Semco, Inc. v. Sims Bros., Inc.

[Cite as Semco, Inc. v. Sims Bros., Inc., 2013-Ohio-4109.]
IN THE COURT OF APPEALS OF OHIO
THIRD APPELLATE DISTRICT
MARION COUNTY
SEMCO, INC.,
PLAINTIFF-APPELLANT, CASE NO. 9-12-62
v.
SIMS BROS., INC., ET AL., OPINION
DEFENDANTS-APPELLEES.
Appeal from Marion County Common Pleas Court
Trial Court No. 09-CV-0218
Judgment Affirmed
Date of Decision: September 23, 2013
APPEARANCES:
J.C. Ratliff and Adam H. Karl for Appellant
Jasper N. Burt and Keith Shumate for Appellee, Sims Bros., Inc.
Case No. 9-12-62
PRESTON, P.J.
{¶1} Plaintiff-appellant, Semco, Inc. (“Semco”), appeals the Marion
County Court of Common Pleas’ October 12, 2011 and November 2, 2012
judgment entries. In its October 12, 2011 judgment entry, the trial court granted
summary judgment in favor of defendant-appellee, Sims Bros., Inc. (“Sims
Bros.”), concluding that Sims Bros. was entitled to summary judgment on
Semco’s conversion claim because Semco failed to demand return of its property
and on its civil-theft claim because no issue of fact existed as to whether Sims
Bros. knew or had reasonable cause to believe that the property was stolen. In its
November 2, 2012 judgment entry, the trial court granted Sims Bros.’s motion for
attorney fees on Semco’s dismissed Consumer Sales Practices Act (“CSPA”)
claim, awarding Sims Bros. its requested attorney fees of $26,130. For the reasons
that follow, we affirm.
{¶2} This case involves a dispute between a foundry, Semco, and a metal
recycler, Sims Bros. It stems from the repeated thefts of Semco’s metal materials
by two of its employees, and the thieves’ sale of those materials at Sims Bros.’s
drive-through recycling center. (Doc. Nos. 80, 83).
{¶3} On March 17, 2009, Semco filed a complaint against Sims Bros. and
two other metal-recycler defendants who settled with Semco and are not parties to
this appeal. (Doc. Nos. 1, 121, 122). Semco’s complaint contained four counts:
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violation of the CSPA under R.C. 1345.01 et seq.; civil theft under R.C. 2913.61,
based on a theory of receiving stolen property; conversion; and, unjust enrichment.
(Id.). Sims Bros. filed its answer on May 8, 2009. (Doc. No. 7).
{¶4} On August 21, 2009, Sims Bros. and the other two defendants filed a
joint motion for judgment on the pleadings as to all of the counts of the complaint.
(Doc. No. 13). Semco did not respond to that motion and instead moved for leave
to file an amended complaint. (Doc. No. 15). Three days later, the trial court
granted Semco’s motion for leave to file an amended complaint and noted that the
defendants could renew their motion for judgment on the pleadings after Semco
filed its amended complaint. (Doc. No. 16).
{¶5} Semco filed its amended complaint on October 2, 2009. (Doc. No.
17). In it, Semco included additional factual allegations and the same four counts
as it did in its original complaint. (Id.). On October 30, 2009, Sims Bros. and the
other two defendants filed a joint motion to dismiss the CSPA and unjust-
enrichment counts. (Doc. No. 20). Also on that day, Sims Bros. filed its answer
to Semco’s amended complaint. (Doc. No. 21). Semco opposed the defendants’
joint motion to dismiss on November 20, 2009, and the defendants filed a reply in
support on December 10, 2009. (Doc. Nos. 24, 26). On January 26, 2010, the trial
court granted the defendants’ motion to dismiss the CSPA and unjust-enrichment
counts. (Doc. No. 28).
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{¶6} On February 16, 2010, Sims Bros. moved pursuant to R.C.
1345.09(F)(1) for attorney fees that it incurred in defending against Semco’s
CSPA claim. (Doc. No. 32). Semco opposed the motion, and Sims Bros. filed a
reply in support. (Doc. Nos. 37, 41). The trial court did not rule on Sims Bros.’s
motion.
{¶7} On August 19, 2011, Sims Bros. moved for summary judgment on the
remaining counts in Semco’s amended complaint—civil theft and conversion.
(Doc. No. 80). Semco filed its opposition to Sims Bros.’s motion on September 6,
2011.1 (Doc. No. 83).
{¶8} On September 14, 2011—nine days after the date by which Semco
was to file its response to Sims Bros.’s motion—Semco filed a motion for leave to
file an affidavit in support of its memorandum in opposition to Sims Bros.’s
motion for summary judgment. (Doc. No. 103). The affidavit was of Dennis
Potts, a private investigator who interviewed three Sims Bros. employees—Otis
Britton, Hibbard Smith, and Chad Rayburn—who were present when, on multiple
occasions, the metal materials were brought to Sims Bros. for sale. (Potts Aff.,
Doc. No. 103, attached). Potts attached to his affidavit investigation reports that
1
The trial court ordered that Semco file its response to the Sims Bros.’s motion for summary judgment “on
or before September 5, 2011.” (Doc. No. 76). Attached to Semco’s memorandum in opposition to Sims
Bros.’s motion for summary judgment was a certificate of service certifying that Semco’s counsel served
opposing counsel with the memorandum in opposition on September 2, 2011. (Doc. No. 83). While it is
the responsibility of the filer, not the clerk of courts, to ensure that a document is timely filed, we do not
address in this appeal the timeliness or untimeliness of Semco’s memorandum in opposition because that
issue is not before this Court.
