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American Surface Solutions, L.L.C. v. Nicholas North America

Court of Appeals of Ohio, Eighth District, Cuyahoga

July 18, 2019

AMERICAN SURFACE SOLUTIONS, L.L.C., Plaintiff-Appellee,
v.
NICHOLAS NORTH AMERICA, ET AL., Defendants-Appellants.

          Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-17-875451

          Bradley Hull, for appellee.

          James Alexander, for appellant.

          JOURNAL ENTRY AND OPINION

          KATHLEEN ANN KEOUGH, JUDGE.

         {¶ 1} Defendants-appellants, Nicholas North America ("North America"), and SteepleJacks of America, L.L.C. ("SteepleJacks") (collectively "appellants"), appeal the trial court's decision entering judgment against them and in favor of plaintiff-appellee, American Surface Solutions, L.L.C. ("appellee" or "American Surface"). For the reasons that follow, we reverse the trial court's judgment and remand for further proceedings.

         {¶ 2} In February 6, 2017, American Surface, through its owner Justin Morales ("Morales"), filed a complaint against appellants, Christopher Hardin, American Surface Solutions Group, L.L.C., Network Solutions, L.L.C., and Citizens Financial Group, a.k.a. Citizens Bank, raising causes of action for fraud, tortious interference with business relations, negligence with willful and wanton misconduct, negligence, civil theft, conversion, deceptive trade practices, unjust enrichment, and fraud in the inducement. The complaint arises out of allegations that Hardin, without authority, contracted and engaged in work under the guise of American Surface, but retained all profits and incurred debts. It was alleged that Hardin's grandfather, North America, facilitated, perpetuated, and concealed Hardin's conduct by establishing a business similar in nature and name to that of American Surface, and allowing Hardin to utilize North America's business, SteepleJacks, as his business operations. American Surface claimed that based on appellants' conduct, they were liable for expenses incurred from unpaid invoices and work not being completed and damage to the business's reputation.

         {¶ 3} On the same day that the complaint was filed, American Surface sought and obtained a temporary restraining order ("TRO") against appellants, including a restraint against bank accounts belonging solely to SteepleJacks. Subsequently, in March 2017, the parties relevant to this appeal, reached an agreement regarding the content of the TRO and it was dismissed; the TRO remained in effect against Hardin.

         {¶ 4} At the February 8, 2018 final pretrial, the trial court granted appellants' counsel's oral motion to withdraw. The record reflects that at the hearing the trial court warned appellants that a continuance of the February 28 trial would not be granted. Moreover, the trial court advised that although North America could represent himself, he could not represent SteepleJacks.

         {¶ 5} Two days prior to trial, new counsel for appellants filed a notice of appearance and also requested a continuance of trial. The motion to continue was denied the following day. On February 28, the day of trial, appellants appeared with counsel, who stated that his presence was for the limited purpose of seeking a continuance. He indicated that he had been recently retained and was not prepared to go forward with trial; he would need a continuance. The trial court noted that the continuance was previously denied. It also stated on the record that North America was advised at the final pretrial that no continuances of trial would be granted and that he could not represent SteepleJacks during the proceedings. Because counsel was unable to proceed and the continuance was denied, North America represented himself pro se.

         {¶ 6} Additionally, because SteepleJacks was not represented by counsel, the trial court proceeded to conduct a "default" hearing against SteepleJacks. Following the presentation of evidence, the trial court entered a general "default judgment" in favor of American Surface and against SteepleJacks in the amount of $72, 066.61. The court held the determination of punitive damages in abeyance until after the trial on the claims against North America.

         {¶ 7} A jury was empaneled and American Surface's claims solely against North America were presented to the jury with the following testimony and evidence.

