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Sunshine Limited Partnership v. C.A.S.T.L.E. High School, Inc.

Court of Appeals of Ohio, Eighth District, Cuyahoga

June 14, 2018

SUNSHINE LIMITED PARTNERSHIP PLAINTIFF-APPELLEE
v.
C.A.S.T.L.E. HIGH SCHOOL, INC. DEFENDANT-APPELLANT

          Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-15-849042

          ATTORNEYS FOR APPELLANT Walter T. Madison Diana Marie Feitl Lucas K. Palmer Roetzel & Andress, L.P.A.

          ATTORNEY FOR APPELLEE Thomas L. Colaluca

          BEFORE: Keough, J., Kilbane, P.J., and Stewart, J.

          JOURNAL ENTRY AND OPINION

          KATHLEEN ANN KEOUGH, J.

         {¶1} Defendant-appellant, C.A.S.T.L.E. High School, Inc. ("CASTLE") appeals from the trial court's judgment that granted default judgment in favor of plaintiff-appellee, Sunshine Limited Partnership ("Sunshine"), and entered judgment against CASTLE in the amount of $379, 993.73 in damages and $103, 821.95 in attorney fees. For the reasons that follow, we reverse and remand.

         I. Background

         {¶2} CASTLE is an Ohio nonprofit corporation operating a charter school within the Cleveland Municipal School District. In 2004, CASTLE entered into an agreement with Sunshine to lease property owned by Sunshine to house its school. In 2010, the agreement was extended through October 2014. In August 2014, CASTLE advised Sunshine that it would not be renewing the lease.

         {¶3} In July 2015, Sunshine filed suit against CASTLE and various individual defendants for breach of contract, promissory estoppel, and fraud. CASTLE answered the complaint and asserted various affirmative defenses and a counterclaim for declaratory judgment that the lease was void and for fraud. The trial court subsequently granted the motions to dismiss of the individual defendants, leaving CASTLE as the sole defendant.

         {¶4} At a case management conference, the trial court set various dates, including deadlines for discovery and dispositive motions, as well as for a final pretrial to be held on June 20, 2016.

         {¶5} In early February 2016, Sunshine filed a motion to compel discovery from CASTLE, asserting that it had served its first discovery requests on CASTLE in December 2015, but CASTLE had not yet responded. The trial court granted the motion and ordered CASTLE to produce the requested discovery within 14 days of the date of its order. CASTLE did not produce the requested discovery, however, and in March 2016, Sunshine filed a motion to dismiss CASTLE's counterclaim and for sanctions as a result of CASTLE's failure to comply with the court's order. In its response, CASTLE asserted that it had not yet responded because the requests were "voluminous" and it was trying to locate the documents. The court met with the attorneys in March 2016, to resolve the discovery dispute and apparently granted CASTLE more time to comply with Sunshine's discovery requests. It denied Sunshine's motion to dismiss and for sanctions.

         {¶6} In April 2016, both Sunshine and CASTLE filed motions for summary judgment. Sunshine also filed a renewed motion to dismiss CASTLE's counterclaim and for sanctions, asserting that although CASTLE had responded to its discovery requests, the responses were inadequate. The trial court did not rule on either the motions for summary judgment or Sunshine's motion to dismiss.

         {¶7} Instead, it held a settlement conference on June 20, 2016. Counsel for CASTLE appeared for the conference but without a client who had authority to settle the case. As a result, the trial court set a settlement conference for June 27, 2016, ordering that "all parties with ultimate binding settlement authority must be present in person." When counsel for CASTLE was an hour late for the conference, the trial court entered default judgment in favor of Sunshine. The court's journal entry states:

Settlement conference held 6/27/16 at 10:30 a.m. Counsel for the plaintiff was present. Counsel for the defendant failed to appear. The court waited for defendant's counsel to appear for one hour before granting default. This settlement conference was set because defendant did not come to a previously scheduled settlement conference with proper authority to settle this matter, as required by court order. Counsel for defendant was informed that any further failures to abide by the court orders would result in default. Accordingly, defendant's counsel's failure to appear on time hereby results in default being granted for the plaintiff. A default hearing on damages only is hereby set for 08/04/16 at 10:00 a.m. Parties should be prepared to present evidence of the damages in this matter at that time, and/or have authority, in person, to ...

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