[Cite as Jack F. Neff Sand & Gravel, Inc. v. Great Lakes Crushing, Ltd., 2014-Ohio-2875.]
IN THE COURT OF APPEALS
ELEVENTH APPELLATE DISTRICT
LAKE COUNTY, OHIO
JACK F. NEFF SAND & GRAVEL, INC., : OPINION
n.k.a. JOHN F. NEFF, INC., et al.,
:
Plaintiffs-Appellants/ CASE NO. 2012-L-145
Cross-Appellees, :
- vs - :
GREAT LAKES CRUSHING, LTD., et al., :
Defendant-Appellee/ :
Cross-Appellant.
Civil Appeal from the Lake County Court of Common Pleas, Case No. 11 CV 000003.
Judgment: Affirmed.
Robert P. DeMarco, DeMarco & Triscaro, Ltd., 30505 Bainbridge Road, Suite 110,
Solon, OH 44139 (For Plaintiffs-Appellants/Cross-Appellees).
Richard N. Selby, II and Keith R. Kraus, Dworken & Bernstein Co., L.P.A.60 South
Park Place, Painesville, OH 44077 (For Defendant-Appellee/Cross-Appellant).
TIMOTHY P. CANNON, P.J.
{¶1} Appellants/cross-appellees, Jack F. Neff Sand & Gravel Inc., n.k.a. John
F. Neff, Inc. (“JFN”), and JoAnn Neff as Executrix of the Estate of John F. Neff, appeal
from the Lake County Court of Common Pleas’ June 29, 2012 judgment awarding
$462,000 to appellee/cross-appellant, Great Lakes Crushing, Ltd. (“GLC”). The
judgment was based on jury findings that JFN breached a contract with GLC and that
JFN and John Neff (“Mr. Neff”) converted property belonging to GLC. JFN was a
concrete recycling business located in Wickliffe, Ohio. Mr. Neff was president of JFN
and named as one of the plaintiffs when suit was filed. GLC is also in the business of
concrete recycling. Defendant Mark Belich (“Mr. Belich”) is the managing member of
GLC.
{¶2} According to the complaint, JFN entered into a license agreement with
GLC, which allowed GLC to perform concrete recycling operations on property owned
by the Trustees of the Lucinda Neff Estate Distribution Trust Agreement (“the
Trustees”). Pursuant to the Trust Agreement, Mr. Neff was agent for the Trustees in
matters involving selling or renting the property. Following an initial term of three
months, which ran from October 1, 2005, until January 1, 2006, the parties continued to
do business on a month-to-month basis until May 2007. At that time, GLC and JFN
entered into a written licensing agreement which granted GLC use of the property for an
additional one year. The contract was signed on May 15, 2007. By its terms, the
contract was made retroactive to May 1, 2007, and was to end on April 30, 2008.
{¶3} In the spring of 2008, the parties again entered into negotiations regarding
terms of renewal. Although a new contract was not reached until July 2008, two months
after the previous contract expired, the parties continued regular business operations in
the interim. Once they agreed to terms, the written agreement was again made
retroactive to May 1, 2008.
{¶4} The July 2008 contract, which is the subject of this litigation, included the
following terms: (1) the contract term was one year, retroactive to May 1, 2008, ending
on April 30, 2009; (2) GLC had the option to renew the contract by written notice at least
60 days prior to the end of the term; (3) GLC had an exclusive right to conduct concrete
recycling operations on the premises and to store materials on the premises; (4) GLC
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had a duty to remove all materials, saleable or not, at the end of the term; (5) should
GLC fail to remove its materials at the end of the term, JFN had the right to remove
GLC’s materials and to charge GLC the costs of removal; (6) GLC was to pay a royalty
to JFN equal to $3.00 per ton on all materials “crushed and/or sold” on the premises; (7)
advance estimates to be applied to the annual royalty obligation were payable in ten
monthly installments of $10,000 each; (8) on April 30, 2009, the parties were to
determine the actual royalty obligation from the preceding year, and if the amount due
exceeded the $100,000 paid in monthly installments, GLC was to pay the excess in a
lump sum.
{¶5} Negotiations for another renewal began in March 2009. The parties had a
dispute regarding trucks that had exited the site without passing over the scale used to
calculate royalties. JFN argued royalty payments were due for the material on these
trucks. GLC argued trucks that bypassed the scales were either empty or carrying
materials belonging to GLC to be used by GLC in its own work; therefore, the trucks
were not carrying materials “crushed and/or sold on site.” JFN estimated GLC owed
$90,000 in royalties due and demanded payment. A March 18, 2009 letter from JFN’s
counsel to Mr. Belich indicated that continued business would require a new contract
and payment of the royalties JFN claimed were due.
