Court Opinion

ID: 4417938
Source: CourtListenerOpinion
Date Created: 2019-07-18 15:51:02.977985+00
Date Added: 2024-06-11T14:51:15.069028
License: Public Domain

[Cite as Am. Surface Solutions, L.L.C. v. N. Am., 2019-Ohio-2909.]

                              COURT OF APPEALS OF OHIO

                             EIGHTH APPELLATE DISTRICT
                                COUNTY OF CUYAHOGA

AMERICAN SURFACE SOLUTIONS,                            :
L.L.C.,
         Plaintiff-Appellee,                           :
                                                                     No. 107225
                 v.                                    :

NICHOLAS NORTH AMERICA,                                :
ET AL.,
         Defendants-Appellants.                        :

                               JOURNAL ENTRY AND OPINION

                 JUDGMENT: REVERSED AND REMANDED
                 RELEASED AND JOURNALIZED: July 18, 2019

            Civil Appeal from the Cuyahoga County Court of Common Pleas
                                Case No. CV-17-875451

                                            Appearances:

                 Bradley Hull, for appellee.

                 James Alexander, for appellant.

KATHLEEN ANN KEOUGH, J.:

                   Defendants-appellants, Nicholas North America (“North America”),

and SteepleJacks of America, L.L.C. (“SteepleJacks”) (collectively “appellants”),

appeal the trial court’s decision entering judgment against them and in favor of

plaintiff-appellee, American Surface Solutions, L.L.C. (“appellee” or “American
Surface”). For the reasons that follow, we reverse the trial court’s judgment and

remand for further proceedings.

              In February 6, 2017, American Surface, through its owner Justin

Morales (“Morales”), filed a complaint against appellants, Christopher Hardin,

American Surface Solutions Group, L.L.C., Network Solutions, L.L.C., and Citizens

Financial Group, a.k.a. Citizens Bank, raising causes of action for fraud, tortious

interference with business relations, negligence with willful and wanton

misconduct, negligence, civil theft, conversion, deceptive trade practices, unjust

enrichment, and fraud in the inducement. The complaint arises out of allegations

that Hardin, without authority, contracted and engaged in work under the guise of

American Surface, but retained all profits and incurred debts. It was alleged that

Hardin’s grandfather, North America, facilitated, perpetuated, and concealed

Hardin’s conduct by establishing a business similar in nature and name to that of

American Surface, and allowing Hardin to utilize North America’s business,

SteepleJacks, as his business operations. American Surface claimed that based on

appellants’ conduct, they were liable for expenses incurred from unpaid invoices and

work not being completed and damage to the business’s reputation.

              On the same day that the complaint was filed, American Surface

sought and obtained a temporary restraining order (“TRO”) against appellants,

including a restraint against bank accounts belonging solely to SteepleJacks.

Subsequently, in March 2017, the parties relevant to this appeal, reached an
agreement regarding the content of the TRO and it was dismissed; the TRO

remained in effect against Hardin.

              At the February 8, 2018 final pretrial, the trial court granted

appellants’ counsel’s oral motion to withdraw. The record reflects that at the hearing

the trial court warned appellants that a continuance of the February 28 trial would

not be granted. Moreover, the trial court advised that although North America could

represent himself, he could not represent SteepleJacks.

              Two days prior to trial, new counsel for appellants filed a notice of

appearance and also requested a continuance of trial. The motion to continue was

denied the following day. On February 28, the day of trial, appellants appeared with

counsel, who stated that his presence was for the limited purpose of seeking a

continuance. He indicated that he had been recently retained and was not prepared

to go forward with trial; he would need a continuance. The trial court noted that the

continuance was previously denied. It also stated on the record that North America

was advised at the final pretrial that no continuances of trial would be granted and

that he could not represent SteepleJacks during the proceedings. Because counsel

was unable to proceed and the continuance was denied, North America represented

himself pro se.

              Additionally, because SteepleJacks was not represented by counsel,

the trial court proceeded to conduct a “default” hearing against SteepleJacks.

