[Cite as Harrod Corp. v. Tiffin Univ., 2010-Ohio-2520.]




                       IN THE COURT OF APPEALS OF OHIO
                           THIRD APPELLATE DISTRICT
                                SENECA COUNTY




HARROD CORP., ET AL.,

        PLAINTIFFS-APPELLANTS,                                     CASE NO. 13-09-33

        v.

TIFFIN UNIVERSITY,                                                 OPINION

        DEFENDANT-APPELLEE.




                  Appeal from Seneca County Common Pleas Court
                            Trial Court No. 09 CV 0070

                                      Judgment Affirmed

                              Date of Decision:           June 7, 2010




APPEARANCES:

        Jacqueline M. Boney for Appellants

        Laurie J. Avery and William V. Beach for Appellee
Case No. 13-09-33


SHAW, J.

       {¶1} Plaintiffs-appellants, Harrod Corp. and Dennis Harrod (collectively

hereinafter “Harrod”), appeal the October 14, 2009 judgment of the Common

Pleas Court of Seneca County, Ohio, granting summary judgment in favor of the

defendant-appellee, Tiffin University (“the university”).

       {¶2} In 2006, the university began eminent domain proceedings to obtain

multiple real estate parcels located at what is commonly known as 322 and 375

Miami Street in Tiffin, Ohio. At the time, the property was owned by Harrod and

was being used to operate a scrap metal salvage business and impound lot. The

university intended to clean up this property and make it suitable to build upon so

that the university could expand its school.

       {¶3} On June 29, 2006, the parties entered into a real estate purchase

agreement (“the original agreement”) regarding these parcels.        The original

agreement provided that the closing on the sale of these parcels would occur on or

before October 1, 2006. It also provided that Harrod was allowed to continue to

operate and control the portion of the real estate located on the north side of

Miami Street until February 1, 2007, to use the impound lot on the premises until

August 30, 2007, to use the portion of the premises located on the south side of

Miami Street until July 1, 2008, and to use the block building on the south side

until July 1, 2011, all of which was to be encompassed in a separate lease

agreement to be executed at the time of closing. The original agreement also

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provided that at the time of closing, the university, having conducted an

environmental audit of the premises and taking the premises subject to the

information contained therein, was accepting the property in its “AS IS” and

“WHERE IS” condition. However, the sale was conditioned upon, inter alia, the

university being approved for a grant from the Clean Ohio Assistance Fund to

remediate the land from pollutants.

       {¶4} The closing did not occur on or before October 1, 2006, and the

parties subsequently entered into a real estate purchase agreement modification

(“the modification”). The modification incorporated the language of the original

agreement with five modifications to that language.            Included in those

modifications were that closing was to occur on or before December 31, 2006, and

that Harrod was permitted to use the south side of the premises and the impound

lot until February 1, 2007.    The modification also provided that Harrod was

permitted to remove any personal property, fixtures, and buildings from the north

side until February 1, 2007.

       {¶5} On December 28, 2006, a non-residential lease (“the lease”) was

executed by the parties for the block building on the south side of the premises.

The terms of the lease provided Harrod with use of the block building from

December 31, 2006, until July 1, 2011.

       {¶6} Closing on the property occurred on December 31, 2006.             On

February 1, 2007, the university took possession of the north side of the property.

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The university hired Tiffin Iron and Metal, a scrap metal business, to remove any

and all items left on the north side of the property and to prepare the land to a

rough grade in order for the university to rid the land of all chemical pollutants in

accordance with EPA standards and to eventually build on the land. Prior to the

sale of the property to the university, Tiffin Iron and Metal had operated its

business on the property pursuant to an oral agreement with Harrod.               As

compensation for ridding the property of all items left on the property, the

university permitted Tiffin Iron and Metal to retain any value it could receive for

the items it removed from the property.

       {¶7} Almost immediately after the university took possession of the north

side, disputes between the parties arose.       These disputes involved the use of

portions of the property, items on different parts of the property, and access to

portions of the property. The disputes eventually resulted in Harrod filing a

complaint against the university in the Common Pleas Court of Seneca County on

March 6, 2007 (“Harrod I”).

