Mackenbach v. Mackenbach

[Cite as Mackenbach v. Mackenbach, 2012-Ohio-311.]
IN THE COURT OF APPEALS OF OHIO
THIRD APPELLATE DISTRICT
HARDIN COUNTY
BRIAN MACKENBACH, ET AL.,
PLAINTIFFS-APPELLANTS, CASE NO. 6-11-03
v.
P. STEVEN MACKENBACH, ET AL., OPINION
DEFENDANTS-APPELLEES.
Appeal from Hardin County Common Pleas Court
Trial Court No. 20081236-CVH
Judgment Reversed and Cause Remanded
Date of Decision: January 30, 2012
APPEARANCES:
Jeremy M. Tomb and Cheryl L. Collins for Appellants
Kenneth E. Hitchen and James L. Crates for Appellees
Case No. 6-11-03
ROGERS, J.
{¶1} Plaintiff-Appellants, Brian Mackenbach and Kenton Plus Enterprises,
LLC (collectively “Appellants”), appeal from the judgment of the Court of
Common Pleas of Hardin County adopting the magistrate’s decision and granting
judgment in favor of Defendant-Appellees, P. Steven Mackenbach, Coldwell
Banker Plus One Professionals Incorporated, and Citizen’s National Bank of
Bluffton (collectively “Appellees”). On appeal, Appellants contend that the trial
court applied the wrong standard of review in reviewing the magistrate’s decision,
and that the trial court abused its discretion in adopting the magistrate’s decision
as it was unsupported by the evidence. Based upon the following, we reverse the
judgment of the trial court.
{¶2} Sometime in 2006, Brian and Steven verbally agreed to form a limited
liability company, Kenton Plus Enterprises, LLC (“Kenton Plus”). One of the
stated purposes of Kenton Plus was to own and lease real property. The real
property at issue here is located at 805 East Columbus Ave., Kenton, Ohio (“805
East Columbus”). In March 2006, articles of organization were filed with the
Ohio Secretary of State. An operating agreement was prepared and signed by
Steven in May 2007, but was never signed by Brian. The operating agreement
called for Brian to invest $55,000.00 in Kenton Plus, which he accomplished.1 In
1
There is disagreement among the parties whether Brian’s $55,000.00 was a loan or an investment.
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consideration thereof, the net profits from Coldwell Banker Plus One Professional
Incorporated (“Coldwell”), the sole tenant of the property located at 805 East
Columbus, would initially be used to repay Brian’s investment. In addition, after
Brian recuperated his initial investment the operating agreement provided that he
would share in one-half of the profits derived from the rent paid by Coldwell to
occupy the property at 805 East Columbus.
{¶3} In August 2008, Appellants filed a complaint against Appellees
seeking money damages and judicial dissolution of Kenton Plus, among other
forms of relief. Specifically, Brian argued that he never received any payments on
his initial investment of $55,000.00 despite Coldwell having earned profits in its
first year of operation. Stemming from this allegation, Brian asserted various
causes of action including, but not limited to, breach of contract, breach of
fiduciary duty, unjust enrichment, negligent misrepresentation, breach of implied
covenant of good faith and fair dealing, and fraud. In response, Appellees filed
answers denying the allegations lodged in Appellants’ complaint.
{¶4} Subsequently, the trial court referred the matter to the magistrate, who
conducted a hearing in April 2010. In December 2010, the magistrate filed its
decision recommending that Appellants’ complaint be dismissed. Magistrate’s
Decision, p. 8. In January 2011, Appellants timely filed objections to the
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magistrate’s decision. In February 2011, the trial court filed its judgment entry
adopting the magistrate’s decision.
{¶5} It is from this judgment Appellants appeal, presenting the following
assignments of error for our review.
Assignment of Error No. I
THE TRIAL COURT APPLIED AN IMPROPER STANDARD
OF REVIEW IN REVIEWING AND AFFIRMING THE
MAGISTRATE’S DECISION.
Assignment of Error No. II
THE TRIAL COURT ABUSED ITS DISCRETION IN
ADOPTING THE MAGISTRATE’S DECISION BECAUSE
THE MAGISTRATE’S DECISION WAS UNSUPPORTED BY
THE EVIDENCE.
Assignment of Error No. I
{¶6} In their first assignment of error, Appellants contend that the trial
court failed to conduct an independent review of the magistrate’s decision as
required by Civ.R. 53(D)(4)(d). We agree.
