Kassoudji v. Stamps

[Cite as Kassoudji v. Stamps, 2016-Ohio-7693.]
IN THE COURT OF APPEALS OF OHIO
SECOND APPELLATE DISTRICT
MONTGOMERY COUNTY
SHIRLEY A. KOSSOUDJI :
:
Plaintiff-Appellee : Appellate Case No. 27170
:
v. : Trial Court Case No. 2014-CV-4211
:
RICK D. STAMPS, et al. : (Civil Appeal from
: Common Pleas Court)
Defendants-Appellants :
:
...........
OPINION
Rendered on the 10th day of November, 2016.
...........
MATTHEW C. SORG, Atty. Reg. No. 0062971, 40 North Main Street, Suite 2700, Dayton,
Ohio 45423
Attorney for Plaintiff-Appellee
F. HARRISON GREEN, Atty. Reg. No. 0039234, 4015 Executive Park Drive, Suite 230,
Cincinnati, Ohio 45241
Attorney for Defendants-Appellants
.............
WELBAUM, J.
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{¶ 1} In this case, Defendants-Appellants, Rick and Irma Stamps (collectively, “the
Stamps”), appeal from a decision denying their Civ.R. 60(B) motion for relief from
judgment. In support of their motion, the Stamps contend that the trial court erred in
overruling the motion because their failure to appear for trial constituted excusable
neglect. The Stamps also contend that their motion should have been granted pursuant
to Civ.R. 60(B)(4), because the judgment against them has been satisfied.
{¶ 2} We conclude that the trial court did not err in overruling the motion based on
Civ.R. 60(B)(1), but did err in denying relief under Civ.R. 60(B)(4). Accordingly, the
judgment of the trial court will be reversed, and this cause will be remanded for further
proceedings.
I. Facts and Course of Proceedings
{¶ 3} In July 2014, Plaintiff-Appellee, Shirley Kossoudji, filed a complaint for money
damages against the Stamps. Kossoudji alleged in the complaint that she was the
deeded owner of premises known as 1915-1927 Troy Street, Dayton, Ohio, and had
entered into a land contract with the Stamps in 2010 for their purchase of the property.
The purchase price was $115,000, with interest accruing on the unpaid balance at 8%
per annum from the commencement date of the contract.
{¶ 4} Under the contract, the Stamps agreed to pay $849 per month for 60 months
beginning January 1, 2010, with a final balloon payment of $101,521 due at the end of
the 60-month period. Late charges of 5% were assessed for untimely payments, and
the Stamps were also required to pay one-twelfth of the annual real estate taxes in equal
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monthly installments for the term of the contract. In addition, the Stamps agreed to
maintain liability, fire, and extended insurance on the premises, and to keep the premises
in good condition. Any structural change or alteration to the premises could not be made
without the owner’s prior written approval.
{¶ 5} Further, the contract allowed Kossoudji to declare all remaining installments
and amounts provided by the contract immediately due upon the Stamps’ failure to pay
an installment of the purchase price when due, or upon their failure to comply with any of
the terms of the contract.
{¶ 6} According to the complaint, the Stamps had not made payments since July
2013, and had failed to remedy the default after being notified. The complaint also
alleged that the Stamps failed to pay real estate taxes and had made significant structural
changes, including destruction of an improved structure on the property. Two claims for
relief were included in the complaint. One was a request for an amount of $118,145.43,
based on past-due installments and taxes, plus acceleration of the balloon payment.
The second claim was based on the demolition of the structure on the property and
significant environmental harm, which allegedly had caused diminution in the property’s
value in excess of $25,000.
{¶ 7} On August 21, 2014, the Stamps’ attorney, Thomas Kendo, filed an answer
on their behalf and a request for mediation. After Kossoudji served requests for
production of documents and for admissions on the Stamps, the court referred the case
to a magistrate and set a scheduling conference for October 10, 2014. Based on this
conference, the magistrate filed a final pretrial order on October 15, 2014, setting
deadlines for discovery and filing summary judgment motions. The order also set a trial
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date of February 25, 2015.
{¶ 8} The final pretrial order, which was sent to the parties’ attorneys through the
court’s e-filing system, contained the following statement:
FAILURE TO APPEAR AT THE TRIAL, OR FAILURE TO HAVE A
WELL INFORMED SUBSTITUTE AVAILABLE, WILL RESULT IN
DISMISSAL OF THE ABSENT PARTIES’ CLAIMS FOR FAILURE TO
PROSECUTE UNDER CIVIL RULE 41(B)(1), OR, IF APPROPRIATE, THE
CASE WILL PROCEED WITHOUT THE ABSENT PARTY OR COUNSEL.
COUNSEL AND/OR PARTIES WHO FAIL TO APPEAR MAY ALSO BE
SUBJECT TO OTHER APPROPRIATE SANCTIONS.
(Bolding and all-capitals format in original). October 15, 2014 Final Pretrial Order, Doc.
#25, p. 3.
{¶ 9} On December 1, 2014, Kossoudji filed a motion for partial summary
judgment, based on Kossoudji’s affidavit and the Stamps’ responses to the request for
admissions and the interrogatories. The Stamps then filed a request for an extension of
time to respond, and received an extension to January 5, 2015. However, the Stamps
did not file a timely response. On January 20, 2015, the Stamps filed another motion to
extend the response time to January 23, 2015. The court granted an extension to
January 20, 2015, and the Stamps then filed an untimely response on January 23, 2015.
