Court Opinion

ID: 9954145
Source: CourtListenerOpinion
Date Created: 2024-03-25 18:11:08.383733+00
Date Added: 2024-06-11T08:11:51.413043
License: Public Domain

[Cite as Bettman v. JDH Bldg. Group, L.L.C., 2024-Ohio-1092.]

                                  IN THE COURT OF APPEALS

                          TWELFTH APPELLATE DISTRICT OF OHIO

                                         WARREN COUNTY

 R. TODD BETTMAN, et al.,                            :

        Appellants,                                  :          CASE NO. CA2023-11-096

                                                     :                 OPINION
     - vs -                                                             3/25/2024
                                                     :

 JDH BUILDING GROUP, LLC,                            :

        Appellee.                                    :

        CIVIL APPEAL FROM WARREN COUNTY COURT OF COMMON PLEAS
                            Case No. 23CV96456

Bailey Cavalieri LLC, Christopher W. Tackett and John P. Miller, for appellants.

Aronoff, Rosen & Hunt, Edward P. Akin and Kevin L. Swick, for appellees.

        PIPER, J.

        {¶ 1} Appellants, Todd and Jean Bettman (the "Bettmans"), timely appeal the

decision of the Warren County Court of Common Pleas denying their motion for a

preliminary injunction without a hearing and the opportunity for discovery prior to staying

the proceedings for arbitration.1

1. Pursuant to Loc.R. 6(a), we sua sponte remove this case from the accelerated calendar for the purposes
of issuing this opinion.
                                                                               Warren CA2023-11-096

                                       Facts and Procedure

        {¶ 2} The Bettmans entered into a contract with JDH Building Group ("JDH

Building") to have JDH Building construct a luxury home in Warren County.2 By January

2023, the Bettmans had paid JDH Building two large deposits for the construction of the

home totaling $619,133 ("Deposit").            When JDH Building allegedly failed to timely

commence construction, the Bettmans attempted to exercise their right to terminate the

contract and asked for their money back. JDH Building declined to refund the Bettmans'

Deposit.

        {¶ 3} The Bettmans responded by filing a complaint in the Warren County

Common Pleas Court requesting, inter alia, recission of the contract as well as damages

for breach of contract. Shortly thereafter, the Bettmans filed a motion for a preliminary

injunction requesting that the funds they deposited with JDH Building be placed in an

escrow account pending final resolution of the action.                  The Bettmans sought the

temporary escrow based upon their belief that JDH Building was in the process of

becoming insolvent. The Bettmans alleged that JDH Building had not paid subcontractors

on multiple different projects resulting in mechanics' liens being placed upon other

homeowners' properties and that JDH Building appeared to be "robbing Peter to pay

Paul." The Bettmans indicated they were concerned that an eventual judgment from a

lawsuit would be uncollectible and meaningless in the future.

        {¶ 4} The hearing on the motion for a preliminary injunction was set for October

24 and 25, 2023. The Bettmans served JDH Building with discovery seeking evidentiary

material to support their motion for a preliminary injunction. The Bettmans maintained

the discovery was aimed at demonstrating the need to preserve their funds. JDH Building

2. The parties' construction agreement lists the contract sum as $3,191,130.

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moved for an extension of time to respond to the discovery requests. The trial court

permitted JDH Building additional time to respond to the Bettmans' discovery requests,

ordering a response by October 6, 2023.

       {¶ 5} On the day the discovery responses were due, JDH Building moved for a

protective order precluding discovery outside the arbitration proceedings. On October

10, 2023, while noting that the hearing on the preliminary injunction was just weeks away,

the Bettmans moved to compel discovery. The Bettmans argued that JDH Building

declined to provide discovery necessary for the hearing on the preliminary injunction. The

Bettmans stated that the very limited discovery they had received was largely

nonresponsive.

       {¶ 6} Without prior notice to the parties, on October 19, 2023, the trial court

vacated the hearing on the preliminary injunction, denied the motion for a preliminary

injunction without a hearing, and determined the outstanding discovery issues were moot.

