Demczyk v. Steamatic of Northeast Ohio, Inc.

[Cite as Demczyk v. Steamatic of Northeast Ohio, Inc., 2011-Ohio-1910.]
COURT OF APPEALS
STARK COUNTY, OHIO
FIFTH APPELLATE DISTRICT
MICHAEL V. DEMCZYK, JUDGES:
BANKRUPTCY TRUSTEE Hon. W. Scott Gwin, P.J.
Hon. William B. Hoffman, J.
Plaintiff-Appellant Hon. John W. Wise, J.
-vs- Case No. 2010CA00117
STEAMATIC OF NORTHEAST OHIO,
INC., ET AL. OPINION
Defendants-Appellees
CHARACTER OF PROCEEDING: Appeal from the Stark County Court of
Common Pleas, Case No. 2009CV02702
JUDGMENT: Affirmed in part; Reversed in part
and remanded
DATE OF JUDGMENT ENTRY: April 18, 2011
APPEARANCES:
For Plaintiff-Appellant For Defendant-Appellee
Michael V. Demczyk, Farmers Insurance of Columbus, Inc.
Bankruptcy Trustee
EDWARD J. HEBEN, JR. THOMAS F. GLASSMAN
Heben & Associates, LLC MATTHEW J. SMITH
3740 Euclid Avenue Smith, Rolfes & Skavdahl, Co., L.P.A.
Cleveland, Ohio 44115 600 Vine Street, Suite 2600
Cincinnati, Ohio 45202
And
For Defendant-Appellee
Steamatic of Northeast Ohio
MEL L. LUTE, JR.
Baker, Dublikar, Beck, Wiley & Mathews
400 South Main Street
North Canton, Ohio 44720
Stark County, Case No. 2010CA00117 2
Hoffman, J.
{¶1} Plaintiff-appellant Michael V. Demczyk, Bankruptcy Trustee, appeals the
April 15, 2010, May 27, 2010, and July 6, 2010 judgment entries entered by the Stark
County Court of Common Pleas, which granted summary judgment in favor of
defendant-appellees Steamatic of Northeast Ohio, Inc. and Farmers Insurance of
Columbus, Inc.
STATEMENT OF THE FACTS AND CASE1
{¶2} Much of Appellant’s Statement of the Case and Statement of the Facts
consists of his expressing his legal conclusions, arguments and speculations rather
than providing this Court with a straight forward rendition of the procedural posture of
the case and facts.
{¶3} Timothy D. and Suzette M. Schuller were the owners of a home located at
9630 Hocking Street, N.W., in Canton, Ohio. They had homeowner’s insurance through
Farmers. In 1996, the Schullers reported to Farmers their home had sustained damage
as a result of a water leak from the dishwasher. Farmers investigated the claim and
determined such was a covered loss, and issued payment to the Schullers, totaling of
1
Appellant’s Brief violates Rule 9(C) of the Local Rules of the Fifth Appellate District
when read in conjunction with App. R. 16(A) and (D). Appellant requested leave to
increase the page limit, which was denied by this Court via Judgment Entry filed
September 24, 2010. Appellant has attempted to circumvent that ruling by placing his
references to the record and case citations in the Appendix attached to his Brief. Had
the references and case citations been included in the body of the Brief, as required by
App. R. 16(A), Appellant would have reached the page limit at the end of page 22.
Individually as author of this Opinion, I would not have entertained any material
presented after page 22. For the same reason, I would not have considered any
material presented after page 12 of Appellant’s Reply Brief. However, because my
colleagues elect to consider those material, I address them herein.
Stark County, Case No. 2010CA00117 3
$3997.23, under the policy’s structured coverage. The Schullers used the insurance
proceeds to repair the damage to the floor.
{¶4} Subsequently, in April, 2002, the Schullers submitted a second claim to
Farmers for damage to the home resulting from the same dishwasher leak, after
discovering toxic black mold in the home. Farmers investigated the second claim and
determined it to be a covered loss. Farmers paid the Schullers a total of $78,548.45.
Of this amount, $34,465.91 was allocated to the home’s structure; $27,916.56, to
content; and $16,165.98, for additional living expenses. The Schullers ultimately chose
Steamatic as the company to undertake remediation work.
