Herhold v. Smith Land Co., L.L.C. , 2016 Ohio 4939 ( 2016 )

[Cite as Herhold v. Smith Land Co., L.L.C., 2016-Ohio-4939.]
STATE OF OHIO ) IN THE COURT OF APPEALS
)ss: NINTH JUDICIAL DISTRICT
COUNTY OF SUMMIT )
SHAWN A. HERHOLD, et al. C.A. No. 28032
Appellants
v. APPEAL FROM JUDGMENT
ENTERED IN THE
SMITH LAND COMPANY, LLC, et al. COURT OF COMMON PLEAS
COUNTY OF SUMMIT, OHIO
Appellees CASE No. CV 2008-05-3634
DECISION AND JOURNAL ENTRY
Dated: July 13, 2016
SCHAFER, Judge.
{¶1} Plaintiff-Appellants, Shawn Herhold and Malavanh Herhold (collectively, “the
Herholds”), appeal from the judgment of the Summit County Court of Common Pleas. This
Court affirms.
I.
{¶2} This appeal stems from the sale of certain property on Brunsdorf Road in
Fairlawn. In July 2002, the Herholds purchased the property from Defendant-Appellees, Smith
Land Company, LLC (“Smith Land”) and its president, Robert Smith (collectively, “the
Defendants”). According to the Herholds, the Defendants represented to them that they would
be able to build a home on the property. Following their purchase, however, the Herholds
discovered that the property suffered from a material defect and was not suitable for building.
The Herholds brought suit against the Defendants for breach of contract, breach of the warranty
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of title, fraud, misrepresentation, and fraudulent concealment/inducement.1 They alleged that the
Defendants failed to disclose the fact that the property “was comprised of substantial wetlands
and illegal fill which severely restricted [its] use and purpose * * *.” The Herholds sought
compensatory damages, punitive damages, interest, and attorney fees.
{¶3} Following an unsuccessful motion to dismiss the Herholds’ complaint for failure
to state a claim, the Defendants filed their answer and, subsequently, a motion for summary
judgment. The court denied the motion for summary judgment and set the matter for trial. The
trial was delayed for some time, however, due to the occurrence of several events. First, Smith
Land filed for bankruptcy and the Herholds had to obtain relief from the automatic bankruptcy
stay in federal court. Second, the Defendants’ counsel withdrew and, once they obtained new
counsel, he filed a motion to disqualify the Herholds’ counsel. Third, after the court denied the
motion to disqualify, the Defendants appealed from the denial; the result of which was a
dismissal for lack of a final, appealable order. See Herhold, et al. v. Smith Land Company, LLC,
et al., 9th Dist. Summit No. 27174 (Jan. 6, 2014). Following the resolution of all of the
foregoing issues, the matter went to trial. At trial, the Herholds dismissed their claim against the
Defendants for breach of warranty of title.
{¶4} The jury found in favor of the Herholds and awarded them $55,000 on their
breach of contract claim, $65,000 on their fraud claims, and $35,000 in punitive damages.
Additionally, the jury determined that the Herholds should be awarded their attorney fees. On
May 20, 2014, the trial court issued a journal entry, memorializing the jury’s verdict and setting
the matter for a hearing on the amount of attorney fees to be awarded. The Herholds then filed a
1
Initially, the Herholds also brought suit against Lawyer’s Title Insurance Company, Sherri
Costanza, and Stouffer Realty. Because those defendants were later dismissed from the suit, we
need not address them.
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motion for prejudgment interest. Before either issue was resolved, however, the Defendants
appealed from the jury’s award. This Court once again dismissed the attempted appeal for lack
of a final, appealable order. See Herhold, et al. v. Smith Land Company, et al., 9th Dist. Summit
No. 27404 (June 26, 2014).
{¶5} Following this Court’s dismissal, the Ohio Supreme Court assigned a visiting
judge to the case. The visiting judge held a hearing on the amount of attorney fees to be awarded
as well as on the issue of prejudgment interest. On January 22, 2015, the visiting judge awarded
the Herholds $39,744 in attorney fees, $32,407.82 in prejudgment interest on their contract
claim, and $36,854.91 in prejudgment interest on their fraud claims. The visiting judge then
stepped aside, and the original trial judge returned to preside over the matter.