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he prepared after interviewing Britton, Smith, and Rayburn. (Id.). In the
investigation reports, Potts documented statements by Britton and Smith that they
believed the materials may have been stolen, and statements by Rayburn that the
materials included finished copper products known as plunger tips. (Id.).
{¶9} On September 16, 2011, Sims Bros. filed its reply in support of its
motion for summary judgment. (Doc. No. 106). A week later, Sims Bros. filed a
memorandum in opposition to Semco’s motion for leave to file Potts’ affidavit.
(Doc. No. 107). On September 29, 2011, Sims Bros. filed a “supplemental
submission” in opposition to Semco’s motion for leave after deposing Semco’s
damages expert witness that day. (Doc. No. 109). Also that day, Semco filed its
reply in support of its motion for leave. (Doc. No. 111). The next day, Sims Bros.
filed supplemental authority in support of its motion for summary judgment.
(Doc. No. 113). On October 5, 2011, Semco filed memoranda in opposition to
Sims Bros.’s “supplemental submission” and supplemental authority. (Doc. Nos.
115, 116).
{¶10} On October 12, 2011, the trial court issued its judgment entry
granting Sims Bros.’s motion for summary judgment. (Doc. No. 120). The trial
court concluded that Semco’s admitted failure to demand return of the stolen
materials sold to Sims Bros. by Semco employees was fatal to its conversion
claim. (Id.). As for Semco’s civil-theft claim, the trial court “considered the
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[Potts] affidavit and its contents despite the fact that the affidavit was, to say the
least, untimely filed” and concluded that it contained “nothing more than hearsay-
opinion statements from the three Sims Bros.’s employees which directly
contradict their sworn testimony contained in their depositions.” (Id.). Given its
contents, the trial court said Semco could not use Potts’ affidavit to create an issue
of fact. (Id.). The trial court therefore issued summary judgment in Sims Bros.’s
favor. (Id.).
{¶11} On November 3, 2011, Semco filed a notice of appeal. (Doc. No.
123). We dismissed that appeal on January 6, 2012 for want of jurisdiction
because the trial court’s summary judgment entry did not resolve Sims Bros.’s
motion for attorney fees that it filed on February 16, 2010. (June 4, 2012 Tr. at 4).
Following our dismissal of that appeal, the trial court held a hearing on Sims
Bros.’s motion on June 4, 2012. (Id.); (Doc. No. 128). On November 2, 2012, the
trial court granted Sims Bros.’s motion and awarded it $26,130 in attorney fees
under R.C. 1345.09(F). (Doc. No. 129).
{¶12} Semco filed a notice of appeal on November 29, 2012, appealing the
trial court’s October 12, 2011 summary judgment entry and its November 2, 2012
entry granting Sims Bros.’s motion for attorney fees. (Doc. No. 133). Semco
raises three assignments of error for our review.
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Assignment of Error No. I
The trial court erred in granting defendant-appellee Sims Bros.,
Inc’s [sic] motion for summary judgment when there were
numerous genuine issues of material fact as to whether Sims
Bros., Inc. knew or had reason to know the Semco materials that
it purchased were stolen.
{¶13} In its first assignment of error, Semco argues that the trial court erred
when it granted summary judgment in favor of Sims Bros. on Semco’s civil-theft
claim. The trial court concluded that the “central element” of Semco’s civil-theft
claim—“that Sims [Bros.] knew, or reasonably could have known, that the
materials at issue were stolen”—was not present. The trial court considered the
affidavit of private investigator Dennis Potts, “despite the fact that the affidavit
was, to say the least, untimely filed,” but concluded that it was “replete with
hearsay statements” and, therefore, “useless in defending a motion for summary
judgment.” (Doc. No. 120). Specifically, the trial court concluded that Sims
Bros.’s employees’ statements contained in Potts’ investigation reports attached to
his affidavit were not admissions of a party-opponent under Evid.R. 801(D),
because they were opinion statements and admissions of liability against their
employer and, therefore, outside the scope of their employment. The trial court
also noted that the statements contradicted the employees’ sworn deposition
testimony. Semco argues that the employees’ statements in Potts’ investigation
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reports were factual assertions, not opinions, made within the scope of
employment.
{¶14} We review a decision to grant summary judgment de novo. Doe v.
Shaffer, 90 Ohio St.3d 388, 390 (2000). Summary judgment is proper where there
is no genuine issue of material fact, the moving party is entitled to judgment as a
matter of law, and reasonable minds can reach but one conclusion when viewing
the evidence in favor of the non-moving party, and the conclusion is adverse to the
non-moving party. Civ.R. 56(C); State ex rel. Cassels v. Dayton City School Dist.
Bd. of Edn., 69 Ohio St.3d 217, 219 (1994).
{¶15} Through a trail of statutes, Ohio law provides for a civil action based
on the crime of receiving stolen property. “Under R.C. 2307.60(A)(1), any person
who has been injured by a criminal act may bring a civil action to recover
damages.” Commonwealth Land Title Ins. Co. v. Choice Title Agency, Inc., 9th
Dist. Lorain Nos. 11CA009981 and 11CA009983, 2012-Ohio-2824, ¶ 21. R.C.
2307.61 allows a property owner who brings a civil action under R.C. 2307.60(A)
“to recover damages from any person who willfully damages the owner’s property
or who commits a theft offense, as defined in section 2913.01 of the Revised
Code, involving the owner’s property * * *.” R.C. 2307.61(A). R.C. 2913.01
defines theft offenses to include violations of R.C. 2913.51, the receiving-stolen-
property statute. R.C. 2913.51(A) provides, “[n]o person shall receive, retain, or
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dispose of property of another knowing or having reasonable cause to believe that
the property has been obtained through commission of a theft offense.”