{¶5} On January 16, 2004, the Schullers filed their original complaint against
Steamatic and Farmers. On the same day, the Schullers also filed a Petition for
Bankruptcy in the United States Bankruptcy Court, Northern District of Ohio. The
Schullers subsequently filed an Amended Complaint, naming Michael Demczyk, the
Bankruptcy Trustee as well as their minor children, as additional plaintiffs. The
Amended Complaint asserted claims of breach of contract, breach of covenant of good
faith and fair dealing, and negligence. The parties eventually filed a stipulation of
voluntary dismissal on April 21, 2005.
{¶6} On April 18, 2006, the Schullers and their minor children refiled the
Complaint against Steamatic, Farmers, DMZ Remodeling and Restoration, Inc., and
Greg Mang.2 Farmers moved for summary judgment on May 4, 2007, arguing the
Schullers did not have standing to file the lawsuit based upon the bankruptcy filing. In
2
DMZ and Mang are not parties to this appeal.
Stark County, Case No. 2010CA00117 4
an agreed judgment entry filed June 19, 2007, the Schullers filed their first Amended
Complaint, naming Appellant and their minor children as party plaintiffs.
{¶7} Steamatic served Appellant and the Schullers with request for admissions
on April 24, 2008. The trial court deemed said request admitted as neither Appellant
nor the Schullers responded to such. Farmers filed a Motion for Summary Judgment on
June 2, 2008, and a Motion to Compel Discovery on June 9, 2008. The trial court set a
briefing schedule with regard to the dispositive motions, and granted Appellant and the
Schullers an extension of time in which to file responses. On July 14, 2008, prior to
filing responses to the motion for summary judgment and motion to compel, Appellant
and the Schullers filed a notice of voluntary dismissal without prejudice.
{¶8} On July 13, 2009, Appellant and the Schuller children refiled their
Complaint. Upon motion of the defendants, the trial court incorporated all discovery in
the prior cases into the most recently filed case. Farmers filed a Motion for Summary
Judgment on February 8, 2010. Steamatic filed a Motion for Summary Judgment on
February 16, 2010. Appellant filed his responses on March 22, 2010. On April 2, 2010,
Appellant filed supplemental affidavits in support of his responses to the motions for
summary judgment. Appellant submitted the Affidavit of Greg Mang of DMZ and
Andrew Smith of A & S Construction. Smith averred the Schullers had contracted him
in 2002, to perform construction services in their kitchen. Smith added Farmers
convinced him not to do the work as the Schullers were going bankrupt and their home
was in foreclosure. Farmers filed a motion to strike the supplemental affidavits as being
untimely filed. The trial court granted Farmer’s motion to strike, and denied Appellant’s
request for leave to file the supplemental affidavits. Via Judgment Entry filed April 15,
Stark County, Case No. 2010CA00117 5
2010, the trial court granted summary judgment in favor of Farmers and Steamatic on
all of Appellant’s claims.
{¶9} Appellant filed a timely Notice of Appeal to this Court. On May 14, 2010,
Appellant filed a motion to vacate judgment pursuant to Civ.R. 60(B), and to correct and
amend Exhibit 6 attached to his motion for summary judgment, which is the Report of
Appellant’s expert Ronald Wright of R.V. Baric Construction Consultants. Appellant
sought relief on the basis of excusable neglect. A clerical error caused three pages of
the expert’s report to be left out of his motion for summary judgment. Via Judgment
Entry filed May 27, 2010, the trial court granted Appellant’s motion to vacate judgment,
and to correct and amend Exhibit 6. In the same judgment entry, the trial court again
granted summary judgment in favor of Appellees. Steamatic and Farmers filed briefs in
opposition to Appellant’s 60(B) Motion on May 27, 2010, and May 28, 2010,
respectively. Via Judgment Entry filed July 6, 2010, the trial court again granted
Appellant’s 60(B) Motion, and again granted summary judgment in favor of Steamatic
and Farmers.
{¶10} It is from the April 15, May 27, and July 6, 2010 Judgment Entries
Appellant appeals, raising the following assignments of error:
{¶11} “I. THE TRIAL COURT COMMITTED REVERSIBLE ERROR WHEN IT
GRANTED APPELLEE FARMERS INSURANCE OF COLUMBUS, INC.’S MOTION
FOR SUMMARY JUDGMENT.