{¶6} On February 19, 2015, the Defendants filed a motion for judgment
notwithstanding the verdict or, in the alternative, a motion for a new trial. The Herholds sought
to strike the motion on the basis of timeliness, but the trial court determined that the motion was
timely. The Herholds then filed a brief in opposition to the motion, and the Defendants filed a
reply.
{¶7} Before the trial judge could rule on the Defendants’ motion, Mr. Smith filed an
affidavit of disqualification with the Ohio Supreme Court, seeking to remove her from the case.
The Defendants’ counsel then filed a motion to withdraw from representation because Mr. Smith
had filed the affidavit without consulting him. The Supreme Court ultimately denied the
affidavit of disqualification, but the trial judge nevertheless recused herself from the case. The
matter was reassigned to another judge, who also recused herself, and a third, who likewise
recused herself.
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{¶8} On September 21, 2015, the fourth trial judge issued an order on the Defendants’
motion for judgment notwithstanding the verdict or, in the alternative, a new trial. The trial court
granted judgment notwithstanding the verdict to Mr. Smith on the issue of whether he was
individually liable for a breach of contract. Because the Herholds did not present evidence that
would have allowed them to pierce the corporate veil, the court determined, it entered judgement
in Mr. Smith’s favor on their breach of contract claim. The court refused, however, to enter a
judgment notwithstanding the verdict in favor of: (1) Smith Land on the breach of contract claim,
or (2) the Defendants on the fraud claims.
{¶9} As to the Defendants’ alternative request for a new trial, the court announced that
it “anticipated ruling” in the Defendants’ favor. The court wrote that the jury’s damage award
appeared to be excessive and contrary to law because: (1) it awarded damages on two claims
even though the jury instructions alleged identical conduct in support of each claim; and (2) the
jury instructions inadequately defined the measure of the damages. The court further wrote that
a new trial was warranted because the instructions presupposed certain matters had been decided
and “unduly emphasized [the Herholds’] theory of the case.” Nevertheless, the court did not
grant the Defendants’ motion in its September 21st ruling. Because the court acknowledged that
it had “founded its conclusion on grounds not asserted by [the Defendants]” in their motion, it set
the matter for further hearing. The court ruled that, pursuant to Civ.R. 59(D), a hearing would be
held for the purpose of allowing the Herholds an opportunity to be heard on the court’s
“anticipated ruling.”
{¶10} On October 1, 2015, the court held a hearing to address the issue of its
“anticipated ruling” on the Defendants’ request for a new trial. Following the hearing, the
Herholds moved for a new trial on the issue of Mr. Smith’s individual liability on their breach of
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contract claim. On November 4, 2015, the court granted the Herholds’ request for a new trial on
the issue of Mr. Smith’s individual liability. Further, it granted the Defendants’ request for a
new trial on all of the Herholds’ other claims. In doing so, the court “affirm[ed] and
incorporate[d] * * * the reasoning from its September 21st order * * *.”
{¶11} The Herholds now appeal from the trial court’s judgment and raise three
assignments of error for our review. For ease of analysis, we rearrange the assignments of error.
II.
ASSIGNMENT OF ERROR III
THAT SMITH AND SMITH LAND COMPANY’S MOTION FOR JNOV AND
NEW TRIAL WAS NOT TIMELY FILED AND THEREFORE THE LOWER
COURTS (sic) GRANTING SMITH JUDGMENT NOTWITHSTANDING THE
VERDICT AND BOTH SMITH AND SMITH LAND A NEW TRIAL IS IN
ERROR.
{¶12} In their third assignment of error, the Herholds argue that the trial court erred by
considering the Defendants’ motion for judgment notwithstanding the verdict because it was
untimely. We disagree.
{¶13} Civ.R. 50(B) governs motions for judgment notwithstanding the verdict. The rule
provides, in relevant part, that
[w]hether or not a motion to direct a verdict has been made or overruled and not
later than twenty-eight days2 after entry of judgment, a party may serve a motion
to have the verdict and any judgment entered thereon set aside and to have
judgment entered in accordance with the party’s motion * * *.