{¶6} The process of computing the actual royalties due was referred to by the
parties as “reconciliation.” At the end of the term, Jean Glavic (“Ms. Glavic”) prepared a
“tally sheet” which computed the total royalties due for the year at $206,758.49. Ms.
Glavic is employed by Mr. Neff’s son, David, who runs a landscaping business from an
office he shared with his father. Ms. Glavic testified that she often undertook small
administrative tasks for Mr. Neff. The purpose of the tally sheet prepared by Ms. Glavic
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was to facilitate reconciliation at the end of each contract term. Pursuant to the
reconciliation, JFN’s calculations showed that GLC owed an additional $106,758.49.
GLC disagreed with the calculations but agreed it owed JFN an additional $25,000.
{¶7} The July 2008 contract was to lapse on April 30, 2009; however, the
parties agreed at trial that a one-month extension had been negotiated in March 2009.
The extension agreement was not reduced to writing, and the parties dispute the
purpose of the extension. Mr. Belich testified the extension was made with the
understanding that a new contract would be forthcoming. Mr. Neff’s deposition, which
was read into evidence, contended the purpose of the extension was to provide GLC
adequate time to remove its equipment and materials. GLC continued normal business
operations during May 2009. In a May 29, 2009 letter to Mr. Belich, entitled
“Termination of License Agreement,” counsel for JFN and Mr. Neff wrote that the
agreement would lapse on May 31, 2009, and that GLC personnel would be subjected
to prosecution for trespass if found on the premises thereafter. At the end of May 2009,
JFN and Mr. Neff locked GLC out of the premises, and negotiations over the recovery of
GLC’s materials began.
{¶8} In July 2009, JFN sued GLC in the Lake County Common Pleas Court; the
suit was assigned case No. 09 CV 002171. While the case was pending, on July 16,
2010, GLC was told it would be permitted to remove its materials. However, following a
dispute over the order in which materials were being removed and whether royalties
must be paid on materials removed, JFN permanently locked GLC out on September 1,
2010. Various materials belonging to GLC—with an alleged estimated value of
approximately $500,000—remained on the premises.
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{¶9} On October 26, 2010, GLC filed a motion to dismiss case No. 09 CV
002171, alleging JFN was no longer a corporation in good standing. On November 3,
2010, the parties filed a stipulation of dismissal of all claims without prejudice. JFN’s
articles of incorporation were subsequently reinstated.
{¶10} The action was re-filed on January 3, 2011. In the re-filed complaint, JFN
and Mr. Neff were both listed as plaintiffs, and GLC was listed as the sole defendant.
An amended complaint was filed on February 15, 2011, and listed two additional
defendants: Mr. Belich and Erik L. Walter (“Attorney Walter”), GLC’s attorney in the
previous action. The amended complaint included seven counts: Count 1 alleged
breach of contract on the part of GLC; Counts 2 and 3 alleged civil theft and conversion
against GLC and Mr. Belich; Count 4 sought punitive damages from GLC and Mr.
Belich; Counts 5, 6, and 7 alleged deceptive trade practices in violation of R.C. 4165.02,
common law trade name infringement, and abuse of process, respectively, against Mr.
Belich and Attorney Walters. Summary judgment was subsequently granted in favor of
Attorney Walters on Counts 5, 6, and 7 and in favor of Mr. Belich on Counts 5 and 7.
{¶11} On March 14, 2011, GLC filed an answer and counterclaim. The
counterclaim included eight counts: Count 1 alleged JFN breached its contract with
GLC; Count 3 alleged JFN and Mr. Neff converted GLC’s property; Counts 2, 4, 5, 6, 7,
and 8 were voluntarily dismissed by GLC.
{¶12} Mr. Neff died on September 25, 2011; his death was suggested on the
record on October 4, 2011. On December 29, 2011, JFN filed a motion to substitute
JoAnn Neff, executrix of Mr. Neff’s estate, as a party in her personal and representative
capacity. On March 9, 2012, the trial court granted the motion as to Mrs. Neff in her
representative capacity as executrix of Mr. Neff’s estate (“the estate”).
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{¶13} The matter proceeded to trial on June 12, 2012. Count 6 of the amended
complaint, against Mr. Belich, was voluntarily dismissed during trial. Counts 2, 3, and 4
of the amended complaint were disposed of by directed verdicts in favor of GLC and Mr.
