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Boaeuf v. Memphis Station, L.L.C.

Court of Appeals of Ohio, Eighth District, Cuyahoga

March 1, 2018


         Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-15-841995

          ATTORNEY FOR APPELLANT Charles W. Zepp Seeley, Savidge, Ebert & Gourash Co., L.P.A.

          ATTORNEYS FOR APPELLEES Gerry Davidson William S. Creighton Jeffrey J. Fanger Fanger & Associates, L.L.C. Nicholas Weiss John F. McIntyre

          BEFORE: Stewart, J., E.A. Gallagher, A.J., and Laster Mays, J.



         {¶1} Plaintiff-appellee Ernest Boaeuf, through his corporation Memphis March 2014, L.L.C., and defendant-appellant Memphis Station, L.L.C., entered into an asset purchase agreement for the sale of a bar and grill, and liquor permit. Boaeuf began operating the tavern, but made only one full payment and one partial payment on a cognovit note that he issued to Memphis Station. Memphis Station obtained a cognovit judgment and then sold all of the assets included in the asset purchase agreement, including the liquor permit, to another buyer. Boaeuf brought this action against Memphis Station, raising several claims, only one of which survived trial - a conversion claim relating to the sale of the bar assets to a third party. The magistrate who conducted the trial found that Memphis Station's sale of the bar assets to another buyer was an unauthorized act of dominion over assets belonging to Boaeuf. The magistrate ordered damages of $25, 000 for the liquor permit, $30, 000 for the bar assets, $20, 000 in punitive damages, and attorney fees in the stipulated amount of $24, 000. The court approved and adopted the magistrate's decision over objections by Memphis Station.

         {¶2} On appeal, Memphis Station argues that the court erred by rejecting its claim that Boaeuf's abandonment of the premises was a defense to the conversion claim, that the court's valuation of the business assets was against the manifest weight of the evidence, and that the court erred by awarding punitive damages and attorney fees.

         I. Abandonment

         {¶3} Memphis Station argues that the evidence showed that Boaeuf abandoned the premises before it sold the bar assets to another party, thus defeating the conversion claim.

         {¶4} "[Conversion is the wrongful exercise of dominion over property to the exclusion of the rights of the owner, or withholding it from his possession under a claim inconsistent with his rights." Joyce v. Gen. Motors Corp., 49 Ohio St.3d 93, 96, 551 N.E.2d 172 (1990).

         {¶5} This case is an example of the common law maxim nemo dat quod non habet (also known as the nemo dat rule): "No one in general can sell personal property and convey a valid title to it unless he is the owner or lawfully represents the owner." Mitchell v. Hawley, 83 U.S. 544, 550, 21 L.Ed. 322 (1872). When Memphis Station sold the bar assets to Boaeuf, it gave up any right or title to those assets; they belonged to Boaeuf. By selling bar assets that it no longer held title to, Memphis Station converted Boaeuf s assets.

         {¶6} Memphis Station does not dispute these legal principles, but argues that Boaeuf had closed the bar and permanently abandoned the bar assets. Indeed, abandonment of property - where the owner has relinquished all right, title, claim, and possession with the intention of not reclaiming it or resuming its ownership, possession, or enjoyment - is an affirmative defense to conversion. McCain v. Brewer, 2d Dist. Darke No. 2014-CA-8, 2015-Ohio-198, ¶ 17. Memphis Station supports its abandonment argument by citing Boaeuf s testimony that the bar business was "not the kind of business that I wanted to be in" and that "in my mind the deal was over" and "so we walked away."

         {¶7} Memphis Station does not give full context to Boaeuf s testimony. The evidence showed that Boaeuf had been managing the bar because it "didn't have a liquor license, and we didn't have a lease." The evidence showed that the Ohio Department of Liquor Control cancelled the application to have the liquor permit transferred to Boaeuf. And as he managed the business while waiting for the transfer of the liquor permit, Boaeuf discovered that some of the bar customers were drug dealing from the bar. When he barred those people from the premises, "the business just evaporated." These two factors - the liquor permit and the clientele - are what caused Boaeuf to "walk away" from operating the bar.

         {¶8} The law makes it clear that "[m]ere non-use is not sufficient to establish the fact of abandonment, absent other evidence tending to prove the intent to abandon." Perez Bar & Grill v. Schneider, 9th Dist. Lorain No. 11CA010076, 2012-Ohio-5820, ΒΆ 32. Boaeuf's trial testimony that he decided to "walk away" from the bar business did not necessarily mean that he had abandoned the bar assets. Indeed, he testified that despite closing the bar, he intended to sell the bar assets to pay off the outstanding balance on the cognovit note. And we note that Boaeuf s statement about walking away from the bar business was made at trial; Memphis Station offered no evidence to show that it confirmed Boaeuf s intentions prior to selling the bar assets to the third party. This was an important omission because Memphis Station had already received a cognovit judgment for the contract price of the bar assets. We conclude that the court relied ...

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