Ellison v. K 2 Motors, L.L.C. , 2023 Ohio 1871 ( 2023 )

[Cite as Ellison v. K 2 Motors, L.L.C., 2023-Ohio-1871.]
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
Matthew Ellison, :
Plaintiff-Appellee, :
No. 22AP-529
v. : (C.P.C. No. 21CV-7908)
K 2 Motors, L.L.C., : (ACCELERATED CALENDAR)
Defendant-Appellant. :
D E C I S I O N
Rendered on June 6, 2023
On brief: Sean M. Kohl, Timothy J. Cook, and Sean P.
Costello for appellee. Argued: Sean M. Kohl.
On brief: John F. Burke, III, for appellant. Argued: John F.
Burke.
APPEAL from the Franklin County Court of Common Pleas
BOGGS, J.
{¶ 1} Defendant-appellant, K 2 Motors, L.L.C. (“K 2”), appeals the judgment of the
Franklin County Court of Common Pleas, which denied K 2’s Civ.R. 60(B) motion for relief
from a default judgment entered in favor of plaintiff-appellee, Matthew Ellison, on Ellison’s
claims for fraud and violations of the Ohio Consumer Sales Practices Act (“CSPA”), R.C.
1345.01, et seq. Because the trial court did not abuse its discretion in denying K 2’s motion,
we affirm that court’s judgment.
I. FACTS AND PROCEDURAL BACKGROUND
{¶ 2} Ellison sued K 2 for violations of the CSPA and for fraud in relation to his
purchase of a 2012 Infiniti G37 sedan from K 2’s used car dealership in Brunswick, Ohio,
No. 22AP-529 2
on September 19, 2021. Ellison alleges that K 2 knew the vehicle had been damaged in a
prior accident and that it had significant frame damage; faulty brakes, brake rotors, and
dirty brake fluid; a leaking faulty steering rack; faulty power steering; a leaking radiator
hose; a leaking sunroof; and other leaks and mechanical and electrical issues.
{¶ 3} Ellison maintains that K 2 repainted some of the vehicle’s parts to hide rust
and damage to the vehicle. He further alleges that, despite its knowledge of the vehicle, K 2
represented to him that the vehicle had been inspected, was in great condition, and had
never been in an accident. Ellison claims that he purchased the vehicle in reliance on K 2’s
representations for the total sales price of $19,649.28.1
{¶ 4} Ellison alleges that the day after he purchased the vehicle its sunroof leaked,
causing damage to the interior, and that, soon thereafter, the vehicle’s steering began
continually locking. On September 22, 2021, Ellison attempted to return the vehicle to K 2
for a refund, but K 2 refused. Ellison alleges that K 2 instead promised to repair the vehicle,
but that it has not honored that promise. Ellison claims that a third-party mechanic
inspected the vehicle on October 25, 2021, determined that the vehicle was unsafe to drive,
and estimated that the cost to return the vehicle to a safe condition would exceed $7,352.
{¶ 5} Ellison alleges that, because of K 2’s actions, he had to lease another vehicle
for $31,882.07, and that he has suffered from anxiety, stress, frustration, lack of sleep, and
worry. Ellison claims that K 2’s actions constitute both common-law fraud and unfair,
deceptive, and unconscionable acts and practices in violation of the CSPA.2 Ellison sought
damages greater than $25,000, including treble damages for K 2’s violations of the CSPA.
1 This amount represents the total of the financed payments over the course of 48 months. Ellison financed
$15,338.70. That amount included the purchase price of $14,236, plus sales tax at 7.5 percent and title and
registration fees. Interest at 12.44 percent over the life of the loan amounted to $4,310.58.
2 Ellison alleges CSPA violations not only with respect to the sale of this vehicle but also with respect to K 2’s
advertising practices.
No. 22AP-529 3
{¶ 6} Ellison served K 2’s statutory agent, David A. Streeter, by personal process
server with a summons and complaint on March 17, 2022. Although K 2 does not dispute
that it was properly served, it did not file an appearance, an answer, or a motion to dismiss
within the time permitted by the Rules of Civil Procedure.
