Court Opinion

ID: 4701401
Source: CourtListenerOpinion
Date Created: 2021-07-06 14:16:26.658563+00
Date Added: 2024-06-11T08:06:17.209968
License: Public Domain

[Cite as Investor Support Serv., L.L.C. v. Dawoud, 2021-Ohio-2293.]

                                     IN THE COURT OF APPEALS

                            TWELFTH APPELLATE DISTRICT OF OHIO

                                           WARREN COUNTY

 INVESTOR SUPPORT SERVICES, LLC,                        :

        Appellant,                                      :             CASE NO. CA2020-09-060

                                                        :                  OPINION
     - vs -                                                                 7/6/2021
                                                        :

 DALIA ZAKY DAWOUD,                                     :

        Appellee.                                       :

                       CIVIL APPEAL FROM MASON MUNICIPAL COURT
                                   Case No. 18CVI00069

Heyman Law, LLC, Matthew W. Faber, D. Andrew Heyman, 1212 Sycamore Street, Suite
32, Cincinnati, Ohio 45202, for appellant

Michael E. Samuels, 278 Ritchie Avenue, Cincinnati, Ohio 45215, for appellant

        S. POWELL, J.

        {¶1}    Appellant, Investor Support Services, LLC ("Equity Team"), appeals the

decision of the Mason Municipal Court, Small Claims Division, rejecting its claims alleging

appellee, Dr. Dalia Zaky Dawoud, was obligated to pay Equity Team a leasing fee and

Equity Team's attorney fees in this dispute over the terms of a property management

agreement ("PMA") entered into by Equity Team and Dawoud regarding the leasing of a
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single-family home owned by Dawoud located in Mason, Warren County, Ohio.1 For the

reasons outlined below, we affirm the trial court's decision.

        {¶2}     On November 2, 2018, Equity Team filed a complaint against Dawoud

alleging she breached the terms of the PMA when she "did not pay the amounts due

thereunder." Due to that alleged breach, Equity Team sought an order requiring Dawoud

to pay it $2,831.40 for "leasing fees, management charges, labor charges, and off boarding

charges" in accordance with the terms of the PMA. Equity Team also sought an order

requiring Dawoud pay its attorney fees for bringing this action under Section 8b of the PMA.

Pursuant to that section of the PMA, should either party employ an attorney to enforce any

of the provisions of the PMA, or to recover damages for a breach of the PMA, like Equity

Team claimed it did here, "the non-prevailing party" must pay to the "prevailing party" all

reasonable costs, damages, and expenses, including reasonable attorneys' fees,

"expended or incurred by the prevailing party in connection therewith."

        {¶3}     On December 18, 2018, Dawoud filed an answer to Equity Team's complaint

generally denying Equity Team's allegations against her. Dawoud also filed a counterclaim

against Equity Team alleging that it was not her, but instead Equity Team, that had

breached the terms of the PMA. Dawoud also alleged that Equity Team had breached its

fiduciary duty owed to her, that Equity Team had "in many ways" breached the "implied

covenant of good faith implicit in the [PMA]" in order to "improperly earn a rental

commission," that Equity Team had been "unjustly enriched by [its] actions," and that Equity

Team had engaged in the unauthorized practice of law when it "provided legal advice to

[her] regarding possible lawsuits that might be brought by third parties * * *." Dawoud further

1. Throughout the record, including the trial court's decision at issue in this appeal, Investor Support Services,
LLC is referred to by the name "Equity Team." For purposes of consistency, we will also refer to Investor
Support Services, LLC by the name "Equity Team."
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alleged that she was entitled to "all monies" that Equity Team had received from her under

the PMA and that Equity Team should be ordered to pay her attorney fees, rather than she

pay the attorney fees of Equity Team.

      {¶4}   On July 1, 2019, a bench trial on the matter was held before a magistrate.

During trial, the magistrate heard testimony from two witnesses: Mark Thompson, the CEO,

founder, and owner of Equity Team, and Dawoud. Following closing arguments, which

were held on August 19, 2019, the magistrate took the matter under advisement noting that

it would provide the parties with a decision in due course.

