Court Opinion

ID: 9893288
Source: CourtListenerOpinion
Date Created: 2023-10-26 16:11:38.287897+00
Date Added: 2024-06-11T09:00:52.150221
License: Public Domain

[Cite as VMI Group, Inc. v. Capstone Constr. Co., L.L.C., 2023-Ohio-3882.]

                              COURT OF APPEALS OF OHIO

                             EIGHTH APPELLATE DISTRICT
                                COUNTY OF CUYAHOGA

COMPANY, INC., ET AL.,                                 :

                Plaintiffs-Appellants/                 :
                Cross-Appellees,
                                                       :                     No. 112539
                v.
                                                       :
CAPSTONE CONSTRUCTION
COMPANY, LLC, ET AL.,                                  :

                Defendants-Appellees/                  :
                Cross-Appellants.

                               JOURNAL ENTRY AND OPINION

                JUDGMENT: AFFIRMED IN PART; REVERSED IN PART;
                          AND REMANDED
                RELEASED AND JOURNALIZED: October 26, 2023

            Civil Appeal from the Cuyahoga County Court of Common Pleas
                      Case Nos. CV-19-916265 and CV-19-925091

                                            Appearances:

                FRANTZ WARD LLP, Melissa A. Jones, and Mark L.
                Rodio, for appellant VMI Group, Inc.

                DINN, HOCHMAN & POTTER, LLC, and Steven B.
                Potter, for appellee Progressive Broadview Heights Real
                Estate, LLC.

                BROUSE MCDOWELL LPA, James T. Dixon, Tyler B.
                Schlimme, and Teresa G. Santin, for appellee New
                Wembley, LLC dba the Wembley Club.
FRANK DANIEL CELEBREZZE, III, J.:

             Appellant VMI Group, Inc. (“VMI”), challenges the decision of the

Cuyahoga County Court of Common Pleas finding that defendant Capstone

Construction Company, LLC (“Capstone”), was available for judgment and

consequently dismissing VMI’s unjust enrichment claims against appellee/cross-

appellant Progressive Broadview Heights Real Estate (“Progressive”) and appellee

New Wembley, LLC dba the Wembley Club (“New Wembley”).

             Progressive filed a cross-appeal asserting that the trial court erred in

failing to allow it the opportunity to object or seek modification to the magistrate’s

decision and in failing to grant Progressive relief from judgment under Civ.R.

60(B)(1) or (5).

             After a thorough review of the applicable law and facts, we reverse in

part, affirm in part, and remand this matter to the trial court for further proceedings

consistent with this opinion.

                       I. Factual and Procedural History

             This matter involves two different construction projects and a number

of parties with competing claims, counterclaims, and cross-claims, many of which

were resolved prior to trial. Because the underlying facts of this matter are not in

dispute, and in the interest of clarity, we will confine our recitation of the facts to

only those relevant to the narrow issues in this appeal.

             In May 2016, Progressive, as owner of certain real property, entered

into a contract with Capstone, as general contractor, to build a skilled nursing facility
in Broadview Heights, Ohio (“Progressive Project”). Capstone contracted with VMI

(among a number of other subcontractors) for VMI to provide concrete work for the

project.

             In August 2016, New Wembley contracted with Capstone for Capstone

to serve as prime contractor for construction of a tennis club facility (“New Wembley

Project”).   Capstone again subcontracted with VMI, among numerous other

subcontractors, for certain services on the project.

             VMI completed its work on both projects, but did not receive the

agreed-upon payment. VMI then commenced suit for breach of contract against

Capstone and asserted an unjust-enrichment claim against Progressive for the

Progressive Project. In addition, VMI sued Capstone for breach of contract relating

to the New Wembley Project and also asserted an unjust-enrichment claim against

New Wembley.

             A bench trial was held before a magistrate. VMI argued at trial that

Capstone was not “available for judgment” because it was no longer operational and

that its net worth had been determined to be $0.00 in the bankruptcy proceeding of

one of its owners.

             The magistrate issued a decision finding that Capstone was available

for judgment since it had not filed for bankruptcy, had remained a party to this

lawsuit, and had pursued Progressive for the same money that VMI was seeking on

its unjust-enrichment claim.
              The magistrate awarded VMI over $200,000 in damages against

Capstone.    The magistrate dismissed VMI’s unjust-enrichment claims against

Progressive and New Wembley.

