Norman v. Hanoverton Motor Cars, Inc.

[Cite as Norman v. Hanoverton Motor Cars, Inc., 2012-Ohio-2697.]
STATE OF OHIO, COLUMBIANA COUNTY
IN THE COURT OF APPEALS
SEVENTH DISTRICT
FAITH NORMAN AS POWER OF ATTY. )
)
PLAINTIFF-APPELLEE, )
)
V. ) CASE NO. 11 CO 13)
HANOVERTON MOTOR CARS, INC. ) OPINION
)
DEFENDANT-APPELLANT. )
CHARACTER OF PROCEEDINGS: Civil Appeal from Court of Common
Pleas of Columbiana County, Ohio
Case No. 10CV415
JUDGMENT: Affirmed
APPEARANCES:
For Plaintiff-Appellee Atty. Tracey A. Laslo
325 East Main Street
Alliance, Ohio 44601
For Defendant-Appellant Atty. C. Bruce Williams
Highland Corner
1376 East State Street
Salem, Ohio 44460
JUDGES:
Hon. Gene Donofrio
Hon. Joseph J. Vukovich
Hon. Mary DeGenaro
Dated: June 15, 2012
[Cite as Norman v. Hanoverton Motor Cars, Inc., 2012-Ohio-2697.]
DONOFRIO, J.
{¶1} Defendant-appellant, Hanoverton Motor Cars, Inc., appeals from a
Columbiana County Common Pleas Court judgment overruling its Civ.R. 60(B)
motion for relief from a default judgment entered in favor of plaintiff-appellee, Faith
Norman as Power of Attorney for James Norman.
{¶2} On April 29, 2010, appellee filed a complaint against appellant asserting
that appellant fraudulently, and in contravention of its representations, failed to pay
off a trade-in vehicle owned by appellee. Appellant’s office manager signed the
certified mail receipt for the complaint on May 13, 2010.
{¶3} Appellee filed a motion for default judgment on June 28, 2010, as
appellant had not filed an answer. On July 2, 2010, the trial court granted default
judgment against appellant in the amount of $18,750, plus interest.
{¶4} On October 15, 2010, appellant filed a motion for leave to answer
instanter. In its motion, appellant asserted that it had just learned of the existence of
the lawsuit. To its motion, appellant attached the affidavit of its office manager,
Rhonda Phillips. Phillips averred that she may have signed for the certified mail and
misplaced it and did not bring it to the attention of Don or Marilyn Hofmeister,
appellant’s owners.
{¶5} At the same time, appellant also filed a Civ.R. 60(B) motion for relief
from judgment again asserting that Phillips lost the mail and appellant was just
recently made aware of the lawsuit.
{¶6} Appellant’s motion proceeded to hearing before a magistrate. The
magistrate found that appellant did not present any evidence that it had a meritorious
claim or defense to present. The magistrate went on to find that appellant did not
meet the three-pronged test set out in GTE Automatic Elec., Inc. v. Arc Industries,
Inc., 47 Ohio St. 2d 146, 351 N.E.2d 113 (1976). Therefore, the magistrate denied
the Civ.R. 60(B) motion. The trial court entered judgment accordingly.
{¶7} Appellant then filed objections to the magistrate’s decision asserting
that (1) it was uncontroverted that it did not have actual knowledge of the lawsuit and
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(2) it asserted both in its answer and at the hearing that it did not commit a fraudulent
transaction against appellee, thus raising a possibly meritorious defense.
{¶8} The trial court considered the objections. It went on to find that
appellant failed to prove excusable neglect or any other reason justifying relief from
judgment. The court, therefore, denied the motion for relief from judgment.
{¶9} Appellant filed a timely notice of appeal on March 25, 2011.
{¶10} Appellant raises two assignments of error. These assignments of error
raise the same argument. Therefore, we will address them together. They state:
THE TRIAL COURT ERRED IN AFFIRMING THE
MAGISTRATE’S DECISION OF DECEMBER 28, 2010 AND DENYING
APPELLANT’S MOTION FOR RELIEF FROM JUDGMENT UNDER
CIV.R. 60(B) WHEN THE MANIFEST WEIGHT OF THE EVIDENCE
SUPPORTED THE CONCLUSION THAT APPELLANT’S EVIDENCE
DEMONSTRATED EXCUSABLE NEGLECT JUSTIFYING RELIEF
FROM JUDGMENT.
