JOHN ZAPPOLA v. ROCK CAPITAL SOUND CORP., ET AL.
No. 100055
Cоurt of Appeals of Ohio, EIGHTH APPELLATE DISTRICT, COUNTY OF CUYAHOGA
May 29, 2014
2014-Ohio-2261
Blackmon, J., Keough, P.J., and Kilbane, J.
JOURNAL ENTRY AND OPINION; JUDGMENT: AFFIRMED
PLAINTIFF-APPELLEE
vs.
ROCK CAPITAL SOUND CORP., ET AL.
DEFENDANTS/COUNTERCLAIM PLAINTIFFS-APPELLANTS
vs.
HUGHIE‘S AUDIO VISUAL SERVICE, INC.
COUNTERCLAIM DEFENDANT-APPELLEE
Civil Appeal from the Cuyahoga County Court of Common Pleas, Case No. CV-09-704138
David A. Campbell
Gregory C. Scheiderer
Vorys, Sater, Seymour and Pease, L.L.P.
2100 One Cleveland Center
1375 East Ninth Street
Cleveland, Ohio 44114
ATTORNEYS FOR APPELLEES
James M. Johnson
James M. Johnson Co., L.P.A.
110 Hoyt Block Building
700 West St. Clair Avenue
Cleveland, Ohio 44113
Richard L. Dempsey
Justin D. Gould
Richard L. Dempsey Co., L.P.A.
1350 Euclid Avenue, Suite 1550
Cleveland, Ohio 44115
{1} Appellant, Rock Capital Sound Corporation (“Rock Capital“), appeals the jury verdict in favor of plaintiff-appellee John Zappola (“Zappola“) on his claim for breach of contract, and the jury verdict in favor of Zappola on Rock Capital‘s counterclaim, as well as the trial court‘s decision granting third-party defendant Hughie‘s Audio Visual Service, Inc.‘s (“Hughie‘s“) motion for directed verdict on Rock Capital‘s counterclaim and third-party comрlaint. Rock Capital assigns the following errors for our review:
- The trial court erred in granting counterclaim defendant Hughie‘s Audio Visual Service, Inc.‘s (“HAVS“) motion in limine to exclude defendant/counterclaim plaintiff Rock Capital Sound Corporation‘s (“RCSC“) evidence of damages.
- The trial court erred in granting HAVS’ renewed motion for directed verdict and in dismissing HAVS from the case.
- The trial court erred in entering the verdict in favor of plaintiff John Zappola (“Zappola“) and against RCSC for breach of contract when interrogatories were inconsistent with the verdict.
- The jury‘s award of $40,000 in damages on Zаppola‘s breach of contract claim is not supported by competent and credible evidence.
- The trial court erred in denying RCSC‘s motion for new trial regarding the directed verdict in favor of third-party defendant HAVS against RCSC‘s counterclaim.
- The trial court erred in denying RCSC‘s motion for judgment notwithstanding the verdict and, in the alternative, motion for new trial regarding the verdict in favor of Zappola‘s breach of contract claim.
{3} On August 21, 2009, after 17 years of serviсe as an account executive, Zappola resigned from Rock Capital, an audio visual service provider. Upon resigning from Rock Capital, Zappola commenced employment with Hughie‘s, another audio visual service provider.
{4} On September 16, 2009, Zappola filed a suit against Rock Capital for unpaid commissions from contracts he had procured for the company. Rock Capital counterclaimed alleging that Zappola breached his contract by failing to give the requisite two-week notice before resigning, that Zappolа misappropriated trade secrets, and that he tortiously interfered with contracts and business relationships.
{5} Rock Capital also filed a third-party complaint against Hughie‘s, under the theory of respondeat superior, alleging that the company was liable for Zappola‘s actions while employed with Hughie‘s Audio Visual. Specifically, Rock Capital alleged that Hughie‘s was also liable for misappropriation of trade secret and tortious interference of contract and business relationships.
