Advantage Bank v. Waldo Pub., LLC, 2009 Ohio 2816 (Ohio App. 6/15/2009)
| Decision Date | 15 June 2009 |
| Docket Number | No. 9-08-67.,9-08-67. |
| Citation | 2009 Ohio 2816 |
| Parties | Advantage Bank, Plaintiff-Appellee, v. Waldo Pub, LLC, et al., Defendants-Appellees, and Wendi Reichardt, et al., Defendants-Appellants. |
| Court | Ohio Court of Appeals |
Appeal from Marion County Common Pleas Court, Trial Court No. 07CV0567.
Judgment Affirmed in Part, Reversed in Part and Cause Remanded.
Cheryl L. Jennings, for Appellant.
Timothy Rankin, for Appellee, Advantage Bank.
James M. Dietz, for Appellee, Olde Oaks, Inc.
A.C. Strip, for Appellee, Waldo Pub, LLC.
{¶1} Appellants, Wendi Reichardt (hereinafter "Reichardt") and Reichardt Investments, LLC (hereinafter "RI"), appeal the Marion County Court of Common Pleas' judgment denying their Civ.R. 60(B) motion and judgment of contempt for their failure to abide by the court's order confirming sale. For the reasons that follow, we affirm in part and reverse in part.
{¶2} In May of 2007, Reichardt attempted to purchase the business and real estate owned by Waldo Pub, LLC; however, the deal was not approved by one of Waldo Pub's lien holders and was not completed. (Nov. 14, 2008 JE, Doc. No. 82, FOF #3).
{¶3} On July 2, 2007, plaintiff-appellee Advantage Bank (hereinafter "Advantage"), filed a cognovit complaint against defendants Waldo Pub, LLC, 294 South Main, LLC, Terry L. Musick, and Belinda H. Musick in the Marion County Court of Common Pleas. (Doc. No. 1). The complaint alleged that defendants defaulted on a promissory note executed in favor of Advantage. (Id.). On that same day, defendants filed an answer confessing judgment for Advantage, and the trial court granted judgment for Advantage on the note. (Doc. Nos. 2, 4) {¶4} On July 6, 2007,1 Reichardt formed RI with the intention of purchasing the business and real estate formerly operated by Waldo Pub, LLC. (Nov. 14, 2008 JE, Doc. No. 82, FOF # 1); (Ex. 8).
{¶5} On August 31, 2007, Advantage filed a motion for the immediate appointment of a receiver pursuant to R.C. 2735.01 over all of the assets owned by the judgment-debtor-defendants. (Doc. No. 14). In its attached memorandum, Advantage recommended that Martin Management Services, Inc. (hereinafter "receiver") be appointed as receiver, and that the receiver be permitted to employ the law firm of Strip, Hoppers, Leithart, McGrath, & Terlecky Co. LPA as counsel. (Id.). That same day, the trial court ordered that the receiver recommended by Advantage be appointed and authorized the hire of counsel from the recommended law firm. (Doc. No. 15).
{¶6} On or about September 19, 2007, RI signed a management agreement with the receiver to operate the business formerly known as Waldo Pub. (Nov. 14, 2008 JE, Doc. No. 82, FOF #4); (Doc. No. 42 at 2). In September 2007, Reichardt made an application with the Citizens Banking Co., later known as Champaign Bank, to obtain a $100,000 loan to purchase the business. Reichardt planned on obtaining an additional loan from a family member. (Nov. 14, 2008 JE, Doc. No. 82, FOF #5).
{¶7} On October 17, 2007, the receiver filed an inventory and appraisal valuing the tangible assets of the judgment-debtors at $174,941.00. (Doc. No. 20). On October 26, 2007, the receiver filed a motion to join Olde Oaks, Inc. on the basis of their interest in the real estate owned by 294 South Main, LLC by virtue of a mortgage in its favor and a UCC-1 statement, both filed August 12, 2005. (Doc. No. 21). On November 1, 2007, the trial court ordered that Olde Oaks be joined as a party-defendant. (Doc. No. 22).
{¶8} On November 2, 2007, the receiver filed a motion for authority to conduct a receiver sale pursuant to R.C. 2735.04. (Doc. No. 23). On November 26, 2007, Olde Oaks filed a motion in opposition to receiver's motion to conduct a sale, specifically requesting a hearing on the receiver's expected administrative priority. (Doc. No. 26). On November 30, 2007, attorney Susan Bruder filed a notice of appearance on behalf of RI. (Doc. No. 27). A hearing was held on the receiver's motion on December 11, 2007, and, on December 18th, the trial court granted the receiver's motion in part and denied it in part. (Doc. No. 29). In its order, the trial court postponed the sale date thirty (30) days so that the receiver could consider documentation submitted by Reichardt and RI, which they believed entitled them to a bid credit at the public sale. (Id.). The trial court ordered that the receiver submit a recommendation. (Id.).