{¶ 7} On April 20, 2022, Ellison filed a motion for default judgment. For violations
of the CSPA, Ellison claimed he was entitled to recover as damages the amount necessary
to repair the vehicle to a safe condition ($8,336.10 according to Ellison’s supporting
affidavit), the monthly payments he had made under his lease of a replacement vehicle
($2,683.50), and $5,000 in damages for emotional distress, all trebled, for a cumulative
total of $48,058.80. He additionally requested an award of reasonable attorney fees in the
amount of $4,441.503 and costs of $389.75. Ellison claimed he was entitled to his actual
damages in the amount of $11,019.60, plus punitive damages, attorney fees, and costs, on
his fraud claim.
{¶ 8} The trial court granted Ellison’s motion for default judgment on May 11,
2022. Based solely on the complaint, the motion for default judgments, and the
attachments to those filings, the court entered judgment against K 2 for $48,058.80, plus
$4,441.50 for attorney fees, $389.75 for costs, and continuing interest.
{¶ 9} Counsel for K 2 filed a notice of appearance on May 20, 2022—nine days after
the trial court entered the default judgment. Approximately a month later, K 2 filed a
motion for relief from judgment, pursuant to Civ.R. 60(B), supported by an affidavit from
its General Manager, R.J. Elser. K 2 claimed it was entitled to relief from judgment for two
3Ellison submitted in support of his motion an affidavit from his attorney, Sean Kohl, who testified to the
amount his law firm had charged Ellison for work on this case and who opined that the hourly rate charged
by the firm’s attorneys and paralegal are reasonable for a consumer practice in Columbus, Ohio.
No. 22AP-529 4
reasons. First, it argued that the default judgment was void because Ellison did not serve
K 2 with the motion for default judgment. Second, K 2 argued that its failure to respond to
Ellison’s complaint was the result of mistake, inadvertence, or excusable neglect and that it
had a valid defense to Ellison’s claims. K 2’s argument in support of its right to relief under
Civ.R. 60(B) constitutes a single paragraph:
Defendant here meets all the requirements [for relief] and
judgment should be vacated. The affidavit of RJ Elser outlines
the reason [why] the underlying complaint was not answered.
It was clearly not answered due to mistake, inadvertence
and/or excusable neglect * * *. Additionally, this matter should
not have proceeded in this Court as this Court had no
jurisdiction as the entire transaction occurred in Medina
County. Moreover, the purchase was governed by a
mandatory arbitration clause * * *. Defendant had no legal
liability for the vehicle in question and * * * even if [it] did the
damages were not in the amount that the plaintiff sought.
Finally, this motion for relief from judgment has been timely
filed.
(June 24, 2022 Mot. for Relief from Jgmt. at 5.)
{¶ 10} The trial court denied K 2’s motion for relief from judgment. It rejected K 2’s
argument that the default judgment was void because Ellison did not serve the motion for
default judgment on K 2. It also held that K 2 was not entitled to relief from judgment
under Civ.R. 60(B) because (1) K 2’s failure to take any action, despite its knowledge of
Ellison’s complaint, could not be construed as excusable neglect or mistake, (2) K 2 failed
to allege a meritorious defense to Ellison’s claims, and (3) K 2’s procedural arguments
lacked merit and/or did not constitute meritorious defenses for purposes of Civ.R. 60(B).
{¶ 11} K 2 has appealed and now presents two assignments of error. Because both
assignments of error essentially contend that the trial court erred by denying K 2’s motion
for relief from judgment, we address them together.
No. 22AP-529 5
II. ANALYSIS
A. Service of the motion for default judgment on K 2 was not required
{¶ 12} Before turning to K 2’s arguments under Civ.R. 60(B), we first address K 2’s
argument that the default judgment was void because Ellison did not serve K 2 with the
motion for default judgment. Where the default judgment is void, K 2 would not be
required to comply with Civ.R. 60(B) to have the judgment vacated. See Patton v. Diemer,
35 Ohio St.3d 68, 70 (1988). The authority to vacate a void judgment is not derived from
Civ.R. 60(B); it is an inherent power possessed by Ohio courts. Id. Nevertheless, we reject
K 2’s argument that the default judgment in this case is void.
{¶ 13} Civ.R. 55, which governs default judgment, states, “When a party against
whom a judgment for affirmative relief is sought has failed to plead or otherwise defend as
provided by these rules, the party entitled to a judgment by default shall apply in writing or
orally to the court therefore.” Civ.R. 55(A). It goes on to provide that, “[i]f the party against
whom judgment by default is sought has appeared in the action, he (or, if appearing by
representative, his representative) shall be served with written notice of the application for
judgment at least seven days prior to the hearing on such application.” (Emphasis added.)
