibbs, 60 Ohio St.3d 69, 73, 573 N.E.2d 62 

(1991). In exercising that discretion, the trial court generally should consider “all the 

circumstances and facts of the case, the presence of conditions and grounds justifying the 

relief, the ends of justice, the rights of all the parties interested in the controversy and subject 

matter, and the adequacy and effectiveness of other remedies.” Gibbs at 73, fn.3, quoting 65 

American Jurisprudence 2d (1972) 873, 874, Receivers, Sections 19, 20; Hawes at ¶ 33. 

Absent an abuse of discretion, an appellate court will not reverse a decision on whether to 

appoint a receiver. Id. A trial court abuses its discretion when it makes a decision that is 

unreasonable, arbitrary, or unconscionable. JPMorgan Chase Bank, N.A. v. Taylor, 2d Dist. 

Montgomery No. 25568, 2013-Ohio-2760, ¶ 6, citing Blakemore v. Blakemore, 5 Ohio St.3d 
4

217, 219, 450 N.E.2d 1140 (1983). 

{¶ 8} R.C. 2735.01, which governs the appointment of receivers, provides that a 

receiver may be appointed by the court of common pleas or a judge thereof in his or her 

county, in the following cases: 

(A) In an action by a vendor to vacate a fraudulent purchase of property, or by 

a creditor to subject project or a fund to his claim, or between partners or 

others jointly owning or interested in any property or fund, on the application 

of the plaintiff, or of a party whose right to or interest in the property or fund, 

or the proceeds thereof, is probable, and when it is shown that the property or 

fund is in danger of being lost, removed, or materially injured[.] 

{¶ 9} The trial court’s decision thoroughly summarized the evidence at the hearing 

on Walsh’s motion for the appointment of a receiver and made findings of fact, as follows: 

Defendant, Terry Smith, testified that, prior to the time Jackass Flats, 

LLC, was established, he had been in the concession business for over 

eighteen years. He and Plaintiff, John Walsh, individually purchased the real 

property located at 6024 Rip Rap Road, Dayton, Ohio. When the operation 

of the bar/restaurant began at the Rip Rap Road property in February, 2003, 

Smith determined the salary he would be paid without consulting with Walsh. 

 The parties originally agreed to operate an Australian-themed bar/restaurant, 

but Smith made the unilateral decision to change the concept of the 

establishment sometime after it was opened. Over time the bar/restaurant 

has become what was described at the oral hearing as a “biker bar.” Smith 
5

testified that he does not believe that Walsh is a 50% owner of Jackass Flats, 

LLC, despite the fact that the tax returns, prepared at Smith’s direction, list 

Walsh as a 50% owner. Smith admitted that he unilaterally made the 

decision to tear down an existing structure on the property, despite the fact 

that he knew Walsh did not want the building torn down. Smith testified 

that, essentially, he knew more than Walsh so he made the decision to tear 

down the building. He paid for the new building with “existing funds” and 

some equity loans. He admitted that Jackass Flats, LLC, has never paid any 

rent to him or Walsh. The company currently operates without an operating 

agreement. Smith is willing to sign a lease for the property but is not willing 

to sign an operating agreement. Smith acknowledged that the liquor license 

for the business is in his name, but it was placed in his name because he 

previously had held a liquor license and had finger prints and a background 

check on file, so it was more convenient for him to obtain the liquor license. 

Smith acknowledged that he paid the cost of the initial application and 

license, but each renewal of the license has been paid for from funds of 

Jackass Flats, LLC. 

Smith admitted that Jackass Flats, LLC does not have liability 

insurance, nor any insurance of any nature. Smith believes that Walsh 

“abandoned the place” after he moved out of the home on the property. 

Smith admitted that Walsh did not like the noise from the bar. He claims 

that Plaintiff has not asked for any documents associated with the business 
6

nor has he taken an interest in the business. Smith testified that he has 

chosen to use the profits from the business to pay off the equity loans. 

