Court of Appeals of Ohio, Eleventh District, Lake
ULTIMATE SALON AND SPA, INC., Plaintiff-Appellant/ Cross-Appellee,
LEGENDS CONSTRUCTION GROUP, Defendant-Appellee/ Cross-Appellant.
Appeal from the Willoughby Municipal Court, Case No. 2017 CVF
J. Hawkins, OH 44095 (For
Russell Andrew Randazzo, Randazzo Law, L.L.C., OH 44113 (For
TIMOTHY P. CANNON, J.
Appellant, Ultimate Salon and Spa, Inc.
("Ultimate"), and cross-appellant, Legends
Construction Group ("Legends"), appeal the May 7,
2018 judgment of the Willoughby Municipal Court. The trial
court entered judgment in favor of Ultimate against Legends,
in the amount of $5, 000.00 on Ultimate's claim for
return of its security deposit. The trial court entered
judgment in favor of Legends on its counterclaim for breach
of the parties' lease agreement, in the amount of $15,
000.00, resulting in a net judgment for Legends in the amount
of $10, 000.00.
This case stems from the lease agreement entered into between
the parties on October 20, 2006. Ultimate leased from
Legends' space in the commercial property located at
36005 Lakeshore Boulevard in Eastlake, Ohio for the purpose
of running a cosmetology business. The lease states the
leased premises is "approximately 3, 000 sq. feet."
The lease term was for "one (1) three-year period with
two (2) three-year period options commencing on January 1,
2007 and ending on December 31, 2015." Ultimate was to
pay a total of $72, 000.00 for the first full term, payable
in monthly installments of $2, 000.00. For the first
three-year option, Ultimate was to pay a total of $90, 000.00
in monthly installments of $2, 500.00, and for the second
three-year option, Ultimate was to pay a total of $99, 000.00
in monthly installments of $2, 750.00. Ultimate occupied the
premises from January 1, 2007, through December 31, 2016.
On March 21, 2017, Ultimate filed a small claims action
against Legends in the Willoughby Municipal Court for the
return of a security deposit in the amount of $5, 000.00. The
complaint alleged: "Plaintiff and defendant entered into
a lease in Jan. of 2007[.] Plaintiff has met all obligations
pursuant to the lease and vacated the premises. Defendant has
violated the lease by failing to return the security
deposit." Attached to the complaint were several
exhibits: (1) a letter from Ultimate's attorney to
Matthew Miozzi, President of Legends, demanding the $5,
000.00 security deposit; (2) a letter to Legends from Frank
and Ann Bergant, co-owners of Ultimate, regarding vacating
the leased premises; (3) a declaration of facts by Frank
Bergant, signed by Frank and Ann Bergant; and (4) an undated
lease agreement signed by Ann Bergant as lessee and Frank
Bergant as witness with a handwritten note at the top, which
states, "2nd lease 1st page [and]
last page [different] from original lease." The undated
lease contains no signature on the signature block designated
for the lessor.
After the case was transferred to the regular docket on April
11, 2017, Legends filed an answer, denying the allegations in
the complaint and denying the content of the exhibits.
Legends also filed a counterclaim, alleging that Ultimate
breached the lease agreement when it failed to return the
leased premises in the same condition it was received.
Legends alleged Ultimate made "in excess of $50, 000,
worth of alterations, changes, and construction changes to
the premises" during the term of the lease, and Legends
spent "tens of thousands of dollars in construction
costs" to return the premises to its pre-lease
condition. Legends requested monetary damages in the amount
of $15, 000.00. The following documents were attached to the
answer and counterclaim: (1) several plans depicting the
layout of the leased premises; (2) the lease agreement of
October 20, 2006, signed by Matthew Miozzi as lessor, Ann
Bergant as lessee, and a witness; and (3) permits from the
City of Eastlake Building Department. Ultimate filed an
answer to the counterclaim on May 26, 2017.
On December 1, 2017, Ultimate filed a motion for summary
judgment. Ultimate contended that two lease agreements
existed between the parties: (1) the October 20, 2006 lease
agreement and (2) a subsequent lease agreement sent to
Ultimate by Legends in "October or November of
2007," which was the same document that was attached to
its complaint. Ultimate argued that under both lease
agreements, it was entitled to the return of the security
deposit. Attached to its summary judgment motion were copies
of both lease agreements and the affidavits of Frank and Ann
On December 14, 2017, Ultimate filed a motion for a
protective order, requesting an order of protection
"prohibiting the Defendant from obtaining any
information concerning the independent contractors used by
the Plaintiff in the pursuit of its business." Ultimate
maintained that Legends sent a set of interrogatories and a
request to produce, "requesting proprietary information
concerning the identities and rates of compensation between
Plaintiff and its independent contractors."
On January 2, 2018, Legends filed a "Brief in Opposition
to Plaintiffs Motion For Summary Judgment and Defendant's
Motion for Summary Judgment." Legends argued it never
executed the purported second lease agreement, noting the
agreement does not indicate the parties to the lease and was
not signed by Legends or one of its representatives. Legends
contended it was entitled to judgment on its breach of
contract claim because Ultimate breached multiple terms of
the October 20, 2006 lease agreement, to wit: (1) Ultimate
"allowed other business owners to operate their own
businesses out of the Leased Premises in violation [of]
Section 2 of the Lease Agreement"; (2) "Ultimate
breached the rent obligation of the Lease Agreement" in
violation of Section 18; and (3) Ultimate returned the leased
premises in a condition materially different from the
condition it was received on January 1, 2007. Legends further
argued that due to its breach of the lease agreement,
Ultimate was not entitled to return of the security deposit.
