Smithey v. Frost & Co., Inc.

[Cite as Smithey v. Frost & Co., Inc., 2009-Ohio-3151.]
IN THE COURT OF APPEALS OF OHIO
THIRD APPELLATE DISTRICT
AUGLAIZE COUNTY
JAMES L. SMITHEY,
PLAINTIFF-APPELLEE, CASE NO. 2-09-08
CROSS-APPELLANT,
v.
FROST & CO., INC., et al. OPINION
DEFENDANTS-APPELLANTS,
CROSS-APPELLEES.
Appeal from Auglaize County Common Pleas Court
Trial Court No. 2008-CV-0452
Appeal Dismissed
Cross-Appeal Dismissed
Date of Decision: June 29, 2009
APPEARANCES:
Derek A. Younkman for Appellant
R.C. Wiesenmayer for Appellee
Case No. 2-09-08
WILLAMOWSKI, J.
{¶1} The defendants-appellants/cross-appellees, Frost & Co., Inc., now
known as Frost Mechanical Holdings, Inc., and Frost Mechanical, Inc. (hereinafter
referred to collectively as “Frost Mechanical”), appeal the January 16, 2009
journal entry of the Auglaize County Common Pleas Court. Frost Mechanical
contends that the trial court erred when it denied their motion for relief from
judgment. The plaintiff-appellee/cross-appellant, James L. Smithey, filed a cross-
appeal challenging the same journal entry of the trial court. On appeal, Smithey
contends that the trial court erred by ordering the clerk of courts to retain the
amount of the judgment he had obtained against Frost Mechanical. For the
reasons set forth herein, the appeal and cross-appeal are dismissed.
{¶2} Smithey and John McCormick had been shareholders in Frost & Co.,
Inc., which in turn was the sole shareholder of Frost Mechanical, Inc. and another
company. On May 23, 2008, the parties entered into an agreement of
reorganization in which Smithey’s shares were redeemed. In his capacity as the
vice-president of Frost & Co., Inc. and as the president of Frost Mechanical, Inc.,
McCormick executed a cognovit note payable to Smithey in the amount of
$115,000. The note did not mature until May 23, 2010; however, Frost
Mechanical was required to make quarterly interest payments beginning on May
23, 2008. Frost Mechanical failed to make two quarterly interest payments.
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Case No. 2-09-08
{¶3} On December 30, 2008, Smithey accelerated the balance due on the
note and filed a complaint for cognovit judgment. That same day, Frost
Mechanical filed its answer confessing judgment, and the trial court entered
judgment in the amount of $115,000 plus pre-judgment and post-judgment interest
at the rate of 11%, late charges as provided in the note, and court costs. On
January 9, 2009, the court garnished $118,856.17 from Frost Mechanical’s bank
account(s).
{¶4} On January 16, 2009, Frost Mechanical filed a motion for relief from
judgment arguing that they were entitled to a set-off. The court also held a hearing
on January 16, 2009, at which counsel argued the motion for relief from judgment.
At the conclusion of the hearing, the court stated, “I’m not gonna set aside the
judgment.” (Hearing Tr., Mar. 12, 2009, at 26:15-16). The court then stated that
Frost Mechanical was entitled to a set-off, but they would have to go through
arbitration as provided by the agreement of reorganization. The court ordered the
clerk of courts to retain and invest the $118,856.17. Following the hearing, the
court filed a journal entry, which stated:
This matter came before the Court upon the request for hearing
filed by the Defendants, upon issues of distribution of attached
proceeds from a bank account(s) of the Defendants, Motion for
relief from judgment pursuant to Civil Rule 60, and a request to
set aside execution. Upon hearing, the Court FINDS that
Defendants have not set forth good cause to vacate the Judgment
pursuant to Civil Rule 60(B), and the Court further FINDS that
Defendants and Plaintiff have entered into an agreement
requiring notice of claims followed by binding arbitration,
neither of which has yet been accomplished.
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Case No. 2-09-08
The Court further FINDS that the Defendants claim that they
have unspecified set-offs, and therefore, this Court does hereby
ORDER that the Clerk of this court shall retain the $118,856.17
she has received pursuant to Plaintiff’s action to enforce its
Cognovit Judgment. * * * The parties are instructed that either
party may request a hearing at any time for distribution of said
funds, and the Court will entertain such request. * * *
IT IS SO ORDERED.
