Court Opinion

ID: 4524719
Source: CourtListenerOpinion
Date Created: 2020-04-13 13:09:44.196341+00
Date Added: 2024-06-11T12:12:16.156910
License: Public Domain

[Cite as Clarkwestern Dietrich Bldg. Sys., L.L.C. v. Certified Steel Stud Assn., Inc., 2020-Ohio-1431.]

                                      IN THE COURT OF APPEALS

                             TWELFTH APPELLATE DISTRICT OF OHIO

                                              BUTLER COUNTY

 CLARKWESTERN DIETRICH BUILDING                           :
 SYSTEMS, LLC dba CLARKDIETRICH,
                                                          :            CASE NO. CA2019-09-151
        Appellee,
                                                          :                     OPINION
                                                                                 4/13/2020
     - vs -                                               :

                                                          :
 CERTIFIED STEEL STUD
 ASSOCIATION, INC., et al.,                               :

        Appellant.                                        :

          CIVIL APPEAL FROM BUTLER COUNTY COURT OF COMMON PLEAS
                            Case No. CV2013-10-2809

Frost Brown Todd LLC, Matthew C. Blickensderfer, Simon Y. Svirnovskiy, 3300 Great
American Tower, 301 East Fourth Street, Cincinnati, Ohio 45202; Cohen & Grigsby, P.C.,
Anthony Cillo, Fridrikh V. Shrayber, 625 Liberty Avenue, Pittsburgh, Pennsylvania, 15222,
for appellee

Faruki PLL, D. Jeffrey Ireland, Stephen A. Weigand, Jason W. Palmer, 201 East Fifth Street,
Suite 1420, Cincinnati, Ohio 45202, for appellant

Millikin & Fitton Law Firm, Steven A. Tooman, 9032 Union Centre Boulevard, Suite 200,
West Chester, Ohio 45069; Helmer, Martins, Rice & Popham Co., L.P.A., James B. Helmer,
Jr., Robert M. Rice, Jennifer L. Lambert, B. Nathaniel Garrett, 600 Vine Street, Suite 2704,
Cincinnati, Ohio 45202, for John J. Reister, Receiver
                                                                              Butler CA2019-09-151

         HENDRICKSON, P.J.

         {¶ 1} Appellant, Certified Steel Stud Association, Inc. ("the Association"), appeals

the decision of the Butler County Court of Common Pleas distributing settlement proceeds

to   appellee,    Clarkwestern      Dietrich   Building     Systems,     LLC,    DBA     ClarkDietrich

("ClarkDietrich"). For the reasons set forth below, we affirm the trial court's decision.1

         {¶ 2} In 2015, ClarkDietrich brought claims against the Association for violations of

the Ohio Deceptive Trade Practices Act, unfair competition, disparagement, defamation,

and civil conspiracy. After an 11-week jury trial, ClarkDietrich offered to dismiss its claims

against the Association with prejudice on the eve of closing arguments. The Association

refused the settlement.        ClarkDietrich then moved to dismiss its claims against the

Association with prejudice, which was opposed by the Association and denied by the trial

court.    The jury returned a unanimous verdict in favor of ClarkDietrich, awarding the

company $49.5 million, $43 million of which was apportioned to the Association. The trial

court subsequently entered a judgment against the Association in the amount of $43 million.

The Association stipulated it has insufficient tangible assets to satisfy the judgment.

         {¶ 3} Thereafter, ClarkDietrich moved the trial court for an assignment of the

Association's possible breach of fiduciary duty claim against its officers, directors, and

agents, based on their decisions to decline ClarkDietrich's offer to dismiss by stipulation,

oppose ClarkDietrich's motion to dismiss, and proceed with the case through the jury

determination. The trial court held a hearing on the matter, and at the suggestion of the

trial court, ClarkDietrich withdrew its motion for assignment and filed a motion for the

appointment of a receiver. On March 29, 2017, over the Association's objection, the trial

court appointed a receiver, John Reister ("the Receiver"), "to investigate and, if he

1. Pursuant to Loc.R. 6(A), we sua sponte remove this case from the accelerated calendar for the purposes
of issuing this opinion.
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                                                                        Butler CA2019-09-151

determine[d] it to be appropriate, bring, prosecute, and manage claims against [the

Association's] officers, directors and agents arising from the decisions to reject

ClarkDietrich's settlement offer and oppose ClarkDietrich's motion to dismiss." The trial

court further stated: "The appointment of a receiver is necessary to give ClarkDietrich an

opportunity to collect its judgment. If a receiver is not appointed, claims that could fund the

judgment may well lapse." This court upheld the trial court's decision to appoint a receiver

to investigate and prosecute such claims. Clarkwestern Dietrich Bldg. Sys., L.L.C. v.