In so doing, the trial court noted that it would be remiss if it did not consider the effect a

preliminary injunction hearing would have on the arbitration proceedings. It stated that

the hearing for the motion for a preliminary injunction would involve evidence regarding

the merits of the underlying action, which the trial court stated would directly conflict with

JDH Building's request for a stay. The trial court then ruled that the Bettmans failed to

establish, by clear and convincing evidence, that they will be irreparably harmed. In doing

so, the trial court accepted JDH Building's suggestion that mechanics' liens are not

unusual in the business of construction and not indicative of a threat of insolvency. After

denying the Bettmans' motion for a preliminary injunction, the trial court denied the

Bettmans' motion to compel and JDH Building's motion for a protective order, concluding

that those discovery issues were moot. In a journal entry issued less than an hour later,

the trial court granted JDH Building's motion to stay proceedings pending arbitration. The

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Bettmans raised three assignments of error for review.

                                  Final Appealable Order

       {¶ 7} As an initial matter, JDH Building argues that this case should be dismissed

for lacking a final appealable order. A preliminary injunction is a provisional remedy that

is considered interlocutory, tentative, and impermanent in nature. N. Fairfield Baptist

Church v. G129, L.L.C., 12th Dist. Butler No. CA2009-11-281, 2010-Ohio-2543, ¶ 16. As

such, an order granting or denying a preliminary injunction does not automatically qualify

as a final appealable order. Empower Aviation, L.L.C. v. Butler Cty. Bd. of Commrs., 185

Ohio App.3d 477, 2009-Ohio-6331, ¶ 9 (1st Dist.). Instead, a trial court's order granting

or denying a preliminary injunction is a final appealable order only if it fulfills the two-

pronged test set forth in R.C. 2505.02(B)(4). Freeman Indus. Prods. L.L.C. v. Armor

Metal Group Acquisitions, Inc., 193 Ohio App.3d 438, 2011-Ohio-1995, ¶ 16 (12th Dist.).

Therefore, this court may only consider the trial court's order denying the Bettmans'

request for preliminary injunctive relief if it falls within the confines of R.C. 2505.02(B)(4).

Wells Fargo Ins. USA Servs., Inc. v. Gingrich, 12th Dist. Butler No. CA2011-05-085, 2012-

Ohio-677, ¶ 5.

       {¶ 8} According to R.C. 2505.02(B)(4), an order granting or denying a preliminary

injunction is a final appealable order where:

              (a) The order in effect determines the action with respect to
              the provisional remedy and prevents a judgment in the action
              in favor of the appealing party with respect to the provisional
              remedy; [and]

              (b) The appealing party would not be afforded a meaningful
              or effective remedy by an appeal following final judgment as
              to all proceedings, issues, claims, and parties in the action.

       {¶ 9} In applying the two-pronged test, we find the first prong required by R.C.

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2505.02(B)(4)(a) has been satisfied.3              The trial court's order denying the Bettmans'

request for a preliminary injunction determined the action with respect to the provisional

remedy and prevented a judgment in favor of the Bettmans regarding their request for

preliminary injunctive relief.

        {¶ 10} With regard to the second prong, the Bettmans must be able to demonstrate

they would be deprived of a meaningful and effective remedy if they cannot appeal now.

Wells Fargo at ¶ 10, citing E. Cleveland Firefighters, IAFF Local 500 v. E. Cleveland, 8th

Dist. Cuyahoga No. 88273, 2007-Ohio-1447, ¶ 4. In other words, the Bettmans must

demonstrate they "would have no adequate remedy from the effects of that interlocutory

order on appeal from final judgment." Empower Aviation at ¶ 18.

        {¶ 11} The fundamental principle underpinning this court's review of interlocutory

orders under R.C. 2505.02(B)(4)(b) is that a court of appeals has jurisdiction when the

"'the proverbial bell cannot be unrung and an appeal after final judgment on the merits

will not rectify the damage' suffered by the appealing party." State v. Muncie, 91 Ohio

St.3d 440, 451 (2001), quoting Gibson-Myers & Assocs. v. Pearce, 9th Dist. Summit No.

19358, 1999 Ohio App. LEXIS 5010, *6-7 (Oct. 27, 1999).

        {¶ 12} Generally, where a party would be entitled to monetary damages for any

loss suffered from a preliminary injunction, there is no right to an immediate appeal from

a ruling on a preliminary injunction. Wells Fargo, 2012-Ohio-677 at ¶ 13; N. Fairfield

Baptist Church, 2010-Ohio-2543 at ¶ 24. However, there are exceptions where an award

of monetary damages at the end of litigation would not remedy the damages occurring

during the time the injunction should have been in effect. Premier Health Care Services,

Inc. v. Schneiderman, 2d Dist. No. 18795, 2001 Ohio App. LEXIS 5170 (Aug. 21, 2001);

3. JDH Building does not contest that the first prong of the test exists, noting that disputes generally focus
on the second prong of the test.

