COBBLESTONE SQUARE II CO., LTD. v. L&B FOOD SERVICES, INC., ET AL.
No. 95968
Court of Appeals of Ohio, EIGHTH APPELLATE DISTRICT, COUNTY OF CUYAHOGA
September 22, 2011
[Cite as Cobblestone Square II Co., Ltd. v. L&B Food Servs., Inc., 2011-Ohio-4817.]
BEFORE: S. Gallagher, J., Boyle, P.J., and Keough, J.
JOURNAL ENTRY AND OPINION; Civil Appeal from the Cuyahoga County Court of Common Pleas, Case Nos. CV-697951 and CV-689779; JUDGMENT: AFFIRMED
Mark G. Petroff
David A. Hamamey, II
Petroff & Associates L.L.C.
1288 Abbe Road
Elyria, OH 44035
ATTORNEYS FOR APPELLEE
Valerie L. Tolbert
Carnegie Management & Development Corp.
27500 Detroit Road
Suite 300
Westlake, OH 44145
Christopher J. Freeman
P.O. Box 401
Medina, OH 44258-0401
SEAN C. GALLAGHER, J.:
{1} This is an appeal and cross-appeal from the judgment of the Cuyahoga County Court of Common Pleas in consolidated Case Nos. CV-689779 and CV-697951. For the reasons stated herein, we affirm the decision of the trial court.
{2} On November 11, 1999, Cobblestone Square II Co., Ltd. (“Cobblestone“), through its predecessor, Cobblestone Square Company, Ltd., entered a lease with L&B Food Services, Inc. (“L&B“). The principals, Barry and Lauren Keating, personally guaranteed the lease. L&B, through the Keatings, оpened and managed a Quiznos franchise. L&B agreed
{3} Shortly after the L&B‘s Quiznos franchise opened, Cobblestone leased space to a Bellacino‘s restaurant in the same shopping center. Bellacino‘s sold pizza, salads, and grinders. The parties agreed that grinders are sub-type sandwiches. Sometime in 2000 and again in 2003, Quiznos Corporate and the Keatings, respectively, issued written notice to Cobblestone of a potential breach of the exclusivity clause pursuant to Section 24 (“landlord‘s default clause“) of the lease becausе of Bellacino‘s presence. Bellacino‘s had been operating for less than one year at the time of the inquiry, so there was insufficient sales data to determine whether the primary product was pizzas, salads, or grinders. L&B and Quiznos dropped the issue until 2003, when the Keatings directly challenged Bellacino‘s primary product. Cobblestone responded to the Keatings’ challenge by issuing written notice that Bellacino‘s was not primarily selling grinders and therefore no breach occurred. The Keatings never followed up on their 2003 inquiry either.
{4} The landlord‘s dеfault clause, allegedly invoked by the 2000 and 2003 inquiries, contained terms that limited the damages available to L&B upon Cobblestone‘s default. Damages were limited to money damages or injunctive relief. Abating rent or terminating the lease were specifically excluded, and Cobblestone had 90 days to cure any breach.
{5} On September 19, 2005, L&B renewed the lease for another five-year term and amended the lease to include a provision that allowed L&B to abandon the lease if certain conditions were met. Section 4.C. of the amendment granted L&B a one-time right to terminate the lease within one year of the amendment if several conditions were met: (1) L&B could not be in default of the terms of the amendment; (2) Cobblestone has not signed a lease for a minimum of 45,000 square feet within the shopping center; (3) L&B‘s sales have not increased by a minimum of 20 percent, and L&B has provided quarterly sales report documentation to Cobblestone; and (4) L&B provided written notice to Cobblestone exercising its right to terminate no later than September 30, 2006. If all those conditions were met, L&B would have had ten days to vacate the premises and the lease would be terminated. If any one of the conditions were not met, the lease remained in full force and effect for the remaining term.
