Washington Mut. Bank v. Beatley , 2020 Ohio 4658 ( 2020 )

[Cite as Washington Mut. Bank v. Beatley, 2020-Ohio-4658.]
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
Washington Mutual Bank, :
Plaintiff-Appellee, :
No. 19AP-614
v. : (C.P.C. No. 06CV-9066)
Jack K. Beatley et al., : (REGULAR CALENDAR)
Defendants-Appellants :
JPMorgan Chase Bank, N.A., :
Intervenor-Appellee. :
D E C I S I O N
Rendered on September 29, 2020
On brief: Kevin E. Humphreys, for appellants.
On brief: Brickler & Eckler, LLP, and Daniel C. Gibson, for
intervenor-appellee.
APPEAL from the Franklin County Court of Common Pleas
BROWN, J.
{¶ 1} This is an appeal by defendants-appellants, Jack K. Beatley and 64 W.
Northwood Avenue, LLC (collectively "appellants"), from a judgment of the Franklin
County Court of Common Pleas overruling appellants' objections to a magistrate's
decision denying their motion for contempt against intervenor-appellee, JPMorgan Chase
Bank, N.A. (hereafter "Chase").
{¶ 2} On July 14, 2006, Washington Mutual Bank, N.A. (hereafter "Washington
Mutual"), filed a complaint in foreclosure, naming as defendants Jack K. Beatley
(individually "Beatley"), 64 W. Northwood Avenue, LLC, and Don Breckenridge. The
No. 19AP-614 2
complaint alleged that Washington Mutual was the holder of a note and mortgage secured
by property located at 64 W. Northwood Avenue, Columbus, and that Beatley was in
default.
{¶ 3} On September 1, 2006, appellants filed a motion to dismiss the complaint,
pursuant to Civ.R. 12(B), asserting that Washington Mutual lacked standing to bring the
action because its name was an unregistered fictitious name as defined under R.C.
1329.01. By decision and entry filed October 26, 2006, the trial court granted the motion
to dismiss.
{¶ 4} In 2008, following appeals by the parties to this court and the Supreme
Court of Ohio, the Supreme Court substituted the Federal Deposit Insurance Company
("FDIC"), in its capacity as receiver of Washington Mutual, as the party plaintiff and real
party in interest. In June 2009, the Supreme Court dismissed appellants' appeal as
improvidently granted, and the matter was ultimately remanded to the trial court.
{¶ 5} On March 17, 2010, FDIC filed a notice of removal to the Southern District
of Ohio. Chase subsequently sought, and was granted, leave to intervene in the federal
action. In March 2011, the claims between FDIC and appellants were resolved pursuant
to a settlement and dismissal with prejudice, leaving intervenor Chase and appellants as
the only remaining parties. In February 2012, Chase filed a complaint in foreclosure in
the federal action, and appellants then filed a motion to dismiss for lack of subject-matter
jurisdiction. The federal court subsequently granted appellants' motion to dismiss,
remanding the matter to the trial court.
{¶ 6} On April 26, 2013, Chase filed a motion for summary judgment in the trial
court, asserting it was the holder of the subject note and mortgage. Appellants filed a
memorandum contra Chase's motion for summary judgment. On April 18, 2014, the trial
court filed a decision and entry denying Chase's motion for summary judgment and
dismissing the action.
{¶ 7} On December 21, 2017, appellants filed a motion for contempt against
Chase seeking an order by the trial court holding Chase in contempt for "failing to obey
the Court's Order of April 18, 2014, pursuant to R.C. 2705, et seq." (Appellants' Mot. for
Contempt at 1.) In its memorandum in support, appellants argued that Chase had
reported information to the Internal Revenue Service ("IRS") "for the issuance of a Form
No. 19AP-614 3
1099-C for Tax Year 2014 against Beatley." (Appellants' Mot. for Contempt at 4.)
Appellants asserted that issuance of the 1099-C form was in contravention of the trial
court's decision and entry of April 18, 2014 (hereafter "the 2014 decision") in which the
trial court found that any losses or consequences to be borne as a result of Chase's failure
to act as to any claims related to the note and mortgage should be borne by Chase and not
appellants.
{¶ 8} On January 8, 2018, Chase filed a memorandum in opposition to the
motion for contempt, asserting the underlying dispute came to an end when the trial court
entered the 2014 decision dismissing the action and, therefore, the trial court lacked
jurisdiction to consider a civil contempt motion. Chase further argued the 2014 decision
did not affirmatively direct it to refrain from issuing a 1099-C form. On May 25, 2018,
appellants filed a reply to Chase's memorandum contra.
