Mazzurco v. Aeon Fin., L.L.C. , 2016 Ohio 3324 ( 2016 )

[Cite as Mazzurco v. Aeon Fin., L.L.C., 2016-Ohio-3324.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 103537
MARK MAZZURCO, ET AL.
PLAINTIFFS-APPELLEES
vs.
AEON FINANCIAL, L.L.C., ET AL.
DEFENDANTS-APPELLANTS
JUDGMENT:
AFFIRMED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-14-833492
BEFORE: Celebrezze, J., Jones, A.J., and Boyle, J.
RELEASED AND JOURNALIZED: June 9, 2016
ATTORNEY FOR APPELLANT
David N. Patterson
Patterson & Simonelli
33579 Euclid Avenue
Willoughby, Ohio 44094
ATTORNEY FOR APPELLEES
David A. Freeburg
McFadden, Freeburg Co., L.P.A.
6690 Beta Drive, Suite 320
Mayfield Village, Ohio 44143
FRANK D. CELEBREZZE, JR., J.:
{¶1} Appellant, Aeon Financial, L.L.C. (“Aeon”), appeals a judgment rendered
against it for damages that resulted from a real estate transaction. After a thorough
review of the record and law, this court affirms.
I. Factual and Procedural History
{¶2} On September 29, 2014, M&I Properties Development, Inc. and its owner,
Mark Mazzurco (collectively “M&I”), filed an action against Aeon, Patriot Land Title
Agency, Ltd. (“Patriot”), Tony D’Eusanio, Jr., and Martha Neff. M&I asserted claims of
negligence and misrepresentation against D’Eusanio and Neff; breach of contract and
fiduciary duty, and negligence against Patriot; and breach of contract and warranty
against Aeon. M&I’s claims alleged that it endeavored to purchase a condominium unit
using its realtor, D’Eusanio.
{¶3} The unit, located at 23823 Banbury Circle, Warrensville Heights, Ohio, was
marketed by Neff on behalf of its owner, Aeon. Patriot handled the title work for the
transaction. The unit to which Aeon had title was Unit D, but the unit shown to
Mazzurco was actually a different unit in the building, Unit F. The property descriptions
contained within the deeds for the building described the units according to letter, but the
units were physically labeled using numbers. Aeon did not hold title to Unit F, but after
the sale was completed, M&I took possession of Unit F, made improvements, and then
discovered the issue approximately one year later.
{¶4} The trial court set a discovery schedule at a case management conference and
ordered the parties to complete discovery by June 29, 2015. Aeon moved for additional
time to propound its first set of interrogatories, which the trial court denied on January 26,
2015. On February 11, 2015, M&I moved the court to allow them to amend their
complaint to assert an additional fraud claim against Aeon, which the court granted.
{¶5} On March 3, 2015, Aeon filed a motion for summary judgment. M&I
responded in opposition. While the motion was pending, M&I filed a notice of partial
dismissal indicating they had settled the claims against Patriot, D’Eusanio, and Neff.
M&I also sought additional time to file expert reports and filed a motion to compel
discovery. They asserted that Aeon was served with discovery requests including
interrogatories and for production of documents in November 2014, to which no response
had been received. They then served Aeon with a letter giving it until April 13, 2015 to
respond or they would seek court intervention. Again, no response was received. On
May 7, 2015, the court issued an order granting M&I’s motion to compel. The court
gave Aeon 15 days to comply, or “the failure of [Aeon] to comply with this order may
result in sanctions as set forth in Civ.R. 37(B), including payment of fees and/or judgment
being rendered.”
{¶6} On May 22, 2015, M&I filed a motion to show cause asserting that Aeon had
failed to comply with the court’s order. The court scheduled a contempt hearing on June
29, 2015, and indicated that Aeon “must demonstrate cause why it should not be held in
contempt of court for its failure to comply with this court’s [May 17, 2015] discovery
order. A failure to demonstrate cause at this hearing may result in sanctions under Civ.R.
37(B) including judgment being rendered.” The hearing was conducted and the court
ordered Aeon to comply with M&I’s discovery requests by July 10, 2015.
{¶7} On July 14, 2015, M&I filed a motion for sanctions for Aeon’s failure to
comply with the court’s discovery orders. Attached to the motion were Aeon’s responses
to discovery, which M&I felt were inadequate. The court scheduled a hearing for
August 11, 2015, and again warned Aeon that it must demonstrate that its responses were
complete under Civ.R. 26 and that a failure to do so would result in judgment being
rendered and attorney fees. On August 19, 2015, that hearing took place. Afterward,
the court granted M&I’s motion and rendered judgment in their favor and against Aeon.
