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Hunter v. Shield

Court of Appeals of Ohio, Tenth District

June 19, 2018

Ruth A. Hunter et al., Plaintiffs-Appellants,
v.
Rhino Shield et al., Defendants-Appellees.

          APPEAL from the Franklin County Court of Common Pleas C.P.C. No. 14CV-1274

         On brief:

          Law Offices of James P. Connors, and James P. Connors, for appellants.

          Sybert, Rhoad, Lackey & Swisher, LLC, and Dave Lackey, for appellee AmCoat Industries, Inc.

         Argued:

          James P. Connors.

          Dave Lackey.

          DECISION

          SADLER, J.

         {¶ 1} Plaintiffs-appellants, Ruth A. Hunter and David G. Hunter, appeal from the July 18, 2016 judgment entry of the Franklin County Court of Common Pleas granting the motion to dismiss filed by defendant-appellee AmCoat Industries, Inc., for lack of personal jurisdiction, denying appellants' motion for sanctions, and denying appellants' motions for default judgment and renewed supplemental motion for default judgment and sanctions as moot, and appeal from the April 25, 2017 judgment entry denying appellants' motion for reconsideration. For the following reasons, we affirm the judgment of the trial court.

         I. FACTS AND PROCEDURAL HISTORY

         {¶ 2} This case concerns whether appellants established that an Ohio trial court had personal jurisdiction over appellee AmCoat Industries, Inc., a Florida corporation, in order to litigate claims arising from an Indiana entity's allegedly faulty application of the Rhino Shield ceramic coating product on appellants' Ohio residence and subsequent failure to adequately make promised repairs.

         {¶ 3} On December 31, 2012, appellants signed a contract for the application of a ceramic coating to their Ohio residence, along with preparation and repair work including pressure washing, caulking and sealing as necessary, filling in stucco cracks, and masking/shielding certain areas to prevent over-spraying. The header of the contract contains a "Rhino Shield" logo with "By Tri-State Coating, Inc." stated directly underneath the logo. (Sept. 4, 2014 Am. Compl., Ex. B at 1.) In the header, phone numbers are provided with 317 area codes and for 888-RHINO41, and website addresses are provided with names indicating Indiana, Kentucky, and Ohio. The sales representative is listed as Rudy Pallone, who provides a 614 area-code phone number. Appellant David Hunter signed the contract. The price agreed on in the contract is a total of $11, 998 with a $1, 200 down payment, a partial payment of $5, 399, and $5, 399 due on completion, with all checks made payable to "RhinoShield." (Sept. 4, 2014 Am. Compl., Ex. B at 1.) The body of the contract states the customer shall pay certain fees and costs should "Tri-State Coatings"[1] file a legal action to collect amounts due, and cancellation and any other written notices should be sent to Tri-State Coating, Inc. ("Tri-State") at a particular Indianapolis address. (Sept. 4, 2014 Am. Compl., Ex. B at 1.) The contract continues:

Tri-State Coating Limited warranty: Tri-State Coating warrants the material is of the quality specified and will transfer to the Customer all manufacturer's written warranties. Tri-State Coating warrants workmanship for two (2) years after the date of completion and will remedy substantial defects without charge to the Customer, on written notice from Customer within such period. Tri-State Coating and Customer agree that all implied warranties including, without limitations, warranties of habitability, fitness for a particular purpose and merchant ability [sic] are hereby excluded and there are no warranties or representations which extend beyond those expressly set forth in this agreement.
Tri-State Coatings makes no warranties express or implied regarding any of the products or services except the express warranties provided herein. TRI-STATE COATING EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES EXCEPT AS PROVIDED HEREIN. WITHOUT LIMITING THE FOREGOING, THERE IS NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE WITH RESPECT TO THE GOODS OR SERVICES SOLD.
* * *
Entire Understanding: Tri-State Coating is not liable or bound by any warranties, guarantees, statement, or representations made by any broker, agent, employee, or other persons representing or proposing to represent to Tri-State Coating unless expressly set forth in the Agreement. It is understood and agrees [sic] that all prior understanding and agreement between the parties are merged in the Agreement, and that Agreement alone fully and completely constitute the Final Agreement. Any subsequent changes or modification hereto shall not be binding on either party unless in writing and signed by both parties hereto.