Following the presentation of evidence, the trial court entered a general “default

judgment” in favor of American Surface and against SteepleJacks in the amount of
$72,066.61. The court held the determination of punitive damages in abeyance until

after the trial on the claims against North America.

              A jury was empaneled and American Surface’s claims solely against

North America were presented to the jury with the following testimony and

evidence.

              Morales testified that he owns “American Surface Solutions, L.L.C.,”

a rubber pour-in-place business, that was informally started in 2015. He officially

registered his business with the Ohio Secretary of State on May 5, 2016. According

to Morales, he created the name, logo, and graphics in 2015. He stated that he

created the name “American Surface Solutions” from his previous concrete company

named “Resurfacing Solutions.” He stated that he got into the field of rubber

resurfacing through his friend, Hardin, who used to be in the pour-in-place business

prior to Hardin’s incarceration for getting paid to do jobs, but not performing the

work. Hardin’s prior business was named “American Safety Surface.” According to

Morales, Hardin’s company went under due to Hardin’s conduct and Morales

thought he could help out his friend. Plaintiff’s exhibit No. 9 was an email sent in

February 2014 from Hardin’s email “americansurface@aol.com” to Morales asking

about whether he “ever look[ed] over my business and see what u wanna do? Busy

season starts in a week or two.”

              Morales testified that he believed that Hardin did not act in good faith

in attempting to generate business on behalf of American Surface. He stated that
they never agreed on distribution of profits and disagreed on “the cut” Hardin

should receive from jobs performed.

              In fact, Morales discovered in January 2017 that Hardin was doing

business under the guise of American Surface. Hardin created business cards and

letterhead with American Surface’s logo, but they did not contain any contact

information relating to American Surface — the address was that of SteepleJacks.

The business cards reflected that Hardin was the “owner/project manager” of

American Surface.

              Morales testified about a contract that was obtained through

discovery purportedly between American Surface and Fasting Enterprises, a

company in Washington D.C. The contract provided that the proposed start date

would be October 17, 2016, with an estimated finish date of December 17, 2016. The

contract was executed by “Chris Morales, V.P., American Surface Solutions.” The

contract was for $114,760. An accompanying letter provided that American Surface

has “been in business for 10 years.” Morales stated that this statement was not true

as to his company; only Hardin’s prior company would qualify. Additionally,

Morales stated that the references that were listed were not associated with

American Surface.

              Morales stated that he did not authorize the contract and that his

business did not receive any compensation from Hardin under this contract. Once

he discovered the existence of the contract, Morales had to take out a loan to correct

Hardin’s work and was damaged $7,000.
              Morales also testified about a job that Hardin contracted for and

partially completed at a children’s learning center in Indiana. Morales testified that

he became aware of the contract when the center’s coordinator contacted him and

advised him that the work was not completed, but that the money was paid. Based

on the information that he was provided, Morales testified that Hardin prepared an

estimate on March 31, 2016, for the center. The contract was signed by the center

on May 4, 2016, and by Hardin on May 10. It contained Hardin’s personal contact

information and a website “www.americansurfacesolutions.com, but was faxed

between the parties using SteepleJacks’ fax number. The contract provided for

removal of the existing wooden structure, the purchase and installation of new

playground equipment, and repair and resurface of an existing play area. The total

contract price was $68,120.

              Morales testified that the center issued two checks payable to

“American Surface Solutions.”      The checks were issued on May 5, 2016, and

September 30, 2016, in the amounts of $42,040 and $20,750, respectively and

endorsed by “American Surface Solutions.” According to bank records, the May

check was deposited into a Citizen’s Bank Account owned by “Nicholas North

America, d.b.a. American Surface Solutions.”       Morales testified that he never

received, endorsed, or deposited these checks.

              Morales also discovered at this time that he did not own the website

domain “www.americansurfacesolutions.com.”          According to Morales, Hardin

encouraged him to use the host company “Big Tuna” to set up a website. Morales
testified that he was paying for this service, but discovered that the domain name

“americansurfacesolutions.com” was registered to SteepleJacks on December 30,

2015. When he asked Hardin to change ownership of the domain name to him,

Hardin told him “nice try” and laughed it off. Accordingly, Morales was forced to

create a new website: “americansurfacesolutions.net.”

