Danopulos v. Am. Trading II, L.L.C.

[Cite as Danopulos v. Am. Trading II, L.L.C., 2021-Ohio-2196.]
IN THE COURT OF APPEALS
FIRST APPELLATE DISTRICT OF OHIO
HAMILTON COUNTY, OHIO
IRENE DANOPULOS, : APPEAL NO. C-200350,
C-200354
Plaintiff-Appellee/Cross- : TRIAL NO. A-1406301
Appellant,
:
VS. O P I N I O N.
:
AMERICAN TRADING II, LLC,
:
Defendant-Appellant/Cross-
Appellee. :
Civil Appeal From: Hamilton County Court of Common Pleas
Judgment Appealed From Is: Affirmed in Part, Reversed in Part, and Cause
Remanded
Date of Judgment Entry on Appeal: June 30, 2021
W. Michael Conway for Plaintiff-Appellee/Cross-Appellant,
Crehan & Thumann, LLC, and Robert J. Thumann, for Defendant-Appellant/Cross-
Appellee.
OHIO FIRST DISTRICT COURT OF APPEALS
BERGERON, Presiding Judge.
{¶1} A robbery, a fistful of jewels, and a pawnshop provide the backdrop to
this long-running dispute, which now reaches our court for the third time. The
victim of the robbery sued the pawnshop that bought her jewelry from the thief
(before reselling it to someone else) for conversion, and the question before us
implicates the propriety of the damage award issued by the trial court. After a
comprehensive review of the record, we affirm the trial court’s damage award in part,
but reverse and remand on the issue of damages for the plaintiff’s diamond bracelet.
I.
{¶2} The roots of this case stretch back to 2014, when a group of thieves
burglarized the Dayton-area home of Irene Danopulos. The thieves seized several pieces
of valuable jewelry, then sold three of the stolen items—an emerald ring, a brooch, and a
diamond bracelet—to American Trading II, LLC, a Cincinnati pawn shop. American
Trading retained the jewelry for the requisite 15-day period, then sold it for scrap to a
third party. See R.C. 4727.12(A). By the time that the detective working on Mrs.
Danopulos’s case traced the jewelry to American Trading, all three pieces had already
been destroyed and alienated. Mrs. Danopulos accordingly sued for conversion.
{¶3} We have already heard two appeals in this matter. After the trial court
initially granted summary judgment to American Trading, we reversed, holding that the
pawn shop’s compliance with R.C. Chapter 4727’s reporting and retention requirements
did not “eliminate[] the pawnbroker’s liability for conversion with respect to stolen
property in a claim brought by the true owner of the stolen property.” Danopulos v.
American Trading II, LLC, 2016-Ohio-5014, 69 N.E.3d 157, ¶ 21 (1st Dist.). On remand,
the trial court considered testimony from both parties before determining that Mrs.
2
OHIO FIRST DISTRICT COURT OF APPEALS
Danopulos “could not prevail on her claim absent evidence that she had made a demand
for her property when it was still in American Trading's possession or control * * * .”
Danopulos v. American Trading II, LLC, 2018-Ohio-2536, 115 N.E.3d 849, ¶ 6 (1st
Dist.), appeal accepted, 153 Ohio St.3d 1495, 2018-Ohio-4092, 108 N.E.3d 1104, appeal
dismissed as improvidently granted and ordered non-precedential, 157 Ohio St.3d 147,
2019-Ohio-3204, 132 N.E.3d 687. Mrs. Danopulos appealed and we reversed again,
explaining that even if American Trading qualified as a “lawful” possessor of the stolen
jewelry, its intentional acts resulting in the destruction of the property constituted a
conversion. Id. at ¶ 16. We remanded the cause “for the trial court to enter judgment for
Danopulos on the issue of liability and to determine the amount of her damages.” Id. at
¶ 20. Although the Supreme Court initially accepted American Trading II for review, it
subsequently dismissed the matter as improvidently granted and rendered our opinion
non-precedential except for the parties inter se. See American Trading II, LLC, 157 Ohio
St.3d 147, 2019-Ohio-3204, 132 N.E.3d 687.
{¶4} On remand once again, the trial court—under a new judge—reviewed the
transcripts and evidence submitted prior to Mrs. Danopulos’s second appeal. Surveying
the record, it reasoned that although “American Trading offered evidence about the
amount for which it purchased and sold the jewelry * * * only Danopulos’[s] expert
witness, Michael Karaman, testified about the market value of the pieces at the time that
they were converted.” Mr. Karaman opined that the market value of the emerald ring
was $31,500 and the market value of the brooch was $8,000, but he did not offer an
opinion on the value of the bracelet. The trial court assessed the expert’s testimony as
more credible than American Trading’s valuation of the brooch and ring, and it
accordingly awarded Mrs. Danopulos “$31,500 for the ring and $8,000 for the brooch.”
