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McConnell v. Bare Label Productions, Inc.

Court of Appeals of Ohio, Eleventh District, Trumbull

December 29, 2017

RICHARD McCONNELL, Plaintiff-Appellant,
v.
BARE LABEL PRODUCTIONS, INC., et al. Defendants, TAMMY SCHMITT, Intervening Defendant-Appellee

         Civil Appeal from the Trumbull County Court of Common Pleas, Case No. 2008 CV 00278.

          Robert N. Farinacci, (For Plaintiff-Appellant).

          Bruce M. Broyles, (For Intervening Defendant-Appellee).

          OPINION

          DIANE V. GRENDELL, J.

         {¶1} Plaintiff-appellant, Richard McConnell, appeals the Judgment Entry of the Trumbull County Court of Common Pleas, following this court's remand in McConnell v. Bare Label Prods., Inc., 11th Dist. Trumbull No. 2013-T-0050, 2015-Ohio-1206. The issue before this court is whether a trial court must comply with the mandate of an appellate court where the judgment is supported by a majority of judges hearing the cause. For the following reasons, the judgment of the lower court is modified and reversed, and this cause is remanded to the trial court for further proceedings consistent with this opinion.

         {¶2} The underlying case, originally filed on January 24, 2008, involved claims against intervening defendant-appellee, Tammy Schmitt, for violation of R.C. 1701.37, interference with a business relationship, breach of a fiduciary duty, and punitive damages/attorney fees. The factual and procedural history of this case is set forth in McConnell, 2015-Ohio-1206.

         {¶3} Following trial to the court, judgment was entered against Schmitt in the amount of $23, 030 on April 9, 2013. McConnell appealed.

         {¶4} After the case had been pending for twenty-three months on appeal, on March 31, 2015, this court issued the following Judgment Entry, constituting the mandate of this court: "The order of this court is that the judgment of the Trumbull County Court of Common Pleas is reversed and this cause is remanded for further proceedings consistent with the opinion." App.R. 27 ("[a] court of appeals may remand its * * * judgments * * * to the court below for further proceedings therein" and "[a] certified copy of the judgment shall constitute the mandate"). In accord with Section 3(B)(3), Article IV of the Ohio Constitution, this Judgment was rendered by two judges of this court - the second judge concurring in judgment only. Id. ("[a] majority of the judges hearing the cause shall be necessary to render a judgment"). The third judge concurred in part and dissented in part.

         {¶5} Upon remand, the trial court determined that it was without "clear directive" as to how to proceed, as "the authored opinion was not joined by enough jurists to create a majority as to the body of its work."

         {¶6} On April 28, 2015, the trial court entered judgment against Schmitt in the amount of $23, 071 for lost profits of the business during the first six months of operation, $23, 071 for lost profits during the remaining six months of McConnell's employment contract; and $1 for punitive damages.

         {¶7} On May 26, 2015, McConnell filed a Notice of Appeal. On appeal, McConnell raises the following assignments of error:

         {¶8} "[1] The court erred to the prejudice of plaintiff in again finding that appellant was not entitled to an award of statutory forfeiture damages pursuant to R.C. 1701.94 contrary to the clear directives of the reviewing court."

         {¶9} "[2.] The court erred to the prejudice of plaintiff in failing to include significant and primary revenue sources in its calculation of lost profits contrary to the clear directives of the reviewing court."

         {¶10} "[3.] The court erred to the prejudice of plaintiff in failing to award lost profits beyond the term of the management agreement contrary to the clear directives of the reviewing court."

         {¶11} "[4.] The trial court erred to the prejudice of appellant by failing to award as damages his percentage of ownership of Club Pink's property removed by the appellee just prior to sale and then returned immediately thereafter contrary to the clear directives of the reviewing court."

         {¶12} "[5.] The trial court erred to the prejudice of appellant by failing to award attorneys fees to appellant and only awarding one dollar in punitive damages contrary to the clear directives of the reviewing court."

         {¶13} In the first assignment of error, McConnell claims the trial court failed to comply with this court's mandate in the prior appeal to award statutory damages pursuant to R.C. 1701.94. We agree.

         {¶14} On this issue in the prior appeal, the trial court had found in favor of Schmitt on McConnell's claim that she violated R.C. 1701.37(C), by failing to produce corporate records upon request. This court reversed and remanded with instructions for "the lower court * * * to either reinstate the December 26, 2012 Judgment [awarding McConnell statutory fines in the amount of $47, 580 for violating 1701.37(C)], or, if it finds this amount to be in error, to recalculate the amount of statutory damages to which McConnell is entitled." McConnell, 2015-Ohio-1206, at ¶ 38.

