Court Opinion

ID: 2716038
Source: CourtListenerOpinion
Date Created: 2014-08-07 17:04:14.429296+00
Date Added: 2024-06-11T08:02:59.745993
License: Public Domain

[Cite as Resource Title Agency, Inc. v. Ohio Dept. of Job & Family Servs., 2014-Ohio-3427.]
                             IN THE COURT OF APPEALS OF OHIO

                                  TENTH APPELLATE DISTRICT

Resource Title National Agency, Inc.,                  :

                 Appellant-Appellant,                  :
                                                                            No. 14AP-39
v.                                                     :               (C.P.C. No. 13CV-10149)

Ohio Department of Job and                             :            (REGULAR CALENDAR)
Family Services,
                                                       :
                 Appellee-Appellee.
                                                       :

                                           D E C I S I O N

                                     Rendered on August 7, 2014

                 Climaco, Wilcox, Peca, Tarantino & Garofoli Co., L.P.A.,
                 David M. Cuppage and Margaret M. Metzinger, for
                 appellant.

                 Michael DeWine, Attorney General, and Patria V. Hoskins,
                 for appellee.

                  APPEAL from the Franklin County Court of Common Pleas

LUPER SCHUSTER, J.
        {¶ 1} Appellant, Resource Title National Agency, Inc. ("appellant"), appeals from
a decision of the Franklin County Court of Common Pleas affirming a determination of
the Unemployment Compensation Review Commission ("UCRC"), which found appellant
was a successor in interest to Resource Title Agency, Inc. ("Resource Title").
I. Facts and Procedural History
        {¶ 2} On April 19, 2011, appellant entered an asset purchase agreement ("APA")
with Resource Title. Under the terms of the agreement, appellant agreed to purchase
Resource Title's furniture, fixtures, automobile, certain lease security deposits, good will
and other intangible assets (including customer files, customer lists, trade names,
trademarks, and trade secrets).            Appellant also purchased Resource Title's accounts
No. 14AP-39                                                                             2

receivable, escrow advances, and Resource Title's "work-in-process" except for a portion
expressly excluded in the APA.
       {¶ 3} Appellant retained 61 of Resource Title's 69 employees and continued to
operate at the same address as Resource Title.        Resource Title ceased business on
December 31, 2010, and no evidence was presented showing any meaningful business
operations after that date. Appellant began operating on January 1, 2011.
       {¶ 4} Resource Title provided various commercial and retail real estate title
services. Appellant's sole shareholder, Leslie Rennell, was a former board member and
president of Resource Title, as well as the ex-wife of Resource Title's sole shareholder,
Richard Rennell, Sr. Another former board member and the executive vice president of
Resource Title, Andrew Rennell, became appellant's chief operating officer. Testimony
demonstrated that appellant was created in order to become a certified "woman-owned"
business so it could have an opportunity to secure government contracts not otherwise
obtainable by Resource Title.
       {¶ 5} The Ohio Department of Job and Family Services ("ODJFS") determined
appellant was a successor in interest to Resource Title and required appellant to pay
contributions into the Ohio Unemployment Compensation Fund at a rate of 8.80 percent.
Appellant appealed that decision. In the Director's Reconsidered Decision on August 31,
2012, the director affirmed appellant's 8.80 percent contribution rate, effective January 1,
2011. Appellant appealed the director's decision to the UCRC on September 10, 2012.
       {¶ 6} On June 18, 2013, a UCRC hearing officer conducted a telephone hearing
and took testimony from Andrew Rennell, Leslie Rennell, and ODJFS' unemployment
compensation specialist who initially determined appellant to be a successor in interest to
Resource Title. After considering the evidence and testimony, the UCRC affirmed that
appellant was a successor in interest to Resource Title. Appellant appealed UCRC's
determination to the Franklin County Court of Common Pleas which affirmed the
decision on December 17, 2013. Appellant timely appealed that decision to this court.
II. Assignments of Error
       {¶ 7} Appellant assigns the following assignment of error for our review:
              [1.] The Trial Court committed reversible error in affirming
              the decision of the Director, Ohio Department of Job and
              Family Services, in finding that Appellant is a successor in
No. 14AP-39                                                                             3

              interest to a transferring employer for purposes of
              transferring the employer's unemployment compensation
              account.