{6} On April 14, 2010, Zappola amended his complaint to assert an ERISA сlaim against Rock Capital. Specifically, Zappola alleged that since leaving the employ of Rock Capital, he has been denied access to the funds in his 401(K) plan, in violation of state and federal laws. Zappola also alleged that Rock Capital may have converted the
{7} Upon remand from the federal court, the trial court gave the parties 120 days to complete discovery. Both Zappola and Hughie‘s issued interrogatories and requests for production of documents to Rock Capital, that largely went unanswered. Specifically, Rock Capital did not provide any responses regarding damages suffered as a result of the alleged conduct of Zappola and Hughie‘s.
{8} As a result, in May and June 2012, both Zappola and Hughie‘s filed respective motions to compel Rock Capital to fully respond to the interrogatories and requests for production of documents, or in the alternative, to dismiss the counterclaim and third-party complaint. Thereafter, Rock Capital provided a partial response to the interrogatories and provided nothing to support its claimed damages.
{9} Subsequently, on June 8, 2012, Zappola renewed his motion to compel Rock Capital to respond to discovery and to dismiss the counterclaim and third-party complaint, or in the alternative requested that the trial court grant the motion in limine. On that same date, Hughie‘s filed a supplemental motion to compel Rock Capital to provide meaningful answers to interrogatory numbers 4, 5, 6, 8, and 11 through 29, and requests for production of documents 1, 2, 3, 6 through 11, 13, and 14.
{10} On December 12, 2012, Zappola filed a renewed motion to dismiss Rock Capital‘s counterclaim on the basis that despite successive motions to compel discovery, his discovery requests remained unanswered. On that same date, Hughie‘s joined
{11} On March 6, 2013, both Zappola and Hughie‘s renewed their respective motions to dismiss the counterclaim and the third-party complaint, or in the alternative, motion in limine. In their motions, both parties cited Rock Capital‘s repeated failure to cooperate in discovery. On March 11, 2013, both Zappola and Hughie‘s moved the court for a motion in limine for an order prohibiting Rock Capital from introducing any evidence of financial harm or damage to the alleged claims.
{12} On April 1, 2013, on the eve of trial, the trial court denied Zappola and Hughie‘s respective motions to dismiss Rock Capital‘s counterclaim and third-party comрlaint. The trial court issued a journal entry indicating that the arguments that were set forth in the respective motions may be presented as a basis to bar evidence at trial. Following the entry, due to a previously scheduled trial on its docket, the trial court transferred the case to a visiting judge.
{13} On the morning of the trial, the parties met in the chambers of the visiting judge and put forth their respective arguments on whether Rock Capital‘s evidence of damages should be barred because of its failure to respond to discovery. Hughie‘s renewed its motion in limine that Rock Capital be barred from introducing any and all
{14} After Rock Capital‘s opening statement, Hughie‘s moved for directed verdict on all claims because of Rock Capital‘s failure to properly allege damages. The visiting judge overruled Hughie‘s motion, and extensive discussions took place regarding Rock Capital‘s failure to produce documents evincing damages.
{15} During the discussion, Rock Capital indicated that it had given approximately 2,000 pages of commission documents to Zappola. Hughie‘s indicated that it had nеver received those documents that Rock Capital was now attempting to use in its case against them and objected to their admissibility. After hearing from the parties, the visiting judge granted Hughie‘s motion in limine to exclude the documents.
{16} Following the ruling, Hughie‘s moved for a directed verdict on Rock Capital‘s third-party complaint on the grounds that the case could not be proven without the element of financial damages. The visiting judge granted Hughie‘s motion for directed verdict and Rock Capital‘s case against Zappola proceeded on all claims.
{17} The jury ruled in favor of Zapрola on all counts of Rock Capital‘s counterclaim. The jury found that Rock Capital breached the contract with Zappola and awarded him $40,000. In response to interrogatories, the jury also found that Rock Capital was not damaged by Zappola‘s failure to give a two-week notice upon resigning. In addition, the visiting judge awarded Zappola $6,400 in prejudgment interest.
