MILA Invests., Ltd. v. Hutchins

[Cite as MILA Invests., Ltd. v. Hutchins, 2019-Ohio-4298.]
IN THE COURT OF APPEALS OF OHIO
SECOND APPELLATE DISTRICT
MONTGOMERY COUNTY
MILA INVESTMENTS, LTD., et al. :
:
Plaintiff-Appellant : Appellate Case No. 28213
:
v. : Trial Court Case Nos. 2005-CV-723 &
: 2007-CV-169
PAUL M. HUTCHINS, et al. :
: (Civil Appeal from
Defendant-Appellee : Common Pleas Court)
:
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OPINION
Rendered on the 18th day of October, 2019.
...........
JERRY A. MEADOWS, Atty. Reg. No. 0021262, 7501 Paragon Road, Lower Level,
Dayton, Ohio 45459
Attorney for Plaintiff-Appellant, David H. Kennett
BRIAN R. MCHENRY, Atty. Reg. No. 0065876, 130 West Second Street, Suite 1850,
Dayton, Ohio 45402
Attorney for Defendant-Appellee, The Cincinnati Insurance Company
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FROELICH, J.
{¶ 1} David H. Kennett appeals from a judgment of the Montgomery County Court
of Common Pleas, which overruled his motion to revive a dormant judgment and granted
attorney’s fees to Paul Hutchins. For the following reasons, the trial court’s judgment will
be affirmed.
I. Procedural History
{¶ 2} The Breitenstrater Family Trust held commercial properties, which were
managed by Hutchins Commercial Real Estate and Paul Hutchins. Beginning in 2005,
the trustee of the Breitenstrater Family Trust and/or Kennett (a beneficiary of the trust)
brought actions against Hutchins and his company related to actions taken by Hutchins
in relation to the trust properties. MILA Investments, Ltd., Trustee of the Breitenstrater
Family Trust v. Hutchins Commercial Real Estate, Montgomery C.P. No. 2005 CV 723;
MILA Investments, Ltd., Trustee of Breitenstrater Trust v. Hutchins Commercial Real
Estate, Inc., Montgomery C.P. No. 2005 CV 9799; and Kennett v. Hutchins Commercial
Real Estate, Ltd., Montgomery C.P. No. 2007 CV 169. The trial court subsequently
consolidated these three cases, and they ultimately were voluntarily dismissed without
prejudice, pursuant to Civ.R. 41, in August 2007.
{¶ 3} In October 2007, MILA Investments, as trustee of the trust, and others again
brought suit against Hutchins Commercial Real Estate, LLC, and Hutchins. MILA
Investments, Ltd., Trustee of the Breitenstrater Family Trust v. Hutchins Commercial Real
Estate, LLC, Montgomery C.P. No. 07 CV 8932. In January 2008, Hutchins Commercial
Real Estate and Hutchins brought suit against Leona Sowder as trustee of the
Breitenstrater Family Trust. Hutchins Commercial Real Estate LLC v. Sowder, Trustee
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of the Breitenstrater Family Trust, Montgomery C.P. No. 2008 CV 1140. Sowder filed a
counterclaim in the 2008 action. The two actions were consolidated in August 2008.
{¶ 4} In December 2008, MILA Investments (trustee), Robert Lachey
(representative of MILA Investments and individually), Warren Miller (representative of
MILA Investments and individually), Kennett (beneficiary of trust and individually),
Hutchins Commercial Real Estate, LLC, Hutchins (individually), and Cincinnati Insurance
Company (“CIC,” Hutchins’s liability carrier) entered into a mutual general release
agreement. (Def.’s Ex. L.) Under the agreement, the Hutchins parties and/or CIC
agreed to pay the Breitenstrater parties a sum of $35,000 upon execution. The
Breitenstrater parties agreed to a general release and to dismiss, with prejudice, “all
claims currently brought, or which could have been brought or that may arise in the future
as a result of the facts and allegations described in the Case.” (Def.’s Ex. L at ¶ 11.)