         {¶ 8} Morales testified that he owns "American Surface Solutions, L.L.C.," a rubber pour-in-place business, that was informally started in 2015. He officially registered his business with the Ohio Secretary of State on May 5, 2016. According to Morales, he created the name, logo, and graphics in 2015. He stated that he created the name "American Surface Solutions" from his previous concrete company named "Resurfacing Solutions." He stated that he got into the field of rubber resurfacing through his friend, Hardin, who used to be in the pour-in-place business prior to Hardin's incarceration for getting paid to do jobs, but not performing the work. Hardin's prior business was named "American Safety Surface." According to Morales, Hardin's company went under due to Hardin's conduct and Morales thought he could help out his friend. Plaintiffs exhibit No. 9 was an email sent in February 2014 from Hardin's email "americansurface@aol.com" to Morales asking about whether he "ever look[ed] over my business and see what u wanna do? Busy season starts in a week or two."

         {¶ 9} Morales testified that he believed that Hardin did not act in good faith in attempting to generate business on behalf of American Surface. He stated that they never agreed on distribution of profits and disagreed on "the cut" Hardin should receive from jobs performed.

         {¶ 10} In fact, Morales discovered in January 2017 that Hardin was doing business under the guise of American Surface. Hardin created business cards and letterhead with American Surface's logo, but they did not contain any contact information relating to American Surface - the address was that of SteepleJacks. The business cards reflected that Hardin was the "owner/project manager" of American Surface.

         {¶ 11} Morales testified about a contract that was obtained through discovery purportedly between American Surface and Fasting Enterprises, a company in Washington D.C. The contract provided that the proposed start date would be October 17, 2016, with an estimated finish date of December 17, 2016. The contract was executed by "Chris Morales, V.P., American Surface Solutions." The contract was for $114, 760. An accompanying letter provided that American Surface has "been in business for 10 years." Morales stated that this statement was not true as to his company; only Hardin's prior company would qualify. Additionally, Morales stated that the references that were listed were not associated with American Surface.

         {¶ 12} Morales stated that he did not authorize the contract and that his business did not receive any compensation from Hardin under this contract. Once he discovered the existence of the contract, Morales had to take out a loan to correct Hardin's work and was damaged $7, 000.

         {¶ 13} Morales also testified about a job that Hardin contracted for and partially completed at a children's learning center in Indiana. Morales testified that he became aware of the contract when the center's coordinator contacted him and advised him that the work was not completed, but that the money was paid. Based on the information that he was provided, Morales testified that Hardin prepared an estimate on March 31, 2016, for the center. The contract was signed by the center on May 4, 2016, and by Hardin on May 10. It contained Hardin's personal contact information and a website "www.americansurfacesolutions.com, but was faxed between the parties using SteepleJacks' fax number. The contract provided for removal of the existing wooden structure, the purchase and installation of new playground equipment, and repair and resurface of an existing play area. The total contract price was $68, 120.

         {¶ 14} Morales testified that the center issued two checks payable to "American Surface Solutions." The checks were issued on May 5, 2016, and September 30, 2016, in the amounts of $42, 040 and $20, 750, respectively and endorsed by "American Surface Solutions." According to bank records, the May check was deposited into a Citizen's Bank Account owned by "Nicholas North America, d.b.a. American Surface Solutions." Morales testified that he never received, endorsed, or deposited these checks.

         {¶ 15} Morales also discovered at this time that he did not own the website domain "www.americansurfacesolutions.com." According to Morales, Hardin encouraged him to use the host company "Big Tuna" to set up a website. Morales testified that he was paying for this service, but discovered that the domain name "americansurfacesolutions.com" was registered to SteepleJacks on December 30, 2015. When he asked Hardin to change ownership of the domain name to him, Hardin told him "nice try" and laughed it off. Accordingly, Morales was forced to create a new website: "americansurfacesolutions.net."

         {¶ 16} Morales told the jury about negative reviews that American Surface received on various web-based search engines. Both reviews warned about doing business with American Surface and Hardin stating that money was paid, but no work was ever performed.

         {¶ 17} Morales gave testimony about a truck rental from Penske that he did not authorize. According to Morales, he was contacted by Penske for an unpaid balance of $2, 276.61 for a truck rental to "American Surface Solutions." Based on the records he received through discovery, Morales stated that Hardin rented a Penske truck on two occasions - May 17 and 23, 2016. The rental agreement noted that the address for American Surface Solutions was the physical ...


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