Beswick Group N. Am., L.L.C. v. W. Res. Realty, L.L.C. , 2017 Ohio 2853 ( 2017 )

[Cite as Beswick Group N. Am., L.L.C. v. W. Res. Realty, L.L.C., 2017-Ohio-2853.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 104330
BESWICK GROUP NORTH
AMERICA, L.L.C., ET AL.
PLAINTIFFS-APPELLANTS
vs.
WESTERN RESERVE REALTY, L.L.C., ET AL.
DEFENDANTS-APPELLEES
JUDGMENT:
AFFIRMED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-15-844723
BEFORE: Celebrezze, J., E.T. Gallagher, P.J., and S. Gallagher, J.
RELEASED AND JOURNALIZED: May 18, 2017
ATTORNEY FOR APPELLANT
Joseph A. Pfundstein
P.O. Box 46449
Cleveland, Ohio 44146
ATTORNEYS FOR APPELLEES
David M. Dvorin
Lieberman, Dvorin & Dowd, L.L.C.
30195 Chagrin Boulevard, Suite 300
Pepper Pike, Ohio 44124
Cynthia A. Lammert
Coakley & Lammert Co., L.P.A.
1100 Superior Avenue, East, Suite 1314
Cleveland, Ohio 44114
Also Listed
For Prominent Title Agency, L.L.C.
Christopher P. Finney
Finney Law Firm, L.L.C.
4270 Ivy Pointe Boulevard, Suite 225
Cincinnati, Ohio 45245
FRANK D. CELEBREZZE, JR., J.:
{¶1} Appellant, the Beswick Group North America, L.L.C. (“BGNA”), appeals the
grant of summary judgment in favor of appellees, Western Reserve Realty, L.L.C., d.b.a.
Re/Max Traditions (“Re/Max”), David Reimer, and Diane Armington, where the court
determined that appellees were entitled to commissions for the sale of commercial
property. BGNA argues there are unresolved material issues of fact that preclude
summary judgment. After a thorough review of the record and law, this court affirms.
I. Factual and Procedural History
{¶2} BGNA entered into two exclusive rights contracts with Re/Max to market
two adjoining commercial properties owned by BGNA for sale or lease. The contracts
were signed October 30, 2013. The contract terms were for six months, with provisions
that extended Re/Max’s right to a six percent sales commission for six months for any
contract for sale that was formed where the buyer was shown the property by Re/Max or
another agent during the initial contract term. Re/Max, through its agents showed the
properties and an offer was made, and according to Re/Max, accepted by BGNA.
However, the closing date did not occur until November 12, 2014. BGNA disputed that
it owed Re/Max any commission on the sale. Re/Max filed notice with the escrow
company employed for the sale and approximately $42,000 was held by the company and
later deposited with the court. Re/Max also filed broker’s liens on the properties. The
closing for the property went forward and the property was transferred to a new owner.
{¶3} BGNA filed suit against Re/Max, and two of its employees, Reimer and
Armington, on April 24, 2015. BGNA claimed that appellees violated the exclusive
rights contracts for the sale or lease of the two commercial properties. BGNA also
asserted that appellees failed to properly furnish information and market the properties
such that at least one missed closing occurred, and that appellees fraudulently filed liens
against the properties when they were sold by another real estate broker after the
exclusive rights contracts ended.
{¶4} Appellees filed an answer and counterclaim as well as a third-party complaint
against Thomas Beswick, managing member of BGNA, individually. The escrow
company was also named as a defendant, but it deposited the funds held by it with the
court and was dismissed. Discovery proceeded, but BGNA and Beswick failed to
respond to requests for admissions and other discovery requests.
