Natl. Contracting Group, Ltd. v. P&S Hotel Group, Ltd. , 2021 Ohio 2940 ( 2021 )

[Cite as Natl. Contracting Group, Ltd. v. P&S Hotel Group, Ltd., 2021-Ohio-2940.]
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
National Contracting Group, Ltd., :
Plaintiff-Appellee, :
No. 20AP-144
v. : (C.P.C. No. 14CV-11760)
P&S Hotel Group, Ltd., : (REGULAR CALENDAR)
Defendant-Appellant. :
D E C I S I O N
Rendered on August 26, 2021
On brief: Strip, Hoppers, Leithart, McGrath & Terlecky
Co., L.P.A., and Aaron C. Firstenberger, for appellee.
On brief: Sanjay K. Bhatt, for appellant.
APPEAL from the Franklin County Court of Common Pleas
KLATT, J.
{¶ 1} Defendant-appellant, P&S Hotel Group, Ltd., appeals a judgment of the
Franklin County Court of Common Pleas in favor of plaintiff-appellee, National Contracting
Group, Ltd. For the following reasons, we affirm.
{¶ 2} National Contracting Group was a commercial construction contractor based
in Delaware County, Ohio. P&S is a limited liability company that owns a hotel in
Reynoldsburg, Ohio. In 2010, P&S contracted with National Contracting Group to convert
its hotel from a Country Inn & Suites brand hotel to a Holiday Inn Express brand hotel (the
"Holiday Inn project"). National Contracting Group completed the Holiday Inn project in
late 2010 or early 2011.
No. 20AP-144 2
{¶ 3} On June 24, 2011, representatives for P&S and National Contracting Group
met and agreed that P&S could satisfy its outstanding financial obligation for the Holiday
Inn project by paying $254,915.22 to National Contracting Group. National Contracting
Group sent P&S an invoice for that amount.
{¶ 4} The same individuals who are the members of P&S are also the members of
another limited liability company, PVS, Ltd. PVS owns a hotel near Polaris Fashion Place
in Columbus, Ohio. In 2012, PVS hired National Contracting Group to convert its hotel
from a Wingate by Wynham brand hotel to a Four Points by Sheraton brand hotel (the
"Four Points project").
{¶ 5} On May 23, 2012, PVS caused its bank to wire $100,000 to National
Contracting Group to be applied to the amount PVS owed National Contracting Group for
the Four Points project. However, National Contracting Group applied the $100,000
payment from PVS to the outstanding balance P&S owed to National Contracting Group for
the Holiday Inn project.
{¶ 6} Later in 2012, National Contracting Group asked the Delaware County Court
of Common Pleas to appoint a receiver to wind down its affairs. On December 12, 2012,
pursuant to R.C. 1705.44, the Delaware County Court of Common Pleas appointed Martin
Management Services, Inc. ("Receiver") as the receiver for the business and assets of
National Contracting Group.
{¶ 7} When the Receiver examined National Contracting Group's records, it
discovered the $100,000 wire transfer from PVS that National Contracting Group had
applied to P&S' account. In January 2013, the Receiver instructed National Contracting
Group's bookkeeper to reverse the $100,000 credit applied to P&S' account and instead
apply that credit to the outstanding balance due from PVS to National Contracting Group
on the Four Points project. The bookkeeper complied with these instructions.
{¶ 8} After performing this bookkeeping modification, the amount due from P&S
to National Contracting Group for the Holiday Inn project was $183,915.22. On January 11,
2013, the bookkeeper, on behalf of the Receiver, sent an invoice to P&S showing an
outstanding balance in the amount of $183,915.22 due to National Contracting Group for
the Holiday Inn project. P&S received the invoice and did not question or object to the
No. 20AP-144 3
amount owed, but made no further payments to National Contracting Group or the
Receiver.
{¶ 9} The Receiver demanded payment in the amount of $183,915.22 from P&S in
letters dated April 2 and 25, 2013. P&S did not respond to either letter.
{¶ 10} On November 14, 2014, National Contracting Group filed a complaint against
P&S seeking $183,915.22 in damages. P&S answered and asserted a counterclaim, in which
P&S claimed that National Contracting Group breached the parties' contract by not paying
for tile and carpet installed during the Holiday Inn project.
{¶ 11} The parties tried their case before a magistrate. In a decision dated March 9,
2018, the magistrate rendered findings of fact consistent with the facts set out above. The
magistrate found in National Contracting Group's favor on its claim for breach of contract.
With regard to the counterclaim, the magistrate determined that P&S had proven a breach
of contract related to the tile and/or tile installation National Contracting Group did not
pay for, but P&S did not prove a breach relating to the carpet. Because P&S paid $63,781.09
for tile and/or tile installation, the magistrate deducted that amount from the $183,915.22
P&S owed National Contracting Group, resulting in a damages award of $118,134.13, plus
interest.