                Morales told the jury about negative reviews that American Surface

received on various web-based search engines. Both reviews warned about doing

business with American Surface and Hardin stating that money was paid, but no

work was ever performed.

                Morales gave testimony about a truck rental from Penske that he did

not authorize. According to Morales, he was contacted by Penske for an unpaid

balance of $2,276.61 for a truck rental to “American Surface Solutions.” Based on

the records he received through discovery, Morales stated that Hardin rented a

Penske truck on two occasions — May 17 and 23, 2016. The rental agreement noted

that the address for American Surface Solutions was the physical address of

SteepleJacks.    Morales stated that he did not pay the outstanding invoice —

$2,276.61 was still due and owing.

                Morales also testified about bank records received through discovery.

He stated that the Citizen’s Bank Account, owned by “Nicholas North America, d.b.a.

American Surface Solutions,” was opened on March 3, 2016, and closed in June

2016. He stated that he did not authorize this bank account to be opened. The

records show that the May check received from the Indiana learning center was
endorsed by American Surface Solutions and deposited into the account. According

to Morales, the records reveal that money was transferred between this account and

accounts owned by North America and SteepleJacks. Additionally, checks were

issued from this account payable to Hardin, cash, and other individuals. According

to Morales, the signatures on the signature line of the checks were the signatures of

“Nick America” and Hardin; no checks were endorsed by North America. Morales

denied that he ever authorized any deposits, transfers, or payments from this

account.

North America’s Role

              Morales testified that North America did not have any authority to act

on behalf of American Surface both before and after it was formally organized.

According to Morales, he sued SteepleJacks and North America because the money

that Hardin collected doing jobs under the guise of American Surface was deposited

into accounts that North America had control over, including the Citizens Bank

account, and Hardin used SteepleJacks’ business address and operations — the

business that North America owned.

              Morales further stated that through discovery he obtained a

handwritten document that indicated how Hardin and North America would split

the profits from American Surface Solutions. Morales indicated this was how

Hardin was going to “pay back” North America.
Damages

              Morales testified that he suffered damages in the amount of

$72,066.61 based on three separate incidents. First, he stated that $62,790 was paid

to “American Surface Solutions” from the Indiana learning center — the job was

performed under his company name, but not paid to his company. He stated that

he had to take out a loan to correct the job that Hardin contracted for with Fasting

Enterprises, but stated he only suffered damage in the amount of $7,000. Finally,

he stated that he suffered damages in the amount of $2,276.61 for the unpaid Penske

bill.

North America’s Testimony

              North America was called as a witness by American Surface on cross-

examination. He testified he was trying to help his grandson, Hardin, with a

business venture.   North America testified that he formed “American Surface

Solutions” in December 2015, which is when he admitted that he owned the domain

name “americansurfacesolutions.com” and that he did not give it to Hardin to turn

over to Morales even after North America was made aware of the situation. North

America testified that he formally established “American Surface Solutions Group”

with the Ohio Secretary of State for his grandson, who operated the business solely

on his own. North America stated that his grandson had 12-years of experience in

the rubber pour-in-place field and that his grandson previously ran a business —

“American Safety Surface” doing this type of work. He stated he set up the business
for his grandson who had just been released from jail. And because of Hardin’s

felony record, he could not get any money to open the business or bank accounts.

               North America stated that he know about Morales’s company,

American Surface in December 2015. He agreed that Morales did not authorize him

to create the business “American Surface Solutions Group” or do anything

associated with American Surface.        He further admitted that his company,

SteepleJacks, is not in the rubber pour-in place business.

               Morales rested his case pending admission of exhibits, which North

America did not object. After a prompt from the trial court, North America moved

for a directed verdict, which the court granted on the fraud in the inducement claim.

Additionally, plaintiff dismissed the civil theft claim. North America did not call any

witnesses, including himself.