Certified Steel Stud Assn., Inc., 12th Dist. Butler No. CA2017-04-040, 2017-Ohio-8129.

       {¶ 4} After his appointment, the Receiver filed a complaint against the four directors

of the Association, alleging that the directors breached their fiduciary duty to the Association

by rejecting the settlement offer, and further sought a declaration that the directors'

decisions were not protected by the business judgment rule. In response, two of the

directors, William Gardner and Edward Slish, filed counterclaims, alleging that they were

entitled to indemnification from the Association. Thereafter, the Receiver and one of the

directors, Thomas Porter, reached a settlement which was approved by the trial court. After

the settlement was approved, ClarkDietrich moved the trial court to distribute the settlement

proceeds to ClarkDietrich.      The Association filed a memorandum in opposition to

ClarkDietrich's motion, wherein it argued the trial court should retain any funds recovered

by the Receiver because if the directors were successful in defending the Receiver's

lawsuit, the Association would have a duty to indemnify the directors. The Association

further argued its duty to indemnify would take priority over payment to a general creditor

like ClarkDietrich. The trial court granted ClarkDietrich's motion, dismissed the claims

against Porter, and ordered the clerk to distribute the funds to ClarkDietrich. Those funds

were released to ClarkDietrich 12 days after the court's order.

       {¶ 5} Thereafter, the trial court granted summary judgment and judgment on the

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                                                                             Butler CA2019-09-151

pleadings in favor of the three remaining director-defendants and dismissed the directors'

counterclaims. The Receiver appealed the trial court's decisions and Gardner filed a cross-

appeal. Ultimately, this court affirmed the trial court's decision in all respects. Reister v.

Gardner, 12th Dist. Butler Nos. CA2019-01-010, CA2019-01-011, and CA2019-01-020,

2019-Ohio-4720.2

       {¶ 6} After the trial court decided the summary judgment and rendered judgment

on the pleadings in favor of the remaining directors, the Receiver and a second director,

Henri Jung, reached a settlement. According to the terms of the settlement, Jung would

deposit $550,000 with the trial court in exchange for the Receiver dismissing the claims,

which were on appeal at the time, brought against him by the Receiver.

       {¶ 7} On June 5, 2019, the Receiver moved the trial court to approve the settlement.

The following day, before the trial court approved the settlement between the Receiver and

Jung, ClarkDietrich moved the trial court to distribute the settlement proceeds to

ClarkDietrich. On June 20, 2019, the Association filed a memorandum in opposition to

ClarkDietrich's motion to distribute the settlement proceeds to ClarkDietrich.                  In its

memorandum, the Association argued the money paid by Jung in the settlement should be

held by the trial court or the Receiver pending further proceedings. The Association claimed

that the trial court should hold the proceeds because the Association may have a duty to

indemnify its directors. The Association contended its duty to indemnify its directors would

take priority over payment to a creditor such as ClarkDietrich. According to the Association,

the trial court impliedly considered this possible outcome because it ordered that any

recovery by the Receiver should be deposited with the trial court, rather than directly with

ClarkDietrich.

2. The Receiver and ClarkDietrich appealed our decision, and the matter has been accepted for review by
the Ohio Supreme Court. See 03/17/2020 Case Announcements #2, 2020-Ohio-897.
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                                                                      Butler CA2019-09-151

       {¶ 8} On July 16, 2019, the trial court granted ClarkDietrich's motion to approve the

settlement. In its order the trial court stated the following: "Recovery on these claims will

be used to satisfy the outstanding judgment against [the Association] (the result of a 2015

jury verdict in this case) in whole or in part." The court further indicated the settlement

proceeds shall be paid to and deposited with the trial court for further distribution.   The

funds were deposited with the trial court on July 26, 2019.

