[Cite as Ohio Valley Business Advisors, L.L.C. v. AER Invest. Corp., 2017-Ohio-1283.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 104771
OHIO VALLEY BUSINESS ADVISORS, L.L.C.
PLAINTIFF-APPELLEE
vs.
AER INVESTMENT CORPORATION
DEFENDANT-APPELLANT
JUDGMENT:
AFFIRMED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-14-834130
BEFORE: Boyle, P.J., Laster Mays, J., and Celebrezze, J.
RELEASED AND JOURNALIZED: April 6, 2017
ATTORNEY FOR APPELLANT
Dorothea J. Kingsbury
30195 Chagrin Boulevard, #110
Cleveland, Ohio 44124
ATTORNEY FOR APPELLEE
Jack S. Malkin
20521 Chagrin Boulevard, Suite E
Shaker Heights, Ohio 44122
MARY J. BOYLE, P.J.:
{¶1} Defendant-appellant, AER Investment Corp. (“AER”), appeals from a
judgment in favor of plaintiff-appellee, Ohio Valley Business Advisors, L.L.C. (“Ohio
Valley”), in the amount of $28,976.16. AER raises two assignments of error for our
review:
1. The trial court erred in finding that a valid contract for the contingent
purchase of appellant’s business existed with K9 Playtime, L.L.C.
2. The trial court erred in reaching a conclusion that was contrary to the
manifest weight of the evidence.
{¶2} Finding no merit to AER’s arguments, we affirm.
I. Procedural History and Factual Background
{¶3} The undisputed facts from the relevant contracts and trial are as follows.
Since 2009, AER owned a franchise business in Highland Heights, Ohio, known as Camp
Bow Wow. On April 4, 2014, AER sold the assets of Camp Bow Wow back to the
franchisor, DOG Development, L.L.C. (“DOG”), for $175,000, pursuant to an asset
purchase agreement. The terms of the asset purchase agreement between AER and
DOG, however, included a contingent purchase price if DOG was able to resell the
business for more than $175,000 before August 31, 2014. AER was also given an
opportunity to submit resale proposals from third parties during that same time period.
Thus, if Camp Bow Wow was resold during this time frame for more than $175,000,
either through DOG’s efforts or through AER’s efforts, then AER was entitled to 100
percent of the additional purchase price minus certain expenses that were spelled out in
the asset purchase agreement. On April 7, 2014, AER, through its president, Amy Ryan,
entered into a nonexclusive business listing agreement (“brokerage agreement”) with
Ohio Valley, a broker, where AER engaged Ohio Valley to “find a buyer” for Camp Bow
Wow on or before August 31, 2014.
{¶4} Per the brokerage agreement, AER agreed to pay Ohio Valley a
nonrefundable listing fee of $5,000 in advance, and then a 12 percent brokerage fee in the
event of a successful sale, up to $40,000 (minus the $5,000 listing fee). The brokerage
agreement further provided that potential buyers excluded from the brokerage agreement
were “only those potential buyers who originated” through the franchisor, DOG.
{¶5} The brokerage agreement between AER and Ohio Valley also incorporated
the terms of the asset purchase agreement between AER and DOG. The brokerage
agreement stated:
WHEREAS, AER and DOG have executed agreements to sell [Camp Bow
Wow] to DOG effective April 1, 2014, but the terms of such sale include a
contingent purchase price if DOG resells [Camp Bow Wow] at a price
higher than $175,000 prior to August 31, 2014, and AER is given the right
to submit resale proposals from third parties during such period[.]
***
The Broker understands that AER is the former owner of [Camp Bow
Wow] and has sold the business to DOG under a contract that allows AER
to find a buyer before 8/31/2014 that will pay a higher price than the
$175,000 that DOG has agreed to pay for the business. DOG has agreed
to not unreasonably refuse any proposal, but DOG can sell without AER’s
consent for more than $300,000, or decline to sell to any purchaser they are
not willing to have as a DOG franchisee, and AER has no liability to Broker
beyond the listing fee in such circumstances.
{¶6} On May 7, 2014, DOG forwarded Ryan a letter of intent to purchase Camp
Bow Wow. The potential buyer, an anonymous limited liability corporation (the name
of the corporation was blacked out, followed by “L.L.C.”), proposed to purchase Camp
Bow Wow for $250,000. Although Ryan suspected that Michael Paquette, who owned a
Camp Bow Wow franchise in Cuyahoga Falls, was the anonymous potential buyer, it is
undisputed that neither AER nor Ohio Valley knew who the potential buyer was at that
time. Ryan rejected the proposed offer because it was too low; she initially listed Camp
Bow Wow at a price of over $500,000. Plus, she felt that she still had time to find a
buyer who would pay more for her business before the August 31 deadline.
{¶7} On August 18, 2014, Lee Huff, managing member of Ohio Valley,
presented Ryan with a nonbinding letter of intent to purchase Camp Bow Wow for
$300,010. Three “buyers” signed the letter of intent: Jennifer D’Aurelio, Missy
Bedwell, and Michael J. Paquette.