{¶ 9} The matter was referred to a magistrate of the trial court who conducted a
hearing on the contempt motion. On May 29, 2018, the magistrate issued a decision
denying appellants' motion for contempt. The decision of the magistrate included the
following findings of fact:
On April 18, 2014, this Court issued a Decision and Entry.
That Entry terminated the litigation.
At a point in time after the April 18, 2014 Entry, Chase or
someone on behalf of Chase prepared an IRS Form 1099-C.
The IRS form 1099-C is used to report a discharge of
indebtedness.
Nowhere within the April 18, 2014 Entry is there language
that orders Chase to do or refrain from doing any act
concerning the 1099-C.
(Mag. Decision at 2.)
{¶ 10} The magistrate's conclusions of law provided in part: "The undersigned
reviewed the Court's Entry within the framework of contempt. The undersigned could not
locate any language that orders Chase to do or refrain from doing any act directly related
to the 1099-C. Hence, * * * Chase cannot be held in contempt – civil or criminal." (Mag.
Decision at 3.)
No. 19AP-614 4
{¶ 11} On June 8, 2018, appellants filed objections to the magistrate's decision. In
its objections, appellants argued that, while "Beatley conceded during the hearing [that]
the April 18, 2014 Entry did not specifically address a Form 1099-C, Beatley submits that
a direct reference is not necessary to find contempt." (Appellants' Objs. at 4.) On June 12,
2018, Chase filed a memorandum in opposition to appellants' objections, asserting in part
that the trial court lacked jurisdiction to consider the contempt motion to the extent it
seeks a finding of civil contempt. Chase further argued that the 2014 decision was not
sufficiently specific to support the requested contempt sanction.
{¶ 12} On August 14, 2019, the trial court issued a decision and entry overruling
appellants' objections. In its decision, the trial court held in part that appellants "failed to
prove by clear and convincing evidence that Chase failed to abide by the April 18, 2014
court order." (Aug. 14, 2019 Decision at 3.) The trial court additionally determined that
the relief sought by appellants was "remedial rather than punitive," making the motion
"one for civil contempt." (Aug. 14, 2019 Decision at 3.) The court therefore concluded
that the contempt motion was moot because "the underlying case was terminated upon
the filing of the April 18, 2014 court order." (Aug. 14, 2019 Decision at 3.)
{¶ 13} On appeal, appellants set forth the following two assignments of error for
this court's review:
[I.] THE TRIAL COURT ERRED AS A MATTER OF LAW IN
ITS CONCLUSION THAT IT HAD NO JURISDICTION TO
HOLD CONTEMPT PROCEEDINGS AFTER THE FILING OF
THE COURT'S APRIL 18, 2014, DECISION AND ENTRY
WHICH TERMINATED THE ACTION.
[II.] THE TRIAL COURT ERRED BY INCORRECTLY
INTERPRETING JUDGE REECE'S APRIL 18, 2014,
JUDGMENT, AND ENTERING A FINDING THAT CHASE'S
POST-JUDGMENT ISSUANCE OF A 1099-C AGAINST MR.
BEATLEY WAS NOT CONTRARY TO THE ADJUDICATION
BY JUDGE REECE'S [sic] SET FORTH IN THE APRIL 18,
2014 DISMISSAL ENTRY.
{¶ 14} Appellants' assignments of error are interrelated and will be considered
together. In these assignments of error, appellants contend the trial court erred in:
(1) determining it had no jurisdiction to hold contempt proceedings following the filing of
No. 19AP-614 5
the 2014 decision, and by (2) incorrectly interpreting the 2014 decision and failing to find
Chase in violation of that order for issuing a 1099-C form.
{¶ 15} Under the first assignment of error, appellants challenge the trial court's
jurisdictional determination as to the contempt motion, asserting the trial court had
inherent as well as statutory authority to enforce the findings and conclusions of the court
in the 2014 decision. In support, appellants rely in part on R.C. 2705.02(A) (providing
that a party may be punished for contempt if found guilty of "[d]isobedience of, or
resistance to, a lawful writ, process, order, rule, judgment, or command of a court or
officer").