             The magistrate also issued a decision finding in favor of Progressive on

its counterclaim against Capstone and awarded over $1.7 million in damages. The

magistrate denied Capstone’s claims against subcontractors, finding that these

claims had been resolved by Progressive and dismissed with prejudice.

              VMI and Capstone each filed objections to the magistrate’s decisions,

which were overruled by the trial court. Progressive asserts that it was not served

with the magistrate’s decisions or VMI’s objections and Capstone’s objections and

filed a motion for leave to file a response to VMI’s objections. The trial court held

the motion in abeyance pending the resolution of VMI’s appeal.

              VMI appealed the court’s order overruling the objections, but the

appeal was dismissed for lack of a final appealable order because there were still

pending claims.

              On remand, the trial court entered an order requiring certain parties

to submit either notices of dismissal, if their claims had been resolved, or notices of

intent to proceed, if their claims were still pending. Progressive maintains that it

was not served with this order.

              The trial court then issued a nunc pro tunc entry, adding Civ.R. 54(B)

language to its journal entry adopting the magistrate’s decision and overruling

VMI’s objections and Capstone’s objections. With regard to VMI’s objection about
the magistrate’s finding that Capstone was available for judgment, the court stated

as follows:

      The Court overrules VMI’s Objection concerning the dismissal of its
      unjust enrichment claims against Progressive and New Wembley. The
      Magistrate properly determined that Capstone, the general contractor
      for the projects at properties owned by Progressive and New Wembley,
      was available for judgment. A subcontractor must prove that a general
      contractor is unavailable for judgment before pursuing a property
      owner for amounts owed to the subcontractor through an unjust
      enrichment claim. Booher Carpet Sales, Inc. v. Erickson, 2nd Dist.
      App. No. 98-CA-0007, 1998 Ohio App. LEXIS 4643 (Oct. 2, 1998).
      Further, courts at both the state and federal level in Ohio have held that
      where a case record does not indicate that a general contractor has filed
      for bankruptcy and remains a party to a case involving an unjust
      enrichment claim against the owner of a property, the general
      contractor is available for judgment and the unjust enrichment claim
      against the property owner cannot stand.               Coyne v. Hodge
      Construction, Inc., 9th Dist. App. No. 02CA0061-M, 2004-Ohio-727
      (Feb. 18, 2004); Carter-Jones Lumber Company v. Oro RB SPE
      Owner, LLC, S.D.Ohio Nos. 19-cv-5087 and 20-cv-04894, 2021 U.S.
      Dist. LEXIS 117835.

      In relation to the Progressive project, the Magistrate determined that
      Capstone was available for judgment as: (1) Capstone actively
      participated in the instant action; (2) Capstone was pursuing
      Progressive for the same funds that VMI sought in its unjust
      enrichment claim against Progressive; and, (3) no evidence of a
      bankruptcy filing by Capstone had been submitted. Further, as
      concerns the New Wembley project, the Magistrate determined that
      Capstone remained available for judgment as Capstone actively
      participated in litigating the issues in this case and as no evidence of a
      bankruptcy filing by Capstone had been submitted. The Court finds
      unpersuasive VMI’s assertion that Capstone was unavailable for
      judgment. Capstone’s active participation throughout the history of
      this case, its pursuit of damages from Progressive, and the lack of any
      evidence of a bankruptcy filing on its behalf establish that Capstone
      remains an on-going concern that remains available for judgment. The
      Court finds that the Magistrate properly determined that Capstone
      remained available for judgment and, further, that VMI’s unjust
      enrichment claims against Progressive and New Wembley should be
      dismissed.
              Progressive then filed a motion for reconsideration/motion for relief

from judgment. The following day, VMI filed the instant appeal, raising one

assignment of error for our review:

      The trial court erred in finding Capstone to be available for judgment
      and subsequently dismissing VMI’s unjust enrichment claims against
      Progressive and New Wembley.

             The docket reflects that the court held Progressive’s motion for

reconsideration/motion for relief from judgment in abeyance.

              Progressive cross-appealed, raising three cross-assignments of error

for our review:

      1. The trial court failed to provide Progressive the opportunity to object
      to or seek modification of the magistrate’s decisions since the clerk
      never served Progressive or its counsel with a copy of the magistrate’s
      decisions as required by Civ.R. 53(D)(5).