Verdict

               The jury entered a unanimous general verdict in favor of American

Surface and against North America in the amount of $72,066.61. During the

punitive damages phase of the trial, the jury heard testimony from Morales. A

majority of the jury awarded punitive damages in favor of American Surface and

against North America in the amount of $20,000. A majority of the jury also found

that American Surface should be awarded attorney fees. The trial court then heard

testimony from Morales and Attorneys Bradley Hull and Janet Volle regarding

attorney fees. Following the testimony, the trial court modified the attorney fee

request and awarded attorney fees in favor of American Surface and against North
America and SteepleJacks in the amount of $19,855.50. The court order that the

attorney fees be paid jointly and severally by North America and SteepleJacks. The

trial court also ordered punitive damages in favor of American Surface and against

SteepleJacks in the amount of $20,000.

              Appellants now appeal, raising five assignments of error. Additional

relevant facts and procedural background will be discussed under the relevant

assignment of error.

              As a preliminary matter, American Surface contends that the appeal

should be dismissed as untimely. We disagree. On March 6, 2018, the trial court

entered final judgment, following the jury verdict. Appellants timely filed their

motion for a new trial on April 3, 2018, — 28 days following the judgment. See Civ.R.

59. The trial court denied the motion on April 25, 2018; the appeal was filed on May

23, 2018. Accordingly, the appeal was timely.

                       I. Temporary Restraining Order

              In their first assignment of error, appellants contends the trial court

erred in issuing a prejudicial temporary restraining order that prejudiced them.

Specifically, appellants contend that the motion seeking the restraining order was

not in compliance with Civ.R. 65(A) because it was issued without (1) notice; (2)

certification why the TRO should be issued without notice; (3) certification by the

attorney regarding the efforts made to notify appellants; and (4) posting a bond.

Appellee contends the motion was in compliance, but even if it was not, the issue is

moot because appellants ultimately agreed to the restraining order.
                Even if we would agree with appellants that the request seeking the

TRO was not in compliance with Civ.R. 65(A), the issue is moot. In this case, the

TRO expired on March 14, 2017, when the parties reached an “agreement,” whereby

the TRO was dismissed against North America, SteepleJacks, Network Solutions,

and Citizens Financial Group. Accordingly, once the TRO expired or was dismissed,

the controversy surrounding the order became moot. State ex rel. Celebrezze v. Bd.

of Cty. Commrs., 32 Ohio St.3d 24, 26, 512 N.E.2d 332 (1987), fn. 2 (injunction no

longer in effect when it expired upon the resolution of the case; the issue of its

propriety is moot); McClead v. McClead, 4th Dist. Washington No. 06CA67, 2007-

Ohio-4624, ¶ 14 (expiration of challenged order renders an appeal of that order

moot). “Issues are moot when they present no actual, genuine, live controversy, the

decision of which can definitely affect existing legal relations.” Kormanik v. Cooper,

195 Ohio App.3d 790, 2011-Ohio-5617, 961 N.E.2d 1187, ¶ 12 (10th Dist.).

                Even if the issue was not moot and a claim that a live controversy

exists based on the grant of the TRO, appellants have failed to demonstrate how they

were prejudiced or what damages they sustained as a result of the TRO being issued.

The general statement that the TRO “tied up the bank account for the business

enterprise” is insufficient to prove that they were damaged as a result of the TRO

being issued.

                Accordingly, the first assignment of error is overruled as moot.
                              II. Motion to Continue

               In their second assignment of error, appellants contend that the trial

court abused its discretion in failing to continue the trial.

