[Cite as Le v. Li , 2019-Ohio-5269.]

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

THANH DINH LE Plaintiff-Appellant

v. SHAN GUI LI, et al. Defendants-Appellees : : : : : : : : : : Appellate Case No. 28274

Trial Court Case No. 2015-CV-2837 (Civil Appeal from Common Pleas Court)

. . . . . . . . . . . O P I N I O N Rendered on the 20th day of December, 2019.

. . . . . . . . . . . KEVIN A. BOWMAN, Atty. Reg. No. 0068223, 130 West Second Street , Suite 900, Dayton, Ohio 45402 Attorney for Plaintiff-Appellant MICHAEL WOLOSHIN, Atty. Reg. No. 0096420, 530 York Street, Newp ort, Kentucky 41071 Attorney for Defendants-Appellees

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

TUCKER, J.-2-

{¶ 1} Plaintiff-appellant, Thanh Dinh Le, appeals from the trial cour t’s judgment of December 24, 2018, in which the court adopted a magistrate’s de cision that had been entered on August 22, 2018. As the magistrate recommended, the court granted judgment in Le’s favor on his claims for breach of contract aga inst Defendants-appellees, Shan Gui Li and Chinh Van Luong; denied Le’s claim for declarat ory judgment against Appellees; and entered judgment in Appellees’ favor on their jo int counterclaim for breach of contract against Le. 1 Raising two assignments of error, Le argues that the court er red by awarding damages to Appellees on their counterclaim, and by refusing to award him the full amount of damages he sought on his claims for breach o f contract. For the following reasons, we find that the court did not err, and its judgment of December 24, 2018, is therefore affirmed. I. Facts and Procedural History {¶ 2} In 2006, Le and Appellees became interested in purchasing the g as station and convenience store located at 6430 Springfield-Xenia Road in Springfield, along with the corresponding parcel of real property. The gas station, th e convenience store and the land were owned at the time by LVH, Inc., which held a liqu or license in connection with the store. Apparently with their prospective purchase in mind, Le and Appellees incorporated LSV Company, Ltd. (“LSV”) on or about July 24, 200 6. {¶ 3} On September 5, 2006, LSV entered into a contract with LVH, Inc . whereby

1 The briefs indicate that Appellant’s surname is Le. Appellant ’s Brief 2, 5-10, 12-13 and 15-16; Appellees’ Brief 1; Appellant’s Reply Brief 1-4 and 6. We refer to Appellant likewise in this opinion.-3- the latter allowed LSV to manage the gas station and the store (together, the “Business”) in exchange for a payment of $52,000, plus the cost of the stor e’s existing inventory, and the assumption of several other obligations. The two entities were also parties to an independent agreement in which LSV’s payment of $52,000 was to be credited against the purchase price for the land and the Business. Subsequently , LSV delegated its management responsibility to a corporation formed by Appellees, Union Market Two, Inc. (“Union Market Two”). 2 {¶ 4} In turn, Union Market Two subsequently delegated management responsibility to Le in the “Man agement Agreement,” a contract executed on or about June 26, 2007, by Shan Gui Li, who signed on behalf of Union Ma rket Two, and by Le, who signed on behalf of “VLS Company, LLC.” 3 Le agreed to “be fully responsible for the operation of said business in accordance with all applicabl e federal, state and local laws,” and to indemnify Union Market Two against “all claims, d emands and causes of action for the violations [sic] of any such laws.” Union Marke t Two agreed that it would

2 Appellees incorporated Union Market Two on February 14, 2007. LSV’s delegation of management responsibility was apparently informal, but regardle ss, the parties did not enter a written agreement into the record. Similarly, the date on which LSV delegated its management responsibility to Union Market Two cannot be asc ertained from the record, though the magistrate determined from the parties’ tria l testimony that the delegation occurred “at some point between September 5, 2006[,] and July 1, 2007.” Magistrate’s Trial Decision 3, Aug. 22, 2018.