{¶5} After this failure to respond, appellees filed a motion for summary judgment
on January 28, 2015. After no response was filed by BGNA or Beswick, the court
granted the motion in March 2016. Appellant then filed a motion for relief from
judgment. Appellees filed motions for prejudgment interest, release of deposited funds,
punitive damages, and attorney fees. However, BGNA filed a notice of appeal before
these motions were addressed. After the notice was filed, the trial court ruled on the
various motions, but later vacated the rulings based on a lack of jurisdiction.
{¶6} This court remanded the case for the limited purposes of ruling on the
pending motions and determining the validity of the liens. The trial court granted
appellees’ motion for prejudgment interest and for the release of funds, but otherwise
denied the motions. The trial court’s entry can be read to find in favor of Re/Max in the
amount of $28,500. After allowing additional briefing, BGNA now assigns the
following error for review:
I. The trial court abused its discretion in denying [BGNA’s] motion to
vacate judgment as there clearly was a showing of excusable neglect in the
motion.
II. The trial court erred in granting [appellees’] motion for summary
judgment as even with the evidence construed as it was by the trial court,
[appellees’] claim for a commission failed as a matter of law.
III. The trial court erred in dismissing count two of [appellant’s] complaint
as the trial court never addressed the validity of the brokers [sic] lien filed
by [appellees] which to date has not been released by [appellees] despite
required to under Ohio Revised Code Section 1311.92.
II. Law and Analysis
A. Relief From Judgment
{¶7} BGNA first argues that the trial court should have granted its motion for
relief from judgment. Civ.R. 60(B) provides an avenue for relief from a final judgment
when the moving party shows that it has satisfied the requirement of the rule. To prevail,
the movant must demonstrate that: “(1) the party has a meritorious defense or claim to
present if the relief is granted; (2) the party is entitled to relief under one of the grounds
stated in Civ.R. 60(B)(1)-(5); and (3) the motion is made within a reasonable time * * *.”
GTE Automatic Elec., Inc. v. ARC Industries, Inc., 47 Ohio St.2d 146, 150, 351 N.E.2d
113 (1976). If the movant fails to satisfy any of these requirements, it is not an abuse of
the court’s discretion to overrule the motion. Id. An abuse of discretion is connoted by
a decision that is unreasonable, arbitrary, or unconscionable. Blakemore v. Blakemore, 5
Ohio St.3d 217, 219, 450 N.E.2d 1140 (1983).
{¶8} Here, BGNA made the motion soon after the court entered judgment so
timing is not at issue. Therefore, BGNA had to show that it had a meritorious claim or
defense and that it satisfied at least one of the prerequisites under Civ.R. 60(B)(1)-(5).
BGNA argues that the judgment was entered against it as a result of excuseable neglect
under Civ.R. 60(B)(2). Its attorney asserted that he did see the electronic notification
that was sent when appellees filed their motion for summary judgment, and was unaware
it had been filed. However, this does not constitute excusable neglect. Garrett v. Gortz,
8th Dist. Cuyahoga No. 90625, 2008-Ohio-4369, ¶ 16 (“it was incumbent on him to check
the docket to keep informed of the progress of the case. The failure to * * * keep
informed of the progress of an ongoing case does not qualify as excusable neglect.”);
Roberts v. Roberson, 8th Dist. Cuyahoga No. 92141, 2009-Ohio-481, ¶ 19.
{¶9} The affidavit filed with BGNA’s motion does not raise a procedural
irregularity that would demonstrate excusable neglect as occurred in Am. Express Travel
Related Servs., Inc. v. Carleton, 10th Dist. Franklin No. 02AP-1400, 2003-Ohio-5950, ¶
15. There, the Tenth District found excusable neglect when a party failed to respond to a
motion for summary judgment that the party never received. Here, the affidavit of
BGNA’s attorney attests that the electronic notification that was sent must have gone to
his spam folder rather than his regular email inbox, so he never saw it. He averred that
the system was new, and that he would have responded had he seen the notification.
