^^ ^3f ^.s r IN THE OHIO SUPREME COURT CASE N®. f,.. ti.4;; HUNTINGTON NATIONAL BANK Plaintiff-Appellant, V. JASAR RECYCLING, INC, Defendant-Appellee. APPEAL FROM TI-IE COLUMBIANA. COUNTY COURT OF APPEALS, SEVENTI-I APPELLATE DISTRICT COURT OF APPEALS CASE NO: 11-CO-24 MEMORANDUM IN SUPPORT OF JURISDICTION Of Appellant Huntington National Bank Christopher Maruca (0070284) THE MARI rCA LAW FIRM, LLC 201 East Commerce Street Suite 316 Youngstown, OI-I 44503 330-743-0300 330-743-0301 Counsel for Appellee :^'i': Gregory E. O'Brien (003 7073) CAVITCH, FAMILO & DURKIN, CO., LPA. 1300 East Ninth Street 20th Floor Cleveland, OH 44114 216-621-7860 Fax 216-621-3415 [email protected]Counsel for Appellant v?.f.; P^ t}^ "C0 i334 1 ;^ ^;^:. %'s,^r%^'L {';f3 f:,3^.^^1i'.:E S,3i€ l
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IN THE OHIO SUPREME COURT would tender the full sales price to Huntington to be applied to Capco's indebtedness. Jasar took possession of the inventory but never paid Huntington or
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^^ ^3f ^.s r
IN THE OHIO SUPREME COURT
CASE N®. f,.. ti.4;;
HUNTINGTON NATIONAL BANK
Plaintiff-Appellant,
V.
JASAR RECYCLING, INC,
Defendant-Appellee.
APPEAL FROM TI-IE COLUMBIANA. COUNTY COURT OF APPEALS,SEVENTI-I APPELLATE DISTRICT
COURT OF APPEALS CASE NO: 11-CO-24
MEMORANDUM IN SUPPORT OF JURISDICTIONOf Appellant Huntington National Bank
Christopher Maruca (0070284)THE MARI rCA LAW FIRM, LLC201 East Commerce StreetSuite 316Youngstown, OI-I 44503330-743-0300330-743-0301Counsel for Appellee
:^'i':
Gregory E. O'Brien (003 7073)CAVITCH, FAMILO & DURKIN, CO., LPA.1300 East Ninth Street20th FloorCleveland, OH 44114216-621-7860Fax [email protected] for Appellant
v?.f.; P^ t}^ "C0 i334 1;^ ^;^:.
%'s,^r%^'L {';f3 f:,3^.^^1i'.:E S,3i€ l
TABLE OF CONTENTS
PAGE
EXPLANATION OF PUBLIC OR GREAT GENERAL INTEREST ..........................,.,..............1
STA.TEMENT OF TIIE FACTS AND CASE ................................................................. ...........2
ARGUMENT IN SUPORT OF PROPOSITION OF LAW.................. . ......... . ............................... S
Propositions of Law:
1. A judgment against a debtor who seeks a stay of execution but doesnot post an adequate supersecieas bond or seek relief from theobligation of posting such bond is voluntarily satisfied when thecreditor garnishes the debtor's funds in the amount of the judgment.
Sep. 30, 2013 Judgment Entry, Case No. 11-CO-24 denying reconsideration .. ............... A
Sep. 23, 2011 Judgment Entry, Case No. I 1-CO-24 denying dismissal. ... ............. ......... B
Feb. 8, 2013 Opinion, Case No. 11-CO 24 ... ...................................... ... .... ........ C
Feb. 8, 2013 Judgment Entry, Case No. 11-CO-24... ........................................................ D
I
I. WHY THIS CASE IS OF PUBLIC OR GREAT GENERAL INTEREST
Finality of judgments is a cornerstone policy concept in the Anglo-American
jurisprudential system. Without a bright line test to inform litigants and lower courts alike when
a case is over, losing parties are only encouraged to attempt to perpetuate litigation indefinitely.
A rule of law that allows dissatisfied losers in cases involving the payment of money to continue
to pursue appeals, even after the adverse judgment has been fully litigated and fully paid, is an
unwarranted drag on the efficiency of the civil justice system. And, an open ended approach that
encourages serial appeals is bad policy.