But it held that without any specific expert testimony as to “the bracelet’s value,
Danopulos failed to prove her damages related to that piece of jewelry.”
3
OHIO FIRST DISTRICT COURT OF APPEALS
{¶5} American Trading now appeals the trial court’s award of damages,
characterizing Mr. Karaman’s testimony as too speculative to support his $31,500 and
$8,000 valuations of the ring and brooch, respectively. It points to its own
transactions—purchasing all three pieces for $2,125, then selling the parts for
$7,964.30—as the proper metric for damages. For her part, Mrs. Danopulos cross-
appeals, arguing that the trial court erred in its finding that she failed to prove a non-
speculative amount of damages for conversion of her diamond bracelet.
II.
{¶6} Both the assignment and the cross-assignment of error in this case
involve a common issue of law: namely, the caliber of evidence a plaintiff must marshal
to prove a non-speculative amount of damages in a conversion action. For sake of
efficiency, we will address the legal standard for the two assignments together before
embarking on the analyses.
{¶7} We review a trial court’s finding of damages in a civil bench trial as to
“whether [it] is against the manifest weight of the evidence.” See Koleti v. Mehlman, 1st
Dist. Hamilton No. C-190015, 2020-Ohio-2708, ¶ 8. “We are mindful that, in a bench
trial, ‘the trial judge is best able to view the witnesses and observe their demeanor,
gestures and voice inflections, and use these observations in weighing the credibility of
the proffered testimony.’ ” Id., quoting Seasons Coal Co., Inc. v. Cleveland, 10 Ohio
St.3d 77, 80, 461 N.E.2d 1273 (1984). Consequently, we will reverse the trial court’s
judgment only when the trial court “clearly lost its way and created a manifest
miscarriage of justice.” Fischoff v. Hamilton, 1st Dist. Hamilton No. C-120200, 2012-
Ohio-4785, ¶ 11.
{¶8} The proper measure of damages in a successful action for conversion is
“ ‘the value of the converted property at the time of the conversion.’ ” Pruitt v. LGR
Trucking, Inc., 148 Ohio App.3d 481, 2002-Ohio-722, 774 N.E.2d 273, ¶ 13 (1st Dist.),
4
OHIO FIRST DISTRICT COURT OF APPEALS
quoting Brumm v. McDonald & Co. Securities, Inc., 78 Ohio App.3d 96, 104, 603 N.E.2d
1141, (4th Dist.1992). Fair market value is defined as “ ‘[t]he price that a seller is willing
to accept and a buyer is willing to pay on the open market and in an arm’s-length
transaction.’ ” Perez Bar & Grill v. Schneider, 9th Dist. Lorain No. 11CA010076, 2012-
Ohio-5820, ¶ 35, citing Black’s Law Dictionary 1587 (8th Ed.2004). But calculation of
fair market value is not always as simple as checking the number on a price tag or
purchase receipt. The fair market value of an item can vary depending on the particular
market in which it is exchanged. See Akro-Plastics v. Drake Industries, 115 Ohio App.3d
221, 227, 685 N.E.2d 246 (11th Dist.1996) (“[W]hen goods are not in the hands of
consumers, but are still lodged somewhere in the chain of distribution, the concept of
fair market value becomes less obvious.”). A panel of drywall generally commands a
lower price between a manufacturer and a home-builder than it would between a
hardware store and a consumer; wholesalers can take advantage of special relationships
or bulk discounts unavailable to retail buyers. Since damages in a conversion action are
“ ‘determined by the harm done, the market that determines the measure of recovery * *
* is that to which [the plaintiff] would have to resort in order to replace the subject
matter.’ ” Id., quoting Restatement of the Law 2d, Torts, Section 911 at 473, Comment D
(1979). When the injured plaintiff in a conversion action is a consumer, the proper
measure of damages is the retail price. Id. (“ ‘Thus, the consumer can recover the retail
price; the retail dealer, the wholesale price.’ ”). Finally, when actual damages exceed the
market value of converted property, courts can sometimes enhance this value in the
interest of “mak[ing] the plaintiff whole.” R&S Distrib. Inc., v. Hartge Smith
Nonwovens, LLC, 1st Dist. Hamilton No. C-090100, 2010-Ohio-3992, ¶ 36, quoting
Pryor v. Webber, 23 Ohio St.2d 104, 107, 263 N.E.2d 235 (1970).