{¶ 10} On January 23, 2015, attorney Andrew Engel, who was associated with
Kendo’s firm, entered his appearance as co-counsel for the Stamps. Subsequently,
Kossoudji filed her identification of trial exhibits on January 26, 2015, and later objected
to any trial exhibits that the Stamps would proffer, based on their failure to identify exhibits
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in accordance with the pretrial order. Kossoudji also filed her pretrial statement on
February 11, 2015. The Stamps did not file a pretrial statement.
{¶ 11} On February 11, 2015, the Magistrate filed a decision denying Kossoudji’s
partial motion for summary judgment. The decision noted that the Stamps had admitted
these matters: entering into the land installment contract; not making any payments
since June 2013; and failing to timely remedy their default. However, the magistrate
concluded that a genuine issue of material fact existed regarding damages, because
Kossoudji failed to offer an accounting on which the court could rely to decide damages.
The magistrate’s decision further noted that trial was set for February 25, 2015, and that
the decision was electronically filed with the court’s e-filing system. In addition, the
decision stated that the system would post a record of the filing to the e-filing account
“Notifications” tab of several participants, including Kendo and Engel. February 11, 2015
Magistrate’s Decision, Doc. #42, p. 6.
{¶ 12} The trial was held on February 25, 2015, but the Stamps did not appear for
trial. Their attorneys also did not appear. On April 3, 2015, the magistrate filed a
decision, noting these facts, and further noting that Kossoudji had appeared for trial and
had presented uncontroverted evidence as to her ownership of the real estate. The
magistrate also observed that Kossoudji had clearly and convincingly proven that the
Stamps were in breach of contract for non-payment. In addition, the decision stated that
Kossoudji had provided an accounting that was entered into evidence, and that the
damages based on breach of contract were $133,929.44. The magistrate then awarded
Kossoudji that amount, plus statutory interest from February 25, 2015. Again, a copy of
the decision was posted to the e-filing system and distributed to the Stamps’ attorneys.
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{¶ 13} An amended magistrate’s decision was filed on April 15, 2015. This
decision indicated that Kossoudji had orally moved for default judgment and had
established a prima facie case as to the relief requested. The amended decision added
that the land installment contract was in default and was null and void. As a result, the
magistrate ordered the Stamps to quit-claim their interest in the property within seven
days, and if the Stamps failed to do so, the magistrate’s decision and judgment entry
adopting the decision would serve as a properly executed conveyance in lieu of the
document regularly required for such conveyance and transfer. This decision was also
filed and sent electronically to the parties’ attorneys.
{¶ 14} On April 27, 2015, the Stamps’ attorney filed a motion for an extension of
time to file objections to the magistrate’s amended decision. The court granted the
motion, and gave the Stamps until May 12, 2015, to file their objections. However, no
objections were filed, and on May 15, 2015, the trial court filed a judgment entry adopting
the magistrate’s decision dated April 15, 2015. The court, therefore, awarded Kossoudji
$133,929.44, plus statutory interest from February 25, 2015, and also ordered the Stamps
to quit-claim their interest in the property within seven days. Again, the court stated that
upon the Stamps’ failure to quit-claim the property, the magistrate’s decision and court’s
entry adopting the decision would operate as a properly executed document conveying
the property.
{¶ 15} After stating that the order was a final appealable order, and that there was
no just reason for delay, the trial court directed the clerk to serve each party with notice
of the entry of judgment and its date of entry on the journal. As before, the court posted
its judgment on the e-filing system, with notification to Kendo and Engel.
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{¶ 16} On May 18, 2015, the clerk filed the 58(B) notice, as directed. Kossoudji
then filed a praecipe for a certificate of judgment against the Stamps on June 10, 2015.
No appeal was taken from the judgment of the court that had been filed on May 15, 2015.
{¶ 17} Subsequently, on March 21, 2016, the Stamps, using different counsel, filed
a motion for relief from judgment, based on Civ.R. 60(B)(1) and (4). The motion was
supported by the affidavit of Rick Stamps, who denied knowing that his attorneys would
not be present at the trial on February 25, 2015. After further memoranda were filed, the
court held an evidentiary hearing on June 3, 2016, at which Rick Stamps testified. The
court then filed a decision on June 7, 2016, denying the motion for relief from judgment.
The Stamps appeal from that decision.
II. Excusable Neglect
{¶ 18} The Stamps’ First Assignment of Error states that:
The Trial Court Erred in Overruling Defendants-Appellants’ Rule
60(B) Motion Because Appellants’ Failure to be Present at the Hearing Was
an Instance of Excusable Neglect.
{¶ 19} Under this assignment of error, the Stamps contend that they are entitled to
relief based on excusable neglect. In this regard, the Stamps argue that they had a
meritorious defense against the breach of contract claim and were diligently litigating the
case until the final hearing when they failed to appear. They additionally argue that they
were not told their attorneys would not appear for trial, were not provided a copy of the
court’s judgment, and learned of the judgment more than a month later. The Stamps,
therefore, contend that their failure to appear did not constitute a total disregard for the
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judicial system.