         {¶15} Instead of complying with this court's mandate, the trial court concluded that the determination that Schmitt had violated R.C. 1701.37(C) was against "the manifest weight of the direct evidence" and so would "not impose a statutory penalty." The court further stated that it could not "in good conscience simply revert to [the December 26, 2012 Judgment] as suggested by the author of the appellate decision."[1]

         {¶16} It is well-established law that "an inferior court has no discretion to disregard the mandate of a superior court in a prior appeal in the same case." Nolan v. Nolan, 11 Ohio St.3d 1, 462 N.E.2d 410 (1984), syllabus; Calvaruso v. Calvaruso, 9th Dist. Summit No. 21781, 2004-Ohio-1877, ¶ 30. "[T]he rule is necessary to ensure consistency of results in a case, to avoid endless litigation by settling the issues, and to preserve the structure of superior and inferior courts as designed by the Ohio Constitution" Nolan at 3; State ex rel. Potain v. Mathews, 59 Ohio St.2d 29, 32, 391 N.E. 343 (1979) ("[t]he [Ohio] Constitution does not grant to a court of common pleas jurisdiction to review a prior mandate of a court of appeals").

         {¶17} It is equally well-established that "[a] judge shall comply with the law." (Emphasis sic.) Jud.Cond.R. 1.1; Disciplinary Counsel v. O'Neill, 103 Ohio St.3d 204, 2004-Ohio-4704, 815 N.E.2d 286, ¶ 10 ("[b]y refusing to comply with the mandate of an appellate court, respondent violated [a] basic judicial duty").

         {¶18} The trial court justified the violation of its judicial duty on the grounds that "[t]he opinion from the Appellate Court was not a majority opinion, " but, "[r]ather, it was authored by one jurist" while "[a]nother jurist concurred in the judgment only." In doing so, the court misconstrued what constituted this court's judgment and what constituted this court's opinion. The opinion is a "written statement explaining [the court's] decision in a given case." Black's Law Dictionary 1125 (8th Ed.2004). The court's opinion is distinct from its judgment which is "[a] court's final determination of the rights and obligations of the parties in a case." Id. at 858. The opinion in the 2015 McConnell appeal was unsupported by a majority of the judges, but the judgment did have the support of a majority of judges. The fact that the opinion lacked precedential value did not absolve the inferior court in the case from abiding by this court's judgment.

         {¶19} The first assignment of error is with merit. The trial court's April 28, 2015 Judgment Entry is reversed with respect to the denial of statutory damages. Based on the record, judgment is entered in favor of McConnell in the amount of $47, 580 on Count I of the Amended Complaint (Violation of O.R.C. §1701.37 by Defendant Schmitt).

         {¶20} In the second and third assignments of error, McConnell challenges the trial court's award of lost profits on remand.

         {¶21} In the prior appeal, this court held as follows with respect to lost profits:

McConnell presented sufficient evidence of Club Pink's profitability to merit an award of lost profits beyond his seven-month period of employment. * * * Given the totality of the evidence, the trial court should have fashioned an appropriate remedy to compensate McConnell, not only for lost shareholder profits during his period of employment, but also for the period after his employment, during which he remained a 49% shareholder.
McConnell's losses as a 49% owner of Masury Real Estate * * * were demonstrated with reasonable certainty. * * * McConnell is entitled to $35, 770, representing his share of the rents * * *

McConnell, 2015-Ohio-1206, at ¶ 45-46.

         {¶22} On remand, the trial court partially complied with this court's mandate. The court awarded McConnell $23, 071 "for lost profits during his operation of the club, " and $23, 071 "for lost profits for the remaining six months under his employment contract."

         {¶23} The trial court did not, however, award McConnell lost profits from Masury Real Estate. Rather, the court construed this court's judgment that "McConnell is entitled to $35, 770, representing his share of the rents" as "dicta" which it "decline[d] to follow."

         {¶24} As noted above, this court's judgment was supported by a majority of the judges and the trial court is without discretion to disregard it.

         {¶25} The second and third assignments of error are with merit. The trial court's April 28, 2015 Judgment Entry is reversed with respect to future lost profits from Masury Real Estate. Based on the record, judgment is entered in favor of McConnell in the amount of $35, 770 representing "[o]ne-half (1/2) of the rental monies collected or entitled to be collected by Masury Real Estate, Inc." See page 9 of the Amended Complaint.

         {¶26} In the fourth and fifth assignments of error, McConnell contends the trial court did not enter a proper award of punitive damages in accordance with this court's previous decision.

         {¶27} In the prior appeal, this court held as follows with respect to punitive damages:

On remand, the trial court should fashion an award of punitive damages, taking into consideration McConnell's testimony regarding attorney fees and the removal of property and equipment from the club building.

McConnell, 2015-Ohio-1206, at ¶ 51; also id. at ¶ 49 ("[p]unitive damages may [be] awarded based on a claim of breach of fiduciary duty where there is a demonstration of 'actual malice'").

         {¶28} The trial court made a pretense of complying with this court's judgment, stating, "in review of the evidence presented, * * * the Appellate Court is correct" Thereupon, the court "award[ed] McConnell $1.00 (ONE DOLLAR) in punitive damages against Schmitt after taking ...


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