{¶ 12} P&S objected to the magistrate's decision. In a judgment issued February 18,
2020, the trial court overruled P&S' objections and adopted the magistrate's decision.
{¶ 13} P&S now appeals the February 18, 2020 judgment, and it assigns the
following errors:
[1.] The trial court erred in finding that the Receiver had lawful
authority to reverse payment applications of $100,000 (wire
transfer) and $10,000 (check) made to [National Contracting
Group] by another entity, PVS, Ltd.[,] on behalf of P&S Hotel.
[2.] The trial court erred in failing to award damages to P&S
Hotel upon finding that [National Contracting Group] had
breached the parties' contract by its failure to pay Mohawk
Carpet all of the outstanding invoices.
{¶ 14} By its first assignment of error, P&S challenges the Receiver's authority to
reverse payments originally applied to P&S' account and instead apply those payments to
the amount due for the Four Points project. This court, however, cannot address this
collateral attack on the Receiver's authority.
No. 20AP-144 4
{¶ 15} Initially, we may summarily deal with the $10,000 payment. Although P&S
claims that two payments are at issue in this assignment of error, the evidence shows that
the Receiver only reversed one payment: the $100,000 wire transfer. PVS paid National
Contracting Group $10,000 via a check dated June 15, 2012, and National Contracting
Group applied the $10,000 to the amount P&S owed for the Holiday Inn project. However,
unlike the $100,000 credit stemming from the wire transfer, the Receiver did not reverse
the credit arising from the $10,000 check. Thus, the $10,000 payment is irrelevant to this
assignment of error.
{¶ 16} We are left, then, with the question of whether the Receiver's authority
encompassed the ability to transfer the $100,000 credit from P&S' account to PVS' account.
The Receiver asserts that it had the necessary authority, pointing to the order appointing it
Receiver. In relevant part, that order states:
4. The Receiver is authorized to enter, take possession of,
manage, operate, protect, and have complete and exclusive
charge and control of all of the assets, business and operations
of [National Contracting Group] including, without limitation,
all * * * accounts * * * (collectively the "Company Assets").
***
6. The Receiver is authorized to do all things and to take all
actions, in his judgment, that are necessary or appropriate to
preserve, protect and/or maintain the Company Assets * * *.
(Ex. A, Compl.)
{¶ 17} R.C. 2735.04(B) delineates the powers a trial court may grant a receiver. This
list includes the power to "[g]enerally do any other acts that the court authorizes." R.C.
2735.04(B)(8). Consequently, R.C. 2735.04(B) enables "the trial court to exercise its sound
judicial discretion to limit or expand a receiver's powers as it deems appropriate." State ex
rel. Celebreeze v. Gibbs, 60 Ohio St.3d 69, 67-68 (1991).
{¶ 18} Because the appointing court defines the powers of the receiver, it controls
the receiver's actions. Dispatch Printing Co. v. Recovery L.P., 10th Dist. No. 14AP-473,
2015-Ohio-381, ¶ 25. Ultimately, the receiver is a trustee or ministerial officer of the
appointing court, subject to that court's order and direction. Id. at ¶ 24-25. Therefore, a
receiver's authority cannot be collaterally attacked in another court. Grant v. A.B. Leach &
No. 20AP-144 5
Co., 280 U.S. 351, 360 (1930); Young v. FirstMerit Bank, NA, N.D.Ohio No. 1:06CV1486
(Feb. 1, 2007); Castlebrook, Ltd. v. Dayton Properties Ltd. Partnership, 78 Ohio App.3d
340, 345 (2d Dist.1992).
{¶ 19} Here, pursuant to the court order, the Receiver possessed the power to
manage National Contracting Group's accounts, and the Receiver purportedly exercised
that power by reversing a credit on one account and applying it to a different account. P&S
knew about the Receiver's actions. In January 2013, P&S received a revised invoice
indicating it owed National Contracting Group $183,915.22 for the Holiday Inn project.
National Contracting Group twice demanded payment of $183,915.22 in April 2013.
Darshan Shah, a P&S partner, testified that he understood after receiving an April 2013
demand for payment that the Receiver had reversed the credit for the $100,000 wire
transfer, thus increasing the amount P&S owed to $183,915.22.
{¶ 20} At that time, P&S' recourse was to address the Receiver's alleged overreach
with the Delaware County Court of Common Pleas, the appointing court. As the appointing
court, the Delaware County Court of Common Pleas could decide whether the Receiver
exceeded the bounds of the authority that that court had granted it. P&S, however, did not
seek a ruling from the appointing court. P&S did not challenge the Receiver's authority
until the current litigation in a court that did not appoint the Receiver.