      2. The trial court erred by failing to provide Progressive the
      opportunity to object or seek modification of the magistrate’s decision
      upon remand.

      3. The failure to grant relief from judgment under Civ.R. 60(B)(1) or
      Civ.R. 60(B)(5) also constitutes error.

                              II. Law and Analysis

              We will begin with VMI’s appeal. In its sole assignment of error, VMI

argues that the trial court erred in finding that Capstone was available for judgment

and consequently dismissing VMI’s unjust-enrichment claims against Progressive

and New Wembley. VMI contends that this determination was against the manifest

weight of the evidence.
              In an appeal from a civil bench trial, this court generally reviews the

trial court’s judgment under a manifest weight standard of review. Huntington

Natl. Bank v. Slodov, 8th Dist. Cuyahoga No. 110113, 2021-Ohio-2932, ¶ 47. In

assessing whether a verdict in a civil bench trial is against the manifest weight of the

evidence, we examine the entire record, weigh the evidence and all reasonable

inferences, consider the witnesses’ credibility, and determine whether, in resolving

conflicts in the evidence, the trier of fact clearly lost its way and created such a

manifest miscarriage of justice that the verdict must be overturned and a new trial

ordered. Sonis v. Rasner, 2015-Ohio-3028, 39 N.E.3d 871, ¶ 53 (8th Dist.), citing

State v. Martin, 20 Ohio App.3d 172, 175, 485 N.E.2d 717 (1st Dist.1983). “[A]

reviewing court will generally uphold a trial court’s judgment as long as the manifest

weight of the evidence supports it — that is, as long as ‘some’ competent and credible

evidence supports it.” Patel v. Strategic Group, L.L.C., 2020-Ohio-4990, 161

N.E.3d 42, ¶ 20 (8th Dist.), quoting MRI Software, L.L.C. v. W. Oaks Mall FL,

L.L.C., 2018-Ohio-2190, 116 N.E.3d 694, ¶ 12 (8th Dist.).

              “‘[W]hen a subcontractor is not paid by the contractor and the owner

has not paid the contractor for some aspect of the job at issue, the subcontractor can

look to the owner for payment under a theory of unjust enrichment’ for the funds or

value retained under the unsatisfied contract price.” Sterling Contracting, LLC v.

Main Event Entertainment, LP, 8th Dist. Cuyahoga No. 110965, 2022-Ohio-2138,

¶ 16, quoting Moosehead Harvesting, Inc. v. Eureka Midstream, LLC, 7th Dist.

Monroe No. 18 MO 0015, 2019-Ohio-3961, ¶ 13, citing Meridien Marketing Group,
Inc. v. J&E Bldg. Group, Inc., 2d Dist. Miami No. 2011-CA-02, 2011-Ohio-4872,

¶ 30, Ross-Co Redi Mix Co. v. Steveco, Inc., 4th Dist. Pickaway No. 95CA3, 1996

Ohio App. LEXIS 437 (Feb. 6, 1996), and Brower Prods., Inc. v. Musilli, 2d Dist.

Miami Nos. 98 CA 58 and 98 CA 59, 1999 Ohio App. LEXIS 2283 (May 21, 1999).

                However, before a subcontractor may pursue an unjust-enrichment

claim against an owner, it must be established that the general contractor is

“‘“unavailable for judgment and unable to pursue the owner for the money that the

subcontractor is seeking.”’” Sterling at ¶ 16, quoting BFI Waste Sys. of Ohio v.

Professional Constr. & Safety Servs., 9th Dist. Lorain No. 06CA008972, 2008-

Ohio-1450, ¶ 7, quoting Booher Carpet Sales, 2d Dist. Greene No. 98-CA-0007,

1998 Ohio App. LEXIS 4643, at 17. An unjust-enrichment claim is not viable when

the possibility exists that either the subcontractor could make a double recovery or

that the owner could pay twice for the same performance. Sterling at id., citing

Booher at id.

                With regard to the issue of Capstone’s availability for judgment, the

trial court noted in its decision that (1) Capstone and VMI were both attempting to

recover the same amounts from Progressive; (2) Capstone had not filed for

bankruptcy; and (3) Capstone had defended against the claims in the case and

asserted affirmative claims on its behalf.

                VMI argues that the trial court failed to consider all of the evidence

supporting Capstone’s insolvency and consequential unavailability for judgment.

