Seminatore v. Climaco, Climaco, Seminatore, Lefkowitz & Garofoli

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.]

JOURNAL ENTRY and OPINION {¶ 1} Kenneth F. Seminatore appeals from a judgment of the common pleas court which adopted the final report of a court-appointed Special Master in connection with the winding up of the general partnership of Climaco, Climaco, Seminatore, Lefkowitz and Garofoli in accordance with R.C. 1775.36.

{¶ 2} On appeal, Seminatore raises four assignments of error, charging in two of them that the court abused its discretion in adopting findings of the Special Master regarding partnership assets and liabilities and regarding no breach of fiduciary duty, claiming these findings were against the manifest weight of the evidence. In the other two assignments of error, he argues that the court abused its discretion in awarding sanctions against him and in dismissing his fraud claim.

{¶ 3} After a thorough review of the record before us, we have concluded that the Special Master's report is supported by competent, credible evidence, and we therefore reject the first and second assignments of error. Further, because Seminatore has failed to present us with either a transcript of proceedings or an App.R. 9 statement of the contempt hearing on his fraud claim, we are unable to conduct meaningful review of the third and fourth assignments of error, and we therefore summarily overrule them.

{¶ 4} The record before us reveals that, in 1976, several attorneys, including Seminatore, formed the General Partnership of Climaco, Climaco, Seminatore, Lefkowitz and Garofoli, from which they practiced law. Thereafter, the General Partnership leased office space in the Leader Building in downtown Cleveland.

{¶ 5} In 1982, the members of the General Partnership formed a legal professional association, Climaco, Climaco, Seminatore, Lefkowitz and Garofoli, L.P.A. (hereinafter the Firm), but because they already had a lease in the name of the General Partnership, the Firm subleased the office space from the General Partnership. In 1986, when the Firm moved to the Halle Office Building, it continued to use the General Partnership as a pass through entity, i.e., the General Partnership leased the office space, and the Firm then subleased the space from the partnership. The General Partnership's assets were limited to furniture, artwork, and equipment purchased to furnish the Firm's office.

{¶ 6} On April 17, 1997, the Firm terminated Seminatore, and as a result, he sued the firm in common pleas court Case No. 352977, where the court entered a directed verdict in favor of the Firm on his claims for wrongful termination, promissory estoppel, and breach of fiduciary duty. On appeal, however, in App. No. 76658, we reversed in part, remanding his promissory estoppel and breach of fiduciary duty claims. On further appeal, the supreme court denied the parties' discretionary cross-appeals. See Seminatore v. Climaco, et al. (2001),91 Ohio St.3d 1513, 746 N.E.2d 615.

{¶ 7} At the time of his termination from the Firm, Seminatore owned a 12.75% interest in the General Partnership. On November 15, 1999, he filed a complaint in common pleas court for dissolution and an accounting of the General Partnership, and a fraud claim under R.C.1777.99, naming the partnership and the individual partners as defendants. During the course of proceedings, one of the partners, Michael Climaco, sought affirmative relief from the remaining partners and requested the court order them to purchase his share in the General Partnership.

{¶ 8} On April 7, 2000, the General Partnership filed a motion for sanctions against Seminatore, asserting that his claim under R.C. 1777.99 constituted frivolous conduct because that statute had been repealed in 1996. On May 18, 2000, the court conducted a hearing on the motion for sanctions; however, our record does not contain a transcript or App.R. 9 statement of that hearing. Thereafter, the court imposed sanctions against Seminatore in the amount of $1,732.50.

{¶ 9} On September 6, 2000, the court dismissed Seminatore's fraud claim, ordered the dissolution of the General Partnership, and referred the winding-up of the partnership to a Special Master. The Special Master met with the parties and reviewed depositions, pleading, briefs, exhibits and the court file, and conducted a physical inspection of the leased space in the Halle Building.

{¶ 10} On November 7, 2000, the Special Master issued a final report, finding, inter alia, that the General Partnership was only a pass through entity, with no source of revenue other than funds it received from the Firm; that it had been the lessee of office space in the Halle Building in downtown Cleveland, and that lease constituted a liability because the rental amount exceeded market value; and that the only assets of the partnership consisted of furniture, equipment, and artwork. The Special Master determined that the liability of the lease exceeded the estimated value of the partnership assets, and, therefore, he recommended that Seminatore and Michael Climaco be discharged from any liabilities of the partnership but that they be found to have no claim to any partnership assets.