       {¶ 9} On August 8, 2019, the trial court issued a decision and entry granting

ClarkDietrich's motion to distribute settlement proceeds. In doing so, the trial court found

that the Association's argument was not supported by statutory or case law and indicated

that the receivership was established for the limited purpose of determining if there are

claims for breach of fiduciary duty against the Association's directors, and if so, pursuing

those claims to give ClarkDietrich an opportunity to collect its judgment. The trial court

further noted that the July 16, 2019 settlement order "specifically provided that 'recovery on

these claims will be used to satisfy the outstanding $43 million judgment against [the

Association] (the result of a 2015 jury verdict in this case) in whole or in part.'" Thus, the

trial court ordered the clerk to disburse the settlement proceeds to ClarkDietrich. The funds

were disbursed to ClarkDietrich the following day via an escrow deposit refund check.

       {¶ 10} The Association now appeals the trial court's decision to distribute the

settlement proceeds to ClarkDietrich despite the directors' potential indemnification claims.

       {¶ 11} As its sole assignment of error, the Association claims:

       {¶ 12} THE COURT ERRED IN RELEASING THE JUNG SETTLEMENT FUNDS TO

CLARKDIETRICH.

       {¶ 13} As an initial matter, after the Association filed its notice of appeal,

ClarkDietrich moved this court for an order dismissing the Association's appeal as moot.

Specifically, ClarkDietrich claims the Association's appeal should be dismissed because it

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                                                                      Butler CA2019-09-151

failed to seek a stay before the settlement funds were distributed to ClarkDietrich. Thus,

ClarkDietrich argues that because the funds were distributed and the order was executed,

the appeal is moot. We agree.

       {¶ 14} Where the trial court rendering judgment has jurisdiction of the subject matter

of the action and of the parties, and where fraud has not intervened, and the judgment is

voluntarily paid and satisfied, payment puts an end to the controversy and takes away from

the defendant the right to appeal or prosecute error or even to move for vacation of

judgment." Kevin O'Brien & Assocs. v. Baum, 10th Dist. No. 03AP-1010, 2004-Ohio-2713,

¶ 7. Thus, a satisfaction of judgment renders an appeal moot where the judgment is

voluntarily paid and accepted as satisfaction. Reliable Credit Assn., Inc. v. SAFA, Inc., 12th

Dist. Butler No. CA2018-11-223, 2019-Ohio-2492, ¶ 15.          This resolves the case and

operates to eliminate the right to appeal. Blodgett v. Blodgett, 49 Ohio St. 3d 243, 245

(1990), citing In re Appropriation for Highway Purposes, 169 Ohio St. 314, 315 (1959).

Simply put, the satisfaction of judgment "puts an end to the controversy" previously litigated

and takes away the right to appeal or prosecute error. Krauss v. Kilgore, 12th Dist. Butler

No. CA99-02-031, 1999 Ohio App. LEXIS 3425, *5-6 (July 26, 1999), citing Blodgett.

       {¶ 15} A party is deemed to have acted voluntarily in satisfying a judgment when the

party fails to seek a stay order prior to the judgment being satisfied. Hagood v. Gail, 105
Ohio App. 3d 780, 790 (11th Dist.1995); see also Capitol Communications, Inc. v. GBS

Corp., 10th Dist. Franklin Nos. 10AP-08 and 10AP-09, 2010-Ohio-5964 (dismissing appeal

as moot where the appellant failed to obtain a stay of execution of the trial court's judgment

and release of the escrowed funds); Slovak v. Univ. Off-Campus Hous., 4th Dist. Athens

No. 99 CA 50, 2000 Ohio App. LEXIS 2262 (May 19, 2000) (dismissing appeal as moot

because the clerk of courts, not one of the parties, satisfied the judgment by distributing

escrowed funds in accordance with the trial court's judgment). If the judgment is satisfied,

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                                                                         Butler CA2019-09-151

the appeal must be dismissed because the issues in the case have become moot. Weist

v. Weigele, 170 Ohio App. 3d 700, 2006-Ohio-5348, ¶ 12 (1st Dist.), citing Hagood.