However, no evidence was introduced at the oral hearing regarding any 

payments made on the equity loans. Smith claimed that Plaintiff previously 

had access to the bank accounts of the business but he stated that he noticed 

that Plaintiff was changing the passwords on the bank account so he closed 

the operating and other accounts and moved the accounts to banks where 

Plaintiff would not have access to the accounts. Smith testified that he does 

not have the daily cash sheets for 2012, except December and he no longer 

keeps the daily cash sheets after the information recorded in the computer on 

the record sent to the accountant. 

John Walsh testified that he and Smith each paid approximately 

$75,000 to purchase the real property from American Aggregates. Prior to 

the time that Smith tore down the existing structure on the property, they had 

not discussed tearing the building down. Walsh was out of town when the 

building was torn down. Walsh has not received any rent for the property 

since October, 2007. He also testified that Smith does not consult with him 

regarding business decisions or the operation of the bar. Walsh believes that 

he was barred from the business by Smith approximately five years ago. 

Walsh has requested daily cash sheets and other documents from Smith, who 

has not provided them to Walsh. [Smith] told [Walsh] in 2012 that the daily 

cash sheets blew away in a wind storm and also told Walsh that the records 
7

had been eaten by mice. Without his consent, Smith instituted “bike nights,” 

where many motorcycle riders congregate at the bar. Walsh does not agree 

with the bar/restaurant catering to bikers, although the highest grossing sales 

night each week is “bike night.” Unfortunately, the daily cash sheets from 

2005 and 2006 that have been provided to Walsh demonstrate that the daily 

cash sheets and the information provided to the accountants do not match up 

in some instances, resulting in substantial under-reporting of income. Walsh 

has known there was no insurance on the property since 2003 and attempted 

to obtain insurance, but was turned down because Smith would not cooperate 

in obtaining insurance. Sometime in 2007 or 2008 Smith changed the 

password on all of the bank accounts and moved the accounts to different 

financial institutions. Thereafter, Walsh had no access to any financial 

information for the business other than that which was provided through this 

litigation. 

The tax returns prepared at the direction of Terry Smith and 

presumably filed with the Internal Revenue Service, reveal gross receipts and 

ordinary business income as follows: 

YEAR GROSS RECEIPTS ORDINARY INCOME 

 2006 $867,998.00 $116,486.00 

2007 $1,024,986.00 $41,430.00 

2008 $927,783.00 $34,864.00 

2009 $824,344.00 -$37,693.00 
8

 2010 $788,833.00 $30,735.00 

2011 $642,307.00 -$26,731.00 

Between 2006 and 2011, Smith unilaterally paid himself as “Compensation of 

officers” the following amounts: 

2006 $76,600.00 

2007 $71,700.00 

2008 $79,200.00 

2009 $76,800.00 

 2010 $61,200.00 

2011 $56,800.00 

Despite being president of the LLC, Walsh was not paid anything during the 

aforementioned years as “compensation.” He has received only one 

distribution from the company as profits in 2006 in the sum of $47,000.00. 

Smith received a like amount. 

Beth Aker also testified at the oral hearing. She worked at Jackass 

Flats, LLC from 2003 until 2006 as a bartender, she prepared the books and 

did inventory and ordering. She has a background in accounting and worked 

in accounting and finance at Wright Patterson Air Force Base for over eleven 

years. After reviewing financial information for parts of 2005 and 2006, she 

concluded that there was under reporting of income from the business by 

Smith to the accountants for the business in the following amounts: 

September 2005 $16,120.00 
9

October 2005 $12,151.81 

June 2006 $6,940.66 

 The most significant discrepancies occurred on Wednesdays, which are 

known as “bike nights” at Jackass Flats. 

Aker testified that at some point prior to the time she left the 

employment of Jackass Flats, Smith was out of town for an extended period 

of time and during that time she reported income to the accountants. Upon 

his return when Smith learned that she had sent complete, unedited 

information to the accountants, he fired her. Smith claims to have fired Aker 

because he believed she was drinking on the job. Smith claims that the 

discrepancies in the daily sheets and the amounts reported to the accountant 

are as a result of the manager of the business, Jeff, “not knowing how to use a 

computer” and Jeff did not record cash payouts correctly. 