(Sept. 4, 2014 Am. Compl., Ex. B at 2.) The December 31, 2012 contract further states that Tri-State will not be responsible for indirect or consequential damages, the buyer's remedy is limited to the price actually paid, and that "[a]ny questions, disputes, controversies, or litigation arising either directly or indirectly from [the December 31, 2012] contract" shall be submitted to arbitration conducted in Marion County, Indiana. (Sept. 4, 2014 Am. Compl., Ex. B at 2.) The contract footer states: "7745 E. 89th St. Indianapolis, IN 46256 indyrhinoshield@yahoo.com." (Sept. 4, 2014 Am. Compl., Ex. B at 2.)

         {¶ 4} On February 6, 2014, appellants filed a complaint alleging violations of the Ohio Consumer Sales Practices Act ("CSPA"), negligent and/or false misrepresentation, breach of contract, and violations of the Ohio Home Sales Solicitation Act ("HSSA") arising from claimed problems with the project. Appellants cited failures of inspection, preparation and repair work, application of the coating, and clean up as well as subsequent failures to honor warranties and remedy those problems as promised. Appellants named as defendants "Rhino Shield" under a Columbus, Ohio address, "Tri-State Coatings and Repair LLC" under a West Chester, Ohio address, "Tri-State Coating, Inc." under an Indianapolis, Indiana address, "John D. Robertson, " "Cleveland Coatings, Inc., " "Jim Williams, " and "Rudy Pallone." (Feb. 6, 2014 Compl. at 1.) Tri-State answered and asserted a third-party complaint against Alexandre Dgebuadze, a contractor hired by Tri-State to perform services on appellants' home. (Mar. 11, 2014 Answer and Third-Party Compl. at 1.)

         {¶ 5} On September 4, 2014, appellants moved for leave to file an amended complaint, and the trial court granted appellants' motion. In the amended complaint, appellants named several new defendants: "Rhino Shield" under an Indianapolis, Indiana address, "Aleksandre Dgebuadze, " "Timeless Coatings LLC", "Rhino Shield Florida" under a Destin, Florida address, "Rhino Shield" under a Brighton, Michigan address, and appellee in the instant case, "AmCoat Industries, Inc." Regarding the nature of the complaint, appellants alleged the "case arises from an agreement for home exterior painting and repair services which the defendants, who are collectively and individually known as 'Rhino Shield, ' agreed to perform for [appellant] David Hunter pursuant to written contract on December 31, 2012." (Sept. 4, 2014 Am. Compl. at 2.)

         {¶ 6} Addressing jurisdiction and the parties, the amended complaint asserts in pertinent part that "[defendants are collectively and individually known as 'Rhino Shield' in one form or another, and are believed to be a loosely organized group of foreign and domestic corporations, limited liability companies, and/or individuals based in Indiana, Kentucky, Florida, Michigan, or perhaps some other state" and that " 'Rhino Shield' is now believed to also be known as AmCoat Industries Inc. and/or Rhino Shield Florida, " entities allegedly licensed to conduct business in Michigan and not Ohio. (Sept. 4, 2014 Am. Compl. at 3.) Appellants assert that Rhino Shield conducts business nationwide through an extensive mass marketing strategy without revealing the true parent company, has "reformed information about how it conducts business, now claiming to be a nationwide network of 'distributors, ' " and held itself out as Rhino Shield when contracting with consumers but actually had the services performed and product application done by subcontractors or others. (Sept. 4, 2014 Am. Compl. at 4.)

