MRI Software, L.L.C. v. W. Oaks Mall FL, L.L.C.

• Decision Date: 07 June 2018
• Docket Number: No. 105846,105846
• Citation: 116 N.E.3d 694,2018 Ohio 2190
• Parties: MRI SOFTWARE, L.L.C., Plaintiff–Appellant/Cross–Appellee v. WEST OAKS MALL FL, L.L.C., Defendant–Appellee/Cross–Appellant
• Court: Ohio Court of Appeals

116 N.E.3d 694

2018 Ohio 2190

MRI SOFTWARE, L.L.C., Plaintiff–Appellant/Cross–Appellee

v.WEST OAKS MALL FL, L.L.C., Defendant–Appellee/Cross–Appellant

No. 105846

Court of Appeals of Ohio, Eighth District, Cuyahoga County.

RELEASED AND JOURNALIZED: June 7, 2018

Alexander E. Gertsburg, Michael A. Callam, Maximilian Julian, Gertsburg Law Firm Co. L.P.A., 100 N. Main Street, Suite 300, Chagrin Falls, Ohio 44022, Vladimir P. Belo, Dinsmore & Shohl L.L.P., 191 W. Nationwide Blvd., Suite 300, Columbus, Ohio 43215, ATTORNEYS FOR APPELLANT/CROSS–APPELLEE

Keith W. Schneider, Maguire & Schneider L.L.P., 1650 Lake Shore Drive, Suite 150, Columbus, Ohio 43204, Frederick D. Elias, Christine R. Essique, Elias & Elias P.C., 7091 Orchard Lake Road, Suite 110, West Bloomfield, Michigan 48322, ATTORNEYS FOR APPELLEE/CROSS–APPELLANT

BEFORE: Jones, J., Kilbane, P.J., and Celebrezze, J.

JOURNAL ENTRY AND OPINION

LARRY A. JONES, SR., J.:

{¶ 1} Plaintiff-appellant/cross-appellee, MRI Software, L.L.C. ("MRI"), appeals the trial court's judgment in favor of defendant-appellee/cross-appellant, West Oaks Mall FL, L.L.C. For the reasons that follow, we affirm in part, reverse in part, and remand for a determination of attorney fees and costs.

{¶ 2} MRI is an Ohio-based software company that provides real estate investment and management software. West Oaks owns a mall in Ocoee, Florida, and is a subsidiary of Moonbeam Capital Investments (collectively referred to as "West Oaks").

{¶ 3} In 2013, West Oaks approached MRI about transitioning its software from its then-current program, QuickBooks, to another management software because West Oaks needed a program that could keep pace with its expanding business. According to West Oaks, it relied on MRI's representations that the software could meet the company's needs; West Oaks was intending to expand the use of real estate software to its other properties. West Oaks required a web-based system, as opposed to a Windows-based system, because it had different users located throughout the United States that would need to access the system.

{¶ 4} In March 2013, West Oaks entered into a one-year contract with MRI, effective April 1, 2013. The "Agreement" consisted of eight documents drafted by MRI. The Agreement also included a three-week express implementation plan, for which West Oaks paid an additional $8,800. But, according to West Oaks, MRI's software was not implemented within three weeks or anytime thereafter. West Oaks continued to use QuickBooks while attempting to implement MRI's software.

{¶ 5} West Oaks notified MRI of the problems it was having with its software and requested MRI's assistance multiple times. West Oaks ceased paying its invoices to MRI in July 2013. At that point West Oaks had already paid $23,000 to MRI. In January 2014, MRI sent notice to West Oaks, terminating the contract and accelerating the payments that were due, which totaled $94,432.45.

{¶ 6} West Oaks purchased a new software system in January 2014, which it had up and running in three days. In 2015, MRI filed suit against West Oaks alleging breach of contract and unjust enrichment.

{¶ 7} The case proceeded to a bench trial. Prior to trial, the court granted discovery sanctions in favor of West Oaks and against MRI due to MRI's failure to timely produce discovery documents. After trial, the court issued comprehensive findings of fact and conclusions of law with judgment in favor of West Oaks on all claims, but provided that each party would bear its own costs.¹

{¶ 8} MRI filed a timely notice of appeal, and West Oaks filed a notice of cross-appeal. MRI raises the following assignments of error for our review:

I. The trial court erred as a matter of law in its interpretation of the parties' contract.

II. The trial court erred in its legal conclusion that Plaintiff failed to perform under the contract.

III. The trial court erred in failing to find unjust enrichment.

{¶ 9} West Oaks raises the following cross-assignment of error:

I. The Trial Court erred in failing to award reasonable attorney fees and costs to Defendant, pursuant to Section 10.16 of the parties' contract because (a) the Trial Court determined the contract between the parties is enforceable * * *, and (b) Defendant is the prevailing party.