{¶ 16} In response to the first assignment of error, Chase argues appellants
brought a motion for civil (as opposed to criminal) contempt, for which the trial court had
no continuing jurisdiction. According to Chase, because the 2014 decision involved an
unconditional dismissal by the trial court which contains no reservation of jurisdiction,
the court in the instant proceeding correctly determined it lacked jurisdiction over a civil
contempt motion.
{¶ 17} The Supreme Court has recognized that "in general, when a trial court
unconditionally dismisses a case or a case has been voluntarily dismissed under Civ.R.
41(A)(1), the trial court patently and unambiguously lacks jurisdiction to proceed." State
ex rel. Hummel v. Sadler, 96 Ohio St.3d 84, 2002-Ohio-3605, ¶ 22, citing Page v. Riley,
85 Ohio St.3d 621, 623 (1999). See also State ex rel. Rice v. McGrath, 62 Ohio St.3d 70,
71 (1991) (the trial court, "having unconditionally dismissed the underlying case, patently
and unambiguously lacked jurisdiction over it").
{¶ 18} However, despite a dismissal, "a trial court may consider certain collateral
issues not related to the merits of the action." Hummel at ¶ 23. One such collateral issue
is contempt, and "a court may exercise continuing jurisdiction depending upon the nature
of the contempt proceeding." State ex rel. Conkle v. Sadler, 10th Dist. No. 02AP-438,
2002-Ohio-6104, ¶ 9. In addressing this issue, courts "distinguish between civil and
criminal contempt proceedings." State ex rel. Corn v. Russo, 90 Ohio St.3d 551, 554
(2001). In the case of a civil contempt "[w]here the parties have settled the underlying
case that gave rise to the civil contempt motion, the contempt proceeding is moot, since
the case has come to an end." Conkle at ¶ 9, citing Corn at 555. A trial court, however,
No. 19AP-614 6
"may consider the collateral issue of criminal contempt even after the underlying action is
no longer pending." Id., citing Corn at 556. See also State ex rel. Benbow v. Runyan, 99
Ohio St.3d 410, 2003-Ohio-4127, ¶ 7, citing Corn at 556; Cooter & Gell v. Hartmarx
Corp., 496 U.S. 384, 396 (1990) ("even when a trial court has unconditionally dismissed a
case, the court retains jurisdiction to consider the collateral issue of criminal contempt").
{¶ 19} In determining if a contempt proceeding is civil or criminal, "the pertinent
test is 'what does the court primarily seek to accomplish by imposing sentence?' " Conkle
at ¶ 10, quoting Corn at 555, citing Shillitani v. United States, 384 U.S. 364, 370 (1966).
Under Ohio law, "[c]ivil contempt sanctions are designed for remedial or coercive
purposes and are often employed to compel compliance with a court order." Id. By
contrast, criminal contempt sanctions "are punitive in nature and are designed to
vindicate the authority of the court." Id., citing Corn at 555; Denovchek v. Bd. of
Trumbull Cty. Commrs., 36 Ohio St.3d 14, 15 (1988). Accordingly, "civil contempts are
characterized as violations against the party for whose benefit the order was made,
whereas criminal contempts are most often described as offenses against the dignity or
process of the court." Id., citing Corn at 555.
{¶ 20} As noted under the facts, the trial court in the instant case determined that
"[t]he requested relief is remedial rather than punitive, making Beatley's motion one for
civil contempt." (Aug. 14, 2019 Decision at 2.) On review, we agree.
{¶ 21} In their memorandum in support of the motion for contempt, appellants
asserted that Chase's action in reporting tax information (i.e., filing the Form 1099-C)
"cause[d] damages to Beatley" by "attributing Beatley with income for the year 2014."
(Appellants' Mot. for Contempt at 4.) Based on that allegation, appellants' motion sought
"a Judgment in favor of Beatley and against Chase for the amount of Beatley's tax liability,
penalties, and interest to the Internal Revenue Service caused by Chase's failure to comply
with the Order plus any related expenses and costs, as well as reasonable attorney fees,
caused by Chase's contemptuous conduct, including * * * costs and fees incurred in
bringing this Motion." (Appellants' Mot. for Contempt at 5-6.)