{6} In September 2006, L&B notified Cobblestone of its intent to invoke Section 4.C. of the amended lease. Rather than vacating the premises within ten days as required by
{7} In May 2008, L&B notified Cobblestone of its intent to vacate the premises, in part relying on the September 2006 letter. This time L&B ceased paying rent and did vacate the premises. Two months later, per the terms of the lease, Cobblestone issued a notice of default for failure to pay rent.
{8} In a race to the courthouse, L&B filed a complaint against Cobblestone, in Lorain County Court of Common Pleas, for breach of contract based on the allegation that Bellacino‘s presence violated the exclusivity clause of L&B‘s lease. Shortly thereafter, Cobblestone filed its action for breach of contract for unpaid rent, in Cuyahoga County Court of Common Pleas. The Lorain action was transferred to Cuyahoga County, and the cases were consolidated for trial. The trial court, after holding a bench trial, entered judgment in favor of Cobblestone on all claims, but limited Cobblestone‘s judgment to $3,514, representing two months’ rent. The trial court found that Cobblestone failed to mitigate its damages. On L&B‘s claim, the trial court found no breach occurred and, in the alternative, L&B and the Keatings failed to provide evidence of damages.
{9} L&B and the Keatings timely appealed the decision, raising three assignments of error. Cobblestone timely cross-appealed, raising one assignment of error. We will first address L&B and the Keatings’ assignments of error, which provide as follows:
“I. The trial court incorrectly found the primary use provision contained in L&B‘s lease was not violated when landlord continued to permit Bellacinos‘s [sic] to stay in this shopping center.”
“II. The trial court incorrectly determined Keatings and L&B did not offer evidence of their damages as a result of Bellanico‘s [sic] being in the shopping center in violation of the primary usе provision.”
“III. The trial court abused its discretion in denying Keatings and L&B‘s motion for continuance.”
{10} We will address the assignments of error in reverse order.
{11} L&B and the Keatings’ third assignment of error challenges the trial court‘s decision to deny a motion to continue the bench trial set for March 9, 2010. L&B and the Keatings argue that they lacked notice of the March trial date. On February 24, 2010, L&B and the Keatings missed a settlement-conference and were contacted by the court. As the basis for a continuance, L&B and the Keatings claimed the lead trial counsel and one subpoenaed witness were unavailable for the March trial date. Their third assignment of error is without merit.
{12} “The grant or denial of a motion for a continuance is a matter which is within the discretion of the trial court and will be reversed on appeal only if the trial court abused that discretion. When determining whether that discretion has been abused, a reviewing court must balance the interests of judicial economy and justice against any potential prejudice to
{13} Some factors to consider include the following: “the length of the delay requested; whether other continuances have been requested and received; the inconvenience to litigants, witnesses, opposing counsel and the court; whether the requested delay is for legitimate reasons or whether it is dilatory, purposeful, or contrived; whether the [moving party] contributed to the circumstance which gives rise to the request for a continuance; and other relevant factors, depending on the unique facts of each case.” (Internal citations and quotations omitted.) Id.
{14} In this case, the court originally set the bench trial for February 24, 2010. On December 24, 2009, the parties filed a joint motion to continue the trial, citing discovery issues. The trial court granted the continuance, converted the February trial date into a settlement conference, and reset the trial to March 9, 2010. L&B and the Keatings claim they never received the notices resetting the trial schedule, sent in both case numbers to both their attorneys. Rather, they claim to have only received the short cards that cancelled the original schedule, sent only in Case No. CV-689779. The lead trial attorney, Attorney
{15} The trial court, in granting the joint motion to continue the original trial date, stated that no further continuances would be granted. Although L&B and the Keatings dispute receiving notice of that order, the reasons stated for the continuance were the absencе of Attorney Petroff and a witness. L&B and the Keatings were represented by Attorneys Petroff and Hamamey. Attorney Hamamey was available and prepared for trial. See Toledo v. Emery, Lucas App. No. L-01-1361, 2002-Ohio-2694, ¶ 58 (noting that one of two trial attorneys for a party was available and ready for trial in affirming the trial court‘s decision to deny a continuance). The allegedly unavailable witness, James Foley, testified at the close of trial.