While there is no dispute that a losing party's "voluntary satisfaction" of a judgment
terminates the litigation and moots his or her right to appeal, there is uncertainty in Ohio law as
to when the satisfaction of a particular judgment is "voluntary" and when it is not. This is
especially true when determining "voluntariness" involves balancing the prevailing party's right
to employ lawful means to enforce an award of money damages (such as, e.g., garnishment
proceedings, etc.), and the losing party's right to stay such enforcement while the judgnlent is
appealed---by filing the requisite papers and providing security for eventual payment in the event
the appeal is unsuccessful.
In this particular case, the court of appeals determined that where the losing party files a
motion to stay, but doesn't file an adequate bond as security, the prevailing party's subsequent
satisfaction of the judgment by enforcement through garnishment is not "voluntary." The court
below reached this conclusion even though the losing party offered no explanation for its failure
to file a bond and souglit no relief from the requirement of filing a bond, despite clearly having
sufficient funds.
This rule, if not subject to further review in this Court, invites dissatisfied litigants to
prolong otherwise concluded litigation ad infinitum. The drafters of the civil rules required the
1
necessity of filing an adequate supersedeas boncl --in addition to merely moving for a stay of
execution---as a prerequisite to terminating the prevailing party's right to enforce its judgment
because they understood that the entry of a final judgment is a major landmark on the road to the
conclusion of the litigation---with satisfaction being the absolute finish line.
While permitting the loser to prolong the litigation by seeking judicial review is a
fundamental component of due process, doing so without risk or cost is to err to the other
extreme. Posting a bond not only provides the prevailing party with security for the eventual
payment of the judgment, it discourages halfhearted, speculative, or abusive appeals by requiring
the appellant to have "skin in the game."
A nile of law that permits the losing party to both stay enforcement and seek appeal of a
judgment, without requiring any security for delaying the winner's right to its award, sends the
wrong message. It is important to all litigants and to the fair working of our system of justice that
these rights and rules be clear and unambiguous.
While this Court has weighed in on the issue of determining the finality of "voluntarily"
satisfied judgments in the context of lawful enforcement proceedings in the past, it has not done
so in recent decades and it has never addressed the necessity of posting a supersedeas bond (or
attempting to post one, or seeking relief from the obligation to post one) as the lynchpin of
"voluntariness," even though Civ.R. 62(B) suggests that to be the case. This case presents that
opportunity and as such, it is one of public or great general interest.
II. STATEMENT OF THE FACTS AND CASE
Capco Polyiner Industries, Inc. ("Capco") was a plastics recycler. Loans from 1-luntington
National Bank ("Huntington^') to Capco were secured by Capco's inventory. Capco was winding
down its business and proposed to sell its remaining inventory to Jasar Recycling, Inc. ("Jasar"),
another plastics recycler. The contract between those parties specifically provided that Jasar
2
would tender the full sales price to Huntington to be applied to Capco's indebtedness. Jasar took
possession of the inventory but never paid Huntington or Capco.
The Trial Court Proceedings
Huntington sued Jasar alleging breach of contract and unjust enrichment. On July 1, 2011
the trial court entered summary judgment for Huntington on the breach of contract claim in the
amount of $99,335,16. On July 18, the trial court entered a second judgment against Jasar
awarding Huntington attorneys' fees of $7,767.50.
Execution on Judgment
On July 12, 2011 Htmtington executed on the original judgment by f ling an "Affidavit of
Garnishment of Property Other Than Personal Earnings." On the same day, the trial court issued
orders of garnishment to Jasar's bank. Jasar filed a request for hearing but later withdrew it. On
July 26, 2011, the bank deposited $99,335.16 with the Clerk of Court.
On July 28, Jasar appealed the summary judgment and attorney fee awards. Jasar also
requested the trial court to stay the judgment pending appeal, but did not file a bond or seek
relief from the requirement of filing a bond. On August 1, the trial court denied the motion for
stay citing the failure to seek a bond.
On August 3, on order of the trial court, the Clerk to release the $99,335.16 of garnished
funds to Huntington. Also on August 3, 2011, Huntington filed a second "Affidavit of
Garnishment" and the trial court issued a second order of garnishment to Jasar's bank in the
amount of $22,337.34, representing the attorney fee award, interest on both judgments, and
costs.