{¶16} In a criminal receiving-stolen-property case, this Court listed the
factors a court may consider in determining whether reasonable minds could
conclude that the defendant knew or should have known the property was stolen:
(a) the defendant’s unexplained possession of the merchandise, (b)
the nature of the merchandise, (c) the frequency with which such
merchandise is stolen, (d) the nature of the defendant’s commercial
activities, and (e) the relatively limited time between the thefts and
the recovery of the merchandise.
State v. Adams, 3d Dist. Defiance No. 4-09-16, 2009-Ohio-6863, ¶ 9, quoting
State v. Davis, 49 Ohio App.3d 109, 112 (8th Dist.1988). We also quoted Ohio
Jury Instructions’ directives to jurors for determining whether a defendant had
reasonable cause to believe property was stolen:
[i]n determining whether the defendant had reasonable cause to
believe that the property was obtained through a theft offense you
must put yourself in the position of this defendant with his/her
knowledge, or lack of knowledge, and under the circumstances and
conditions that surrounded him/her at that time. You must consider
the conduct of the persons involved and determine if their acts and
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words and all the surrounding circumstances would have caused a
person of ordinary prudence and care to believe that the property had
been obtained through the commission of a theft offense.
Id., quoting 2 Ohio Jury Instructions, CR Section 513.51 (2009).
{¶17} The key inquiry presented by Semco’s first assignment of error is
whether there is a genuine issue of material fact as to whether Sims Bros. knew or
had reasonable cause to believe that the materials the thieves sold to Sims Bros.
were stolen. After reviewing the record and viewing the evidence in a light most
favorable to Semco, we conclude that summary judgment in favor of Sims Bros.
on Semco’s civil-theft claim was appropriate because there was no genuine issue
of material fact concerning that question.
{¶18} At its drive-through recycling center in Marion, Sims Bros. receives
a variety of scrap metals from a variety of sources. (Sims Depo. at 27-28).
Although not as frequently as other types of scrap metal, Sims Bros. occasionally
receives scrap metal, such as copper castings, originating from foundries—for
example, if someone is cleaning out a foundry. (Id. at 28); (Britton Depo. at 49-
53); (Smith Depo. at 38-40). One of the thieves—Jeff Dolick—volunteered that
they were in town cleaning out a foundry and would be bringing in the scrap
metal. (Rayburn Depo. at 66, 70). Dolick’s vehicle had Indiana license plates,
and his story “made sense.” (Rayburn Depo. at 66, 70). (See also Britton Depo. at
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50); (Smith Depo. at 47). The thieves stole and sold the materials between
February and July 2008, before getting caught on July 8, 2008. (Tennar Depo. at
6, 127); (Dolick Depo. at 8-9).
{¶19} Britton and Smith testified that they did not suspect the materials
were stolen. (Britton Depo. at 49); (Smith Depo. at 47). Rayburn testified that
although he initially suspected the materials may have been stolen, after consulting
with Britton and Smith, he no longer believed they were. (Rayburn Depo. at 70).
Smith testified in his deposition that the materials looked like scrap. (Smith Depo.
at 38). (See also Rayburn Depo. at 37-45). Semco’s finished plunger tips bear
stamped “Semco” imprints that cannot be removed without grinding them.
(Tennar Depo. at 91, 151). However, the materials that Britton, Smith, and
Rayburn saw did not bear any identifying marks, such as the “Semco” imprint.
(Britton Depo. at 63); (Smith Depo. at 59); (Rayburn Depo. at 95). Nor were the
materials the type that Sims Bros. automatically rejects—such as kegs, grave
markers, and railroad material—or the type of which Sims Bros. is suspicious—
such as new material. (Sims Depo. at 31); (Fischer Depo. at 62); (Smith Depo. at
53); (Britton Depo. at 49); (Rayburn Depo. at 37-45). Dolick did not steal finished
materials or materials bearing identification marks, such as a “Semco” stamp.
(Dolick Depo. at 10). Sims Bros. received no alerts from Semco or law
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enforcement authorities to be on the lookout for stolen Semco materials. (Furman
Depo. at 29-30).
{¶20} Applying the factors this Court listed in Adams, (a) one of the thieves
explained their possession of the materials, and his story “made sense” to the Sims
Bros. employees; (b) to at least one Sims Bros. employee, the materials appeared
to be scrap metal, and the materials did not appear to be finished product bearing
the “Semco” imprint; (c) Sims Bros. occasionally receives foundry-type materials
at its recycling center; (d) Sims Bros. operates a drive-through recycling center, at
which they receive a variety of scrap metals from a variety of sources; and, (e) the
thieves stole and sold materials to Sims Bros. for approximately five months
before getting caught. See Adams, 2009-Ohio-6863, at ¶ 9. Weighing the facts
above and these factors, there was no genuine issue of material fact that Sims
Bros. did not know and had no reasonable cause to believe that the materials were
stolen. Semco has not directed us to any Civ.R. 56 evidence that creates a genuine
issue of material fact.
{¶21} Semco argues that Potts’ affidavit creates genuine issues of material
fact. The trial court considered Potts’ affidavit but concluded that it contained
inadmissible hearsay, which cannot be used to defeat summary judgment.2 Hall v.
2
Sims Bros. argues that Potts’ affidavit is not part of the record because the trial court never granted
Semco’s motion for leave to file it. We disagree. By considering Potts’ affidavit, the trial court implicitly
granted Semco leave to file it. Price v. Price, 3d Dist. Hancock No. 5-86-19, 1987 WL 1363642, *12 (Mar.