III. Standard of Review
      {¶ 8} The     standard   of   review   for   appeals   from   UCRC   is   found   in
R.C. 4141.26(D)(2), which states that a common pleas court may affirm UCRC's decision
where it is "supported by reliable, probative, and substantial evidence and is in
accordance with law." A court of appeals' review of an administrative agency's ruling "is
more limited than that of a common pleas court. This court does not weigh evidence."
Kate Corp. v. Ohio State Unemp. Comp. Rev. Comm., 10th Dist. No. 03AP-315, 2003-
Ohio-5668, ¶ 7, citing Childs v. Oil & Gas Comm., 10th Dist. No. 99AP-626 (Mar. 28,
2000), citing Lorain City Bd. of Edn. v. State Emp. Relations Bd., 40 Ohio St.3d 257
(1988). Although appellate courts are not permitted to make factual findings or weigh the
credibility of the witnesses, the court does have a duty to determine whether the board's
decision is supported by the evidence in the record. Tzangas, Plakas & Mannos v. Ohio
Bur. of Emp. Servs., 73 Ohio St.3d 694, 696 (1995). Administrative agencies have
discretion to promulgate and interpret their own rules, and a reviewing court should give
due deference to statutory interpretations by an administrative agency that has
substantial experience and been delegated enforcement responsibility. Weiss v. Pub. Util.
Comm., 90 Ohio St.3d 15, 17-18 (2000), citing Collinsworth v. W. Elec. Co., 63 Ohio St.3d
268, 272 (1992).
      {¶ 9} Thus, a court of appeals determines only if the common pleas court abused
its discretion. Tzangas at 696-97. In successor-in-interest cases, "this court has defined
'abuse of discretion' as connoting more than an error in judgment, but implying a decision
that is without a reasonable basis and clearly wrong." All Star Personnel, Inc. v. Unemp.
Comp. Rev. Comm., 10th Dist. No. 05AP-522, 2006-Ohio-1302, ¶ 13, quoting WLS
Stamping Co., Inc. v. Admr., Ohio Bur. of Emp. Servs., 10th Dist. No. 93AP-278 (Dec. 14,
1993), citing Angelkovski v. Buckeye Potato Chips Co., 11 Ohio App.3d 159 (10th
Dist.1983).
IV. Discussion
      {¶ 10} Generally, R.C. 4141.24(F) provides two methods by which an employer
may qualify as a successor in interest: (1) by operation of law or (2) through voluntary
No. 14AP-39                                                                               4

application. Because appellant and Resource Title did not file an application to obtain
successor-in-interest status, this appeal only concerns whether appellant acquired
successor-in-interest status by operation of law. R.C. 4141.24(F) reads in part:
               If an employer transfers all of its trade or business to another
               employer or person, the acquiring employer or person shall be
               the successor in interest to the transferring employer and
               shall assume the resources and liabilities of such transferring
               employer's account, and continue the payment of all
               contributions, or payments in lieu of contributions, due under
               this chapter.

"Pursuant to [the] first method, successor-in-interest status arises automatically upon the
transfer of the entire business of the predecessor." All Star Personnel at ¶ 16, citing
Makkas v. Unemp. Comp. Bd. of Rev., 18 Ohio St.3d 349, 350 (1985).
         {¶ 11} Under the Ohio Administrative Code, a transferee is a successor in interest
by operation of law where: "(1) [t]here is a transfer of all of the transferor's trade or
business located in the state of Ohio; and (2) [a]t the time of the transfer the transferor is
liable under Chapter 4141. of the Revised Code." Ohio Adm.Code 4141-17-04(A)(1) and
(2). The Ohio Administrative Code also states that for the purposes of R.C. 4141.24, an
employer's " 'trade or business' includes all real, personal and intangible property integral
to the operation of the trade or business." (Emphasis added.) Ohio Adm.Code 4141-17-
01(A).
         {¶ 12} Appellant contends it is not a successor in interest by operation of law
because Resource Title did not transfer all of its assets to appellant. More specifically,
appellant points to the language from the APA which excludes a portion of Resource
Title's "work in process" or the "funds payable to Seller with respect to work performed by
Seller as to customer transactions which have not closed on or before the Effective Date
[of the APA]." (R. 22, Record of Proceedings, exhibit C, Schedule A.)
         {¶ 13} The record demonstrates the UCRC based its determination on sufficient
and reliable evidence in affirming the director's redetermination. With respect to the
assets expressly withheld in the APA, or the "work-in-process" accounts receivable,
appellant failed to identify with any specificity the number of accounts retained, the
amount owed on those accounts, and whether the accounts constituted a significant
portion of Resource Title's business.
No. 14AP-39                                                                               5