{¶ 20} Civ.R. 60(B) provides that:
On motion and upon such terms as are just, the court may relieve a
party or his legal representative from a final judgment, order or proceeding
for the following reasons: (1) mistake, inadvertence, surprise or excusable
neglect; (2) newly discovered evidence which by due diligence could not
have been discovered in time to move for a new trial under Rule 59(B); (3)
fraud (whether heretofore denominated intrinsic or extrinsic),
misrepresentation or other misconduct of an adverse party; (4) the judgment
has been satisfied, released or discharged, or a prior judgment upon which
it is based has been reversed or otherwise vacated, or it is no longer
equitable that the judgment should have prospective application; or (5) any
other reason justifying relief from the judgment.
{¶ 21} A motion brought under Civ.R. 60(B)(1) for excusable neglect must be
brought within a reasonable time, and “not more than one year after the judgment, order,
or proceeding was entered or taken.” Civ.R. 60(B). “To prevail on a motion brought
under Civ.R. 60(B), the movant must demonstrate that: (1) the party has a meritorious
defense or claim to present if relief is granted; (2) the party is entitled to relief under one
of the grounds stated in Civ.R. 60(B)(1) through (5); and (3) the motion is made within a
reasonable time, and, where the grounds of relief are Civ.R. 60(B)(1), (2) or (3), not more
than one year after the judgment, order or proceeding was entered or taken.” GTE
Automatic Elec., Inc. v. ARC Industries, Inc., 47 Ohio St. 2d 146, 351 N.E.2d 113 (1976),
paragraph two of the syllabus. However, “[t]hese requirements are independent and in
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the conjunctive; thus the test is not fulfilled if any one of the requirements is not met.”
Strack v. Pelton, 70 Ohio St. 3d 172, 174, 637 N.E.2d 914 (1994), citing GTE at 151.
{¶ 22} We review decisions on Civ.R. 60(B) motions for abuse of discretion. Id.,
citing Rose Chevrolet, Inc. v. Adams, 36 Ohio St. 3d 17, 20, 520 N.E.2d 564 (1988).
“ ‘Abuse of discretion’ has been defined as an attitude that is unreasonable, arbitrary or
unconscionable.” AAAA Enterprises, Inc. v. River Place Community Urban
Redevelopment Corp., 50 Ohio St. 3d 157, 161, 553 N.E.2d 597 (1990), citing Huffman v.
Hair Surgeon, Inc., 19 Ohio St. 3d 83, 87, 482 N.E.2d 1248 (1985). Most abuses of
discretion “will result in decisions that are simply unreasonable, rather than decisions that
are unconscionable or arbitrary.” Id. The court stressed in AAAA Enterprises that “[a]
decision is unreasonable if there is no sound reasoning process that would support that
decision.” Id.
{¶ 23} In the case before us, the trial court concluded that the combined actions of
the Stamps and their attorneys exhibited disregard for the judicial system and Kossoudji’s
rights. The court, therefore, concluded that the neglect was not excusable. In this
regard, the court stressed that both the Stamps and their attorneys had notice of the time
and place of trial, but no one appeared. In addition, no motion to continue the trial was
filed.
{¶ 24} We agree with the trial court in connection with this particular ground for
relief. In GTE, the Supreme Court of Ohio specifically adopted the general rule that “the
neglect of a party's attorney will be imputed to the party for the purposes of Civ.R. 60(B)
(1).” (Citation omitted.) GTE, 47 Ohio St. 2d 146, 351 N.E.2d 113, at paragraph four of
the syllabus. As an explanation for this general rule, the court noted in GTE that:
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There is certainly no merit to the contention that dismissal of petitioner's
claim because of his counsel's unexcused conduct imposes an unjust
penalty on the client. Petitioner voluntarily chose this attorney as his
representative in the action, and he cannot now avoid the consequences of
the acts or omissions of this freely selected agent. Any other notion would
be wholly inconsistent with our system of representative litigation, in which
each party is deemed bound by the acts of his lawyer[-]agent and is
considered to have “ ‘notice of all facts, notice of which can be charged upon
the attorney.’ ”
Id. at 152, quoting Link v. Wabash R. Co., 370 U.S. 626, 82 S. Ct. 1386, 8 L. Ed. 2d
734 (1962), which in turn quotes Smith v. Ayer, 101 U.S. 320, 326, 25 L. Ed. 955
(1879).
{¶ 25} Consistent with GTE, we have noted that “an attorney's neglect, including
failure to attend a hearing, constituted inexcusable neglect and did not justify granting the
client relief from judgment under Civ.R. 60(B)(1), which applies to mistake, inadvertence,
surprise, and excusable neglect.” Smith v. Gilbert, 2d Dist. Clark No. 2014-CA-81, 2015-
Ohio-444, ¶ 14, citing Whitt v. Bennett, 82 Ohio App. 3d 792, 796-797, 613 N.E.2d 667
(2d Dist.1992).
{¶ 26} In the case before us, the Stamps were represented by counsel during the
proceedings, and counsel had notice of the trial date several months before trial. During
the evidentiary hearing, Rick Stamps testified that he was aware of the trial date, but was
instructed not to appear. However, the Stamps’ counsel did not file a request to continue
the trial date. Notably, co-counsel had entered an appearance on behalf of the Stamps
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in late January 2015. Thus, the Stamps had two attorneys available to attend trial or file
continuances on their behalf. Both attorneys were given notice on February 11, 2015,
when the magistrate overruled the partial motion for summary judgment, that the February
25, 2015 trial date would proceed. In view of these facts, the trial court’s decision to deny
the motion for relief under Civ.R. 60(B)(1) was based on sound reasoning.