{¶9} “An award of damages must be shown with a reasonable degree of
certainty and in some manner other than mere speculation, conjecture, or surmise.”
5
OHIO FIRST DISTRICT COURT OF APPEALS
Capital Plus, Inc. v. Parker Ents. Imperial Dist., Inc., 1st Dist. Hamilton No. C-030046,
2004-Ohio-3896, ¶ 53. However, “once a plaintiff establishes a right to damages,
plaintiff's right will not be denied merely because the damages cannot be calculated with
mathematical certainty.” Austin v. Chukwuani, 2017-Ohio-106, 80 N.E.3d 1199, ¶ 21
(8th Dist.). We will not reverse a trial court’s assessment of damages so long as “some
competent, credible evidence supports it.” See Parker Ents. at ¶ 53.
III.
{¶10} In its assignment of error, American Trading challenges the trial
court’s damages award on two fronts. First, it attacks the expert testimony of Mr.
Karaman, characterizing his valuations of the jewelry as “based on speculation,”
“unreliable,” and “inadmissible.” Next, it contends that the trial court committed
reversible error by declining to peg fair market value to the prices that American
Trading paid—and subsequently received—for the jewelry.
A.
{¶11} First, we address the admissibility and weight of Mr. Karaman’s
testimony. “[A]n expert’s opinion is admissible so long as it provides evidence of more
than mere possibility or speculation.” State v. Beasley, 153 Ohio St.3d 497, 2018-Ohio-
493, 108 N.E.3d 1028, ¶ 162. Moreover, we will not reverse a trial court’s decision to
admit expert testimony “absent an abuse of discretion.” Blair v. McDonagh, 177 Ohio
App.3d 262, 2008-Ohio-3698, 894 N.E.2d 377, ¶ 28 (1st Dist.).
{¶12} Regarding his qualifications, Mr. Karaman conveyed that he owned a
retail jewelry business called James Free Jewelers and had been engaged in the field of
fine jewelry and watches for 38 years. He described himself as a “graduated gemologist”
who presented at various trade shows and professional organizations. Defense counsel
6
OHIO FIRST DISTRICT COURT OF APPEALS
did not object to Mr. Karaman’s qualifications below, and conceded at oral argument
that he considered Mr. Karaman sufficiently qualified to offer an expert appraisal.
{¶13} Instead of questioning Mr. Karaman’s credentials, American Trading
finds fault with his methods. Unable to examine the destroyed pieces (by virtue of their
destruction), Mr. Karaman relied on other sources: a grainy photocopy taken by
American Trading, older photographs provided by Mrs. Danopulos, and information
relayed to him from counsel. His valuation of the brooch relied heavily on Mrs.
Danopulos’s statement to counsel (telephoned along to Mr. Karaman) that her husband
initially purchased it for $8,000. Noting the “handwork” of the piece, the settings of the
jewels, and the presence of diamonds, Mr. Karaman concluded that “it is worth [the
$8,000 paid], if not more.” Defense counsel objected to hearsay on the statement that
the Danopuloses initially paid $8,000, but does not re-raise the hearsay objection on
appeal.
{¶14} Mr. Karaman took a different approach to evaluate Mrs. Danopulos’s
emerald ring. He concluded, based on the images and extant information, that the ring
was “four carat and it’s Columbian * * * and it’s over a hundred years old.” He then
testified that a “middle range” Columbian emerald would sell for $6,000 per carat,
making the emerald alone worth $24,000. To that number, he added $4,500 for the
diamonds (three carats at $1,500 per carat, again premised on a midpoint quality
assessment) and $3,000 for other “factors” including the age and handwork of the piece,
for a total evaluation of $31,500. Finally, he mentioned that if the emerald was of higher
quality—which he could not tell from the photographs—it could sell for as much as
$20,000 a carat. Defense counsel objected to all of Mr. Karaman’s testimony on the
valuation of the ring, though he did not elaborate on specific grounds for the objection.
{¶15} Mr. Karaman’s appraisals of the jewelry could have been clearer or more
detailed. Counsel probed only superficially about his methods and sources, and Mr.
7
OHIO FIRST DISTRICT COURT OF APPEALS
Karaman did not opine at all as to the value of the stolen bracelet. But the fact than an
expert’s testimony falls below the ideal does not render it “mere possibility or
speculation.” Beasley, 153 Ohio St.3d 497, 2018-Ohio-493, 108 N.E.3d 1028, at ¶ 162.