Belich. Count 1 of the amended complaint (JFN’s breach of contract claim against
GLC) and Counts 1 and 3 of GLC’s counterclaim (breach of contract and conversion)
were the only counts considered by the jury.
{¶14} Prior to trial, appellants filed a motion in limine seeking to exclude
testimony regarding verbal statements allegedly made by Mr. Neff to Mr. Belich. The
trial court granted the motion in part and overruled it in part: it permitted GLC to use
such statements to defend against allegations that GLC breached its contract with JFN,
but not to prosecute its own claims for breach of a verbal contract modification and
conversion. The jury was later instructed on the limited use of the statements. Counsel
for appellants objected to any use of such statements on the basis that the statements
were hearsay. In addition, at the close of evidence, GLC requested a punitive damages
instruction with regard to its conversion claim. The trial court overruled that request.
{¶15} On June 18, 2012, the jury returned a verdict in favor of GLC on
appellants’ breach of contract claim and in favor of GLC on its breach of contract and
conversion counterclaims. The jury awarded compensatory damages in the amount of
$462,000 to GLC against appellants, jointly and severally.
{¶16} On June 25, 2012, GLC filed a motion for prejudgment interest pursuant to
R.C. 1343.03(A) and (C). On June 26, 2012, appellants filed a motion for judgment
notwithstanding the verdict (“JNOV”). Appellants made the following arguments: the
jury could only conclude GLC had breached the contract; JFN was not obligated under
the contract to permit GLC to enter the premises after the contract expired; there was
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no taking of property to justify the verdict for conversion; and the verdict of conversion
entered against Mr. Neff in his individual capacity was not supported by any evidence
that Mr. Neff should be held individually liable. While those motions were pending, JFN
and the estate filed an appeal with this court, which was dismissed for lack of a final,
appealable order. Jack F. Neff Sand & Gravel, Inc. v. Great Lakes Crushing, Ltd., 11th
Dist. Lake No. 2012-L-085, 2012-Ohio-4894.
{¶17} On November 21, 2012, the trial court overruled GLC’s motion for
prejudgment interest. Noting the contract did not provide for any money to be paid to
GLC and that the issues were contested in good faith, the trial court held GLC was
entitled to interest only from the date of judgment, June 15, 2012, pursuant to R.C.
1343.03(B). On the same date, the trial court overruled appellants’ motion for JNOV. It
found that evidence of a course of dealings was presented and tended to show GLC
had been permitted to remain on the premises during renegotiation periods despite the
absence of a written extension agreement between the parties. Further, the trial court
found a sufficient basis for the jury to determine that Mr. Neff was acting in his personal
capacity when he excluded GLC from the premises, to wit: Mr. Neff was the
administrator for the trust that owned the property; Mr. Neff’s deposition testimony
indicated he had excluded GLC from the premises; and a letter from Mr. Neff’s counsel
indicated GLC personnel would need his permission to enter the property after May 31,
2009.
{¶18} Appellants, JFN and the estate, filed a timely notice of appeal and assert
five assignments of error. Appellee, GLC, filed a cross-appeal and asserts two
assignments of error.
{¶19} Appellants’ first assignment of error states:
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{¶20} “The trial court committed prejudicial error by allowing Defendants-
Appellees to introduce evidence of alleged verbal agreements between Defendants-
Appellees and decedent.”
{¶21} Appellants argue the trial court erred in admitting oral statements of Mr.
Neff, who was deceased at the time of trial, regarding the existence of an oral extension
agreement between Mr. Neff and Mr. Belich. The trial court found admissible
“statements of the deceased that are used by [GLC] in defense as opposed to an
offense.” GLC was thus permitted to offer statements Mr. Neff made to Mr. Belich in
order to defend against the breach of contract claim prosecuted by appellants.
However, GLC was not permitted to use Mr. Neff’s statements to prosecute its own
counterclaims against appellants.
{¶22} Appellants raise two issues under this assignment of error. First, they
assert that Mr. Neff’s statements were inadmissible hearsay, governed by the hearsay
exception found in Evid.R. 804(B)(5), and should have been excluded. In response,
GLC asserts that the admitted statements were not hearsay by definition, pursuant to
Evid.R. 801(D)(2).
{¶23} “‘Hearsay’ is a statement, other than one made by the declarant while
testifying at the trial or hearing, offered in evidence to prove the truth of the matter
asserted.” Evid.R. 801(C). Although we apply an abuse of discretion standard to
evidentiary rulings on matters such as relevancy and the admission of expert testimony,
the trial court does not have discretion to admit hearsay “except as otherwise provided
by the Constitution of the United States, by the Constitution of the State of Ohio, by
statute enacted by the General Assembly not in conflict with a rule of the Supreme
Court of Ohio, by these rules, or by other rules prescribed by the Supreme Court of
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Ohio.” Evid.R. 802. See also State v. DeMarco, 31 Ohio St.3d 191, 195 (1987).
