Nat'l Contracting Grp., Ltd. v. P&S Hotel Grp., Ltd.
| Decision Date | 26 August 2021 |
| Docket Number | No. 20AP-144,20AP-144 |
| Citation | 177 N.E.3d 308 |
| Parties | NATIONAL CONTRACTING GROUP, LTD., Plaintiff-Appellee, v. P&S HOTEL GROUP, LTD., Defendant-Appellant. |
| Court | Ohio Court of Appeals |
On brief: Strip, Hoppers, Leithart, McGrath & Terlecky Co., L.P.A., and Aaron C. Firstenberger, Columbus, for appellee.
On brief: Sanjay K. Bhatt, Columbus, for appellant.
DECISION
{¶ 1} Defendant-appellant, P&S Hotel Group, Ltd., appeals a judgment of the Franklin County Court of Common Pleas in favor of plaintiff-appellee, National Contracting Group, Ltd. For the following reasons, we affirm.
{¶ 2} National Contracting Group was a commercial construction contractor based in Delaware County, Ohio. P&S is a limited liability company that owns a hotel in Reynoldsburg, Ohio. In 2010, P&S contracted with National Contracting Group to convert its hotel from a Country Inn & Suites brand hotel to a Holiday Inn Express brand hotel (the "Holiday Inn project"). National Contracting Group completed the Holiday Inn project in late 2010 or early 2011.
{¶ 3} On June 24, 2011, representatives for P&S and National Contracting Group met and agreed that P&S could satisfy its outstanding financial obligation for the Holiday Inn project by paying $254,915.22 to National Contracting Group. National Contracting Group sent P&S an invoice for that amount.
{¶ 4} The same individuals who are the members of P&S are also the members of another limited liability company, PVS, Ltd. PVS owns a hotel near Polaris Fashion Place in Columbus, Ohio. In 2012, PVS hired National Contracting Group to convert its hotel from a Wingate by Wynham brand hotel to a Four Points by Sheraton brand hotel (the "Four Points project").
{¶ 5} On May 23, 2012, PVS caused its bank to wire $100,000 to National Contracting Group to be applied to the amount PVS owed National Contracting Group for the Four Points project. However, National Contracting Group applied the $100,000 payment from PVS to the outstanding balance P&S owed to National Contracting Group for the Holiday Inn project.
{¶ 6} Later in 2012, National Contracting Group asked the Delaware County Court of Common Pleas to appoint a receiver to wind down its affairs. On December 12, 2012, pursuant to R.C. 1705.44, the Delaware County Court of Common Pleas appointed Martin Management Services, Inc. ("Receiver") as the receiver for the business and assets of National Contracting Group.
{¶ 7} When the Receiver examined National Contracting Group's records, it discovered the $100,000 wire transfer from PVS that National Contracting Group had applied to P&S’ account. In January 2013, the Receiver instructed National Contracting Group's bookkeeper to reverse the $100,000 credit applied to P&S’ account and instead apply that credit to the outstanding balance due from PVS to National Contracting Group on the Four Points project. The bookkeeper complied with these instructions.
{¶ 8} After performing this bookkeeping modification, the amount due from P&S to National Contracting Group for the Holiday Inn project was $183,915.22. On January 11, 2013, the bookkeeper, on behalf of the Receiver, sent an invoice to P&S showing an outstanding balance in the amount of $183,915.22 due to National Contracting Group for the Holiday Inn project. P&S received the invoice and did not question or object to the amount owed, but made no further payments to National Contracting Group or the Receiver.
{¶ 9} The Receiver demanded payment in the amount of $183,915.22 from P&S in letters dated April 2 and 25, 2013. P&S did not respond to either letter.
{¶ 10} On November 14, 2014, National Contracting Group filed a complaint against P&S seeking $183,915.22 in damages. P&S answered and asserted a counterclaim, in which P&S claimed that National Contracting Group breached the parties’ contract by not paying for tile and carpet installed during the Holiday Inn project.