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Fairmont Homes, Inc., 105 Ohio App.3d 424, 436 (4th Dist.1995) (“Affidavits
based on hearsay evidence are not admissible for the purposes of summary
judgment.”), citing Pond v. Carey Corp., 34 Ohio App.3d 109 (10th Dist.1986);
Pennisten v. Noel, 4th Dist. Pike No. 01CA669, 2002 WL 254021, *2 (Feb. 8,
2002). Potts’ affidavit and the investigation reports attached to it contain multiple
alleged statements by Sims Bros. employees, which we address in turn.
{¶22} In his affidavit, Potts averred that Britton, Smith, and Rayburn made
certain statements to him. Several of these statements concerned the frequency
with which the thieves visited Sims Bros. and the quantities the thieves sold to
Sims Bros. (Potts Aff. at ¶ 7, 8, 10, 11, Doc. No. 103, attached). Potts also
averred that Rayburn told him that Sims Bros. owner Scott Fischer initially graded
some of the materials that the thieves produced for sale. (Id. at ¶ 10). The
investigation reports attached to Potts’ affidavit contain similar statements
allegedly made by Britton, Smith, and Rayburn concerning the frequency of visits,
quantities of materials, and Fischer’s grading involvement. (Id. at Investigation
Reports).
{¶23} Even assuming these statements in Potts’ affidavit and investigation
reports were admissible—such that the trial court could have considered them in
deciding whether to grant Sims Bros.’s motion for summary judgment—they are
13, 1987) (“[T]here is a presumption that a final judgment resolves all pending motions where the relief
sought in those motions is implicitly granted or denied by the final judgment.”).
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not inconsistent with the facts above warranting summary judgment, and they do
not create a genuine issue of material fact concerning whether Sims Bros. knew or
had reasonable cause to believe the materials were stolen. Individuals cleaning
out a shop, warehouse, or foundry occasionally make multiple trips to the Sims
Bros. drive-through, bringing in high volumes of materials for sale. (Smith Depo.
at 39-40); (Britton Depo. at 48-53). As for Fischer, he simply graded the materials
as “copper no. 2”—something less than 100 percent pure copper—during one of
the thieves’ visits to the drive-through, and there is no indication he knew or had
reasonable cause to believe the materials were stolen. (Rayburn Depo. at 60-61).
{¶24} Potts also averred and stated in the investigation reports that when he
showed Rayburn sample Semco materials, Rayburn twice told him that Sims Bros.
purchased “new plunger tips” or “new tips” from the thieves. (Id. at ¶ 10, 11,
Investigation Reports). Again, even assuming these statements by Rayburn were
admissible, they do not create a genuine issue of material fact. No photographs or
descriptions of the “new plunger tips” or “new tips” are attached to or contained in
Potts’ affidavit and investigation reports.3 However, in his deposition, Rayburn—
using photographs marked as Plaintiff’s Exhibit 2—identified the materials that
Sims Bros. purchased from the thieves. (Rayburn Depo. at 37-45). Among them
were plunger tips with coarse exteriors and no threading or holes in them. (Id. at
3
Semco attached to its memorandum in opposition to Sims Bros.’s motion for summary judgment several
unsworn and unauthenticated materials, including the investigation reports and accompanying compact
disc. However, Potts did not attach the compact disc to his affidavit, and we do not consider its contents.
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42, 45). Semco did not come forth with admissible evidence, such as
authenticated photographs, identifying or describing the “new plunger tips” and
“new tips” that Potts showed Rayburn. In other words, Semco failed to
demonstrate that “new plunger tips” and “new tips” were different than the
plunger tips that Rayburn identified in his deposition. Therefore, even assuming
they were admissible, Rayburn’s statements, as restated by Potts, do not create a
genuine issue of material fact.
{¶25} Finally, Potts averred and stated in the investigation reports that
Britton and Smith told him that they thought the materials were stolen or may have
been stolen. (Id. at ¶ 9, 12, Investigation Reports). Even assuming the
investigation reports were admissible, we agree with the trial court that these
statements by Britton and Smith, as restated by Potts, are inadmissible hearsay that
cannot be used to defeat summary judgment.
{¶26} Under Evid.R. 801(D)(2)(d), “[a] statement is not hearsay if * * *
[t]he statement is offered against a party and is * * * a statement by the party’s
agent or servant concerning a matter within the scope of the agency or
employment, made during the existence of the relationship * * *.” See Shumway
v. Seaway Foodtown, Inc., 3d Dist. Crawford No. 3-97-17, 1998 WL 125555, *2
(Feb. 24, 1998), citing Evid.R. 801(D)(2)(d). Admissions of liability against an
employer, including statements of opinion regarding liability, are not within an
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employee’s scope of employment and are therefore inadmissible under Evid.R.
801(D)(2)(d). Johnson v. United Dairy Farmers, Inc., 1st Dist. Hamilton No. C-
940240, 1995 WL 96853, *3 (Mar. 8, 1995), citing Stormont v. New York Cent. R.
Co., 1 Ohio App.2d 414, 419 (10th Dist.1964) and Kroger Grocery & Baking Co.
v. McCune, 46 Ohio App. 291, 294 (2d Dist.1933). However, factual assertions
made by an employee within his or her knowledge and scope of employment are
admissible. Cordle v. Bravo Dev., Inc., 10th Dist. Franklin No. 06AP-256, 2006-
Ohio-5693, ¶ 16.
{¶27} The party claiming admissibility under Evid.R. 801(D)(2)(d) bears
the burden of showing that the statement concerned a matter within the scope of
the declarant’s employment. Pennisten, 2002 WL 254021, at *2 (citations
omitted); Brock v. Gen. Elec. Co., 125 Ohio App.3d 403, 409-410 (1st Dist.1998).
