Kavalec v. Ohio Express, Inc.

71 N.E.3d 660

2016 Ohio 5925

Steven J. KAVALEC, et al., Plaintiffs–Appellees

v.OHIO EXPRESS, INC., et al., Defendants–Appellants.

No. 103410.

Court of Appeals of Ohio, Eighth District, Cuyahoga County.

Sept. 22, 2016.

Andrea L. Burdell–Ware, The ABW Law Firm, Medina, OH, for appellant.

Daniel L. Powell, Mark V. Guidetti, Joseph W. Diemert, Joseph W. Diemert & Associates, Chance Douglas, W. Andrew Hoffman, Hoffman Legal Group L.L.C., Cleveland, OH, for appellee.

Alanna B. Klein, Cleveland, OH, for Phoenix Rising Transportation L.L.C.

Before: E.A. GALLAGHER, P.J., E.T. GALLAGHER, J., and CELEBREZZE, J.

EILEEN A. GALLAGHER, P.J.

{¶ 1} Defendant-appellant Robert Kavalec appeals from the judgments entered against him in the Cuyahoga County Court of Common Pleas on plaintiff-appellees William Kavalec, Stuart Kavalec and Steven Kavalec's claims for conversion.¹ We affirm in part, and reverse in part.

Facts and Procedural Background

{¶ 2} This case arises out of a business dispute amongst family members. At one time, William Kavalec operated a trucking company, to wit: Cleveland Cartage Service, Inc. ("Cleveland Cartage"), out of 3600 Ridge Road in Brooklyn, Ohio. In 1993, William retired and left behind all the shop equipment of Cleveland Cartage for his sons, Steven and Stuart, to use in the operation of their own trucking corporation, Hawk Enterprises ("Hawk").

{¶ 3} Hawk was incorporated on October 22, 1992, opened in July 1993, and operated out of 3600 Ridge Road until 2010. Hawk's business suffered a downturn due to the recession and was strained by financial difficulties in 2010. A proposal was made wherein Robert Kavalec, uncle to Steven and Stuart, and brother to William, would open a new corporation, Ohio Express, which would purchase the assets of Hawk and assume certain Hawk liabilities. Robert would be the president of Ohio Express and Steven and Stuart would continue to operate the trucking business under the new corporation.

{¶ 4} Ohio Express was incorporated in July 2010 and an asset purchase agreement between Hawk and Ohio Express was signed by Robert and Stuart on August 16, 2010. Ohio Express began operating on September 7, 2010. A dispute arose between Robert and the appellees regarding the operation of the business following a motor vehicle accident in the fall of 2011. As a result, Robert's wife, Ellen Kavalec, began an audit of Ohio Express in October 2011. Following the audit, Robert and Steven had an argument on November 4, 2011, which resulted in the termination of Steven's employment with Ohio Express.

{¶ 5} The falling out of the parties intensified the next day when Robert demanded the keys to Ohio Express's office and sought to exclude Steven and William from the property. Steven was eventually allowed into Ohio Express's building on November 5 and removed a few items. Automobiles belonging to Steven and Stuart that were left on Ohio Express's property were later turned over to them. Ellen Kavalec also provided Steven with a check to repay him for a fuel purchase and turned over a computer and cell phones belonging to him.

{¶ 6} The remaining property located at 3600 Ridge Road, which Robert believed belonged to Ohio Express, was liquidated in an asset purchase agreement with a company called Phoenix Rising Transport.

{¶ 7} A complaint in this action was filed on November 10, 2011, and was mutually dismissed without prejudice by the parties on April 10, 2012. The complaint was refiled on April 5, 2013. Appellees alleged claims of fraudulent inducement, breach of contract, intentional interference with prospective economic advantage, tortious interference with contract, civil theft and replevin. The complaint also included a declaratory judgment action. Counterclaims for conversion and breach of fiduciary duty were asserted by Robert and Ellen Kavalec.

{¶ 8} The case proceeded to a jury trial. Following the presentation of the plaintiffs-appellees' case, appellant moved for a directed verdict. As a result of that motion, the trial court sua sponte and over objection converted appellees' claims for civil theft and replevin into a single count of conversion. On the conversion claim, the jury returned verdicts against Robert in the amounts of $78,800 in favor of William, $41,679 in favor of Steven and $4,900 in favor of Stuart. Because only the conversion verdicts against Robert personally have been appealed, we limit our discussion to the conversion claim.

{¶ 9} Following trial, Robert filed motions for a new trial and judgment notwithstanding the verdict. The trial court denied the motion for new trial but granted the motion for judgment notwithstanding the verdict, in part, and denied it in part. The trial court reduced the verdict in favor of Stuart by $2,000, finding that $2,000 of the $4,900 in conversion damages sought by Stuart was established to be property of a separate entity. The trial court otherwise denied the motion for judgment notwithstanding the verdict.