       {¶ 16} The Ohio Supreme Court has identified two exceptions to the mootness

doctrine. In re Suspension of Huffer from Circleville High School, 47 Ohio St. 3d 12 (1989),

paragraph one of the syllabus. Specifically, if an issue is capable of repetition yet evades

review or involves a matter of great public or great general interest, the court is vested with

jurisdiction to hear the appeal even though the issue raised in the appeal is moot. Id.

       {¶ 17} In this case, the Association argues its appeal is not moot because it did not

voluntarily pay the judgment and sought a stay of the proceedings prior to the distribution

of the settlement. With regard to the stay, the Association admits it did not file a motion to

stay, but contends it effectively moved for a stay when it opposed ClarkDietrich's motion to

distribute the settlement funds and asked the trial court to hold the funds until the Receiver's

action against the directors concluded. The Association further contends it had no reason

to seek a stay until August 8, 2019, when the trial court granted the motion to distribute the

settlement proceeds to ClarkDietrich, and that those funds were released to ClarkDietrich

before the Association was on notice of the court's decision. Thus, the Association claims

it was deprived of its ability to seek any other relief and believes this court is able to provide

meaningful relief. In the alternative, the Association argues that even if its appeal is moot,

it is saved by the "capable of repetition, yet evading review" doctrine.

       {¶ 18} After reviewing the record, we find the settlement funds were voluntarily

disbursed to ClarkDietrich and that the judgment was satisfied.               As a result, the

Association's claims on appeal are moot.         The record reflects the trial court and the

Association received notice on June 5, 2019 of the Jung settlement. The following day,

ClarkDietrich moved the trial court to distribute the settlement proceeds to ClarkDietrich.

On June 20, 2019, the Association filed its memorandum in opposition to ClarkDietrich's

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                                                                        Butler CA2019-09-151

motion wherein the Association raised its claim of priority to the settlement funds. Nearly a

month after the Association filed its memorandum, the trial court granted ClarkDietrich's

motion to approve the settlement and expressly noted that "[r]ecovery on [the Receiver's]

claims will be used to satisfy the outstanding judgment against [the Association] (the result

of a 2015 jury verdict in this case) in whole or in part." As a consequence, we find the

Association was on notice on July 16, 2019, after it had filed its memorandum in opposition

and before the trial court had granted the motion to disburse the funds to ClarkDietrich, that

the settlement proceeds would be used to satisfy ClarkDietrich's outstanding judgment

against the Association. At that point, the Association was aware that the settlement

proceeds would be disbursed to ClarkDietrich, in a manner consistent with the trial court's

July 16, 2019 order. We note that the trial court did not issue the order disbursing the funds

to ClarkDietrich until August 8, 2019, more than three weeks after it informed the parties

that the settlement was approved. Despite this three-week period, the Association failed to

take any action to prevent the disbursement to ClarkDietrich and the judgment was satisfied.

       {¶ 19} We are also unpersuaded by the Association's argument that its

memorandum in opposition to ClarkDietrich's motion to distribute the settlement proceeds

is equivalent to moving the trial court to stay the distribution of those funds. That is, we find

that merely litigating priority to the funds before disbursement is not equivalent to requesting

a stay. See Capitol Communications., Inc., 2010-Ohio-5964 (holding that despite litigation

regarding priority to certain escrowed funds, the creditor failed to seek a stay of execution

to prevent distribution of the funds and therefore the matter was moot); Baird v. L.A.D.

Holdings, LLC, 1st Dist. Hamilton Nos. C-160265 and C-160409, 2017-Ohio-2953 (finding

an appeal moot where the creditor failed to seek a stay of the trial court's order before the

judgment was satisfied and the settlement funds were distributed). As a result, the record

reflects the Association never attempted to stay the distribution of the settlement proceeds.

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                                                                       Butler CA2019-09-151

Due to the Association's inaction, we find the satisfaction of the judgment was voluntary,

and that any appeal from that judgment is now moot.

