Smith-Kadey, L.L.C. v. Companions of Ashland, L.L.C.

[Cite as Smith-Kadey, L.L.C. v. Companions of Ashland, L.L.C., 2018-Ohio-3753.]
COURT OF APPEALS
ASHLAND COUNTY, OHIO
FIFTH APPELLATE DISTRICT
SMITH-KADEY, LLC, ET AL. JUDGES:
Hon. W. Scott Gwin, P.J.
Plaintiffs-Appellants Hon. William B. Hoffman, J.
Hon. Patricia A. Delaney, J.
-vs-
Case No. 18-COA-008,
COMPANIONS OF ASHLAND, LLC 18-COA-009
Defendant-Appellee
OPINION
CHARACTER OF PROCEEDING: Appeal from the Ashland Municipal Court,
Case No’s. 16CVG00248, 16CVG00249
JUDGMENT: Affirmed
DATE OF JUDGMENT ENTRY: September 12, 2018
APPEARANCES:
For Plaintiffs-Appellants For Defendant-Appellee
KATHRYN M. EYSTER ROBERT DESANTO
165 W. Main Street 432 Center Street
Shelby, OH 44875 Ashland, OH 44805
Ashland County, Case No. 18-COA-008, 18-COA-009 2
Hoffman, J.
{¶1} Appellants Smith-Kadey, LLC and Jerry Smith appeal the judgment entered
by the Ashland Municipal Court awarding Appellee Companions of Ashland, LLC attorney
fees and costs in the amount of $17,977.00.
STATEMENT OF THE FACTS AND CASE
{¶2} Tiffany Behrendsen is the owner of Appellee. Appellant Jerry Smith is part
owner of Appellant Smith-Kadey, LLC. From 2004 to 2012, Behrendsen was employed
by Smith, working for his businesses and assisting in the administration of nursing homes.
While employed by Smith, Behrendsen started her own separate business, Appellee in
the instant case.
{¶3} Appellee leased space from Appellants in two locations in Ashland.
Appellee expanded to Mansfield, leasing space in a building owned and managed by
Smith.
{¶4} Smith has an interest in a business named “Care Companions of Ohio,”
which provides similar services to Appellee, training nurse’s aides. Initially Smith and
Behrendsen had an amicable business relationship, exchanging clients their businesses
were unable to serve, with Appellee sending nurse’s aides to complete clinicals at nursing
homes operated by Smith.
{¶5} Behrendsen left her employment with Smith in 2012, to focus solely on
operating Appellee. Thereafter, Smith considered Appellee to be a competitor which
threatened his businesses.
{¶6} Appellee stopped sending nurse’s aide trainees for clinicals in Smith’s
nursing homes. Smith became upset with Behrendsen, threatening, “I have more money
Ashland County, Case No. 18-COA-008, 18-COA-009 3
than you, you do not want to go down this road, you will be sorry if you do.” He demanded
she fire the employee who recommended Appellee no longer send trainees to Smith’s
facilities. Behrendsen declined to fire the employee.
{¶7} Smith pressured Behrendsen to eliminate the word “Companions” from her
business name, despite the fact the word is frequently used in names of home health care
businesses. Smith told her if she would stop using “Companions” in her business name,
“we’ll make ‘this’ all go away.”
{¶8} Smith harassed Behrendsen and Appellee for at least four years with phone
calls, text messages, and lawsuits, and by interfering with her business relationships.
Because of Smith’s conduct, Appellee vacated the property in Mansfield. At the time she
signed the lease in Mansfield, Smith assured her it was identical to the leases she
previously signed in Ashland. However, the Mansfield lease included a vague non-
compete clause in an attempt to restrict Appellee from competing with Smith’s
businesses. A lawsuit ensued in Richland County wherein Smith and his wife sued
Behrendsen. The Richland County Common Pleas Court found the non-compete clause
invalid. Ultimately the case was settled and dimissed.
{¶9} In September of 2013, Smith served a three-day eviction notice on Appellee
for one of the Ashland properties. The notice did not mention unpaid rent as the basis for
the eviction, and ultimately Appellants did not pursue the eviction.
{¶10} On March 15, 2016, Appellants served on Appellee notice to leave the
premises as to both Ashland properties. The notice gave non-payment of rent for eight
months, totaling $20,088.00, as the reason for the eviction. Evictions actions were filed
as to both leased properties on March 22, 2016.