{¶8} On August 25, 2014, Huff presented Ryan with a legally binding offer to
purchase that it prepared where K9 Playtime, L.L.C. (“K9”) formally offered to purchase
Camp Bow Wow from AER for $300,010. The offer to purchase lists the purchaser’s
corporation as K9 and the seller’s corporation as DOG. Under K9’s corporate name, it
states “Purchaser: M. Paquette, J. D’Aurelio, and M. Bedwell.” Under DOG’s
corporation name, it states: “Seller: Heidi Ganahi.”
{¶9} Before K9 and DOG executed the offer to purchase, AER “halted the
consummation of the purchase,” alleging that Ohio Valley was not entitled to its
brokerage fee of $28,976.16 because the proposed buyer originated through DOG. AER
asserted that one of the buyers, Michael Paquette, already owned a Camp Bow Wow
elsewhere in Ohio, and was therefore a purchaser generated by DOG’s efforts and not
Ohio Valley’s efforts.
{¶10} Stanley Dub, Ryan’s former attorney, testified that after Ryan received the
August 18, 2014 letter of intent, he and Ryan believed that it was sent by the same person
who sent the May 7 letter of intent. Ryan and Dub testified that the letters were nearly
identical except for the dates. So Dub called DOG and asked someone at DOG to
confirm who sent the letter of intent in May (since they knew that letter had originated
through DOG). DOG informed Dub that it was Bark-N-Play, L.L.C., whose majority
member was Michael Paquette. Because of this, Dub stopped the sale going through
Ohio Valley. Instead, Dub instructed the members of K9 to make the offer directly
through DOG rather than Ohio Valley.
{¶11} On September 4, 2014, Dub sent an email to the president of Ohio Valley,
informing him that AER would not pay Ohio Valley the brokerage fee under the
brokerage agreement.
{¶12} The sale of AER’s former Camp Bow Wow from DOG to K9 closed on
December 17, 2014, netting AER $283,134.68. AER did not pay Ohio Valley a
brokerage fee pursuant to the brokerage agreement, asserting that there was not a valid
contract for sale on August 31, 2014, under the terms of the brokerage agreement because
the sale was originated through DOG.
{¶13} In October 2014, Ohio Valley filed a complaint for breach of contract and
several other related claims against AER. The case was ultimately tried to the bench.
{¶14} The trial court found in favor of Ohio Valley. Specifically, the trial court
found that a valid agreement existed between AER and Ohio Valley, that K9 was not an
excluded purchaser under the brokerage agreement, and that AER owed Ohio Valley the
$28,976.16 brokerage fee. The trial court also dismissed Ohio Valley’s claims for unjust
enrichment and for attorney fees. It is from this judgment that AER appeals.
II. Contractual Capacity
{¶15} In its first assignment of error, AER argues that because K9 was not a
registered corporation in the state of Ohio until after the offer to purchase was executed, it
lacked the legal capacity to enter into a contract, and therefore, the offer to purchase was
not a valid contract. The offer to purchase was dated August 25, 2014. K9 filed its
articles of incorporation with the Ohio Secretary of State on September 3, 2014. AER
contends that because the offer to purchase was not a valid contract, Ohio Valley did not
meet the deadline to find a purchaser for Camp Bow Wow by August 31, 2014, and was
not entitled to the brokerage fee.
{¶16} At the trial in this case, however, AER did not raise this issue — not in its
trial brief, its opening statement, cross-examination, or in its closing argument. At trial,
AER did not dispute that the offer to purchase was indeed a valid contract. Rather, AER
claimed that the offer to purchase did not satisfy the requirements of the brokerage
agreement because the offer to purchase originated through the franchisor, DOG, and
therefore, was excluded under the brokerage agreement.1
{¶17} AER’s claim at trial that the offer to purchase originated through DOG was
based on the fact that one of three members of K9, Michael Paquette, also sent the letter
of intent to purchase Camp Bow Wow to Ryan on May 7, 2014. AER contended that
because it was undisputed that the first offer originated through DOG (DOG forwarded
the May 7 letter of intent to Ryan) and the same person made the second offer, then the
second offer also originated through DOG and was excluded under the brokerage
agreement.
{¶18} It is axiomatic that errors not raised in the trial court may not be raised for
the first time on appeal. State v. Thiel, 3d Dist. Wyandot No. 16-16-01, 2017-Ohio-242,
¶ 162, citing State v. Williams, 51 Ohio St.2d 112, 364 N.E.2d 1364 (1977) (arguments
that are not raised in the trial court are waived for purposes of appeal). Accordingly,
AER has waived all but plain error on this argument for purposes of appeal.