Id. The rule imposes no notice requirement with respect to a party who has not appeared
in the action. Thus, a defendant who has not made an appearance in the action is not
entitled to notice that a motion for default judgment has been filed before the court may
enter judgment. Hartman v. Crime Victims Reparations Fund, 138 Ohio App.3d 235, 238
(10th Dist.2000).
{¶ 14} In support of its argument, K 2 points to Civ.R. 5(A), which it contends
required service of Ellison’s motion for default judgment on K 2 before the trial court could
validly enter judgment. Civ.R. 5(A) sets out requirements for service and filing of pleadings
No. 22AP-529 6
and papers in a civil action, but it confirms that an application for default judgment need
not be served on a party who has not appeared in the action. It first states a general rule:
“Except as otherwise provided in these rules, * * * every written motion other than one
which may be heard ex parte * * * shall be served upon each of the parties.” Id. It goes on,
however, to state, “Service is not required on parties in default for failure to appear except
that pleadings asserting new or additional claims for relief or for additional damages
against them shall be served upon them in the manner provided for service of summons in
Civ. R. 4 through Civ. R. 4.6.” (Emphasis added.) Id. Thus, consistently with Civ.R. 55(A),
Civ.R. 5(A) does not require service of a motion for default judgment on a party that is in
default for failure to appear.
{¶ 15} We liberally construe the term “appeared” for purposes of Civ.R. 55(A). See
Bank of N.Y. Mellon v. Watkins, 10th Dist. No. 11AP-539, 2012-Ohio-4410, ¶ 10 (finding
that defendant appeared by filing requests for mediation and an extension of time to answer
and by participating in mediation), citing Columbus Mgt. Co. v. Nichols, 10th Dist. No.
92AP-191, 1992 Ohio App. LEXIS 4076 (Aug. 4, 1992). “Appearance” is commonly
understood to imply “some sort of presentation or submission to the court in which the
action is pending,” but it also “may be reasonably construed to reach informal contacts or
correspondence between the parties or the court which serve the same purpose” by
indicating a clear intention to defend in the action. Columbus Mgt. Co. at *6-7. Both when
Ellison filed his motion for default judgment and when the trial granted that motion, K 2
had not appeared in the action. K 2 had not made a formal court filing, nor is there any
indication in the record of any correspondence between K 2 and either the trial court or
Ellison that would indicate K 2’s clear intention to defend against Ellison’s claims. Thus, K
No. 22AP-529 7
2 was in default for failure to appear, and Ellison was not required to serve his motion for
default judgment on K 2 under either Civ.R. 5(A) or 55(A).
{¶ 16} K 2 fares no better with its invocation of Loc.R. 19.01 as a source of a duty for
Ellison to serve K 2 with his motion for default judgment. Loc.R. 19.01 states:
Every * * *motion * * * filed with the Court or a judge shall be
served upon all opposing counsel and upon all parties not
represented by counsel. Proof of service in writing shall be
shown on or attached to the * * * motion * * *. No paper
delivered to the Court or a judge without a certificate of service
shall be considered by any judge of this Court except trial briefs
where it has been agreed by counsel that they shall not be
exchanged.
Loc.R. 19.01 does not specifically exempt from its requirements motions for default
judgment, but the local rule may not impose a service requirement that is inconsistent with
the Rules of Civil Procedure. See Civ.R. 83(A) (local rules “shall not be inconsistent with
[the Rules of Civil Procedure] or with other rules promulgated by the Supreme Court”). See
also Vance v. Roedersheimer, 64 Ohio St.3d 552, 554 (1992), citing Section 5(B), Article IV,
Ohio Constitution and Civ.R. 83. To the extent a local rule is inconsistent with the Rules of
Civil Procedure, the local rule is unenforceable. Day’s Constr. Co. v. Rosenstock, 10th Dist.