Ashland County, Case No. 18-COA-008, 18-COA-009 4
{¶11} Appellee supplied proof of rent payments for several of the months in
question, which Appellants refused to acknowledge. Appellants did not amend their
complaints, and continued to pursue both actions. Appellee could not produce records
demonstrating it had paid rent for three of the months in question: December 2008, July
2009, and October 2009. Smith waived rent for December of 2008, as it was Appellee’s
first month in business. The parties stipulated rent was unpaid for July and October of
2009, in the total amount of $5,000.00.
{¶12} Following a hearing before a magistrate in the Ashland Municipal Court, the
magistrate found Appellants waived the three-day notice to vacate by accepting rent
payments following service of the notice. The magistrate recommended the eviction
actions be dismissed, Appellants be granted judgment for two months rent as stipulated
by the parties, the claim for delinquent rent for December of 2008 be dismissed,
Appellee’s counterclaim for unfair competition be dismissed, and Appellee’s request for
attorney fees be heard if properly brought before the court. Neither party objected to the
decision of the magistrate, and the court entered judgment in accordance with the
magistrate’s decision.
{¶13} Appellee filed a motion for attorney fees and cost for frivolous conduct. After
a hearing before the magistrate, the magistrate found Appellants’ eviction actions were
based on a factual contention which had no evidentiary support and were not warranted
under existing law. The magistrate found Appellants’ conduct in filing factually untrue
allegations, seeking forfeiture after clear waiver, and attempting to terminate the lease
was motivated by an improper purpose to unfairly destroy, damage or harass Appellee.
The magistrate determined Appellee met its burden of proof to demonstrate Appellants’
Ashland County, Case No. 18-COA-008, 18-COA-009 5
subjective intent was to annoy, harass, and maliciously injure Appellee. Accordingly, the
magistrate found Appellants’ conduct was frivolous under R.C. 2323.51, justifying an
award of attorney fees. The magistrate found Appellee is entitled to an award of fees in
the amount of $8,250.00 to Attorney Lang and in the amount of $6,730.00 to Attorney De
Santo, and Appellee further was entitled to reimbursement from Appellants for the
expense of transcribing the trial transcript in the amount of $2,997.00.
{¶14} Appellants filed objections to the magistrate’s decision. The court overruled
all objections and entered judgment in accordance with the magistrate’s decision.
{¶15} It is from the January 16, 2018 judgment of the court Appellants prosecute
their appeal, assigning as error:
THE TRIAL COURT ERRED IN FINDING PLAINTIFFS’ CONDUCT
TO BE FRIVOLOUS AND AWARDING ATTORNEY FEES AND COST.
{¶16} Appellants first argue the court erred in hearing both cases, and all causes
of action together, rather than bifurcating the forcible entry and detainer actions from the
claims for unpaid rent.
{¶17} R.C. 1923.081 provides:
A trial in an action for forcible entry and detainer for residential
premises, other than an action against a deceased resident of a
manufactured home park, or for a storage space at a self-service storage
Ashland County, Case No. 18-COA-008, 18-COA-009 6
facility, as defined in division (A) of section 5322.01 of the Revised Code,
pursuant to this chapter may also include a trial on claims of the plaintiff for
past due rent and other damages under a rental agreement, unless for good
cause shown the court continues the trial on those claims. For purposes of
this section, good cause includes the request of the defendant to file an
answer or counterclaim to the claims of the plaintiff or for discovery, in which
case the proceedings shall be the same in all respects as in other civil
cases. If, at the time of the trial, the defendant has filed an answer or
counterclaim, the trial may proceed on the claims of the plaintiff and the
defendant. A plaintiff who is a park operator may seek a judgment for past
due rent and other damages under a rental agreement against a deceased
manufactured home park resident in a separate civil action for damages.
{¶18} Appellants argue the court should have proceeded in a summary nature on
their claim for eviction, citing Smith v. Wright, 65 Ohio App. 2d 101, 416 N.E.2d 655 (8th
Dist. Cuyahoga 1979) and Haney v. Roberts, 130 Ohio App. 3d 293, 720 N.E.2d 101 (4th
Dist. Scioto 1998) for the proposition while R.C. 1923.081 permits joinder of forcible entry
and detainer actions with related actions for damages, such joinder was not intended to
alter the summary nature of forcible entry and detainer actions.
{¶19} However, the record is devoid of any objection to the proceeding employed
by the trial court. Further, Appellants failed to file objections to the magistrate’s report of
March 24, 2017, which disposed of the underlying claims for eviction and rent, and has
therefore waived any claim of error on appeal. Civ. R. 53(D)(3)(b)(iv).
Ashland County, Case No. 18-COA-008, 18-COA-009 7
{¶20} Appellants next argue the award of fees was not properly itemized as to the
separate causes, and further the fees were not specifically identifiable as the result of the
frivolous conduct.