{¶ 27} In Smith, we commented that “an attorney's abandonment of a client may
constitute an extraordinary circumstance justifying relief under Civ.R. 60(B)(5).” Smith
at ¶ 15, citing Melton v. Melton, 1st Dist. Hamilton No. C-130123, 2013-Ohio-4790, ¶ 13.
In this regard, we observed that “ ‘[a]bandonment would occur if the attorney were
prohibited from practicing law by a disciplinary committee * * * in which case the client
would be without scienter.’ ” Id. at ¶ 16, quoting Mayor v. WCI Steel, Inc., 11th Dist.
Trumbull No. 2000-T-0054, 2001 WL 276976 (Mar. 16, 2001). In fact, we granted relief
in Smith on that basis, as the appellant’s attorney had been “suspended from the practice
of law shortly before trial.” Id.
{¶ 28} This is not the only situation in which relief can be granted for an attorney’s
actions under Civ.R. 60(B)(5), as “fault should not automatically be imputed when an
attorney has grossly neglected a diligent client's case and misleads the client to believe
that his interests are being properly handled.” Whitt, 82 Ohio App. 3d at 797-798, 613
N.E.2d 667. Accord Robinson v. Miller Hamilton Venture, L.L.C., 12th Dist. Butler No.
CA2010-09-226, 2011-Ohio-3017, ¶ 19. After Whitt was decided, we declined to permit
relief in situations where no evidence existed to indicate that the clients acted diligently
or that the attorney had misled the clients. Gary R. Gorby & Assoc., L.L.C. v. McCarty,
2d Dist. Clark No. 2010-CA-71, 2011-Ohio-1983, ¶ 50; Bank of Am. v. McGlothin, 2d Dist.
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Clark No. 2012-CA-96, 2013-Ohio-2755, ¶ 29 (affirming denial of Civ.R. 60(B)(5) motion
based on plaintiff’s failure to show diligence in pursing discovery).
{¶ 29} Unfortunately, the Stamps sought relief in the trial court only under Civ.R.
60(B)(1) and (4), not Civ.R. 60(B)(5). Accordingly, the application of Civ.R. 60(B)(5) has
been waived and we will not consider it on appeal. See Nix v. Williams Family
Partnership, Ltd., 12th Dist. Butler No. CA2013-05-076, 2013-Ohio-5208, ¶ 25, and
Stables v. Bland, 11th Dist. Trumbull No. 2002-T-0075, 2003-Ohio-1751, ¶ 15 (both
refusing to consider arguments under Civ.R. 60(B)(5) where this part of the statute was
not raised in the trial court.) Notably, the Stamps also have not raised Civ.R. 60(B)(5)
during this appeal, meaning that we cannot consider it even under a plain error analysis.1
{¶ 30} We do think the circumstances of this case present a difficult situation, and
if the Stamps had properly presented an argument under Civ.R. 60(B)(5) based on
abandonment, relief might appropriately have been granted.
{¶ 31} Accordingly, the First Assignment of Error is overruled.
III. Satisfaction of Judgment
{¶ 32} The Stamps’ Second Assignment of Error states that:
The Trial Court Erred in Denying Defendants-Appellants’ Motion to
Set Aside Judgment Because the Judgment Has Already Been Satisfied.
{¶ 33} Under this assignment of error, the Stamps contend that the trial court erred
in failing to set the judgment aside under Civ.R. 60(B)(4) because the judgment has been
1 The Stamps’ attorney did mention during closing argument at the motion hearing that
the Stamps had been “abandoned.” June 3, 2016 Transcript of Proceedings, p. 32.
However, he never argued Civ.R. 60(B)(5) in the trial court and has not raised it on appeal.
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satisfied. In this regard, the Stamps contend that the property in question has been
deeded back to Kossoudji, and that the additional award of money damages is
inequitable.
{¶ 34} Civ.R. 60(B)(4) permits a party to obtain relief from judgment “if the
judgment has been satisfied, released or discharged, or a prior judgment upon which it is
based has been reversed or otherwise vacated, or it is no longer equitable that the
judgment should have prospective application * * *.”
{¶ 35} In connection with this assignment of error, the Stamps rely on the part of
Civ.R. 60(B)(4) pertaining to satisfaction of judgments. They contend the judgment
against them has been satisfied because the property has been transferred back to
Kossoudji. The Stamps, therefore, maintain that they have been deprived of the benefit
of the contract because they no longer possess the property, and further money damages
are inequitable. The trial court did not address this argument in its decision, even though
it was raised below.
{¶ 36} We have indicated that the basis for relief Civ.R. 60(B)(4) “is premised upon
the occurrence of facts after the rendering of judgment that would justify relief from the
judgment.” (Emphasis sic.) Lussier v. Ned Peppers, Inc., 2d Dist. Montgomery No.
26180, 2014-Ohio-5169, ¶ 19, citing Old Phoenix Nat. Bank v. Sandler, 14 Ohio App. 3d
12, 13, 469 N.E.2d 943 (9th Dist.1984).