Mr. Karaman essentially testified that he received information about the pieces from
Mrs. Danopulos’s counsel; that the photographs he reviewed matched (or at least did not
contradict) that information; and that based on the information he had and his own
knowledge of market prices, the pieces had a minimum market value of $8,000 and
$31,500. American Trading can certainly point out flaws in this chain of logic, but that
doesn’t render the testimony inadmissible. Indeed, taken to its logical extreme,
American Trading’s argument would find that no expert could ever offer an opinion in a
factual scenario such as this one. We have an impeccably-credentialed expert
confronting imperfect information because—by virtue of the defendant’s actions—the
jewelry no longer exists to be more precisely appraised.
{¶16} American Trading’s complaint goes more to the weight of Mr. Karaman’s
testimony than admissibility. On this point, it emphasizes his failure to cite any relevant
treatises or catalogues, and it criticizes that all of the information he used to make his
valuations came (indirectly) from Mrs. Danopulos. Under the circumstances, however,
neither factor is so unreasonable that it undercuts the credibility of Mr. Karaman’s
appraisals. His reliance on midpoint valuations for the jewels represents a reasonable
means of calculating a valuation and certainly sits within the core of his expertise. In
fact, he arguably undervalued the items considerably by not ascribing much (if any)
value to the metals and artistry for each piece. These items were one-of-a-kind pieces,
with artistic and antique value beyond the sheer price of the gems and metals they
contained. In light of American Trading’s decision to scrap the pieces (which precluded
a thorough examination of them) it makes perfect sense that the owner of the jewelry—
Mrs. Danopulos—would be the best alternative source of information. We will not
8
OHIO FIRST DISTRICT COURT OF APPEALS
penalize her for a lack of “mathematical certainty” in her damages that stems directly
from American Trading’s act of conversion. See Chukwuani, 2017-Ohio-106, 80 N.E.3d
119, at ¶ 21; American Trading II, 2018-Ohio-2536, 115 N.E.3d 849, at ¶ 16 (holding
American Trading’s “intentional[] disassembli[ing]” of the jewelry to be an act of
conversion).
{¶17} American Trading never seriously challenged Mrs. Danopulos’s testimony
that her husband originally purchased the brooch for $8,000, nor her description of the
ring as containing a four-carat Columbian emerald and three carats of diamonds. The
trial court did not fault Mr. Karaman for relying on Mrs. Danopulos’s information in his
appraisal of the items, implicitly finding Mrs. Danopulos to be a credible source. Without
some contrary appraisal from American Trading or reason to question Mrs. Danopulos’s
credibility, the trial court’s decision to accept Mr. Karaman’s appraisals as the best
measure of damages falls far from a “manifest miscarriage of justice.” See Fischoff, 1st
Dist. Hamilton No. C-120200, 2012-Ohio-4785, at ¶ 11. We reject the first issue raised
by American Trading’s assignment of error.
B.
{¶18} Next, American Trading argues that the trial court should have based its
damages calculation on the prices that American Trading paid ($2,125) and received
($7,964.30) for the jewelry. However, there are many reasons to doubt American
Trading’s contention that these numbers represent a fair market value.
{¶19} The probative value of the initial sale from the thief to American Trading
is easily disregarded. That sale was tainted by the thief’s knowledge that he had no real
claim of title, paid nothing for the jewelry, and needed to dispose of it without drawing
attention to himself. The thief had every incentive to accept a price far below fair market
value, even with the generous assumption that he knew what the pieces were worth. The
9
OHIO FIRST DISTRICT COURT OF APPEALS
sale was not an “open market” and “arms-length” transaction. See Perez Bar & Grill, 9th
Dist. Lorain No. 11CA010076, 2012-Ohio-5820, at ¶ 35.
{¶20} The transaction between American Trading and its scrap buyer is properly
disregarded for a different reason: it is unrepresentative of the relevant market. Mrs.
Danopulos is a consumer who would have to purchase fine jewelry from a retail shop, not
a pawn broker or a scrapper trading in a handful of specific stones. Damages must
reflect the harm done to her, and should therefore be based on retail—not mid-market—
value. See Akro-Plastics, 115 Ohio App.3d at 227, 685 N.E.2d 246. Moreover, the record
shows that American Trading did not maximize the value of its own sale of the jewelry.