{¶ 5} In January 2009, the plaintiffs in Case No. 2007 CV 8932 voluntarily
dismissed their complaint with prejudice; however, Case No. 2008 CV 1140 remained
pending. Kennett moved to intervene in Case No. 2008 CV 1140, but his request was
denied. In 2015, after notice to the parties, the trial court dismissed with prejudice
Sowder’s counterclaim in the 2008 action for failure to prosecute.1
{¶ 6} In February 2016, Kennett, as a beneficiary of the trust, brought suit against
Hutchins and his company, raising claims that Sowder previously had raised in the 2008
action. Kennett v. Hutchins, Montgomery C.P. No. 2016 CV 1028. On September 23,
1 The record in the cases before us suggests that the trial court and the parties believed
that the plaintiffs’ claims in Case No. 2008 CV 1140 also had been dismissed and that
Sowder’s counterclaim was the only claim that remained pending. However, the record
here contains no exhibits demonstrating that the plaintiffs (the Hutchins parties) dismissed
their complaint in the 2008 action.
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2016, the trial court granted summary judgment to the Hutchins defendants on the ground
that Kennett’s claims were barred by the December 2008 mutual general release
agreement. The court further noted that Kennett’s claims were not sufficiently pled and
would be time-barred by the four-year statute of limitations. (Def.’s Ex. P.)
{¶ 7} On May 16, 2018, Kennett moved for an order to revive a judgment entitled
“Agreed Entry,” allegedly filed in Case Nos. 2005 CV 723 and 2007 CV 169. The agreed
entry was captioned MILA Investments v. Paul Hutchins, appeared to be signed by the
attorneys for plaintiffs and defendants and by the trial judge, was apparently file-stamped
(although no date or time was included), and had an apparent bar code sticker from the
clerk of courts. The entry provided that “Defendant shall pay, within ten days of the
signing of this agreed entry, a total sum of Two Million Ninety Thousand Dollars to
Plaintiffs as follows: One Million Nine Hundred Thousand Dollars to David H. Kennett,
Plaintiff and One Hundred Ninety Thousand Dollars to MILA Investments, Plaintiff.” In
exchange, the plaintiffs agreed to release Hutchins, his company, and CIC from any future
liability. The agreed entry stated that it incorporated an “Exhibit A,” but no exhibit was
attached.
{¶ 8} In his motion, Kennett acknowledged that the agreed entry does not appear
on the online dockets of either case, and that none of the attorneys involved has been
able to locate a copy of the entry or exhibit. Kennett asserted that Ohio law is silent on
a procedure for reviving a filed judgment that does not appear on the records of a court,
but general equitable principles should allow the trial court to revive the judgment.
{¶ 9} Hutchins, his company, and CIC opposed Kennett’s motion. Hutchins
summarized the reasons why the motion should be denied as follows:
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The reasons why the Court is not capable of granting the relief
requested by David Kennett are exceedingly great but boil down to the
following: (1) there is no underlying judgment for the Court to renew; (2) the
mysterious $1,900,000 agreed judgment which David Kennett claims to
have “recently found” is obviously fake, forged and is being used in the
attempt to facilitate a fraud on the Court and the Defendants; (3) the very
claims which purportedly gave rise to the mysterious agreed judgment were
in fact voluntarily dismissed pursuant to Civ.R. 41(A) over ten years ago in
August of 2007; (4) pursuant to the legal effect of the filing of the voluntary
dismissal the Court lacks jurisdiction to grant the relief requested by David
Kennett; (5) the rendition, validity and enforcement of the purported
$1,900,000 agreed judgment is expressly contrary to the General Release
(defined below) entered into between David Kennett and the Defendants in
December 2008 wherein David Kennett released the Defendants from any
and all claims arising from the management agreement which was at issue
within this case; (6) David Kennett fairly recently filed a new action
attempting to assert various released claims against the Defendants in
violation of the General Release within Montgomery County Common Pleas
Court 2016-CV-1028. The validity, scope and effect of the General
Release has already been determined and found within a final appealable
order * * * dated September 23, 2016. Said entry was crystal clear in its
use of language expressly notifying notifying [sic] David Kennett that the
terms of the General Release completely released any and all claims
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related to the Defendants’ prior management of property owned by the
Breitenstrater Family Trust. * * *
The Hutchins parties claimed that Kennett had engaged in frivolous conduct in violation
of R.C. 2323.51(B)(2) and Civ.R. 11, and they sought attorney fees as a sanction.
