Case Information
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[Cite as
Tarr v. Am. Flooring Transport, Inc.
,
COURT OF APPEALS
STARK COUNTY, OHIO
FIFTH APPELLATE DISTRICT
CLIFFORD TARR, dba CARPET JUDGES:
EXPRESS, INC. Hon. William B. Hoffman, P. J.
Hon. Sheila G. Farmer, J.
Plaintiff-Appellant Hon. John W. Wise, J.
-vs-
AMERICAN FLOORING TRANSPORT, Cаse No. 2014 CA 00216 INC., et al.
Defendants-Appellees O P I N I O N CHARACTER OF PROCEEDING: Civil Appeal from the Canton Municpal
Court, Case No. 2014 CVF 3657 JUDGMENT: Affirmed
DATE OF JUDGMENT ENTRY: August 17, 2015 APPEARANCES:
For Plaintiff-Appellant For Defendants-Appellees JEFFREY R. JAKMIDES DOUGLAS C. BOND 325 East Main Street 700 Courtyard Centre Alliance, Ohio 44601 116 Cleveland Avenue NW
Canton, Ohio 44702 *2 Stark County, Case No. 2014 CA 00216
Wise, J. Plaintiff-Appellant Clifford Tarr, dba Carpet Express, Inc., aрpeals the
decision of the Canton Municipal Court, Stark County, which granted judgment in favor of Defendants-Appellees George Morris and American Flooring Transport, Inc. The relevant facts leading to this appeal are as follows. At the times pertinent to this аppeal, Appellant Clifford Tarr, dba Carpet
Express, Inc., operated a carpet sales business, while George Morris, Jr. and his corporation, Appellee American Flooring Transport, Inc. (“AFT”), were in the business of transporting carpet products by truck, generally from distribution hubs in Georgia to various carpet retailers in the Ohio area. During the spring and summer of 2012, the parties engaged in a business
relationship for purposes of hauling appellant's carpet rolls. Morris also permitted appellant to store some of appellant's inventory in the AFT facility in Canton. A dispute ultimately arose as to the whereabouts of some of the carpet, particularly after AFT shut down operations approximately in May 2012. On July 26, 2012, appellant filed a complaint in the Stark County Court of
Common Pleas against Morris and AFT, under case number 2012CV02355, alleging the two defendants had stolen the missing carpet. After Morris had filed a pro se answer and attended a subsequent pretrial hearing, the court ordered him to secure counsel for the corporatе entity, AFT. In October 2012, appellant filed a motion for default judgment, claiming
Morris had failed to secure counsel for the corporation and had failed to defend the
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action. On December 4, 2012, the trial court granted the motion and entered judgment
for appеllant against Morris and AFT, jointly and severally, in the amount of $21,079.53.
Morris thereupon filed a direct appeal. On August 26, 2013, this Court
issued a decision finding default judgment against Morris was erroneous, but
determining that default judgment was appropriate against appellant AFT. See Tarr v.
Americаn Flooring Transport, Inc. , 5th Dist. Stark No. 13CA00002,
Canton Municipal Court on July 15, 2014 against Morris and Appellеe AFT. Appellant therein sought civil damages for alleged theft, pursuant to R.C. 2307.60, and for alleged failure to deliver the subject of a bailment, pursuant to R.C. 1307.403. The matter proceeded to a bench trial on October 24, 2014. Among other
things, testimony was presented by Morris wherein he asserted that appellant told him he had a buyer in Akron for appellant's stored carpet; however, when Morris tried to deliver same, the Akron buyer rejected it. Tr. at 61-62. Morris further recalled that after several unsuccessful attempts to contact appellant, the carpet was returned to Georgia. Tr. at 63-64. Via a municipal court judgment entry issued October 31, 2014, all of
appellant's claims were denied and judgment was granted in favor of Morris and AFT. *4 On November 21, 2014, appellant filed a notice of appeal. He herein raises the following three Assignments of Error: “I. THE TRIAL COURT ERRED IN HOLDING THAT THE APPELLANT
HAD FAILED TO PROVIDE THE REQUISITE PROOF TO PERMIT THE PIERCING OF THE CORPORATE VEIL. “II. THE TRIAL COURT ERRED IN HOLDING THAT THE TERMS OF
THE AGREEMENT BETWEEN THE PARTIES CONSTITUTED A GRATUITOUS BAILMENT AND THAT, AS SUCH, ONLY A DUTY OF SLIGHT CARE WAS OWED TO THE APPELLANT. “III. THE TRIAL COURT ERRED IN EXCLUDING BUSINESS RECORDS
DEMONSTRATING THAT DELTA NEVER RECEIVED THE CARPET WHICH APPELLEE CLAIMED TO HAVE SHIPPED TO THEM, AND FURTHER CASTING DOUBT ON APPELLEE'S CLAIMS RELATING TO THE DISPOSAL OF THE GOODS.”
I. In his First Assignment of Error, appellant contends the trial court erred in finding appellant had failed to provide the requisite proof to allow piercing of the corporate veil. We disagree. As an appellatе court, we are not the trier of fact; instead, our role is to
determine whether there is relevant, competent, and credible evidence upon which the
factfinder could base his or her judgment. Tennant v. Martin–Auer, 188 Ohio App.3d
768,
the general rule that shareholders are not personally liable for the debts of a
corporation. Bumpus v. Ward , 5th Dist. Knox No. No. 2012–CA–5,
506, 513, 895 N.E.2d 538 (2008), clarified that “to fulfill the second prong of the
Belvedere test for piercing the corporate veil, the plaintiff must demonstrate that the
defendant shareholder exercised control over the corporation in such a manner as to
commit fraud, an illegal act, or a similarly unlawful act.” It is well-established that all
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three prongs of the test must be met for piercing to occur. See State ex rel. Cordray v.
