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SKF USA, Inc. v. Zarwasch and Heza Seals, L.L.C.

Court of Appeals of Ohio, Eighth District

June 20, 2013


Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. JL-12-475738

ATTORNEYS FOR APPELLANT Thomas C. Pavlik Rochelle L. Paley Novak Pavlik Deliberato, L.L.P. Skylight Office Tower

ATTORNEYS FOR APPELLEE: Harry W. Greenfield Theodore M. Dunn, Jr. Buckley King L.P.A., Stephen J. Sundheim Justin J. Williams Pepper Hamilton L.L.P.

BEFORE: E.A. Gallagher, J., Jones, P.J., and Keough, J.



{¶1} Appellant, Helmut Zarwasch-Weiss, appeals from the decision of the Cuyahoga County Court of Common Pleas wherein the trial court found him in contempt of court and determined that the assets of A-S Holdings, Inc., and Austro Seal, L.L.C., were part of a court-ordered receivership. Finding no merit to the instant appeal, we affirm the decision of the trial court.

{¶2} In early 2012, the United States District Court for the Northern District of Ohio entered judgment for SKF USA Inc. ("SKF"), and against appellant and Heza Seals, L.L.C. ("Heza"), in the amount of $771, 085.62. Appellant was the owner, president and managing member of Heza. During the proceedings before the district court, the court found that the appellant and Heza misappropriated SKF's trade secrets and spoliated evidence on several occasions. SKF transferred the judgment to the Cuyahoga County Court of Common Pleas.

{¶ 3} After initial attempts to collect the debt were unsuccessful, SKF moved the court to appoint a receiver over Heza's assets. The trial court conducted a hearing and appointed Robert Greenwald as receiver. The receiver order instructed Mr. Greenwald to take immediate control, possession, management and charge of records of Heza's accounting, assets and property. During that same time period, SKF also attempted to garnish appellant's wages from Heza.

{¶4} In August 2012, Mr. Greenwald reported to Heza's facilities to begin his duties under the receivership order. Mr. Greenwald testified that he knocked on the front door numerous times with no response and then walked around to the back of the building in which he entered through an open overhead door. An employee retrieved the appellant and Mr. Greenwald introduced himself, handed the appellant a copy of the receiver order and followed appellant to the office. Mr. Greenwald testified that he explained to appellant that he was there to take peaceful possession of Heza pursuant to the order. Mr. Greenwald reported that appellant responded by stating "Heza Seal no longer exists and had [Greenwald] done [his] homework [he] would have known that and [he] would have known that there aren't any assets left." Tr. 58.

{¶ 5} Mr. Greenwald testified that appellant refused to provide any information about Heza other than that it closed a while ago and the assets had been transferred to a new company. When he asked for proof of the closure and transfer, appellant told Mr. Greenwald that the documents did not exist. Appellant did offer Mr. Greenwald what he called "the remaining assets" of Heza, which were on a pallet. Appellant refused to confirm whether the pallet contained items such as customer lists or intellectual property. Additionally, appellant refused to answer Mr. Greenwald's questions about the ownership of the machines and equipment that he saw were still operating. After less than one hour, appellant told Mr. Greenwald that the conversation was finished and told him to leave.

{¶ 6} Mr. Greenwald returned later that same day with police assistance. Mr. Greenwald informed the police of the receiver order and asked for their assistance in conducting his duties. Appellant showed the police officers documents regarding the new company and the transfer of assets, documents that appellant had previously told Mr. Greenwald did not exist. The officers advised appellant to cooperate and handed the incorporation papers to Mr. Greenwald. However, before he could review the documents, appellant took them back. The officers did not get involved and Mr. Greenwald was only able to recover the material on the pallet — partial accounting records, the alleged remaining inventory, books and records including some of the financials and payroll records.

{¶7} Mr. Greenwald testified that he reviewed the records and found discrepancies in the payroll records, including payments that directly benefitted appellant and his wife. Additionally, Mr. Greenwald uncovered a second bank account used by Heza at Ohio Commerce Bank. Mr. Greenwald learned that Heza processed $10, 000 to $40, 000 per month in deposits and disbursements through this Ohio Commerce account, including payments for payroll, suppliers, vendors and payments to appellant's wife, Adelaida Zarwasch. Without Mr. Greenwald's knowledge, and after the court's receivership order, appellant liquidated and closed the Ohio Commerce Bank account.

{¶ 8} SKF conducted a deposition of appellant's wife wherein SKF learned more about the transfer of Heza's assets. Mrs. Zarwasch testified that Roland Zarwasch, the appellant's brother who lives in Austria, started a company called A-S Holding Co., Inc., that is owned by a trust. Mrs. Zarwasch explained that she is the trust's beneficiary and Roland Zarwasch is the trustee. Mrs. Zarwasch further stated that A-S Holding owns a business called Austro Seal, L.L.C., which Roland asked her to run in May 2012 when Austro Seal began its operations. Mrs. Zarwasch agreed to run the company and used her maiden name, Adelaida Segueda, on the papers for the new company and used a friend's address, not her own.

{ΒΆ 9} Through the receiver's investigation and Mrs. Zarwasch's deposition, SKF learned that immediately after Heza stopped operating, Austro Seal began operating at the same location. Mrs. Zarwasch stated that Heza stopped operating and, with no break or down time, the same employees, using the same equipment, began running Austro Seal. Mrs. Zarwasch also stated that during the transition, she called Heza's ...

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