{¶ 10} CIC also opposed Kennett’s motion and adopted Hutchins’s opposition
memorandum. CIC emphasized that the purported agreed entry was a contradiction
within itself, as the listing of both case numbers on the entry would not have occurred
until after the cases were consolidated on July 30, 2007, but the time stamp identified the
clerk of courts as Dan Foley, who was no longer clerk of courts in July 2007.
{¶ 11} The trial court held a hearing on Kennett’s motion to revive the judgment
and on Hutchins’s motion for sanctions. Kennett testified on his own behalf regarding
the motion, and offered the agreed entry (Pl.’s Ex. 1) as an exhibit. Hutchins also
testified, and the defendants presented several court documents demonstrating the
procedural history of the various related cases (Def.’s Ex. A-K, M-P), as well as a copy of
the general mutual release agreement (Def.’s Ex. L). Hutchins also called an attorney,
Christopher Epley, to testify regarding the reasonableness of the attorney’s fees for
purposes of the motion for sanctions, and presented an invoice for $5,360 (Def.’s Ex. Q).
{¶ 12} On October 8, 2018, the trial court overruled Kennett’s motion to revive the
dormant judgment, reasoning:
Defendant has urged a variety of bases upon which the Court might
not enforce Exhibit 1, including the voluntary dismissals of these actions,
and the release signed by Kennett which the Court found valid and
probative in a 2016 case brought by Plaintiff against Defendant for claims
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arising out of the same transactions between the parties as alleged in the
instant case(s). The Court finds these legal defenses to be valid and
persuasive for dismissal of this matter. However, the Plaintiff asks the
Court to act in equity to enforce this entry, again calling it a judgment, by
exercise of its equity power.
As such, Plaintiff claims that he would not have signed the Exhibit L
release had he been aware of the “judgment” (his word) evidenced by
Exhibit 1. Presumably also, Kennett might claim (though he did not) that
he would not have voluntarily dismissed the instant matter had he known
about Exhibit 1.
Kennett was, however, unable to articulate any plausible theory of
who, how or why Exhibit 1 came to be. Although he made a vague
allegation of some manner of fraud against him, the Court finds such to be
illogical, not reasonable and an unworthy basis upon which to invoke the
Court’s power to enforce such a document in law or in equity. And, the
Court finds crucial that Exhibit 1 is without any basis whatsoever for
authentication. No one knows who prepared it, no one recalls having ever
signed it, Kennett himself was and is now unable to explain how its terms
were agreed, or any reason why they were agreed or kept from he who
benefitted most from it -- Kennett himself. Without more, the Court finds
no basis upon which to exercise its equity power.
In its ruling, the court also granted the motion for attorney fees, pursuant to R.C. 2323.51,
and awarded $5,360.
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{¶ 13} Kennett appeals from the trial court’s judgment, raising three assignments
of error.
II. Denial of Motion to Revive Dormant Judgment
{¶ 14} Kennett’s first assignment of error states: “The trial court erred in finding no
basis in law or fact for the court to exercise jurisdiction for consideration of the motion to
revive the agreed entry as a dormant judgment.” Kennett “submits that the trial court did
have power in equity to determine whether or not the Agreed Order was valid.”
{¶ 15} Kennett testified that he first became aware of Exhibit 1 in the first part of
April 2018 when his wife found the document while going through old files at their house;
he did not find any attachment to the document. Kennett stated that he had never seen
the agreed entry before and “absolutely ha[d] no idea where it came from or how it got
here.” Kennett further testified that he had no knowledge of how the judge’s or attorneys’
signatures came to be on the document.
{¶ 16} Kennett described his efforts to obtain information about the agreed entry.
He testified that he tried to contact Robert Lachey of MILA Investments, but Lachey did
not know anything about the agreed entry. Kennett tried to contact MILA Investments’
attorney, but he did not return Kennett’s call. Kennett stated that the attorney for the
defendants in those cases was now deceased. Kennett indicated that he spoke with the
judge who allegedly signed the entry; the judge stated that he had checked court records
but could not find anything on file. Finally, Kennett checked with CIC, which indicated
that it had no record of the agreed entry.
{¶ 17} During cross-examination by Hutchins’s counsel, Kennett was asked about
apparent errors in the agreed entry, such as typographical errors, a discrepancy in how
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one attorney usually signed his name, and an apparent error in another attorney’s
address. Kennett repeatedly denied preparing Exhibit 1.