Final Appealable Order
{19} Before we address the merits of the instant matter, we note that at the time of the appeal, there was a pending motion for attorney fees for frivolous conduct, Zappola‘s claim for punitive damages that had been bifurcated for trial and was arguably still pending, as well as a pending motion for prejudgment interest. In light of the above, we ordered the parties to brief the question whether the decision was final and appealable.
{20} Appellate jurisdiction is limited to the review of final ordеrs.
{21} Regarding the motion for attorney fees for frivolous conduct, we note that sanctions for frivolous conduct are generally considered to be collateral to the underlying action. See, e.g., Linetsky v. Dejohon, 8th Dist. Cuyahoga No. 98370, 2012-Ohio-6140. Thus, a motion for sanctions does not impede the finality of the judgment. See also Crenshaw v. Integrity Realty Group, L.L.C., 8th Dist. Cuyahoga No. 100031, 2013-Ohio-5593, ¶ 3 (the trial court stayed consideration of
{22} Regarding Zapрola‘s claim for punitive damages, Rock Capital argues that the claim is moot, because the basis for the jury‘s verdict in Zappola‘s favor was that Rock Capital breached the contract. We agree.
{23} Punitive damages are generally not recoverable in a breach of contract action. Sivit v. Village Green of Beachwood, 8th Dist. Cuyahoga No. 98401, 2013-Ohio-103, citing Mabry-Wright v. Zlotnik, 165 Ohio App.3d 1, 2005-Ohio-5619, 844 N.E.2d 858 (3d Dist.), citing Digital & Analog Design Corp. v. N. Supply Co., 44 Ohio St.3d 36, 540 N.E.2d 1358 (1989). As such, this claim does not deprive us of jurisdiction.
{24} Finally, regarding the motion for prejudgment interest, the record reveals that the trial court granted the motion on May 29, 2013, prior to the filing of the instant appeal. However, Zappola was ordered to submit a calculation of the amount of interest due, but the amount was not determined before the appeal was filed. The parties subsequently agreed upon the amount.
{25} In general, a pending motion for prejudgment interest renders a judgment non-final. Miller v. First Internatl. Fidelity & Trust Bldg., Ltd., 113 Ohio St.3d 474, 2007-Ohio-2457, 866 N.E.2d 1059. However, because the trial court granted the motion before this appeal was filed, all that remained was the determination of the amount.
Motion in Limine
{27} In the first assigned error, Rock Capital argues the trial court erred when it granted Hughie‘s motion in limine to exclude Rock Capital‘s evidence of damages.
{28} A motion in limine is essentially a request to limit or exclude evidence or testimony at trial. Sokolovic v. Hamilton, 195 Ohio App.3d 406, 2011-Ohio-4638, 960 N.E.2d 510 (8th Dist.). Therefore, the standard of review on appeal of the grant of a motion in limine is whether the trial court abused its discretion. Id., citing Thakur v. Health Care & Retirement Corp. of Am., 6th Dist. Lucas No. L-08-1377, 2009-Ohio-2765. See also Estate of Johnson v. Randall Smith, Inc., 135 Ohio St.3d 440, 2013-Ohio-1507, 989 N.E.2d 35, ¶ 22, citing Illinois Controls, Inc. v. Langham, 70 Ohio St.3d 512, 526, 1994-Ohio-99, 639 N.E.2d 771.
{29} Abuse of discretion means more than an error of law or of judgment and implies that the court‘s attitude was unreasonable, arbitrary, or unconscionable. Blakemore v. Blakemore, 5 Ohio St.3d 217, 450 N.E.2d 1140 (1983). Consequently, absent such evidence, this court must affirm the decision of the trial court.
