from the Franklin County Court of Common Pleas No. 14CV-11486
E. Arnold & Associates, LPA, Damion M. Clifford, and
Alvin E. Mathews, Jr., for appellee.
K. Duncan, for appellant Bret Adams; Bret Adams, pro se.
1} Defendant-appellant, Bret Adams, appeals the
judgment of the Franklin County Court of Common Pleas entered
on March 17, 2017, adopting the magistrate's decision on
bench trial rendered November 22, 2016, and overruling
Adams' objections and supplemented objections to the
magistrate's decision. For the following reasons, we
affirm the decision of the trial court.
FACTS AND PROCEDURAL BACKGROUND
2} The record indicates that plaintiff-appellee,
Patricia Pappas, and her daughter, Christine Margarum, had
approached Adams in 2013 to work with Margarum on a project,
the Fashion Meets Music Festival ("FMMF"). Adams
was then a practicing attorney with approximately 30 years of
experience, with a focus on sports and entertainment law.
Adams and Margarum formed FM2, LLC
("FM2"), with Adams as the majority
owner and managing member and Margarum as the minority
member, to promote FMMF for the 2014 Labor Day weekend.
During 2013 and 2014, Pappas provided $549, 881 in the form
of secured and unsecured loans to help finance FMMF.
3} On November 6, 2014, Pappas filed a one-count
complaint against Adams, demanding judgment against him in
connection with a March 4, 2014 promissory note Adams had
signed, promising to repay Pappas $100, 000 plus interest at
the rate of 6 percent per annum on or before May 3, 2014. The
complaint alleges Adams had defaulted on the obligation,
warranting payment of additional interest at the rate of 8
percent per annum, as provided in the promissory note.
4} On December 8, 2014, Pappas amended her complaint
to add FM2, LLC d/b/a FMMF as a party-defendant.
The amended complaint set forth three counts and requested
judgment against Adams and FM2, jointly and
severally, in the amount of $549, 881, plus interests, costs,
and attorney fees.
5} Count 1 alleged breach of contract against
FM2 in connection with a $250, 000 promissory note
and a $100, 000 loan fee, for which Pappas sought damages in
the amount of $350, 000 plus interest. Count 2 alleged breach
of contract against Adams on the March 4, 2014 promissory
note, for which Pappas sought damages in the amount of $100,
000 plus contractual interest of 8 percent per annum. Count 3
alleged Adams and FM2 were unjustly enriched by
additional, unsecured loans Pappas had made to them in the
amount of $159, 881. Pappas sought damages in the amount of
the additional loans plus interest. Count 3 further alleged
that Adams had given Pappas a $40, 000 check post-dated
September 2, 2014, giving full assurance that the check would
be good on that date. The complaint alleges that Pappas
presented the post-dated check for payment on September 2,
2014, but it was dishonored because Adams had stopped payment
on it. Pappas sought damages for $40, 000 plus interest.
6} On February 23, 2015, Adams filed a third-party
complaint against Pappas' daughter, Margarum, alleging
that she also was a party to the March 4, 2014 promissory
note for $100, 000 whereby Adams and Margarum agreed to pay
Pappas pursuant to the terms of the note on or before May 3,
2014. That action, assigned Franklin C.P. No. 14 CV 011486,
alleged that Pappas had failed to name Margarum as a
party-defendant in her action against Adams and
FM2, but that Margarum was personally, jointly
and/or severally liable for certain damages alleged by
Pappas. Adams voluntarily dismissed his third-party complaint
against Margarum pursuant to Civ.R. 41(A), without prejudice,
on May 1, 2015.
7} On June 3, 2015, Pappas filed a motion for
partial summary judgment on Count 1 against FM2
for a $250, 000 promissory note dated July 1, 2013 and a
$100, 000 loan fee. On October 19, 2015, the trial court
granted Pappas' motion and entered judgment against
FM2 in the amount of $350, 000 plus statutory
interest from the date of judgment.
8} On December 2, 2015, a bench trial was held
before a magistrate on the remaining causes of action as set
forth under Counts 2 and 3 of the amended complaint. The
record indicates the trial was not recorded electronically,
but was recorded by a court stenographer who subsequently
filed a transcript of the proceedings with the trial court.
The parties filed post-trial briefs on December 23, 2015.
However, the record further indicates that magistrate retired
before filing a written decision and that, pursuant to Civ.R.
53 and LocR. 99.02 of the Franklin County Court of Common
Pleas, General Division, the case was referred to another
magistrate for a second bench trial.
9} On August 25, 2015, a retrial of the bench trial
was conducted by the second magistrate. Adams was the only
witness called to testify at the retrial.
10} Following the retrial, the parties submitted
proposed findings of fact and conclusions of law as ordered
by the magistrate. On November 22, 2016, the magistrate
issued a 20-page decision on bench trial, which included
detailed findings of fact and conclusions of law. In her
findings of fact, the magistrate stated as follows:
This Magistrate's Findings of Facts are based on the
testimony of the sole witness, Bret Adams, and the exhibits
introduced into evidence. This Magistrate reviewed all the
exhibits and considered each as to its weight and
credibility. The credibility of the witness was considered.