               We review the decision to deny a motion to continue for an abuse of

discretion. Harmon v. Baldwin, 107 Ohio St.3d 232, 2005-Ohio-6264, 837 N.E.2d

1196, ¶ 15. Our review requires this court to apply a balancing test — weighing the

trial court’s interest in controlling its own docket and the public’s interest in the

prompt efficient dispatch of justice versus any potential prejudice to the moving

party. State v. Unger, 67 Ohio St.2d 65, 67, 423 N.E.2d 1078 (1981). The following

factors should be considered by a trial court when considering a motion for a

continuance: (1) the length of the delay requested; (2) whether other continuances

have been requested and received; (3) the inconvenience in litigants, witnesses,

opposing counsel, and the court; (4) whether the requested delay is for legitimate

reasons or whether it is dilatory, purposeful, or contrived; (5) whether the moving

party contributed to the circumstances that caused the request for a continuance;

(6) and other relevant factors depending on the circumstances of the case. See

Unger at 67-68.

               Moreover, because there are no “mechanical tests for deciding when

a denial of a continuance is so arbitrary as to violate due process * * * the answer

must be found in the circumstances present in every case, particularly the reasons

presented to the trial judge at the time the request is denied.” Unger at 67, quoting

Ungar v. Sarafite, 376 U.S. 575, 589, 84 S.Ct. 841, 11 L.Ed.2d 921 (1964).
               American Surface contends that the trial court did not abuse its

discretion because the motion for continuance was untimely pursuant to the court’s

local rules.   Moreover, it asserted that appellants proceeded with firing their

attorney at the final pretrial, despite being warned that (1) no continuance would be

granted (2) any new counsel would need to be prepared to go forward with trial

twenty days later, and (3) that if SteepleJacks did not have any attorney, it would be

in default and unable to defend itself.

               The record reveals that the trial court allowed appellants’ counsel to

withdraw at the final pretrial held on February 8. Whether the basis for counsel

withdrawing was because appellants fired their attorneys or whether this was a

voluntary attorney-client separation is unclear from the record; no transcript or

App.R. 9(C) statement has been submitted to this court revealing the exact

circumstances surrounding the withdraw. However, what we can discern from the

February 28 transcript and the arguments from the parties on appeal, that on

February 8, North America was apprised that no continuances would be granted and

he could not represent SteepleJacks at trial.

               Appellants contend that the trial court abused its discretion in

denying its request for a continuance because the Unger factors weighed in favor of

granting the continuance. In support of their argument, appellants cite to this

court’s decision in Swanson v. Swanson, 8th Dist. Cuyahoga No. 90472, 2008-

Ohio-4865.
              In Swanson, a mother appealed the trial court’s judgment that

designated the father the residential parent of the parties’ child. Twenty days before

trial, mother’s counsel filed a motion to withdraw, asserting that mother had fired

him. Twelve days before trial, the court permitted mother’s counsel to withdraw,

and six days before trial, mother filed a motion to continue because she was unable

to obtain substitute counsel. Mother stated in her motion to continue that “she had

made numerous attempts to hire counsel but her phone calls were not returned.”

Id. at ¶ 6. The trial court denied her motion “and forced the mother to proceed pro

se.” Id. Mother appealed and asserted that the trial court abused its discretion by

denying her motion to continue.

              This court found that “numerous factors weighed in favor of granting

a short continuance to allow the mother to obtain new counsel.” Id. at ¶ 15. This

court first observed that the case had been pending for approximately eight months,

the court had set the trial only three months before mother requested her

continuance, and she had not requested a prior continuance. This court noted that

"the mother requested the continuance solely to obtain new counsel" and not “to

delay the proceedings.” Id. at ¶ 16. Additionally, this court determined that a short

continuance would not have inconvenienced the parties, except for rescheduling.

This court further recognized that “the mother’s conduct of firing her attorney

contributed to the need for the continuance,” but stated that “this alone does not

warrant the denial of her motion.” Id. at ¶ 18. This court thus determined that “the
Unger factors weighed strongly toward granting the mother’s motion for a

continuance.” Id. at ¶19.

              We find Swanson persuasive. After reviewing the Unger factors, the

facts of the case, and the procedural history, we find that the trial court abused its

discretion in dying appellants’ motion for a continuance of trial.