This would indicate that it was in fact delivered to him, but he did not take the necessary
steps to ensure prompt notification. That is more similar to this court’s Garrett case,
where a party was having ongoing mail service issues and did not take steps to keep
informed on the status of the case. Garrett at ¶ 16.
{¶10} Even if this did constitute some type of excusable neglect, BGNA does not
have a valid claim or defense. “A ‘meritorious defense’ means a defense ‘going to the
merits, substance, or essentials of the case.’” Wayne Mut. Ins. Co. v. Marlow, 2d Dist.
Montgomery No. 16882, 1998 Ohio App. LEXIS 2378 (June 5, 1998), citing Black’s Law
Dictionary, abridged, 290 (6th Ed.1991). BGNA, failed to respond to discovery
requests, and thus admitted all the essential elements of appellees’ breach of contract
claim. BGNA’s arguments to excusable neglect only involve its failure to file an
opposition to summary judgment. That is not the reason the trial court granted appellees’
motion. Appellees were able to show through BGNA’s admissions and their own
affidavits that BGNA breached the exclusive rights contracts and were owed a six percent
commission. BGNA’s claim that the closing occurred outside the six-month extension
period of the agreement is unavailing given its admissions as explained below.
Therefore, BGNA’s first assignment of error is overruled.
B. Summary Judgment
{¶11} In its second assignment of error, BGNA argues that even though they failed
to respond to appellees’ motion for summary judgment, there are still material issues of
fact that prevent the court from determining that appellees are entitled to judgment.
{¶12} Summary judgment provides an abbreviated mechanism of resolving
disputes where there is no material issue to decide and one party is entitled to judgment as
a matter of law.
Civ.R. 56(C) provides that before summary judgment may be granted, it
must be determined that (1) no genuine issue as to any material fact remains
to be litigated, (2) the moving party is entitled to judgment as a matter of
law, and (3) it appears from the evidence that reasonable minds can come to
but one conclusion, and viewing such evidence most strongly in favor of the
nonmoving party, that conclusion is adverse to the party against whom the
motion for summary judgment is made.
Camardo v. Reeder, 8th Dist. Cuyahoga No. 80443, 2002-Ohio-3099, ¶ 11. When a
motion for summary judgment is made and supported as provided in Civ.R. 56, “the
nonmoving party may not rest on the mere allegations of his pleading, but his response,
by affidavit or as otherwise provided in Civ.R. 56, must set forth specific facts showing
that there is a genuine triable issue.” Id. at ¶ 13. This court reviews a trial court’s
decision de novo — without deference — and conducts an independent review of the
matter.
{¶13} Here, the only evidence introduced to the trial court indicates that appellees
are entitled to judgment as a matter of law on BGNA’s claims against them and appellees’
claims against BGNA and Beswick. BGNA failed to submit any evidence to the trial
court supporting its position that there are material questions of fact. Therefore, we are
only guided by the affidavits submitted by Armington and Reimer, the admissions of
BGNA, and the pleadings.
{¶14} The affidavits establish that BGNA and Re/Max entered into exclusive
rights contracts to market two commercial properties. Re/Max employees marketed
those properties and received at least one offer from “3MB Capital.” In the request for
admissions sent to BGNA, Re/Max sought to have BGNA admit, among other things, that
it entered into the contracts, the properties were shown to the ultimate purchaser during
the contract terms, and BGNA accepted an offer from the purchaser during the pendency
of the exclusive rights contracts:
3. Admit that Defendants procured a buyer for your property located at
14814 Clifton Boulevard, Lakewood, Ohio who paid an amount over the
list price.
4. Admit that 3MB Capital made an offer to purchase the Archwood
Properties on or about November 3, 2013.
5. Admit that Thomas Beswick, on behalf of Plaintiff, accepted the offer
referenced in Request for Admission No. 4 on or about November 4, 2013.
6. Admit that Defendant David Reimer notified Thomas Beswick, on
behalf of Plaintiff, in early January 2014 that 3MB Capital wanted an
extension of the purchase agreement to give it time to obtain cash for the
purchase, or, alternatively, a release of the purchase agreement and return of
the $2,000 earnest money.