{¶9} On December 26, 2007, the receiver filed a motion for order approving terms of a rescheduled public sale. (Doc. No. 30). The receiver recommended that: RI be given a bid credit of $17,214.78 for its documented fixed improvements to the assets; if RI was not the successful bidder at public auction that it be paid said amount as an administrative expense of the receiver; RI be given administrative priority on said amount; that certain tangible property on the premises owned by RI be excluded from the sale; that the minimum sale bid be lowered to $192,000; and that all prospective bidders deposit with the receiver a refundable deposit of $17,000.00 seven days prior to the sale date. (Id.). Attached to the receiver's recommendation and memorandum in support were receipts documenting Reichardt's and RI's expenses and improvement costs. (Id.).
{¶10} On December 31, 2007, RI filed a response to the receiver's recommendation seeking an additional credit of $12,936.07, for a total credit of $30,150.85, for items and expenses unaccounted for in the receiver's recommendation. (Doc. No. 31). On that same day, Olde Oaks filed a memorandum in opposition to the receiver's recommendation that RI be given a bid credit. (Doc. No. 32). On January 9, 2008, the trial court approved the receiver's terms of rescheduled public sale and rejected RI's memo seeking additional credit and Olde Oaks' memo seeking no bid credit for RI. (Doc. No. 33).
{¶11} A notice of receiver's sale was filed on January 24, 2008, notifying the trial court that the sale would be conducted on February 25, 2008. (Doc. No. 34). On March 6, 2008, the receiver filed a report of the sale and a motion for confirmation of the sale. (Doc. No. 35). The report indicated that: RI and Jeff Hardacre were present at the public sale; RI made an opening bid of $192,000.00 but was ultimately outbid by Hardacre; and that Hardacre submitted the highest bid of $225,000.00. (Id.). The report also disclosed that, after the conclusion of the sale, Hardacre questioned whether the food and beverage inventory at the premises was part of the deal. (Id.). The receiver informed Hardacre that the food and beverage inventory belonged to RI; and thus, the inventory was not an asset of the receivership and not part of the deal. (Id.).
{¶12} On March 24, 2008, Hardacre filed a response to the receiver's report of sale and motion for confirmation of sale seeking clarification on whether the food and beverage inventory was included in the sale, according to the terms of the sale as advertised. (Doc. No. 37). On that same day, Olde Oaks filed a response to the report objecting to the payment of $15,000 to the receiver without any documentation of its expenses. (Doc. No. 38).
{¶13} On March 26, 2008, the receiver filed notice with the court of its intention to file an application for approval of fees and costs in response to Olde Oaks. (Doc. No. 39). On March 31, 2008, the receiver filed a reply to Hardacre's response alleging that it could not convey the food and beverage inventory since no such inventory existed at the outset of the receivership. (Doc. No. 40). As such, the receiver asked the court to confirm the sale and order Hardacre to proceed or forfeit his deposit. (Id.).
{¶14} On April 3, 2008, the trial court set the matter for hearing. (Doc. No. 41). A status hearing was held on April 25, 2008, but was not officially recorded. (Nov. 14, 2008 JE, Doc. No. 82, FOF ##8-9). At the hearing, counsel for Hardacre informed the court that he was not sure if Hardacre wished to proceed with the sale. (Id., FOF #10). Attorney Bruder stated that RI was willing to proceed with the purchase in the amount of $224,000.00, its final bid at the sale, if Hardacre did not wish to proceed with his bid of $225,000.00. (Id., FOF #11).
{¶15} On April 29, 2008, Hardacre filed a status report wherein he alleged that: his original objection regarding the food and beverage inventory was settled between the parties; following the February 25, 2008 sale, however, RI ceased operations of the bar/restaurant in breach of its management agreement with the receiver; that RI's actions have negatively impacted the value of the bar/restaurant; and that the receiver is now unable to transfer the intangible asset of good will of an existing business to him. (Doc. No. 42). Hardacre proposed that the trial court confirm sale to him in the amount of $225,000.00, but deduct RI's $17,214.78 administrative lien as damages due to its breach of the management agreement. (Id.).
{¶16} On May 2, 2008, the receiver filed a status report recommending that the trial court confirm the sale either to Hardacre for $225,000.000 or to RI for $224,000.00. (Doc. No. 43).
{¶17} On May 27, 2008, the trial court filed its order confirming sale. (Doc. No. 46). The trial court found that Hardacre was not willing to close on the sale for his bid of $225,000.00, because the receiver was unable to convey both the food and liquor inventory and RI closed the bar/restaurant operation. (Id.). The trial court found that under the terms of the sale, the second highest bidder could proceed with their offer if the highest bidder did not close, and that RI indicated a willingness to proceed to closing at its bid of $224,000.00. (Id.). Under the circumstances, the trial court also found that Hardacre was entitled to a release of his deposit. (Id.). The trial court then ordered that the assets of Waldo Pub, LLC and 294 South Main,...
To continue reading
Request your trial