{¶ 11} The parties tried their case before a magistrate. In a decision dated March 9, 2018, the magistrate rendered findings of fact consistent with the facts set out above. The magistrate found in National Contracting Group's favor on its claim for breach of contract. With regard to the counterclaim, the magistrate determined that P&S had proven a breach of contract related to the tile and/or tile installation National Contracting Group did not pay for, but P&S did not prove a breach relating to the carpet. Because P&S paid $63,781.09 for tile and/or tile installation, the magistrate deducted that amount from the $183,915.22 P&S owed National Contracting Group, resulting in a damages award of $118,134.13, plus interest.
{¶ 12} P&S objected to the magistrate's decision. In a judgment issued February 18, 2020, the trial court overruled P&S’ objections and adopted the magistrate's decision.
{¶ 13} P&S now appeals the February 18, 2020 judgment, and it assigns the following errors:
{¶ 14} By its first assignment of error, P&S challenges the Receiver's authority to reverse payments originally applied to P&S’ account and instead apply those payments to the amount due for the Four Points project. This court, however, cannot address this collateral attack on the Receiver's authority.
{¶ 15} Initially, we may summarily deal with the $10,000 payment. Although P&S claims that two payments are at issue in this assignment of error, the evidence shows that the Receiver only reversed one payment: the $100,000 wire transfer. PVS paid National Contracting Group $10,000 via a check dated June 15, 2012, and National Contracting Group applied the $10,000 to the amount P&S owed for the Holiday Inn project. However, unlike the $100,000 credit stemming from the wire transfer, the Receiver did not reverse the credit arising from the $10,000 check. Thus, the $10,000 payment is irrelevant to this assignment of error.
{¶ 16} We are left, then, with the question of whether the Receiver's authority encompassed the ability to transfer the $100,000 credit from P&S’ account to PVS’ account. The Receiver asserts that it had the necessary authority, pointing to the order appointing it Receiver. In relevant part, that order states:
(Ex. A, Compl.)
{¶ 17} R.C. 2735.04(B) delineates the powers a trial court may grant a receiver. This list includes the power to "[g]enerally do any other acts that the court authorizes." R.C. 2735.04(B)(8). Consequently, R.C. 2735.04(B) enables "the trial court to exercise its sound judicial discretion to limit or expand a receiver's powers as it deems appropriate." State ex rel. Celebrezze v. Gibbs , 60 Ohio St.3d 69, 67-68, 573 N.E.2d 62 (1991).
{¶ 18} Because the appointing court defines the powers of the receiver, it controls the receiver's actions. Dispatch Printing Co. v. Recovery L.P. , 10th Dist., 2015-Ohio-381, 28 N.E.3d 562, ¶ 25. Ultimately, the receiver is a trustee or ministerial officer of the appointing court, subject to that court's order and direction. Id. at ¶ 24-25. Therefore, a receiver's authority cannot be collaterally attacked in another court. Grant v. A.B. Leach & Co. , 280 U.S. 351, 360, 50 S.Ct. 107, 74 L.Ed. 470 (1930) ; Young v. FirstMerit Bank, NA , N.D.Ohio No. 1:06CV1486, 2007 WL 405925 (Feb. 1, 2007) ; Castlebrook, Ltd. v. Dayton Properties Ltd. Partnership , 78 Ohio App.3d 340, 345, 604 N.E.2d 808 (2d Dist.1992).
{¶ 19} Here, pursuant to the court order, the Receiver possessed the power to manage National Contracting Group's accounts, and the Receiver purportedly exercised that power by reversing a credit on one account and applying it to a different account. P&S knew about the Receiver's actions. In January 2013, P&S received a revised invoice indicating it owed National Contracting Group $183,915.22 for the Holiday Inn project. National Contracting Group twice demanded payment of $183,915.22 in April 2013. Darshan Shah, a P&S partner, testified that he understood after receiving an April 2013 demand for payment that the Receiver had reversed the credit for the $100,000 wire transfer,...
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