{¶ 37} The case on which Sandler relied for this proposition is Wurzelbacher v.
Kroeger, 40 Ohio St. 2d 90, 320 N.E.2d 666 (1974). Sandler at 13. Wurzelbacher
involved only the part of Civ.R. 60(B)(4) pertaining to the inequity of prospective
application of a judgment, and the Supreme Court of Ohio made no comments about the
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rest of Civ.R. 60(B)(4). Id. at 92. Nonetheless, by necessary implication, satisfaction of
a judgment would normally involve events occurring after the judgment. See e.g., Bob
Krihwan Pontiac-GMC Truck, Inc. v. Gen. Motors Corp., 145 Ohio App. 3d 671, 675, 763
N.E.2d 1253 (10th Dist.2001) (observing that in ordinary civil actions where judgment is
entered in favor of one party for an amount of money, “the judgment is satisfied, in
essence, by the losing party's paying the money.”)
{¶ 38} In the case before us, the trial court ordered the Stamps to quit-claim their
interest in the property, and also awarded Kossoudji $133,929.44, plus statutory interest
from February 25, 2015, as damages. In this regard, Kossoudji responds that she
brought a complaint for money damages, asking for acceleration of all amounts under the
land contract (alleged at that time to be $118,145.43 – a sum that included $13,884 in
monthly payments unpaid to that date, taxes that were owed for 2011-2013, and a balloon
payment of $101,521). Kossoudji also points out that she asked for an amount in excess
of $25,000 for demolition of a structure on the property and environmental harm suffered
by the property – therefore, implying that the judgment was intended to cover both types
of damages and has not been satisfied.
{¶ 39} The judgment entry the magistrate initially filed does not specify which part
of the judgment might be attributable to past-due amounts for payments and taxes, and
which part might have been attributable to damages caused by demolition of the structure
and alleged environmental harm. However, at trial, Kossoudji presented an exhibit
indicating that her damages were as follows: $22,332.92 for unpaid payments and late
fees from July 2013 through December 2014; $10,095.31 for unpaid real estate taxes;
and $101,501.21 for the balloon payment due on January 1, 2015. The total amount
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claimed, thus, was $133,929.44, which was allocated solely to amounts due under the
contract. This is exactly the amount the magistrate awarded. See Plaintiff’s Trial Ex. 4,
and Magistrate’s Decision, Doc. #44, pp. 2-3, and Amended Magistrate’s Decision, Doc.
#48, pp. 2-3. As a result, even if Kossoudji wished to claim an amount for alleged
damages to the property, she did not present any evidence to that effect. Furthermore,
after the $133,929.44 amount was awarded, the magistrate and trial court also ordered
that the property be deeded back to Kossoudji.
{¶ 40} In responding to the Stamps’ assignment of error, Kossoudji further argues
that while the appropriate measure for relief of breach of a land contract is return of the
property, termination of the contract is not an exclusive remedy under R.C. 5313.10.
Specifically, R.C. 5313.10 states that termination is an exclusive remedy “unless the
vendee has paid an amount less than the fair rental value plus deterioration or destruction
of the property occasioned by the vendee's use.” In that case, “the vendor may recover
the difference between the amount paid by the vendee on the contract and the fair rental
value of the property plus an amount for the deterioration or destruction of the property
occasioned by the vendee's use.” Id.
{¶ 41} According to Kossoudji, the Stamps’ argument about satisfaction of the
judgment ignores the fact that Kossoudji’s complaint requested damages for
environmental damages and destruction of the property. Again, Kossoudji’s argument is
that she was entitled to more damages than simply terminating the contract and obtaining
the property. As we observed, however, the damages that Kossoudji lists in Plaintiff’s
Trial Ex. 4 say nothing about the fair rental value of the property or about deterioration or
destruction.
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{¶ 42} R.C. Chapter 5313 has been described as “ ‘essentially a “consumer
protection law ” ’ ” * * *. Howard v. Temple, 172 Ohio App. 3d 21, 2007-Ohio-3074, 872
N.E.2d 1260, ¶ 9 (4th Dist.), quoting Albright v. Cochran, 5th Dist. Morrow No. CA-613,
1984 WL 4479, *2 (Mar. 2, 1984). It is “intended to prevent a ‘windfall to a vendor who
has previously collected substantial sums under a land contract and/or has actually
recovered the property.’ ” Id., quoting Farkas v. Bernard, 10th Dist. Franklin No.
95APE10-1365, 1996 WL 257455, *4 (May 16, 1996). As a result, “upon an election of
forfeiture, the statutes limit a vendor's remedies.” Id., citing Koehler v. Paniagua, 3d Dist.
Hancock No. 5-02-64, 2003-Ohio-1972, ¶ 9.
{¶ 43} However, R.C. Chapter 5313 has been limited to land contracts for
residential dwellings only. (Citations omitted.) P.M.D. Land Co. v. Warner Realty, Inc.,
11th Dist. Trumbull No. 2009-T-0021, 2009-Ohio-6704, ¶ 37. See also Johnson v.
Maxwell, 51 Ohio App. 3d 137, 139, 554 N.E.2d 1370 (9th Dist.1988) (noting that “R.C.
Chapter 5313 has no application to purely commercial properties”). (Citation omitted.)