The court set a hearing to determine damages.
{¶8} After that hearing, it issued an order awarding damages to M&I in the amount
of $13,050 and $3,028 in attorney fees. Aeon then filed this appeal assigning two errors
for review:
I. The trial court erred to the prejudice of [Aeon] by awarding
compensatory damages in favor of [M&I] against [Aeon].
II. The trial court erred to the prejudice of [Aeon] by awarding [M&I]
attorney fees against [Aeon] for alleged discovery disputes.
II. Law and Analysis
A. Damages Award
{¶9} Aeon first argues that the court erred in awarding damages to M&I. Aeon
claims there was no basis for an award of damages against it because it never had any
face-to-face dealings with Mazzurco. It further alleges that M&I was not harmed as a
result of taking possession of the wrong condominium unit.
{¶10} This court, sitting en banc, has addressed the appropriate measure of
damages for fraudulent misrepresentation in a real estate transaction. Northpoint
Properties v. Charter One Bank, 8th Dist. Cuyahoga No. 94020, 2011-Ohio-2512.
“[T]he appropriate inquiry is whether competent evidence of damages has been presented
to establish with reasonable certainty an amount sufficient to fully and fairly compensate
the aggrieved party.” Id. at ¶ 36. This court went over the various methods of
calculating damages in fraudulent misrepresentation cases and set forth, “it is recognized
that the benefit-of-the-bargain rule may be an appropriate measure of damages when this
measure can be established by proof in accordance with the usual rules of certainty in
damages.” Id. at ¶ 35, citing Restatement of the Law 2d, Torts, Section 549, Comments g
& h. See also Molnar v. Beriswell, 122 Ohio St. 348, 352, 171 N.E. 593 (1930), citing
Linerode v. Rasmussen, 63 Ohio St. 545, 59 N.E. 220 (1900) (“[T]he measure of damage
in [fraudulent misrepresentation] cases is the difference between the actual value of the
property at the time of purchase and sale and its value at that time, had the property been
as it was represented to be.”).
{¶11} Here, M&I presented evidence of the value of the condominium unit it was
shown, $30,000, and the value of the unit it was actually conveyed, $11,000.1 The court
found awarding the difference between the two was an appropriate measure of damages.
Mazzurco also paid roughly $11,000 in the transaction.
1
This, coupled with $7,800 for a year of lost rent that resulted, fairly compensated M&I
according to the trial court. 2 The court used a longstanding method of calculating
damages to arrive at an appropriate amount to make M&I whole. See Northpoint.
Further, there is substantial, reliable evidence supporting the trial court’s decision.
{¶12} Aeon argues that there is no evidence of fraud on its part so the court could
not employ such a method for calculating damages. It goes on to argue there is no
evidence of wrongdoing on its part at all, so the court should have awarded no damages.
{¶13} The trial court entered judgment in favor of M&I on all claims against Aeon
as a sanction for violating numerous discovery orders. Aeon does not argue this was
error. M&I’s amended complaint alleged a fraud claim against Aeon. Therefore, Aeon
was found liable for fraud. The trial court did not award punitive damages or attorney
fees for fraud, but that does not negate the fact that the trial court entered judgment on all
claims, including fraud. Aeon’s argument that there was no evidence of fraud is
disingenuous given that Aeon never provided appropriate discovery to M&I, and as a
result, they were relieved of the responsibility of presenting such evidence.
{¶14} The court held a damages hearing where it indulged Aeon’s attempt to
establish that it was not culpable for any damages, but that was not the purpose of the
hearing and M&I cannot be expected to present evidence as to liability where Aeon did
not comply with discovery requests and that issue was previously resolved.
The court deducted $13,750 from this amount to account for money M&I received when the
2
other parties in the case settled.
{¶15} The real issue before this court is whether the trial court’s damage award
was supported by substantial, reliable evidence. It was.
B. Attorney Fees
{¶16} Aeon next argues that there was no basis to award attorney fees to M&I as a
result of Aeon’s discovery violations.