Civ.R. 50(B). The Herholds argue that the trial court erred by granting the Defendants’ motion
for judgment notwithstanding the verdict because the Defendants filed their motion more than 28
2
Previously, Civ.R. 50(B) required motions to be filed within 14 days of the entry of judgment.
The rule was amended, effective July 1, 2013, to increase the time for filing to 28 days. Because
the trial court relied on the amended version of the rule in reaching its decision and the Herholds
have cited that version of the rule in their brief, we rely on it in reaching our decision.
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days after the court entered its judgment in this matter. According to the Herholds, the judgment
in this matter was entered on May 20, 2014.
{¶14} The trial court’s May 20, 2014 journal entry memorialized the jury’s verdict in
this matter. That entry was not a final judgment, however, because the trial court still had to
resolve the outstanding issues of attorney fees and prejudgment interest. See Civ.R. 54(A)
(“‘Judgment’ * * * includes a decree and any order from which an appeal lies as provided in
[R.C.] 2505.02 * * *.”); Herhold, et al. v. Smith Land Company, et al., 9th Dist. Summit No.
27404 (June 26, 2014) (dismissing appeal because court had yet to issue a final judgment). The
court resolved those issues and entered its judgment on January 22, 2015. The final judgment in
this matter, therefore, was entered on that date. The Defendants then filed their motion for
judgment notwithstanding the verdict on February 19, 2015. Because the Defendants filed their
motion within 28 days of the entry of judgment, their motion was not untimely, and the trial
court did not err by considering it. The Herholds’ third assignment of error is overruled.
ASSIGNMENT OF ERROR I
THAT THE LOWER COURT ERRED AS A MATTER OF LAW WHEN, ON
ITS OWN INITIATIVE, MORE THAN FOURTEEN DAYS AFTER ENTRY
OF JUDGMENT ORDERED A NEW TRIAL IN VIOLATION OF RULE 59(D)
OF THE OHIO RULES OF CIVIL PROCEDURE.
{¶15} In their first assignment of error, the Herholds argue that the trial court erred
when it granted the Defendants a new trial, on its own initiative, beyond Civ.R. 59(D)’s
prescribed time limit. We do not agree that the court’s ruling was untimely.
{¶16} Civ.R. 59(D) provides for the granting of a new trial “[o]n initiative of court.”
The rule provides as follows:
Not later than twenty-eight days after entry of judgment the court of its own
initiative may order a new trial for any reason for which it might have granted a
new trial on motion of a party.
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The court may also grant a motion for a new trial, timely served by a party, for a
reason not stated in the party’s motion. In such case the court shall give the
parties notice and an opportunity to be heard on the matter. The court shall
specify the grounds for new trial in the order.
Under Civ.R. 6(B), a trial court “may not extend the time for taking any action under * * *
Civ.R. 59(D) * * *, except to the extent and under the conditions stated in [that rule].”
{¶17} In their appellate brief, the Herholds rely upon a former version of Civ.R. 59(D).
The former version of the rule contained a 14-day time limit. Much like Civ.R. 50(B), the rule
was amended, effective July 1, 2013, to increase the prescribed time limit to 28 days. The
amendment applied to all actions then pending, “except to the extent that [its] application in a
particular action * * * would not be feasible or would work injustice * * *.” Civ.R. 86(JJ).
Because the Herholds filed this action in 2008, it was pending when the amendment to Civ.R.
59(D) went into effect.
{¶18} In ruling on the Herholds’ motion to strike the Defendants’ motion for judgment
notwithstanding the verdict or, alternatively, a new trial, the trial court employed the amended
versions of both Civ.R. 50(B) and Civ.R. 59(D). Relevant to this assignment of error, the court
found that “a motion for new trial * * * can be made either before or after a final, appealable
order, but no later than 28 days after the final, appealable order.” The Herholds never argued
that the 28-day time limit should not apply because it “would not be feasible or would work
injustice.” Id. Moreover, on appeal, they rely upon the amended version of Civ.R. 50(B) in
support of their third assignment of error. That assignment of error concerns the portion of the
Defendants’ motion that requested judgment notwithstanding the verdict. The Herholds have not
explained why this Court should apply two different versions of the Civil Rules to the same
motion. See App.R. 16(A)(7). Because this suit was pending when the amendment to Civ.R.