“Absent evidence that the statement concerned a matter within the scope of the
declarant’s duties, the statement is not admissible.” Pennisten at *2, citing
Shumway.
{¶28} Here, Britton’s and Smith’s statements were ones of opinion
regarding liability. (Potts Aff. at ¶ 9 (“Mr. Smith stated that he thought the copper
materials that were being brought in for sale were stolen but he was not sure where
they were coming from.” (emphasis added)); (Id. at ¶ 12 (“Mr. Britton advised that
he thought the Semco materials that were brought in for sale to Sims may have
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been stolen from a foundry but did not know of any around here.” (emphasis
added)); (Id. at Investigation Reports (“[Smith] stated he thought these items were
stolen but not sure where they came from.” (emphasis added); “Mr. Britton
advised that he thought they may be stolen from a foundry but did not know of any
around here.” (emphasis added)). Accordingly, Evid.R. 801(D)(2)(d)’s hearsay
exemption does not apply to these statements. They are inadmissible hearsay and
do not create a genuine issue of material fact precluding summary judgment. See
Johnson at *3 (classifying as inadmissible “statements of opinions regarding
liability” an employee’s statements that a newspaper rack was in “a bad location”
and that “she was afraid somebody else would” sustain an injury); Pennisten at *1-
2 (holding that the trial court did not err by striking paragraphs in an affidavit
containing hearsay statements of an employee concerning the dangerous
placement of a machine).
{¶29} For these reasons, the trial court did not err in granting summary
judgment in favor of Sims Bros. on Semco’s civil-theft claim. Semco’s first
assignment of error is therefore overruled.
Assignment of Error No. II
The trial court erred in granting defendant-appellee Sims Bros.,
Inc’s [sic] motion for summary judgment on Semco’s conversion
claim.
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{¶30} In its second assignment of error, Semco argues that the trial court
erred when it granted summary judgment in favor of Sims Bros. on Semco’s
conversion claim. The trial court concluded that summary judgment was
warranted because Semco admitted it did not demand from Sims Bros. the return
of the stolen materials, and it therefore could not prove an essential element of
conversion. Semco argues that the trial court erred because the notice requirement
of R.C. 2307.61 was not a prerequisite to Semco’s filing suit, and because
demanding the return of the materials would have been superfluous and was not
required. As with the first, we review de novo this second assignment of error.
{¶31} “It is axiomatic that a party may not assert an issue for the first time
on appeal.” Neville v. Neville, 3d Dist. Marion No. 9-08-37, 2009-Ohio-3817, ¶
14, citing Gibson v. Gibson, 3d Dist. Marion No. 9-07-06, 2007-Ohio-6965, ¶ 34.
In its memorandum in opposition to Sims Bros.’s motion for summary judgment,
Semco failed to assert its argument that R.C. 2307.61’s notice requirement was not
a prerequisite to Semco’s filing its conversion claim. Because Semco asserts that
argument for the first time on appeal, we need not consider it. Id. Even if we
were to consider it, Semco’s R.C. 2307.61 argument lacks merit because its
conversion claim was a common-law claim, not a statutory one, so R.C. 2307.61 is
not applicable. (See Doc. No. 17).
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{¶32} Semco did argue below that demanding return of the materials would
have been superfluous, so we address that argument. “Conversion is the wrongful
exercise of dominion over property to the exclusion of the rights of the owner, or
withholding it from his possession under a claim inconsistent with his rights.”
Warnecke v. Chaney, 194 Ohio App.3d 459, 2011-Ohio-3007, ¶ 15 (3d Dist.),
quoting State ex rel. Toma v. Corrigan, 92 Ohio St.3d 589, 592 (2001) (internal
quotation marks omitted). “The elements of conversion are: (1) plaintiff’s
ownership or right to possession of the property at the time of the conversion; (2)
defendant’s conversion by a wrongful act or disposition of plaintiff’s property
rights; and (3) damages.” Id., quoting Miller v. Cass, 3d Dist. Crawford No. 3-09-
15, 2010-Ohio-1930, ¶ 32 (internal quotation marks omitted).
{¶33} “If the defendant came into possession of the property lawfully, the
plaintiff must prove two additional elements to establish conversion: (1) that the
plaintiff demanded the return of the property after the defendant exercised
dominion or control over the property; and (2) that the defendant refused to deliver
the property to the plaintiff.” Peirce v. Szymanski, 6th Dist. Lucas No. L-11-1298,
2013-Ohio-205, ¶ 19, citing R & S Distrib., Inc. v. Hartge Smith Nonwovens,
L.L.C., 1st Dist. Hamilton No. C-090100, 2010-Ohio-3992, ¶ 23. See also Marion
Plaza, Inc. v. The Fahey Banking Co., 3d Dist. Marion No. 9-2000-59, 2001 WL
218434, *4 (Mar. 6, 2001) (“A demand and refusal in a conversion action are
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usually required to prove the conversion of property otherwise lawfully held.”
(citation omitted)). “The object of the demand and refusal elements are to ‘turn an
otherwise lawful possession into an unlawful one, by reason of a refusal to comply
* * *.’” RFC Capital Corp. v. EarthLink, Inc., 10th Dist. Franklin No. 03AP-735,
2004-Ohio-7046, ¶ 61, quoting Fidelity & Deposit Co. v. Farmers & Citizens
Bank, 72 Ohio App. 432, 434 (5th Dist.1943).