      {¶5}   On March 19, 2020, the magistrate issued a detailed, 15-page decision on the

matter. As part of that decision, the magistrate determined that while Dawoud did owe

Equity Team $473.40 for past due management fees, a fee in which Dawoud conceded that

she owed to Equity Team at trial, Dawoud did not owe Equity Team a leasing fee since

Equity Team had "failed to procure a ready, willing, and able tenant for the property" in

accordance with Section 4g of the PMA. Pursuant to that section of the PMA:

             Manager shall sign and execute the Lease on Owner's behalf,
             collect deposits and other monies from Tenant according to the
             terms of the Manager approved Lease. When Manager
             provides notice to Owner of a Tenant Applicant who is ready,
             willing, and able to sign a lease the Leasing Fee is due and
             payable.

      {¶6}   In so holding, the magistrate found the tenant Equity Team procured, J.B.,

"never agreed to lease the property on terms acceptable to [Dawoud]." The magistrate

determined that this "was the result of the failure of Equity Team to confirm, and then to

convey accurately to [J.B.], the terms that were actually acceptable to [Dawoud]." The

magistrate also found Dawoud had failed to prove any part of her counterclaim against

Equity Team by a preponderance of the evidence. The magistrate reached this decision

despite acknowledging that Dawoud's counterclaim against Equity Team "had some initial

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appeal."

      {¶7}   The magistrate further found that it would be "unjust to award attorney fees to

either party" in this case, thereby denying both Equity Team's and Dawoud's reciprocal

requests for attorney fees. In so holding, the magistrate noted that there were "several

circumstances of the case" that led the magistrate to find "justice requires the parties to

bear their own fees and costs." Specifically, as the magistrate stated:

             The first is that [Dawoud] was responsible for a lot of the
             difficulties in this case. She signed the PMA giving Equity Team
             enormous discretion, and then pretty much insisted on
             micromanaging each decision while refusing to fund the account
             and while allowing a friend to reside in the property without
             notice to Equity Team (creating other burdensome issues that
             Equity Team did not bargain for). Equity Team clearly expended
             a lot of energy in this case dealing not with managing the
             property, but with trying to get past [Dawoud] so that it could get
             to its job of managing the property. In short, [Dawoud] created
             a certain level of disruption for which Equity Team paid in "sweat
             equity" (no pun intended), at no cost to [Dawoud]. That is worth
             something.

      {¶8}   Continuing, the magistrate stated:

             Second, both parties obviously made a conscious decision to
             hire counsel and to invest in a major battle in Small Claim[s]
             Court over principle, a battle that would accrue attorney fees (by
             any fair market value) well in excess of the value of the claim
             itself. Winning this $2,000 case was so important to [Dawoud]
             that she was willing to return from her medical practice in
             Nevada for an Ohio trial even after she suffered a cardiac arrest
             that put her into intensive care for three days in February 2019,
             requiring her to seek a continuance of the April trial date. In this
             Magistrate's view, the accrual of attorney fees is not reasonable
             or rational, and should not be rewarded, "under these
             circumstances."

(Emphasis and parentheses sic.)

      {¶9}   Concluding, the magistrate stated:

             Finally, and closely related to the last point, this Magistrate does
             not think that Small Claims Court is intended for nuclear warfare.
             If it is not against public policy, it should be against public policy
             for small claims litigants to "lawyer up" with a view toward

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              recovering attorney fee awards that (objectively) would
              quintuple the value of the small claim. Like a good handful of
              other cases over which this Magistrate has presided, it is hard
              to believe that either party or either attorney (both of whom
              performed zealously, as trial attorneys must) have been well-
              served by this case. This Magistrate is well-familiar with (and a
              fan of) litigating on principle, but as a colleague once observed:
              "Principle is expensive."

(Emphasis and parentheses sic.)

       {¶10} On April 6, 2020, Equity Team filed an objection to the magistrate's decision.

