Cleveland Town Ctr., L.L.C. v. Fin. Exchange Co. of Ohio, Inc. , 2017 Ohio 384 ( 2017 )

[Cite as Cleveland Town Ctr., L.L.C. v. Fin. Exchange Co. of Ohio, Inc., 2017-Ohio-384.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 104162
CLEVELAND TOWN CENTER, L.L.C.
PLAINTIFF-APPELLANT/
CROSS-APPELLEE
vs.
FINANCIAL EXCHANGE COMPANY OF OHIO, INC.
DEFENDANT-APPELLEE/
CROSS-APPELLANT
JUDGMENT:
AFFIRMED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-14-837122
BEFORE: Keough, A.J., E.A. Gallagher, J., and Boyle, J.
RELEASED AND JOURNALIZED: February 2, 2017
ATTORNEY FOR APPELLANT
Douglas E. Bloom
Bloom Law Group, L.L.C.
24460 Aurora Road
Bedford Heights, Ohio 44146
ATTORNEYS FOR APPELLEE
Timothy J. Gallagher
Christopher J. Weber
Kegler, Brown, Hill & Ritter Co., L.P.A.
600 Superior Avenue, Suite 2510
Cleveland, Ohio 44114
KATHLEEN ANN KEOUGH, A.J.:
{¶1} Plaintiff-appellant, Cleveland Town Center, L.L.C. (“CTC”), appeals from
the trial court’s judgment that granted summary judgment to defendant-appellee,
Financial Exchange Company of Ohio, Inc. (“FECO”). FECO cross-appeals from the
trial court’s judgment that failed to award FECO attorney and expert witness fees
incurred in preparing for and attending a hearing regarding the amount of attorney fees
and court costs to be awarded FECO upon the trial court’s grant of summary judgment.
We affirm the trial court’s judgment.
I. Facts and Procedural History
{¶2} In 1992, FECO entered into a lease agreement to rent commercial property in
a shopping center located at 14333 Euclid Avenue in Cleveland. Throughout the lease
period, FECO operated a Money Mart store at the property, offering, among other things,
check cashing services and the purchase of precious metals.
{¶3} The parties’ agreement was amended and extended in 2002 and again in
2005. CTC acquired the property in 2006. In October 2010, FECO and CTC entered
into a lease amendment that extended the lease for an additional two years (until October
31, 2012) at the base monthly rent of $1600 per month, and gave FECO the option to
renew the lease for two additional five-year periods. In April 2012, FECO notified CTC
that it was exercising one of its options to renew the lease agreement for another five
years, until October 31, 2017.
{¶4} It is undisputed that the lease agreement contained the following exclusivity
provision:
The Landlord covenants that so long as the Tenant is in actual possession of
the Premises and is carrying on its business in the Premises in accordance
with the terms of the Lease, the Landlord will not, at any time during the
initial Term of the Lease or any extension thereof, permit any other tenant
or occupant of the center to carry on or offer the services of check cashing,
cash wire services, sale of money orders, cash advances, consumer loans,
Western Union Agent (other than a chartered bank or trust company),
purchase of precious metals, pawning, or income tax preparation, e-filing,
and discounting.
In the event that the Tenant produces a documented occurrence of another
tenant in breach of above said Exclusivity, the Tenant, at its entire
discretion, may either terminate the Lease on thirty (30) days written notice
to the Landlord, or the Tenant may choose to conduct business at a base
rental rate of $800.00 per month until the end of the term or until such time
the tenant breaching the above said Exclusivity vacates the center.
{¶5} On November 8, 2011, FECO provided written notice to CTC that “other
tenants at the property are cashing checks and providing income tax preparation, e-filing
and discounting” in violation of the lease agreement, such that FECO was exercising its
right to reduce its base monthly rental rate to $800. Thereafter, from November 2011
through August 2014, FECO paid and CTC accepted rental payments at a monthly base
rate of $800.
{¶6} On July 28, 2014, FECO gave CTC written notice of its election to
terminate the lease agreement as of August 31, 2014, because another tenant at the
property was purchasing precious metals, in violation of the lease agreement.
