Court Opinion

ID: 8206610
Source: CourtListenerOpinion
Date Created: 2022-09-15 14:08:46.889088+00
Date Added: 2024-06-11T16:41:16.936919
License: Public Domain

[Cite as Skoda Minotti Co. v. Kent, 2022-Ohio-3237.]

                              COURT OF APPEALS OF OHIO

                             EIGHTH APPELLATE DISTRICT
                                COUNTY OF CUYAHOGA

SKODA MINOTTI COMPANY,                                 :

                Plaintiff-Appellee,                    :
                                                            No. 111227
                v.                                     :

JOHN H. KENT, ET AL.,                                  :

                Defendants-Appellants.                 :

                               JOURNAL ENTRY AND OPINION

                JUDGMENT: AFFIRMED
                RELEASED AND JOURNALIZED: September 15, 2022

            Civil Appeal from the Cuyahoga County Court of Common Pleas
                                Case No. CV-18-897904

                                            Appearances:

                WELTMAN, WEINBERG & REIS, CO., L.P.A., and Roy J.
                Schechter, for appellee.

                Weston Hurd LLP, Robert A. Poklar, Matthew C. Miller,
                and Patrick M. Cannell, for appellants.

EMANUELLA D. GROVES, J.:

                   Defendants-appellants, John H. Kent (“Kent”) and K.B. Directional,

LLC (“KB Directional”), (collectively “Appellants”), appeal the trial court’s decision

granting summary judgment in favor of plaintiff-appellee Skoda Minotti Company
(“Skoda”) on its claim for breach of contract. For the reasons set forth below, we

affirm.

                       Procedural and Factual History

               Kent is the sole proprietor and owner of KB Directional, an entity that

is engaged in directional drilling services on a contract basis for utility companies.

In the spring of 2017, Kent hired Skoda, an accounting and litigation support firm,

to perform various accounting services for himself and KB Directional. The

engagement included reconstructing accounting records and ledgers from 2011

through 2016, preparing income tax returns that were outstanding since 2007, and

assisting Kent and his attorney with respect to a pending divorce matter.

              On May 17, 2018, Skoda filed a complaint in Cuyahoga County

Common Pleas Court alleging that it properly executed extensive professional

services for Kent and KB Directional and fully performed all conditions precedent

required under the parties’ written agreement.. Skoda further alleged that Kent and

KB Directional failed to fully compensate Skoda for the services rendered, despite

due demand.

              On June 21, 2018, while the underlying case was pending, Kent filed

a Chapter 13 petition in the U.S. Bankruptcy Court for the Western District of

Pennsylvania (“Bankruptcy Court”). In December 2018, Kent’s attorney filed a

suggestion of bankruptcy, which resulted in the trial court staying all matters until

the conclusion of the bankruptcy proceedings.
                 On May 19, 2019, Kent filed an Adversary Proceeding Complaint1

against Skoda in the Bankruptcy Court asserting claims including breach-of-

contract, unjust enrichment, and conversion. The matter proceeded to a full trial.

To be discussed in detail below, on May 5, 2020, the federal judge issued a

Memorandum Opinion (“Memorandum Opinion”) finding in favor of Skoda on

Kent’s breach-of-contract claim.

                 Subsequently, on August 13, 2020, Skoda filed a motion to vacate the

stay, which the trial court granted. On April 19, 2021, Skoda filed an amended

complaint, naming KB Directional as a new party defendant. In the amended

complaint, Skoda alleged that “[u]pon information and belief, Kent filed the

Adversary Proceeding in part, in an effort to thwart Skoda from obtaining a

judgment and pursuing collection through this common plea court action * * *.”

                 Further, that

      [a]fter a full and fair opportunity for the parties to litigate the claims
      raised in the Adversary Proceeding, and an evidentiary hearing
      involving numerous witnesses and extensive documentary evidence,
      United States District Court Judge Thomas P. Agresti issued a 27 page
      Memorandum Opinion on May 7, 2020, resolving numerous factual
      issues, and ruling that Skoda did not breach the contract and had
      properly performed under the Agreement, that Kent had breached the
      Agreement, and refusing to award Kent monetary damages.2

                 On August 13, 2021, Skoda filed a motion for summary judgment and

attached, among other things, the affidavit of the firm’s managing partner, Frank

      1   The adversary proceeding is a core matter pursuant to 28 U.S.C. 157(b)(2)(E).

      2 A copy of the Memorandum Opinion was attached to the Amended Complaint as
Exhibit 3.
Suponcic (“Suponcic”). In its motion, Skoda centrally argued that the Bankruptcy

Court’s Memorandum Opinion compelled judgment in its favor, because Kent was

estopped from litigating any of the contractual issues. Appellants filed their brief in

opposition arguing that collateral estoppel was not applicable.