On August 17, 2011 Jasar's bank deposited with the Clerk of Court $22,337.34 from
Jasar's account. Jasar filed a second request for hearing, but withdrew that as well.
3
On September 2, 2011, the trial court issued an "Order of Distribution of Garnished
Funds" directing the Clerk to distribute the $22,337.34 to Huntington, which it did, fully
satisfying both judgments against Jasar.
Later on September 2, Huntington filed a satisfaction of judgment in the trial court and a
motion to dismiss in the Court of Appeals. In support of the latter, IIuntington argued that
because all judgments under review had been fully satisfied, the appeal was moot.
In opposition, Jasar offered the affidavit of its president in which it claimed for the first
time that it had attempted to obtain a bond, and that its lender refused to extend a letter of credit
required by the bonding company.
On September 23, the Court of Appeals denied Huntington's motion to dismiss the appeal
in a one sentence order that offered no insight into its reasoning.
Appellate Proceedings
On February 11, 2013 the Court of Appeals reversed summary judgment for Huntington
and remanded the case to the trial court. The Court of Appeals once again refused to dismiss the
appeal as moot, even though both judgments had been long satisfied, citing only its September
23, 2011 ruling as authority.
Huntington requested reconsideration and certification of a conflict to this Court, but the
Court of. Appeals denied both motions on September 30, 2013. With regard to Huntington's
request to certify a conflict, the Court articulated the legal issue before it as: '-does the
satisfaction of a judgment through garnishment proceedings always render an appeal moot?" 'I11e
Court did not attempt to address the issue. Instead it proceeded to distinguish the facts of the four
cases that Huntington had cited as being in conflict. However, even though the intermediate
court of appeals did not appear to give any weight to the affidavit of Jasar's president, the clear
message to the bench and bar was that posting an adequate supersedeas bond is not a prerequisite
4
to effectively staying the prevailing party's right to enforce its judgment, or at least to avoiding
the loss of the right to appeal on the basis of a"voltmtarily" satisfied judgment.
III ARGUMENT IN SUPPORT OF PROPOSITION OF LAW
Propositions of Law:
1. A judgment against a debtor who seeks a stay of execution but doesnot post an adequate supersedeas bond or seek relief from theobligation of posting such bond is voluntarily satisfied when thecreditor garnishes the debtor's funds in the amount of the judgment.
Once a judgment has been journalized, a party may commence proceedings to execute or
enforce that judgment unless a stay of proceedings, pursuant to Civ.R. 62, has been granted.
Piazza v. R. & S. Sarver, Inc., 17 Ohio App. 3d 177, 478 N.E.2d 256, 17 Ohio B. 308, 1984 Ohio
App. LEXIS 12463 (1984).
Civ.R. 62(B) provides:
When an appeal is taken the appellant may obtain a stay ofexecution of a judgment or any proceedings to enforce a judgmentby giving aii adequate supersedeas bond. The bond may be given ator after the time of filing the notice of appeal. The stay is effectivewhen t11e supersedeas bond is approved by the court.
The relief granted under Civ,R. 62(B) is not the granting of the stay, rather, it is the
setting of an amount of the supersedeas bond which must be posted in order to make the stay
{¶31} At his July 29, 2010 deposition, McNee stated that in response to
Huntington's first set of interrogatories and request for documents, he printed a list
from an email. (McNee dep. 81-82). He stated that he also provided his attorney
with numerous documents including relevant emails and bills of lading. (McNee dep.
83, ex. 5). Huntington's counsel put on the record that he just received these
documents that day because Jasar's counsei had them in a file he did not realize that
he had. (McNee dep. 83-84). , Huntington's counsel noted that Jasar's counsel did
not intentionally withhold the documents, (McNee dep. 83-84).
{¶32} Huntington's counsel also asked McNee to provide copies of other
emails, some addresses, and pickup slips withaut having to make a formal discovery
request and McNee agreed. (McNee dep, 100-101, 103, 109). McNee admitted that
in response to the discovery requests, he did not examine the pickup slips for the
loads Jasar picked up from Capco. (McNee dep. 125-126). He also admitted that he
I did not search his emails for exchanges between Jasar and Capco or Jasar and
Huntington. (McNee dep. 139).