The credibility of a witness is based upon the appearance of
the witness upon the stand; his/her manner of testifying; the
reasonableness of the testimony; the opportunity he/she had
to see, hear and know the things concerning which he/she
testified; his/her accuracy of memory; frankness (or lack of
it); intelligence, interest and bias (if any); together with
all the facts and circumstances surrounding the testimony.
Of importance in deciding the Findings of Facts, this
Magistrate notes that she is free to believe all, some, or
none of the testimony of each witness appearing before her.
State v. Ellis, 8th Dist, Cuyahoga No.
98538, 2013-Ohio-1184. It should be noted that for purposes
of the Findings of Facts, this Magistrate found Adams to be
evasive and lacking credibility at times during his
(Nov. 22, 2016 Mag.'s Decision at 3.)
11} The magistrate found as not credible Adams'
testimony regarding the March 4, 2014 promissory
note for $100, 000 that Adams had drafted and signed at
Pappas' request. The magistrate stated:
7. In a check dated February 4, 2014 from Plaintiff payable
to FM2, Plaintiff loaned Adams and Margarum $50,
000.00 for the Festival. Exhibit 3. At Plaintiffs request,
Adams drafted the March 4, 2014 promissory note for
$100, 000 ("Note"). Adams testified that he did not
sign the Note to be personally responsible. Adams'
testimony to this effect lacks credibility, especially taking
into consideration Adams' extensive legal career with an
emphasis in contract law. This Magistrate notes that, in
stark contrast to the prior promissory note drafted by Adams
and executed on July 1, 2013, FM2 is listed
nowhere on the Note, the Note states "the undersigned
BRET ADAMS and CHRISTINE MARGARUM promise to pay", and
the Note is signed by Adams and Margarum personally without
any reference to FM2. The Note provides an
interest rate of 6% per annum and was due on May 3, 2014. In
the event of default, the Note provided an 8% interest rate
per annum. Exhibit 7. In a check dated March 11, 2014 from
Plaintiff to FM2, Plaintiff loaned Adams and
Margarum $60, 000.00 for the Festival. Exhibit 3. This
Magistrate finds that the checks in Exhibit 3 constitute
consideration for the Note. Adams testified that both checks
in Exhibit 3 were received by FM2, were used for
the Festival, and FM2 benefitted from the
payments. He further testified that none of the money leant
by Plaintiff as evidenced by Exhibits 3 and 7 was repaid to
(Mag.'s Decision at 4-5.)
12} The magistrate next discussed the additional,
unsecured loans totaling $189, 000 that Pappas had made, as
appeared in Exhibit 4. The magistrate considered Adams'
testimony that all of those loans were received by
FM2, were used for FMMF that FM2
benefitted from the payments, and that none of this $189, 000
was repaid to Pappas.
13} The magistrate found that Adams' had
withdrawn $323, 882 from FM2 for his personal use.
The magistrate's decision lists ten monthly withdrawals
totaling $323, 882 that Adams had made for himself in 2014.
The magistrate's decision states:
Adams could not definitively recall why he made these
payments to himself, however the totals were well above his
agreed upon monthly salary of $10, 000.00. At one point he
indicated that some of these payments could have gone toward
artist payments for the Festival. At another point he
testified that he had personally invested over $1.4 million
by selling $1 million of personal assets and receiving
personal loans from individuals and these withdrawals were to
pay himself back for his personal investment. This Magistrate
notes that Adams testimony in this regard lacks credibility
in that (1) he indicated there was absolutely no
documentation of such a large investment and/or loans from
others; (2) despite very specific notations of other payments
in the Check Detail, these substantial withdrawals noted
above gave no notation other than "Bret Adams"; and
(3) this testimony is contrary to his prior testimony that he
did not want to take any risk in his career by investing in
FM2. As such, this Magistrate finds that in 2014,
Defendant Adams withdrew $323, 882 from FM2 for
his personal use.
(Mag.'s Decision at 6.)
14} The magistrate also made a finding in regards to
the post-dated (September 2, 2014) $40, 000 check Adams had
given Pappas, and which was returned after Pappas presented
it because Adams had placed a stop payment order on the
check. The magistrate found Adams' testimony that he had
informed Pappas of the stop payment "unbelievable."
(Mag.'s Decision at 6.)
15} The magistrate's decision also sets forth
specific findings supporting Pappas' claim that Adams had
transferred FM2 assets to another entity Adams had
created, MSD Productions, LLC ("MSD"),
11.FM2 was approximately $750, 000.00 "in the
hole" prior to the 2014 Festival. Exhibit 11 shows the
extremeness of FM2' insolvency in August 2015.
In October of 2015, Adams unilaterally dissolved
FM2 internally. FM2 was dissolved
corporately, but not officially with the Secretary of State.
As of his testimony, FM2 still had over $400, 000.00 in