59(D) went into effect and the Herholds have not argued that it was error for the lower court to
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rely on the amended version of the rule, we likewise rely on it in addressing the Herholds’
argument.
{¶19} Civ.R. 59(D) consists of two paragraphs. The first paragraph addresses a court’s
ability to order a new trial, on its own initiative, when no one has moved for a new trial within
the prescribed time limit. See Stackhouse v. Logangate Property Mgt., 172 Ohio App. 3d 65,
2007-Ohio-3171, ¶ 31-32 (7th Dist.); Cleveland v. 8409 Euclid Ave., Inc., 8th Dist. Cuyahoga
Nos. 46555, 46630, 46739 & 46740, 1984 WL 4505, *3-4 (Mar. 2, 1984). In those instances, a
trial court only has 28 days to order a new trial “for any reason for which it might have granted a
new trial on motion of a party.” Civ.R. 59(D). See also CitiBank v. Abu-Niaaj, 2d Dist. Green
No. 2011 CA 45, 2012-Ohio-2099, ¶ 13. The second paragraph of Civ.R. 59(D) addresses a
court’s ability to order a new trial when (1) a timely motion has been filed, but (2) the court
intends to grant the new trial “for a reason not stated in the party’s motion.” Civ.R. 59(D). In
those instances, the rule does not place a time limit on the court’s ruling. See Stackhouse at ¶ 32;
see also Kelly v. Moore, 376 F.3d 481, 481 (5th Cir.2004) (interpreting the federal version of the
rule).
{¶20} As previously noted, the Defendants’ filed their motion for judgment
notwithstanding the verdict or, alternatively, a new trial within 28 days of the entry of judgment
in this matter. Their motion indicates that it was served upon the Herholds that same day, and
the Herholds have not disputed service. Therefore, the Defendants’ motion was timely filed
under Civ.R. 59. See Civ.R. 59(B). Because their motion was timely filed, the second paragraph
of Civ.R. 59(D) applied to the court’s ruling, and it was not subject to the 28-day time limit
contained in the first paragraph of the rule. See Civ.R. 59(D); Stackhouse at ¶ 32-33. See also
Kelly at 481. We, therefore, reject the Herholds’ argument that the trial court issued a ruling
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beyond Civ.R. 59(D)’s prescribed time limit. The Herholds’ first assignment of error is
overruled.
ASSIGNMENT OF ERROR II
THAT THE LOWER COURT ERRED AS A MATTER OF LAW WHEN IT
GRANTED A NEW TRIAL TO SMITH LAND AND SMITH[.]
{¶21} In their second assignment of error, the Herholds argue that the trial court erred
by granting the Defendants’ motion for new trial. Because the trial court based its decision on
items that are not a part of the record, this Court must presume regularity and affirm the trial
court’s decision.
{¶22} “[A]n appellate court’s review is restricted to the record provided by the appellant
to the court. Accordingly, the appellant assumes the duty to ensure that the record, or the
portions necessary for review on appeal, is filed with the appellate court.” (Internal citations and
quotations omitted.) Bank of Am., N.A. v. Wiggins, 9th Dist. Wayne No. 14AP0033, 2015-Ohio-
4012, ¶ 13. Accord Lunato v. Stevens Painton Corp., 9th Dist. Lorain No. 08CA009318, 2008-
Ohio-3206, ¶ 11 (“This Court has repeatedly held that it is the duty of the appellant to ensure that
the record on appeal is complete.”). “When the record is incomplete, this Court must presume
regularity in the trial court’s proceedings and affirm its decision.” Helms v. Gains, 9th Dist.
Summit No. 27616, 2015-Ohio-4000, ¶ 4.