Therefore, we apply a de novo review to determine whether the testimony here
constitutes hearsay or non-hearsay. See John Soliday Fin. Group, LLC v. Pittenger,
190 Ohio App.3d 145, 150 (5th Dist.2010).
{¶24} Evid.R. 801(D)(2) states, in relevant part, that admissions by a party-
opponent are not hearsay if “[t]he statement is offered against a party and is (a) the
party’s own statement, in either an individual or a representative capacity, or * * * (d) 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[.]”
{¶25} Appellants argue that Evid.R. 801(D)(2) does not apply because Mr. Neff
was deceased at the time of trial and because the estate was substituted as a party.
Appellants cite to Covert v. Covert, 3rd Dist. Seneca No. 13-84-33, 1985 Ohio App.
LEXIS 9262 (Nov. 6, 1985), in support of their argument that Evid.R. 801(D)(2) does not
apply to statements of a decedent. The Covert Court noted that the Staff Note to
Evid.R. 801(D)(2)(a) states: “‘Problems of trustworthiness are not critical in this class of
admission since the opposing party controls the decision to introduce the statement and
party-declarant will be in court to refute any unfavorable impact of the statement.’” Id. at
*4-5 (emphasis added). This argument does not have merit, however, because
subsection (a) does not apply to the case sub judice. The out-of-court statement was
not made by JFN, the party against whom it was offered, but by Mr. Neff as JFN’s
agent.
{¶26} Subsection (d), pertaining to a party’s “agent or servant,” is the relevant
portion of the rule. The admissible out-of-court statements allegedly made by Mr. Neff
were offered by Mr. Belich during his testimony. They were offered against JFN, a
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named plaintiff in the case and a party to the contract at issue. At the time Mr. Neff
allegedly made these statements, he was president of JFN. Further, the alleged
statements concerned the contract between JFN and GLC, a matter “within the scope of
the agency” that existed between Mr. Neff and JFN.
{¶27} Nothing in subsection (d) or the accompanying Staff Note suggests its
application is limited to the living agents of the party against whom a statement is
introduced. Nor does it mention the declarant’s presence in court. To the contrary, the
Staff Note states that the statements of a party’s agent made in the course of the
agency relationship and concerning matters relating to the relationship are admissible
against the party. The Ohio Supreme Court has also recognized the application of this
rule in similar circumstances. See Eberly v. A-P Controls, Inc., 61 Ohio St.3d 27, 30-31
(1991) (where statements made by the decedent, as sole owner and president of the
incorporated defendant, were admitted by the plaintiff throughout trial as non-hearsay,
pursuant to Evid.R. 801(D)(2)).
{¶28} Accordingly, the testimony offered by Mr. Belich was not hearsay and,
thus, was admissible. It is therefore unnecessary to analyze the statements under the
hearsay exception found in Evid.R. 804(B)(5). Appellants’ first argument is not well
taken.
{¶29} We recognize the potential for prejudice to the party against whom
testimony of a deceased “agent or servant” is offered. However, Evid.R. 403(A) permits
the trial court, in its role as gate-keeper, to consider whether the probative value of
otherwise admissible evidence is “substantially outweighed by the danger of unfair
prejudice[.]” Here, the trial court astutely recognized that Mr. Neff’s version of events
was memorialized in his deposition, which was read to the jury. It also limited GLC’s
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use of the deceased “agent or servant” statement to defending the claim against it, not
in prosecuting its own cause of action.
{¶30} Appellants next object to the admission of Mr. Neff’s statements on the
grounds that the agreement between the parties contained a “no oral modifications
clause.” No such clause appears in the agreement. The language to which appellants
direct this court states:
If Licensee is not in breach of any of the terms and conditions of
this agreement, he shall have the option to renew this agreement
for an additional one year period, under terms and conditions to be
negotiated by the parties. Any such optional renewal shall be in
writing directed to Licensor no less than 60 days prior to the
expiration of this agreement.
This language grants GLC an option to renew the contract upon 60 days written notice.
Although it requires the option be exercised in writing, if at all, it does not preclude the
parties from orally modifying the contract. This argument is also not well taken.
{¶31} Appellants’ first assignment of error is without merit.