{31} As previously noted, on March 6, 2013, both Zappola and Hughie‘s renewed their respective motions to dismiss Rock Capital‘s counterclaim and the third-party complaint, or in the alternative motion in limine. In their respective motions, both parties cited Rock Capital‘s repeated failure to cooperate in discovery and moved the court for a motion in limine for an order prohibiting Rock Capital from introducing any evidence of financial harm or damage to the alleged claims.
{32} Also, as previously noted, the trial court‘s April 1, 2013 journal entry, while denying the respective motions of Hughie‘s and Zappola, stated that the arguments set forth by Zappola and Hughie‘s may be presented as a basis to bar evidence at trial. As such, Rock Capital was on notice that the matter would be revisited at trial. In addition, because the matter was transferred to a visiting judge, Rock Capital was on notice that the visiting judge had authority, not only to revisit the matter, but to also rule on the matter.
{33} Thus, when Rock Capital sought to introduce the documents against Hughie‘s, after extended discussions, the trial court granted Hughie‘s motion in limine to exclude the documents, because it determined that Rock Capital had provided no
{34} Pursuant to
{35} Nonetheless, Rock Capital argues that the visiting judge did not have discretion to rule on or disturb pretrial rulings. However, we have previously held that visiting judges may, in their discretion, defer to the rulings of the original judge, but are also not prohibited from exercising discretion to revisit prior rulings. O‘Connor v. Fairview Hosp., 8th Dist. Cuyahoga No. 98721, 2013-Ohio-1794, citing Schultz v. Duffy, 8th Dist. Cuyahoga No. 93215, 2010-Ohio-1750.
{36} Moreover, even if the visiting judge was not authorized to rule on the motion in limine and subsequently erred by excluding the documents Rock Capital claims supported damages occasioned by Hughie‘s, they were not prejudiced. Rock Capital‘s claims against Hughie‘s were all brought pursuant to the doctrine of respondeat superior because Zappola was employed by Hughie‘s when he allegedly engaged in tortious interference of contract and misappropriated trade secrets.
{38} Thus, based on the facts of the instant case, the trial court properly granted Hughie‘s motion in limine to exclude all documents relating to damages. Accordingly, we overrule the first assigned error.
Motion for Directed Verdict
{39} In the second assigned error, Rock Capital argues the trial court erred when it granted Hughie‘s motion for directed verdict and dismissed them from the case.
{40} We employ a de novo standard of review in evaluating the grant or denial оf a motion for directed verdict. United States Bank v. Amir, 8th Dist. Cuyahoga No. 97438, 2012-Ohio-2772, citing Groob v. KeyBank, 108 Ohio St.3d 348, 2006-Ohio-1189, 843 N.E.2d 1170, ¶ 14. A motion for directed verdict is properly granted if “the trial court, after construing the evidence most strongly in favor of the party against whom the motion is directed, finds that upon any determinative issue reasonable minds could come to but one conclusion upon the evidence submitted and that conclusion is adverse to such party.”
{41} In the instant case, Rock Capital brought two claims, pursuant to respondeat superior, against Hughie‘s; one for tortious interference of contract and business relationships and the other for misappropriаtion of trade secrets.
{43} In regard to the second claim, effective July 20, 1994, the General Assembly enacted the Ohio Uniform Trade Secrets Act,
{44} Damages resulting from the misappropriation of trade secrets are generally calculated in the following ways:
Damages may include both the actual loss caused by misappropriation and the unjust enrichment caused by misappropriation that is not taken into acсount in computing actual loss. In lieu of damages measured by any
other methods, the damages caused by misappropriation may be measured by imposition of liability for a reasonable royalty that is equitable under the circumstances considering the loss to the complainant, the benefit to the misappropriator, or both, for a misappropriator‘s unauthorized disclosure or use of a trade secret.
{45} A review of the essential elements of Rock Capital‘s two causes of actions against Hughie‘s reveals that it cannot establish at least one pivotal еlement of the claims. Specifically, Rock Capital cannot establish that it was financially damaged by any alleged actions on the part of Hughie‘s. As discussed in the first assigned error, the trial court granted Hughie‘s motion in limine to bar Rock Capital from introducing any and all documents purporting to be evidence of damages against Hughie‘s.