       {¶ 14} The testimony at the June 2013 telephone hearing also provided sufficient
evidence that Resource Title transferred all the property "integral" to its business, thereby
making appellant a successor in interest to Resource Title. In addition to acquiring nearly
all of Resource Title's tangible and intangible assets, employees, and remaining at the
same physical location, appellant took Resource Title's "existing blueprint for processes
and workflow." (R. 22, Tr. 27.) Appellant's chief operating officer testified that most of
Resource Title's employees were kept in order to service the work in process. He also
agreed that Resource Title's employees brought "institutional knowledge" and that
appellant could not have "conducted the business and transitions" without carrying over
most of those employees. (R. 22, Tr. 29, 31.)
       {¶ 15} In addition to the testimony, the record shows Resource Title filed a
"change in status" form with ODJFS in September 2011. The form was executed by Tim
McFarland, who served as the director of human resources for Resource Title and,
beginning January 1, 2011, occupied the same position with appellant. In response to the
question of whether appellant was "taking over [Resource Title's] entire business
organization," McFarland answered "no." As a follow-up question, the form requested an
explanation of what portion of Resource Title was sold and what portion was retained. In
response, McFarland wrote, "[a]ssets purchased by new company.                No liabilities."
Notably, Resource Title did not list any assets it was retaining. Based on the above
evidence, the UCRC correctly determined that appellant received the assets "integral to"
Resource Title's business or trade.
       {¶ 16} Appellant also argued the "Pulte Title line of business" is an asset, and was
excluded from the transfer as were the liabilities. (Appellant's Brief, 23.)       However,
appellant conceded at oral argument that Pulte Title was not an asset capable of being
transferred by appellant, as appellant did not own Pulte Title, a separate legal entity.
Similarly, appellant conceded Resource Title's failure to transfer liabilities to appellant is
not relevant in determining successor-in-interest status. See also Kate Corp. at ¶ 13
(finding the establishment of successor-in-interest status does not require the acquisition
of a predecessor's debts or obligations). Accordingly, we will not address those arguments
and need to determine only if appellant acquired the property "integral to" Resource
Title's trade or business.
No. 14AP-39                                                                            6

       {¶ 17} For the first time on appeal, appellant argues that "many of the most
significant assets of Resource Title, its relationships with its underwriters and insurance
carriers, were not transferred." (Appellant's Brief, 23.) However, in its Request for
Reconsideration and Appeal from ODJFS' contribution rate determination, appellant
failed to mention these underwriter or insurance relationships. Appellant only lists the
assets excluded from the APA as the "work in process" defined in the APA and Resource
Title's interest in "Pulte Homes of Ohio, LLC." Similarly, in its appeal to the Franklin
County Court of Common Pleas, appellant stated it was "required to establish entirely new
relationships with each and every underwriter." (R. 23, at 7.) However, as in its appeal to
the UCRC, appellant does not include these underwriter relationships in its appeal to the
common pleas court when discussing "assets" being excluded from the APA. While
appellant previously explained it had to form new relationships with underwriters and
secure new "errors and omissions" insurance, appellant never claimed such relationships
amounted to transferable assets. Because the argument that these relationships are
somehow assets was raised for the first time on appeal, the argument is waived. Berning
v. Ohio Dept. of Transp., 10th Dist. No. 11AP-837, 2012-Ohio-2991, ¶ 10, citing Golden
Christian Academy v. Zelman, 144 Ohio App.3d 513, 516-17 (10th Dist.2001).
       {¶ 18} After a review of the entire record and based upon the above evidence, we
find the trial court did not abuse its discretion in finding that the UCRC's decision was
supported by reliable, probative, and substantial evidence demonstrating Resource Title
transferred all the property integral to its business to appellant, thereby establishing
appellant is a successor in interest pursuant to R.C. 4141.24(F).
V. Conclusion
       {¶ 19} Based on a complete review of the record, we conclude the trial court did
not abuse its discretion in affirming the decision of the UCRC. Accordingly, we overrule
appellant's assignment of error and affirm the judgment of the Franklin County Court of
Common Pleas.
                                                                      Judgment affirmed.

                          SADLER, P.J., and KLATT, J., concur.