3 The magistrate stated that “VLS Company, LLC” is an “entity th at was never formally created under the laws of the State of Ohio.” Magistrate’s Tri al Decision 4. Assuming that VLS Company, LLC never existed as a matter of law, Union M arket Two effectively delegated management responsibility to Le himself as a sole pro prietor. The Ohio Secretary of State’s website, on the other hand, lists VLS Comp any, LLC, Entity No. 1628571, as a currently active, domestic limited liability corp oration that was incorporated on June 9, 2006, by Thanh Le.-4- “remain solely responsibl[e]” for “any bills, pending cause[s] of action or claim[s] that [might] have arisen prior to the date of [the Management] Agree ment[’s]” execution, and that as compensation for his services, Le would “receive the en tire profits” generated by the Business during the term of the agreement. {¶ 5} Later, on an unspecified date, Le and Appellees executed a cont ract entitled

“Letter of Intent to Purchase All the Shares of Stock of Union Market Two, Inc. and LSV Company, Ltd. for the Business Conducted at 6430 Springfield-Xe nia Road, Springfield, Ohio.” This contract required Le to pay “rent” directly to LVH , Inc. “in the amount of $3,500 per month” during “the term of the [M]anagement [A]greem ent.” 4 Additionally, Le agreed to pay Union Market Two, Inc. $54,198.96 for the Busines s’s “assets, inventory and good will,” with the majority of the price to be remitted i n monthly installments of $2,000; to pay Appellees $52,000, reflecting the amount LSV pai d to LVH, Inc. under the agreement of September 5, 2006; and to assume LSV’s liability f or “any [sic] promissory note and mortgage for the purchase of the real estate located a t 6430 Springfield-Xenia Road.” In return, Appellees agreed that “[u]pon closing” of th e sale of the land and the Business to LSV, they would “transfer and assign all their shar es of stock in Union Market Two, Inc. and LSV” and “resign their offices in [those] compani es.” 5

4 The agreement of September 5, 2006, between Union Market Two a nd LVH, Inc. required that the former assume the latter’s “ ‘monthly mortgag e obligation, together with escrow payments for real estate taxes and assessments and insur ance[,] in the amount of $3,456.07,’ ” though it did not include a provision expressl y requiring that Union Market Two pay “rent” to LVH, Inc. Magistrate’s Trial Decision 5, quo ting the agreement of September 5, 2006.

5 The letter of intent (LOI) did not specify the person or entit y to which Appellees were obligated to “transfer and assign all their shares of stock,” t hough the context implies that the parties intended for Le to be the recipient of the transfer

.-5- {¶ 6} Le assumed management of the Business on June 26, 2007. Therea fter, he failed to pay suppliers’ invoices, including those of the ga soline supplier, which stopped delivering in January 2008; failed to repair a broken g asoline pump, despite receiving insurance compensation for that purpose; and failed t o pay the Ohio Department of Taxation, leading to the suspension of the liquor license associated with the convenience store. On April 3, 2008, the owner of LVH, Inc . entered the convenience store and changed the locks, which prevented Le from continuing as manager and effectively terminated the Management Agreement. Nevertheless, the sale of the land and the Business by LVH, Inc. to LSV was closed on April 11, 20 08. Le not only attended the closing but gave Appellees a check for $12,000, without whi ch they would not have been able to pay the purchase price. Appellees afterward sold the land and the Business to a third party on August 20, 2009. {¶ 7} Le filed a complaint against Appellees on May 29, 2015, to whic h Appellees responded with an answer and a counterclaim. The case eventual ly proceeded to a bench trial before a magistrate that began on November 15, 2017 , and ended on January 31, 2018. On August 22, 2018, the magistrate entered a decisio n, and in its judgment of December 24, 2018, the trial court adopted the magistrate’s dec ision. Le timely appealed to this court on January 23, 2019. II. Analysis {¶ 8} Because they implicate the same standard of review, we address Le’s assignments of error together. For his first assignment of err or, Le contends that:

THE TRIAL COURT ERRED IN AWARDING DAMAGES TO THE APPELLEE [sic] ON THEIR COUNTERCLAIM.-6- And for his second assignment of error, Le contends that:

THE TRIAL COURT ERRED IN REFUSING TO AWARD DAMAGES

TO THE PLAINTIFF FOR LOST PROFITS. {¶ 9} The “standard of review following a civil bench trial is whethe r the trial court’s judgment [was] against the manifest weight of the evidence.” Downtime Rebuild, L.L.C. v. Trinity Logistics, Inc. , 2019-Ohio-1869, ___ N.E.3d ___, ¶ 12 (1st Dist.). As would b e true in a criminal case, an appellate court applying this stand ard must review the record; weigh the evidence and all reasonable inferences; consider the credibility of witnesses; and determine whether in resolving conflicts in the evidence, t he factfinder clearly lost its

way. Eastley v. Volkman , 132 Ohio St.3d 328, 2012-Ohio-2179, 972 N.E.2d 517, ¶ 12- 13 and 17; State v. Thompkins , 78 Ohio St.3d 380, 387, 678 N.E.2d 541 (1997); Bynum

v. Cotterman , 2d Dist. Montgomery No. 26222, 2015-Oho-617, ¶ 8, citing Eastley at ¶ 17. The appellate court’s consideration of the credibility of witne sses is limited because it “must defer to the factfinder’s decisions whether, and to what extent, to credit the testimony of particular witnesses,” but it nevertheless “may de termine which of several competing inferences suggested by the evidence should be prefer red.” See State v.

Cochrane , 2d Dist. Montgomery No. 27023, 2017-Ohio-216, ¶ 6; see also State v.

Anderson , 10th Dist. Franklin No. 14AP-1047, 2015-Ohio-4458, ¶ 17. {¶ 10} Though the appellate court should also be “guided by a presumpt ion that the [trial court’s] findings of [fact] were * * * correct,” it evaluates the trial court’s legal

conclusions de novo. Seasons Coal Co., Inc. v. City of Cleveland , 10 Ohio St.3d 77, 79- 80, 461 N.E.2d 1273 (1984); Castlebrook Apts. v. Ballard , 2d Dist. Montgomery No. 22421, 2008-Ohio-4633, ¶ 13. A trial court’s judgment should b e reversed “only in the-7- exceptional case in which the evidence weighs heavily against t he judgment.” (Citation omitted.) Bynum at ¶ 8. {¶ 11} Here, according to Le, the trial court found that Appellees had “materially breached both the LOI and the Management Agreement,” and based on that characterization of the court’s judgment, Le argues in his firs t assignment of error that the court erred by awarding damages to Appellees on their countercl aim for breach of contract. Appellant’s Brief 8-9. In Le’s estimation, the cour t thereby disregarded the general principle that “[o]nce there has been a material breach of [a] contract, * * * the breaching party is not entitled to collect damages from the non breaching party.” Appellant’s Brief 8-9; see also Hostetler v. Cent. Farm and Garden, Inc. , 5th Dist. Tuscarawas No. 2010 AP 23 0046, 2012-Ohio-507, ¶ 40. Le thus m ischaracterizes the content of the decision on appeal, and his argument is not well taken. {¶ 12} The trial court’s judgment indicated unmistakably that “[n]eith er the [m]agistrate nor [the] [c]ourt [itself] [found] that [Appellees ]’ breach of the [M]anagement [A]greement, based upon [Appellees’] failure to pay bills that arose before [the agreement was executed], was a material breach.” Final and Appealable De cision and Entry Overruling Plaintiff’s Objections to the Magistrate’s Decision 7, Dec. 24, 2018 [hereinafter Judgment Entry ]. Instead, the court concurred with the magistrate’s finding that Le and Appellees mutually—but not materially—breached the Management A greement. Judgment Entry 8. Having been adopted by the trial court, this finding of fact is entitled to considerable deference on appeal, given that the “determinat ion of whether a party’s breach of a contract was a ‘material breach’ is generally a que stion of fact.” O’Brien v.

Ohio State Univ. , 10th Dist. Franklin No. 06AP-946, 2007-Ohio-4833, ¶ 11.-8- {¶ 13} The magistrate, furthermore, determined that the Management Agr eement and the LOI were separate contracts. See Magistrate’s Trial Decision 15 (describing the subject of the Management Agreement and the subject of the LOI as “separate issues”). Implicitly, the trial court concurred, and Le has not formally challenged the determination on appeal. Judgment Entry 8 and 12; Appellant’s Brief 8-17. T herefore, irrespective of Appellees’ material breach of the LOI, the court’s decision to award damages to Appellees for Le’s breach of the Management Agreement did not contravene the general principle that “[o]nce there has been a material breach of [a] contract, * * * the breaching party is not entitled to collect damages from the nonbreaching party.” See Hostetler at ¶ 40. Neither of the parties materially breached the Management Agree ment. 6 Judgment Entry 7-8. {¶ 14} Deferring, as we must, to the court’s finding that neither Le n or Appellees materially breached the Management Agreement, we conclude that the court did not enter judgment contrary to the manifest weight of the evidence by awa rding damages to Appellees on their counterclaim for breach of contract. Le’s f irst assignment of error is

overruled.