               On December 31, 2021, the trial court granted summary judgment in

favor of Skoda and against Appellants in the amount of $33,717.55, plus interest, as

provided in the contract accruing at 1 percent per month from March 3, 2021.

               Appellants now appeal and assigns the following sole error for review:

                                 Assignment of Error

      The trial court erred in granting plaintiff-appellee’s motion for
      summary judgment.

                                  Law and Analysis

               In the sole assignment of error, Appellants argue the trial court erred

in granting summary judgment in Skoda’s favor on its breach-of-contract claim.

Standard of Review

               To begin, Civ.R. 56(C) provides that summary judgment shall be

rendered if “the pleadings, depositions, answers to interrogatories, written

admissions, affidavits, transcripts of evidence, and written stipulations of fact, if

any, timely filed in the action, show that there is no genuine issue as to any material

fact and that the moving party is entitled to judgment as a matter of law.” Summary

judgment is proper where:

      (1) there is no genuine issue of material fact; (2) the moving party is
      entitled to judgment as a matter of law; and (3) reasonable minds can
      come to but one conclusion and that conclusion is adverse to the
      nonmoving party, said party being entitled to have the evidence
      construed most strongly in his or her favor.

Bohan v. McDonald Hopkins, L.L.C., 8th Dist. Cuyahoga No. 110060, 2021-Ohio-

4131, ¶ 19, citing Horton v. Harwick Chem. Corp., 73 Ohio St.3d 679, 653 N.E.2d

1196 (1995), paragraph three of the syllabus; Zivich v. Mentor Soccer Club, 82 Ohio

St.3d 367, 696 N.E.2d 201 (1998).

              “The party moving for summary judgment bears the burden of

demonstrating that no material issues of fact exist for trial.” Edvon v. Morales, 8th

Dist. Cuyahoga No. 106448, 2018-Ohio-5171, ¶ 17, citing Dresher v. Burt, 75 Ohio

St.3d 280, 292, 662 N.E.2d 264 (1996). If the movant satisfies the initial burden,

then the nonmoving party has the burden to set forth specific facts that there remain

genuine issues of material fact that would preclude summary judgment. Id. A trial

court’s grant of summary judgment is reviewed de novo. Grafton v. Ohio Edison

Co., 77 Ohio St.3d 102, 105, 671 N.E.2d 241 (1996).

Breach of Contract

              Preliminarily, to prevail on a breach-of-contract claim, the party

seeking to enforce the contract must prove, by a preponderance of the evidence, all

of the elements of the claim. Holliday v. Calanni Enters., 8th Dist. Cuyahoga

No. 110001, 2021-Ohio-2266, ¶ 20, citing On Line Logistics, Inc. v. Amerisource

Corp., 8th Dist. Cuyahoga No. 82056, 2003-Ohio-5381, ¶ 39, citing Cooper &

Pachell v. Haslage, 142 Ohio App.3d 704, 707, 756 N.E.2d 1248 (9th Dist.2001).

These elements include “the existence of a contract, performance by the plaintiff,
breach by the defendant, and damage or loss to the plaintiff.” Holiday at Id., citing

Doner v. Snapp, 98 Ohio App.3d 597, 600, 649 N.E.2d 42 (2d Dist.1994).

              In the instant matter, Skoda argued in its motion for summary

judgment that the above elements were already determined by the Bankruptcy Court

in the adversarial proceeding. Specifically, whether Kent and Skoda entered into a

contract, whether Skoda properly performed the subject contract, and whether Kent

breached the contract by failing to fully pay for the services rendered were

determined after a full and fair trial in the Bankruptcy Court.