{¶32} Appellants’ second and third assignments of error both concern the trial
court denying appellants’ motion for a directed verdict on GLC’s counterclaims for
breach of contract and conversion.
{¶33} A trial court must grant a motion for a directed verdict if, after construing
the evidence in a light most favorable to the non-moving party, it concludes that
“reasonable minds could come to but one conclusion upon the evidence submitted,” a
conclusion adverse to the non-moving party. Civ.R. 50(A)(4). “Because a directed
verdict only tests the sufficiency of the evidence, it presents a question of law that
appellate courts review de novo.” Jarupan v. Hanna, 173 Ohio App.3d 284, 291 (10th
Dist.2007) (citation omitted).
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{¶34} Appellants’ second assignment of error states:
{¶35} “The trial court committed prejudicial error by overruling plaintiffs-
appellants’ Motion for a Directed Verdict on defendants-appellees’ counterclaim for
breach of contract.”
{¶36} The contract term at issue states: “[a]t the end of the term, it shall be the
duty of the licensee [GLC] to remove all materials saleable or not.” Appellants maintain
this clause required GLC to have completed removal of its materials before the contract
term expired. GLC counters that “at the end of the term” is not synonymous with “by the
end of the term” and contends that the clause contemplates GLC having some
reasonable period of time after the contract expired to remove its materials.
{¶37} Where a contract term is ambiguous, its meaning is a question of fact.
Walter v. Agoston, 12th Dist. Warren No. CA2003-03-039, 2004-Ohio-2488, ¶12.
“Contract terms are ambiguous where the language is susceptible to two or more
reasonable interpretations.” Id. Furthermore, “[i]t is a fundamental principle of contract
interpretation in Ohio that unclear language in a contract will be interpreted against the
drafter.” Id., citing McKay Machine Co. v. Rodman, 11 Ohio St.2d 77, 80 (1967). It
does not appear to be in dispute that counsel for JFN and Mr. Neff drafted the
agreement at issue.
{¶38} The phrase, “at the end of the term,” is ambiguous. It could mean either
(1) GLC was required to remove its materials by the time the contract expired or, (2)
once the contract expired, GLC was required to remove its materials within a
reasonable time. Evidence was presented that GLC had not been required to remove
its equipment and materials when the previous agreement expired. Furthermore, on at
least one occasion when a previous contract expired, Mr. Neff apparently indicated to
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his counsel that GLC would require approximately 30 days to vacate the premises—a
fact Mr. Neff’s counsel acknowledged in a letter to Mr. Belich.
{¶39} Construing this evidence in a light most favorable to GLC, a reasonable
trier of fact could conclude that GLC should have been given access to the premises
within a reasonable amount of time after the contract term expired for the purpose of
removing its materials. The trial court did not err in denying appellants’ motion for a
directed verdict with regard to GLC’s counterclaim for breach of contract.
{¶40} Appellants’ second assignment of error is without merit.
{¶41} Appellants’ third assignment of error states:
{¶42} “The trial court erred by overruling plaintiff-appellants’ Motion for a
Directed Verdict on defendants-appellees’ conversion counterclaim.”
{¶43} “The three basic 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.’” Perez Bar & Grill v. Schneider, 9th Dist. Lorain No. 11CA010076, 2012-
Ohio-5820, ¶10, quoting Keybank Natl. Assn. v. Guarnieri & Secrest P.L.L., 7th Dist.
Columbiana No. 07 CO 46, 2008-Ohio-6362, ¶15.
{¶44} Appellants neither dispute GLC’s ownership of the materials in question
nor do they attack GLC’s claim to damages. Appellants argue they had no contractual
obligation to permit GLC access to the premises after the contract term expired and
therefore did not breach the contract or wrongfully exercise dominion over GLC’s
property. Appellants further argue their actions were consistent with GLC’s property
rights because GLC was given several opportunities to recover its property. Thus,
appellants argue they committed no wrongful act.
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{¶45} GLC argues the contract required appellants to permit GLC access to the
premises following expiration of the contract for the purpose of removing the materials
GLC had stored on the premises. Thus, GLC’s position is that appellants breached the
contract and wrongfully took control of property belonging to GLC. GLC further argues
that an opportunity to recover its property approximately one year later should not
defeat its conversion counterclaim.
{¶46} Construing the evidence in a light most favorable to GLC, a reasonable
trier of fact could find appellant’s exclusion of GLC from the premises was contrary to
the prior course of dealings between the parties and a breach of the contract,
constituting a wrongful act for the purposes of conversion. GLC presented evidence
that it owned construction materials of significant value, which it was not permitted to
remove from the premises; that those materials lost value as they sat unused; and that
GLC was forced to expend money to purchase replacement materials. Thus, GLC
presented evidence on each element of conversion, and a reasonable trier of fact could
determine appellants converted GLC’s property. Though appellants gave GLC the
opportunity to remove its property the following summer, GLC contended the damage
had largely been done and GLC was never able to remove all of its property.