No exhibits were attached to the motion for summary judgment.
On the same day, however, Legends filed a "Notice of
Filing of Deposition Transcript and Exhibits." Attached
to that notice were the depositions of Frank and Ann Bergant
and Matthew Miozzi; plans depicting the leased premises;
Ultimate's 2015 income tax return; the October 20, 2006
lease agreement; permits from the City of Eastlake Building
Department; and notes from the "Division of
Inspection" dated October 25, 2007.
A magistrate's decision was issued on January 30, 2018,
which addressed Ultimate's motion for a protective order
and the parties' competing motions for summary judgment.
Regarding Ultimate's motion for a protective order, the
magistrate's decision states:
Plaintiff has requested an order of protection prohibiting
Defendant from obtaining any information, either through
discovery, or at trial regarding independent contractors used
by the Plaintiff in pursuit of its business. It is the
position of the Defendant that the independent contractors
are "legally not employees' and therefore permitting
them to work in the leased premises was in violation of the
Lease. Defendant cites no authority where independent
contractors engaged in the salon business, working solely at
a salon, are not employees for purposes of the salon
Whether a worker is an 'employee' or 'independent
contractor' is critical when it comes to such issues as
pension eligibility, workers' compensation, and wage and
hour law. The Internal Revenue Service has an interest in
this distinction, perhaps more than other agencies.
Additionally, an important distinction on the definition of
an employee vs. an independent contractor is whether the
service provided by the independent contractor is an integral
part of the employer's business. See U.S. v.
Silk, 331 U.S. 704, 67 S. C.t. 1463, 1469, 91 L.Ed. 1757
(1947). There is no argument where salon workers are not
integral to the work in a salon.
The protection order is granted as to no discovery may be had
regarding the subject of independent contractors used by the
Plaintiff in the pursuit of its business.
magistrate's decision further states that there remain
genuine issues of material fact to be litigated and that both
motions for summary judgment are denied. Neither party filed
objections to the magistrate's decision.
The trial court entered an order adopting the
magistrate's decision on the same day. The trial court
ordered Ultimate's motion for a protection order was
granted and summarily denied both motions for summary
The matter proceeded to a bench trial on March 23, 2018.
Frank Bergant, Vice-President of Ultimate, testified that he
first approached Matthew Miozzi in the summer of 2006 about
renting space in the building at 36005 Lakeshore Boulevard.
He and his wife Ann Bergant intended to use the space for
their salon and spa business. The parties entered into a
lease agreement in October 2006. The building had previously
been a Burger King restaurant, and renovations were necessary
to make it suitable for a salon. Mr. Bergant testified he
paid Mr. Miozzi to renovate the leased premises. After the
renovations, the Bergants took possession of the premises on
January 1, 2007.
Towards the end of 2007, the Bergants wanted to expand their
business. After a discussion with Mr. Miozzi, they took
possession of an additional 1, 000 square feet of the
building. They paid Mr. Miozzi to renovate the expansion. Mr.
Bergant explained: "We paid him to do the remodel of it,
because it was his building and he asked if he can do the
Mr. Bergant testified that after acquiring the additional
area, Mr. Miozzi sent him a new lease agreement. The second
lease agreement was entered into evidence. It does not list a
lessor and lessee and is undated. It also states a different
lease term and payment terms than the first lease. The term
of the second lease is "for one (1) three-year period
with one (1) five-year period option commencing on January 1,
2007 and ending on December 31, 2014." The payment terms
For the initial term, Lessee shall pay to Lessor at the
address specified above as rent ("Base Rent") for
the Premises for the full term thereof the sum of $79,
200.00, payable in payments of $2, 000.00 for the first
twelve (12) months and $2, 300.00 for the next twenty-four
(24) months on the first day of each month for the term of
this lease. Base Rent owed for any period less than a
calendar month shall be computed on pro-rated basis. For the
first five-year option, the total sum of $162, 000.00 in
sixty (60) monthly payments of $2, 700.00.
are two handwritten notes in the margins of the second lease.
Next to the description of the premises, which states it is
"approximately 3, 000 sq. feet," there is a
handwritten "4, 000-". Next to the payment terms
there is a handwritten "3, 500-". Mr. Bergant
testified those notes were made by Mr. Miozzi and were in his
handwriting. Mr. Bergant explained the note of "4,
000" reflected the increased square footage of the
leased premises and the note of "3, 500" indicated
the increased rent.
Mr. Bergant testified that he and his wife signed the new
agreement and returned it to Mr. Miozzi. When presented with
the new lease agreement, Mr. Bergant affirmed it was not
signed by Mr. Miozzi. The only signatures on the lease are
"Frank Bergant" on the signature block for
"Witness" and "Ann M. Bergant" on the
signature block for "Lessee." Mr. Bergant testified
they began paying $3, 500.00 in rent beginning in 2010.
Additional renovations were made to the premises in 2011,
which included relocation of the ceiling. Mr. Bergant
testified that subsequently there was also "work done on
our reception area, our pedicure area and our hair station
area where we had the ceilings lowered down." All of the
renovations were discussed with Mr. Miozzi, and Mr. Bergant
explained: "Since it was his building, again he wanted
to do the work. So we paid him."
Mr. Bergant testified he believed Mr. Miozzi was doing all
the renovation work through "Legends Construction,"
the same company that was the landlord for the building. He