No. 94APG02-254, 1994 Ohio App. LEXIS 5003, *9 (Nov. 1, 1994) (Loc.R. 3.04, which
provided 14 days to respond to a motion, did not apply to a motion for default judgment
because it would be inconsistent with Civ.R. 55(A)). See also Third Fed. S. & L. v. Sutton,
9th Dist. No. 28763, 2018-Ohio-2003, ¶ 15 (affirming default judgment where “Civ.R. 55(A)
did not require service of the motion [for default judgment] on * * * a party having not
appeared in the action, and [Summit County] Loc.R. 7.04 does not create such a
requirement”). Accordingly, Loc.R. 19.01 does not require service of a motion for default
No. 22AP-529 8
judgment on a party who has not appeared in the action, as the plain language of Civ.R.
5(A) and 55(A) unambiguously provides that such service is not required.
{¶ 17} Because Civ.R. 5(A), Civ.R. 55(A), and Loc.R. 19.01 did not require Ellison to
serve his motion for default judgment on K 2, we reject K 2’s argument that the default
judgment was improper for lack of service.4
B. The trial court did not abuse its discretion by denying K 2’s motion
for relief from judgment
{¶ 18} We now turn to K 2’s argument that the trial court erred in denying relief
from judgment pursuant to Civ.R. 60(B). Appellate courts apply an abuse of discretion
standard when reviewing a decision to grant or deny relief under Civ.R. 60(B). State ex rel.
Jackson v. Ohio Adult Parole Auth., 140 Ohio St.3d 23, 2014-Ohio-2353, ¶ 21, citing Rose
Chevrolet v. Adams, 36 Ohio St.3d 17, 21 (1988). “Abuse of discretion” implies an
“unreasonable, arbitrary, or unconscionable use of discretion, or * * * a view or action that
no conscientious judge could honestly have taken.” State v. Kirkland, 140 Ohio St.3d 73,
2014-Ohio-1966, ¶ 67, quoting State v. Brady, 119 Ohio St.3d 375, 2008-Ohio-4493, ¶ 23.
{¶ 19} Pursuant to Civ.R. 60(B), a court may relieve a party from a final judgment
“on motion and upon such terms as are just,” for any of five enumerated grounds. To
prevail on a Civ.R. 60(B) motion, the moving party must establish that “(1) the party has a
meritorious defense or claim to present if relief is granted; (2) the party is entitled to relief
under one of the grounds stated in Civ.R. 60(B)(1) through (5); and (3) the motion is made
4 Contrary to K 2’s characterization of a default judgment entered without service of the motion for default
judgment on the defaulting party as void, this court has held that failure to comply with a service requirement
such as that in Civ.R. 5(A) or 55(A) only renders a judgment voidable. Hall v. Parcels of Land Encumbered
with Delinquent Tax Liens, 10th Dist. No. 96APE11-1552, 1997 Ohio App. LEXIS 2437, *4-5 (June 5, 1997),
citing Billiter v. Winship, 10th Dist. No. 93AP-176, 1993 Ohio App. LEXIS 4754, *8 (Sept. 28, 1993), citing
AMCA Internatl. Corp. v. Carlton, 10 Ohio St.3d 88, 90-91 (1984). “ ‘A procedural defect, such as failure to
give notice as required, may be sufficient to afford relief from a default judgment on appeal or for relief under
Rule 60(b) * * *, however the error should not usually be treated as so serious as to render the judgment void.’ ”
Hall at *5, quoting Winfield Assoc., Inc. v. Stonecipher, 429 F.2d 1087, 1091 (10th Cir.1970).
No. 22AP-529 9
within a reasonable time, and, where the grounds of relief are Civ.R. 60(B)(1), (2) or (3),
not more than one year after the judgment, order or proceeding was entered or taken.” GTE
Automatic Elec., Inc. v. ARC Industries, Inc., 47 Ohio St.2d 146 (1976), paragraph two of
the syllabus.
{¶ 20} A party who moves for relief from judgment is not automatically entitled to a
hearing. Davis v. Davis, 10th Dist. No. 15AP-1078, 2016-Ohio-7790, ¶ 13, citing Kay v.
Marc Glassman, Inc., 76 Ohio St.3d 18, 19 (1996). “ ‘If the material submitted by the
movant in support of a motion for relief from judgment under Civil Rule 60(B) contains no
operative facts or meager and limited facts and conclusions of law, it will not be an abuse
of discretion for the trial court to overrule the motion and refuse to grant a hearing.’ ” U.S.
