Thorson Baker & Assocs., Inc. v. Nicholas

204 N.E.3d 611

THORSON BAKER & ASSOCIATES, INC., Plaintiff-Appellee,

v.Mark NICHOLAS and Brooks Holstein, et al., Defendants-Appellants.

No. 111374

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

Released and Journalized: December 22, 2022

McCarthy, Lebit, Crystal & Liffman Co., LPA, Nicholas R. Oleski, Cleveland, and David M. Cuppage, for appellant Mark Nicholas.

Hahn Loesser & Parks, LLP, Christina T. Hassell, and O. Judson Scheaf, III, Columbus, for appellee Brooks Holstein.

JOURNAL ENTRY AND OPINION

SEAN C. GALLAGHER, A.J.:

{¶ 1} Mark Nicholas, a resident of Mississippi, appeals the judgments entered against him in favor of Thorson Baker & Associates, Inc. ("TBA"), a corporation located in Richfield, Ohio,¹ and Brooks Holstein, who is also a resident of Mississippi, in part claiming the trial court lacked personal jurisdiction over Nicholas. For the following reasons, we reverse and vacate the judgments entered against Nicholas with the added caveat that TBA failed to file an appellate brief after filing for two extensions of time to do so. Pursuant to App.R. 18(C), we accept Nicholas's statements of facts and issues in his brief as correct and reverse the judgment because appellant's brief reasonably appears to sustain such action based on the trial court record.² MADFAN, Inc. v. Makris , 2017-Ohio-979, 86 N.E.3d 707, ¶ 1 (8th Dist.) ; In re S.M.T. , 8th Dist. Cuyahoga No. 97181, 2012-Ohio-1745, 2012 WL 1382563, ¶ 3 ; State v. Kasulaitis , 8th Dist. Cuyahoga No. 95423, 2011-Ohio-852, 2011 WL 683820, ¶ 2.

{¶ 2} In 2008, Nicholas partnered with Holstein to redevelop the main entrance to the Mississippi State University. Cotton Mill Market Place, LLC ("Cotton Mill"), was incorporated to facilitate the development with Nicholas and Cotton Mill Centre I, LLC (an entity solely owned by Holstein), being designated as the members of the limited liability company. Cotton Mill hired Cupkovic Architecture, LLC ("Cupkovic"), as the lead architect, but the terms of the agreement did not include personal guarantees executed by Nicholas or Holstein. Cupkovic, in turn, hired TBA as a consulting engineer on the project.

{¶ 3} By late 2009, financial difficulties plagued Cotton Mill's project. Cupkovic and TBA were owed for outstanding invoices, with Cupkovic claiming nearly $650,000 in unpaid services. The outstanding debt owed to TBA was not disclosed or accounted for at the time. In negotiating a resolution to the financial dispute to permit the development project to proceed, Nicholas and Holstein each executed a personal guarantee of all payments Cotton Mill owed to both Cupkovic and TBA. The agreement was negotiated by Cupkovic, and TBA considered itself to be a third-party beneficiary. By that point, however, Holstein took steps to withdraw himself from the project.

{¶ 4} In December 2013, TBA filed the underlying lawsuit against Nicholas and Holstein based entirely on Nicholas's and Holstein's personal guarantees. Both Nicholas and Holstein filed motions to dismiss for the lack of personal jurisdiction, claiming that neither had the requisite connections to Ohio in their respective personal capacities. In its response, TBA claimed that Cotton Mill, through its agent John Szabo, had conducted business in Ohio under Ohio's long-arm jurisdiction statute and, therefore, Nicholas in particular had purposely availed himself of the privilege of conducting business in Ohio based on the terms of the contract entered between Cupkovic and Cotton Mill. The trial court denied the motions. Holstein answered the complaint and filed a cross-claim against Nicholas regarding their business disputes arising from the Mississippi-based project.

{¶ 5} In 2017 the trial court granted TBA partial summary judgment upon its claims against Nicholas and Holstein, entering judgment against the two defendants jointly and severally in the amount of $686,985.69. The trial court denied multiple requests seeking to certify that partial summary judgment as a final appealable order under Civ.R. 54(B) for collection purposes.

{¶ 6} Near the end of 2018, the trial court conducted a bench trial, upon Holstein's cross-claim against Nicholas, empaneling an advisory jury panel under Civ.R. 39(C)(1). The jury advised the court that Nicholas was liable to Holstein, but several other issues remained to be determined by the trial court. Finally, in February 2022, the trial court issued its findings of fact and conclusions of law awarding Holstein $2,082,271.44 in damages based on Holstein's claims against Nicholas arising from the Mississippi-based project. Nicholas timely appealed the several entries comprising the final judgment, but the primary focus is on the personal-jurisdiction issue that Nicholas timely preserved at the onset of the underlying proceedings.