{16} More important, we adhere to the general maxim that a trial court acts and speaks only through its journal. Ohio Valley Radiology Assoc., Inc. v. Ohio Vаlley Hosp. Assn. (1986), 28 Ohio St.3d 118, 124, 502 N.E.2d 599. “Ohio courts have traditionally held that while some form of notice of a trial date is required to satisfy due process, an entry of the date of trial on the court‘s docket constitutes reasonable, constructive notice of that fact.” Id.
{17} In this case, the trial court journalized the trial date and issued notice to the parties. It was incumbent upon the parties to monitor the docket, and no reason was given for that failure.
{18} We also note that L&B and the Keatings do not claim to have been prejudiced by the decision to go forward with trial. According to the record, Attorney Hamamey claims to have been notified of the ultimate trial date on February 24, 2010, 14 days prior to the trial date. Furthermore, he stated that he “adequately went forward preparing exhibit lists, witness lists, [and] issuing subpoenas” upon learning of the March 9th trial date. In light of that, the trial court correctly reasoned that everyone‘s availability, including the court‘s, outweighed any potential prejudice created by the absence of one of L&B and the Keatings’ attorneys. The trial court did not abuse its discretion in denying the motion to continue the trial, and L&B and the Keatings’ third assignment of error is overruled.
{19} L&B and the Keatings’ second assignment of error challenges the trial court‘s conclusion that they failed to provide prima facie evidence of damages in support of their breach of contract claim. In light of that finding, the trial court found in favor of Cobblestone upon L&B and the Keatings’ claim. Their second assignment of error is without merit. For the purposes of addressing this assignment of error, any reference to L&B will be a reference to L&B and the Keatings.
{20} “To succeed on a breach of contract claim, a party must prove the existence of a contraсt, that party‘s performance under the contract, the opposing party‘s breach, and resulting damages. In reviewing the trial court‘s decision, we apply the standard that judgments supported by competent, credible evidence in the record must not be reversed as being against the manifest weight of the evidence. In addition, we give deference to the trial court‘s findings.” (Internal citation omitted.) Povroznik v. Mowinski Builders, Inc., Cuyahoga App. No. 93225, 2010-Ohio-1669, ¶ 13. We are also mindful that the general principle in determining contract damages is to place the injured party in as good of a position as it wоuld have been but for the breach. Schulke Radio Prods., Ltd. v. Midwestern Broadcasting Co. (1983), 6 Ohio St.3d 436, 439, 453 N.E.2d 683.
{21} In this case, the trial court determined that L&B did not prove damages as a result of Cobblestone‘s leasing another store to a restaurant that allegedly sold sub-type sandwiches as its primary product. At trial, L&B sought two alternate theories of damages: the first being costs to open and maintain the Quiznos franchise, and the second being essentially lost profits from Bellacino‘s cannibalization of L&B‘s customers.
{22} In addressing L&B‘s first theory of damages, we must adhere to any limitation on damages agreed to in the lease. As discussed earlier, Section 24 of the lease agreement between L&B and Cobblestone limits L&B‘s recovery to money damages and/or injunctive
{23} L&B‘s second theory on damages seeks, albeit implicitly, lost profits. L&B further offered two forms of evidence of lost profits: those stemming from the general total losses from L&B‘s balance sheet and those measured through Bellacino‘s gross sales of sub-type sandwiches.
{24} “In order for a plaintiff to recovеr lost profits in a breach of contract action, the amount of the lost profits, as well as their existence, must be demonstrated with reasonable certainty.” Gahanna v. Eastgate Properties, Inc. (1988), 36 Ohio St.3d 65, 521 N.E.2d 814, syllabus. “[L]ost profits may be established with reasonable certainty either directly or
through an expert witness. Proof with mathematical precision is not required, nor need the proof be clear and irrefutable, but profit loss cannot be left to mere conjecture and must be capable of measurement based upon known reliable factors without undue speculation.” Michigan Millers Mut. Ins. Co. v. Christian, 153 Ohio App.3d 299, 312-313, 2003-Ohio-2455, 794 N.E.2d 68.