{¶ 44} From the evidence presented at the hearing, the land contract between the
Stamps and Kossoudji appears to have involved commercial property, not a residential
dwelling. Rick Stamps indicated that he used the property for recycling asphalt shingles.
One building on the property was leaning and uninhabitable, and was never used. This
was the building that was demolished. The property also contained a Quonset metal
building used for storing tools and as part of the Stamps’ business.
{¶ 45} Where R.C. Chapter 5313 does not apply, a vendor has several available
remedies:
Where there has been a breach of the contract by the vendee's
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failure to make the payments specified in the contract, the vendor may bring
an action against the vendee for the payments due, recover judgment
therefor, levy upon the land and sell the same to satisfy such judgment,
thereby extinguishing the equity of the vendee in such land. The vendor
may also treat the transaction as giving to him a lien upon the premises in
the nature of an equitable mortgage, and he may bring an action to
foreclose the same and obtain an order requiring the vendee to pay the
balance due by a certain time, and, in default thereof, have the premises
sold to satisfy the claim of vendor for the balance due on the contract.
Where the vendee is in possession and a substantial part of the purchase
price has been paid, this is the equitable and fair procedure to adopt.
Where the contract * * * provides for a forfeiture, which the vendor
may declare, he may declare such forfeiture and bring an action at law in
ejectment to recover the possession of the premises, but in such case the
vendee may by answer set up facts, if they exists [sic], which will justify a
court of equity in relieving him against the consequences of the forfeiture.
Johnson at 140, quoting Woloveck v. Schueler, 19 Ohio App. 210, 218-219 (9th
Dist.1922).
{¶ 46} In Johnson, the contract allowed the vendor to declare a forfeiture or to
accelerate the debt and foreclose on the property. Id. at 141. This is similar to the
provision in the land installment contract between the Stamps and Kossoudji.
Specifically, their contract stated that upon various defaults of the purchaser, including
failure to pay installments or taxes, or to insure the property:
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Seller shall have the option to declare all of the remaining installments and
amounts provided for herein immediately due and payable. In such event,
the Seller may utilize any legal or equitable remedy to proceed against the
Purchaser, including, without limitation, foreclosure of the Purchaser’s
interest, forfeiture or any other remedy set forth in Chapter 5313 of the Ohio
Revised Code.
Plaintiff’s Trial Ex. 2 (Land Contract), p. 5.
{¶ 47} Although the contract refers to R.C. Chapter 5313, it does not appear, as
we noted, that this chapter applies. The remedy in Johnson was that the seller was given
judgment for the amount due under the land contract and the property was ordered sold
by sheriff’s sale. A deficiency judgment was then granted to the sellers, because the
amount of the sale proceeds did not satisfy the amount of the judgment. Johnson, 51
Ohio App. 3d at 138-139, 554 N.E.2d 1370. The court of appeals affirmed this as
appropriate. Id. at 141.
{¶ 48} In Smith v. Jewett, 5th Dist. Richland No. 04 CA 96, 2005-Ohio-3982,
the vendor of commercial real estate that was purchased through a land installment
contract brought an action for real estate forfeiture and damages. In that situation, the
trial court held that the land should be forfeited and that the vendor should retain the
payments that had previously been made as stipulated damages. Id. at ¶ 3-4. Quoting
Johnson, the court observed that “ ‘[f]orfeiture clauses contained in land installment
contracts are enforceable in Ohio, so long as the resulting benefit to the vendor is not
“extravagantly unreasonable or manifestly disproportionate to the actual damages
sustained” by the vendor.’ ” Id. at ¶ 19, quoting Johnson at 140, which in turn quotes
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Norpac Realty Co. v. Schackne, 107 Ohio St. 425, 140 N.E. 480 (1923), paragraph one
of the syllabus.
{¶ 49} In Johnson, the court stressed that “other remedies are favored and
forfeiture clauses are rarely strictly enforced by modern Ohio courts.” Johnson at 140.
Even in Smith, the court only ordered forfeiture of the land and retention of the payments
made, not the total contract price plus forfeiture.
{¶ 50} In the case before us, the trial court awarded $133,929.44 in damages, and
also ordered the property re-conveyed to Kossoudji, who sold the property to a third party
on May 18, 2015, three days after the trial court’s judgment was entered. See Affidavit
of Shirley Kossoudji, attached as Ex. A to Plaintiff’s Memorandum Contra to Defendant’s
Motion to Set Aside Judgment under Civ.R. 60(B), Doc. #61.
{¶ 51} The sale was an event that occurred post-judgment, and would have fallen
within the purview of Civ.R. 60(B)(4). It would also be inequitable to give the judgment
prospective application. Specifically, the trial court did not order Kossoudji to credit the
amount of the sale against the judgment obtained against the Stamps, and on its face,
this violated the rules applying to land installment contracts. In this regard, we also note
that the complaint requested money damages only, and did not even request that the
court order the property forfeited.
{¶ 52} Furthermore, even if we agreed with Kossoudji that R.C. Chapter 5313
applies, R.C. 5313.07 indicates that where a contract has been in existence for five years
or more from the date of the first payment, or the vendee has paid more than 20% towards
the purchase price, the vendor must use a proceeding for foreclosure and judicial sale
under R.C. 2323.07, and the vendor is entitled to the proceeds of the sale, up to the
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unpaid balance on the contract.