{¶23} The trial court here ordered a new trial because it concluded that,
upon review of the jury’s verdicts, its answers to interrogatories, the manner in
which the jury was instructed, the phrasing of the jury interrogatories, and the
damages awarded, * * * the jury’s verdicts and damage awards and the resulting
judgment were contrary to law, and not sustained by the weight of the evidence.
The court wrote that the jury’s damage awards appeared to be duplicative because the jury
instructions did not differentiate between the conduct in support of the breach of contract claim
10
and the conduct in support of the fraud claims. The court further wrote that the instructions
“unduly emphasized [the Herholds’] theory of the case” and were “misleading” and
grammatically unsound. Additionally, the court found fault with the instructions insofar as they
defined the different measures of damages because it found the instructions to be incomplete in
several respects. The court ultimately concluded that the jury was not properly instructed and
that a new trial was “required under the circumstances.”
{¶24} Upon review, the record does not contain any of the trial exhibits or a copy of the
jury instructions that the court read to the jury. On April 29, 2014, both parties filed proposed
jury instructions. Neither the parties, nor the court, however, ever filed the finalized jury
instructions that were read to the jury at trial. When the Defendants filed their motion for
judgment notwithstanding the verdict or, alternatively, a new trial, they had an expedited
transcript prepared and filed that transcript in the lower court. The transcript they filed, however,
does not include the jury instructions, and the Herholds never had a separate transcript prepared.
The record, as filed, only contains the transcript of the testimony given at trial. It does not
contain any discussions regarding the jury instructions, the instructions themselves, or the
exhibits.
{¶25} We note that, in setting forth its “anticipated ruling” on the Defendants’ motion,
the trial judge quoted from the jury instructions. The judge did not elaborate as to how he
secured the instructions, given that no one filed them and given that he was not the judge who
presided over the trial in this matter. Even assuming that the instructions upon which he relied
were, in fact, the same instructions given to the jury, however, this Court cannot rely on the
quoted portions of the instructions to reach a decision in this matter. The trial judge did not
quote the instructions in their entirety and took issue with them, in part, because he found them
11
to be incomplete. Without the complete instructions, as read to the jury at trial, this Court cannot
determine whether the trial court erred in reaching its ruling.
{¶26} This Court is not without sympathy for the Herholds. They waited six years for
this matter to go to trial and then discovered, another 16 months later, that the fourth trial judge
in this matter was vacating the unanimous jury verdicts in their favor. Because the Herholds are
the appellants here, however, it was their burden to ensure that the record was complete and
contained all of “the portions necessary for review on appeal.” Wiggins, 2015-Ohio-4012, at ¶
13. Accord Lunato, 2008-Ohio-3206, at ¶ 11. Without the portions of the record necessary to
review the trial court’s ruling in this matter, this Court has no choice but to “presume regularity
in the trial court’s proceedings and affirm its decision.” Helms, 2015-Ohio-4000, at ¶ 4.
Accordingly, the Herholds’ second assignment of error is overruled on that basis.
III.
{¶27} The Herholds’ assignments of error are overruled. The judgment of the Summit
County Court of Common Pleas is affirmed.
Judgment affirmed.
There were reasonable grounds for this appeal.
We order that a special mandate issue out of this Court, directing the Court of Common
Pleas, County of Summit, State of Ohio, to carry this judgment into execution. A certified copy
of this journal entry shall constitute the mandate, pursuant to App.R. 27.
Immediately upon the filing hereof, this document shall constitute the journal entry of
judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the
period for review shall begin to run. App.R. 22(C). The Clerk of the Court of Appeals is
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instructed to mail a notice of entry of this judgment to the parties and to make a notation of the
mailing in the docket, pursuant to App.R. 30.
Costs taxed to Appellants.
JULIE A. SCHAFER
FOR THE COURT
MOORE, P. J.
WHITMORE, J.
CONCUR.
APPEARANCES:
THOMAS A. SKIDMORE, Attorney at Law, for Appellants.
BRADLEY S. LEBOEUF, Attorney at law, for Appellees.
KAREN EDWARDS-SMITH, Attorney at Law, for Appellees.