{¶19} AER does not acknowledge its failure to raise this argument in the trial
At oral argument in this case, AER asserted that it raised this argument below, and cited two
1
places in the transcript where it claimed that it did. We disagree. In both places of the transcript,
on direct examination of Stanley Dub and cross-examination of Lee Huff, AER’s attorney briefly
mentioned during his questioning that the entity, K9, was not formed until after the offer to purchase
was submitted. On both occasions, however, the context of the questioning was to establish that
Michael Paquette was the actual buyer (not K9) and, therefore, the contract between AER and Ohio
Valley was not valid because Michael Paquette originated through DOG and was excluded as a
potential buyer under the brokerage agreement. AER’s questioning was not what AER is arguing
here, i.e., that the contract between DOG and K9 was not valid because K9 was not a registered
corporation in the state of Ohio before the deadline of August 31, 2014. And although AER may
have mentioned the fact that K9 was not formed until September 3, 2014, those two times, it did not
use that fact as any part of its argument to the court before, during, or after trial.
court, nor does it invoke the plain-error doctrine on appeal. Under these circumstances,
we need not address it. See State v. Gavin, 4th Dist. Scioto No. 13CA3592,
2015-Ohio-2996, ¶ 25, citing State v. Quarterman, 140 Ohio St.3d 464, 2014-Ohio-4034,
19 N.E.3d 900 (an appellate court need not consider plain error where appellant fails to
timely raise plain-error claim); State v. Sims, 10th Dist. Franklin No. 14AP-1025,
2016-Ohio-4763, ¶ 11 (appellant cannot meet burden of demonstrating error on appeal
when she only preserved plain error and did not argue plain error on appeal); In re A.R.,
12th Dist. Butler No. CA2015-08-143, 2016-Ohio-4919, ¶ 33 (appellant is precluded
from raising plain error on appeal where he does not argue it in his brief); Coleman v.
Coleman, 9th Dist. Summit No. 27592, 2015-Ohio-2500, ¶ 9 (when a claim is forfeited on
appeal and the appellant does not raise plain error, the appellate court will not create an
argument on his behalf).
{¶20} Further,
[i]n appeals of civil cases, the plain error doctrine is not favored and may be
applied only in the extremely rare case involving exceptional circumstances
where error, to which no objection was made at the trial court, seriously
affects the basic fairness, integrity, or public reputation of the judicial
process, thereby challenging the legitimacy of the underlying judicial
process itself.
Goldfuss v. Davidson, 79 Ohio St.3d 116, 679 N.E.2d 1099 (1997), syllabus. This is not
such the case here.
{¶21} Accordingly, AER’s first assignment of error is overruled.
III. Manifest Weight of the Evidence
{¶22} In its second assignment of error, AER argues that the trial court’s judgment
was against the manifest weight of the evidence. In this assignment of error, AER
makes the same argument that it did in its first assignment of error.
{¶23} AER maintains that “[w]hether or not a corporate entity exists for purposes
of asserting legal rights is critical. As indicated, supra, individual members of an LLC
seek the safe harbor of the protection from personal liability such a structure affords.”
AER’s argument is indeed interesting because in its trial brief that it filed before trial, it
stated, “the personal liability of a member of a limited liability company has no bearing
on this decision. Whether or not he would be personally responsible for anything is very
different than whether he is [an] ‘involved party’ to a transaction.” Thus, not only did
AER fail to raise this argument at trial, it argued the opposite.
{¶24} Accordingly, as we previously stated, we need not address AER’s argument
because AER failed to raise it in the trial court. AER’s second assignment of error is
overruled.
{¶25} Ohio Valley argues that it is entitled to attorney fees. The brokerage
agreement, however, specifically stated that in the event of a dispute between AER and
Ohio Valley, both parties would pay their own attorney fees. Moreover, the trial court
ordered that each party pay its own attorney fees. Ohio Valley did not file a cross-appeal
in this case as required by App.R. 3(C). This appellate rule requires that a party “who
intends to defend a judgment or order against an appeal taken by an appellant and who
also seeks to change the judgment or order, shall file a notice of cross appeal within the
time allowed by App.R. 4.” App.R. 3(C)(1). Ohio Valley is clearly seeking to change
the trial court’s order. Thus, we decline to address this argument.
{¶26} Further, Ohio Valley requests this court to award it sanctions under App.R.
23. App.R. 23 provides that “[i]f a court of appeals shall determine that an appeal is
frivolous, it may require the appellant to pay reasonable expenses of the appellee
including attorney fees and costs.” Ohio Valley, however, did not move for sanctions
under App.R. 23. Although courts have an inherent power to sanction litigants and
counsel, as Ohio Valley asserts, we decline to do so here. See Siemientkowski v. State
Auto Mut. Ins. Co., 8th Dist. Cuyahoga No. 87229, 2006-Ohio-4122, ¶ 10, citing Link v.
Wabash RR. Co., 370 U.S. 626, 632, 82 S.Ct. 1386, 8 L.Ed.2d 734 (1962).
{¶27} Judgment affirmed.
It is ordered that appellee recover from appellant the costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this court directing the common
pleas court to carry this judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of
the Rules of Appellate Procedure.
MARY J. BOYLE, PRESIDING JUDGE
ANITA LASTER MAYS, J., and
FRANK D. CELEBREZZE, JR., J., CONCUR