THE TRIAL COURT ABUSED ITS DISCRETION IN DENYING
APPELLANT’S MOTION FOR RELIEF FROM JUDGMENT UNDER
CIV.R. 60(B).
{¶11} Appellant first argues that it alleged two meritorious defenses.
Additionally, it states that it also asserted in its answer that appellee could not
demonstrate her claims within the standard of proof required.
{¶12} Second, appellant argues that it demonstrated excusable neglect. It
notes that the complaint was signed for by its officer manager. The office manager
then misplaced the complaint due to the rearranging of the office furniture and family
health issues. Appellant asserts that it never had actual notice of the lawsuit until it
received a copy of the default judgment by regular mail in late August/early
September, at which time the owner contacted counsel who prepared an answer and
a Civ.R. 60(B) motion.
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{¶13} Finally, appellant argues that its motion was timely filed. It asserts that
it filed the motion less than 45 days after receipt of the default judgment entry and
less than three-and-a-half months after the court entered default judgment.
{¶14} The Ohio Supreme Court set out the controlling test for Civ.R 60(B)
motions in GTE, 47 Ohio St.2d at paragraph two of the syllabus:
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.
{¶15} If the movant fails to satisfy any of the above elements, the court shall
deny relief. Argo Plastic Products Co. v. Cleveland, 15 Ohio St.3d 389, 391, 474
N.E.2d 328 (1984), citing GTE, at 151.
{¶16} The standard of review used to evaluate the trial court's decision to
grant or deny a Civ.R. 60(B) motion is abuse of discretion. Preferred Capital, Inc. v.
Rock N Horse, Inc., 9th Dist. No. 21703, 2004-Ohio-2122, ¶9. Abuse of discretion
connotes more than an error in judgment; it implies that the trial court's judgment is
arbitrary, unreasonable, or unconscionable. Blakemore v. Blakemore, 5 Ohio St.3d
217, 219, 450 N.E.2d 1140 (1983).
{¶17} The trial court in this case found that appellant did not demonstrate
excusable neglect or any other reason justifying relief from judgment and, therefore,
did not satisfy the second GTE element.
{¶18} The second element of the GTE test requires that the moving party be
entitled to relief under one of the grounds stated in Civ.R. 60(B)(1) through (5). The
grounds for relief under Civ.R. 60(B) and the second GTE element are:
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(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.
{¶19} Appellant asserted that it was entitled to relief based on excusable
neglect under Civ.R. 60(B)(1). In support, it offered the affidavit and testimony of
office manager Rhonda Phillips and the testimony of Don Hofmeister.
{¶20} In her affidavit, Phillips averred that although she may have signed for
certain mail during the spring and summer of 2010, she misplaced a number of items
during this time due to changes in office furniture and her distraction over significant
family issues including her granddaughter’s hospitalization. (Phillips Aff. ¶3). She
further averred that she was not consciously aware of any lawsuit having been filed
against appellant nor did she bring any lawsuit to the attention of Don or Marilyn
Hofmeister, appellant’s owners. (Phillips Aff. ¶¶4-5). Phillips’s testimony basically
mirrored her affidavit.
{¶21} Hofmeister testified that he was not made aware of the lawsuit until
October 2010. (Tr. 4). On cross examination, he testified that Phillips has the
authority to sign for certified mail. (Tr. 5). He also stated that he did not receive any
mail relating to this case. (Tr. 6-7). Finally, Hofmeister testified that he immediately
contacted his attorney once he learned of the default judgment. (Tr. 7-8).
{¶22} The certified mail return receipt from the complaint shows that Philips
signed for the complaint on May 13, 2010. The trial court entered default judgment
on July 2. On July 20, the court sent a debtor disclosure form and order to complete
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it to appellant by certified mail, which apparently was not signed for. On August 30,
the court sent copies of the motion for default judgment, default judgment entry,
motion for disclosure and judgment entry for disclosure by regular mail with certificate
of mailing to appellant. Then on October 15, appellant filed its Civ.R. 60(B) motion.