              It was unreasonable for the trial court to assume that any counsel

appellants would have retained would be properly prepared to go forward with trial

in twenty days. This is a factor that a trial court must take into consideration in

determining whether to grant a motion to withdraw. Especially in light of the trial

court’s statement that it would not grant any continuance. Ohio courts have

repeatedly recognized that a trial court abuses its discretion when it allows an

attorney to withdraw from the case on or near the day of trial and then denies the

unrepresented party’s motion for a continuance. See, e.g., Griffin v. Lamberjack,

96 Ohio App.3d 257, 644 N.E.2d 1087 (6th Dist.1994).

              Moreover, much like in Swanson, the complaint was filed

approximately a year prior to trial, and much of the delay into case was attributed to

American Surface’s attempt to secure service on and maintain its case against

Hardin. At all times appellants were represented by counsel and defended the

action, including filing motions to compel discovery and filing a counterclaim.

              Additionally, the record reflects that appellants never requested a

continuance of trial. Moreover, the length of the requested continuance was a mere

thirty days to prepare for a case, that the trial court admitted was “document heavy.”
Finally, in counsel’s written motion for a continuance and oral request, it

determined that appellants had valid defenses to plaintiff’s complaint. The request

for the continuance was not for dilatory or frivolous purposes.

               Although it can be argued that appellants’ actions were the cause for

the continuance because of an allegation that they fired their counsel at the final

pretrial, the record does not reveal the nature for counsel orally requesting to

withdraw. And as this court noted in Swanson, the firing of counsel alone does not

warrant a denial of a motion to continue.

               Most importantly, once it was discovered that the principal

defendant, Hardin, had settled his case with plaintiffs on the eve of trial, without any

notification to appellants, the prejudice that this caused to appellants is apparent

based on the allegations in the complaint. This development was not disclosed until

the day of trial. Neither the trial court nor the appellants could have contemplated

this settlement at the time the trial court issued the blanket order on February 8 or

when it summarily denied appellants’ written motion for a continuance two days

prior to trial. This prejudice outweighed the trial court’s desire to control its docket

on a case that was only pending for approximately one year that involved multiple

defendants and complex causes of action. The Unger factors weighed in favor of a

continuance, which the trial court should have granted. It was unreasonable not to

do so.
                The second assignment of error is sustained. The judgments against

SteepleJacks and North America are vacated and the case is remanded to the trial

court for further proceedings.

                Having sustained the second assignment of error, the remaining

assignments of error challenging the individual judgments are hereby rendered

moot.

                Judgment reversed and remanded.

        It is ordered that appellants recover from appellee costs herein taxed.

        The court finds there were reasonable grounds for this appeal.

        It is ordered that a special mandate be sent to said court to carry this judgment

into execution.

        A certified copy of this entry shall constitute the mandate pursuant to Rule 27

of the Rules of Appellate Procedure.

KATHLEEN ANN KEOUGH, JUDGE

EILEEN T. GALLAGHER, P.J., CONCURS;
EILEEN A. GALLAGHER, J., DISSENTS WITH SEPARATE OPINION

EILEEN A. GALLAGHER, J., DISSENTING:

                I respectfully dissent from the opinion of my learned colleagues.

                I do not believe that the trial court abused its discretion in denying an

eleventh-hour motion for a trial continuance.
              This matter was originally filed on February 6, 2017 with active

motion and discovery practice by all parties. Trial commenced over one year later.

              It is the bailiwick of the trial court to schedule its docket. We know

not the reason that counsel withdrew their representation of defendant as the record

does not so reflect. We do know, however, that there were off-the-record discussions

with the court regarding same and that the court indicated at the time that there

would be no continuances of the trial and, therefore, if they chose new counsel, said

counsel would be required to proceed on the previously scheduled trial date.

              I would overrule this assignment of error.

              I do note that on March 2, 2018, the trial court entered a judgment of

default against defendant SteepleJacks of America, L.L.C., in the amount of

$72,066.61 plus statutory interest and attorney fees.

              Defendant SteepleJacks of America, L.L.C. was represented by

counsel and actively participated in motion practice including the filing of an answer

and counterclaim.      Therefore, pursuant to Civ.R.55, default judgment was

inappropriate. The trial court should have entered judgment based on an ex parte

trial.