{¶12} “II. THE TRIAL COURT COMMITTED REVERSIBLE ERROR WHEN IT
GRANTED APPELLEE FARMERS INSURANCE OF COLUMBUS, INC.’S MOTION TO
STRIKE PLAINTIFF’S SUPPLEMENTAL AFFIDAVITS IN SUPPORT OF PLAINTIFF’S
Stark County, Case No. 2010CA00117 6
RESPONSE TO DEFENDANTS’ MOTIONS FOR SUMMARY JUDGMENT AND
DENIED APPELLANTS’ MOTION FOR LEAVE TO FILE SUPPLEMENTAL
AFFIDAVITS.
{¶13} “III. THE TRIAL COURT COMMITTED REVERSIBLE ERROR WHEN IT
GRANTED APPELLEE STEAMATIC OF NORTHEAST OHIO, INC.’S MOTION FOR
SUMMARY JUDGMENT.”
I
{¶14} In his first assignment of error, Appellant contends the trial court erred in
granting summary judgment in favor of Farmers.
{¶15} Summary judgment proceedings present the appellate court with the
unique opportunity of reviewing the evidence in the same manner as the trial court.
Smiddy v. The Wedding Party, Inc. (1987), 30 Ohio St.3d 35, 36, 506 N.E.2d 212. As
such, this Court reviews an award of summary judgment de novo. Grafton v. Ohio
Edison Co. (1996), 77 Ohio St.3d 102, 105, 671 N.E.2d 241.
{¶16} Civ.R. 56 provides summary judgment may be granted only after the trial
court determines: 1) no genuine issues as to any material fact remain to be litigated; 2)
the moving party is entitled to judgment as a matter of law; and 3) it appears from the
evidence that reasonable minds can come to but one conclusion and viewing such
evidence most strongly in favor of the party against whom the motion for summary
judgment is made, that conclusion is adverse to that party. Temple v. Wean United, Inc.
(1977), 50 Ohio St.2d 317, 364 N.E.2d 267.
{¶17} It is well established the party seeking summary judgment bears the
burden of demonstrating that no issues of material fact exist for trial. Celotex Corp. v.
Stark County, Case No. 2010CA00117 7
Catrett (1987), 477 U.S. 317, 330, 106 S.Ct. 2548, 91 L.Ed.2d 265. The standard for
granting summary judgment is delineated in Dresher v. Burt (1996), 75 Ohio St.3d 280at 293, 662 N.E.2d 264: “ * * * a party seeking summary judgment, on the ground that
the nonmoving party cannot prove its case, bears the initial burden of informing the trial
court of the basis for the motion, and identifying those portions of the record that
demonstrate the absence of a genuine issue of material fact on the essential element(s)
of the nonmoving party's claims. The moving party cannot discharge its initial burden
under Civ.R. 56 simply by making a conclusory assertion the nonmoving party has no
evidence to prove its case. Rather, the moving party must be able to specifically point to
some evidence of the type listed in Civ.R. 56(C) which affirmatively demonstrates the
nonmoving party has no evidence to support the nonmoving party's claims. If the
moving party fails to satisfy its initial burden, the motion for summary judgment must be
denied. However, if the moving party has satisfied its initial burden, the nonmoving party
then has a reciprocal burden outlined in Civ.R. 56(E) to set forth specific facts showing
there is a genuine issue for trial and, if the nonmovant does not so respond, summary
judgment, if appropriate, shall be entered against the nonmoving party.” The record on
summary judgment must be viewed in the light most favorable to the opposing party.
Williams v. First United Church of Christ (1974), 37 Ohio St.2d 150, 309 N.E.2d 924.
{¶18} In the instant action, the trial court granted summary judgment in favor of
Farmers based upon several findings. First, the trial court found Appellant was judicially
estopped from asserting the Schullers’ claims against Farmers because Appellant, in
his Report of the Trustee filed in the bankruptcy proceeding, indicated said claims were
without any merit. Next, the trial court found Appellant lacked standing to assert the
Stark County, Case No. 2010CA00117 8
within action on behalf of the Schullers as all of the Schullers’ liabilities to creditors were
extinguished through the bankruptcy discharge. Further, the trial court found, assuming
Appellant had standing, there was no evidence of recoverable damages. Finally, the
trial court found, assuming Appellant had standing and there was evidence of
recoverable damages, there was no evidence Farmers breached the contract or acted
in bad faith.
{¶19} We address each in turn.
{¶20} The trial court found Appellant was judicially estopped from bringing the
instant action against Farmers as Appellant had previously found the claims to be
without merit.