{¶34} We concluded above that there is no genuine issue of material fact
that Sims Bros. neither knew nor had reasonable cause to believe that the materials
the thieves sold to Sims Bros. were stolen. Because Sims Bros. did not know or
have reasonable cause to believe that the materials were stolen, Sims Bros. came
into possession of the materials lawfully, and Semco was required to establish the
demand and refusal elements of conversion. See Peirce, 2013-Ohio-205, at ¶ 20
(holding that summary judgment was appropriate on appellant-jewelry owner’s
conversion claim because appellee-jewelry store did not know or have reason to
believe the jewelry it purchased was stolen, and because appellant failed to
produce evidence of demand and refusal). See also State v. Jeantine, 10th Dist.
Franklin No. 09AP-296, 2009-Ohio-6775, ¶ 23 (“The gist of a theft offense is not
the particular ownership of the property, but instead the ‘wrongful taking.’”),
citing State v. Shoemaker, 96 Ohio St. 570, 572 (1917).
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{¶35} Semco does not argue that it demanded from Sims Bros. that it return
the materials and that Sims Bros. refused. Indeed, no evidence in the record
suggests that Semco made a demand and Sims Bros. refused. Because Semco did
not introduce evidence establishing demand and refusal, the trial court properly
granted Sims Bros. summary judgment on Semco’s conversion claim. See Peirce,
2013-Ohio-205, at ¶ 20.
{¶36} Semco instead argues, without citing authority, that the demand and
refusal elements did not apply because demand would have been “superfluous”
and “futile” given the nature of the scrap metal business, where metal materials are
processed, combined with other inventory, and sold. However, Semco’s argument
overlooks the legal significance of the demand and refusal elements. Because
Sims Bros. did not know or have reasonable cause to believe that the materials
were stolen, its possession of the materials—in whatever form—was not unlawful
as long as Semco did not demand their return. Therefore, without a demand and
refusal, there could be no conversion in this case.
{¶37} For these reasons, the trial court did not err in granting summary
judgment in favor of Sims Bros. on Semco’s conversion claim. Semco’s second
assignment of error is therefore overruled.
Assignment of Error No. III
The trial court erred in awarding defendant-appellee, Sims Bros.
Inc. [sic], its attorney fees under R.C. 1345.09(F).
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{¶38} In its third assignment of error, Semco argues that the trial court
erred when it awarded Sims Bros. $26,130 in attorney fees under R.C. 1345.09(F).
Semco argues that its CSPA claim was not groundless, and it did not maintain the
claim in bad faith—the prerequisites for a fee award under R.C. 1345.09(F)(1).
Semco also argues that even if a fee award was appropriate under the statute, the
amount of fees that the trial court awarded was excessive.
{¶39} The CSPA provides for the award of reasonable attorney fees to the
prevailing party in an action brought under the CSPA if either of two
circumstances apply:
The court may award to the prevailing party a reasonable attorney’s
fee limited to the work reasonably performed and limited pursuant to
section 1345.092 of the Revised Code, if either of the following
apply:
(1) The consumer complaining of the act or practice that violated
this chapter has brought or maintained an action that is groundless,
and the consumer filed or maintained the action in bad faith;
(2) The supplier has knowingly committed an act or practice that
violates this chapter.
R.C. 1345.09(F).
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{¶40} “A trial court possesses discretion when determining whether to
award R.C. 1345.09(F) attorney fees.” Davis v. Byers Volvo, 4th Dist. Pike No.
11CA817, 2012-Ohio-882, ¶ 67, citing Charvat v. Ryan, 116 Ohio St.3d 394,
2007-Ohio-6833, ¶ 27 (additional citation omitted). See also Schneble v. Stark,
12th Dist. Warren Nos. CA2011-06-063 and CA2011-06-064, 2012-Ohio-3130, ¶
86, citing Einhorn v. Ford Motor Co., 48 Ohio St.3d 27, 29 (1990). “Absent an
abuse of that discretion, the trial court’s determination of attorney fees will not be
disturbed on appeal.” Schneble at ¶ 86, citing Moore v. Vandemark Co., Inc., 12th
Dist. Clermont No. CA2003-07-063, 2004-Ohio-4313, ¶ 26 and Bittner v. Tri–
County Toyota, Inc., 58 Ohio St.3d 143, 146 (1991). “An abuse of discretion
implies that a trial court’s attitude is unreasonable, arbitrary, or unconscionable.”
Davis at ¶ 67, citing Blakemore v. Blakemore, 5 Ohio St.3d 217, 219 (1983).
{¶41} The trial court awarded Sims Bros. its attorney fees under R.C.
1345.09(F)(1). It concluded that Semco’s CSPA claim was “groundless and did
not come close to being able to survive a Rule 12(B)(6) motion,” and that Semco’s
“continuation of the action by way of its amended complaint, after [Sims Bros.]
had filed its 12(B)(6) motion, indicates bad faith.” (Doc. No. 129). We agree with
the trial court.
{¶42} We first address the “groundless” requirement of R.C. 1345.09(F)(1).
The CSPA does not define “groundless,” so we apply its ordinary and common
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understanding. See Culbreath v. Golding Ents., L.L.C., 114 Ohio St.3d 357, 2007-
Ohio-4278, ¶ 22, citing R.C. 1.42. Black’s Law Dictionary defines “groundless”
as “lacking a basis or a rationale.” Black’s Law Dictionary 772 (9th Ed.2009).
Thus, a claim is “groundless” if it lacks a legal or factual basis. See id.; Palmer v.
Daniel Troth & Son Builders, Inc., 10th Dist. Franklin No. 97APE08-1050, 1998
WL 255566, *5 (May 19, 1998). Here, we agree with the trial court that Semco’s
CSPA claim lacked a legal basis.