In its objection, Equity Team initially argued the magistrate erred by finding Dawoud did not

owe it a leasing fee since Equity Team had substantially performed its obligations under

Section 4g of the PMA by finding a "ready, willing, and able tenant." Equity Team also

argued the magistrate erred by not ordering Dawoud to pay its attorney fees even though it

was the "prevailing party on the main issue of its Complaint." The trial court overruled Equity

Team's objection in its entirety on July 14, 2020. In reaching this decision, the trial court

noted that it had reviewed the "lengthy trial transcript," exhibits, pleadings, and arguments

presented, and found the magistrate's decision was "thorough, well-reasoned and legally

sound."

       {¶11} Equity Team now appeals the trial court's decision, raising two assignments

of error for review.

       {¶12} Assignment of Error No. 1:

       {¶13} THE TRIAL COURT ERRED AS A MATTER OF LAW IN DENYING

PLAINTIFF'S REQUEST FOR ATTORNEY'S FEES.

       {¶14} In its first assignment of error, Equity Team argues the trial court erred by

denying its request that Dawoud pay its attorney fees. To support this claim, Equity Team

cites to Section 8g of the PMA, which, as noted above, requires the "non-prevailing party"

to pay the attorney fees of the "prevailing party" should either party employ an attorney to

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enforce any of the provisions of the PMA, or to recover damages for a breach of the PMA.

Based on that section of the PMA, Equity Team argues that it was the "prevailing party"

entitled to recover its attorney fees from Dawoud since it successfully defended against

Dawoud's counterclaim and was the only party who received a monetary judgment in its

favor, i.e. a judgment requiring Dawoud to pay it $473.40 for past due management fees.

We disagree.

       {¶15} "Ohio follows the 'American Rule,' under which a prevailing party generally

may not recover their attorney fees and costs from the opposing, non-prevailing party."

Burdick v. Burd Brothers, Inc., 12th Dist. Clermont No. CA2018-07-054, 2019-Ohio-1593, ¶

18, citing State ex rel. Gmoser v. Village at Beckett Ridge Condominium Owners' Assn.,

Inc., 12th Dist. Butler No. CA2016-02-035, 2016-Ohio-8451, ¶ 44. There is an exception to

this rule, however, that provides that "[a]ttorney fees may be awarded when a statute or an

enforceable contract specifically provides for the losing party to pay the prevailing party's

attorney fees * * *." Wilborn v. Bank One Corp., 121 Ohio St.3d 546, 2009-Ohio-306, ¶ 7,

citing Nottingdale Homeowners' Assn., Inc. v. Darby, 33 Ohio St.3d 32, 34 (1987).

       {¶16} "Fee-shifting contractual provisions are generally enforceable 'so long as the

fees awarded are fair, just and reasonable as determined by the trial court upon full

consideration of all of the circumstances of the case.'" Lamar Advantage GP Co., L.L.C. v.

Patel, 12th Dist. Warren No. CA2011-10-105, 2012-Ohio-3319, ¶ 44, quoting Southeast

Land Dev., Ltd. v. Primrose Mgt., LLC, 193 Ohio App.3d 465, 2011-Ohio-2341, ¶ 15 (3rd

Dist.); and Wilborn at ¶ 8. There is no dispute that the fee-shifting provision found in Section

8g of the PMA is enforceable. The only dispute is whether Equity Team was the "prevailing

party" in this case, thereby entitling it to recover its attorney fees from Dawoud pursuant to

that section of the PMA.

       {¶17} "A prevailing party is the party who successfully prosecutes the action or

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successfully defends against it, prevailing on the main issue, even though not necessarily

to the extent of his or her original contention." Al-Zubi v. Cosmetic & Implant Dental Ctr. Of

Cincinnati, Inc., 1st Dist. Hamilton No. C-190406, 2020-Ohio-3272, ¶ 15, citing

Wigglesworth v. St. Joseph Riverside Hosp., 143 Ohio App.3d 143, 150 (11th Dist.2001).

There is not a "prevailing party" in every case and "[d]enying costs to both parties can be

appropriate when neither party entirely prevails."      State ex rel. Reyna v. Natalucci-

Persichetti, 83 Ohio St.3d 194, 198 (1998). The determination of whether one party is the

"prevailing party" is subject to a de novo standard of review. Gauthier v. Gauthier, 12th

Dist. Warren Nos. CA2018-09-098 and CA2018-09-099, 2019-Ohio-4208, ¶ 63, citing L.G.