{¶47} Appellants’ third assignment of error is thus without merit.
{¶48} Appellants’ fourth and fifth assignments of error concern the trial court’s
ruling on appellants’ JNOV motion. We review de novo a trial court’s ruling on a motion
for JNOV, as it presents a question of law. Seese v. Admr., Bureau of Workers’ Comp.,
11th Dist. Trumbull No. 2009-T-0018, 2009-Ohio-6521, ¶11. The Ohio Supreme Court
explained the trial court’s task in ruling on a motion for JNOV, pursuant to Civ.R. 50(B),
in Posin v. A.B.C. Motor Court Hotel, 45 Ohio St.2d 271, 275 (1976) (citation omitted):
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The test to be applied by a trial court in ruling on a motion for
judgment notwithstanding the verdict is the same test to be applied
on a motion for a directed verdict. The evidence adduced at trial
and the facts established by admissions in the pleadings and in the
record must be construed most strongly in favor of the party against
whom the motion is made, and, where there is substantial evidence
to support his side of the case, upon which reasonable minds may
reach different conclusions, the motion must be denied. Neither the
weight of the evidence nor the credibility of the witnesses is for the
court’s determination in ruling upon either of the above motions.
{¶49} Appellants’ fourth assignment of error states:
{¶50} “The trial court committed prejudicial error by overruling plaintiff-
appellants’ Motion for JNOV on the jury’s award against the Estate of John Neff.”
{¶51} Under this assignment, appellants argue the trial court should have
granted JNOV in favor of the estate on GLC’s conversion counterclaim because the
contract was between the corporate entities, JFN and GLC, and there was no evidence
presented to pierce the corporate veil and hold Mr. Neff individually liable.
{¶52} “[A] plaintiff need not pierce the corporate veil” in order to hold a corporate
officer personally liable for his or her own tortious acts. Roberts v. RMB Enters., 197
Ohio App.3d 435, 449 (12th Dist.2011).
A corporate officer, however, ‘may not be held liable merely by
virtue of his status as a corporate officer.’ [Mohme v. Deaton, 12th
Dist. Warren No. CA2005-12-133, 2006-Ohio-7042, ¶28.] Rather,
‘(t)he true basis of liability is the officer’s violation of some duty
owed to the third person which injures such third person.’ Krieger
Ford, Inc. v. Chase Motors, Inc. (Aug. 3, 1999), Franklin App. No.
98AP-982, 1999 WL 561693, at *8. In other words, the evidence
presented must indicate that the corporate officer ‘specifically
directed the particular act to be done, or participated, or co-
operated therein.’ (Emphasis omitted.) Young v. Featherstone
Motors, Inc. (1954), 97 Ohio App. 158, 171, 124 N.E.2d 158.
Id.
{¶53} Furthermore, where the owner of a corporation exercises control over the
corporation such that it has no separate mind, will, or existence and thereby commits
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fraud, an illegal act, or similarly unlawful act, the corporation may be considered its
owner’s alter ego. Dombroski v. Wellpoint, Inc., 119 Ohio St.3d 506, 2008-Ohio-4827,
¶29. In such cases, the corporate form may be disregarded to hold the owner
personally liable to persons injured by such control and wrong. Id. at ¶18, 29, citing
Belvedere Condominium Unit Owners’ Assn. v. R.E. Roark Cos., 67 Ohio St.3d 274
(1993), paragraph three of the syllabus.
{¶54} Although the contract at issue here was between GLC and JFN, GLC
presented evidence that Mr. Neff, not JFN, controlled the premises. The land is owned
by a trust. Mr. Neff was one of the trustees and had sole authority to rent and/or sell the
premises. According to the trust agreement, Mr. Neff was compensated by the
proceeds of any rental or sale. Furthermore, GLC was told it would need Mr. Neff’s
permission to enter the premises after the contract between JFN and GLC expired, and
Mr. Neff testified in deposition that he, not JFN, refused to permit GLC to enter.
{¶55} Perhaps most significant here is that Mr. Neff, in his individual capacity,
was named as a plaintiff. He was not joined as a party by GLC. The allegations
throughout the complaint suggest it was Mr. Neff who was in charge, and JFN and Mr.