{¶21} The doctrine of judicial estoppel precludes a party from asserting a
position in a legal proceeding inconsistent with one previously asserted. Bruck v. Mason
(1992), 84 Ohio App.3d 398, 400.
{¶22} While we find Farmers’ argument regarding judicial estoppel compelling,
we, nonetheless, find the trial court erred in granting summary judgment on this ground.
Farmers did not assert this argument in its February 8, 2010 Motion for Summary
Judgment. A trial court is not permitted to base its decision to grant summary judgment
upon an argument which was not asserted in the summary judgment motion. Battin v.
Trumbull County, 11th App. No.2000-T-0091, 2002-Ohio-5162. Accord: Butler v.
Harper, 9th App. No. 21051, 2002-Ohio-5029; Hollinghead v. Bey (July 21, 2000), 6th
App. No. L-99-1351, unreported.3
3
Although Farmers may have raised the issue in its pleadings in the previously
dismissed cases, it did not do so in the case sub judice. While discovery from those
Stark County, Case No. 2010CA00117 9
{¶23} We, likewise, find the trial court erred in granting summary judgment on
the ground Appellant lacked standing. Farmers did not assert lack of standing in its
February 8, 2010 Motion for Summary Judgment; therefore, the trial court was not
permitted to base its decision on such argument. Furthermore, based upon Farmers’
assertion in the prior cases, it may be judicially estopped from asserting the trustee
lacks standing in the case sub judice.
{¶24} The trial court also granted summary judgment in favor of Farmers on the
additional ground that there was no evidence of recoverable damages. Upon review of
the entire record in this matter, we find a genuine issue of material fact exists as to the
amount of damages sustained by the Schullers. Although all of the Schuller’s liabilities
to creditors were discharged through the bankruptcy proceeding, the possible amount of
damages recoverable by the Schullers could potentially exceed the amount of debt
discharged in bankruptcy. To say there were no recoverable damages is speculative.
Accordingly, we sustain Appellant’s assignment of error as to Appellant’s breach of
contract claim.
{¶25} The trial court further determined summary judgment was appropriate as
Appellant failed to present evidence Farmers acted in bad faith in dealing with the
Schullers. In Zoppo v. Homestead Ins. Co. (1994), 71 Ohio St.3d 552, the Ohio
Supreme Court held: “An insurer fails to exercise good faith in the processing of a claim
of its insured where its refusal to pay the claim is not predicated upon circumstances
that furnish reasonable justification therefore.” Id. at syllabus, para. 1.
prior cases were deemed part of this record, we find no similar agreement as to
incorporation of prior pleadings.
Stark County, Case No. 2010CA00117 10
{¶26} The trial court properly found Farmers did not blatantly refuse to provide
coverage under the policy. Rather, Farmers paid over $78,000, to or on behalf of the
Schullers following the April, 2002 dishwasher malfunction. Farmers investigated and
reopened the 1996 claim. Appellant does not dispute these facts. Rather, Appellant
asserts Farmers did not pay the Schullers the full value of the claim. According to
Appellant, Farmers refused to provide the Schullers with sufficient “Additional Living
Expenses” and they were forced to purchase successively more expensive homes. As
a result, the Schullers were unable to afford their mortgage payments and ultimately
ended up in bankruptcy.
{¶27} The Farmers’ policy provided for Additional Living Expenses “for the
shortest time needed to (a) repair or replace the damaged property, or (b) permanently
relocate * * *”. Farmers paid Additional Living Expenses, which in part were used to pay
housing rent, until the Schullers relocated. Although Appellant claims the Schullers
were forced to purchase a home because Farmers would not accept any of their
proposed rentals, the record does not support this assertion. The owners of the first
home the Schullers wished to rent would not rent the residence, but only sell it. The
Schullers themselves decided to purchase the home. They subsequently purchased a
third home, taking a loss on the second home. These financial decisions were not the
result of any actions or inactions by Farmers. Accordingly, we find the trial court
properly granted summary judgment on Appellant’s bad faith claim.
{¶28} Appellant’s first assignment of error is sustained in part and overruled in
part.
Stark County, Case No. 2010CA00117 11
II
{¶29} In his second assignment of error, Appellant maintained the trial court
erred in granting Farmers’ motion to strike supplemental affidavits, and in denying
Appellant’s motion for leave to file supplemental affidavits.
