Olive Branch Holdings v. Smith Technology

Citation909 N.E.2d 671,2009 Ohio 1105,181 Ohio App.3d 479
Decision Date12 March 2009
Docket NumberNo. 08AP-461.,No. 08AP-464.,No. 08AP-463.,No. 08AP-462.,08AP-461.,08AP-463.,08AP-462.,08AP-464.
PartiesOLIVE BRANCH HOLDINGS, L.L.C., Appellee; Haney, Appellant, v. SMITH TECHNOLOGY DEVELOPMENT, L.L.C. et al., Appellees. (Two Cases) Haney, Appellant, v. Smith Technology Development, L.L.C. et al., Appellees. (Two Cases)
CourtUnited States Court of Appeals (Ohio)

Bailey Cavalieri L.L.C., Michael P. Mahoney, and Timothy A. Riedel, Columbus, for appellee Olive Branch Holdings, L.L.C.

Frost Brown Todd L.L.C., Michael K. Yarbrough, Kevin T. Shook, and Elizabeth M. Norton, Columbus, for appellant H. Brian Haney.

Hahn Loeser & Parks L.L.P., Stephen E. Chappelear, and Jeffrey A. Yeager, Columbus, for appellee Smith Technology Development, L.L.C.

FRENCH, Presiding Judge.

{¶ 1} Plaintiff-appellant, H. Brian Haney, appeals from the November 15, 2007 and April 30, 2008 judgments of the Franklin County Court of Common Pleas in four consolidated cases involving attempts by Haney and plaintiff-appellee, Olive Branch Holdings, L.L.C. ("Olive Branch"), to subject certain patents owned by defendant-appellee, Smith Technology Development, L.L.C. ("Smith Technology"), to the satisfaction of money judgments against Smith Technology.

{¶ 2} On April 27, 2004, the Franklin County Court of Common Pleas confirmed an arbitration award in favor of Haney and against Smith Technology in the amount of $1,238,443.11, plus interest, and entered judgment accordingly. See Haney v. Smith Technology Dev., L.L.C., Franklin Cty. C.P. No. 03CVH12-13231 (the "confirmation action"). On November 15, 2004 in the confirmation action, Haney filed a motion to apply property on execution under R.C. 2333.21 (the "R.C. 2333.21 motion"). In his motion, Haney requested an order that ten identified patents owned by Smith Technology be applied toward satisfaction of his judgment. The R.C. 2333.21 motion did not include a certificate of service as required by Civ.R. 5(D) and Loc.R. 19.01 of the Court of Common Pleas of Franklin County, General Division ("Loc.R. 19.01"), although Smith Technology admits that it became aware of Haney's motion on November 30, 2004, after receiving a copy that Haney mailed on November 23, 2004, eight days after filing his motion with the clerk of courts.

{¶ 3} Without holding a hearing, and despite the absence of a certificate of service, the trial court granted Haney's R.C. 2333.21 motion on December 7, 2004, and ordered that the patents be applied toward satisfaction of Haney's judgment. The order authorized and directed Haney's attorney, Richard D. Rogovin, to execute and deliver, "as the duly authorized representative of [Smith Technology]," instruments to effectuate the assignment of the patents to Haney or his assignee. The following week, Rogovin executed assignments of the patents from Smith Technology to Haney's assignee, Matthew 6 Foundation ("Matthew 6"), and filed the assignments with the United States Patent and Trademark Office. The December 7, 2004 order neither assigned a value to the patents nor provided for their sale as a means of reducing Haney's judgment.

{¶ 4} On January 11, 2005, Smith Technology filed a motion to vacate the December 7, 2004 order, arguing that R.C. 2333.21 may not be used to subject a patent to satisfaction of a judgment, that Haney failed to properly invoke R.C. 2333.21, and that Haney failed to comply with the requirements of Civ.R. 5(D) and Loc.R. 19.01 by not filing a certificate of service with his motion. After conducting a hearing on January 14, 2005, the trial court vacated the December 7, 2004 order, stating: "As no certificate of service was filed with regard to [Haney's] motion, said motion was never properly before the Court." Upon stipulation of the parties, however, the court ordered that the patents remain in Matthew 6's possession and enjoined all parties from disposing of or taking any action against the patents. The court also scheduled a hearing for January 19, 2005, regarding the applicability of R.C. 2333.21 to the patents.

{¶ 5} Over the next year, Smith Technology and Haney entered into a series of agreed orders, by which the trial court continued the scheduled hearing, left the patents in Matthew 6's possession, and maintained the injunction prohibiting the parties from taking action against the patents. Each agreed order stated that it should not be construed as an admission or waiver of any claim or defense by either party. The final agreed order, filed February 2, 2006, continued the hearing regarding the proper statutory procedure for subjecting the patents to the satisfaction of Haney's judgment, including the applicability of R.C. 2333.21, to March 28, 2006, although it does not appear from the record that the scheduled hearing occurred.