Neff who sustained damage. When the record is viewed in a light most favorable to
GLC, there is substantial evidence from which the jury could have concluded Mr. Neff
was personally liable to GLC. The trial court did not err in overruling appellants’ motion
for JNOV with regard to Mr. Neff’s individual liability.
{¶56} Appellants’ fourth assignment of error is without merit.
{¶57} Appellants’ fifth assignment of error states:
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{¶58} “The trial court committed prejudicial error by overruling plaintiff-
appellants’ Motion for JNOV on the issue of Defendant’s breach of the License
Agreement.”
{¶59} Under this assignment, appellants argue GLC breached the contract by
failing to remove its materials from the premises by the end of the contract term and by
failing to pay royalties due from reconciliation. Thus, appellants argue that GLC, having
breached the contract itself, could not prevail on its own breach of contract
counterclaim.
{¶60} Appellants presented evidence that the contract between the parties had
expired and that GLC had been warned repeatedly about its duty to remove its
materials by the end of the term. GLC, however, presented evidence of a course of
dealings between the parties in which GLC had previously continued normal business
operations after the expiration of its contract, pending renewal. The previous contract
between the parties was made retroactive to cover two months during which the parties
were engaged in renewal negotiations and during which normal business continued.
Warning letters from JFN’s counsel appear in each set of negotiations and could have
been construed as a negotiating tactic rather than a serious threat. The contract called
for reconciliation of royalties, but did not set a date certain by which GLC had to settle
any outstanding debt. The record indicates payments were made and accepted late
and that business continued normally in the interim. Furthermore, the contract provides
a remedy for GLC’s failure to remove its materials: a clause permitted JFN to remove
GLC’s materials and charge GLC the cost of removal in the event GLC failed to remove
its materials.
17
{¶61} The fact that GLC may have breached the contract by failing to pay the
royalties due does not defeat its counterclaim for conversion. There was evidence from
which reasonable minds could conclude appellants breached the contract and
converted GLC’s property. As such, the trial court did not err in overruling appellants’
motion for JNOV.
{¶62} Appellants’ fifth assignment of error is without merit.
{¶63} We turn now to GLC’s cross-appeal. GLC’s first assignment of error
states:
{¶64} “The trial court erred in failing to award prejudgment interest to Great
Lakes Crushing.”
{¶65} Under this assignment of error, GLC argues a favorable judgment in a
breach of contract case entitles the prevailing party to an award of prejudgment interest
under R.C. 1343.03(A). GLC further argues it was entitled to an award of prejudgment
interest on both of its counterclaims—breach of contract and conversion—under R.C.
1343.03(C).
{¶66} In denying GLC’s motion for prejudgment interest, the trial court applied
R.C. 1343.03(B) and granted GLC interest from the date of judgment. The trial court
indicated it had no basis to find appellants failed to exercise good faith in settlement
negotiations or in litigating the case, and the contract at issue did not provide for any
money to be paid to GLC.
{¶67} GLC first argues it is entitled to prejudgment interest on its breach of
contract counterclaim, pursuant to R.C. 1343.03(A). “‘R.C. 1343.03(A) automatically
bestows a right to statutory interest as a matter of law on a judgment, and does not
leave any discretion to the trial court to deny such interest.’” Marion Plaza, Inc. v. 700
18
Block, LLC, 7th Dist. Mahoning No. 09 MA 113, 2010-Ohio-1539, ¶13, quoting Cafaro
Northwest Partnership v. White, 124 Ohio App.3d 605, 608 (7th Dist.1997). Thus,
whether a party is entitled to an award of prejudgment interest pursuant to R.C.
1343.03(A) is a question of law subject to de novo review. Id.
{¶68} Although the terms of R.C. 1343.03(A) clearly allow interest to run
from every breach of contract judgment, prejudgment interest is not
an entitlement in every breach of contract action. By the explicit
terms of R.C. 1343.03(A), prejudgment interest is limited to those
contracts that provide for a payment of money that the breaching
party failed to pay.
RPM, Inc. v. Oatey Co., 9th Dist. Medina Nos. 3282-M & 3289-M, 2005-Ohio-1280, ¶64.
In this case, the contract did not call for appellants to pay GLC any money. GLC is not
entitled to prejudgment interest on the basis of R.C. 1343.03(A).
{¶69} GLC next argues it is entitled to prejudgment interest on its conversion
counterclaim, pursuant to R.C. 1343.03(C), because appellants did not make a good-
faith effort to settle the case. An award of prejudgment interest pursuant to R.C.