         {¶ 7} The causes of action in the amended complaint remained the same as stated in the original complaint. In Counts 1 and 4, appellants allege the defendants violated two Ohio consumer protection statutes: the CSPA and the HSSA. In Count 2 of the amended complaint, appellants allege the defendants negligently and/or intentionally made misrepresentations to appellants on which they relied to their detriment. In Count 3, appellants allege the defendants breached the written contract of December 31, 2012 by failing to complete the agreement, failing to perform services and repair, and failing to honor warranties and guarantees, including the written warranty in the December 31, 2012 agreement (previously stated in this opinion) and a separate "25 Year Non-Prorated Transferable Limited Warranty" for the Rhino Shield ceramic coating. (Sept. 4, 2014 Am. Compl., Ex. E at 1.) The 25-year transferable warranty, which covers only the replacement of the coating material, bears the Rhino Shield name and logo with an Indianapolis address, indicates "Tri-State Coatings, Inc." as "[d]ealer, " and states that it is "valid only when the Rhino Shield Ceramic Coat Material is applied * * * in accordance with the Manufacturer's approved methods." (Sept. 4, 2014 Am. Compl., Ex. E at 1.) Appellants demanded judgment against the defendants jointly and severally "where applicable, " in an amount exceeding $25, 000 for both compensatory and punitive damages, treble damages where appropriate, interest, attorney fees, costs of the action, and further relief as deemed just and appropriate. (Sept. 4, 2014 Am. Compl. at 22.)

         {¶ 8} On January 13, 2015, appellee filed a notice of improper service, indicating that "[t]he proper service address for AmCoat is 4012 West Commons Drive, Unit 116, Destin, Florida 32541, which is the address listed with the Florida Department of State, Division of Corporation." (Jan. 13, 2015 Notice at 1.) Attached to the notice is an affidavit of AmCoat officer Steve Dominique, averring "AmCoat is a corporation organized and existing under the laws of the state of Florida" with a principal address at that Destin address as well as a print out of the state of Florida entity search for AmCoat. Appellee filed a second notice of improper service on January 26, 2015, noting the continued impropriety of service by ordinary mail under the circumstances. Appellants filed a motion for default judgment on February 10, 2015, and appellee filed a motion for sanctions against appellants and their attorney on February 12, 2015 for doing so.

         {¶ 9} The case was temporarily stayed pending a decision on arbitration involving Tri-State.[2] The case was reinstated to the court's active docket on November 10, 2015. The trial court then granted appellants' motion for default judgment against Dgebuadze on November 10, 2015 and denied Tri-State's motion for partial summary judgment on January 25, 2016.

         {¶ 10} On April 7, 2016, appellee filed an amended motion to dismiss due to failure of appellants to obtain service within one year as required under Civ.R. 3(A). Appellee noted it entered an appearance solely for the purpose of moving the court to dismiss the case against it. On April 17, 2016, appellants filed a memorandum contra appellee's motion to dismiss, as well as a renewed supplemental motion for default judgment against appellee and for sanctions pursuant to R.C. 2323.51.

         {¶ 11} Appellee filed a motion to dismiss for lack of jurisdiction and failure to state a claim on which relief can be granted on April 26, 2016.[3] Appellee argued it distributes the product Rhino Shield to the Indiana corporation Tri-State, the allegations are based on conduct between Tri-State and appellants and appellee has had no participation in any of the transactions that form the basis of the allegations, appellants had not asserted any product liability claims, and appellee has no business transactions or contacts with the state of Ohio. Thus, appellee asserts that Ohio's long-arm jurisdiction rule and statute-Civ.R. 4.3 and R.C. 2307.382-cannot be used to confer personal jurisdiction on appellee. Appellee argued, in the alternative, that appellants had failed to state a claim against appellee on which relief can be granted pursuant to Civ.R. 12(B)(6). Appellee attached the dealership/supply agreement between Tri-State and appellee, information on appellee's registered trademark for ...


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