7. Admit that Thomas Beswick, on behalf of Plaintiff, did not respond to
Defendant David Reimer regarding 3MB Capital’s request for an extension
of the purchase agreement as referenced in Request for Admission No. 6.
8. Admit that Thomas Beswick, on behalf of Plaintiff, did not sign a
release of the 3MB Capital purchase agreement.
9. Admit that Thomas Beswick, on behalf of Plaintiff, did not sign a
release of the Exclusive Right to Sell or Lease (Commercial) Agreement
with Defendant western Reserve Realty, LLC dba RE/MAX Traditions.
10. Admit that you sold the Archwood Properties to 3MB Capital on or
about November 12, 2014.
{¶15} As a result of BGNA’s failure to respond to these requests for admissions,
they were deemed admitted and considered by the trial court as such. Therefore, BGNA
admitted that it entered into an agreement with Re/Max, accepted an offer for purchase
above the listing price prior to the expiration of the agreement, and that Re/Max was
entitled to a six percent sales commission.
{¶16} These admissions are determinative on BGNA’s claims against Re/Max in
its first cause of action and Re/Max’s claims against BGNA.1
{¶17} While the closing may have taken place on November 12, 2014, the
admissions and affidavits of Reimer and Armington indicate that BGNA accepted the
offer for sale during the pendency of the exclusive rights contracts. Paragraph three of
the exclusive rights contracts in the record states,
After the termination of this Agreement or any extension thereof the
Broker’s authority shall continue for a six (6) month period as to any
prospective Purchaser or Tenant or any other person to whom this Property
was submitted during the term of this Agreement. If the Owner enters into
an Agreement of sale or lease for the Property with any person to whom
said Property was shown, presented or submitted by the Broker, or the
Owner or any other broker, during the term of this Agreement, the
BGNA separately assigns error to the grant of summary judgment and dismissal of its
1
second cause of action to determine the validity of the broker’s liens and the failure of appellees to
release those liens after the escrow company retained funds to cover any broker’s fees. Therefore,
the second cause of action will be addressed in that assignment of error.
transaction shall be conclusively presumed to have been made by the
Broker, and the commission shall be paid by the Owner.
{¶18} The only evidence in the record is that BGNA entered into an agreement for
the sale of the property during the pendency of the agreement, but that the closing did not
take place until after the expiration of the agreement. The contract does not concern the
date of transfer of title, but the date a contract for sale is entered. With no contrary
evidence in the record, Re/Max showed that it was entitled to judgment as a matter of law
on its claims against BGNA. The claims against Beswick individually are not addressed
in BGNA’s appellate brief. Therefore, they do not appear to appeal the judgment in
favor of appellees on this claim. However, the claim involves the same harm and the
same damages to be satisfied from the funds deposited with the court. Therefore, there is
no reason to separately address them on appeal when BGNA did not.
{¶19} Therefore, BGNA’s second assignment of error is overruled.
C. Broker’s Liens Claim
{¶20} Finally, BGNA claims the trial court erred in granting summary judgment
and in not vacating its judgment on its second cause of action seeking the court to
determine the validity of the broker’s liens that appellees filed because the court never
addressed the validity of the liens.
{¶21} The trial court determined, pursuant to R.C. 1311.92(C), that the liens were
extinguished when the escrow company retained sufficient funds to cover any broker fees,
which it later deposited with the court. This statutory provision provides, “[w]hen funds
have been placed in escrow pursuant to division (A) of this section, the broker claiming a
broker’s lien under this section has an equitable lien on the escrowed funds, and the lien
recorded on the lien property shall be extinguished as a matter of law.” In fact, BGNA
readily admits that the closing went forward and ownership transferred to the new owner.