       {¶ 20} We also find that the Association's appeal is not saved by the "capable of

repetition, yet evading review" doctrine. That doctrine is an exception to the general rule

against deciding moot issues that applies when: (1) the challenged action is too short in

duration to be fully litigated before its expiration, and (2) there is a reasonable expectation

that the complaining party will be subjected to the same action in the future. State ex rel.

Cincinnati Enquirer v. Ronan, 124 Ohio St. 3d 17, 2009-Ohio-5947, ¶ 5. However, an issue

is not capable of repetition, yet evading review simply because it may continue to exist.

Lindeman v. Walker, 4th Dist. Gallia No. 99CA10, 2000 Ohio App. LEXIS 2386, *6 (May 24,

2000). Rather, if the issue could be reviewed in another case if the party seeks a stay of

the court order, then it is does not fall under the exception to the general rule. Id.

       {¶ 21} Here, there is nothing in the record to suggest that the Association will be

subjected to the same action in the future. Specifically, in order to be subjected to the same

action for a second time, several events would have to occur before the issue of priority to

settlement proceeds and their untimely disbursement could be presented to the court. After

reviewing the record, there is no evidence in the record that each of those events will occur

in the future or that the trial court will handle any future settlement in the same manner as

the Jung settlement at issue. Rather, the record reflects the two settlements that have

occurred in this case, the Jung settlement and the Porter settlement, were disbursed after

similar events took place, but in varying time frames. Moreover, the issue of priority to any

future settlement funds could be reviewed in another case if the Association timely sought

a stay of the court order before distribution occurred. Therefore, while it is possible the

same action could occur again, it does not fall under the exception simply because this

scenario may exist in the future.

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                                                                         Butler CA2019-09-151

       {¶ 22} We further note that even if the appeal was not moot, the Association's claim

that the trial court erred in releasing the settlement funds to ClarkDietrich because the

directors' potential indemnification claims take priority over ClarkDietrich's judgment still

fails as the Receiver was not authorized to pay indemnification claims.

       {¶ 23} Under Ohio's receivership statutes, the trial court must exercise sound judicial

discretion in overseeing a receivership. State ex rel. Celebrezze v. Gibbs, 60 Ohio St. 3d
69, 74 (1991). Thus, in receivership actions, "an appellate court will not disturb a trial court's

judgment regarding a receiver's powers absent a showing of an abuse of discretion." Park

Natl. Bank v. Cattani, Inc., 187 Ohio App. 3d 186, 2010-Ohio-1291, ¶ 14 (12th Dist.). An

abuse of discretion is more than an error of law; rather, it suggests that the trial court's

decision is unreasonable, arbitrary, or unconscionable. Id., citing Natl. City Bank v. Semco,

Inc., 183 Ohio App. 3d 229, 2009-Ohio-3319, ¶ 8 (3rd Dist.); Blakemore v. Blakemore, 5
Ohio St. 3d 217, 219 (1983).

       {¶ 24} In the recent appeal related to the Receiver's claims against the remaining

two director-defendants, this court determined that the trial court properly denied the

directors' requests for indemnification from the Association because the Receiver's

appointment did not authorize the payment of indemnification claims. Specifically, this court

stated the following:

              [T]he Receiver was appointed for the limited purposes under
              R.C. 2739.01 "to investigate and, if he determines it to be
              appropriate, bring, prosecute, and manage claims against [the
              Association's] officers, directors and agents arising from the
              decisions to reject ClarkDietrich's settlement offer and oppose
              ClarkDietrich's motion to dismiss." Under those terms, the
              Receiver's appointment was premised on limited authority, none
              of which involves the authorization to pay indemnification
              claims.

Reister, 2019-Ohio-4720, ¶ 32. (Emphasis added.)

       {¶ 25} The trial court rejected the Association's claim of priority to the settlement

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                                                                         Butler CA2019-09-151

funds for similar reasoning. In its decision, the trial court noted the following:

              The receivership was established for the limited purpose of
              determining if there are claims for breach of fiduciary duty
              against the [Association's] directors, and if so, pursuing those
              claims "to give ClarkDietrich an opportunity to collect its
              judgment." * * * Moreover, the [July 16, 2019] [s]ettlement
              [o]rder specifically provided that "recovery on these claims will
              be used to satisfy the outstanding $43 million judgment against
              [the Association] * * * in whole or in part."

