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Heartland Federal Credit Union v. Horton

Court of Appeals of Ohio, Second District

July 3, 2013

MATTHEW HORTON Defendant-Appellant

(Civil Appeal from (Common Pleas Court) Trial Court Case No. 2010-CV-3856

BARRY W MANCZ, Atty. Reg. #0011857, Rogers & Greenberg, LLP, Attorney for Plaintiff-Appellee.

GREGORY M. GANTT, Atty. Reg. 0064414, Attorney for Defendant-Appellant.



{¶1} Defendant-appellant Matthew Horton appeals the decision of the Montgomery County Common Pleas Court granting judgment in favor of plaintiff-appellee Heartland Federal Credit Union on its conversion claim against him and awarding treble damages.

{¶2} From approximately November 2004 through April 2005, Heartland contracted with Corporate Construction Services, Inc. (CCS) for construction services on three different projects. Heartland dealt with Horton who was employed with CCS and was a 10% shareholder and vice president as well. Heartland directed payments intended for CCS's construction services to Horton, often making the checks payable to him. Horton deposited the money into his personal bank account.

{¶3} In March 2005, a receiver was appointed to control, manage, and liquidate the assets of CCS in Franklin County Common Pleas Court case no. 2007-CV-9488. The receiver sued Heartland on behalf of CCS to recover the money for the construction services rendered on the three projects (Heartland I). It was not until discovery in Heartland I that Heartland learned of Horton's conversion and misappropriation of the money it had paid him intended for CCS. Prior to trial, Heartland settled with the receiver for $25, 000.00, incurring $27, 096.75 in attorney fees in the process.

{¶4} On May 7, 2010, Heartland sued Horton for misappropriation and conversion in the Montgomery County Common Pleas Court. Horton subsequently filed a motion to dismiss on the basis of collateral estoppel, waiver, and res judicata. He argued that those doctrines barred Heartland's present lawsuit since it was a party to CCS's receivership litigation in Heartland I and he was in privity with CCS as 10% shareholder and vice president. The motion was later summarily overruled by the trial court.

{¶5} The matter proceeded to a trial before a magistrate on February 17, 2011. On April 21, 2011, the magistrate issued his decision finding that Horton had utilized the payments from Heartland for his own personal use causing Heartland to sustain damages of at least $62, 056.70. In addition to the $52, 096.75 Heartland incurred in settling the lawsuit initiated against it by the court appointed receiver on behalf of CCS, the magistrate noted that Heartland had overpaid $9, 959.95 on the third project due to an asphalt reduction. The magistrate also awarded treble damages for a total judgment in favor of Heartland and against Horton in the amount of $186, 170.01. The magistrate also summarily rejected Horton's defenses of waiver, laches, estoppel, and res judicata, finding that none of those defenses was applicable to the facts of this case.

{¶6} Horton filed objections to the magistrate's decision without filing a concomitant transcript of the February 17, 2011 proceedings before the magistrate. The trial court remanded the case to the magistrate to address whether res judicata barred the present action based on what could have been litigated in Heartland I. The court also asked the court to clarify the award of the actual damages and explain why treble damages were appropriate.

{¶7} In response to the trial court's remand, the magistrate issued a follow-up decision on December 29, 2011. The magistrate clarified that the actual damages amount of $62, 056.70 represented the $9, 959.95 cost overrun on the third project plus the $25, 000.00 Heartland settled with receiver in Heartland I and the $27, 096.75 it incurred in attorney fees associated with that litigation. The magistrate found that Horton's actions were so egregious as to allow for treble damages. As for Horton's res judicata defense, the magistrate concluded that it did not apply to this case because Heartland I was settled and never proceeded to a valid final judgment.

{¶8} Horton filed objections to the magistrate's second decision which the trial court subsequently overruled on September 14, 2012. This appeal followed.

{¶9} Horton raises three assignments of error, the first of which states:


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