Bank Natl. Assn. v. Lewis, 10th Dist. No. 18AP-550, 2019-Ohio-3014, ¶ 28, quoting
Adomeit v. Baltimore, 39 Ohio App.2d 97 (8th Dist.1974), paragraph four of the syllabus.
Although Ohio courts should strive to decide cases on their merits, “we refuse to let
Civ.R. 60(B) serve as an emasculation of the pleading rules and time limits.” Griffey v.
Rajan, 33 Ohio St.3d 75, 79 (1987).
{¶ 21} K 2 claims it is entitled to relief under Civ.R. 60(B)(1), which permits a court
to grant relief upon a showing of “mistake, inadvertence, surprise or excusable neglect.”
The Supreme Court of Ohio has defined the “elusive concept” of excusable neglect in the
negative; a defendant’s inaction “is not ‘excusable neglect’ if it can be labeled as a ‘complete
disregard for the judicial system.’ ” Kay at 20, quoting GTE Automatic Elec. at 153. A court
must “ ‘take into consideration all the surrounding facts and circumstances’ ” to determine
whether excusable neglect exists in each case. Rose Chevrolet at 21, quoting Colley v.
Bazell, 64 Ohio St.2d 243, 249 (1980). If a “movant alleges inadvertence and excusable
neglect as grounds for relief from judgment under Civ.R. 60(B)(1), but does not set forth
No. 22AP-529 10
any operative facts to assist the trial court in determining whether such grounds exist, the
court does not abuse its discretion in denying the motion for relief from judgment.” Id.{¶ 22} K 2 filed an affidavit from Elser, its General Manager, in support of its motion
for relief from judgment. Elser explained that “normal procedure” was for Streeter, K 2’s
statutory agent, to forward legal documents to Elser by email and then to mail the original
documents to KDK Mitsubishi, the name under which K 2 does business. (Elser Aff. at ¶ 3,
attached to June 24, 2022 Mot. for Relief from Jgmt.) It was Elser’s responsibility to
forward legal complaints to the company’s attorney. Elser admits that he received an email
from Streeter, alerting him to Ellison’s complaint, on March 27, 2022, but claims he did not
receive a paper copy of the complaint. He states, “because I never received the paper copies
of the complaint, and despite my usual practice, I neglected to forward the complaint to”
K 2’s attorney. Id. at ¶ 4. Elser’s affidavit establishes that both Streeter (an attorney) and
Elser knew of Ellison’s lawsuit by March 27, 2022. The issue before us therefore resolves
to whether, despite that knowledge, Elser’s failure to forward the complaint to K 2’s
attorney for preparation of a defense amounts to excusable neglect.
{¶ 23} A party’s failure to plead after receiving a copy of a complaint generally does
not amount to excusable neglect. Kormanik v. Haley, 10th Dist. No. 12AP-18, 2012-Ohio-
5975, ¶ 19, citing LaSalle Natl. Bank v. Mesas, 9th Dist. No. 02CA008028, 2002-Ohio-
6117, ¶ 13. In some circumstances, however, relief from a default judgment may be
warranted for excusable neglect when a corporate employee has failed to forward the
summons and complaint that has been validly served on the corporation to the appropriate
person in the corporate hierarchy. Perry v. GMC, 113 Ohio App.3d 318, 322 (10th
Dist.1996), citing Hopkins v. Quality Chevrolet, Inc., 79 Ohio App.3d 578, 582 (4th
Dist.1992).
No. 22AP-529 11
{¶ 24} This court has adopted a two-part test from Hopkins for determining whether
internal corporate errors are excusable under Civ.R. 60(B)(1). Kormanik at ¶ 20. To
demonstrate excusable neglect, the movant “must present circumstances ‘ “sufficient to
show (1) that there is a set procedure to be followed in the corporate hierarchy for dealing
with legal process, and (2) that such procedure was, inadvertently, not followed until such
time as a default judgment had already been entered against the corporate defendant.” ’ ”
Id., quoting Perry at 324, quoting Hopkins at 583. The Fourth District Court of Appeals
addressed the concern that allowing relief in those circumstances would “provide a ready
excuse” for any corporation that seeks to vacate a default judgment for any reason, stating
that “sham use of this exception will be significantly reduced by requiring sworn affidavits
with facts sufficient to demonstrate that the summons and complaint never reached the
appropriate person in the corporate hierarchy.” Hopkins at 582-83.