{¶17} Civ.R. 37(D) provides in part:
If a party * * * fails * * * to serve answers or objections to interrogatories
submitted under Rule 33, after proper service of the interrogatories, * * *
the court in which the action is pending on motion and notice may make
such orders in regard to the failure as are just, and among others it may take
any action authorized under subsections (a), (b), and (c) of subdivision
(B)(2) of this rule. In lieu of any order or in addition thereto, the court shall
require the party failing to act or the attorney advising him or both to pay
the reasonable expenses, including attorney’s fees, caused by the failure,
unless the court expressly finds that the failure was substantially justified or
that other circumstances make an award of expenses unjust.
(Emphasis added.)
{¶18} Courts have broad discretion over discovery matters. State ex rel. Abner v.
Elliott, 85 Ohio St. 3d 11, 16, 706 N.E.2d 765 (1999). This discretion extends to
sanctions imposed as a result of discovery violations under Civ.R. 37(D). State ex rel.
Citizens for Open, Responsive & Accountable Govt. v. Register, 116 Ohio St. 3d 88,
2007-Ohio-5542, 876 N.E.2d 913, ¶ 18, citing Ruwe v. Springfield Twp. Bd. of Trustees,
29 Ohio St. 3d 59, 61, 505 N.E.2d 957 (1987); Covington v. MetroHealth Sys., 150 Ohio
App.3d 558, 2002-Ohio-6629, 782 N.E.2d 624, ¶ 24 (10th Dist.). In order to have an
abuse of discretion, “the result must be so palpably and grossly violative of fact or logic
that it evidences not the exercise of will but the perversity of will, not the exercise of
judgment but the defiance of judgment, not the exercise of reason but instead passion or
bias.” Nakoff v. Fairview Gen. Hosp., 75 Ohio St. 3d 254, 256, 662 N.E.2d 1 (1996).
{¶19} In its brief, Aeon makes the preposterous statement that “[n]othing, in the
Record reveals that the Appellees made any reasonable effort to resolve the alleged
disputed discovery.” Appellant’s brief at 6. While Aeon may wish to focus on its
discovery responses that the court found inadequate, this ignores Aeon’s intransigence
from November 2014 to July 2015 and its complete failure to respond to prior repeated
requests and orders.
{¶20} M&I filed their initial discovery requests in November 2014. They
attempted to work with Aeon in receiving responses as evidenced by letters in the record.
After no response, M&I sought the help of the court by filing motions to compel, show
cause, and for sanctions. Aeon missed all the deadlines set by the trial court without
providing any discovery except the final deadline of July 10, 2015. The court determined
that these responses were inadequate and ordered judgment in favor of M&I as a sanction.
Aeon’s stated reason for failing to timely comply — it assumed an attorney that was
initially working on the case but was later replaced sent appropriate discovery responses
— is unavailing in the face of multiple orders and discovery hearings that occurred after
the initial attorney withdrew.
{¶21} The attorney who originally represented Aeon withdrew from the case on
March 11, 2015, and new counsel entered a notice of substitution on April 6, 2015.
After that, Aeon failed to produce discovery in compliance with the court’s motion to
compel, show cause order, and contempt hearing. Aeon finally provided discovery
responses that were sent in July, which stated without explanation that the party
answering the propounded interrogatories was the original attorney for Aeon that was
removed from the case. This attorney was not an employee or representative of Aeon.
{¶22} At the damages hearing, M&I produced evidence in the way of invoices for
the work their attorney did in the case. These itemized invoices documented the time the
attorney spent in attempting to get discovery from Aeon. An attorney also testified to the
reasonableness of the hours expended and the hourly rate of $225 to $250 that M&I’s
attorney charged in the representation. Aeon offered nothing to seriously counter this
evidence. The trial court had a sufficient basis to award attorney fees in the amount of
$3,028. The court did not abuse its discretion in awarding reasonable attorney fees
incurred by M&I for Aeon’s recalcitrance.
III. Conclusion
{¶23} The trial court did not err in awarding M&I $13,050 in damages that
resulted from the real estate transaction between M&I and Aeon. The court also did not
err in awarding reasonable attorney fees in the amount of $3,028 to M&I as a result of
Aeon’s violations of the trial court’s discovery orders.
{¶24} Judgment affirmed.
It is ordered that appellees recover of appellant costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent out of this court to said 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.
_________________________________________________________
FRANK D. CELEBREZZE, JR., JUDGE
LARRY A. JONES, SR., A.J., and
MARY J. BOYLE, J., CONCUR