{¶43} “A violation of the CSPA is premised upon the existence of a
‘supplier’, a ‘consumer’, and a ‘consumer transaction,’ all of which are defined
under the act.” DeRosa v. Elliott Leveling, Inc., 6th Dist. Lucas No. L-07-1148,
2008-Ohio-3502, ¶ 33, citing R.C. 1345.02 and 1345.03. The CSPA defines
“consumer transaction” as “a sale, lease, assignment, award by chance, or other
transfer of an item of goods, a service, a franchise, or an intangible, to an
individual for purposes that are primarily personal, family, or household, or
solicitation to supply any of these things.” (Emphasis added.) R.C. 1345.01(A).
The Supreme Court of Ohio has held “that, as used in R.C. 1345.01(A),
‘individual’ means ‘natural person.’” Culbreath at ¶ 26. A business entity, such
as a corporation, is not a “natural person.” Id. at ¶ 23-26.
{¶44} Here, Semco based its CSPA claim on a theory that because it was
the owner of the materials that the thieves sold to Sims Bros., Semco “[stood] in
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the shoes” of the thieves, who Semco said were “consumers” under the CSPA who
engaged in “consumer transactions” with “supplier” Sims Bros. (Amended
Complaint at ¶ 27, 33, 34, 42, Doc. No. 17). However, Semco’s erroneous stand-
in-the-shoes argument notwithstanding, a plaintiff must be a natural person, not a
business entity, to maintain an action under the CSPA. See Culbreath at ¶ 26
(“We have declined to recognize Culbreath’s right to maintain an action under the
OCSPA based upon the fact that the law firm is not an ‘individual’ for purposes of
the act.”); Anderson Law Office, LLC v. Esquire Deposition Services, LLC,
N.D.Ohio No. 1:09 CV 1909 (Mar. 31, 2011) (“Based on the Culbreath decision,
the court determines that Plaintiff Anderson Law Office does not possess standing
under the OCSPA.”). Because Semco is a corporation—not a natural person—we
agree with the trial court that Semco’s CSPA claim was groundless for at least that
reason.
{¶45} We next address the “bad faith” requirement of R.C. 1345.09(F)(1).
The CSPA does not define “bad faith,” so we apply its ordinary and common
understanding. See Culbreath at ¶ 22, citing R.C. 1.42. Black’s Law Dictionary
defines “bad faith” as “[d]ishonesty of belief or purpose.” State ex rel. Bardwell v.
Cuyahoga Cty. Bd. of Commrs., 127 Ohio St.3d 202, 2010-Ohio-5073, ¶ 8,
quoting Black’s Law Dictionary 159 (9th Ed.2009) (internal quotation marks
omitted). The Supreme Court of Ohio has described “bad faith” as follows:
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A lack of good faith is the equivalent of bad faith, and bad faith,
although not susceptible of concrete definition, embraces more than
bad judgment or negligence. It imports a dishonest purpose, moral
obliquity, conscious wrongdoing, breach of a known duty through
some ulterior motive or ill will partaking of the nature of fraud. It
also embraces actual intent to mislead or deceive another.
Slater v. Motorists Mut. Ins. Co., 174 Ohio St. 148 (1962), paragraph two of the
syllabus, overruled on other grounds in Zoppo v. Homestead Ins. Co., 71 Ohio
St.3d 552 (1994). See also Palmer, 1998 WL 255566, at *6, quoting Slater.
{¶46} Here, Semco’s original complaint included a CSPA claim. (Doc. No.
1). Sims Bros. and the other defendants moved for judgment on the pleadings
under Civ.R. 12(C), requesting, in part, that the trial court dismiss Semco’s CSPA
claim because, among other reasons, Semco was not an “individual” who
possessed standing to bring a CSPA claim. (Doc. No. 13). Sims Bros. and the
other defendants cited Culbreath several times in their motion. (Id.). Instead of
responding to the motion, Semco sought and was granted leave to file an amended
complaint. (Doc. No. 16). Semco filed its amended complaint, which contained
additional factual allegations and added paragraphs to Semco’s CSPA count.
(Doc. No. 17). Sims Bros. and the other defendants moved to dismiss the CSPA
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claim, again citing Culbreath and other authorities. (Doc. No. 20). The trial court
granted the motion to dismiss. (Doc. No. 28).
{¶47} The trial court concluded that Semco acted in bad faith when it
included the CSPA claim in its amended complaint after the defendants filed their
motion for judgment on the pleadings, bringing Culbreath and other authorities to
Semco’s attention.4 We also note that Semco apparently knew it was not a party
to a “consumer transaction” but included a CSPA claim in its amended complaint
anyway, alleging that it “[stood] in the shoes” of the thieves.
{¶48} We find unpersuasive Semco’s argument that its CSPA claim was
not groundless because the trial court denied the defendants’ joint motion for
judgment on the pleadings. The trial court did not rule on the merits of the motion
for judgment on the pleadings, but rather denied it and Semco’s motion to hold it
in abeyance pending a ruling on Semco’s motion for leave to file its amended
complaint. (Doc. No. 16). Indeed, the trial court informed the defendants that
they could “renew their motion for judgment on pleadings after being served the
amended complaint.” (Id.).
{¶49} Based on these facts, the trial court could have determined that
Semco acted with a dishonest purpose. It was not abuse of its discretion for the
trial court to conclude that Semco filed its CSPA claim in bad faith. Accordingly,
4
In reaching this conclusion, the trial court mistakenly referred to the defendants’ motion for judgment on
the pleadings, filed before Semco’s amended complaint, as a “12(B)(6) motion.” This apparent oversight
does not impact our analysis.
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the trial court did not abuse its discretion when it decided an attorney-fee award to
Sims Bros. was appropriate.
{¶50} Nor did the trial court abuse its discretion in setting the amount of the
attorney fee award. R.C. 1345.09(F) provides that a trial court “may award to the
prevailing party a reasonable attorney’s fee limited to the work reasonably
performed.” As with the decision of whether to award attorney fees, “the amount
any such award pursuant to R.C. 1345.09(F) [is] left to the trial court’s discretion.”
