Tokles & Son, Inc. v. Midwestern Indemnity Co.

• Decision Date: 13 September 1991
• Docket Number: 91-LW-1017,L-89-395
• Parties: Tokles & Son, Inc., Appellant/Cross-Appellee v. Midwestern Indemnity Co., Appellee/Cross-Appellant Court of Appeals
• Court: Ohio Court of Appeals

Tokles & Son, Inc., Appellant/Cross-Appellee v. Midwestern Indemnity Co. Appellee/Cross-Appellant

No. L-89-395

91-LW-1017 (6th)

Court of Appeals of Ohio, Sixth District Lucas

September 13, 1991

This is an appeal and a cross-appeal from Lucas County Court of Common Pleas Trial Court No. CV 87-3389

George C. Rogers and James D. Godbey, for appellant/cross-appellee.

Thomas T. Schell, for appellee/cross-appellant.

OPINION AND JOURNAL ENTRY

ABOOD J.

This is a consolidated appeal and cross-appeal from-judgments of the Lucas County Court of Common Pleas which, collectively determined the action in favor of appellee on appellant's claims for breach of contract and "bad faith", and in favor of appellant on appellee's counterclaim for "bad faith" and fraud. Appellant, Tokles & Son Inc., sets forth six assignments of error in support of its appeal:

"I. THE TRIAL COURT ERRED IN FAILING TO STRIKE DEFENDANT'S ANSWER AND COUNTERCLAIM AS UNTIMELY FILED, AND IN FAILING TO GRANT DEFAULT JUDGMENT.

"II. THE TRIAL COURT ERRED IN GRANTING A DIRECTED VERDICT AT THE THE [sic] CLOSE OF PLAINTIFF'S CASE ON THE GROUND THAT PLAINTIFF HAD NOT ESTABLISHED ANY EVIDENCE ON THE VALUE OF THE LOSS [sic] ORDER OF SEPTEMBER 13, 1989 AND THE COURT ERRED IN REITERATING SUCH HOLDING IN ITS ORDER OF NOVEMBER 28, 1989. THESE ERRORS WERE CUMULATIVE OF ERRORS LIMITING PLAINTIFFS [sic] INTRODUCTION INTO EVIDENCE OF TESTIMONY CONCERNING LOSS AND ADMISSIONS OF DEFENDANT'S EMPLOYEES.

"III. THE TRIAL COURT ERRED IN FAILING TO CONSIDER DEFENDANT'S ATTEMPT TO DENY ITS INSUREDS COMPENSATION ON THE SPURIOUS ISSUE OF LACK OF VALUATIONS WHEN IT HAD IN FACT ADMITTED SUCH VALUATIONS EVIDENCE OF POST FILING BAD FAITH.

"IV. THE TRIAL COURT ERRED IN OVERRULING PLAINTIFF'S MOTION TO DISMISS DEFENDANT'S COUNTERCLAIM IN TORT FOR AN INSURER AGAINST ITS INSUREDS FOR FRAUD WHEN NEITHER OHIO NOR ANY OTHER STATE RECOGNIZE SUCH A TORT, AND FOR FAILURE TO CONSIDER SUCH SPURIOUS RETALIATORY COUNTERCLAIM AS EVIDENCE OF DEFENDANTS' [sic] BAD FAITH.

"V. THE TRIAL COURT ERRED IN GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT ON THE BAD FAITH CLAIM WHEN THERE WAS AMPLE EVIDENCE OF BAD FAITH IN THE INITIAL DENIAL OF THE CLAIM AS WELL AS SUBSEQUENT POST LITIGATION CONDUCT OF DEFENDANT AS TO ITS SPURIOUS COUNTERCLAIM AND SPURIOUS CONTESTING OF VALUATION.

"VI. THE TRIAL COURT ERRED IN EXCLUDING THE AIRLINE TICKETS FROM EVIDENCE [sic] THE RECORDS BEING BUSINESS RECORDS PURSUANT TO EVIDENCE R803 (G)."

Appellee, Midwestern Indemnity Company, sets forth two conditional assignments of error and one unconditional assignment of error in support of its cross-appeal:

"APPELLEE'S CONDITIONAL CROSS-ASSIGNMENT OF ERROR IN RESPONSE TO APPELLANT'S ASSIGNMENT OF ERROR II

"IN THE EVENT THAT THIS COURT REVERSES THE TRIAL COURT'S DECISION TO GRANT MIDWESTERN'S MOTION FOR DIRECTED VERDICT ON THE ISSUE OF DAMAGES, THEN, THIS COURT SHOULD ENTER FINAL JUDGMENT FOR MIDWESTERN ON THE BASIS OF [sic] THAT THE TRIAL COURT SHOULD HAVE GRANTED MIDWESTERN'S MOTION FOR DIRECTED VERDICT ON THE OTHER GROUNDS REQUESTED BY MIDWESTERN AT THE END OF APPELLANT'S CASE.

"APPELLEE'S CONDITIONAL CROSS-ASSIGNMENT OF ERROR IN RESPONSE TO APPELLANT'S ASSIGNMENT OF ERROR V

"IN THE EVENT THAT THIS COURT REVERSES THE TRIAL COURT'S DECISION GRANTING MIDWESTERN'S POST-TRIAL MOTION FOR SUMMARY JUDGMENT, THEN THIS COURT SHOULD ENTER FINAL JUDGMENT FOR MIDWESTERN ON THE BASIS THAT THE TRIAL COURT SHOULD HAVE GRANTED MIDWESTERN'S PRE-TRIAL MOTION FOR SUMMARY JUDGMENT REQUESTING DISMISSAL OF TOKLES [sic] BAD FAITH CLAIM.