The court finds the testimony of Defendant Smith to be lacking in 

credibility. It is too coincidental that the days on which there are 

discrepancies in the recorded sales are also “bike nights,” when large amounts 

of cash come into the business. Smith has exercised sole discretion and 

authority over the business, despite the fact that he and Walsh are equal 

owners of the business and the real property. Furthermore, Smith’s 

testimony revealed that he practiced rather lax methods of accounting and 

management and does not embrace Walsh’s equal right to decision making, 

access to records and the business nor ownership in the business. 
[Cite as Walsh v. Smith, 2014-Ohio-1451.]

The court finds that Plaintiff has proven by clear and convincing 

evidence that property of the limited liability corporation is in danger of being 

lost, removed, or materially injured as a result of the actions and inactions of 

Defendant, Terry Smith. The facts presented bear some resemblance to 

those confronting the court in Kunkle v. Kunkle, [6th Dist. Fulton No. 

F-07-034,] 2008-Ohio-5804, where partners, who also happened to be family 

members, disposed of business property and spent funds without the 

authorization of the partnership. While neither party in this action provided 

the court with a copy of the LLC agreement, and while Defendant testified 

that he was the owner of the business, the tax returns for 2006 through 2011, 

prepared at the direction of Defendant, list John Walsh and Terry Smith each 

as 50% owners of the entity known as Jackass Flats, LLC. Despite their equal 

ownership, Defendant acknowledged that he has set his own salary, without 

consulting with Plaintiff. Defendant admitted that despite the substantial 

receipts of the business, he has not insured the property or the business. 

Given that the limited liability corporation operates a bar and maintains 

kitchen equipment, it is concerning that the Defendant has made the 

conscious decision not to insure the premises or business. Unlike in 

Crawford v. Hawes, [2d Dist. Montgomery No. 23209,] 2010-Ohio-952, 

where there was no evidence that insurance was not maintained, here, 

Defendant acknowledged that the premises and business were not currently 

insured, and had not been insured for some time. Furthermore, the 

accounting and financial records maintained by Defendant show either 
11

mismanagement or potentially theft. Substantial discrepancies exist between 

daily cash sheets and income reported to the accountant for tax and other 

purposes. Plaintiff has not realized any income from the business in over six 

years, despite the fact that the business has been profitable in all but two of 

those years. While Defendant maintains that records were thrown away after 

they were damaged in a storm, Plaintiff submitted records that he has been 

provided from 2005 and 2006 which detail substantial underreporting of 

income. Plaintiff’s delay in commencing this action and in requesting a 

receiver does not obviate the need for a receiver to protect the assets of the 

limited liability company, nor does it countenance Defendant’s continued 

behavior in effectively excluding Plaintiff from the business. Even though 

Defendant has begun sharing some information with Plaintiff, that limited 

cooperation is very recent and does not resolve the ongoing, pervasive 

conflict over this business and the need to protect the business assets from 

loss. 

{¶ 10} Smith and Jackass Flats claim that the trial court’s decision was not 

supported by clear and convincing evidence and was an abuse of discretion, because Smith 

“was a capable and effective manager” of Jackass Flats and Walsh’s complaints concerned 

access to the building and business records. They assert that Jackass Flats was operating at 

a profit and that “there was no evidence that money or profits are in danger of being lost, 

removed or materially injured in the operation of Jackass Flats, LLC.” Smith and Jackass 

Flats argue that, contrary to the trial court’s findings, the facts in this case are analogous to 
12

Crawford v. Hawes, 2d Dist. Montgomery No. 23209, 2010-Ohio-952. 

{¶ 11} In Crawford, a part-owner of a bar brought suit against his partner for breach 

of contract and other claims after his employment at the bar was terminated and he was 

barred from the business. The bar had been open for two months when the complaint was 

filed. The plaintiff sought the appointment of a receiver, and the motion was granted. We 

reversed the trial court’s decision, concluding that the plaintiff had presented evidence of his 

financial interest in the property, but failed to demonstrate any danger to the business’s 

profits or money. We stated: 

The record of the receivership hearing establishes that Crawford [the 

plaintiff] presented no evidence, other than his unsubstantiated allegations, 

that [defendants] were stealing money from the bar. Contrary to Crawford’s 

assertions, [defendant] presented evidence at the hearing which demonstrated 

that the bar’s financial records were being kept by an accountant. Evidence 

was also adduced which established that the taxes and insurance on the bar 

were current, and all of the bar’s employees’ salaries were also being paid on 

time. [Defendant’s] testimony suggests that the bar was an ongoing, solvent 

business. Crawford failed to establish that any monies or profits generated 

by the bar were “in danger of being lost, removed, or materially injured.” As 

movant, Crawford failed to establish by clear and convincing evidence his 

right to have a receiver appointed. 