{¶7} CTC subsequently brought suit against FECO for breach of contract. It
claimed that FECO had breached the lease agreement by (1) failing to pay the full rental
amount of $1600 per month from November 2011 through August 2014; and (2) failing to
make any rental payments after August 2014. FECO denied the allegations of the
complaint and brought a counterclaim for declaratory judgment that (1) it had not
breached the lease agreement, (2) CTC was not entitled to the relief sought in its
complaint, and (3) FECO was entitled to recover its attorney fees and costs incurred in the
lawsuit pursuant to Section 22 of the lease agreement.
{¶8} Both parties subsequently filed motions for summary judgment. The trial
court granted FECO’s motion and denied CTC’s motion. In its written decision, that trial
court found that in 2011, FECO notified CTC that other tenants on the property were
cashing checks and providing income tax preparation, e-filing and discounting, in
violation of the lease agreement, and that FECO properly elected at that time to pay a
reduced base monthly rent of $800 as provided by the lease agreement.
{¶9} The trial court further found that FECO’s notice to CTC in 2014 that another
tenant was selling precious metals on the property was a report of a new violation that
triggered for that violation an election of remedies — either reduced rent or termination
of the lease — and that FECO’s decision to terminate the lease was within its prerogative.
Accordingly, the trial court found that FECO was not obligated to pay rent or any other
charges under the lease after August 31, 2014.
{¶10} The trial court further found that as the prevailing party, FECO was entitled
under the lease agreement to recover its reasonable attorney fees and court costs. The
court set a date for an evidentiary hearing to determine the attorney fees and costs, but
ordered that “[i]f the parties stipulate to this amount they should notify the court of such
stipulation before October 15 and the hearing will be canceled.”
{¶11} FECO’s counsel sent a letter to CTC’s counsel with a copy of its invoice to
FECO for services rendered through the date of the trial court’s decision, and asked if
CTC would stipulate to the attorney fees in order to avoid a hearing. The letter advised
that should CTC not stipulate, FECO would seek to recover the additional attorney fees
and costs associated with any hearing to recover its fees. CTC did not stipulate, and
thereafter the trial court conducted an evidentiary hearing to determine the amount of
FECO’s reasonable attorney fees and costs.
{¶12} At the hearing, FECO presented the testimony of its attorney, along with
supporting evidence, to establish the attorney fees and costs FECO incurred from the
commencement of the action through the issuance of the trial court’s decision. FECO
also presented expert testimony to establish that the attorney fees and expenses were
reasonable and necessarily incurred. CTC did not present any evidence at the hearing,
and did not object to any of FECO’s evidence.
{¶13} After the hearing, FECO submitted a supplemental memorandum in support
of its recovery of $5,107.06 in attorney fees and $2,351.68 in expert fees incurred in
preparing for and appearing at the hearing. The trial court subsequently ordered that
FECO was entitled to recover $16,170.86 in attorney fees and costs. The trial court’s
order did not include an award for attorney fees incurred after the trial court’s decision
through the date of the hearing on attorney fees, nor any award for expert witness fees.
This appeal and cross-appeal followed.
II. Law and Analysis
A. CTC’s Appeal
{¶14} In its assignment of error, CTC asserts that the trial court erred in granting
summary judgment to FECO on its counterclaim for declaratory judgment.
{¶15} Under Civ.R. 56(C), summary judgment is appropriate when (1) there is a
genuine issue of material fact, (2) the moving party is entitled to judgment as a matter of
law, and (3) after construing the evidence most favorably for the party against whom the
motion is made, reasonable minds can only reach a conclusion that is adverse to the
nonmoving party. Zivich v. Mentor Soccer Club, Inc., 82 Ohio St. 3d 367, 369-370, 696
NE.2d 201 (1998); Temple v. Wean United, Inc., 50 Ohio St. 2d 317, 327, 364 N.E.2d 267
(1977). We review the trial court’s judgment de novo, using the same standard that the
trial court applies under Civ.R.56(C). Grafton v. Ohio Edison Co., 77 Ohio St. 3d 102,
105, 671 N.E.2d 241 (1996). Accordingly, we stand in the shoes of the trial court and
conduct an independent review of the record.