{133} At the conclusion of the deposition, counsel for both parties put an
agreement on the record that Jasar would provide additional information to
Huntington without the need for another discovery request. (McNee dep. 152). This
information included emails between Jasar and Capco, contact information for any
employees that were involved in the transportation of inventory from Capco to Jasar,
contact information for Brenda Hoschar, pickup slips for January 18, 19, and 20, and
an address for D&G's warehouse in Sebring. (McNee dep. 152-153).
{T34} At the September 22, 2010 hearing on the motion to compel, it came to
light that since Huntington had filed the second motion for sanctioris, Jasar had
provided Huntington with most, if not all, of the requested discovery information. a(Sept. 22, 2010, Tr. 4-5). Huntington's counsel could not point to anything specific
tihat was missing from discovery except that there were possibly some emails that
McNee could not locate, (Sept. 22, 2010, Tr. 5-6). Thus, while Jasar may not have
immediately provided all information to Huntington, as of the September 22, 2010
_..:. ..... _ , ....., .. .. . . ^ ^
_g-
hearing, Jasar had complied with the discovery requests.
{135} Additionally, at the hea(ng, the magistrate noted that in his usual
handling of discovery sanctions, when parties did not comply, he normally prohibited
them from using the evidence and prohibited them from using any documents that
were requested in their defense. (Sept. 22, 2010, Tr. 8).
1136) Because the exclusion of reliable and probative evidence is a severe
sanction the trial court should only invoke it when it is clearly necessary to enforce
willful noncomp€iance or to prevent unfair surprise. Nickey v. Brown, 7 Ohio App.3d
32, 34, 454 N.E.2d 177 (1992).
{137} In this case, the magistrate and the trial court unnecessarily imposed
the most severe sanctions on Jasar, While Jasar clearly did not comply with the
discovery requests in a timely manner and caused Huntington to file two motions to
comply, Jasar eventually did comply. By the time of the hearing on the second
motion to compel, Huntington could not point to anything that Jasar had not yet
provided except that there was a possibility that there could be more emails between
McNee and Capco. Furthermore, the magistrate stated at the hearing that normally in
this type of situation, he would disallow evidence that was not disclosed. Instead, in
this case, he imposed much more severe penalties by entering findings that a
contract existed between Capco and Jasar and that Huntington was a ttrird-party
beneficiary of the contract in addition to putting on an order barring Jasar from
^ presenting evidence supporting any affrmative defenses,
(138) Under these circumstances, the discovery sanctions constituted an
abuse of discretion. The court needlessly imposed the most severe sanctions
possib€e. The court entered findings that a contract existed between ,Iasar and
Capco and that Huntington was a third-party beneficiary to that contract. And the
court prohibited Jasar from presenting any affirmative defenses. In imposing these
sanotiQns, the court essentially entered judgment for Huntington. Accordingly,
Jasar's first assignment of error has merit.
^139} Jasar's second assignment of error states:
-9-
THE TRIAL COURT ERRED IN GRANTING HUNTINGTON'S
MOTION FOR SUMMARY JUDGMENT.
(140} Here, Jasar contends summary judgment was not appropriate. It
asserts the trial court ignored portions of McNee's deposition that created a genuine
issue of material fact. Jasar points to testimony by McNee that Capco cancelled the
Agreement because it wanted to sell its inventory to other customers and later
entered into a new agreement with Jasar to sell its remaining intrentory. Under the
alleged new agreement, Jasar was to pay Capco directly and Huntington was not a
third-party beneficiary. Jasar argues that construing these facts in its favor creates a
genuine issue of material fact to preclude summary judgment.
{141} Alternatively, Jasar argues that if this court determines that the
Agreement was in force and legally binding, summary judgment was still not proper
because there exists a factual dispute regarding Capco's performance under the
Agreement and whether Jasar accepted the inventory. It contends the inventory it
eventually removed from the building was not the same quality or quantity as Capco
had represented. Jasar states it tried to return the inventory, but Capco refused.
{142} In reviewing a trial court's decision on a summary judgment motion,
appellate courts apply a de novo standard of review. Cole v. Am. lndustries &