Law and Analysis

I. The Trial Court's Ruling on the Motion for Directed Verdict

{¶ 10} In his first assignment of error, Robert argues that the trial court erred in failing to grant his motion for directed verdict with respect to appellees' claims for replevin and civil theft.

{¶ 11} We find this assignment of error to be moot. Although the trial court stated that it denied Robert's motion for directed verdict as to appellees' claims for civil theft and replevin, the court incongruously "converted" those claims into a single claim of conversion and did not allow the theft and replevin claims to be submitted to the jury. In fact, the trial court specifically noted that the required formalities for proceeding under a replevin claim had not been followed by appellees. The trial court's action in amending the complaint into a single conversion claim and not allowing appellees to proceed with their civil theft and replevin claims had the same effect as granting a directed verdict on those claims.²

{¶ 12} Therefore, appellant's first assignment of error is moot.

II. The Trial Court's Sua Sponte Amendment of the Complaint

{¶ 13} In his second assignment of error, Robert argues that the trial court erred and abused its discretion in sua sponte amending the pleadings to replace the replevin and civil theft claims with a single count of conversion. Robert argues that he did not have adequate notice that conversion was a claim in the case or an adequate opportunity to prepare a defense and question witnesses as to conversion. The trial court rejected this argument as part of its denial of Robert's motion for judgment notwithstanding the verdict, stating:

The court finds that the elements for theft and replevin are substantially the same as those of conversion. Likewise, the evidence Defendant required to defend against those claims for theft and replevin are substantially the same as those required to defend against claims for theft and replevin. Therefore, the court's amendment to the Complaint did not substantially prejudice the Defendant.

{¶ 14} The authority of a trial court to sua sponte amend the pleadings pursuant to Civ.R. 15(B) has been previously established under Ohio law. King Steel Sales Corp. v. Hanover Steel Corp., 8th Dist. Cuyahoga No. 46584, 1983 WL 2893 (Dec. 15, 1983) ; Stafford v. Aces & Eights Harley–Davidson, LLC, 12th Dist. Warren No. CA2005–06–070, 2006-Ohio-1780, 2006 WL 902556, ¶ 22 (affirming the trial court's decision to sua sponte apply Civ.R. 15(B) and amend pleadings even though the parties never moved to amend their pleadings).

{¶ 15} Civ.R. 15(B) allows for the amendment of the pleadings to conform to evidence presented at trial and, therefore "treats issues that were not raised in the pleadings as if they were so raised, as long as they were tried with the express or implied consent of the parties and substantial prejudice will not arise from the result." Nguyen v. Chen, 12th Dist. Butler No. CA2013–10–191, 2014-Ohio-5188, 2014 WL 6612424, ¶ 16, quoting Aztec Internatl. Foods, Inc. v. Duenas, 12th Dist. Clermont No. CA2012–01–002, 2013-Ohio-450, 2013 WL 501734, ¶ 25. "The rule expresses a liberal policy toward the allowance of amendments * * * [and] was promulgated to provide the maximum opportunity for each claim to be decided on its merits rather than on procedural niceties." Stafford, at ¶ 21, quoting Hall v. Bunn, 11 Ohio St.3d 118, 121, 464 N.E.2d 516 (1984).

{¶ 16} "Under Civ. R. 15(B), implied consent is not established merely because evidence bearing directly on an unpleaded issue was introduced without objection; it must appear that the parties understood the evidence was aimed at the unpleaded issue." State ex rel. Evans v. Bainbridge Twp. Trustees, 5 Ohio St.3d 41, 448 N.E.2d 1159 (1983), paragraph two of the syllabus. In determining whether the parties impliedly consented to litigate an issue, various factors should be considered, including: "whether [the parties] recognized that an unpleaded issue entered the case; whether the opposing party had a fair opportunity to address the tendered issue or would offer additional evidence if the case were to be tried on a different theory; and, whether the witnesses were subjected to extensive cross-examination on the issue." Id., at paragraph one of the syllabus.

{¶ 17} Whether the parties impliedly consented to try an unpleaded issue is a decision left to the sound discretion of the trial court and, therefore, will not be reversed absent an abuse of discretion. Id., at paragraph three of the syllabus. An abuse of discretion implies that the trial court's attitude is unreasonable, arbitrary or unconscionable. Blakemore v. Blakemore, 5 Ohio St.3d 217, 219, 450 N.E.2d 1140 (1983).

{¶ 18} In the case sub judice, the record reflects that Robert did not expressly consent to the trial of the conversion claim, in fact, when the subject of a conversion action was raised for the first time by the trial court during the consideration of Robert's motion for a directed verdict,...