Mr. Karaman testified that the pieces had substantially greater value as art and antiques,
and that the act of disassembling the jewelry seriously devalued it. American Trading’s
decision to sell the pieces for scrap indicates that it did not know (or did not care) that
the pieces were worth more whole. Mrs. Danopulos’s damages should not be curtailed
by American Trading’s decision to sell the pieces for less than retail price and destroy
their antique and artistic value.
{¶21} As the trial court acknowledged in its decision, the only witness to testify
as to the value of the pieces in the retail market for fine jewelry was Mr. Karaman. There
are some issues with Mr. Karaman’s testimony, but none so serious that they render the
testimony inadmissible, and American Trading failed to offer any viable alternative
measure of damages. Even if we harbored no concerns about American Trading’s
valuations, the fact that the judge picked the expert’s opinion over American Trading’s
alternative fails to create a manifest weight issue on this record. We hold that competent
and credible evidence supported trial court’s damages award for the ring and brooch,
and therefore overrule American Trading’s assignment of error in full.
10
OHIO FIRST DISTRICT COURT OF APPEALS
IV.
{¶22} In her sole cross-assignment of error, Mrs. Danopulos argues that the trial
court should have awarded $15,000 for her diamond bracelet. She calculates this
number by combining Mr. Karaman’s testimony that the value of the mid-range
diamonds in her ring was $1,500 per carat and her own testimony that the bracelet
contained 10 carats of diamonds.
{¶23} We agree with Mrs. Danopulos that the trial court committed reversible
error when it wholly denied damages for her diamond bracelet. In its order awarding
damages, the trial court reasoned that Mrs. Danopulos “failed to prove her damages” for
the bracelet because “Karaman did not offer specific testimony as the bracelet’s value.”
But this statement mischaracterizes a plaintiff’s burden for proving damages. Expert
testimony can be an effective method to calculate damages beyond “mere speculation,
conjecture, or surmise.” Parker Ents., 1st Dist. Hamilton No. C-030046, 2004-Ohio-
3896, at ¶ 53. It is not, however, the only method. A plaintiff must prove her damages
to “a reasonable degree of certainty.” Id. Lay testimony—combined with or independent
of expert testimony—can sometimes be enough to meet this burden.
{¶24} Consider a hypothetical example. Let’s say that Mrs. Danopulos
purchased her diamond bracelet from a retail jeweler the day before the robbery, paid a
value of $15,000, and retained her receipt. Let’s further suppose that she presented the
receipt at trial and testified that it was an accurate record of her purchase. Under these
circumstances, expert testimony on the value of the bracelet would be entirely
superfluous. Unless we had some compelling reason to question the veracity of the
receipt or the testimony, we would conclude that Mrs. Danopulos met her burden.
{¶25} Of course, the circumstances of this case are not as clear-cut. Because the
bracelet was a family heirloom, Mrs. Danopulos was unable to testify to a prior purchase
value. She did testify, however, that the bracelet was made of gold, contained 10 carats
11
OHIO FIRST DISTRICT COURT OF APPEALS
of diamonds, and originally belonged to her great-grandmother (likely making it over a
century old). Combined with Mr. Karaman’s testimony on the value of mid-range
diamonds, this testimony was enough—if deemed credible—to establish a reasonable fair
market value for the bracelet. It was certainly enough to prove that the bracelet’s worth
exceeded $0, which means that Mrs. Danopulos cannot be made “whole” by the existing
damages award. See R&S Distrib., 1st Dist. Hamilton No. C-090100, 2010-Ohio-3992,
at ¶ 36.
{¶26} We conclude that the trial court erred by requiring specific, expert
testimony of the bracelet’s value in this case, and remand for a determination of the
bracelet’s valuation. Recognizing that a new trial judge will hear this matter, the court in
its discretion can request new evidence or testimony on the valuation of the bracelet, or
it may decide the matter on the state of the existing record. If the trial court deems Mrs.
Danopulos’s testimony on the bracelet to be credible, it should combine that testimony
with Mr. Karaman’s valuation of mid-range diamonds at $1,500 per carat to calculate the
market value for the bracelet. Mrs. Danopulos’s cross-assignment of error is sustained.
V.
{¶27} The trial court’s damages award is sustained in part, reversed in part,
and this cause is remanded for proceedings consistent with this opinion.
Judgment accordingly.
WINKLER and HENDON, J.J., concur.
SYLVIA SIEVE HENDON, retired, from the First Appellate District, sitting by
assignment.
Please note:
The court has recorded its entry on the date of the release of this opinion.
12