{¶ 18} Kennett stated that he knew he had signed a release, but he would not have
done so had he known that he was owed more than a million dollars. Kennett
commented that there had been “considerable fraud involved” in the cases. Kennett
stated that he went to an attorney with the agreed entry, in good faith, so that the matter
could be clarified. Kennett indicated that his attorney recommended the motion to revive
a dormant judgment due to passage of time since the entry was created.
{¶ 19} Paul Hutchins testified that he did not, at any time, negotiate a settlement
to pay Kennett $1.9 million. Hutchins stated that the only settlement agreement was
Exhibit L, the general mutual release agreement.
{¶ 20} The evidence at the hearing supported the trial court’s conclusion that
Kennett had not established that the agreed entry (Exhibit 1) was a valid judgment such
that the court should exercise its equitable power to revive it. The purported agreed entry
was not properly time-stamped (no date or time was included), and it did not appear in
any court docket. Kennett presented no witnesses who could authenticate the document
and testify to the creation and/or signing of the agreed entry. Hutchins denied that any
settlement had been reached with Kennett, other than the general mutual release
agreement (Exhibit L), which Kennett acknowledged that he had signed.
{¶ 21} In addition, the evidence at the hearing demonstrated that Kennett
dismissed without prejudice his action in Case No. 2007 CV 169 on August 2, 2007.
(Def.’s Ex. F.) In addition, the parties to Case Nos. 2005 CV 723 reached a settlement,
and that case was dismissed without prejudice on August 29, 2007. (Def.’s Ex. G.)
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{¶ 22} It is well established that, “following a Civ.R. 41 voluntary dismissal without
prejudice, the parties are in the same position they were in before the action was filed.”
Nielsen v. Firelands Rural Elec. Coop., Inc., 123 Ohio App.3d 104, 109, 703 N.E.2d 807(6th Dist.1997), citing Zimmie v. Zimmie, 11 Ohio St.3d 94, 464 N.E.2d 142 (1984); State
v. Bays, 2d Dist. Greene No. 2014-CA-24, 2015-Ohio-1935, ¶ 11. “The action is treated
as if it never had been commenced, the trial court loses jurisdiction over the dismissed
matter, and ‘[j]urisdiction cannot be reclaimed by the court.’ ” Bays at ¶ 11, quoting Zimmie
at 95. Accordingly, once Case Nos. 2005 CV 723 and 2007 CV 169 were dismissed
without prejudice, the trial court no longer had authority to take further action in those
cases.
{¶ 23} Kennett’s first assignment of error is overruled.
III. Attorney’s Fees as Sanction
{¶ 24} In his second and third assignments of error, Kennett claims that the trial
court erred in awarding attorney’s fees and in finding that the requested amount was
reasonable.
{¶ 25} Pursuant to R.C. 2323.51(B)(1), “any party adversely affected by frivolous
conduct may file a motion for an award of court costs, reasonable attorney’s fees, and
other reasonable expenses incurred in connection with the civil action or appeal.”
Frivolous conduct includes conduct of a party that:
(i) * * * obviously serves merely to harass or maliciously injure another party
to the civil action or appeal or is for another improper purpose, including,
but not limited to, causing unnecessary delay or a needless increase in the
cost of litigation.
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***
(iii) * * * consists of allegations or other factual contentions that have no
evidentiary support or, if specifically so identified, are not likely to have
evidentiary support after a reasonable opportunity for further investigation
or discovery.
R.C. 2323.51(A)(2)(a)(i), (iii).
{¶ 26} “Whether particular conduct is frivolous may be either a factual or a legal
determination. * * * A trial court’s factual finding that a party’s conduct was [or was not]
frivolous will not be disturbed where the record contains competent, credible evidence to
support the court’s determination. * * * In contrast, whether a pleading is warranted under
existing law or can be supported by a good-faith argument for an extension, modification,
or reversal of existing law is a question of law, which is reviewed de novo.” Swartz v.
Hendrix, 2d Dist. Darke No. 2010-CA-18, 2011-Ohio-3422, ¶ 22, citing Foland v.
Englewood, 2d Dist. Montgomery No. 22940, 2010-Ohio-1905, ¶ 32.