{¶ 53} The contract in the case before us was in effect for more than three years
prior to default, and by that time, the Stamps had paid $48,595.38. (This included 42
monthly payments of $849, plus taxes, and a $5,000 down payment.) See Plaintiff’s Trial
Ex. 4, pp. 1-2. Assuming for the sake of argument that the total amount due under the
contract, including the down payment, monthly payments, property taxes, and the balloon
payment was $182,524.82 (the total of all payments and amounts due shown on Trial Ex.
4), the Stamps had paid approximately 26.62% of the total amount. Id. Contrary to R.C.
5313.07, however, Kossoudji did not bring an action for foreclosure and judicial sale; she
only brought a claim for money damages.
{¶ 54} Even if we assume that the 20% amount had not been satisfied, in situations
where a contract has existed for less than five years, the vendor “may bring an action for
forfeiture of the vendee's rights in the land installment contract and for restitution of his
property under Chapter 1923. [forcible entry and detainer] of the Revised Code.” R.C.
5313.08. Use of the remedies in R.C. 5313.07 and 5313.08, however, precludes
vendors from obtaining deficiency judgments. See, e.g., Flora v. Pullins, 2d Dist.
Champaign No. 96-CA-13, 1996 WL 648353, *2 (Nov. 8, 1996). Accord Good Shepherd
Baptist Church, Inc. v. City of Columbus, 20 Ohio App. 3d 228, 229, 485 N.E.2d 725 (10th
Dist.1984); Howard, 172 Ohio App. 3d 21, 2007-Ohio-3074, 872 N.E.2d 1260, at ¶ 12 (all
citing R.C. 5313.10).
{¶ 55} We noted in Flora that R.C. 5313.10 expands this “ ‘exclusive remedy’ ” in
certain cases. Id. In this regard, we stressed that “R.C. 5313.10 provides that the
seller's election of remedies bars further action on the land contract ‘unless the vendee
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has paid an amount less than the fair rental value plus deterioration or destruction of the
property occasioned by the vendee's use.’ Under those circumstances, ‘the vendor may
recover the difference between the amount paid by the vendee on the contract and the
fair rental value of the property plus an amount for the deterioration or destruction of the
property occasioned by the vendee's use.’ ” Id. at *3, quoting R.C. 5313.10.
{¶ 56} In this situation, “R.C. 5313.10 limits recovery to an ‘award for property
damage and for the balance of the fair rental value for the holdover period * * *.’ ” Voska
v. Coffman, 6th Dist. Sandusky No. S-13-008, 2013-Ohio-5474, ¶ 11, quoting Goodrich
v. Sickelbaugh, 6th Dist. Lucas No. L-85-194, 1986 WL 3447, *2 (Mar. 21, 1986).
{¶ 57} Needless to say, R.C. 5313.10 would not permit a court to grant the full
purchase price of the contract plus forfeiture of the property. Instead, recovery would be
limited to forfeiture or foreclosure, plus property damage and the balance of fair rental
value for a holdover period. Again, according to Plaintiff’s Trial Ex. 4, the evidence
presented by Kossoudji had nothing to do with forfeiture, the property damage, or the
balance of fair rental value for a holdover period. The damages claimed and awarded
were for the full value of all remaining payments due under the contract. In addition, the
property was ordered forfeited to Kossoudji.
{¶ 58} In Entingh v. Howard, 2d Dist. Montgomery No. 13407, 1992 WL 379305,
(Dec. 22, 1992), we concluded that the vendor would be limited to the return of the
property and the remedies as limited by R.C. 5313.10, even though the vendor’s
complaint did not rely on R.C. 5313.07 or R.C. 5313.08.
{¶ 59} We first agreed with the vendors-appellants that their complaint had not
been specifically filed under R.C. 5313.07 or R.C. 5313.08, because the vendors had only
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asked for removal of the cloud on their title created by the land contract, “pursuant to Ohio
Revised Code 5313.09.” Id. at *1. We concluded, however, that the record nonetheless
supported the trial court’s conclusion that the vendor’s remedies were limited by R.C.
5313.10. Id. at *2. R.C. 5313.09 allows judgments for a vendor to operate as a
cancellation of a land installment
{¶ 60} In this regard, we noted that R.C. 5313.09 states that “ ‘[a] judgment for the
vendor shall operate to cancel the land installment contract’ * * * [and] that * * * ‘the county
recorder of such county shall record such authenticated judgment as an instrument of
cancellation.’ ” Id. at *2. We stressed that “[i]n our view ‘a judgment for the vendor’
refers to and is limited to a judgment obtained under either R.C. 5313.07 (foreclosure) or
R.C. 5313.08 (forfeiture and restitution).” Id. We thus held that “it follows that the
cancellation of the contract pursuant to R.C. 5313.09 was the result of the plaintiffs
pursuing the exclusive remedy provided for in R.C. 5313.08.” Id.
{¶ 61} This was so even though the vendor had sought money damages for breach
of the land contract and had specifically not asked the court for forfeiture or foreclosure
under R.C. 5313.07 or R.C. 5313.08. In other words, the vendor obtained the remedy
attributable to these sections, even though the vendor chose not to rely on them. As a
result, we concluded that the trial court did not err in limiting the vendors to the damages
listed in R.C. 5313.10, which amounted to $205, rather than the damages in excess of
$40,000 that the vendors had requested. Entingh, 2d Dist. Montgomery No. 13407, 1992
WL 379305, at *1-2.