1343.03(C) lies within the sound discretion of the trial court. Kalain v. Smith, 25 Ohio
St.3d 157, 159 (1986). An abuse of discretion is the trial court’s “failure to exercise
sound, reasonable, and legal decision-making.” State v. Beechler, 2d Dist. Clark No.
09-CA-54, 2010-Ohio-1900, ¶62, quoting Black’s Law Dictionary, 11 (8th Ed.2004). In
Kalain, at 159, the Ohio Supreme Court addressed the issue of what constitutes failure
to make a good faith effort to settle the case:
A party has not ‘failed to make a good faith effort to settle’ under
R.C. 1343.03(C) if he has (1) fully cooperated in discovery
proceedings, (2) rationally evaluated his risks and potential liability,
(3) not attempted to unnecessarily delay any of the proceedings,
and (4) made a good faith monetary settlement offer or responded
in good faith to an offer from the other party. If a party has a good
faith, objectively reasonable belief that he has no liability, he need
not make a monetary settlement offer.
19
{¶70} In this case, the trial court found no evidence that appellants failed to act
in good faith and specifically found that appellants had an objectively reasonable belief
they were without liability. Nothing in the record suggests appellants were
uncooperative in discovery or intentionally delayed the proceedings. As the trial court
noted, the issues were “hotly disputed.” GLC does not direct us to anything in the
record that causes us to second guess the trial court’s finding that appellants had an
objectively reasonable belief in the merits of their case. The trial court did not abuse its
discretion in refusing to award prejudgment interest to GLC on its conversion
counterclaim.
{¶71} GLC’s first assignment of error is without merit.
{¶72} GLC’s second assignment of error states:
{¶73} “The trial court erred in instructing [the] jury on punitive damages on
GLC’s conversion claim.”
{¶74} Under this assignment, GLC argues it was entitled to a punitive damages
instruction with regard to its conversion counterclaim because JFN and Mr. Neff acted
with malicious disregard for GLC’s legal rights.
{¶75} Appellants argue this issue was not preserved for our review, as GLC did
not object to the jury instruction at trial. However, the record reflects GLC did object,
stating: “[t]he only objection we have to the jury instructions is the failure to include a
punitive damages instruction. We believe, under the second definition of malice,
conscious disregard for the rights of others, it has the substantial likelihood of causing
harm.” The trial court overruled that objection. The issue is, therefore, properly
preserved for our review.
20
{¶76} Trial courts enjoy broad discretion in fashioning jury instructions. Smith v.
Redecker, 4th Dist. Athens No. 08CA33, 2010-Ohio-505, ¶51. However, a trial court
may not refuse to issue a requested instruction if it is a correct statement of law
appropriate and pertinent to the facts. Id. With regard to the facts, the trial court has
discretion to determine whether sufficient evidence was presented at trial to warrant
giving the requested instruction. Id. at ¶52. “Thus, in our review we must determine
whether the trial court abused its discretion by finding that the evidence was insufficient
to support the requested charge.” Id.
{¶77} In Preston v. Murty, 32 Ohio St.3d 334, 336 (1987), the Ohio Supreme
Court discussed the circumstances that warrant a punitive damages instruction on the
basis of malice:
We therefore hold that actual malice, necessary for an award of
punitive damages, is (1) that state of mind under which a person’s
conduct is characterized by hatred, ill will or a spirit of revenge, or
(2) a conscious disregard for the rights and safety of other persons
that has a great probability of causing substantial harm. In the
latter case, before submitting the issue of punitive damages to the
jury, a trial court must review the evidence to determine if
reasonable minds can differ as to whether the party was aware his
or her act had a great probability of causing substantial harm.
Furthermore, the court must determine that sufficient evidence is
presented revealing that the party consciously disregarded the
injured party’s rights or safety.
{¶78} Here, the trial court did not abuse its discretion in finding that the evidence
was insufficient to warrant an instruction on punitive damages. Nothing in the record
suggests appellants’ actions were motivated by “hatred, ill will or a spirit of revenge.” Id.
Appellants also cannot be said to have consciously disregarded GLC’s legal rights. The
fact that the parties apparently engaged in heated negotiations and debates regarding
their respective rights under the contract does not equate to bad faith or malice.
21
{¶79} GLC’s second assignment of error is without merit.
{¶80} For the foregoing reasons, the judgment of the Lake County Court of
Common Pleas is affirmed.
DIANE V. GRENDELL, J.,
CYNTHIA WESTCOTT RICE, J.,
concur.
22
Jack F. Neff Sand & Gravel, Inc. v. Great Lakes Crushing, Ltd.
Combined Opinion