{¶23} The Ohio Supreme Court has only defined “excusable neglect” in the
negative. The Court has stated that neglect is not excusable if it is an act of complete
disregard for the judicial system. Kay v. Marc Glassman, Inc., 76 Ohio St.3d 18, 20,
665 N.E.2d 1102 (1996).
{¶24} In Benesch, Friedlander, Coplan & Arnoff v. City Concrete, L.L.C., 7th
Dist. No. 06-MA-95, 2007-Ohio-3331, we examined several cases where courts of
appeals upheld the trial court’s finding of excusable neglect when a complaint was
served on someone at the defendant’s place of business but was not forwarded to
the appropriate person in the company. See Perry v. General Motors Corp., 113
Ohio App.3d 318, 680 N.E.2d 1069 (1996); Hopkins v. Quality Chevrolet, Inc., 79
Ohio App.3d 578, 607 N.E.2d 914 (1992); Sycamore Messenger, Inc. v. Cattle
Barons, Inc., 31 Ohio App.3d 196, 509 N.E.2d 977 (1986).
{¶25} Yet in Benesch, we affirmed the trial court’s finding of inexcusable
neglect where the complaint was received by a non-employee and the defendant’s
president “may have” been aware of it. We noted that we were bound by the abuse
of discretion standard of review.
{¶26} But in WFMJ Television, Inc. v. AT&T Fed. Sys. CSC, 7th Dist. No. 01-
CA-69, 2002-Ohio-3013, this court affirmed the trial court’s finding of excusable
neglect where the complaint was received at the defendant’s place of business but
was not forwarded to the appropriate person. We stated that the case teetered on
the border of inexcusable neglect. Id. at ¶22. Nonetheless, we concluded that
regardless of whether we would have made the same decision, we would defer to the
trial court and declined to find that it abused its discretion. Id.
{¶27} What these cases demonstrate is that there is a fine line between
excusable and inexcusable neglect and the courts, including this court, must defer to
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the trial court’s determination on whether the neglect is excusable given our abuse of
discretion standard of review.
{¶28} In this case the trial court found: “[R]earranging office furniture, not
opening certified mail, or even the unfortunate illness of a family member is not
deemed excusable neglect.” It went on to point out that the complaint was served on
May 13, 2010, and the motion for default judgment was not filed until June 28, 2010.
Yet the motion for relief from judgment was not filed until October 15, 2010. The
court found it significant that appellant failed to discover or take any action to correct
its mistake during this time. Thus, the court concluded that the failure to answer the
complaint arose from appellant’s own carelessness and inattention.
{¶29} Given the fine line between excusable and inexcusable neglect and the
trial court’s reasoned decision, we cannot find that the court abused its discretion in
finding no excusable neglect.
{¶30} The trial court did not abuse its discretion in finding that appellant did
not meet the second GTE element. Because a movant on a Civ.R. 60(B) motion for
relief from judgment must satisfy all three GTE elements in order to be entitled to
relief, we must affirm the court’s judgment denying appellant’s motion for relief from
judgment.
{¶31} Our review in this case is limited to determining whether the trial court
acted unreasonably, arbitrarily, or unconscionably. Given the court’s reasoned
decision, it clearly did not act arbitrarily or unconscionably. And when determining
whether a court’s decision is unreasonable, we must look at whether there is a sound
reasoning process that would support the decision. AAAA Enterprises, Inc. v. River
Place Community Redevelopment, 50 Ohio St.3d 157, 161, 553 N.E.2d 597 (1990).
“It is not enough that the reviewing court, were it deciding the issue de novo, would
not have found that reasoning process to be persuasive, perhaps in view of
countervailing reasoning processes that would support a contrary result.” Id. Thus,
although we may have reached a different conclusion in this case if we reviewed it de
novo, we find that the trial court acted reasonably in issuing its decision. Because
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the trial court in this case acted within its discretion in denying appellant’s Civ.R.
60(B) motion, appellant’s first and second assignments of error are without merit.
{¶32} For the reasons stated above, the trial court’s judgment is hereby
affirmed.
Vukovich, J., concurs.
DeGenaro, J., concurs in judgment only.