{¶ 6} On January 19, 2006, during the period encompassed by the agreed orders, Olive Branch obtained a judgment against Smith Technology in the United States District Court for the Eastern District of Texas. Thereafter, on January 20 and 24, 2006, to satisfy its own judgment, Olive Branch filed actions in the Franklin County Court of Common Pleas for a creditor's bill and for a writ of execution relating to the ten patents identified in Haney's R.C. 2333.21 motion. See Olive Branch Holdings, L.L.C. v. Smith Technology Dev L.L.C., Franklin Cty. C.P. No. 06CVH01-935 (the "creditor's bill action"); Olive Branch Holdings, L.L.C. v. Smith Technology Dev., L.L.C., Franklin Cty. C.P. No. 06EX01-47 (the "execution action"). On April 7, 2006, with the agreement of the parties, the trial court consolidated Olive Branch's creditor's bill and execution actions into the confirmation action.

{¶ 7} On May 3, 2006, the trial court ordered the parties to file simultaneous briefs regarding the proper procedure for subjecting the patents to satisfaction of the judgments against Smith Technology and regarding who should hold the patents pending final determination of the parties' actions. On May 26, 2006, Haney, Smith Technology, and Olive Branch filed memoranda setting forth their positions and legal arguments.

{¶ 8} On May 16, 2007, Haney filed a creditor's bill complaint to reach an 11th patent owned by Smith Technology. See Haney v. Smith Technology Dev., L.L.C, Franklin Cty. C.P. No. 07CVH05-6644. Haney also filed a motion in the consolidated action to apply the 11th patent on execution pursuant to R.C. 2333.21. On September 24, 2007, the trial court consolidated Haney's creditor's bill complaint with the other consolidated cases.

{¶ 9} On November 15, 2007, the trial court issued its decision and entry on the proper method of execution on patents and an order to transfer possession of the patents to Smith Technology. The court noted that since vacating the December 7, 2004 order, it had not made any determination as to Haney's right to the patents under R.C. 2333.21 or as to whether Matthew 6's possession of the patents conferred any ownership rights on either Matthew 6 or Haney. The court then stated: "Due to the uncertainty surrounding the valuation of the patents at bar, and upon historical precedence, the court finds that the proper method for executing patents is a creditor's bill filed pursuant to R.C. 2333.01 [and] that execution on the patents pursuant to R.C. 2333.21 and 2327.09 [is] not proper." Discussing the parties' priorities, the court determined that Olive Branch has the first and best lien on the ten originally identified patents by virtue of its January 20, 2006 creditor's bill complaint and that Haney has the first and best lien on the 11th patent by virtue of his May 15, 2007 creditor's bill complaint. The trial court rejected Haney's argument that his attempt to reach the patents through R.C. 2333.21 gave him priority, as the most diligent creditor, over Olive Branch, with respect to the first ten patents. Finally, the court ordered that the patents be transferred back to Smith Technology, as the current and rightful owner, pending final resolution of this action.

{¶ 10} Subsequent to the trial court's decision and entry, Haney filed several motions, including a motion for leave to file a creditor's bill counterclaim and cross-claim instanter and a motion for the addition of Civ.R. 54(B) language and to stay the November 15, 2007 decision and entry pending appeal. Haney also refiled his R.C. 2333.21 motion, this time with a certificate of service, and argued that the refiled motion should relate back to the filing date of his original R.C. 2333.21 motion. The trial court disposed of Haney's motions in a decision and entry filed April 30, 2008. The trial court denied Haney's motion to refile his R.C. 2333.21 motion with relation back to the original November 15, 2004 filing date and denied Haney's request that Matthew 6 be permitted to retain the patents pending appeal. The trial court granted Haney's motion for leave to file a creditor's bill counterclaim and cross-claim with respect to the ten originally identified patents to preserve his rights on appeal and his priority as to other creditors, but the court declined to readdress the issue of priority between Haney and Olive Branch. Finally, the court granted Haney's motion for the addition of Civ.R. 54(B) language and issued a new judgment entry, incorporating a certification that "there is no just reason for delay" into its November 15, 2007 decision and entry.

{¶ 11} Haney filed a notice of appeal on May 29, 2008, and he asserts the following assignments of error:

I. Assignment of Error # 1: The trial court erred when it found that a creditor's bill is the only way to attach a patent.

II. Assignment of Error # 2: The trial court erred when it determined that * * * Haney was not the most diligent judgment creditor.

III. Assignment of Error # 3: The trial court erred when it refused to allow * * * Haney to refile his motion to apply patents on execution.

IV. Assignment of Error # 4: The trial court...

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