{¶ 25} The complaints in both Perry and Hopkins, although properly served on the
corporations, never reached the appropriate person in each defendant’s corporate
hierarchy. See Perry at 324 (complaint did not reach in-house general counsel, whose duty
it was to alert outside counsel); Hopkins at 583 (neither of the two persons charged with
dealing with the corporation’s legal matters—its President and its General Manager—was
made aware of the case until after the default judgement had been entered). Perry and
Hopkins are distinguishable from this case because, here, notice of Ellison’s lawsuit did
reach the appropriate person within the corporation. That person was Elser, who learned
of the complaint from Streeter on March 27, 2022 but failed to act to safeguard K 2’s ability
to defend against Ellison’s claims.
{¶ 26} The only fact K 2 has presented to justify that failure is that Elser never
received a physical copy of the complaint from Streeter after he learned of Ellison’s lawsuit.
No. 22AP-529 12
In light of his knowledge of Ellison’s lawsuit, Elser’s failure to act is not excusable in the
same way that a corporation’s failure to act is excusable when the responsible corporate
employee remains unaware that a case has been filed until after default judgment has been
entered. See Morgan Adhesives Co. v. Sonicor Instrument Corp., 107 Ohio App.3d 327,
335 (9th Dist.1995) (rejecting corporation’s claim of excusable neglect where evidence
established defendant’s knowledge of the suit and of the consequences of its failure to
participate).
{¶ 27} Both Streeter and Elser knew of Ellison’s lawsuit before the time for filing an
answer had passed. As an attorney, Streeter should have appreciated the limited time
allowed for answering the complaint, and Elser was admittedly aware of his duty to forward
legal complaints to K 2’s outside counsel. From these facts, the trial court could reasonably
conclude that Elser’s reliance on the fact that he did not receive a physical copy of the
complaint from Streeter did not excuse his failure to act. For these reasons, we conclude
that the trial court did not abuse its discretion in determining that K 2 did not establish a
right to relief from default judgment under Civ.R. 60(B)(1).
The trial court also found that K 2 failed to establish that it had a meritorious defense to
Ellison’s claims. “Meritorious,” in this context, “refers to the substantive merits of the
underlying claim.” Meyer v. Geyman, 6th Dist. No. WD-07-018, 2007-Ohio-5474, ¶ 13.
“[A] proffered defense is meritorious if it is not a sham and when, if true, it states a defense
in part, or in whole, to the claims for relief set forth in the complaint.” Amzee Corp. v.
Comerica Bank-Midwest, 10th Dist. No. 01AP-465, 2002-Ohio-3084, ¶ 20, citing The Pool
Man, Inc. v. Rea, 10th Dist. No. 95APG04-438, 1995 Ohio App. LEXIS 4577 (Oct. 17, 1995).
To establish a right to relief from judgment under Civ.R. 60(B), a movant must do more
than make a bare allegation that it has a meritorious defense to present if relief is granted.
No. 22AP-529 13
Miller v. Susa Partnership, L.P., 10th Dist. No. 07AP-702, 2008-Ohio-1111, ¶ 19, citing
Bright v. Family Medicine Found., Inc., 10th Dist. No. 05AP-835, 2006-Ohio-5037, ¶ 22.
A movant need not prove that it would prevail on its defense, but the movant “must allege
supporting operative facts with enough specificity to allow the court to decide that the
movant has a defense that he could have successfully argued at trial.” Mattingly v.
Deveaux, 10th Dist. No. 03AP-793, 2004-Ohio-2506, ¶ 10. Other than the conclusory
statements that it has “no legal liability for the vehicle in question” and that it “sold the
vehicle * * * in an “As Is” condition and did not fail to disclose any known defects,” K 2
asserted only procedural defenses—that Ellison filed his complaint in an improper
jurisdiction and that any dispute between the parties is governed by an arbitration
agreement. (June 24, 2022 Mot. For Relief from Jgmt. at 3, 5.)