{¶30} The decision to grant or deny a continuance rests within the sound
discretion of the trial court. State v. Unger (1981), 67 Ohio St.2d 65, 67. The term
“continuance” applies to continuances of deadlines as well as trial dates. See, Braden
v. Sinar, 9th Dist. App. No. 23656, 2007-Ohio-4527. An appellate court may reverse the
trial court's decision if it amounts to an abuse of discretion. Id. An abuse of discretion is
more than an error in judgment; it means that the trial court was unreasonable, arbitrary,
or unconscionable in its ruling. Blakemore v. Blakemore (1983), 5 Ohio St.3d 217, 219.
When applying the abuse of discretion standard, an appellate court may not substitute
its judgment for that of the trial court. Freeman v. Crown City Mining, Inc. (1993), 90
Ohio App.3d 546, 552.
{¶31} On February 23, 2010, the trial court granted Appellant until March 22,
2010, to file his response to Farmers’ and Steamatic’s motions for summary judgment.
Appellant filed his response with supporting exhibits on March 22, 2010. Subsequently,
on April 2, 2010, Appellant filed the affidavits of Greg Mang, president of former
defendant DMZ, and Andrew Smith, whom Appellant states he was unable to locate
until after the settlement with DMZ. Farmers filed a motion to strike. Thereafter,
Appellant filed a motion for leave to file the affidavits on April 9, 2010. The trial court
granted Farmers’ motion to strike and denied Appellant’s request for leave.
Stark County, Case No. 2010CA00117 12
{¶32} In light of the protracted procedural history of this matter, we find the trial
court did not abuse its discretion in striking Appellant’s untimely affidavit.
{¶33} Appellant’s second assignment of error is overruled.
III
{¶34} In his final assignment of error, Appellant contends the trial court erred in
granting summary judgment in favor of Steamatic on Appellant’s negligence claim.
Appellant submits the fifth cause of action in his Complaint alleged breach of contract
against Steamatic, not negligence. We find whether the Complaint sounded in breach
of contract or negligence against Steamatic is irrelevant as the trial court properly
granted summary judgment against Appellant. Our reasons follow.
{¶35} Evidence presented established the mold and remediation work performed
by Steamatic in 2002, was in accordance with environmental protocol developed by the
EA Group, and the work satisfied the safe habitability threshold. In her deposition,
Suzette Schuller stated Steamatic did not follow the remediation protocol set forth by
the EA Group. Although Steamatic failed to pass the EA Group’s safe habitability
threshold based upon initial air quality samples, a subsequent test of air quality samples
satisfied the threshold. The Schullers’ home was safe to occupy following Steamatic’s
remediation work; therefore, Appellant is unable to establish Steamatic either breached
its contract with the Schullers or negligently performed the remediation work.
{¶36} Based upon the foregoing, we find the trial court did not err in granting
summary judgment in favor of Steamatic.
{¶37} Appellant’s third assignment of error is overruled.
Stark County, Case No. 2010CA00117 13
{¶38} The judgment of the Stark County Court of Common Pleas is affirmed in
part, reversed in part and remanded.
By: Hoffman, J.
Gwin, P.J. and
Wise, J. concur
s/ William B. Hoffman _________________
HON. WILLIAM B. HOFFMAN
s/ W. Scott Gwin _____________________
HON. W. SCOTT GWIN
s/ John W. Wise _____________________
HON. JOHN W. WISE
Stark County, Case No. 2010CA00117 14
IN THE COURT OF APPEALS FOR STARK COUNTY, OHIO
FIFTH APPELLATE DISTRICT
MICHAEL V. DEMCZYK :
BANKRUPTCY TRUSTEE :
:
Plaintiff-Appellant :
:
-vs- : JUDGMENT ENTRY
:
STEAMATIC OF NORTHEAST OHIO, :
INC., ET AL. :
:
Defendants-Appellees : Case No. 2010CA00117
For the reasons stated in our accompanying Opinion, the judgment of the Stark
County Court of Common Pleas is affirmed in part, reversed in part and remanded for
further proceeding in accordance with our Opinion and the law.
Cost assessed equally.
s/ William B. Hoffman _________________
HON. WILLIAM B. HOFFMAN
s/ W. Scott Gwin _____________________
HON. W. SCOTT GWIN
s/ John W. Wise _____________________
HON. JOHN W. WISE