However, BGNA argues that appellees failed to file a release of the liens as required by
R.C. 1311.90(A)(1). That allegation was included in its complaint with references to that
code section. The affidavits filed by appellees and the admissions do not address this
cause of action. While portions of the cause of action are premised on BGNA’s
argument that any liens are invalid because appellees did not earn a commission, a portion
of this cause of action states specifically that appellees failed to file a release after BGNA
deposited sufficient funds. In its motion for summary judgment, appellees asserted that
because the property transferred, BGNA did not have standing to assert a cause of action
on behalf of the new owner concerning any existing encumbrances to title. Appellees
asserted that the property transferred to a new owner, and if any lien still remains on the
property, a cause of action enures to that new owner, not BGNA. There is no evidence in
the record that a lien exists on the property. The affidavit attached to the motion for
relief from judgment does not mention any liens. Records of two liens were attached to
BGNA’s complaint, but this does not speak to the continuing existence of the liens or
provide standing if the liens still exist on property no longer owned by BGNA.
{¶22} R.C. 1311.93 authorizes a cause of action against a broker that fails to
timely release a lien under R.C. 1311.90. However, the statute restricts a cause of action
to any person who has a legal or equitable interest in the lien property.
Where the party does not rely on any specific statute authorizing invocation
of the judicial process, the question of standing depends upon whether the
party has alleged such a “personal stake in the outcome of the controversy,”
Baker v. Carr, 369 U.S. 186, 204, as to ensure that “the dispute sought to
be adjudicated will be presented in an adversary context and in a form
historically viewed as capable of judicial resolution.” Flast v. Cohen, 392
U.S. 83, 101.
Sierra Club v. Morton, 405 U.S. 727, 732, 92 S.Ct. 1361, 31 L.Ed.2d 636 (1972).
{¶23} Here, BGNA has not identified any legal or equitable interest it has in the
property. The property was purchased by another entity and title transferred prior to
BGNA filing its complaint. BGNA alleges, without support, that it has impacted its
credit. Even if this is true, the statute requires more than a showing of damages. It
requires a showing of a legal or equitable interest in the property, which BGNA has failed
to establish.
{¶24} Similarly, BGNA has not identified an interest in the property or stake in the
continued existence of the liens. Where a seller may be held liable for a continuing lien
that exists after transfer of real property to a buyer, the seller may have a stake in the
outcome because a seller may be liable to a buyer for valid, continuing liens that were not
released at closing. But here, the liens are no longer valid as a matter of law. By the
terms of R.C. 1311.92, those liens are no longer existing liens, and the buyer has a cause
of action against the broker if the broker fails to timely release any liens. R.C. 1311.93.
{¶25} BGNA failed to set forth the necessary elements for a valid cause of action
against appellees for their failure to timely release the liens. Further, BGNA is incorrect
when it states that the trial court did not address the validity of the liens. The court found
that the liens were no longer subsisting liens as a result of R.C. 1311.92. Appellees’
failure to file a release does not result in a cause of action capable of being sustained by
BGNA, but by the new owner where BGNA has not identified a legal or equitable interest
in the property after transfer.
{¶26} Therefore, the trial court did not err in granting summary judgment on
BGNA’s second cause of action or in denying BGNA’s motion for relief from judgment.
III. Conclusion
{¶27} Appellees demonstrated they were entitled to judgment as a matter of law
where they submitted affidavits and admissions determinative of the issues in the case.
BGNA offered nothing to contradict the evidence submitted by appellees. Therefore, the
trial court properly granted summary judgment to appellees. Further, BGNA failed to
show that the trial court abused its discretion in denying their motion for relief from
judgment.
{¶28} Judgment affirmed.
It is ordered that appellees recover from appellant costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this court directing the common
pleas 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.
FRANK D. CELEBREZZE, JR., JUDGE
EILEEN T. GALLAGHER, P.J., and
SEAN C. GALLAGHER, J., CONCUR