6 Near the end of oral arguments, Le sugge sted that the trial co urt should have determined that the Management Agreement and the LOI were compo nents of a single contract memorialized as two documents. Yet, assuming for sake of analysis that the trial court had held that the two documents were a single contr act, Appellees’ material breach would not automatically have precluded their recovery ofdamages for Le’s nonmaterial breach. Although a “breaching party is not [ordinaril y] entitled to collect [contract] damages from [the] non-breaching party,” the “non-br eaching party is [nevertheless] not entitled to receive more than [he] would hav e absent the breach.” See, e.g. , Gray v. Petronelli , 11 Dist. Trumbull No. 2016-T-0030, 2017-Ohio-2601, ¶ 21 (referring to the measure of damages for breach of a constructi on contract). To prevent the non-breaching party from receiving a windfall, a court may award damages to the breaching party “on a quantum meruit basis.” See id.-9- {¶ 15} In his second assignment of error, Le insists that the “complet ely unrebutted” testimony of his expert witness, a certified public accountant, established without “question that [he] lost a profitable business” because Appellees breached the LOI, and based on that characterization of the record, he argue s that the trial court erred by denying him recovery for lost profits. Appellant’s Brief 11 -13. For purposes of appellate review, however, if the “evidence [adduced at trial] is susceptible to more than one interpretation, [the appellate court] must construe it cons istently with the [trial] court’s judgment,” and matters such as the “weight to be given the evid ence and the credibility of * * * witnesses are primarily for the trial court” to determ ine. See, e.g. , San Allen, Inc.

v. Buehrer , 2014-Ohio-2071, 11 N.E.3d 739, ¶ 89 (8th Dist.). {¶ 16} The trial court in the instant case conducted an independent re view of the transcript of the testimony offered before the magistrate by Le ’s expert witness, and it found that the witness’s “testimony was not credible.” Judgmen t Entry 9. Explaining its finding, the court noted among other things that the witness ca lculated the Business’s net profit to be $25,000 to $50,000 per month based on an outdated accounting record of a single month’s sales data; that the witness was unaware not onl y that Le had failed to pay certain bills for the Business, but also that the Business’s li quor license had been suspended during Le’s tenure as manager; 7 and that the witness could not account for

7 In his initial brief and again in his reply, Le states that “t he non-payments [sic] which resulted in the suspension were from before [sic] [he] began op erating the [Business] in July 2007.” Appellant’s Brief 17; Appellant’s Reply 2. The re cord appears to substantiate Le’s statement inasmuch the suspension resulted, a t least in part, from the failure of Le’s predecessors to timely pay certain sales tax as sessments that came due before Le’s term as manager began. Yet, the evidence also sugg ests that the suspension resulted from Le’s failure to timely pay tax assessm ents that came due during his term as manager, though the record has not been developed s ufficiently to permit a definitive apportionment of the fault for the suspension. Rega rdless of the apportionment-10- the discrepancy between the Business’s 2007 corporate tax retur n, which reported a net loss of $737, and her own calculations for the same year, which indicated a profit of approximately $248,000. Id. at 9-10. {¶ 17} As the trial court’s explanation illustrates, the testimony of Le’s expert witness hardly sufficed to establish without “question that [he ] lost a profitable business” because Appellees breached the LOI. Appellant’s Brief 12. Ess entially, Le takes issue with the court’s credibility determination, but “a difference o f opinion on [the] credibility of witnesses and evidence is not” an appropriate basis for appella te reversal of a trial court’s judgment. Seasons Coal Co. , 10 Ohio St.3d 77, 81, 461 N.E.2d 1273. Le’s second assignment of error is overruled.

III. Conclusion {¶ 18} We find that the trial court did not err by awarding damages to Appellees for Le’s non-material breach of the Management Agreement, despite A ppellees’ material breach of the LOI, because the Management Agreement and the LOI were separate contracts. Additionally, we find that Le has not demonstrated that the trial court erred as a matter of law by determining that he failed to prove his clai m for lost profits. Therefore, the trial court’s judgment of December 24, 2018, is affirmed.

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

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

of fault, the suspension of the liquor license should have been taken into consideration as part of any evaluation o f the Business’s profitability.-11-

Copies sent to:

Kevin A. Bowman Michael Woloshin Hon. Mary E. Montgomery