{¶7} We review a trial court’s adoption of a magistrate’s decision under an
abuse of discretion standard. Figel v. Figel, 3d Dist. No. 10-08-14, 2009-Ohio-
1659, ¶ 9, citing Marchel v. Marchel, 160 Ohio App.3d 240, 2005-Ohio-1499, ¶ 7
(8th Dist.). A trial court will be found to have abused its discretion when its
decision is contrary to law, unreasonable, not supported by the evidence, or
grossly unsound. See State v. Boles, 2d Dist. No. 23037, 2010-Ohio-278, ¶ 17-18,
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citing Black’s Law Dictionary (8 Ed.Rev.2004) 11. When applying the abuse of
discretion standard, a reviewing court may not simply substitute its judgment for
that of the trial court. Blakemore v. Blakemore, 5 Ohio St.3d 217, 219 (1983).
{¶8} Civ.R. 53(D)(4)(d) states:
If one or more objections to a magistrate’s decision are timely
filed, the court shall rule on those objections. In ruling on
objections, the court shall undertake an independent review as to
the objected matters to ascertain that the magistrate has
properly determined the factual issues and appropriately
applied the law. Before so ruling, the court may hear additional
evidence but may refuse to do so unless the objecting party
demonstrates that the party could not, with reasonable diligence,
have produced that evidence for consideration by the magistrate.
(Emphasis added.)
{¶9} Pursuant to Civ.R. 53(D)(4)(b), the trial court’s review of a
magistrate’s decision is de novo. Goldfuss v. Traxler, 3d Dist. No. 16-08-12,
2008-Ohio-6186, ¶ 7, citing Stumpff v. Harris, 2d Dist. No. 21407, 2006-Ohio-
4796, ¶ 16. While a trial court is required to independently review the record and
make its own factual and legal findings, the trial court may rely upon the
magistrate’s credibility determinations when it reviews the magistrate’s decision.
Gilleo v. Gilleo, 3d Dist. No. 10-10-07, 2010-Ohio-5191, ¶ 47, citing Hendricks v.
Hendricks, 3d Dist. No. 15-08-08, 2008-Ohio-6754, ¶ 25, citing Osting v. Osting,
3d Dist. No. 1-03-88, 2004-Ohio-4159. After completing its de novo review the
trial court may adopt, reject, or modify the magistrate’s decision. Tewalt v.
Peacock, 3d Dist. No. 17-10-18, 2011-Ohio-1726, ¶ 31. A trial court’s failure to
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conduct an independent review in accordance with Civ.R. 53 is an abuse of its
discretion. Figel at ¶ 10, citing In re Scarborough, 12th Dist. No. CA99-05-054,
1999 WL 1057229, *3 (Nov. 22, 1999).
{¶10} An appellate court presumes that a trial court performed an
independent analysis of a magistrate’s decision. Gilleo at ¶ 46, citing Mahlerwein
v. Mahlerwein, 160 Ohio App.3d 564, 2005-Ohio-1835, ¶ 47 (4th Dist.), citing
Hartt v. Munobe, 67 Ohio St.3d 3, 7 (1993). Therefore, the party asserting error
must affirmatively demonstrate that the trial court failed to conduct an
independent analysis. Gilleo at ¶ 46, citing Mahlerwein at ¶ 47.
{¶11} Appellants contend that the trial court failed to conduct a de novo
review of the magistrate’s decision. In support, Appellants cite to the following
language in the trial court’s judgment entry:
In reviewing the transcript of the evidentiary hearing before the
Magistrate as to all claimed objections this Court must
determine whether the findings of fact are reasonable and not an
abuse of discretion.
Accordingly, the Court in considering same notes that deference
should be given to those determinations made by the Magistrate,
as the trier of fact, based upon his ability to best view the
witnesses and observe their demeanor, gestures, and voice
inflictions (sic), etcetera and then use same in weighing the
credibility of the testimony.
Judgment Entry, p. 2. Appellants contend that the preceding language connotes
the trial court’s improper deference to the magistrate’s decision. Rather than
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reviewing the magistrate’s decision de novo, Appellants maintain that the trial
court inappropriately reviewed the magistrate’s decision for an abuse of discretion.
{¶12} In response, Appellees contend that the trial court properly
conducted an independent review of the magistrate’s decision. In support,
Appellees cite to language in the trial court’s judgment entry, which immediately
follows the language cited by Appellants. That language reads:
In reaching the conclusions found herein, the Court
independently reviewed all of the evidence of record including
the transcript of proceeding, exhibits, and arguments of counsel,
whether or not specifically referred to in this decision. Judgment
Entry, p. 2.