              Thus, Skoda argued that because these findings were made after a

trial between the same parties, whom were both represented by counsel, and

involved the same material issues raised in the pleadings, they constitute res

judicata and collateral estoppel. Consequently, Skoda argued there remained no

genuine issue of material fact and they were entitled to summary judgment as a

matter of law. For the reasons that follow, we agree.

Res Judicata and Collateral Estoppel

              Res judicata precludes “‘the relitigation of a point of law or fact that

was at issue in a former action between the same parties and was passed upon by a

court of competent jurisdiction.’” Jefferson v. Current Successor, 8th Dist.

Cuyahoga No. 108010, 2019-Ohio-2905, ¶ 8, citing State ex rel. Kroger Co. v. Indus.

Comm., 80 Ohio St.3d 649, 651, 687 N.E.2d 768 (1998), quoting Office of

Consumers’ Counsel v. Public Util. Comm., 16 Ohio St.3d 9, 10, 475 N.E.2d 782

(1985).   Pursuant to the concept of claim preclusion, “a valid final judgment
rendered upon the merits bars subsequent actions based upon any claim arising out

of the transaction or occurrence that was the subject matter of the previous action.”

Id., citing Grava v. Parkman Twp., 73 Ohio St.3d 379, 653 N.E.2d 226 (1995),

syllabus.

               Relevantly, collateral estoppel, or issue preclusion, prevents

relitigation of an issue that has been actually and necessarily litigated and

determined in a prior action. Thistledown Racetrack L.L.C. v. Cuyahoga Cty. Bd.

of Revision, 8th Dist. Cuyahoga No. 109469, 2021-Ohio-2511, ¶ 28, citing Fort Frye

Teachers Assn. v. State Emp. Relations Bd., 81 Ohio St.3d 392, 395, 1998- Ohio 435,

692 N.E.2d 140 (1998).

               Collateral estoppel applies when three requirements are met: “the fact

or issue (1) was actually and directly litigated in the prior action, (2) was passed upon

and determined by a court of competent jurisdiction, and (3) when the party against

whom collateral estoppel is asserted was a party in privity with a party to the prior

action.” Thompson v. Wing, 70 Ohio St.3d 176, 183, 637 N.E.2d 917 (1994), citing

Whitehead v. Gen. Tel. Co., 20 Ohio St.2d 108, 254 N.E.2d 10 (1969), paragraph two

of the syllabus.

               “The essential test in determining whether the doctrine of collateral

estoppel is to be applied is whether the party against whom the prior judgment is

being asserted had full representation and a ‘full and fair opportunity to litigate that

issue in the first action.’” Kobal v. Edward Jones Sec., 8th Dist. Cuyahoga No.

109753, 2021-Ohio-1088, ¶ 26, citing Cashelmara Villas Ltd. Partnership v.
DiBenedetto, 87 Ohio App.3d 809, 813, 623 N.E.2d 213 (8th Dist.1993), quoting

Hicks v. De La Cruz, 52 Ohio St.2d 71, 74, 369 N.E.2d 776 (1977).

                 To begin, we note, in the present matter, there is no dispute that the

parties are identical to those in the Bankruptcy Court action. Further, the parties do

not dispute that a court of competent jurisdiction entered a final judgment on the

merits of the claim. As such, we will primarily address whether the same issue was

actually and directly litigated in the adversarial proceedings in the Bankruptcy

Court.

                 In addressing the breach-of-contract claim in the Bankruptcy Court,

the exhaustive and well-reasoned Memorandum Opinion began by encapsulating

Kent’s essential allegations as follows:

         17. Debtor and Defendants entered into a contract on or about
         June 1, 2017, to organize Debtor’s financial records and assist him with
         advisory and tax compliance matters.

         18. Debtor paid certain amounts over to Skoda and Page3 in performing
         under the contract.

         19. Skoda and Page have failed to perform their end of the contract by
         their refusal to produce any work product or any invoices to prove how
         his payments for these services were expended. Therefore, Skoda and
         Page have breached the contract between them and Debtor.

                 The Memorandum Opinion continued that Skoda’s response to

Kent’s breach-of-contract claim focused on two arguments namely:

         3
         Given the time sensitivity, the amount of the work that needed to be done to
create the general ledger, and the lack of availability of any Skoda personnel who could
devote full attention to such a project, Suponcic subcontracted this part of the work to
Laura Page, someone outside the firm that could do the work more quickly.
      First, that to the extent the Defendants failed to complete work for the
      Debtor as was envisioned in the contract, it was solely due to Debtor’s
      failure to provide the Defendants with materials that they needed to do
      so.