{¶ 22} Under Ohio law, if sanctions sought in a contempt proceeding "are
primarily designed to benefit the complainant through remedial or coercive means, then
the contempt proceeding is civil." Denovchek at 16. As set forth above, the contempt
No. 19AP-614 7
motion alleged damages to appellants and requested monetary compensation (i.e., the
amount of Beatley's tax liability, penalties and interest, as well as any related expenses,
costs and attorney fees) as a result of Chase's issuance of the tax reporting form. As
determined by the trial court, the relief sought under the motion is fairly characterized as
remedial, i.e., for the benefit of appellants and, therefore, in the nature of civil contempt,
not criminal. Further, the record supports Chase's contention that the 2014 decision of
the trial court dismissing the underlying action contained no language reserving
jurisdiction. Accordingly, we find no error in the trial court's conclusion that it lacked
jurisdiction to consider a subsequent civil contempt motion.
{¶ 23} However, even assuming the alleged contempt could be characterized as
criminal in nature (i.e., to vindicate the authority of the court), we find no error by the
trial court in its further determination that appellants failed to prove Chase was in
violation of the 2014 decision. As noted above, appellants' second assignment of error
challenges the trial court's interpretation of the 2014 decision and its failure to find Chase
in contempt for violating that decision.
{¶ 24} In asserting before the trial court that Chase was in contempt, appellants
relied on the following language from the 2014 decision: "Therefore, the Court finds any
losses or consequences to be borne as a result of Chase's failure to act – timely or
otherwise – with respect to any claims related to the subject note and mortgage should be
borne by Chase and/or the FDIC, not by the Beatley Defendants." (Apr. 18, 2014 Decision
at 25.)
{¶ 25} The magistrate, on review of the 2014 decision, found no language "that
orders Chase to do or refrain from doing any act directly related to the 1099-C." (Mag.
Decision at 3.) The trial court similarly determined the 2014 decision contained no
language prohibiting Chase "from filing a 1099 tax document." (Aug. 14, 2019 Decision
at 3.) The court therefore concluded: "Beatley has failed to prove by clear and convincing
evidence that Chase failed to abide by the April 18, 2014 court order." (Aug. 14, 2019
Decision at 3.)
{¶ 26} A reviewing court "will not reverse the decision of the court below in a
contempt proceeding in the absence of a showing of an abuse of discretion." State ex rel.
Ventrone v. Birkel, 65 Ohio St.2d 10, 11 (1981). In order to be "guilty of contempt for
No. 19AP-614 8
failure to comply with a court order, there must be an order with which the person
charged has failed to comply." Godward v. Kory, 5th Dist. No. 2010-CA-00350, 2011-
Ohio-5265, ¶ 20, citing S. Euclid Fraternal Order of Police, Lodge 80 v. D'Amico, 29 Ohio
St.3d 50 (1987). Further, "[i]f the contempt charge is premised on a party's failure to obey
an order of the court, then the order must be clear and definite, unambiguous and not
subject to dual interpretations, and the contemnor must have knowledge of the order."
Id. See also Doles v. Doles, 4th Dist. No. 1085 (May 9, 1985) ("In determining whether an
order has been violated in the context of contempt proceedings, the order will not be
expanded by implication beyond the meaning of its terms.").
{¶ 27} A review of the 2014 decision supports the findings of the magistrate and
trial court that there is no language expressly prohibiting Chase from issuing a tax
information form, and we note appellants acknowledge such fact in their brief. We
further note that the language in the 2014 decision regarding any losses or consequences
to be borne by Chase and/or FDIC appears to be, in context, directed to the trial court's
discussion of the fact there was a purchase and assumption agreement between Chase and
FDIC and that appellants were "not parties" to that agreement. (Apr. 18, 2014 Decision
at 25.) Again, however, the 2014 decision contains no directive (or even reference) to tax
reporting issues.
{¶ 28} In general, "[p]roceedings for contempt for noncompliance will not lie
where the order does not expressly address the alleged act of disobedience." Cortland
United Methodist Church v. Knowles, 11th Dist. No. 2006-T-0110, 2007-Ohio-3383, ¶ 34.
Here, given the absence of any specific order prohibiting the complained conduct (and
assuming, arguendo, the trial court had jurisdiction to consider the motion), we find no
abuse of discretion by the trial court in declining to hold Chase in contempt for an alleged
violation of the 2014 decision.
{¶ 29} Based on the foregoing, appellants' two assignments of error are overruled,
and the judgment of the Franklin County Court of Common Pleas is hereby affirmed.
Judgment affirmed.
KLATT and BEATTY BLUNT, JJ., concur.
____________________