{¶ 7} Personal jurisdiction is a question of law that appellate courts review de novo. Kauffman Racing Equip., L.L.C. v. Roberts , 126 Ohio St.3d 81, 2010-Ohio-2551, 930 N.E.2d 784, ¶ 27. When a defendant asserts the affirmative defense of the lack of personal jurisdiction through a motion to dismiss, it becomes the plaintiff's burden to show that the trial court possesses personal jurisdiction over that particular defendant. Id. Under Civ.R. 12(B)(2), in consideration of the written submissions and without an evidentiary hearing, a plaintiff need only make a prima facie showing of jurisdiction to defeat the motion to dismiss. Id. , citing Fallang v. Hickey , 40 Ohio St.3d 106, 107, 532 N.E.2d 117 (1988). "However, even where the trial court decides personal jurisdiction absent an evidentiary hearing, the plaintiff continues to bear ‘the burden of proving, in its case-in-chief at trial, existence of facts upon which jurisdiction is based by a preponderance of evidence.’ " State ex rel. DeWine v. 9150 Group L.P. , 2012-Ohio-3339, 977 N.E.2d 112, ¶ 15 (9th Dist.), quoting Barile v. Univ. of Virginia , 2 Ohio App.3d 233, 234, 441 N.E.2d 608 (8th Dist. 1981), fn. 2. A defendant is therefore not prejudiced by that lower, initial threshold standard for determination of personal jurisdiction only because this preliminary determination is not dispositive of the issue throughout the trial proceedings. Id. ; Mayfran Internatl., Inc. v. Eco-Modity, L.L.C. , 2019-Ohio-4350, 135 N.E.3d 792, ¶ 9 (8th Dist.). The burden of proving the existence of personal jurisdiction rests upon the plaintiff in preserving any judgment that follows, and the denial of a motion to dismiss based on the lack of personal jurisdiction can be appealed only after the final judgment is rendered. Nejman v. Charney , 8th Dist. Cuyahoga No. 102584, 2015-Ohio-4087, 2015 WL 5781169, ¶ 15.

{¶ 8} Whether a trial court possesses personal jurisdiction over a nonresident defendant invokes two questions, both of which must be answered in the affirmative to secure the trial court's jurisdiction to consider the merits of the matter: "(1) whether the long-arm statute and the applicable rule of civil procedure confer[s] jurisdiction and, if so, (2) whether the exercise of jurisdiction would deprive the nonresident defendant of the right to due process of law under the Fourteenth Amendment to the United States Constitution." Kauffman Racing Equip. at ¶ 28, citing U.S. Sprint Communications Co. Ltd. Partnership v. Mr. K's Foods, Inc., 68 Ohio St.3d 181, 183-184, 624 N.E.2d 1048 (1994). Under the Fourteenth Amendment analysis, a plaintiff must establish that the defendant's contact with the forum state meets a minimum threshold, which is determined by the breadth of the jurisdiction invoked. "Personal jurisdiction can be either general or specific" in nature. Id. at ¶ 46, citing Conti v. Pneumatic Prods. Corp. , 977 F.2d 978, 981 (6th Cir. 1992).

{¶ 9} " ‘General jurisdiction is proper only where "a defendant's contacts with the forum state are of such a continuous and systematic nature that the state may exercise personal jurisdiction over the defendant even if the action is unrelated to the defendant's contacts with the state." ’ " Id. , quoting Bird v. Parsons , 289 F.3d 865, 873 (6th Cir. 2002), and Third Natl. Bank in Nashville v. WEDGE Group, Inc. , 882 F.2d 1087, 1089 (6th Cir. 1989). Specific jurisdiction, on the other hand, arises when " ‘a [s]tate exercises personal jurisdiction over a defendant in a suit arising out of or related to the defendant's contacts with the forum.’ " Id. at ¶ 47, quoting Helicopteros Nacionales de Colombia, S.A. v. Hall , 466 U.S. 408, 414, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984), fn. 8. Thus, if specific jurisdiction is invoked, the jurisdiction is limited to the contacts bringing rise to the lawsuit. TBA's claim against Nicholas focuses on specific jurisdiction; there was no argument that Nicholas's personal connection to Ohio was continuous or systemic in nature.

{¶ 10} Under Kauffman Racing Equip., L.L.C. , 126 Ohio St.3d 81, 2010-Ohio-2551, 930 N.E.2d 784, at ¶ 48,

specific jurisdiction "is permissible only if [a defendant's] contacts with Ohio satisfy the three-part test that this court established in Southern Machine Company v. Mohasco Industries, Inc. , 401 F.2d 374, 381 (6th Cir. 1968) :

" ‘First, the defendant must purposefully avail himself of the privilege of acting in the forum state or causing a consequence in the forum state. Second, the cause of action must arise from the defendant's activities there. Finally, the acts of the defendant or consequences caused by the defendant must have a substantial enough connection with the forum state to make the exercise of jurisdiction over the defendant reasonable.’ "

Id. , quoting Bird at 874. All three prongs of the test must be established in order to invoke the jurisdiction of the forum state's court.

{¶ 11} "To satisfy the minimum-contacts requirement, ‘it is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and...