{¶ 11} Two days later, on November 9, 2000, the trial court adopted the final report of the Special Master. On November 21, 2000, Seminatore filed a motion to vacate the court's order adopting the Special Master's report, arguing he had 14 days to file objections.

{¶ 12} On December 5, 2000, Seminatore filed this appeal, raising four assignments of error for our review. The first two state:

{¶ 13} THE TRIAL COURT ABUSED ITS DISCRETION WHEN IT ADOPTED THE FINDINGS OF THE COURT-APPOINTED SPECIAL MASTER REGARDING PARTNERSHIP ASSETS AND LIABILITIES WHICH FINDINGS WERE NOT SUPPORTED BY THE MANIFEST WEIGHT OF THE EVIDENCE.

{¶ 14} THE TRIAL COURT ABUSED ITS DISCRETION WHEN IT ADOPTED THE FINDING BY THE COURT-APPOINTED SPECIAL MASTER OF NO BREACH OF FIDUCIARY DUTY WHICH WAS NOT SUPPORTED BY THE MANIFEST WEIGHT OF THE EVIDENCE.

{¶ 15} Seminatore argues that the Special Master's report is against the manifest weight of the evidence and that the court erred in adopting this report without allowing him 14 days to file objections in accordance with Civ.R. 53 procedures. Seminatore alleges clear documentary and testimonial evidence before the Special Master established that the General Partnership had valuable assets and no liabilities.

{¶ 16} The General Partnership, on the other hand, asserts that it was only a pass through entity, with no source of revenue, and that its lease was a major liability which exceeded any assets. It further asserts that we should presume regularity because Seminatore failed to produce a record of the proceedings before the Special Master.

{¶ 17} Based on our review of that record, we are unable to conclude that the Special Master's report is against the manifest weight of the evidence. It is well established that judgments supported by some competent, credible evidence will not be reversed by a reviewing court as being against the manifest weight of the evidence. See C.E. Morris Co. v. Foley Construction Co. (1978), 54 Ohio St.2d 279, 376 N.E.2d 578. Here, the limited record supports the Special Master's conclusion that the General Partnership did not breach any fiduciary duty and that the General Partnership's lease constituted a significant liability which exceeded its assets.

{¶ 18} In particular, both parties relied on a Trial Depreciation Report prepared by Ernst Young in 1994, which analyzed the partnership assets and liabilities when another partner, Thomas Colaluca, left the Firm. In this report, Ernst Young found the fair market value of improvements made to the leasehold to be zero because of their fixed nature, which made them the lessor's property under the terms of the lease. It further found the estimated value of the General Partnership's furniture and equipment to be $65,358; naturally, this figure would have depreciated since then.

{¶ 19} On the other hand, using the lease analysis table appended to the Ernst Young report, commencing on April 1997 and through the life of the lease, the date of Seminatore's termination, the General Partnership will be liable for a $1,132,679 overpayment on the fair market value of the lease at the Halle Building. As noted by the General Partnership, because of the Firm's downsizing, much of this space is unused, and cheaper, more practical office space is readily available. Therefore, based on the exhibits before the Special Master, his finding that the partnership's liabilities exceeded its assets is supported by the manifest weight of the evidence.

{¶ 20} Given the state of the record, and without any contrary evidence to rebut the contents of the documentation reviewed by the Special Master, we are constrained to conclude the Special Master's findings are supported by competent, credible evidence.

{¶ 21} With respect to Seminatore's procedural contention that the court denied him the opportunity to object to the Special Master's report in accordance with Civ.R. 53, there are two reasons why this challenge must fail: first, the procedures set forth in Civ.R. 53, as amended in 1995, no longer expressly apply to non-court-employed special masters, see, e.g., State ex rel. Head of Claims, Allstate Ins. Co. v. Gaul (1999), 131 Ohio App.3d 419, 722 N.E.2d 616, citing the Staff Note to the Amendment of Civ.R. 53(D) in 1995 (Prior language largely drawn from Federal Civil Rule 53 relative to special masters and largely applicable to situations where special masters were appointed for individual cases and were not court employees is eliminated.); second, even assuming arguendo that this rule applies by analogy, Seminatore cannot prevail because, pursuant to Civ.R. 53(E)(4)(c), he had an obligation to actually file objections even after the court adopted the Special Master's report, and he failed to do so. Accordingly, he has waived the opportunity to present this argument on appeal.

{¶ 22} Civ.R. 53(E)(3)(b) provides in part:

{¶ 23} (b) * * * A party shall not assign as error on appeal the court's adoption of any finding of fact or conclusion of law unless the party has objected to that finding or conclusion under this rule.

