DESIGNERS CHOICE, INC. v. ATTRACTIVE FLOORINGS, LLC, et al.
C.A. No. 19CA011576
IN THE COURT OF APPEALS NINTH JUDICIAL DISTRICT COUNTY OF LORAIN, OHIO
September 28, 2020
2020-Ohio-4617
APPEAL FROM JUDGMENT ENTERED IN THE COURT OF COMMON PLEAS COUNTY OF LORAIN, OHIO CASE No. 15CV188007
HENSAL, Judge.
{¶1} Designers Choice, Inc. appeals the denial of its motion for directed verdict, motion to reopen the judgment, and motion for new trial in the Lorain County Court of Common Pleas. For the following reasons, this Court affirms in part and reverses in part.
I.
{¶2} Designers Choice and Attractive Floorings, LLC were both in the floor covering business. Interested in expanding its business, Attractive Floorings entered into an asset purchase agreement with Designers Choice in 2012. Under the terms of the agreement, Attractive Floorings acquired all of the assets of Designers Choice, including its inventory, furniture, fixtures, equipment, and all other tangible and intangible property. In exchange, Attractive Floorings agreed to pay Designers Choice $355,000. Attractive Floorings signed a promissory note, promising to pay Designers Choice $3,697.92 monthly until January 1, 2020, followed by the
{¶3} Everything went well until 2015 when Mr. Moen suffered a series of health issues. Unable to keep Attractive Floorings’ business going, he informed the owner of Designers Choice, Jon Lilley, that he was going to have to declare bankruptcy. Sympathetic to Mr. Moen‘s situation, Mr. Lilley allegedly told him that, if he returned some of the equipment Attractive Floorings had purchased and got up to date on a separate rental agreement he had signed with Mr. Lilley and his mother, Mr. Lilley would forgive the balance remaining on the asset purchase agreement. Mr. Moen complied with Mr. Lilley‘s terms, but did not end up filing for bankruptcy because he was able to sell one of his other locations. When Mr. Lilley learned that Mr. Moen did not file for bankruptcy, had sold one of his locations for a substantial amount, and that Attractive Floorings had run up a large balance on Designers Choice‘s line of credit at various merchants, he demanded payment of the balance of the asset purchase agreement and accelerated the promissory note.
{¶4} When Mr. Moen did not pay the rest of the balance owed, Designers Choice sued Attractive Floorings for breach of contract and to collect on the note. It also sued Mr. Moen under his guaranty. Attractive Floorings and Mr. Moen counterclaimed, alleging that the parties had orally amended the agreement. At trial, Designers Choice sought $200,885.28, which it claimed was the balance of the promissory note. Following the presentation of the evidence, it moved for a directed verdict, which the trial court denied. The jury found in favor of Designers Choice, but only awarded it $50,000 in damages. The trial court subsequently entered a judgment in favor of Designers Choice for $50,000 without interest. Designers Choice moved to reopen the judgment and for a new trial, seeking the entire $200,885 plus prejudgment and post-judgment interest, but the trial court denied its motions. Designers Choice has appealed, assigning five errors.
ASSIGNMENT OF ERROR I
THE TRIAL COURT ERRED WHEN IT DENIED DESIGNERS CHOICE, INC.‘S MOTION FOR A DIRECTED VERDICT.
{¶5} In its first assignment of error, Designers Choice argues that the trial court incorrectly denied the motion for directed verdict that it made at the close of Attractive Floorings’ case. A motion for directed verdict tests the legal sufficiency of the evidence supporting a claim. Ruta v. Breckenridge-Remy Co., 69 Ohio St.2d 66, 68 (1982). Consequently, a motion for directed verdict can only be granted when, having construed the evidence most strongly in favor of the nonmoving party, the trial court concludes that reasonable minds could only reach a conclusion upon the evidence submitted that is adverse to the nonmoving party.
{¶6} Initially, Designers Choice argues that the trial court should have granted it a directed verdict on Attractive Floorings’ claim that there had been an oral modification of the asset purchase agreement. We conclude, however, that this argument was rendered moot by the jury‘s verdict in its favor. Attractive Floorings acknowledged at the start of the trial that its counterclaim
{¶7} Designers Choice next argues that it was entitled to a directed verdict on Attractive Floorings equitable estoppel and fraud claims. It also argues that it was entitled to a directed verdict on Attractive Floorings’ argument that it had agreed to waive a clause in the agreement that required all changes to be in writing. Specifically, Designers Choice argues that there was no evidence that it waived the requirement that Mr. Moen had to purchase a life insurance policy that had Designers Choice as its primary beneficiary or the requirement that Attractive Floorings was responsible for paying any charges it made under its line of credit at the Edward R. Hart Company. In light of the jury‘s verdict, we conclude that these arguments are also moot. Accordingly, because Designers Choice‘s arguments concerning the trial court‘s denial of its motion for directed verdict are moot, its first assignment of error is overruled.
ASSIGNMENT OF ERROR II
THE TRIAL COURT ERRED WHEN IT DENIED DESIGNERS CHOICE, INC.‘S MOTION TO REOPEN THE JUDGMENTS AND ENTER JUDGMENTS FOR THE AMOUNT OF THE LIQUIDATED DAMAGES.
{¶8} In its second assignment of error, Designers Choice argues that the trial court incorrectly denied its motion for a judgment notwithstanding the verdict.