{25} L&B‘s first measure of lost profits — demonstrated by evidence of lost profits from L&B‘s balance sheet — is not appropriate. The only claim against Cobblestone is for breach of the exclusivity clause. The rationale behind the exclusivity clause is to limit competition. Cobblestone is not the insurer of L&B‘s business venture and is not contractually bound to cover all losses sustained by L&B upon the breach of any lease term, only those damages that result from the breach. Mowinski Builders, Inc., 2010-Ohio-1669, at ¶ 13. In this case, the damages are those derived from the competition with Bellаcino‘s sub-type sandwich sales. L&B‘s total business losses between 2000 and May 2008 do not establish or demonstrate compensable damages in this case. Bellacino‘s began operating approximately the same time L&B opened its Quiznos franchise. There is no baseline for comparing L&B‘s sales and, therefore, L&B‘s total losses cannot be used as indicators of Bellacino‘s effect on its business. Whether or not L&B was profitable as a company is also irrelevant to determining the amount of damages stemming from Cobblestone‘s alleged
{26} The final and most important issue with the total losses is that L&B did not separate the losses caused by the alleged competition from those caused by the economy, the inability of Cobblestone to properly develop the shopping center, or the anchor-store Kmart‘s departure. In fact, Barry Keating testified that Kmart‘s departure caused lowered sales, but he was unable to identify the actual amount. Incidentally, those three reasons were among the reasons the Quiznos Corporate representative gave for the inability of L&B to meet the sales projections. Bellacino‘s presence was but one factor and, therefore, the evidence that L&B continually missed sales goals and failed to turn a profit cannot be used as an indicator of damages in this case without more analysis.
{27} In the alternative, L&B introduced a breakdown of Bellacino‘s sales from 2006 through 2009 by product category in an effort to prove damages through its competitor‘s gross sub-type sandwich sales. Defendant‘s Exhibit No. 2 introduced at trial lists Bellacino‘s total sales from 2000 through 2009, although the 2000 and 2009 categories were not complete years. The trial court found that L&B‘s damages were speculative. We agree.
{28} There is no evidence in the record that Bellacino‘s customers would have purchased from the Quiznos franchise absent Bellacino‘s, much less that L&B‘s franchise would have received, dollar-for-dollar, every sub-type sale in Bellacino‘s absence. On that
{29} As mentioned before, Quiznos Corporate‘s representative also attributed the failure to meet sales goals to several other extraneous factors as well as the competition with Bellacino‘s. As with L&B and the Keatings’ first measure of damages, total lost prоfits, their expected gross sales cannot be used as an indicator of damages in this instance when the witnesses established several factors responsible for their lost profits and were unable to identify the specific lost profits attributable to the competition alone.
{31} The evidence offered by L&B to establish damages, even if Cobblestone breached the lease, did not demonstrate damages with reasonable certainty. The trier of fact‘s determination that the evidence of damages was speculative and not proved with reasonable certainty is therefore not against the manifest weight of evidence. L&B‘s second assignment of error is overruled.
{32} Finding no error with the trial court‘s conclusion that L&B failed to prove damages, we need not address L&B and the Keatings’ first assignment of error challenging the trial court‘s conclusion that Cobblestone did not breach the lease. Since L&B cannot establish damages, it failed to establish a prima facie claim for breach of contract, and whether the trial court erred by reading a percentage into the definition of “primary use” is immaterial to this apрeal. L&B and the Keatings’ first assignment of error is accordingly moot.