Crawford at ¶ 65. 

{¶ 12} The evidence at the hearing on Walsh’s motion reflects that Jackass Flats 
13

operated at a profit for most years, as Smith asserts. However, the evidence further 

indicated that Smith determined his own salary without consulting with Walsh, and in 2009 

and 2011, Jackass Flats operated at a loss, whereas Smith’s income was $76,800.00 and 

$56,800.00, respectively. In addition, despite the fact that Jackass Flats had net income for 

several years, Walsh received only one distribution from the company. Smith testified that 

he used Smith Denlinger as the business’s accountant, and that he provided financial 

information to the accountant. However, Walsh provided evidence that there were 

occasions where the daily sales amounts reported to the accountant were less than the 

amounts actually collected at Jackass Flats; these typically occurred on “bike night,” when 

cash receipts were higher. Two income tax returns were not timely filed. Moreover, Smith 

admitted that he had not obtained liability insurance for the bar/restaurant, and Walsh stated 

that he was unable to obtain insurance for Jackass Flats without Smith’s cooperation. Lack 

of insurance creates a danger of loss or material injury to the business should any 

catastrophic event, such as a fire or personal injury, occur on the premises. 

{¶ 13} Given the facts of this case, we find Crawford to be distinguishable. 

Walsh presented clear and convincing evidence to support his motion to have a receiver 

appointed, and the trial court did not abuse its discretion in granting the motion for the 

appointment of a receiver. 

{¶ 14} Smith and Jackass Flats’s first and third assignment of error are overruled. 

II. Admissibility of Evidence

{¶ 15} Smith and Jackass Flats’s second assignment of error claims that the trial 

court “erred in admitting, considering, and relying upon inadmissible evidence.” 
14

{¶ 16} The decision whether to admit or exclude evidence is within the sound 

discretion of the trial court, and “unless the trial court clearly abused its discretion and a 

party was materially prejudiced as a result, reviewing courts should be slow to interfere.” 

King v. Niswonger, 2d Dist. Darke No. 2013-CA-1, 2014-Ohio-859, ¶ 12, quoting Waste 

Mgt. of Ohio, Inc. v. Mid-America Tire, Inc., 113 Ohio App.3d 529, 533, 681 N.E.2d 492 

(2d Dist.1996). 

{¶ 17} And, a judge conducting a bench trial is given considerable latitude on 

procedure and evidentiary matters. State v. Blevins, 2d Dist. Montgomery No. 24006, 

2011-Ohio-381, ¶ 34, citing Baker v. Fickert, 2d Dist. Miami No. 95-CA-21, 1995 WL 

545368 (Sept. 13, 1995) and Harold v. Joyner, 2d Dist. Montgomery No. 19137, 

2002-Ohio-3808, ¶ 11. See also State v. Blanton, 111 Ohio App. 111, 119, 170 N.E.2d 754 

(4th Dist.1960)(“The law in Ohio is very clear that the rules as to the admission or exclusion 

of evidence are different when a case is being tried without a jury or by a three-judge court 

sitting as both judge and jury.”) Without some affirmative indication in the record to the 

contrary, an appellate court presumes that a trial court considers only relevant and competent 

evidence. Blevins at ¶ 34, citing State v. Sieng, 2d Dist. Clark No. 2003 CA 35, 

2003-Ohio-7246, ¶ 32. 

{¶ 18} Smith first raises the following exchange during Walsh’s testimony on direct 

examination: 

Q. All right. And if you did not have a discussion with Mr. Smith about 

removing this building, what were the circumstances that he could do that 

without discussing it with you? 
15

A. Like I mentioned previously, I have a full-time occupation and during an 

absence on business, he unilaterally demolished the building, and he was 

known to remark to his cronies, when I heard when I came back – 

[Smith’s counsel]: Objection. 

