Opinion
No. 2009-CA-00037.
DATE OF JUDGMENT ENTRY: September 21, 2009.
Civil appeal from the Stark County Court of Common Pleas, Case No. 2008CV03245.
Affirmed.
John J. Rambacher, Jamie R. Minor, for Plaintiff-Appellant.
Alex J. Ragon, for Defendant-Appellee.
Before: Hon. W. Scott Gwin, P.J., Hon. John W. Wise, J., Hon. Patricia A. Delaney, J.
OPINION
{¶ 1} Declarant Schalmo Construction, Inc. and the Cincinnati Insurance Company appeal a judgment of the Court of Common Pleas of Stark County, Ohio, which found appellants are not entitled to a set-off against the agreed settlement they entered into with appellees A. Bonamase Contracting, Inc., David Bonamase, and Scott Banamase. Appellants assign a single error to the trial court:
{¶ 2} "I. THE TRIAL COURT ERRED IN DETERMINING THAT APPELLANTS COULD NOT SATISFY A JUDGMENT THAT APPELLEES HAD OBTAINED AGAINST THEM THROUGH AN EQUITABLE SET-OFF OF A JUDGMENT THAT APPELLANTS ACQUIRED AGAINST APPELLEES."
{¶ 3} The trial court's judgment entry of January 23, 2009 sets out the relevant facts. Appellant Schalmo Construction entered into three separate agreements with appellees for excavation work for several projects. Two of the projects were public projects for which appellant Cincinnati was the surety. A dispute arose as to the amounts due appellees from appellant Schalmo, and appellees filed claims on both of the Cincinnati bonds.
{¶ 4} On June 19, 2008, appellant Schalmo released its plan for dissolution and liquidation to creditors, including appellees. On July 15, 2008, appellant Schalmo filed a certificate of dissolution with the Ohio Secretary of State dissolving the corporation. Thereafter, appellant Schalmo filed this action pursuant to R.C. 1701.89, seeking the protection of the common pleas court while it finalized its affairs. The court stayed all the pending actions between appellees and appellant, and appellees filed a presentation of claims related to the projects.
{¶ 5} The parties negotiated a settlement for the amounts owed for the projects, including the bond claims from Cincinnati. The terms were memorialized in an agreed judgment entry filed with the trial court on October 14, 2008. Pursuant to the agreed judgment, appellees took a judgment against appellant for $36,250.00, to be satisfied within ten days after the filing of the judgment entry.
{¶ 6} Ten days later, on October 24, 2008, appellees' counsel received correspondence from appellants' counsel indicating that the $36,250.00 agreed judgment would be set off against a judgment appellants had purchased from FirstMerit Bank. The trial court found three entities, Schalmo Construction, Cincinnati, and Schalmo Builders, Inc. purchased a judgment in favor of FirstMerit Bank and against appellees in the amount of $33,667.48, plus interest.
{¶ 7} The trial court correctly cited Nichols v. Metropolitan Life Insurance Company (1941), 137 Ohio St. 542, quoting Andrews v. State ex rel. Blair, Superintendent of Banks, 124 Ohio St. 348, for the proposition that a set-off, whether legal or equitable, must relate to cross demands in the same right and where there is mutuality of obligation. This means the debts must be to and from the same persons and in the same capacity.
{¶ 8} A question of whether one judgment may be set off against another is addressed to the trial court's discretion, exercised in accord with sound principles of the equity and jurisprudence, Judgment Entry at page 3, citing Montalto v. Yeckley (1944), 143 Ohio St. 181.
{¶ 9} The trial court found the agreed judgment entry was made in favor of David Bonamase, Scott Bonamase, and the unincorporated entity, A. Bonamase Contracting, Inc. It was entered against Schalmo Construction and Cincinnati Insurance. The FirstMerit judgment purchased by appellants is in favor of FirstMerit Bank and against David Bonamase, Scott Bonamase, and A. Bonamase Contracting, Inc. It was assigned to Schalmo Construction, Cincinnati Insurance and Schalmo Builders, Inc. The FirstMerit judgment was then assigned by Schalmo Builders, Inc. to Schalmo Construction and Cincinnati Insurance on November 24, 2008.