{¶9} According to Designers Choice, the trial court should have granted its motion because the evidence established that it was entitled to $200,885.28 for the breach of the agreement. This Court has held, however, that a motion for judgment notwithstanding the verdict is not an appropriate method of challenging the amount of a jury‘s damages award. Desai v. Franklin, 177 Ohio App.3d 679, 2008-Ohio-3957, ¶ 25 (9th Dist.), quoting Jemson v. Falls Village Retirement Community, Ltd., 9th Dist. Summit No. 20845, 2002-Ohio-4155, ¶ 17.
ASSIGNMENT OF ERROR III
THE TRIAL COURT ERRED WHEN IT DENIED THE MOTION FOR A NEW TRIAL ON DAMAGES.
{¶10} In its third assignment of error, Designers Choice argues that the trial court incorrectly denied its motion for new trial under
{¶11} Designers Choice argues that the jury‘s damages award was too small and appears to have been given under the influence of passion or prejudice because its actual damages was the “liquidated sum of $200,885.28.” Initially, we note that the Ohio Supreme Court has held that, “[if] the parties have agreed on the amount of damages, ascertained by estimation and adjustment, and have expressed this agreement in clear and unambiguous terms, the amount so fixed should be treated as liquidated damages” provided certain conditions exist. Samson Sales, Inc. v. Honeywell, Inc., 12 Ohio St.3d 27 (1984), syllabus. Neither the asset purchase agreement nor the promissory note, however, had a provision concerning stipulated or liquidated damages.
{¶12} Under the terms of the agreement, Attractive Floorings agreed to pay Designers Choice $355,000 to acquire “substantially all the assets of [Designers Choice], including inventory, furniture, fixtures, equipment, and all other property owned by it and used in the operation of the Business, both tangible and intangible * * *.” The agreement also provided that the purchase price for the assets “shall be allocated in accordance with Exhibit B attached hereto[.]” Exhibit B, however, was left blank, except for its title of “Allocation of Purchase Price[.]”
{¶14} In ruling on the motion for new trial, the trial court determined that it was within the province of the jury to set-off the value of the returned assets from the amount that Attractive Floorings still owed under the purchase agreement. Designers Choice does not challenge that determination in its appellate brief. The trial court also noted that the damages instruction broadly directed the jury to decide the “amount of money that will reasonably compensate [Designers Choice] for the actual dam[ages] * * * proximately caused by the conduct of [Attractive Floorings].”
{¶15} Upon review of the record, we conclude that Designers Choice has not established that the amount of its recovery was too small or that it was given under the influence of passion or prejudice. The trial court, therefore, did not err when it denied Designers Choice‘s motion for new trial. Designers Choice‘s third assignment of error is overruled.
ASSIGNMENT OF ERROR IV
THE TRIAL COURT ERRED AS A MATTER OF LAW WHEN IT SPECIFICALLY ORDERED THAT THE MONETARY JUDGMENT FOR DESIGNERS CHOICE, INC. WILL NOT ACCRUE STATUTORY INTEREST.
{¶16} In its fourth assignment of error, Designers Choice argues that the trial court should have awarded it post-judgment interest. It argues that, under
{¶17}
{¶18} The asset purchase agreement indicated that the purchase price was $355,000. It did not have any language regarding interest rates. A separate promissory note, however, detailed that there would be “no interest thereon” the $355,000, meaning that Attractive Floorings would repay the balance by making 96 monthly payments of $3,697.92. In its complaint, Designers Choice alleged that Attractive Floorings both failed to perform the asset purchase agreement and the promissory note. The jury found that Attractive Floorings “breached [t]he Asset Purchase Agreement and/or Promissory Note[.]”
ASSIGNMENT OF ERROR V
THE TRIAL COURT ERRED AS A MATTER OF LAW WHEN IT DID NOT DETERMINE THE ACCRUAL DATE FOR PREJUDGMENT INTEREST AND FAILED TO AWARD PREJUDGMENT INTEREST.
{¶20} In its fifth assignment of error, Designers Choice argues that the trial court incorrectly determined that it was not entitled to prejudgment interest.
{¶21} The asset purchase agreement and promissory note provide that no interest will accrue on the original balance. They do not contain a provision regarding the interest that will be charged to amounts that have become due and payable. Attractive Floorings argues that the agreement could have provided that there would be interest in the event of a default and that, because it did not, no interest applies. Under
{¶22} Upon review of the record, we conclude that Designers Choice was entitled to prejudgment interest on its damage award. Designers Choice‘s fifth assignment of error is sustained.
III.
{¶23} Designers Choice‘s first, second, and third assignments of error are overruled. Its fourth and fifth assignments of error are sustained. The judgment of the Lorain County Court of Common Pleas is affirmed in part and reversed in part, and this matter is remanded for proceedings consistent with this decision.
Judgment affirmed in part, reversed in part, and cause remanded.
There were reasonable grounds for this appeal.
Immediately upon the filing hereof, this document shall constitute the journal entry of judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the period for review shall begin to run.
Costs taxed equally to both parties.
JENNIFER HENSAL
FOR THE COURT
CALLAHAN, P. J.
TEODOSIO, J.
CONCUR.
APPEARANCES:
MARK E. STEPHENSON, Attorney at Law, for Appellant.
GEOFFREY R. SMITH, Attorney at Law, for Appellees.