Mansour v. Vulcan Waterproofing, Inc., 12th Dist. Butler No. CA99-09-150, 2000
WL 783069, *4 (June 19, 2000). See also White v. Lima Auto Mall, Inc., 3d Dist.
Allen No. 1-08-63, 2009-Ohio-411, ¶ 15. “Unless the amount of fees determined
is so high or so low as to shock the conscience, an appellate court will not
interfere.” White at ¶ 15, citing Brooks v. Hurst Buick-Pontiac-Olds-GMC, Inc.,
23 Ohio App.3d 85, 91 (12th Dist.1985). A trial court judge has “an infinitely
better opportunity to determine the value of services rendered by lawyers who
have tried a case before him than does an appellate court.” White at ¶ 16, citing
Brooks, 23 Ohio App.3d at 91. See also Mike Castrucci Ford Sales, Inc. v.
Hoover, 12th Dist. Clermont No. CA2009-03-016, 2009-Ohio-4823, ¶ 11.
{¶51} “With regard to the reasonableness of the fee award, the Ohio
Supreme Court has set forth a two-part process a trial court is to follow when
determining the amount of fees to award the prevailing party.” Mike Castrucci
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Ford Sales, Inc. at ¶ 14, citing Bittner v. Tri-County Toyota, Inc., 58 Ohio St.3d
143, 145 (1991). “Pursuant to Bittner, the trial court should first calculate the
number of hours reasonably expended on the case multiplied by a reasonable
hourly rate.” Id., citing Bittner at 145. The trial court “may then modify its initial
calculation after applying the factors listed in DR 2-106(B).”5 Id. at ¶ 15, citing
Bittner at 145. Those factors include:
the time and labor involved in maintaining the litigation; the novelty
and difficulty of the questions involved; the professional skill
required to perform the necessary legal services; the attorney’s
inability to accept other cases; the fee customarily charged; the
amount involved and the results obtained; any necessary time
limitations; the nature and length of the attorney/client relationship;
the experience, reputation, and ability of the attorney; and whether
the fee is fixed or contingent.
Id., quoting Bittner at 145-146. “The trial court has the discretion to determine
which factors to apply, and the manner in which the application of the factors will
affect the [trial] court’s initial calculation.” Id., citing Bittner at 146.
{¶52} As the trial court noted, at the hearing on Sims Bros.’s motion for
attorney fees, counsel for Sims Bros. testified that his firm expended 75.2 hours of
5
DR 2-106 of the Disciplinary Rules of the Code of Professional Responsibility has been replaced by Rule
1.5 of the Rules of Professional Conduct. “The factors contained in both the code and the professional
rules are virtually identical.” Mike Castrucci Ford Sales, Inc. at ¶ 15, fn. 2 (citation omitted).
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attorney and paralegal time in defense of Semco’s CSPA claim. (June 4, 2012 Tr.
at 22). (See also D’s Ex. 1). Given the attorney-fee award of $26,130, Sims
Bros.’s counsel’s average hourly rate equaled just over $340 per hour. The trial
court concluded that the number of hours expended on the CSPA claim and the
hourly rate, “[a]lthough on the high side,” were reasonable. (Doc. No. 129). The
trial court did not modify its initial calculation of $26,130, nor was it required to
do so. See Mike Castrucci Ford Sales, Inc. at ¶ 15.
{¶53} Sims Bros.’s attorney-fee witness testified that the number of hours
expended was “entirely reasonable,” and that the hourly rate, although “towards
the upper end” of the reasonable range, was reasonable. (June 4, 2012 Tr. at 55-
58). Included in Sims Bros.’s counsel’s work related to the CSPA claim were a
joint motion for judgment on the pleadings and a joint motion to dismiss two
counts of the amended complaint, including the CSPA claim. (Id. at 10-12, 55).
The defendants, including Sims Bros., prevailed on their joint motion to dismiss
the CSPA claim. (Doc. No. 28). Sims Bros.’s attorney-fee witness testified that
the average hourly rate of over $340 was “on the higher range of the
reasonableness scale” considering rates for “Columbus or central Ohio.” (June 4,
2012 Tr. at 57). He considered central Ohio rates, not just Marion rates, in part
because Semco was represented by two Columbus firms and one Marion firm.
(Id. at 30). The $26,130 award represented approximately one tenth of the total
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amount billed to Sims Bros. to defend it against Semco’s four-count case. (Id. at
58). In its amended complaint, Semco requested $711,000, plus treble damages.
(Doc. No. 17); (June 4, 2012 Tr. at 58).
{¶54} We reject Semco’s argument that any attorney-fee award should not
include fees incurred before September 25, 2009—the day the trial court granted
Semco leave to file an amended complaint and denied the defendants’ motion for
judgment on the pleadings and Semco’s motion to hold that motion in abeyance.
(Doc. No. 16). Again, the trial court did not rule on the merits of the motion for
judgment on the pleadings and instead invited the defendants to renew it after
Semco filed its amended complaint. (Id.). Sims Bros. is not responsible for
Semco’s seeking leave to file an amended complaint.
{¶55} We cannot conclude that the trial court’s decision to award Sims
Bros. $26,130 in attorney fees was unreasonable, arbitrary, or unconscionable.
The trial court did not abuse its discretion. Semco’s third assignment of error is
therefore overruled.
{¶56} Having found no error prejudicial to the appellant herein in the
particulars assigned and argued, we affirm the judgment of the trial court.
Judgment Affirmed
WILLAMOWSKI and SHAW, J.J., concur.
/jlr
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