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                                                                   Warren CA2023-11-096

Columbus v. State, 10th Dist. Franklin No. 22AP-676, 2023-Ohio-195, ¶ 16.

       {¶ 13} A party's possible award of future monetary damages may not amount to a

"meaningful or effective remedy" under R.C. 2505.02(B)(4)(b) where an injunction seeks

access to a finite amount of resources. In AIDS Taskforce of Greater Cleveland v. Ohio

Dept. of Health, 8th Dist. Cuyahoga No. 105971, 2018-Ohio-2727, a charity had applied

to the Ohio Department of Health for funding pursuant to a federal grant but was denied.

Id. After the state approved awards to other organizations, the charity was denied an

injunction to prevent the dispersal of the funds and appealed. Id. The Eighth District held

that R.C. 2502.02(B)(4)(b) was satisfied when funds were likely to be fully distributed and

exhausted before the trial court had the opportunity to render its final judgment. In such

a circumstance, there was a final appealable order because, even if the charity were

ultimately able to prevail on the merits, a lack of funds would render the judgment

meaningless. Id. at ¶ 17. Accord State ex rel. Bowling v. DeWine, 10th Dist. No. 21AP-

380, 2021-Ohio-2902 (finding R.C. 2505.02[B][4][b] met where harm from denial of

preliminary injunction could not be rectified by monetary damages at a later date and

funding source at issue would expire).

       {¶ 14} As the supreme court has stated, when interpreting R.C. 2505.02(B)(4)(b),

"whether [an] appeal after final judgment would afford a meaningful or effective remedy"

requires examining more than the relief sought: a court must "consider whether there is

a harm such that appeal after final judgment would not 'rectify the damage.'" State ex rel

Bowling, 2021-Ohio-2902 at ¶ 26, quoting In re D.H., 152 Ohio St.3d 310, 2018-Ohio-17,

¶ 18. In this case, the Bettmans argue that if their lawsuit is successful but JDH Building

is insolvent, they will not have a meaningful or effective remedy. The trial court started to

address the argument with regard to JDH Building's solvency but then dismissed the

argument reasoning that mechanics' liens are not unusual in the construction industry.

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                                                                 Warren CA2023-11-096

      {¶ 15} However, the finding that mechanics' liens were a usual or customary

business activity was not made following a hearing or after the introduction of evidence.

It was an observation about the construction industry in general. The time for the

Bettmans to present evidence of insolvency was at a hearing on their motion for a

preliminary injunction. To that end, the Bettmans had already moved to compel the

production of evidence they indicated was necessary for purposes of supporting their

arguments.    Instead, the trial court denied the Bettmans' motion for a preliminary

injunction without a hearing, concluding the Bettmans did not establish that JDH Building

was going to be imminently insolvent or otherwise unable to pay monetary damages. The

trial court then denied the Bettmans' motion to compel, concluding that the discovery

dispute had been rendered moot. While JDH Building argues a judgment for monetary

damages is an effective remedy, the Bettmans sought an opportunity to prove that, if their

lawsuit is successful, they would essentially be deprived of a meaningful and effective

remedy.   Therefore, in these narrow and specific circumstances, the threat of an

ineffective remedy following final judgment constitutes a provisional order that satisfies

R.C. 2505.02(B)(4) as a final appealable order. We therefore turn to the merits of the

Bettmans' appeal.

                                   Issues on Appeal

      {¶ 16} Assignment of Error No. 1:

      {¶ 17} THE TRIAL COURT ERRED IN VACATING THE PRELIMINARY

INJUNCTION HEARING IT HAD SCHEDULED ON THE BETTMAN'S MOTION FOR

PRELIMINARY INJUNCTION, IN DENYING THE BETTMAN'S MOTION TO COMPEL

DISCOVERY RELATED TO THEIR REQUEST FOR INJUNCTIVE RELIEF, AND IN

SUMMARILY DENYING THEIR PRELIMINARY INJUNCTION MOTION WITHOUT A

HEARING AND DISCOVERY.

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                                                                     Warren CA2023-11-096

       {¶ 18} Assignment of Error No. 2:

       {¶ 19} THE TRIAL COURT'S DECISION TO DENY THE BETTMAN'S MOTION

FOR PRELIMINARY INJUNCTION ON THE GROUND THAT THEY COULD NOT

ESTABLISH IRREPARABLE HARM IS ERRONEOUS AS A MATTER OF LAW.