[Walsh]: Saying that, “he’s going to be mad.” 

THE COURT: Overruled. Go ahead, sir. 

[Smith’s counsel]: Your Honor, I seriously object. 

THE COURT: It’s – there’s no jury here. I understand the animosity between the 

two parties. I can listen through that and hear the facts. Go ahead. 

The trial court’s response to counsel’s second objection reflects that the trial court would not 

consider the specific negative characterizations and any improper portion of Walsh’s answer. 

{¶ 19} Counsel for Smith later objected to Walsh’s testimony regarding Exhibit 9, 

which consisted of a spreadsheet used by Jackass Flats to report sales for September 2005, 

daily cash sheets for each day of September, and a handwritten summary page comparing the 

total receipts on the spreadsheet versus the daily cash sheets. The handwritten summary 

page was prepared at Walsh’s request by Beth Aker, a former employee of Jackass Flats. 

Counsel objected to Walsh’s testimony regarding the exhibit, stating first that Walsh did not 

understand the forms and, second, that Walsh did not prepare the summary page. The trial 

court overruled the objections. 

{¶ 20} As to counsel’s first objection, Walsh testified that he recognized the form 

and the daily cash sheets as documents typically used by Jackass Flats. Smith had 

previously testified that the spreadsheet and daily cash sheets were business records of 
16

Jackass Flats. The summary page merely took information from the spreadsheet and daily 

cash sheets so that there was a clear comparison of the total receipts as reported on the 

different forms. The information on the summary page was readily available to the court 

from the other documents contained in the exhibit. Moreover, even assuming that Walsh 

should not have testified about the summary sheet, former employee Beth Aker later testified 

that she prepared the summary page from the spreadsheets and daily cash sheets, which were 

business records of Jackass Flats. The trial court did not abuse its discretion in admitting 

the evidence. 

{¶ 21} Walsh subsequently testified about the spreadsheet, daily cash reports, and a 

handwritten summary comparison page contained in Exhibits 10 and 11, which concerned 

October 2005 and June 2006, respectively. Smith’s counsel again objected to Walsh’s 

testimony regarding the summary comparison page. For the reasons stated above, we find 

no abuse of discretion in the trial court’s consideration of these pages. 

{¶ 22} Smith next complains that the trial court allowed Walsh to testify that he 

“had a good idea” that sales were being under-reported. There is no indication that the trial 

court relied on Walsh’s testimony; rather, the trial court had before it the monthly 

spreadsheet and the daily cash reports, both business records of Jackass Flats, from which it 

could reach that conclusion. 

{¶ 23} Finally, Smith and Jackass Flats claim that the trial court relied on 

inadmissible evidence to conclude that Smith received a distribution of approximately 

$47,000 through two checks. Smith testified that, in 2007, he and Walsh each received two 

checks totaling approximately $47,000. Smith stated that Walsh cashed both of his 
17

(Walsh’s) checks; Smith, on the other hand, cashed one check but was unable to cash the 

second check of $23,473. Smith explained that there was not enough money in the bank 

account to cash it. 

{¶ 24} Walsh presented, as Exhibit 13, a letter dated September 8, 2008, from 

Smith’s former counsel to Walsh’s counsel, which stated, “As you know, your client took 

close to $47,000 at a time when he shouldn’t have based on what we believe was his claim 

to the 2006 profits. Mr. Smith has recently cashed his check so that both parties have taken 

approximately $47,000.” Smith testified that the statement in the letter about Smith’s 

cashing the check was incorrect. However, the letter was admitted into evidence without 

objection. 

{¶ 25} We find no abuse of discretion in the trial court’s admission of evidence in 

this case. In addition, we find no indication that the trial court relied upon inadmissible 

evidence, to the prejudice of Smith. The second assignment of error is overruled. 

III. Conclusion

{¶ 26} The trial court’s judgment will be affirmed. 

 . . . . . . . . . . 

HALL, J. and WELBAUM, J., concur. 

Copies mailed to: 

Ralph A. Skilken, Jr. 

Gary J. Leppla 

Philip J. Leppla 

Hon. Mary Katherine Huffman