U.S. Technology Corporation, 5th Dist. No. 11AP060025,
dispositive under the circumstances, and we will focus on it accordingly. This first prong
for piercing the corporate veil is sometimes referred to as the “alter ego doctrine.” See
Pottschmidt v. Klosterman ,
shipping of carpet, was incorporated in late 2009 and had three original shareholders: Judy Phillips, Terry White and Appellee Morris. See Tr. at 53. Articles of incorporation existed for the business. See Tr. at 55. At one point, AFT had nearly 250 customers. Tr. at 59. Morris and Terry White were apparently salaried employees of AFT. Decision- making at AFT was handled initially by White and Morris, along with Thomas Phillips, *7 who is the son of shareholder Judy Phillips. Thomas Phillips eventually had a major disagreement with White and Morris, and a shareholder derivative suit was filed by Judy Phillips against the corporation in 2010. Tr. at 54. Thereafter, decision making at AFT was largely carried out jointly by White and Morris. By Februаry 2013, the corporation had officially closed its doors, although business had ceased sometime around May 2012. See Tr. at 59, 70. We find the evidence in this matter would support a conclusion by the trial
court that AFT was operated in the manner of a close corporation and was not an "alter ego" entity completely controlled by Morris, even absent consideration of whether such control would have been for the purpose of perpetrating fraud or other illegal activity. We thus find the record contains rеlevant, competent, and credible evidence supporting the trial court's decision not to set aside the corporate status of AFT and to refrain from imposing any liability against Morris individually. Appellant's First Assignment of Error is therefore overruled.
II. In his Second Assignment of Error, appellant contends the trial court erred in finding that the relationships between the parties resulted merely in a gratuitous bailment of the carpet. We disagree. As indicated in our recitation of the facts, Morris testified at trial that
appellant had asked him or someone at AFT to permit storage of certain carpet inventory at the AFT warehouse in Canton. Tr. at 69. However, according to Morris, at some point appellant "disappeared for about six months" and appellant's store was *8 found emрty. Tr. at 11. Unable to reach appellant in person or by telephone, AFT returned the carpet to the originating hub in Georgia. Tr. at 12, 62. A bailment is the delivery of goods or personal property by one person to
another in trust for a particular purpose. George v. Whitmer , 5th Dist. Fairfield No. 05-
CA-70,
bailor, bailee, or for the mutual benefit of both. A gratuitous bailment is one in which the
transfer of possession or use of the bailed property is without compensation. Monea v.
Lanci , 5th Dist. Stark No. 2011CA00050,
consideration for the bailment was interwoven into the parties' business arrangements, evidence was presented which wоuld warrant a finding that Morris and AFT allowed appellant to utilize AFT warehouse space as a gesture to assist appellant, who lacked extra space at his original store on Wertz Avenue NW. We find no reversible error in the trial court's decision in this regard.
{¶27}. Appellant's Second Assignment of Error is therefore overruled. III. In his Third Assignment of Error, appellant contends the trial court erred in
excluding certain business documents appellant tried to utilize to show Delta Distribution, a Georgia hub operator, did not receive the carpet which Morris contended AFT shipped back to them. We disagree. The admission or exclusion of relevant evidence rests in the sound
discretion of the trial court. State v. Sage (1987),
been marked as Exhibit E. "A: U-mmm.
{¶33}. "Q: And is that one of your business records in connection with this
matter?
{¶34}. "A: It is. This is the follow up letter from- uh, from Delta Distribution in
regards to me trying to track down what happened to my carpet.
{¶35}. "Q: And what did you learn from that business record?
{¶36}. "A: What I learned from them was that they have no record ... "BY MR. BOND: I'm gonna object again. This is the same Delta ... "BY THE COURT: Alright. Mr. Jakmides, unless we have somebody from Delta that's gonna be able to testify- uh, at this point in time we understand that there may be a concern that the carpet is not where it's supposed to be. ***. "BY MR. JAKMIDES: Okay. *** Alright, I'll withdraw the question." Tr. at 18-19. It is incumbent that a proponent of business records set forth an adequate
foundation to establish the admissibility of the records under Evid.R. 803(6). See Hinte v. Echo, Inc. (1998), 130 Ohio App.3d 678, 684, 720 N.E.2d 994, citing State v. Comstock , 11th Dist. Ashtabula App. No. 96-A-0058, 1997 WL 531304. Upon review, we find the aforecited attempt to utilize appellant's own lay testimony, via a lеading question, as a means of meeting the "qualified witness" requirement of Evid.R. 803(6), in the absence of a stipulation by the parties, was properly denied within the trial court's evidentiary discretion. *11 Appellant's Third Assignment of Error is therefore overruled. For the reasons stated in the foregoing opinion, the judgment of the
Canton Municipal Court, Stark County, Ohio, is hereby affirmed.
By: Wise, J.
Hoffman, P. J., and
Farmer, J., concur.
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