Marion Plaza, Inc. v. 700 Block L.L.C. , 2010 Ohio 1539 ( 2010 )

[Cite as Marion Plaza, Inc. v. 700 Block L.L.C., 2010-Ohio-1539.]
STATE OF OHIO, MAHONING COUNTY
IN THE COURT OF APPEALS
SEVENTH DISTRICT
THE MARION PLAZA, INC., )
) CASE NO. 09 MA 113
PLAINTIFF-APPELLANT, )
)
- VS - ) OPINION
)
700 BLOCK, LLC, dba WACKY BEAR )
AND dba WACKY BEAR STORAGE, )
et al., )
)
DEFENDANTS-APPELLEES. )
CHARACTER OF PROCEEDINGS: Civil Appeal from Common Pleas
Court, Case No. 09CV173.
JUDGMENT: Affirmed and Modified.
APPEARANCES:
For Plaintiff-Appellant: Attorney David Fantauzzi
Attorney Ronald Yourstowsky
2445 Belmont Avenue
P.O. Box 2186
Youngstown, OH 44504-0186
For Defendants-Appellees: Damean Harris, Pro-se
3180 Hadley Avenue
Youngstown, OH 44505
JUDGES:
Hon. Mary DeGenaro
Hon. Gene Donofrio
Hon. Cheryl L. Waite
Dated: March 31, 2010
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DeGenaro, J.,
{¶1} This timely appeal comes for consideration upon the record in the trial court
and Appellant's brief. Plaintiff-Appellant, The Marion Plaza, Inc., appeals the default
judgment granted in its favor and against Defendants-Appellees Damean Harris 1 and 700
Block LLC, dba Wacky Bear Storage, by the Mahoning County Court of Common Pleas.
Marion Plaza's sole argument on appeal is that the trial court erred by awarding
prejudgment and post-judgment interest in the amount of 8% per year, instead of 18% per
year, which is the rate specified in the contracts between the parties. For the following
reasons, Marion Plaza's assignment of error is meritorious. Accordingly, we modify the
judgment of the trial court to include an interest rate of 18%.
Facts and Procedural History
{¶2} Marion Plaza and 700 Block entered into a written Lease Agreement dated
July 3, 2007, whereby 700 Block agreed to lease a space known as Unit No. T-86 in
Marion Plaza's shopping mall. According to the evidence presented by Marion Plaza, the
Lease Agreement obligates 700 Block to pay interest at 18% per year to Marion Plaza on
any past-due amounts. At the time the Lease Agreement was made, Appellee, Damean
Harris signed a written Guaranty of Lease in which he unconditionally guaranteed 700
Block's payments under the Lease Agreement.
{¶3} Marion Plaza and 700 Block also entered into a written In-Line License
Agreement on November 7, 2007, whereby Marion Plaza granted 700 Block the license to
occupy and use an additional space within its shopping mall, known as Unit No. 434-9.
The License Agreement also specifies an interest rate of 18% on past-due amounts.
{¶4} 700 Block violated the Lease Agreement and the License Agreement by
failing to pay amounts due, including interest. Harris failed to pay the amounts due under
the Lease and Guaranty of Lease. As a result, Marion Plaza commenced the instant
1
During the pendency of this appeal, Damean Harris declared bankruptcy, and accordingly we stayed the
proceedings against him until the bankruptcy was resolved. We subsequently received notice that Harris’
bankruptcy had been discharged. We thus lifted the stay and dismissed this appeal as to Harris only.
Accordingly, this opinion and judgment apply only to The Marion Plaza, Inc. and 700 Block LLC, dba Wacky
Bear and Wacky Bear Storage.
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lawsuit to collect all unpaid amounts and charges under the Lease and License
Agreements, plus both prejudgment and post-judgment interest at the rate of 18% per
year. Attached to the Complaint were: a copy of the License Agreement; account
statements as of January 12, 2009 for each of the Units; and the Guaranty of Lease
executed by Harris.
{¶5} 700 Block and Harris were properly served but failed to answer. Marion
Plaza filed an Application for Default Judgment on both liability and damages.
Attachments to the application included account statements dated May 5, 2009, for both
Units, and the affidavit of Marion Plaza Credit and Collections Manager Roger Guglucello.
Guglucello averred that as of May 1, 2009, the amount owed on Unit No. T-86 (the
Leased Premises) was $9,106.09 which included 18% interest on the past-due amounts
which had accrued up to May 1, 2009, and were termed "services charges" in the account
statements. He attested that as of May 1, 2009, the amount owed on Unit No. 434-9 (the
Licensed Premises) was $3,089.65 which included 18% interest charges on the past-due
amounts which had accrued up to May 1, 2009, also termed "services charges" in the
account statement. Guglucello averred that the total amount owed on both the Lease and
the License Agreement as of May 1, 2009, was $12,195.74.