      Second, that the Debtor, having voluntarily made payments to them
      under the contract totaling $28,540 after receiving billing invoices
      from the Defendants, may not now seek to recover such payments by
      claiming a breach of contract.

              In arriving at its conclusion on the breach of contract, the Bankruptcy

Court found significant Skoda’s response that Kent failed to provide certain material

that Skoda had requested “and that such failure was in itself a breach of the contract

by [Kent].” Importantly, the parties’ written agreement provides in pertinent part

that “[y]ou [i.e., Debtor] agree to provide all financial and nonfinancial information

and documentation reasonably deemed necessary or desirable by us in connection

with the engagement.”

              The Bankruptcy Court found that the evidence was overwhelming

that Kent did not provide all the necessary information that was requested of him

by Skoda.    Specifically, that the failure of Kent to provide such information

prevented or hindered Skoda from completing its work under the contract, thereby

excusing any breach of the contract by Skoda.

              The Bankruptcy Court elaborated that

      Suponcic testified credibly to repeated communications that were
      made to the Debtor and/or Mrs. Kent attempting to get them to provide
      information and documents that Skoda needed in order to perform the
      work it had contracted to do. This credible testimony was backed up
      by documentary exhibits, including e-mails, that showed Skoda was
      seeking materials which the Debtor could not, or would not provide.
      Suponcic also credibly testified that it would have been a violation of
      Skoda’s professional ethical obligations and would have exposed Skoda
      to the possibility of preparer liability, if it had filed any tax returns
      based only on the limited materials that Debtor did provide.

              The Bankruptcy Court emphasized that

      Skoda did the best it could with the information that the Debtor did
      provide. Even assuming that Skoda failed to fully perform under the
      contract as the party had envisioned when it was signed, such failure
      was solely the result of the Debtor failing to comply with his obligation
      under the contract to provide all financial and nonfinancial
      information and documentation deemed necessary or desirable by
      Skoda.4

              Nonetheless, Appellants argue that collateral estoppel does not apply

because the Bankruptcy Court never specifically decided whether he breached the

contract. Appellants suggest that the Bankruptcy Court only determined that Skoda

did not breach the contract. However, Appellants’ belief ignores their obligations

under the agreement. As previously stated, Kent agreed to provide all financial and

nonfinancial information and documentation reasonably deemed necessary or

desirable by Skoda in connection with the engagement.

              Here, it is undeniable that Kent failed to provide the requested

financial and nonfinancial information. Despite Appellants’ present assertions, in

failing to do so, they in fact breached the contract. It is worth repeating that the

Bankruptcy Court noted that “such failure was in itself a breach of the contract by

      4 The Bankruptcy Court noted that “the Contract does not expressly include a
‘reasonableness’ component with respect to the Debtor’s obligation to provide
information and documentation as requested by Skoda. If a reasonableness standard is
nevertheless implied, the Court would find the requests for information and
documentation made by Skoda were reasonable and germane to the tasks it was
performing.”
[Kent].” This very finding is what Appellants suggest should again be litigated in a

successive venue.

              Because the instant issue, between the same parties, was decided

when Appellants were fully represented and when they had a full and fair

opportunity to litigate this issue, collateral estoppel applies. Unquestionably, “the

existence of a contract, performance by [Skoda], breach by [Kent], and damage or

loss to [Skoda],” have been squarely determined in the Bankruptcy Court and should

not be relitigated. As such, there was no genuine issue as to any material fact and

Skoda was entitled to judgment as a matter of law. The trial court did not err when

it granted summary judgment in favor of Skoda.

              Accordingly, we overrule the sole assignment of error.

              Judgment affirmed.

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

      The court finds there were reasonable grounds for this appeal.

      It is ordered that a special mandate issue out of this court directing the

Cuyahoga County Common Pleas 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.

_________________________
EMANUELLA D. GROVES, JUDGE

ANITA LASTER MAYS, P.J., and
FRANK DANIEL CELEBREZZE, III, J., CONCUR