       {¶ 20} Assignment of Error No. 3:

       {¶ 21} THE TRIAL COURT ERRED IN STAYING THIS CASE PENDING

ARBITRATION BEFORE PROPERLY CONSIDERING THE BETTMAN'S MOTION FOR

PRELIMINARY INJUNCTION.

       {¶ 22} In their three assignments of error, the Bettmans argue the trial court erred

by denying their motion for a preliminary injunction without a hearing and then almost

simultaneously issued a stay pending arbitration. The Bettmans also argue the trial court

erred by denying their motion to compel discovery, indicating that the Bettmans could not

establish the threat of irreparable harm and finding the issue of discovery was moot but

only after it denied the preliminary injunction.

                  Denial of Preliminary Injunction Without a Hearing

       {¶ 23} The purpose of a preliminary injunction is to preserve the status quo of the

parties pending a final adjudication of the case upon the merits. Back v. Faith Properties,

L.L.C., 12th Dist. Butler No. CA2001-12-285, 2002-Ohio-6107, ¶ 36. In ruling on a motion

for preliminary injunction, a trial court must consider whether: (1) the moving party has

shown a substantial likelihood that he or she will prevail on the merits of their underlying

substantive claim; (2) the moving party will suffer irreparable harm if the injunction is not

granted; (3) issuance of the injunction will not harm third parties; and (4) the public interest

would be served by issuing the preliminary injunction. DK Prods., Inc. v. Miller, 12th Dist.

Warren No. CA2008-05-060, 2009-Ohio-436, ¶ 6.

       {¶ 24} The party seeking the preliminary injunction must establish each of these

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elements by clear and convincing evidence. S.W. Ohio Basketball, Inc. v. Himes, 12th

Dist. Warren No. CA2020-08-045, 2021-Ohio-415, ¶ 33. However, no single element is

dispositive. AK Steel Corp. v. Arcelormittal USA, L.L.C., 12th Dist. Butler No. CA2015-

11-190, 2016-Ohio-3285, ¶ 10; Kyrkos v. Superior Beverage Group, Ltd., 8th Dist.

Cuyahoga No. 99444, 2013-Ohio-4597, ¶ 13. "If there is a strong likelihood of success

on the merits, an injunction may be granted even though there is little evidence of

irreparable harm and vice versa." AK Steel Corp. at ¶ 10; S.W. Ohio Basketball, Inc. at ¶

33, citing Fischer Dev. Co. v. Union Twp., 12th Dist. Clermont No. CA99-10-100, 2000

Ohio App. LEXIS 1873, *8 (May 1, 2000). The grant or denial of a motion for injunctive

relief is reviewed according to the abuse of discretion standard. N. Fairfield Baptist

Church, 2010-Ohio-2543, at ¶ 16.

       {¶ 25} Ohio courts have recognized that, except where a temporary restraining

order has been issued, Civ.R. 65 does not expressly require a hearing on a motion for a

preliminary injunction. Danziger v. Rieman, 6th Dist. Sandusky No. S-19-021, 2020-Ohio-

216, ¶ 19; Executive Mgt. Servs., Inc., v. Cincinnati State Technical & Community

College, 10th Dist. Franklin No. 11AP-600, 2011-Ohio-6767, ¶ 10. Nevertheless, courts

have recognized it is "customary to hold a hearing before granting or denying preliminary

or permanent injunctive relief." Executive Mgt. Servs. at ¶ 8; Cleveland v. K.O. Drugs

Boxing Academy, 8th Dist. No. 74681, 1998 Ohio App. LEXIS 5436 (Nov. 19, 1998).

       {¶ 26} In some cases, the denial of injunctive relief without a hearing is appropriate

where the assertions are patently frivolous or vague and speculative. DeVore v. Ohio

Adult Parole Auth., 10th Dist. Franklin No. 23AP-350, 2023-Ohio-4558, ¶ 24 (Vague and

speculative assertions of a constitutional violation do not support a preliminary injunction).

We have acknowledged, however, that a movant for a preliminary injunction need not

show actual harm "since a threat of harm is a sufficient basis on which to grant such

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relief." Bond Safeguard Ins. Co. v. Dixon Builders I, L.L.C., 12th Dist. Butler No. CA2011-

02-027, 2012-Ohio-3313, ¶ 35.