VMI contends that the trial court focused solely on Capstone’s active participation
in the lawsuit and the fact that it had not filed for bankruptcy while failing to

consider Capstone’s lack of assets, financial struggles, and lack of work.

              In our recent decision in Sterling, 8th Dist. Cuyahoga No. 110965,

2022-Ohio-2138, we affirmed the granting of summary judgment on a

subcontractor’s unjust-enrichment claim against a project owner where the

contractor was determined to be available for judgment. VMI urges us to distinguish

this matter from Sterling because it argues that there was additional evidence

regarding Capstone’s financial situation presented to the trial court that

demonstrated Capstone’s unavailability for judgment and that similar evidence was

not presented in Sterling.

              Progressive argues that the trial court properly found that Capstone

was available for judgment because Capstone vigorously participated in the case,

defending against both VMI’s and Progressive’s claims and asserting its own

affirmative claims. In addition, Capstone filed a post-trial brief, proposed findings

of fact and conclusions of law, and objections to the magistrate’s decisions.

Progressive further notes that Capstone did not file for bankruptcy protection or

seek to dissolve the LLC, and neither VMI nor Progressive’s claims against Capstone

have been distinguished in any bankruptcy proceeding.            Finally, Progressive

contends that findings from the personal bankruptcy action of one of Capstone’s

owners regarding Capstone’s value cannot be used to establish Capstone’s

unavailability.
              New Wembley contends that the trial court did not err in finding

Capstone to be available for judgment and dismissing VMI’s unjust-enrichment

claims. New Wembley asserts that VMI failed to demonstrate that there was no

possibility of double recovery or that Capstone was unable to pursue New Wembley

itself for the damages that VMI was seeking.

              We agree with VMI that Sterling is distinguishable from the instant

matter. In particular, the contractor in Sterling not only pursued a claim against the

subcontractor but obtained a judgment for the full value of the claim. Because this

judgment had not been extinguished in any way, this court determined that it could

not be concluded that no possibility would exist of a double recovery for the

subcontractor.

              In the instant matter, on the other hand, Capstone did not recover on

any of its claims. While the trial court correctly found that there was no evidence

that Capstone had filed bankruptcy, this does not end the inquiry into Capstone’s

availability for judgment. Uncontradicted testimony was presented at trial that

Capstone had no work, no offices, no assets, no employees, and was not conducting

any business. The president and an owner of Capstone, Timothy Steffen (“Steffen”),

further testified that if judgment were to be rendered against Capstone in this

matter, it would be unable to pay any portion of the judgment. VMI presented

certified copies of documents filed in Steffen’s personal bankruptcy case. One of

these documents showed the bankruptcy trustee’s determination that the value of

Capstone was zero.
              As noted by the Second District, “evidence that a party has filed for

bankruptcy is merely some evidence that the party is insolvent.” Meridien, 2d Dist.

Miami No. 2011-CA-02, 2011-Ohio-4872, at ¶ 25, citing Coyne, 9th Dist. Medina No.

03CA0061-M, 2004-Ohio-727, at ¶ 6.          Evidence of a bankruptcy filing is not

conclusive of nor is it necessary to find that a contractor is unavailable for judgment.

Meridien at id.

              Thus, in the instant matter, there was sufficient evidence to

demonstrate that Capstone is insolvent. While Capstone did appear in this case to

defend against the claims and assert its own affirmative claims, it ultimately failed

to recover on its claims and had judgments granted against it totaling nearly two

million dollars. There will be no possibility of double recovery for VMI because at

the conclusion of this matter, all of the issues will be fully resolved and res judicata

will apply to bar further recovery or payment among the parties. While Wembley

asserted at oral argument that it had already paid Capstone and therefore has not

been unjustly enriched by VMI, this issue is not before us. VMI’s unjust-enrichment

claim was dismissed solely because the trial court determined that Capstone was

available for judgment. The merits of VMI’s unjust-enrichment claims have not yet

been considered by the trial court.

              Accordingly, we find that the trial court erred in determining that

Capstone was available for judgment and consequently dismissing VMI’s unjust-

enrichment claims against Progressive and New Wembley solely on that basis. On
remand, the trial court is instructed to consider the merits of VMI’s unjust-

enrichment claims.