Standard of Review

{¶ 10} The standard of review of the trial court's conclusion that MRI failed to perform its contractual obligations is a mixed question of fact and law. Troy Oaks Homes & Residential Club, Inc. v. Sokolowski , 2016-Ohio-8427, 78 N.E.3d 365, ¶ 28 (11th Dist.2016), citing Ohio Edn. Assn. v. Lopez , 10th Dist. Franklin No. 09AP–1165, 2010-Ohio-5079, 2010 WL 4102948. Appellate review of a mixed question of fact and law requires an appellate court to give deference to a trial court's factual findings if they are supported by competent, credible evidence, and to independently review whether the trial court properly applied the law to the facts. Troy Oaks Homes & Residential Club, Inc. at id.

{¶ 11} While the interpretation of a contract is generally a matter of law subject to de novo review, the same standard does not apply when the agreement is ambiguous, as the trial court found in this case. See Dzina v. Dzina, 8th Dist. Cuyahoga No. 83148, 2004-Ohio-4497, 2004 WL 1902566, ¶ 11–13 (whenever contractual language is deemed to be ambiguous, it is the responsibility of the trial court to interpret it, and the trial court has broad discretion in clarifying ambiguous language). The interpretation of an ambiguous term used in a contract is a question of fact and will not be reversed on appeal absent an abuse of discretion. Maines Paper & Food Serv., Inc. v. Eanes , 8th Dist. Cuyahoga No. 77301, 2000 WL 1429418, *2 (Sept. 28, 2000). A trial court's decision does not constitute an abuse of discretion unless it is unreasonable, arbitrary, or unconscionable. Castlebrook Ltd. v. Dayton Properties Ltd. , 78 Ohio App.3d 340, 346, 604 N.E.2d 808 (2d Dist.1992), citing Huffman v. Hair Surgeon, Inc., 19 Ohio St.3d 83, 87, 482 N.E.2d 1248 (1985). Accordingly, when applying this standard of review, an appellate court is not free to substitute its judgment for that of the trial court. Nofzinger v. Blood , 6th Dist. Huron No. H–02–014, 2003-Ohio-1406, 2003 WL 1464519, ¶ 42.

{¶ 12} With regard to the trial court's factual findings that MRI failed to perform its contractual obligations, it is important to note that the weight to be given the evidence and the credibility of the witnesses are issues primarily for the trier of fact. See id. at ¶ 41. A reviewing court must, therefore, accord due deference to the credibility determinations made by the fact finder. See id. at ¶ 65. Because the trial court is best able to view the witnesses and observe their demeanor when it weighs the credibility of the offered testimony, there is a presumption that the findings of the trier of fact are correct. Id. , citing Seasons Coal v. Cleveland , 10 Ohio St.3d 77, 80, 461 N.E.2d 1273 (1984). The standard for appellate review of the trial court's conclusion that MRI failed to establish a claim for unjust enrichment is manifest weight of the evidence. See Hamilton v. Ball , 4th Dist. Scioto, 2014-Ohio-1118, 7 N.E.3d 1241, ¶ 15. Accordingly, following a bench trial, a reviewing court will generally uphold a trial court's judgment as long as the manifest weight of the evidence supports it—that is, as long as "some" competent and credible evidence supports it. Id. at ¶ 15.

No error in interpreting Agreement

{¶ 13} As an initial matter, we note that MRI chose to argue its first two assignments of error together, stating they are "two sides of the same coin." Whether that is the case, the appellate rules state that this court "may disregard an assignment of error presented for review if the party raising it fails to identify in the record the error on which the assignment of error is based or fails to argue the assignment separately in the brief, as required under App.R. 16(A)." App.R. 12(A)(2).² Because cases should be decided on their merits, however, we will address MRI's first and second assignments of error. Counsel is cautioned that, in the future, the failure to separately argue assignments of error may result in this court declining to address assignments of error.

{¶ 14} In the first and second assignments of error, MRI contends that the trial court erred in interpreting the Agreement in West Oaks' favor.

{¶ 15} At trial, West Oaks argued that MRI failed to perform in accordance with the Agreement in the following ways: (1) MRI failed to implement the software in three weeks; (2) MRI did not implement the required "commercial management and accounts payable solutions in the web platform"; (3) MRI failed to meet the functional specifications³ of the software; and (4) MRI failed to provide software support.

A. Express implementation

{¶ 16} The trial court found that MRI failed to complete the express implementation within three weeks or anytime thereafter. The trial court noted that MRI did not even begin the implementation process until four weeks after the effective date of the Agreement and caused further delays. MRI does not contest this finding on appeal; we find that the trial court's findings were supported by competent and credible evidence.

B. MRI received actual or constructive notice of "Errors"

{¶ 17} West Oaks argued and the trial court found that MRI failed to provide a software system in the web platform. The trial court specifically found that MRI was required to "implement the Commercial Management, Accounts Payable and General Ledger solutions in the Web platform as part of the * * * Express Implementation * * * and failed to do so." The trial court also found that the software was essentially unusable for West Oaks' purposes and MRI failed to provide adequate support to fix the software problems.

{¶ 18} Under the parties' agreement, MRI warranted that the software would be free from "Errors," which is defined in the Agreement as "a...