        {¶ 27} Although an evidentiary hearing is not specifically required by Civ.R. 65,

"the language of the rule strongly suggests that an evidentiary hearing will be held prior

to ruling on a preliminary injunction motion." Executive Mgt. Servs. at ¶ 8, citing Johnson

v. Morris, 108 Ohio App.3d 343, 352 (4th Dist.1995). "In determining whether a hearing

is appropriate to any motion for preliminary injunction, the trial court must exercise its

discretion, assess the nature of the allegations and circumstances, and determine

whether a hearing is warranted for that particular motion for preliminary injunction."

Executive Mgt. Servs. at ¶ 12.

        {¶ 28} In this case, the trial court discounted the information provided by the

Bettmans with regard to JDH Building's financial solvency. Without holding a hearing and

before addressing the discovery dispute, the trial court concluded the Bettmans failed to

establish that JDH Building was going to be imminently insolvent or unable to pay

monetary damages.4 The trial court also stated the Bettmans had another remedy at law

"that is to seek monetary relief in the amount of the Deposit." However, the purpose of

the motion for the preliminary injunction was to escrow the funds due to the concern of

insolvency. The trial court's resolution of the Bettmans' motion for a preliminary hearing

4. In Dixon Builders, we determined that the trial court's order granting injunctive relief by having the money
($600,000) deposited with the court was consistent with the purpose of a preliminary injunction. We
reasoned the hearing established a monetary judgment alone would be an inadequate remedy. Bond
Safeguard Ins. Co. v. Dixon Builders I, L.L.C., 12th Dist. Butler No. CA2011-02-027, 2012-Ohio-3313, ¶ 34.

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denied them an opportunity to present their claims at a hearing.5 And the denial of the

preliminary injunctive relief then served as an inappropriate basis for rendering the

discovery dispute moot.

        {¶ 29} While the trial court determined that the Bettmans failed to establish that

JDH Building was going to be imminently insolvent or unable to pay the monetary

damages, we note there were competing motions concerning the discoverability of JDH

Building's financial condition. The trial court was well aware of the discovery dispute but

stated it would be remiss if it did not consider the impact a hearing on a preliminary

injunction might have on the arbitration proceeding. While the trial court technically

denied the motion for a preliminary injunction before it granted the motion to stay

proceedings pending arbitration, the motion to stay clearly played a factor in the trial

court's ruling.

        {¶ 30} As stated by the supreme court, "[w]hen a trial court is faced with a motion

to stay pending arbitration and a motion for a preliminary injunction, the motion for a

preliminary injunction should be heard first." State ex rel. CNG Fin. Corp. v. Nadel, 111

Ohio St.3d 149, 2006-Ohio-5344, ¶ 16. In this case, the motion to stay became a

premature factor the trial court considered when it denied the Bettmans' motion for a

preliminary injunction without a hearing and then mooted the remaining discovery issues.

The trial court then granted JDH Building's motion to stay pending arbitration less than

5. The trial court stated it need not discuss the additional elements of a preliminary injunction calling the
remaining analysis moot. But it also added in a footnote that the Bettmans failed to establish the escrow
of fund will serve the public interest. However, we reiterate that no single factor is dispositive and a strong
showing of one factor can make up for another, less weighty factor. AK Steel Corp., 2016-Ohio-3285 at ¶
10. See also Davis v. McGuffey, 167 Ohio St.3d 1442, 2022-Ohio-2163, ¶ 17 (Kennedy, J., dissenting).
Moreover, if the trial court had conducted a hearing, the Bettmans would have had an opportunity to present
their argument with regard to the public interest element. See Escape Enterprises., Ltd. v. Gosh
Enterprises, Inc., 10th Dist. Franklin Nos. 04AP-834 and 04AP-857, 2005-Ohio-2637, ¶ 47, citing
Blakeman's Valley Office Equip., Inc. v. Bierdeman, 152 Ohio App.3d 86, 2003-Ohio-1074, ¶ 39 (7th Dist.)
(preserving the sanctity of contractual relations has traditionally been in the public interest).

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one hour later. Based upon these circumstances, the Bettmans' three assignments of

error are sustained. The trial court's orders: (1) denying the Bettmans' motion for a

preliminary injunction without conducting a hearing; (2) mooting the Bettmans' discovery

requests and related motions; and (3) staying proceedings pending arbitration are hereby

reversed. This matter is remanded to the trial court to conduct a hearing on the Bettmans'

preliminary injunction motion and consider any corresponding discovery requests.

      {¶ 31} Judgment reversed and remanded.

      S. POWELL, P.J., and BYRNE, J., concur.

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