Harris Family Ltd. Partnership I v. 905 S. Main St. Englewood, L.L.C., 2d Dist. Montgomery

No. 26682, 2016-Ohio-7242, ¶ 37; Simbo Properties, Inc. v. M8 Realty, L.L.C., 8th Dist.

Cuyahoga No. 107161, 2019-Ohio-3091, ¶ 36; and Hustler Cincinnati, Inc. v. Elm 411,

L.L.C., 1st Dist. Hamilton No. C-130754, 2014-Ohio-5648, ¶ 14. "[D]e novo review means

that this court uses the same standard the trial court should have used." Nationwide

Agribusiness Ins. Co. v. Heidler, 12th Dist. Clinton Nos. CA2018-06-003, CA2018-07-004,

CA2018-09-012, and CA2018-09-015, 2019-Ohio-4311, ¶ 71.

       {¶18} Applying the appropriate de novo standard of review to the case at bar, we

find no error in the trial court's decision denying Equity Team's request that Dawoud pay its

attorney fees. This is because, just as the trial court found, neither Equity Team nor

Dawoud can be considered the "prevailing party" under the facts and circumstances of this

case. This holds true despite the fact that Equity Team was the only party who received a

monetary judgment in its favor, i.e., a judgment requiring Dawoud to pay $473.40 for past

due management fees. Equity Team (just like Dawoud) made the conscious decision to

engage in an unnecessarily protracted litigation over the terms of the PMA on principle and,

most likely, Equity Team's pent-up resentment towards Dawoud and her need to

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micromanage Equity Team's actions under the PMA. Given that their claims were litigated

in a small claims court, a court that is intended to provide a quick, informal and inexpensive

way of resolving these types of disputes, such a decision resulted in both Equity Team and

Dawoud incurring attorney fees totaling well over what this case is actually worth.

Therefore, just as the trial court found, because a small claims court is not intended for

"nuclear warfare," neither Equity Team nor Dawoud can be considered the "prevailing party"

in this case. Accordingly, because neither Equity Team nor Dawoud can be considered the

"prevailing party" under the facts and circumstances of this case, the trial court did not err

by denying Equity Team's request that Dawoud pay its attorney fees. Equity Team's first

assignment of error lacks merit and is overruled.

       {¶19} Assignment of Error No. 2:

       {¶20} THE TRIAL COURT ERRED AS A MATTER OF LAW IN FINDING THAT

PLAINTIFF WAS NOT ENTITLED TO A LEASING FEE OR COMMISSION.

       {¶21} In its second assignment of error, Equity Team argues the trial court erred by

finding Dawoud did not owe it a leasing fee in accordance with Section 4g of the PMA

because it "failed to procure a ready, willing, and able tenant." We again disagree.

       {¶22} Whether Equity Team breached Section 4g of the PMA by failing to procure

"a ready, willing, and able tenant" is not a question of law, but instead a question of fact.

See Top Notch Excavating, L.L.C. v. Peterman, 6th Dist. Erie No. E-11-073, 2012-Ohio-

5266, ¶ 11 ("a court's determination of whether a party has materially breached a contract

is a question of fact"); Stocker v. Cochran's Decorative Curbing, Inc., 7th Dist. Mahoning

No. 09 MA 128, 2010-Ohio-1542, ¶ 33 ("[t]he determination of whether a party has

materially breached a contract is generally a question of fact"). We review this issue by

applying a manifest weight standard of review. See Patel v. Strategic Group, L.L.C., 8th

Dist. Cuyahoga No. 109043, 2020-Ohio-4990, ¶ 20 ("[t]he standard of appellate review of

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the trial court's decision that [appellant] breached the contract is manifest weight of the

evidence"), citing Schaste Metals v. Tech Heating & Air Conditioning, 8th Dist. Cuyahoga

No. 71589, 1997 Ohio App. LEXIS 3543, *3 (Aug. 7, 1997) (a breach of contract claim is

reviewed under a manifest weight of the evidence standard). This is the standard of review

that this court typically applies when reviewing civil appeals from bench trials. See Total

Quality Logistics, L.L.C. v. Alliance Shippers, Inc., 12th Dist. Clermont No. CA2020-06-031,

2021-Ohio-781, ¶ 77 ("[t]ypically, when reviewing civil appeals from bench trials, an

appellate court applies a manifest weight standard of review").