(Journal Entry, Jan. 16, 2009).
{¶5} Frost Mechanical appeals the journal entry of the trial court, raising
three assignments of error for our review.
First Assignment of Error
The trial court erred to the prejudice of Appellants in that a
meritorious defense of setoff was presented and the motion for
relief from judgment was timely made.
Second Assignment of Error
The trial court erred to the prejudice of Appellants in that
collateral attacks on cognovit judgments are liberally permitted
and the movants have a lesser burden when the judgment sought
to be vacated is a cognovit judgment.
Third Assignment of Error
The trial court erred to the prejudice of Appellants in that any
doubts are required to be resolved in favor of movants who
pursue relief from a cognovit judgment and as such the denial of
the motion was unreasonable and an abuse of discretion.
In his cross-appeal from the same journal entry, Smithey raises one assignment of
error.
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Case No. 2-09-08
Cross-Assignment of Error
The trial court erred to the prejudice of the Cross-Appellant
when it ordered that the $118,856.17 be retained by the Court,
“until further Order of the Court”.
{¶6} Before considering the merits of the appeal or cross-appeal, we must
first determine whether this court has subject-matter jurisdiction. Jurisdiction may
be raised sua sponte on appeal. Portman v. Mabe, 3d Dist. No. 15-07-12, 2008-
Ohio-3508, at ¶ 18, citing Orthopedics and Sports Medicine, Inc. v. Stover, 3d
Dist. No. 14-06-32, 2007-Ohio-899, at ¶ 10, citing Davison v. Rini (1996), 115
Ohio App.3d 688, 686 N.E.2d 278. See also State ex rel. White v. Cuyahoga
Metro. Hous. Auth. (1997), 79 Ohio St.3d 543, 544, 684 N.E.2d 72, citing State ex
rel. Wright v. Ohio Adult Parole Auth. (1996), 75 Ohio St.3d 82, 84, 661 N.E.2d
728.
R.C. 2505.03 limits the jurisdiction of appellate courts to the
review of final orders, judgments, and decrees. [White, at 544].
“[T]he primary function of a final order or judgment is the
termination of a case or controversy that the parties have
submitted to the trial court for resolution.” Harkai v. Scherba
Industries, Inc. (2000), 136 Ohio App.3d 211, 215. See also R.C.
2505.02(B) (defining what type of orders, judgments, and
decrees are final and appealable). In order to terminate an
action, a final order, judgment, or decree must set forth the
outcome of the dispute and contain a clear statement of the relief
afforded to the parties. In the Matter of Manor Care of Parma,
Franklin App. No. 04AP-768, 2005-Ohio-524, at ¶ 5; Harkai,
supra, 215-216. In other words, the final order, judgment, or
decree must address all of the issues submitted to the trial court
for determination so that the parties may know, by referring
solely to the order, judgment, or decree, the extent of their
responsibilities and obligations. Yahraus v. Circleville (Dec. 15,
2000), Pickaway App. No. 00CA04.
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Case No. 2-09-08
Shambaugh v. Metro. Property and Cas. Ins. Co., 10th Dist. No. 05AP-949, 2006-
Ohio-533, at ¶ 7.
{¶7} In this litigation, as in Shambaugh, the journal entry from which the
appeal and cross-appeal are taken does not delineate the parties’ responsibilities
and/or obligations. See Shambaugh, at ¶ 8. The court made findings, but it did
not rule upon any of the pending motions, including Frost Mechanical’s Civ.R.
60(B) motion, nor did it “actually enter judgment for or against any party on any
claim or issue.” Id. We note the court’s statement at hearing that relief from
judgment would not be allowed. Such statement allows the inference that the
motion for relief from judgment was denied. However, the “‘court speaks only
through its journal[,]’” and as stated above, the journal entry did not enter any
judgment but instead stated the court’s findings. Id. at ¶ 9, quoting State v.
Jordan, 104 Ohio St.3d 21, 2004-Ohio-6085, 817 N.E.2d 864, at ¶ 6. The court’s
journal entry of January 16, 2009 does not constitute a final appealable order, and
both the appeal and cross-appeal must be dismissed for want of jurisdiction.
Appeal Dismissed
Cross-Appeal Dismissed
ROGERS and SHAW, J.J., concur.
/jnc
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