{¶16} On a motion for summary judgment, the moving party carries the initial
burden of identifying specific facts in the record that demonstrate its entitlement to
summary judgment. Dresher v. Burt, 75 Ohio St. 3d 280, 292-293, 662 N.E.2d 264
(1996). If the moving party fails to meet this burden, summary judgment is not
appropriate; if the moving party meets this burden, the nonmoving party has the
reciprocal burden to point to evidence of specific facts in the record demonstrating the
existence of a genuine issue of material fact for trial. Id. at 293. Summary judgment is
appropriate if the nonmoving party fails to meet this burden. Id.
{¶17} The trial court found that FECO advised CTC in 2011 that other tenants at
the property were violating the exclusivity provision by cashing checks and providing
income tax preparation, e-filing and discounting. It further found that in 2014, FECO
advised CTC that another tenant was in violation of the exclusivity provision because it
was buying and selling precious metals. The trial court found that this was a new
violation of the exclusivity provision — not another violation by the same tenant — and
therefore, under the exclusivity provision, FECO was entitled to elect termination of the
lease agreement as its remedy. The trial court found that FECO had therefore not
breached the agreement, and it granted summary judgment to FECO on its claim for
declaratory judgment. On appeal, CTC contends that the trial court erred in granting
summary judgment because FECO did not provide sufficient evidence of a new violation
to trigger an election of remedies under the exclusivity provision.
{¶18} CTC’s argument is without merit. The sworn affidavit of Brian McAndrews,
FECO’s senior vice-president, was attached to FECO’s motion for summary judgment.
In his affidavit, McAndrews averred that on November 8, 2011, FECO gave CTC written
notice that other tenants at the property were performing check cashing services in
violation of the exclusivity provision of the lease agreement. A copy of the 2011 letter
was attached as an exhibit to McAndrews’s affidavit. In the letter, FECO advised CTC
that other tenants at the property were “cashing checks and providing income tax
preparation, e-filing and discounting” in violation of the exclusivity provision.
{¶19} McAndrews further averred that on July 28, 2014, FECO gave CTC
written notice that “another tenant” was performing services that fell within the scope of
the exclusivity provision. A copy of the July 28, 2014 letter was attached as an exhibit to
McAndrews’s affidavit. In this letter, McAndrews advised CTC that other tenants at the
property were providing “income tax preparation, e-filing and purchase of precious
metals” and directed CTC to a picture attached to the letter. The undated picture showed
two tenants at the property located immediately adjacent to Money Mart; one provided tax
preparation services; the other offered “cash for gold.”
{¶20} CTC objects on appeal that the “only evidence” of the new violation was the
picture, and asserts that the picture is insufficient to establish a new violation because
“there is no evidence in the record of who took this picture, when the picture was taken,
and what this picture was taken of.” CTC contends that this “scant evidence,” coupled
with its assertion that this was not a new but merely an ongoing violation since 2011,
demonstrates that FECO’s evidence of a new violation was insufficient to demonstrate
there were no genuine issues of material fact for trial.
{¶21} CTC waived any argument on appeal regarding the authenticity or adequacy
of the photograph, however, because it raised no objection to the photograph in the trial
court. In its combined motion for summary judgment and brief in opposition to FECO’s
motion for summary judgment, CTC made no reference whatsoever to the photograph.
Instead, it argued only that the exclusivity provision gave FECO an option to either pay
reduced rent or terminate the lease, and that because FECO had chosen in 2011 to pay
reduced monthly rent, it could not now elect to terminate the lease. CTC made no
argument about the photograph. It is well established that a party cannot raise new
arguments and legal issues for the first time on appeal, and that failure to raise an issue
before the trial court results in waiver of that issue for appellate purposes. Bank of Am.,
N.A. v. Michko, 8th Dist. Cuyahoga No. 101513, 2015-Ohio-3137, ¶ 28.
{¶22} Moreover, CTC offered no evidence whatsoever in the trial court to rebut
FECO’s evidence that another tenant was purchasing precious metals, and that this was a
new violation, separate from the prior conduct that triggered FECO’s right to pay reduced
monthly rent under the exclusivity provision. In response to FECO’s motion for
summary judgment, CTC’s burden was to set forth specific facts showing that there was a
genuine issue for trial. See Civ.R. 56(E). It failed to do so. Accordingly, because the
only evidence in the record showed that there was a documented occurrence of a new
violation of the exclusivity provision, thereby triggering FECO’s right to terminate the
lease, the trial court did not err in granting summary judgment against CTC and in favor
of FECO.
