Stamatopoulos v. All Seasons Contracting, Inc.

2020 Ohio 566

EVANGELOS STAMATOPOULOS, ET AL. Plaintiffs-Appellants/Cross-Appellees, v. ALL SEASONS CONTRACTING, INC. ET AL., Defendants-Appellees/Cross-Appellants.

No. 107783

No. 107788

COURT OF APPEALS OF OHIO EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA

February 20, 2020

JOURNAL ENTRY AND OPINION

JUDGMENT: AFFIRMED IN PART, VACATED IN PART

Civil Appeal from the Cuyahoga County Court of Common Pleas

Case Nos. CV-12-785907 and CV-12-795314

Appearances:

Thrasher, Dinsmore & Dolan, L.P.A., Mary Jane Trapp, and Ezio A. Listati, for appellants/cross-appellees.

John M. Manos Co., L.P.A., and John M. Manos, for appellees/cross-appellants.

RAYMOND C. HEADEN, J.:

{¶ 1} Plaintiffs-appellants/cross-appellees Evangelos Stamatopoulos ("Stamatopoulos") individually, and as managing member of Lightning Capital Holdings, L.L.C. ("Lightning") (collectively "Appellants"), appeals from the September 12, 2018 journal entry clarifying an August 26, 2015 final entry of judgment in favor of defendants-appellees/cross-appellants Nikolas and Marika Fourtounis, trustees of the Nikolas and Marika Fourtounis Living Trust (collectively "the Fourtounises"). The Fourtounises and defendants-appellees Mark Fourtounis ("Mark"), All Seasons Contracting, Inc., and Global Outdoor Solutions, L.L.C. ("Global") (collectively, "Appellees") filed a cross-appeal. For the reasons that follow, we affirm in part, and vacate in part.

Procedural and Substantive History

{¶ 2} The instant appeal is the result of protracted litigation dating back to June 2012. The underlying dispute arose out of a deteriorated relationship, and a convoluted set of business deals involving multiple individuals and entities. The following factual history was set forth in Stamatopoulos v. All Seasons Contr., 2018-Ohio-379, 104 N.E.3d 1001 (8th Dist.) ("Stamatopoulos II"):

The record reflects that prior to the filing of [the underlying] case, Mark operated contracting, painting, and landscaping companies known as All Seasons Contracting and Painting, Inc., All Seasons Contracting and Landscaping, Co., and All Seasons Contracting, Inc. (collectively "All Seasons"). During his operation of the All Seasons businesses, Mark purchased vehicles and specialized equipment for bridge painting, bridge resurfacing, and landscaping. Mark personally guaranteed the debt for these purchases, and Fifth Third Bank had a security interest in the assets. In 2010, the All Seasons companies began to struggle,and Fifth Third demanded repayment on All Seasons' outstanding loan balance in the amount of $1,200,000. As a result of the demand, both All Seasons and Mark, personally, filed for bankruptcy.

In the midst of his bankruptcy proceedings, Mark's personal friend, [Stamatopoulos], agreed to purchase the assets of All Seasons for $220,000 [pursuant to an Asset Purchase Agreement] and the bankruptcy court issued an order transferring possession of the equipment to Stamatopoulos free and clear from all other encumbrances.

In order to pay the $220,000 for the equipment, Stamatopoulos pledged his New York City apartment as collateral. However, Stamatopoulos was not permitted to take out a second mortgage on the apartment and had to pay its outstanding balance of $31,452 before he could use it as collateral. The record reflects that Mark's parents, the Fourtounises, agreed to loan Stamatopoulos funds to satisfy his outstanding loan. The Fourtounises allege that they advanced "an additional $76,249 for funds to repair the equipment and an additional $39,440 to cover business expenses and interest on the purchase money loan."

Lightning Capital Holdings was formed to take title of the assets after the bankruptcy sale closed. Stamatopoulos testified that he was the sole owner of Lightning Capital Holdings and that Mark's responsibilities with the company included locating all of the equipment that Stamatopoulos had purchased in the bankruptcy proceedings, preparing the equipment for use, and moving the equipment to a warehouse owned by Mark's brother. Mark, however, maintained that he was not an employee, but instead was Stamatopoulos's equal partner in Lightning Capital Holdings and the venture to purchase the All Seasons assets from Fifth Third Bank.

After several months, the personal relationship between Mark and Stamatopoulos deteriorated. By March 2012, the parties severed their business arrangement and entered into a settlement agreement in an effort to resolve their "various financial and business dealings." In the settlement agreement the parties agreed to the following relevant provisions:

1. Concurrently with the execution of this Agreement, [Stamatopoulos] shall execute and deliver a Cognovit Promissory Note to [the Fourtounises] in the amount of $112,000, said amount due and payable on or before June 30, 2012. * * * Said cognovit promissory noteobligation shall be secured by certain equipment owned by [Stamatopoulos], to wit: a Volvo Truck, a so called "Super Sucker" * * *.