{¶ 28} Neither K 2’s bare denial of liability nor its bare denial that it failed to disclose
known defects with the vehicle is sufficient to demonstrate the existence of a meritorious
defense. Nor do K 2 and Elser’s statements that K 2 sold the vehicle “as is” suffice to
establish a meritorious defense. K 2 offers no argument why an “as is” provision in its
contract would create a defense to Ellison’s tort claim of fraud or claim for statutory
violations of the CSPA. While an “as is” clause relieves a seller of a duty to disclose, it “does
not bar a claim for ‘positive’ fraud, a fraud of commission rather than omission.” Brewer
v. Bros., 82 Ohio App.3d 148, 151 (12th Dist.1992). And several Ohio courts have expressly
concluded that an “as is” or “no warranty” clause in a contract does not provide a defense
to a claim for a violation of the CSPA. Hamilton v. Ball, 4th Dist. No. 13CA3533, 2014-
Ohio-1118, ¶ 47 (“While an ‘as is’ clause may be effective in defending a breach of contract
or warranty claim, it does not have a similar effect on CSPA claims, which are a creature of
statutory law”); Keel v. Toledo Harley-Davidson/Buell, 184 Ohio App.3d 348, 2009-Ohio-
No. 22AP-529 14
5190, ¶ 17 (6th Dist.) (“Violations of the CSPA are enumerated by the act, and any disclaimer
of a warranty is ineffective against a claim based on an enumerated violation”); Gallagher
v. WMK Inc., 9th Dist. No. 23564, 2007-Ohio-6615, ¶ 24; contra Tisdale v. Direct Detail,
8th Dist. No. 97503, 2012-Ohio-3252 (holding that a disclaimer of warranties precluded a
consumer from asserting a CSPA claim based on undisclosed defects).
{¶ 29} We turn now to Ellison’s procedural arguments regarding improper venue
and the existence of an arbitration agreement and conclude that neither constitutes a
meritorious defense for purposes of Civ.R. 60(B).
{¶ 30} K 2 asserts that the trial court lacked jurisdiction over Ellison’s claims
because the sale out of which those claims arose occurred in Medina County. Although K 2
raises this issue as one of jurisdiction, it is instead one of venue. Venue and jurisdiction are
distinct legal concepts. “ ‘Jurisdiction connotes the power to hear and decide a case on its
merits, while venue connotes locality, the place where the suit should be heard.’ ” State ex
rel. Dunbar v. Ham, 45 Ohio St.2d 112, 115 (1976), quoting The New York, Chicago, and
St. Louis RR. Co. v. Matzinger, 136 Ohio St. 271, 276 (1940).
{¶ 31} Ohio’s common pleas courts have “original jurisdiction over all justiciable
matters and such powers of review of proceedings of administrative officers and agencies
as may be provided by law.” Article IV, Section 4(B), Ohio Constitution. A common pleas
court’s subject-matter jurisdiction “extends to ‘all matters at law and in equity that are not
denied to it.’ ” Bank of Am., N.A. v. Kuchta, 141 Ohio St.3d 75, 2014-Ohio-4275, ¶ 20,
quoting Saxton v. Seiberling, 48 Ohio St. 554, 558-59 (1891). K 2’s argument is not that
the trial court lacked subject-matter jurisdiction, but that the matter should have been
adjudicated in Summit County, where the vehicle sale occurred. That is actually an
argument about venue.
No. 22AP-529 15
{¶ 32} Venue is a procedural matter. Morrison v. Steiner, 32 Ohio St.2d 86, 88
(1972). Civ.R. 3(C) sets out counties in which “[p]roper venue lies,” but it also states, “Any
action may be venued, commenced, and decided in any court in any county.” (Emphasis
added.) The 1970 Staff Note to Civ.R. 3 recognizes that “any action may be commenced and
decided in any court that has jurisdiction of the subject matter.” Improper venue does not
deprive a court of jurisdiction to hear an action. Cheap Escape Co. v. Haddox, LLC, 10th
Dist. No. 06AP-1107, 2007-Ohio-4410, ¶ 11, citing State ex rel. Florence v. Zitter, 106 Ohio
St.3d 87, 2005-Ohio-3804, ¶ 23. “Rather, the question of venue is one of convenience and
asks in which court, among all of those with jurisdiction, to best bring a claim.” Id., citing
State v. Kremer, 3d Dist. No. 15-05-05, 2006-Ohio-736, ¶ 6.