{¶ 62} In the case before us, Kossoudji filed a complaint for money damages, and
initially was granted damages by the magistrate of $133,929.44. However, the
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magistrate then amended the decision and also ordered the Stamps to file a quit-claim
deed of their interest within seven days. If the Stamps failed to do so, the court decree
was to operate as a transfer of the property interest with agencies like the auditor and
treasurer. Thus, like the vendor in Entingh, Kossoudji obtained the relief set forth in R.C.
5313.09 (and therefore, the relief set forth in R.C. 5313.08), even though her complaint
did not specifically request this remedy.
{¶ 63} We noted in Zumbrink v. Hercules, 2d Dist. Darke No. 1392, 1996 WL
339947 (June 21, 1996), that a vendee of a land contract stands as an equitable owner
of the property until he or she “ ‘has performed all his [or her] obligations under the
contract and has attained legal title to the property * * *.’ ” Id. at *7, quoting Blue Ash
Bldg. & Loan Co. v. Hahn, 20 Ohio App. 3d 21, 24, 484 N.E.2d 186 (1st Dist.1984). In
addition, we stressed that the vendee’s interest equals the amount of the purchase that
has been paid, and the vendee has “ ‘an equitable lien or estate in the land in the amount
paid on the purchase price.’ ” Id., quoting Wayne Bldg. & Loan Co. of Wooster v.
Yarborough, 11 Ohio St. 2d 195, 199, 228 N.E.2d 841 (1967). (Other citation omitted.)
{¶ 64} The point of this discussion is that if the property were commercial rather
than residential, Kossoudji would have had the remedy of bringing an action against the
Stamps for the payments due, and after recovering judgment, she could have levied
against the land and sold it to satisfy the judgment. In that event, Kossoudji could have
obtained a deficiency judgment against the Stamps if the sales price did not equal the
price of the land contract. Alternatively, Kossoudji could have brought a foreclosure
action and could have obtained an order requiring the Stamps to pay the balance due on
the contract by a certain date. Upon a default in that regard, the premises could have
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been sold to satisfy Kossoudji’s claim. Again, the Stamps would have been given credit
for the amount of the sale. Kossoudji may also have chosen forfeiture only, and could
have retained the amounts the Stamps previously paid on the contract, so long as these
amounts were not inequitable.
{¶ 65} If the property were residential, R.C. Chapter 5313 would apply, and
Kossoudji could have elected to file for foreclosure under R.C. 5313.07, or for forfeiture
under R.C. 5313.08. If more than 20% had been paid under the contract, Kossoudji
would have been restricted to having the property foreclosed. If less than 20% had been
paid, Kossoudji would be entitled to have the property forfeited. In either situation,
Kossoudji could have expanded her remedy beyond foreclosure or forfeiture, if she could
establish damages and a loss of fair market value rental during holdover. However, she
would not have been allowed a deficiency judgment.
{¶ 66} In none of the above instances would Kossoudji have been allowed to
recover the full amount of the contract price, as well as unpaid taxes, plus being given the
property back to sell to a third party without accounting for the sales price – in essence,
to recoup a double recovery against the vendee. As a result, we conclude that the trial
court erred in overruling the Stamps’ motion for relief from judgment. Under applicable
Civ.R. 60(B) requirements, the Stamps presented their motion within a reasonable time,
demonstrated that they had a meritorious claim to present, and established that they were
entitled to relief under Civ.R. 60(B)(4). GTE, 47 Ohio St. 2d 146, 351 N.E.2d 113, at
paragraph two of the syllabus.
{¶ 67} As was noted, the trial court did not discuss this argument when it overruled
the motion for relief from judgment. As a general rule, “if the trial court fails to mention
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or rule on a motion or an objection, we presume that the objection or motion was
overruled.” Jeffrey B. Peterson & Assoc. v. Dayton Metropolitan Hous. Auth., 2d Dist.
Montgomery No. 17306, 2000 WL 1006562, *5 (July 21, 2000), citing Dayton Monetary
Assoc. v. Becker, 126 Ohio App. 3d 527, 539, 710 N.E.2d 1151 (2d Dist.1998). (Citation
omitted.) Thus, we assume the trial court rejected the Stamps’ argument regarding
Civ.R. 60(B)(4). Given the state of the record, we conclude that a rejection of the
Stamps’ position was contrary to law, and the court, therefore, abused its discretion.
Accordingly, the Second Assignment of Error is sustained.
IV. Conclusion
{¶ 68} The Stamps’ First Assignment of Error having been overruled, and the
Second Assignment of Error having been sustained, the judgment of the trial court is
reversed, and this cause is remanded for further proceedings. On remand, the trial court
is to determine the actual monetary loss sustained by Plaintiff, taking into account the
amounts attributable to loss of use of the property and the subsequent sales price of the
subject property, plus any other relevant considerations supported by the evidence
presented at trial.
.............
DONOVAN, P.J. and FROELICH, J., concur.
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Copies mailed to:
Matthew C. Sorg
F. Harrison Green
Hon. Timothy N. O’Connell