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Heck v. Pagano

Court of Appeals of Ohio, Ninth District, Summit

November 15, 2017

JOHN HECK, et al. Appellants
v.
SCOTT PAGANO dba ANY EXCUSE FOR A PARTY Appellee

         APPEAL FROM JUDGMENT ENTERED IN THE COURT OF COMMON PLEAS COUNTY OF SUMMIT, OHIO CASE No. CV 2015-04-2195

          JOEL A. HOLT, Attorney at Law, for Appellants.

          THOMAS C. LOEPP, Attorney at Law, for Appellee.

          DECISION AND JOURNAL ENTRY

          DONNA J. CARR, PRESIDING JUDGE.

         {¶1} Appellant, John Heck, appeals the judgment of the Summit County Court of Common Pleas. This Court reverses and remands.

         I.

         {¶2} The instant litigation arises out of a business dispute between Scott Pagano and John Heck, two men who entered into a partnership agreement regarding an entity known as SloMo Booths, LLC ("SloMo"). The nature of the business venture involves designing, manufacturing, and selling slow motion photo booths for the special event industry.

         {¶3} On April 6, 2015, Pagano's business, Any Excuse for a Party, filed a complaint against Heck and SloMo that included a demand for an accounting as well as a claim for money damages. Pagano's central allegation was that Heck, who was responsible for maintaining the accounting books for SloMo, had breached the partnership agreement by failing to provide monthly and quarterly reports to Pagano. Heck filed an answer generally denying the allegations in the complaint. Significantly, Heck also filed a counterclaim alleging that Pagano had failed to perform a number of his duties under the partnership agreement, including booking trade show appearances and contributing to the design, marketing, and selling of the product. Pagano filed an answer generally denying all of the allegations in the counterclaim.

         {¶4} As the litigation unfolded, the parties became entangled in a discovery dispute, a dispute that rests at the center of the instant appeal. Pagano filed an initial request for discovery at the same time he filed the complaint. Thereafter, on January 5, 2016, the trial court approved an agreed protective and confidentiality order. The agreed order set forth guidelines for what would constitute confidential information for the purposes of the litigation and further outlined parameters for how that information would be handled by the parties. Approximately one month later, Pagano filed a motion to compel discovery asserting that Heck had failed to produce an accounting of the business as requested. Pagano attached Heck's deposition in support of the motion to compel and asserted that Heck had acknowledged during his deposition testimony that he was responsible for providing accounting reports to Pagano under the terms of their agreement. The trial court subsequently issued a journal entry granting the motion and ordering Heck to produce all outstanding discovery within 30 days.

         {¶5} On February 26, 2016, the trial court issued a journal entry reflecting numerous stipulations by the parties regarding a variety of procedural matters, including several discovery issues as well as the filing of an amended complaint. The sixth subheading referenced the January 5, 2016 protective and confidentially order and purported to supplement the order with respect to several discovery items. One such paragraph stated that the parties agreed that Pagano should not be permitted to "achieve the object of this action for an accounting by seeking to require defendants to yield such information to [Pagano] without a court's first entering a final judgment declaring [Pagano's] entitlement thereto."

         {¶6} Pagano filed an amended complaint substituting himself in his individual capacity as plaintiff in place of his company. Heck and SloMo filed an amended answer and counterclaim. Pagano filed an answer to the amended counterclaim generally denying the allegations.

         {¶7} Thereafter, Heck provided answers to certain discovery requests. At that time, Pagano filed a second motion to compel discovery. On June 21, 2016, the trial court issued a journal entry granting the motion and ordering Heck to "produce all outstanding discovery, including a full accounting, within thirty (30) days of the date of this Entry & Order." Heck initially filed a motion to reconsider the discovery order. In support of the motion to reconsider, Heck argued that they could not provide an accounting of the business during the discovery phase because the issue of whether they had an obligation to do so was an underlying issue in the litigation. In addition to filing a memorandum in opposition to the motion for reconsideration, Pagano filed a motion for sanctions. On August 8, 2016, the trial court issued a journal entry denying the motion for reconsideration and setting a hearing date on the motion for sanctions.

         {¶8} After the trial court denied the motion for reconsideration, Heck filed a motion to modify the trial court's June 21, 2016 discovery order on the basis that the order was "inconsistent with the terms of [the] stipulated order entered by this court on February 26, 2016[.]" Therein, Heck again posited that it would be improper to require the business to furnish an accounting prior to the trial court determining that issue on the merits. Pagano filed a memorandum in opposition to the motion to modify, arguing that the trial court had already settled the discovery dispute between the parties.

         {¶9} On August 25, 2016, the trial court issued a journal entry captained, "Order Modifying June 21, 2016, Order Compelling Discovery Nunc Pro Tunc[, ]" wherein the court amended its prior discovery order to remove the language compelling Heck to provide a "full accounting" of the business. The trial court took this action with the aim of being consistent with the prior ...


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