{¶ 21} We cannot entertain P&S' argument because it attacks the Receiver's
authority collaterally rather than on a direct appeal from the appointing court. Therefore,
we cannot render the relief P&S seeks; namely, a ruling that the Receiver unlawfully
exceeded his authority by reversing the $100,000 credit originally applied to P&S' account
and applying that credit to PVS' account. Accordingly, we overrule P&S' first assignment of
error.
{¶ 22} By its second assignment of error, P&S argues that the trial court erred in
failing to award it damages upon finding that National Contracting Group breached the
parties' contract by not paying Mohawk Carpet Distribution, Inc. for the carpet installed
during the Holiday Inn project. We disagree.
{¶ 23} At trial, P&S presented evidence that National Contracting Group ordered
carpet for the Holiday Inn project from Mohawk Carpet. Although National Contracting
Group paid for some carpet, it did not pay the entire bill as required by the Holiday Inn
No. 20AP-144 6
project contract. On May 13, 2011, Mohawk Carpet filed an affidavit for a mechanic's lien
in the amount of $45,231.73 against P&S' property. On September 16, 2013, Mohawk
Carpet filed a release of its lien. According to P&S, it paid $17,668 to obtain a release of the
lien.
{¶ 24} To prove a breach of contract, a party must establish the existence and terms
of a contract, its performance of the contract, the other party's breach of the contract, and
damages or loss. Delta Fuels, Inc. v. Ohio Dept. of Transp., 10th Dist. No. 15AP-28, 2015-
Ohio-5545, ¶ 30. With regard to the damages element, the nonbreaching party must
establish the fact of damage and, absent a claim for nominal damages, sustain its burden of
proof as to amount of that damage. Id. As a general rule, a party seeking damages for
breach of contract must present sufficient evidence to show entitlement to damages in an
amount ascertainable with reasonable certainty. Father's House Internatl., Inc. v. Kurguz,
10th Dist. No. 15AP-1046, 2016-Ohio-5945, ¶ 39.
{¶ 25} Here, the trial court found that National Contracting Group did not breach
the parties' contract because P&S failed to produce credible evidence regarding the amount
of damages it sustained. Although Darshan Shah, a P&S partner, testified that P&S paid
$17,668 to secure a release of the mechanic's lien, P&S presented no documentary evidence
to corroborate this testimony. The trial court found Shah's testimony, alone, unconvincing
proof of the amount of P&S' monetary loss. P&S now contests that conclusion.
{¶ 26} We review P&S' challenge under the manifest weight of the evidence
standard. " 'Weight of the evidence concerns "the inclination of the greater amount of
credible evidence, offered at trial, to support one side of the issue rather than the other. * * *
Weight is not a question of mathematics, but depends on [the evidence's] effect in inducing
belief." ' " (Emphasis deleted.) Eastley v. Volkman, 132 Ohio St.3d 328, 2012-Ohio-2179,
¶ 12, quoting State v. Thompkins, 78 Ohio St.3d 380, 387 (1997), quoting Black's Law
Dictionary 1594 (6th Ed.1990). Thus, in reviewing a judgment under the manifest weight
standard, an appellate court weighs the evidence and all reasonable inferences, considers
the credibility of witnesses, and determines whether in resolving the conflicts in the
evidence, the trier of fact clearly lost its way and created such a manifest miscarriage of
justice that the judgment must be reversed, and a new trial ordered. Id. at ¶ 20. In
conducting a manifest weight review, an appellate court must make every reasonable
No. 20AP-144 7
presumption in favor of the trial court's judgment and findings of fact. Id. at ¶ 21. If the
evidence is susceptible to more than one construction, an appellate court must interpret it
in the manner most consistent with the judgment. Id.{¶ 27} While we do not doubt that Mohawk Carpet received compensation in order
to release the mechanic's lien, we agree with the trial court that Shah's testimony is
inadequate evidence of the amount that P&S paid. Specifically, Shah testified, "From what
I remember, [P&S paid] around $17,668." (June 23, 2016 Tr. at 148-49.) Given the
inexactitude of this testimony, we lack confidence in the accuracy of the information
imparted. Additionally, we fail to see why P&S could not adduce a record of the payment.
When asked why he offered no documentation to support his testimony, Shah stated, "I
believe it was part of when it was refinanced during that time it was paid." Id. at 175. We
can make no sense of this answer. We thus conclude that the trial court did not err in
finding no breach of contract arising out of the failure to pay Mohawk Carpet. Accordingly,
we overrule P&S' second assignment of error.
{¶ 28} For the foregoing reasons, we overrule P&S' first and second assignments of
error, and we affirm the judgment of the Franklin County Court of Common Pleas.
Judgment affirmed.
BROWN and MENTEL, JJ., concur.