"ASSIGNMENT OF ERROR I OF CROSS-APPELLANT, MIDWESTERN

"THE TRIAL COURT ERRED TO THE PREJUDICE OF DEFENDANT MIDWESTER [sic] IN DISMISSING SUA SPONTE MIDWESTERN'S COUNTERCLAIM WHERE THE COUNTERCLAIM SET FORTH VIABLE CLAIMS FOR RELIEF AGAINST PLAINTIFF TOKLES."

This case arises out of appellee's denial of appellant's claim for insurance benefits for an alleged theft loss of a tractor-trailer unit ("truck").

I. DEFAULT JUDGMENT

The facts that are relevant to a determination of the issues raised by appellant's first assignment of error are as follows. On November 4, 1987, appellant filed a complaint in the Lucas County Court of Common Pleas which alleged that appellee had breached its contract of insurance and its duty to deal in good faith with appellant when it refused to pay appellant's claim for theft loss of the truck. On November 30, 1988, appellee requested an extension of time in which to "plead." On that same day, the trial court granted the extension and ordered appellee to "plead" on or before January 4, 1988. On January 5, 1988, appellee filed its answer and a counterclaim for "bad faith" and fraud against appellant. On January 6, 1988, appellant filed a motion to strike appellee's answer and counterclaim and a motion for default judgment. On January 12, 1988, appellee filed a memorandum in opposition to appellant's motion and an application for leave to file its answer instanter, in which appellee stated that "*** January 4th was the first day after the new year [holiday]. Defendant's counsel dictated the Answer on the 4th expecting its staff to have it typed and filed the same day. Because of the work load; the Answer was not filed until the next day." On January 13, 1988, appellant filed a "memorandum contra application for leave to serve out of rule," to which it attached an affidavit of Lisa R. Foust, legal secretary for Mark A. Robinson, Esq., which purported to show that appellee's attorney was in the process of gathering information for his counterclaim on January 5, 1988, and did not, therefore, intend to file the answer and counterclaim on January 4, 1988. On January 14, 1988, the trial court filed its judgment entry in which it found that:

"*** 'excusable neglect' has been established by defendant. Therefore the Court finds plaintiff's motions not well-taken and denies same. Accordingly, the defendant is granted leave to file his answer and counterclaim, instanter."

It is to this order that appellant's first assignment of error is directed.

Appellant contends that, since the delay in filing the answer was not excusable, it was error for the trial court to deny its motion to strike the answer and its motion for default judgment. Appellant also argues that since appellee failed to specifically request leave to file its counterclaim, it was likewise error for the court to not strike it.

Appellee responds that the trial court did not abuse its discretion in finding "excusable neglect" pursuant to Civ. R. 6(B) (2), and that a counterclaim need not be specifically referenced in a request for continuance since it is not a separate pleading, rather it is a part of an answer.

The issue presented by appellant's first assignment of error is whether the trial court abused its discretion by granting appellee leave to file its answer and counterclaim instanter.

Civ. R. 6(B) provides, in pertinent part, that:

"When by these rules or by a notice given thereunder or by order of court an act is required or allowed to be done at or within a specified time, the court for cause shown may at any time in its discretion *** (2) upon motion made after the expiration of the specified period permit the act to be done where the failure to act was the result of excusable neglect ***"

When a motion is filed pursuant to Civ. R. 6(B) (2) and there is some evidence of "excusable neglect" presented to the trial court, its decision granting leave to file instanter will not be disturbed by a reviewing court absent a clear abuse of discretion. Miller v. Lint (1980), 62 Ohio St. 2d 209, 214; Evans v. Chapman (1986), 28 Ohio St. 3d 132, 135; Marion Production Credit Assn. v. Cochran (1988), 40 Ohio St. 3d 265, 271; Farmers & Merchants State & Savings Bank v. Raymond G. Barr Ent., Inc. (1982), 6 Ohio App. 3d 43, 44; Jenkins v. Clark (1982), 7 Ohio App. 3d 93, 95; Maintenance Unlimited, Inc. v. Salemi (1984), 18 Ohio App. 3d 29, 32-33, n. 2.

Applying the law as stated to the facts set forth above, this court finds that the trial court did not abuse its discretion in allowing appellee leave to file its answer and counterclaim instanter.

Accordingly, appellant's first assignment of error is not well-taken.

II. APPELLANT'S BREACH OF CONTRACT CLAIM

The facts that are relevant to a determination of appellant's second assignment of error are as follows. On December 8, 1988, the trial court filed its judgment entry in which it ordered that appellant's breach of contract claim, as set forth in Count I of its complaint, would be tried first and separately from the "bad faith" claims as set forth in Count II of the complaint and appellee's counterclaim. On August 7, 1989, the breach of contract case proceeded to trial by jury.

At the trial, Patricia Tokles testified that the business known as Tokles & Son, Inc., was formerly Tokles & Son and, before that, E & T Tokles; that the business was originally operated by her husband and his brother, afterwards by her husband and her son, Timothy Tokles, and now by her and her son; and that E & T Investments, Inc., was organized for the purpose of purchasing a truck.

Timothy Tokles testified that he is manager of Tokles & Son; that he and his former wife, Susan Tokles (Mims), set up E & T Investments, Inc., just prior to purchasing the truck; that his former wife was president and sole shareholder at that time and he was secretary/treasurer; that the sole asset of E & T Investments, Inc., was the truck; that the truck was purchased for use in E & T Investments, Inc.; that the truck was purchased in 1981; that the initial money to pay for the truck came from E & T Tokles; that the periodic insurance and installment payments were paid first by Tokles & Son and then by Tokles & Son,...