{¶ 33} In conjunction with Civ.R. 12(B), Civ.R. 3(D)(1) creates a mechanism for a
defendant to raise the defense of improper venue and to have the action transferred to a
county that is described as proper under Civ.R. 3(C). Civ.R. 3 makes clear that its provisions
“are not jurisdictional” and that a judgment is not subject to collateral attack5 “solely on the
ground that there was improper venue.” Civ.R. 3(H). If a defendant does not raise the
defense of improper venue in a responsive pleading or in a motion under Civ.R. 12(B) and
(G), the defendant waives the defense, and the court in which the action was filed will retain
it. State ex rel. Mun. Constr. Equip. Operators’ Labor Council v. Ohio State Emp.
Relations. Bd., 10th Dist. No. 15AP-471, 2015-Ohio-5001; 1970 Staff Note to Civ.R. 3. Here,
K 2 effectively waived its improper venue claim by not raising it in a responsive pleading or
motion.
5A Civ.R. 60(B) motion for relief from judgment is a collateral attack on the judgment. Miley v. STS Sys., 153
Ohio App.3d 752, 2003-Ohio-4409, ¶ 7 (10th Dist.), citing In re Miller, 33 Ohio App.3d 224, 227 (8th
Dist.1986).
No. 22AP-529 16
{¶ 34} Nonetheless, even assuming K 2 had valid grounds for moving the trial court
to transfer this matter to Summit County pursuant to Civ.R. 3(D), the question of venue
relates only to the place where Ellison’s claims should have been heard, not to the merits of
those claims. It therefore does not constitute a meritorious defense to Ellison’s claims
under Civ.R. 60(B).
{¶ 35} Finally, K 2 argues that the trial court lacked jurisdiction over Ellison’s
complaint because the parties’ contract contained a mandatory arbitration clause. The copy
of the purchase contract attached to Ellison’s complaint confirms the existence of an
arbitration agreement, but not K 2’s contention that the agreement called for mandatory
arbitration. The agreement states, “Any claim or dispute * * * between you and us * * *
which arises out of or relates to your * * * purchase or condition of this vehicle * * * shall,
at your or our election, be resolved by neutral, binding arbitration and not by a court
action.” (Emphasis added.) (Dec. 22, 2021 Compl., Ex. A at 8.) Elsewhere, it states,
“EITHER YOU OR WE MAY CHOOSE TO HAVE ANY DISPUTE BETWEEN US DECIDED
BY ARBITRATION.” (Emphasis sic.) Id. By its plain language, the arbitration agreement
afforded the parties the opportunity to resolve disputes by arbitration, but it did not require
them to do so. Rather, to invoke the arbitration agreement, one party would have to “elect”
or “choose” to submit a dispute to arbitration. Id. By filing his complaint with the trial
court, Ellison chose not to invoke the arbitration provision, and by not timely responding
to Ellison’s complaint, K 2 failed to elect to have Ellison’s claims resolved by arbitration.
{¶ 36} A failure to appear not only admits liability but also waives defenses to the
allegations in the complaint, so the failure to act to preserve the opportunity to arbitrate
waives the contractual right to demand arbitration. Baumann v. Purchase Plus Buyer's
Group, Inc., 10th Dist. No. 01AP-297, 2001 Ohio App. LEXIS 5266, *12 (Nov. 29, 2001).
No. 22AP-529 17
“If defendants received proper service of process, their failure to take any action prior to
judgment to enforce the arbitration clause in the contract at issue is a waiver of the right to
arbitration.” Id. Applying that rationale here, K 2 waived the right to demand arbitration
by not asserting it prior to the entry of judgment. Moreover, the agreement for non-
mandatory arbitration does not constitute a meritorious defense for purposes of
Civ.R. 60(B) because it does not address the merits of Ellison’s claims. Like venue, it
impacts only where Ellison’s claims would be heard, not the merits of those clams. See
Gary R. Gorby & Assocs., L.L.C. v. McCarty, 2d Dist. No. 2010 CA 71, 2011-Ohio-1983, ¶
53 (rejecting argument that right to arbitration under an asset-purchase agreement was a
meritorious defense.)
{¶ 37} For these reasons, we conclude that the trial court did not abuse its discretion
in denying K 2’s motion for relief from judgment.
III. CONCLUSION
{¶ 38} Having rejected each of K 2’s arguments, we affirm the judgment of the
Franklin County Court Common Pleas.
Judgment affirmed.
JAMISON and LELAND, JJ., concur.