{33} Finally, Cobblestone‘s timely cross-appeal provides as follows: “The trial court erred in finding that Cobblestone had failed to properly mitigate its damages and in awarding damages for a two month period rather than for the balance of the lease term.” The trial court granted judgment in favor of Cobblestone for two months’ rent. Cobblestone sought the entire remaining lease term of $47,439.3 Cobblestone advances two arguments in support of its assigned error. First, it claims L&B and the Keatings waived the affirmative defense of mitigation by failing to assert the affirmative defense in a responsive pleading. Second, it challenges the weight of evidence underlying the trial court‘s determination that Cobblestone‘s mitigation efforts were unreasonable by attacking the credibility and reliability of the witness and the evidence. For the following reasons, we find no merit to Cobblestone‘s sole assignment of error. We will address each of Cobblestone‘s arguments in turn.
{34} We agree with Cobblestone that mitigation of damages is an affirmative defense that, pursuant to
the Keatings failеd to raise mitigation as an affirmative defense in their responsive pleading. However,
{35} In the current case, Cobblestone did not object to the mitigation evidence being considered by the trial court at trial. Even if it had, the trial court had discretion to overrule any suсh objection and, if needed, allow Cobblestone additional time within which to prepare for the new arguments.
{36} In addressing Cobblestone‘s second argument, the “burden of proving a failure to mitigate damages lies with the party asserting the defense. A landlord is not required to use extraordinary efforts to find a new tenant or attempt the unreasonable or impracticable. Whether a landlord made reasonable efforts to mitigate damages is a question of fact to be resolved by the trier of fact.” (Internal citations and quotations omitted.) Oakwood Estates v. Crosby, Cuyahoga App. No. 85047, 2005-Ohio-2457, ¶ 11. Judgments supported by competent, credible evidence going to the material elements of the case will not be disturbed as being against the manifest weight of the evidence. Shemo v. Mayfield Hts., 88 Ohio St.3d
{37} Cobblestone challenges the reliability and admissibility of Barry Keating‘s testimony that another company was ready, willing, and able to lease the premises two months after L&B departed. Bаrry Keating testified that another company‘s representative stated that Cobblestone was unwilling to lease out the premises without being paid for the two months of outstanding rent. While Cobblestone objected to Barry Keating relating what Cobblestone‘s representative stated, it did not object to Barry Keating relating what the other company‘s representative stated.
{38} The trial court relied on Barry Keating‘s testimony, regarding the other company‘s representations, to establish that Cobblestone failed to mitigate its damages when it unreasonably turned down the other company‘s application. Since the admission of such was not objected to, it “may properly be considered and given its natural probative effect as if it were at law admissible, the only question being with regard to how much weight should be given thereto.” State v. Petro (1947), 148 Ohio St. 473, 76 N.E.2d 355, paragraph eight of the syllabus. The trial court did not therefore err in considering the evidence.
{39} Cobblestone also challenges the credibility of Barry Keating‘s statements regarding that other company‘s willingness to lease L&B‘s old store space. Generally courts are freе to deem self-serving statements incredible. See Thompson v. Dodson-Thompson,
{40} In this case, the trial court deemed Barry Keating credible — despite not being present during Cobblestone and the other company‘s alleged negotiations — in relating the efforts another company went through to rent out the recently vacated store space. Although his testimony was self-serving, the trial court was in the best position to observe Barry Keating‘s credibility as he testified. Nothing in the record subverts the trial court‘s determination that Barry Keating was more credible than Cobblestone‘s representative on the mitigation issue.
{41} If his testimony is believed, Cobblestone improperly hindered the leasing of the space by requiring the other company to pay the back rent owed by L&B. The trial court‘s ruling is predicated on the fact that the other company intended to negotiate its own lease for
{42} The judgment of the trial court is affirmed.
It is ordered that appellee recover from appellants costs herein taxed.
The court finds there were reasonable grounds for this appeаl.
It is ordered that a special mandate issue out of this court directing the common pleas court to carry this judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to
SEAN C. GALLAGHER, JUDGE
KATHLEEN ANN KEOUGH, J., CONCURS;
MARY J. BOYLE, P.J., CONCURS IN JUDGMENT ONLY