In light of our prior holding regarding the Receiver's inability to pay indemnification claims,

which remains law of the case, the trial court did not abuse its discretion in distributing the

settlement funds to ClarkDietrich on the same basis. Specifically, as the trial court found,

the receivership order is clear that the Receiver was appointed with the limited purpose of

investigating claims against the Association's directors, and to "bring, prosecute, and

manage" those claims if appropriate. As we previously held, that limited authority does not

involve the authorization to pay indemnification claims to the directors. Thus, given the

limited purpose of the receivership, the trial court did not err in disbursing the settlement

funds to ClarkDietrich. Any decision otherwise would have been contrary to the trial court's

intended purpose in creating the receivership and inconsistent with the plain language of

the receivership order.

       {¶ 26} Furthermore, the claims against the directors remain pending before the Ohio

Supreme Court. Thus, any right to indemnification, and the filing of any such claims against

the Association, is merely speculative at this point. However, even if the remaining directors

are successful in any indemnity claims against the Association, the Association remains

operating and could indemnify the directors with alternate funds.            Thus, even if the

Association's appeal was not moot, the trial court did not abuse its discretion in declining to

hold the funds until the Receiver's claims against the remaining two directors are resolved.

       {¶ 27} In light of the foregoing, we find no error in the trial court's decision to release

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                                                                                      Butler CA2019-09-151

the settlement funds to ClarkDietrich. Accordingly, the Association's assignment of error is

overruled.

        {¶ 28} Judgment affirmed.

        RINGLAND and PIPER, JJ., concur.

        PIPER, J., concurring separately.

        {¶ 29} As correctly stated by the lead opinion, a satisfaction of a judgment renders

an appeal moot where the judgment is paid and accepted as satisfaction. However, I view

the consequences of Jung's settlement slightly different than our lead opinion for two

reasons. First, the judgment here was not satisfied, and the litigation remained ongoing

between the Receiver and those remaining parties not dismissed by the settlement. The

controversy between Jung and the Receiver was the only controversy resolved by the

settlement agreement, thereby ending only Jung's right to any further appeal.3 Second,

there is no procedural rule or statutory law that requires a party to seek a stay order prior

to a disbursement of funds in order to maintain appellate rights regarding that disbursement.

        {¶ 30} However, like our lead opinion, I find that the trial court properly granted the

motion to disburse because the Receiver had no authority to pay indemnification claims on

behalf of other directors. The Receiver's authority was specifically limited to determining if

there was a breach of fiduciary duty by the directors and applying any funds recovered

toward the judgment. See State ex rel. Celebrezze, 60 Ohio St. 3d 69 (1991). The court

was within its discretion to disburse the money the Receiver pursued through a settlement

3. One party's dismissal from litigation as a result of a settlement calling for a payment is not a satisfaction of
the judgment; it is merely a condition of the settlement agreement permitting that party to be dismissed. The
litigation as to other parties still exists as does the judgment.
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                                                                                  Butler CA2019-09-151

toward the judgment because collection and disbursement was the limited reason the trial

court appointed a receiver.

        {¶ 31} Despite my slightly different path, I arrive at the same result as the lead

opinion. The Receiver clearly had no authority to pay indemnification requests from the

Association or its directors so that the trial court acted fully within its authority and discretion

in permitting the Receiver to release settlement proceeds to ClarkDietrich.4 The Association

argued for payment to certain directors as a priority rather than seeking a stay of the

disbursement. This alone does not render the Association's argument moot, but rather, it

is meritless. The funds recovered by the Receiver were for the purpose of applying those

funds toward the judgment and the trial court did not abuse its discretion in authorizing the

Receiver to do so. Jung's settlement became an apple that once peeled, the Association

cannot unpeel.       Therefore, I concur with my colleagues in affirming the trial court's

judgment.

4. Contrary to the Association's claim, the trial court had no responsibility to hold the settlement proceeds.
The Association attempts to relitigate the purpose of the Receiver's appointment, an issue this court has
previously ruled upon.
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