{¶ 27} Here, the trial court made a factual determination as to whether Kennett’s
conduct in filing his motion to revive a dormant judgment was frivolous. Thus, we must
determine whether the trial court’s decision was supported by competent, credible
evidence. See Taylor v. Taylor, 2d Dist. Miami No. 2014-CA-16, 2015-Ohio-353, ¶ 11.
{¶ 28} In granting the motion for attorney’s fees, the trial court found:
In considering Defendant’s motion for attorney fees, on the basis of
Kennett’s alleged frivolous conduct under R.C. 2323.51, the Court might
well find, in light of the litany of litigation instituted by Plaintiff regarding the
same contended issues, especially that in Case No. 16 CV 1028
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(Defendant’s Exhibits O and P), that such action by Kennett was “to harass
or maliciously injure” as proscribed in R.C. 2323.51, such action defined at
[(A)](2)(a)(i) of such act. The Court however, declines to do so, finding a
more direct violation of this section at [(A)](2)(a)(iii) of the section, being
conduct urging a contention that has “no evidentiary support.” Kennett is
a trained, though retired, lawyer with intimate knowledge of the history of
the instant matter (and having represented Plaintiff and himself in
subsequent related matters). As such, he must have known that he was
unable to authenticate the Exhibit 1 document; that its content, and how it
related to any agreement reached would not be explainable; and that how
the document came to be would not be explainable. Kennett’s motion was,
accordingly, based upon nothing more than a “hope and a prayer” which is
proscribed by Ohio law, as noted above.
The Court further finds that the testimony of Attorney Epley was
credible and expert and that the fees claimed by Defendant were necessary
and reasonable.
Accordingly, attorney’s fees are awarded in favor of Defendant and
against Kennett in the amount of $5,360.00.
{¶ 29} We find no fault with the trial court’s ruling. Kennett sought to “revive” a
purported agreed entry that was facially suspect, that did not appear on the dockets of
the cases listed in its caption, and that purported to relate to actions that had been
voluntarily dismissed. Kennett could not explain how he came to possess the document,
and he claimed to have no knowledge about the creation of the document. Despite his
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lack of knowledge, Kennett called no witnesses to elicit testimony regarding the
circumstances surrounding the creation and signing of the purported agreed entry. And,
Kennett had signed a release relating to the same matters. The record thus supports
the trial court’s conclusion that Kennett’s motion was based on factual contentions that
had no evidentiary support, contrary to R.C. 2323.51(A)(2)(a)(iii).
{¶ 30} The party seeking sanctions under R.C. 2323.51 bears the burden of
establishing the costs incurred in connection with the frivolous conduct and reasonable
attorney fees that it incurred. A party who may be awarded reasonable attorney fees
may submit an itemized list of the legal services rendered, the time expended in rendering
the services, and the fees associated with those services. R.C. 2323.51(B)(5)(a);
Foland, 2d Dist. Montgomery No. 22940, 2010-Ohio-1905, at ¶ 66.
{¶ 31} At the hearing, Hutchins presented an itemized invoice of legal services
from June 10, 2018 to October 4, 2018 related to Kennett’s motion to revive a dormant
judgment. The invoice reflected total services of 26.80 hours at a rate of $200 per hour,
for a total cost of $5,360. Attorney Christopher Epley testified that he has been a
licensed attorney since 1999, that he has practiced civil litigation during his entire practice,
that he had reviewed the invoice, and that he “felt they [the charges] were reasonable for
the amount of time spent on the case, the novelty of the case, the review of the description
of services rendered, [and] all the exhibits that had to be reviewed and found.” Epley
further testified that he found “the amount of time at the hourly rate for [counsel’s] years
as an attorney [was] reasonable for the area.” No additional witnesses testified
regarding attorney’s fees. Based on the evidence, the trial court did not abuse its
discretion in concluding that the amount of attorney fees requested was reasonable.
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{¶ 32} Kennett’s second and third assignments of error are overruled.
IV. Conclusion
{¶ 33} The trial court’s judgment will be affirmed.
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HALL, J. and TUCKER, J., concur.
Copies sent to:
Jerry A. Meadows
Brian R. McHenry
Brandon C. Hedrick
Charles Ewing
Bradley Smith
Hon. Gregory F. Singer