{46} As a result, Rock Capital was unable to satisfy an essential element of both causes of action. Consequently, both claims against Hughie‘s fail. As such, the trial court properly granted Hughie‘s motion for directed verdict. Accordingly, we overrule the secоnd assigned error.
Breach of Contract
{47} In the third and fourth assigned errors, Rock Capital argues the trial court erred when it entered judgment in favor of Zappola on the breach of contract claim and the jury erred when it awarded Zappola $40,000 based on the verdict.
{49} At trial, Zappola testified that he worked for Rock Cаpital for 17 years, wearing many hats, but primarily as an account executive procuring business to provide stage lighting at events. Zappola testified that his income was based purely on commission with a draw that operated like an advance against the commission.
{50} Zappola testified that under the employment agreement signed at the commencement of his employment, he was paid 30% on the net profits Rock Capital earned on the events he was responsible for contracting. Zappola testified that in the latter part of 2007, Rock Capital changеd the commission structure, wherein Zappola would make 10% on the events that Rock Capital earned at least 40%. Zappola testified that under the revised agreement, he made considerably less money.
{51} Zappola testified that along with the new commission structure, which by itself reduced his income, Rock Capital would assign incorrect invoices to inflate the expenses related to various events he had booked. As a result of these invoices being incorrectly assigned, it made it appear that Rock Capital earned less than 40% on the event, that in turn, caused Zаppola to be ineligible for a commission.
{53} Zappola testified that in the early part of 2009, Rock Capital suspended direct deposit of commissions and began issuing paper checks. Zappola testified that in several instances after receiving his paycheck, he was advised not to cash it for a few days. Zappola testified that he complied, encouraged his coworkers to be patient, but because he was 52 years old, with two children, he was very concerned about his future.
{54} Zappola testified that in August 2009, he decided to go to work for Hughie‘s. Zappola admitted that he did not give the two weeks notice that he realized later was part of his employment agreement. Zappola testified that upon notifying Rock Capital of his intentions, Gary Jurist, the company‘s owner, asked him to reconsider and offered to apply for a credit card loan, so that he could pay Zappola $50,000.
{55} In response, Zappola indicated that he would think about the offer over the weekend. Zappola testified that the following week, he began work with Hughie‘s and letters were sent out to customers in Hughie‘s dаtabase announcing that he was now with the company.
{57} Zappola testified that information about pricing was widely known throughout the industry and to the public at large. Zappola testified that there was nothing secret about Rock Capital‘s or Hughie‘s customer or pricing information. Three former employees of Rock Capital corroborated Zappola‘s testimony about the lack of a trade secret regarding customer lists and pricing.
{58} Rock Capital‘s owner, Gary Jurist, as well as its chief financial officer, Gary Steeberger, testified that their calculations of Zappola‘s commissions differed significantly. According to Jurist and Steeberger, in 2008, Rock Capital paid Zappola $21,896.85 in excess of his draw and in 2009, Zappola fell short of his draw by $31,244.66. By their calculations, after considering commissions that were carried over from 2008 to 2009, they contend that Rock Capital overpaid Zappola by approximately $3,070.
{59} Here, we conclude that Zappola presented credible evidence to prevail on his claim of breach of contract. There is no dispute that a contract existed. Thеre is also
{60} A рarty claiming breach of contract has the duty to prove its damages by a preponderance of the evidence. Hawkins v. Green, 8th Dist. Cuyahoga No. 96205, 2011-Ohio-5175, ¶ 11. This, Zappola has done. Once the plaintiff has made its case, the trial court has discretion to award damages, and this court will not reverse its decision absent an abuse of discretion. Roberts v. United States Fid. & Guar. Co., 75 Ohio St.3d 630, 634, 1996-Ohio-101, 665 N.E.2d 664. Nonetheless, Rock Capital argues the Zappola breached the contract by not giving two weeks notice before resigning, therefore he cannot recover. However, as noted previously, the jury found that Zappola‘s lack of a two week notice was inconsequential and immaterial.