      {¶23} "The standard of review for a manifest weight challenge in a civil case is the

same as that applied to a criminal case." Skyward Learning Servs., Inc. v. Gray, 12th Dist.

Butler No. CA2019-08-140, 2020-Ohio-1182, ¶ 10; Eastley v. Volkman, 132 Ohio St.3d 328,

2012-Ohio-2179, ¶ 17.     When considering a challenge to the manifest weight of the

evidence, this court weighs the evidence and all reasonable inferences, considers the

credibility of witnesses and determines whether in resolving conflicts in the evidence, the

finder of fact clearly lost its way and created a manifest miscarriage of justice warranting

reversal and a new trial ordered. Hacker v. House, 12th Dist. Butler No. CA2014-11-230,

2015-Ohio-4741, ¶ 21, citing Eastley at ¶ 20; Carson v. Duff, 12th Dist. Fayette Nos.

CA2017-03-005 and CA2017-03-007, 2017-Ohio-8199, ¶ 11.             A judgment will not be

reversed as being against the manifest weight of the evidence where the judgment is

supported by some competent, credible evidence going to all essential elements of the

case. Sterling Constr., Inc. v. Alkire, 12th Dist. Madison No. CA2016-12-032, 2017-Ohio-

7213, ¶ 8; Ashburn v. Roth, 12th Dist. Butler Nos. CA2006-03-054 and CA2006-03-070,

2007-Ohio-2995, ¶ 26. "This power is to be invoked only in extraordinary circumstances

where the evidence presented at trial weighs heavily in favor of the appellant." McCartney

v. Universal Elec. Power Corp., 9th Dist. Summit No. 21643, 2004-Ohio-959, ¶ 13, citing

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State v. Otten, 33 Ohio App.3d 339, 340 (1986).

       {¶24} After a thorough review of the record, we find this is not one of those

extraordinary circumstances where the evidence presented at trial weighs heavily in favor

of the appellant, in this case Equity Team, thereby warranting reversal of the trial court's

decision and a new trial. This is because, just as the trial court found, Equity Team "failed

to procure a ready, willing, and able tenant" in accordance with Section 4g of the PMA since

the tenant Equity Team procured, J.B., "never agreed to lease the property on terms

acceptable to [Dawoud]." Procuring a lessee who has an interest in renting a property is

not the same as procuring a lessee who is ready, willing, and able to rent a property on the

terms specified by the lessor. See Ferguson Relators v. Butts, 37 Ohio App.3d 30, 33 (12th

Dist.1987) ("[w]e do not disagree with the basic legal maxim that a real estate broker is

entitled to a commission when he procures a buyer who is ready, willing and able to

purchase the subject property on those terms specified by the owner"); see also Bauman

v. Worley, 166 Ohio St. 471, 475 (1957) (real estate broker was not entitled to collect a

commission for the sale of property where "plaintiff's agent * * * did not produce a buyer

ready, willing and able to purchase the property on the terms specified to her by the owner").

This holds true even where expenses had been incurred and time spent in an effort to lease

the property. Torbeck v. Iannelli, 12th Dist. Clermont No. CA2006-10-085, 2007-Ohio-4539,

¶ 23 ("[a] broker is not entitled to recover a commission for the sale of real estate merely

because he incurred expenses or spent time in an attempt to sell the property"). Therefore,

because the trial court's decision finding Dawoud did not owe Equity Team a leasing fee

was not against the manifest weight of the evidence, Equity Team's second assignment of

error also lacks merit and is overruled.

       {¶25} Judgment affirmed.

       PIPER, P.J., and BYRNE, J., concur.

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