{¶ 10} The trial court found Schalmo Construction was dissolved in July 2008, and it negotiated the assignment of the FirstMerit judgment on October 7, 2008. The court found because it had been dissolved, the corporation had no authority to enter into the assignment. Since Schalmo Construction could not acquire the assignment, the court concluded there was no mutuality of the parties with the case at bar.
{¶ 11} The trial court also found the set-off was improper because the debts are not due the parties in their same capacity. The FirstMerit judgment is a default judgment, but if it were purchased, the owner would be a simple judgment creditor. By contrast, the debt owed to appellees is from a settlement of claims made against statutory performance bonds. In the settlement, appellees agreed to accept far less than what appellants owed on the project. The court found because Schalmo Construction availed itself of dissolution proceedings and sought the protection from its creditors in the common pleas court it would be inequitable to allow Schalmo Construction and Cincinnati Insurance to now set off its liability to appellees with a purchased judgment. The trial court sustained appellee's motion to enforce the agreed judgment entry.
{¶ 12} Our standard of review applying to a court's decision on a motion to enforce a settlement depends upon the question presented. On legal questions concerning the interpretation or construction of a settlement agreement, we review de novo, Continental W. Condominium Unit Owners Association v. Howard E. Ferguson, Inc. (1996), 74 Ohio St. 3d 501, 502. If the issue is a factual or evidentiary one, the trial court's finding will be affirmed if there is sufficient evidence to support the finding. Chirchirglia v. Ohio Bureau of Workers' Compensation (2000), 138 Ohio App. 3d 676, 742 N.E. 2d 180. Here, appellants seek an equitable remedy within the court's discretion, and thus, our standard of review is the abuse of discretion standard. Sandusky Properties v. Aveni (1984), 15 Ohio St. 3d 273, 473 N.E. 2d 798 at 275. The term abuse of discretion has been defined by the Supreme Court as one which is arbitrary, unreasonable, or conscionable. Id., citations deleted.
{¶ 13} Appellants urge there are several factors a court may consider in determining whether one judgment may be set off against another, including (1) whether the judgments of the parties are subsisting and unsatisfied; (2) whether the interests of virtually the same parties are involved; and (3) whether the party against whom set-off is sought is insolvent. Barbour v. National Exchange Bank of Tiffin (1893), 50 Ohio St. 90. Appellants urge these factors are considerations, not requirements, and a court may order a set-off to produce an equitable result between the parties, Diehl v. Friester (1882), 37 Ohio St. 473.
{¶ 14} Appellants urge even if two judgments are from different courts, or, for example, one for tort and another for contract, or even if some of the parties in one case were not parties in the other, this does not necessarily preclude a set off. Barber at 99, citing Diehl, supra.
{¶ 15} Appellants argue the trial court erred in finding the purchase of the FirstMerit judgment could not be accomplished because Schalmo Construction, Inc. had been dissolved. Appellants urge R.C. 1701.88 permits it to wind up its affairs, and here, the purchase of the judgment enabled it to be in a better position to settle or compromise an outstanding claim against it. We do not agree. Besides the reasons cited by the trial court, the purchase of the FirstMerit judgment is too far removed from the date of dissolution, and was originally unrelated to the winding up of the corporation.
{¶ 16} Appellants argue the court should permit a set-off as a matter of judicial economy, because if they cannot set off the FirstMerit judgment, they will be forced to pursue a separate collection action against appellees for the FirstMerit judgment. Appellants argue appellees are insolvent and cannot pay the FirstMerit judgment unless set off of the agreed judgment is permitted. Appellees assert the issue of their solvency was not raised in the trial court, and cannot be raised before us for the first time.
{¶ 17} The trial court has discretion to determine how much weight to give the issue of judicial economy, and this court cannot substitute our judgment for that of the trial court.
{¶ 18} Our review of the record leads us to conclude the trial court did not abuse its discretion in finding appellants are not entitled to set off the FirstMerit judgment against the agreed settlement judgment of October 14, 2008.
{¶ 19} The assignment of error is overruled.
{¶ 20} For the foregoing reasons, the judgment of the Court of Common Pleas of Stark County, Ohio, is affirmed.
Gwin, P.J., Wise, J., and Delaney, J., concur.
JUDGMENT ENTRY
For the reasons stated in our accompanying Memorandum-Opinion, the judgment of the Court of Common Pleas of Stark County, Ohio, is affirmed. Costs to appellants.