{61} We conclude Zappola performed the core duties of the employment agreement, that is procuring profitable business for Rock Capital. In turn, Rock Capital was duty bound to pay Zappola the correct commission. This they failed to do. As such, the jury verdict and attendant award of $40,000 was proper. Accordingly, we overrule the third and fourth assigned errors.
Motion for Judgment Notwithstanding the Verdict or New Trial
{63} We employ a de novo standard of review in evaluating a trial court‘s ruling on a motion for directed verdict or judgment notwithstanding the verdict. Fisher v. Beazer E., Inc., 8th Dist. Cuyahoga No. 99662, 2013-Ohio-5251, citing Whitaker v. Kear, 123 Ohio App.3d 413, 422, 704 N.E.2d 317 (4th Dist.1997); Kanjuka v. MetroHealth Med. Ctr., 151 Ohio App.3d 183, 2002-Ohio-6803, 783 N.E.2d 920 (8th Dist.).
{64} In Posin v. A.B.C. Motor Court Hotel, Inc., 45 Ohio St.2d 271, 275, 344 N.E.2d 334 (1976), the Ohio Supreme Court stated:
The test to be applied by a trial court in ruling on a motion for judgment notwithstanding the verdict is the same test to be applied on a motion for a directed verdict. The evidence adduced at trial and the facts established by admissions in the pleadings and in the record must be construed most strongly in favor of the party against whom the motion is made, and, where there is substantial evidence to support his side of the case, upon which reasonable minds may reach different conclusions, the motion must be denied. Neither the weight of the evidence nor the credibility of the witnesses is for the court‘s determination in ruling upon either of the above motions.
{65} We review a trial court‘s judgment on a
{66}
{67} In determining whether a new trial is warranted, the trial court
“must weigh the evidence and pass upon the credibility of the witnesses, not in the substantially unlimited sense that such wеight and credibility are passed on originally by the jury but in the more restricted sense of whether it appears to the trial court that manifest injustice has been done and that the verdict is against the manifest weight of the evidence.”
Id., citing Rohde v. Farmer, 23 Ohio St.2d 82, 262 N.E.2d 685 (1970), paragraph three of the syllabus.
{68} In the case, as against Hughie‘s, the stated grounds for Rock Capital‘s motion for judgment notwithstanding the verdict or in the alternative a new trial is the allegation that evidence of damage was admitted against Hughie‘s without objections. However, as previously noted, the visiting judge granted a continuing objection to any and all questions regarding damages against Hughie‘s.
{69} Rock Capital also alleged that the trial court misapplied the doctrine of respondeat superior. However, as previously discussed, in response to interrogatories,
{70} As against Zappola, thе basis for Rock Capital‘s motion is that the verdict is inconsistent because Zappola breached the contract by failing to give a two-week notice before resigning. However, as previously discussed, the jury found that to be inconsequential.
{71} Consequently, in accordance with the foregoing, there is substantial evidence from which the jurors could reasonably conclude that Rock Capital breached the contract to pay Zappola the proper commissions. Thus, the visiting judge properly denied the motion for judgment notwithstanding the jury‘s verdict.
{72} In addition, in this matter, we find no abusе of discretion. The record reveals that the verdict was not against the manifest weight of the evidence and did not result in a manifest injustice. The visiting judge acted within her discretion in denying Rock Capital‘s motion for new trial. Accordingly, we overrule the fifth and sixth assigned errors.
{73} Judgment affirmed.
It is ordered that appellee recover from appellants costs herein taxed.
The court finds there were reasonable grounds for this appeal.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure.
PATRICIA ANN BLACKMON, JUDGE
KATHLEEN ANN KEOUGH, P.J., and MARY EILEEN KILBANE, J., CONCUR