{¶21} On several occasions, Appellants indicated to the court they would stipulate
to fees as demonstrated by invoices from the attorneys involved in the case. Tr. (7/25/17)
5-7, 111-113. The doctrine of invited error provides “a party is not permitted to take
advantage of an error that he himself invited or induced the court to make.” Bd. of Clark
Cty. Commrs. v. Newberry, 2nd Dist. Clark No. 2002–CA–15, 2002-Ohio-6087, at ¶ 16,
quoting Davis v. Wolfe, 92 Ohio St. 3d 549, 552, 751 N.E.2d 1051 (2001). By stipulating
to fees at the hearing, Appellants have not only waived any error, they invited the court
to award fees based on the affidavits and invoices submitted by Attorneys Lang and
DeSanto. We note the court did not award the full amount of fees set forth in the invoices.
Findings of Fact 76-79.
{¶22} Finally, Appellants argue the court erred in finding their conduct frivolous
because Appellee stipulated to owing back rent in the amount of $5,000. They further
argue again the court erred in hearing all causes of actions concurrently and mixing the
cases, while at the same time arguing “[t]here was no delay in the cases or a needless
increase in the cost of litigation since the trial court heard all causes of action together.”
{¶23} R.C. 2323.51(A)(2)(a) defines frivolous conduct:
(2) “Frivolous conduct” means either of the following:
(a) Conduct of an inmate or other party to a civil action, of an inmate
who has filed an appeal of the type described in division (A)(1)(b) of this
Ashland County, Case No. 18-COA-008, 18-COA-009 8
section, or of the inmate's or other party's counsel of record that satisfies
any of the following:
(i) It 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.
(ii) It is not warranted under existing law , cannot be supported by a
good faith argument for an extension, modification, or reversal of existing
law, or cannot be supported by a good faith argument for the establishment
of new law.
(iii) The conduct 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.
(iv) The conduct consists of denials or factual contentions that are
not warranted by the evidence or, if specifically so identified, are not
reasonably based on a lack of information or belief.
{¶24} The initial decision of whether a party's conduct is frivolous is a factual
determination, particularly if the alleged conduct was intended to harass or maliciously
injure. Ceol v. Zion Indus., Inc., 81 Ohio App. 3d 286, 291, 610 N.E.2d 1076, 1078–1079
(1992). Because the trial judge has the benefit of observing the course of proceedings
and is familiar with the parties and attorneys involved, a reviewing court is obligated to
Ashland County, Case No. 18-COA-008, 18-COA-009 9
defer to the trial court's findings that one party harassed or injured another. Id. at 292,
610 N.E.2d at 1079–1080.
{¶25} The magistrate specifically found, as noted by the trial court, the testimony
of Behrendsen and other witnesses who testified on behalf of Appellee to be credible,
while finding the testimony of Appellant Smith to lack credibility. The decision of the
magistrate on the underlying action, which as noted above Appellants failed to object to,
was incorporated into the magistrate’s decision in the instant case. In that decision the
court found Appellants waived the forcible entry and detainer action by accepting rent for
a period of eight years after the alleged violation of the lease agreement for non-payment
of rent. The court further found Appellants could have sued Appellee for the $5,000 due
in back rent without filing eviction actions. Following the hearing on frivolous conduct, the
court found Appellants’ claims for eight months of unpaid rent were false, as they had no
records to support their claims, while Appellee was able to prove payment of five month’s
rent and waiver of an additional month’s rent. The court further found Appellants conduct
in filing factually untrue allegations and seeking forfeiture after clear waiver was motivated
by an improper purpose to destroy, damage, or harass Appellee and Behrendsen. The
court found Appellants’ purpose was to destroy Appellee’s ability to fairly compete.
{¶26} We find no error in the finding Appellants engaged in frivolous conduct.
Appellants do not argue the court’s finding they harassed or injured Appellee is
unsupported by the evidence. The eviction action was clearly waived by acceptance of
rent. Further, while claiming Appellee owed rent for eight months, Appellants had no
records to support their claim. While the parties ultimately stipulated to two months back
rent due, the evidence throughout the case supports the court’s conclusion the instant
Ashland County, Case No. 18-COA-008, 18-COA-009 10
action was an attempt to harass Appellee and Behrendsen in order to prevent Appellee
from competing with Appellants’ own businesses. The assignment of error is overruled.
The judgment of the Ashland Municipal Court is affirmed.
By: Hoffman, J.
Gwin, P.J. and
Delaney, J. concur