Said Super Sucker is hereby pledged as security for payment of the Cognovit Promissory Note by titling it to and placing it in the possession of [the Fourtounises.] In the event that [Stamatopoulos] shall default upon the said cognovit promissory obligation, * * * [the Fourtounises] may take free and clear title to said Super Sucker and retain, use and/or dispose of it as they shall deem fit in full satisfaction of the note or may pursue other legal remedies available to them pursuant to Ohio law and in accordance with the terms of said cognovits promissory note.

* * *

2. As additional consideration to the amount set forth in the Cognovit Promissory Note referenced in paragraph 1 above, it is further agreed that [Stamatopoulos] will transfer title to, free and clear of any and all claims and/or encumbrances, vehicles and/or equipment to [Mark] * * * as identified on the attached Exhibit B, incorporated herein.

The terms of the cognovit note, signed by appellees on March 30, 2012, provided that during the pledge period, title to the Volvo vacuum truck would be held by the Fourtounises, but Stamatopoulos would be permitted to use the truck while it is pledged as collateral if he secured a bond to protect against "resulting value diminution." Following the execution of the settlement agreement and cognovit promissory note, Stamatopoulos moved his business operations to a new location, and Mark began operating Global, a landscaping company, with some of the equipment purchased in the bankruptcy sale.

Thereafter, a dispute arose between the parties regarding the ownership of various pieces of business equipment. [Appellees] believed that the settlement agreement signed by Stamatopoulos addressed the disposition of the assets. However, Stamatopoulos argued he was forced to sign the agreement under duress.

{¶ 3} The procedural history of this case is equally convoluted, in part because two separate actions were initiated and proceeded separately for several months. On June 27, 2012, Stamatopoulos filed a verified complaint for replevin, order of possession, and other relief in Cuyahoga County Court of Common Pleasagainst the All Seasons companies, Mark, Global, "Doe Corporation," and the Fourtounises. Stamatopoulos presented seven claims: (1) alter ego, (2) breach of contract related to the asset purchase agreement, (3) fraudulent inducement/intentional misrepresentation related to the asset purchase agreement, (4) conversion, (5) replevin/injunctive relief, (6) unjust enrichment, and (7) trespass to chattel. Stamatopoulos also sought and obtained from the trial court an emergency order of possession of 44 specific pieces of machinery, together with "[a]ll other assets purchased by the Stamatopoulos Parties in the bankruptcy of Defendants All Seasons * * * which are reasonably identifiable and which have yet to be turned over * * *." The order of possession explicitly stated that Stamatopoulos was not required to post a bond to obtain the relief set forth therein.

{¶ 4} All of the Appellees filed requests for a hearing and an emergency stay of the order of possession. The court conducted a hearing and ordered Appellees to provide Stamatopoulos with a list of the locations of the property at issue. On July 16, 2012, Appellees filed a motion to transfer the case to the court's commercial docket. The court denied this motion on July 19, 2012. On July 24, 2012, Appellees filed a notice of removal to federal court. On October 26, 2012, the case was remanded to the Cuyahoga County Court of Common Pleas. On November 16, 2012, Global filed a motion requesting the court order Stamatopoulos to post a bond.

{¶ 5} On November 9, 2012, the Fourtounises initiated a separate action against Stamatopoulos in the trial court seeking confession of judgment on a cognovit note. The Fourtounises obtained a cognovit judgment in the amount of$112,000 against Stamatopoulos. On November 21, 2012, the Fourtounises filed an answer to Stamatopoulos's claims in his replevin action.

{¶ 6} On November 21, 2012, Mark filed an answer and counterclaim to Stamatopoulos's claims in the original case. Mark averred in his answer that the All Seasons companies had been "liquidated by order of the U.S. Bankruptcy Court on June 13, 2011 and the corporate charters for each corporation [were] thereafter cancelled by the Ohio Secretary of State." In his counterclaim, Mark sought an order from the trial court to enforce the settlement agreement. Mark averred that on March 30, 2012, Stamatopoulos had entered into an agreement with Appellees to resolve claims for "past due rent," and for "repayment of loans." According to the terms of this agreement, which was attached to Mark's counterclaim as an exhibit, Stamatopoulos executed a "Cognovit Promissory Note made payable to Manolis Investments, LLC" and the Fourtounises in the amount of $112,000. As security for the note, Stamatopoulos would, inter alia, transfer both the title and the possession of the Super Sucker to the Fourtounises. Mark claimed...