{¶ 24} Although Civ.R. 53(E)(3)(a) provides a party 14 days to file objections, Civ.R. 53(E)(4)(c) states:

{¶ 25} (c) Permanent and interim orders. The court may adopt a magistrate's decision and enter judgment without waiting for timely objections by the parties, but the filing of timely written objections shall operate as an automatic stay of execution of that judgment until the court disposes of those objections and vacates, modifies, or adheres to the judgment previously entered. As we stated in Riolo v. Navin (Apr. 4, 2002), Cuyahoga App. No. 79809, 2002-Ohio-1551:

{¶ 26} Here, although the magistrate's report and the trial court's order adopting it had been filed on the same day, Civ.R. 53(E)(4)(c) afforded Navin fourteen days to file objections and effect the automatic stay provision of that rule. He failed to do so and, therefore, pursuant Civ.R. 53(E)(3)(b), he has waived the right to file an appeal from that judgment. Accord Thompson v. Thompson (Aug. 10, 2001), Portage App. No. 2000-P-0110, unreported; Huffman v. Huffman (July 13, 2001), Trumbull App. No. 2000-T-0095, unreported; Simms v. Simms (Mar. 27, 1998), Portage App. No. 97-P-0005, unreported.

{¶ 27} We agree with the dissent's view that Civ.R. 53 does not apply to this case; however, it is Seminatore who relies solely on this rule to support his contention that the court erred in not affording him an opportunity to object to the Special Master's report; moreover, neither Seminatore nor the dissent have been able to point to any other legal authority to support the proposition that a trial court must provide the party with a reasonable period of time to file objections to a special master's report.

{¶ 28} Thus, because of the absence of any authority to the contrary, Seminatore's only tenable argument is that Civ.R. 53 applies by analogy, and that he had 14 days to file objection. However, he never did so, and Civ.R. 53(E)(4)(c) clearly contemplates the court's adoption of a magistrate's ruling without waiting for objections and does not relieve a party from the duty to file those objections if the court prematurely adopts the magistrate's report. Riolo, supra. Here, Seminatore never filed objections to the Special Master's report, and even if he had the right to do so by analogy to Civ.R. 53, this failure constitutes waiver of his right to appeal from that issue.

{¶ 29} Accordingly, these assignments of error are overruled.

{¶ 30} Seminatore's third and fourth assignments state:

{¶ 31} THE TRIAL COURT ABUSED ITS DISCRETION IN AWARDING SANCTIONS AGAINST MR. SEMINATORE.

{¶ 32} THE TRIAL COURT ABUSED ITS DISCRETION IN DISMISSING MR. SEMINATORE'S FRAUD CLAIM.

{¶ 33} We are unable to review Seminatore's third and fourth assignments of error due to a lack of record. Here, he claims that the trial court erred in dismissing his fraud claim and imposing sanctions after conducting a hearing on these matters. Patently, however, he failed to produce the transcript of this hearing as part of the record on appeal, nor has he presented an App.R. 9 statement.

{¶ 34} [I]n the absence of a record, the proceedings at trial are presumed correct. State v. Brown (1988), 38 Ohio St.3d 305, 314, fn. 4,528 N.E.2d 523.

{¶ 35} As the court stated in Knapp v. Laboratories (1980),61 Ohio St.2d 197, 199, 400 N.E.2d 384:

{¶ 36} The duty to provide a transcript for appellate review falls upon the appellant. This is necessarily so because an appellant bears the burden of showing error by reference to matters in the record. * * * When portions of the transcript necessary for resolution of assigned errors are omitted from the record, the reviewing court has nothing to pass upon and thus, as to those assigned errors, the court has no choice but to presume the validity of the lower court's proceedings, and affirm.

{¶ 37} Further, [i]f a transcript is ``unavailable' an appellant has an obligation to provide a complete record pursuant to App.R. 9(C), (D) or (E). State v. Nero (Feb. 21, 2002), Cuyahoga App. No. 79866, 2002-Ohio-656, quoting State v. Newell (Dec. 6. 1990) Cuyahoga App. Nos. 56801 and 60128.

{¶ 38} Based on Seminatore's failure to provide a transcript or an App.R. 9 statement of these proceedings, we must presume regularity and summarily reject the third and fourth assignments of error.

Judgment affirmed.

ANN DYKE, J., CONCURS, DIANE KARPINSKI, A.J., DISSENTS [See Attached Dissenting Opinion].