{¶6} In its proposed Default Judgment Entry, Marion Plaza requested judgment
in the amount of $12,195.74, plus prejudgment interest in the amount of 18% per year
from May 1, 2009 until the date of judgment, and post-judgment interest in the amount of
18% from the date of judgment going forward. Neither 700 Block nor Harris responded or
defended the lawsuit in any manner.
{¶7} On May 13, 2009, the trial court granted the Default Judgment in the
amount of $12,195.74 as requested, however it modified the pre- and post-judgment
interest rate to 8% instead of the requested 18%. According to the docket, the trial court
did not mail notice of its May 13, 2009 judgment to the parties until May 27, 2009. Thus,
Marion Plaza's notice of appeal, which was filed with this court on June 24, 2009, was
timely pursuant to App.R. 4(A).
R.C. 1343.03(A)
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{¶8} In its sole assignment of error, Marion Plaza asserts:
{¶9} "The trial court erred, contrary to R.C. 1343.03(A), by substituting an interest
rate of 8% per year instead of the interest rate of 18% per year as provided in the written
contracts between the parties."
{¶10} Initially we note that Appellees have failed to file a brief in this action, and
thus pursuant to App.R. 18(C), this court "may accept the appellant's statement of the
facts and issues as correct and reverse the judgment if appellant's brief reasonably
appears to sustain such action."
{¶11} R.C. 1343.03(A) provides that [pre- and post-judgment interest] is calculated
based on the statutory rate unless "unless a written contract provides a different rate of
interest in relation to the money that becomes due and payable, in which case the
creditor is entitled to interest at the rate provided in that contract."
{¶12} Thus, "a judgment creditor is entitled to a contractual interest rate instead of
the statutory rate "when (1) the parties have a written contract, and (2) that contract
provides a rate of interest with respect to money that becomes due and payable." First
Bank of Ohio v. Wigfield, 10th Dist. Nos. 07AP-561, 07AP-562, 2008-Ohio-1278, at ¶20,
citing Hobart Bros. Co. v. Welding Supply Serv., Inc. (1985), 21 Ohio App.3d 142, 144,
486 N.E.2d 1229; Frenchtown Square Partnership v. Shifrin Willens, Inc. (Mar. 18, 1998),
7th Dist. No. 96 C.A. 53; P. & W.F., Inc. v. C.S.U. Pizza, Inc. (1993), 91 Ohio App.3d 724,
729, 633 N.E.2d 606. The statutory rate is a default rate to be used when the parties
have not otherwise stipulated to another rate in a written agreement. Wigfield at ¶19.
{¶13} "R.C. 1343.03(A) automatically bestows a right to statutory interest as a
matter of law on a judgment, and does not leave any discretion to trial court to deny such
interest." Cafaro Northwest Partnership v. White (1997), 124 Ohio App.3d 605, 608, 707
N.E.2d 4. Thus, we apply a de novo standard of review to the purely legal question
raised in this appeal.
{¶14} This court has reversed and remanded trial court judgments in the past for
awarding the statutory rate for pre/post-judgment interest instead of the rate specified in
contracts between the parties pursuant to R.C. 1343.03(A). See Ohio Valley Mall Co. v.
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Fashion Gallery, Inc. (1998), 129 Ohio App.3d 700, 704, 719 N.E.2d 8; Frenchtown
Square Partnership, supra; Cafaro, supra. Although these cases involved a prior version
of R.C. 1343.03(A), the only difference between that version and the current one is that
the prior provided a fixed statutory rate, while the current one provides a variable statutory
rate tied to the federal short-term rate. See Maynard v. Eaton Corp., 119 Ohio St.3d 443,
2008-Ohio-4542, 895 N.E.2d 145, at ¶5-6. More recent decisions from other districts
have also reversed where the trial court granted interest at the statutory rate when a
different rate was specified in the contract between the parties. See, e.g., Wigfield,
supra.
{¶15} Here it is clear from the record that both the Lease Agreement and the
License Agreement specify an 18% interest rate on past-due amounts. With regard to
the Lease Agreement, Guglucello's affidavit and the accompanying account statement
demonstrate that this contract provides an 18% interest rate on past-due amounts.
{¶16} Further, the License Agreement states: "If the Licensee fails to pay, when
the same is due and payable, any amount or charge to be paid to Grantor by Licensee as
provided in this License, such unpaid amounts will bear interest from the due date thereof
to the date of payment at the rate of eighteen percent (18%) per annum. In the event
such rate is prohibited by law, unpaid amounts shall bear interest at the maximum rate
permitted by law."
{¶17} Since both written contracts provide an 18% rate of interest with respect to
money that becomes due and payable, Marion Plaza, as judgment creditor, is entitled to a
pre- and post-judgment interest rate of 18%. R.C. 1343.03(A). The trial court erred by
awarding interest in the amount of 8%. Marion Plaza's sole assignment of error is
meritorious. Accordingly, the judgment of the trial court is affirmed and modified to
specify a pre-judgment and post-judgment interest rate of 18% on the default judgment.
Vukovich, P.J., concurs.
Donofrio, J., concurs.