              We now turn to Progressive’s cross-appeal. Progressive’s first two

cross-assignments of error are interrelated and will be discussed together. In its first

cross-assignment of error, Progressive argues that the trial court erred by failing to

provide Progressive the opportunity to object to or seek modification of the

magistrate’s decisions since the clerk never served Progressive or its counsel with a

copy of the magistrate’s decisions as required by Civ.R. 53(D)(5). In reviewing this

cross-assigned error, we cannot find any action by the trial court that would

constitute error. Progressive asserts that the clerk’s office failed to serve it or his

counsel with the magistrate’s decision and that he also was not served with VMI’s

objections.   Neither of these issues can be attributed to the trial court, and

Progressive’s first cross-assignment of error is overruled.

              Progressive’s second cross-assignment of error argues that the trial

court erred by failing to provide Progressive the opportunity to object or seek

modification of the magistrate’s decision upon remand. We note that after VMI and

Capstone had filed their objections to the magistrate’s decisions, Progressive moved

for leave to file a response to VMI’s objections to the magistrate’s decision. The trial

court entered an order holding that the motion to leave would be held in abeyance

pending the outcome of VMI’s appeal.

              However, VMI’s initial appeal was dismissed after this court

determined that there were still pending claims.         On remand, the trial court
attempted to sort out which claims had been resolved and which remained pending.

It did not address Progressive’s motion for leave at this time.

              The trial court’s order holding Progressive’s motion for leave in

abeyance until after VMI’s appeal was resolved was therefore still in effect. VMI’s

appeal had not been resolved when it had simply been dismissed by this court due

to the lack of a final appealable order. After the present appeal is resolved and this

matter is remanded to the trial court, Progressive’s motion for leave can be

considered. Progressive’s second cross-assignment of error is overruled.

              In its third cross-assignment of error, Progressive argues that the trial

court erred in failing to grant it relief from judgment under Civ.R. 60(B)(1) or (B)(5).

              The    record   reflects   that   Progressive   filed   its   motion   for

reconsideration/motion for relief from judgment one day before VMI filed its notice

of appeal. “‘The Ohio Supreme Court has held that once an appeal is filed, the trial

court is divested of its jurisdiction to consider Civ.R. 60(B) motions for relief from

judgment.’” In re G.C., 8th Dist. Cuyahoga No. 109969, 2021-Ohio-2442, ¶ 9,

quoting State v. Spisak, 8th Dist. Cuyahoga No. 67229, 1995 Ohio App. LEXIS 1567,

9 (Apr. 13, 1995), citing State ex rel. E. Mfg. Corp. v. Ohio Civ. Rights Comm., 63

Ohio St.3d 179, 181, 586 N.E.2d 105 (1992). In addition, this court has repeatedly

held that a trial court lacks jurisdiction to determine a motion for relief from

judgment during the pendency of an appeal, and any action then taken upon such a

motion is null and void. Kornick v. Zomparelli, 8th Dist. Cuyahoga Nos. 53599 and

53875, 1988 Ohio App. LEXIS 896, 3 (Mar. 17, 1988), citing Vavrina v. Greczanik,
40 Ohio App.2d 129, 318 N.E.2d 408 (8th Dist.1974); Reese v. Proppe, 3 Ohio

App.3d 103, 443 N.E.2d 992 (8th Dist.1981); Dempsey v. Chicago Title Ins. Co., 20

Ohio App.3d 90, 484 N.E.2d 1064 (8th Dist.1985).

                 Because the trial court was divested of jurisdiction following VMI’s

notice of appeal, it did not rule upon the motion for reconsideration/motion for

relief from judgment, nor could it have done so. Accordingly, we find that no error

has occurred and overrule Progressive’s third cross-assignment of error.

                                    III. Conclusion

                 The trial court erred in determining that Capstone was available for

judgment and consequently dismissing VMI’s unjust-enrichment claims against

Progressive and New Wembley. On remand, the trial court is to consider the merits

of VMI’s unjust-enrichment claims.

                In addition, the trial court did not fail to provide Progressive an

opportunity to object or respond to VMI’s objections nor did it err in failing to grant

Progressive’s motion for reconsideration/motion for relief from judgment when it

was without jurisdiction to consider such a motion.

                 Judgment affirmed in part, reversed in part, and remanded to the trial

court.

         It is ordered that appellant recover from appellees 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.

___________________________________
FRANK DANIEL CELEBREZZE, III, JUDGE

ANITA LASTER MAYS, A.J., and
MARY J. BOYLE, J., CONCUR