{¶13} Although the foregoing language arguably suggests that the trial
court conducted an independent review of the magistrate’s decision, further review
of the judgment entry suggests otherwise. Specifically, our focus is drawn to a
paragraph near the end of the judgment entry. This paragraph appears after the
trial court has addressed Appellants’ objections, but before it adopts the
magistrate’s decision. The paragraph reads:
It is therefore the order of this Court that the Findings of Fact
and Conclusions of Law contained in the December 12, 2010
Magistrate’s Decision are not unreasonable and do not constitute
an abuse of his discreation (sic). (Emphasis added.)
Judgment Entry, p. 5. We find that the preceding language indicates that the trial
court improperly reviewed the magistrate’s decision for an abuse of discretion.
See Jones v. Smith, 187 Ohio App.3d 145, 2010-Ohio-131, ¶ 14 (4th Dist.). By
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failing to conduct a de novo review of the magistrate’s decision and independently
evaluate the evidence and apply the law the trial court abused its discretion. Figel,
3d Dist. No. 10-08-14, 2009-Ohio-1659, at ¶ 10.
{¶14} Furthermore, our decision today is consistent with this Court’s recent
decision in Barrientos v. Barrientos, 3d Dist. No. 5-11-22, 2011-Ohio-5734, in
which this Court reversed the trial court’s judgment due to its explicit application
of an abuse of discretion standard when it reviewed the magistrate’s decision.
{¶15} Accordingly, we sustain Appellants’ first assignment of error.
{¶16} Our resolution of Appellants’ first assignment of error renders their
second assignment of error moot, and we decline to address it. App.R.
12(A)(1)(c).
{¶17} Having found error prejudicial to Appellants herein, in the particulars
assigned and argued in their first assignment of error, we reverse the judgment of
the trial court and remand the matter for further proceedings consistent with this
opinion.
Judgment Reversed and Cause Remanded
WILLAMOWSKI, J., Concurs.
/jlr
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SHAW, J., DISSENTS.
{¶18} As noted by the majority, the trial court reviews objections to a
magistrate’s decision essentially de novo, except for the trial court’s discretion to
defer to the magistrate’s determinations on the credibility of witnesses.
Specifically, Civ.R. 53 (D)(4)(d) states that the trial court shall “shall undertake an
independent review as to the objected matters to ascertain that the magistrate has
properly determined the factual issues and appropriately applied the law.”
{¶19} In this case, the trial court expressly stated in its Judgment Entry that
it should extend deference to the magistrate’s determinations as to the credibility
of witnesses. The trial court also stated that it “must determine whether the
findings of fact are reasonable and do not constitute an abuse of discretion.” The
statements of deference and determinations of reasonableness are entirely
consistent with the mandate of Civ.R. 53.
{¶20} The trial court further stated in its Judgment Entry that in reaching its
conclusions it “independently reviewed all of the evidence of record including the
transcript of proceedings, exhibits, and arguments of counsel, whether or not
specifically referred to in this decision.” The trial court then determined that “the
Findings of Fact and Conclusions of Law contained in the December 12, 2010
Magistrate’s Decision are not unreasonable and do not constitute and abuse of
discretion.”
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{¶21} At paragraph 10 of the majority decision, the majority notes that this
court must presume that the trial court performed an independent analysis of the
magistrate’s decision and that the party asserting error must affirmatively
demonstrate that the trial court failed to do so. At paragraph 7 of the majority
decision, the majority notes that this court reviews the trial court’s decision under
an abuse of discretion standard and that a trial court will not be found to have
abused its discretion unless that decision is contrary to law, unreasonable, not
supported by the evidence or is otherwise grossly unsound.
{¶22} In my view, the trial court’s two extraneous references to the
magistrate’s discretion in its entry, even if erroneous, and even if sufficient to
challenge the presumption of independent review to be afforded by this court, are
not sufficient to invalidate the trial court’s specific statements that it properly
applied all of the express mandates of Civ.R. 53 in rendering its decision. The
practical reality is that any magistrate’s decision which has been found by the trial
court upon independent review to have “properly determined the factual issues and
appropriately applied the law” under Civ.R. 53, would also not be unreasonable,
arbitrary or unconscionable, and hence would not constitute an abuse of the
magistrate’s discretion. Thus, I believe more is required than to simply show the
trial court used both the terms of Civ. R. 53 and the terms of abuse of discretion in
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order to affirmatively demonstrate that the trial court failed to comply with the
Rule.
{¶23} As such, I believe the trial court’s superfluous references to the
magistrate’s discretion in the circumstances of this case are not sufficient to
constitute an abuse of the trial court’s discretion warranting reversal of the trial
court’s judgment by this court. Accordingly, I respectfully dissent.
/jlr
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