{¶23} CTC’s assignment of error is overruled.
B. FECO’s Cross-Appeal
{¶24} The trial court awarded FECO $16,170.86 in attorney fees and costs under
Section 22 of the lease agreement, which provides that “[i]f any legal action is instituted
to enforce this lease or any part thereof, the prevailing parties shall be entitled to recover
reasonable attorney fees and court costs.” In its cross-appeal, FECO asserts the trial
court erred in not awarding it attorney fees and expert witness fees incurred in preparing
for and presenting at the hearing on attorney fees. FECO requests that this court reverse
the trial court’s judgment regarding attorney fees and remand with instructions that the
trial court award it $5,107.05 in attorney fees and expenses incurred from the date of the
trial court’s judgment granting summary judgment and the hearing on attorney fees, and
$3,251.58 in expert witness costs incurred by FECO to prosecute its claim for attorney
fees. We decline to do so.
{¶25} A party seeking an award of attorney fees has the burden of demonstrating
the reasonable value of such services. Buck v. Pine Crest Condo. Assn. Group D-E-F,
8th Dist. Cuyahoga No. 97861, 2012-Ohio-5722, ¶ 26. Ordinarily, the award of attorney
fees is within the discretion of the trial court. Id. Absent a clear abuse of that
discretion, the lower court’s decision should be affirmed. Id.
{¶26} An abuse of discretion involves far more than a difference in opinion.
Huffman v. Hair Surgeon, Inc., 19 Ohio St. 3d 83, 482 N.E.2d 1248 (1985). An abuse of
discretion occurs when the result is “so palpably and grossly violative of fact and logic
that it evidences not the exercise of will but the perversity of will, not the exercise of
judgment but the defiance thereof, not the exercise of reason but rather of passion or
bias.” Id. In this case, we cannot say that the trial court abused its discretion in
declining to award prehearing attorney and expert witness fees.
{¶27} With respect to the expert witness fees, the lease agreement provides that the
prevailing party is entitled to recover “reasonable attorney fees and court costs.” It
makes no provision for the recovery of expert witness fees. Moreover, an expert witness
was not necessary to substantiate the reasonableness of FECO’s fees. FECO’s lawyer
testified at the hearing that he has 23 years of litigation experience, and in his opinion, the
fees and costs incurred in this case were reasonable, necessary, and appropriate. This
testimony was competent, and the trial court could judge the reasonableness of the
attorney fees from this testimony. Accordingly, the trial court did not abuse its discretion
in not awarding FECO expert witness fees.
{¶28} With respect to the prehearing attorney fees, FECO refers us to cases in
which courts have held that it is error not to award attorney fees incurred in preparing for
a hearing on the reasonableness of attorney fees. However, all of the cases cited by
FECO involve attorney fees awarded by statute, such as the Fair Labor Standards Act and
the Civil Rights Attorneys’ Fees Awards Act. As stated by this court in Turner v.
Progressive Corp., 140 Ohio App. 3d 112, 746 N.E.2d 702 (8th Dist.2000), failure in such
cases to compensate an attorney for the time spent expended on the attorney fee
application “would not comport with the purpose behind most statutory fee
authorizations, viz, the encouragement of attorneys to represent indigent clients and to act
as private attorneys general in vindicating congressional policies.” Id. at 118, citing
Gagne v. Maher, 594 F.2d 336, 334 (2d Cir.1979).
{¶29} This case, however, does not involve a statutory fee authorization nor an
indigent client vindicating a legislative policy. Moreover, as the trial court found, FECO
could have provided the court at the hearing with an accounting of the time and fees
incurred in preparing for the hearing (which it obviously knew), thereby eliminating the
need for another hearing on its supplemental request. Accordingly, we cannot conclude
that although the trial court awarded FECO $16,170.86 in attorney fees, it abused its
discretion in declining to award FECO additional attorney fees for prehearing preparation
and participation.
{¶30} FECO’s cross-assignment of error on its cross-appeal is overruled.
{¶31} Judgment affirmed.
It is ordered that the parties share equally the costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to said court to carry this judgment into
execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of
the Rules of Appellate Procedure.
KATHLEEN ANN KEOUGH, ADMINISTRATIVE JUDGE
EILEEN A. GALLAGHER, J., and
MARY J. BOYLE, J., CONCUR