       {¶8} This complaint alleged three causes of actions: 1) conversion; 2)

fraudulent misrepresentation; and 3) intentional infliction of emotional distress. In

the complaint, Harrod referred to the original agreement, the modification, and the

lease in support of his claims.     In addition, Harrod attached copies of these

documents to the complaint. The university filed its answer to this complaint and




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counterclaimed against Harrod for conversion and trespass.       The matter then

proceeded to the discovery phase and various depositions were taken.

      {¶9} The trial on the complaint and counterclaims in Harrod I was

scheduled to begin on February 11, 2008. On February 7, 2008, Harrod filed a

voluntary dismissal of all his claims without prejudice pursuant to Civ.R. 41(A).

The trial then proceeded as scheduled only upon the university’s counterclaims for

conversion and trespass.

      {¶10} During the trial of Harrod I, the parties presented several exhibits,

including all of the transactional documents, various communications between

counsel for the parties regarding the rights of possession and control of different

portions of the property, and a number of documents regarding the grant from the

Clean Ohio Assistance Fund. In addition, the parties presented the testimony of

Dr. Michael Grandillo, the vice president for development and public affairs for

the university who was the university’s point person for the purchase of the scrap

yard, Richard Farmer, who worked for Tiffin Iron and Metal during the relevant

time period, the attorneys for both the university and Harrod during the

negotiations, purchase, and subsequent disputes regarding the scrap yard, and

Dennis Harrod.

      {¶11} Numerous questions, both on direct and cross-examination, were

posed regarding all of the transactional documents, the agreements made by the

parties, the communications between the attorneys about the land and items on the

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land, each parties’ interests and rights to access and use the land and items on the

land, what each party did to prevent the other party from accessing parts of the

premises and items on the land, what each party did with the items found on the

land, and the specifics about the disputes after February 1, 2007, between the

parties.

       {¶12} In short, the university’s counterclaims were based upon allegations

that the items left on those portions of the property that Harrod did not have the

right to enter were deemed abandoned by him and became the property of the

university for the university to do with as it pleased. Largely, the university was

disposing of these items through Tiffin Iron and Metal, which, as previously

noted, was being compensated by retaining any value it could obtain through the

sale or re-use of these items. Thus, the university claimed that Harrod or someone

acting on his behalf trespassed on the university’s property and converted items

belonging to it for his own use and/or enjoyment. In contrast, Harrod claimed that

he only went on property that he was authorized to be on and only took items

belonging to him.

       {¶13} At the conclusion of the trial in Harrod I, the jury returned a verdict

in favor of Harrod on the conversion claim and a verdict in favor of the university

on the trespass claim, resulting in no money being awarded. The trial court

entered judgment on these verdicts on February 14, 2008. No appeal from this

judgment was made.

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       {¶14} On February 5, 2009, Harrod filed a new complaint against the

university (“Harrod II”). In this complaint, Harrod alleged six causes of action:

1) conversion of personal property; 2) fraud in the inducement; 3) declaratory

judgment; 4) breach of contract; 5) specific performance of contract; and 6)

intentional interference with business relationships or contracts.

       {¶15} The university filed a motion to dismiss the complaint on April 6,

2009, asserting that the complaint in Harrod II was barred by res judicata and that

Harrod’s claims in the new complaint were compulsory to the counterclaims tried

and determined in Harrod I, pursuant to Civ.R. 13(A). Harrod filed a response in

opposition to this motion on April 23, 2009. A hearing was held on this motion on

April 30, 2009. At that time, the trial court, sua sponte, converted this motion to a

motion for summary judgment and permitted supplemental briefing on the issue.

       {¶16} On June 11, 2009, the university filed a motion for summary

judgment, once again asserting that the complaint in Harrod II was barred by res

judicata and that Harrod’s claims in the new complaint were compulsory to the

counterclaims tried and determined in Harrod I, pursuant to Civ.R. 13(A). Harrod

filed a response in opposition to the university’s motion for summary judgment,

and the university filed a reply to that response.

       {¶17} On October 14, 2009, the trial court granted summary judgment in

favor of the university and dismissed the complaint in Harrod II. This appeal

followed, and Harrod now asserts three assignments of error.

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                         ASSIGNMENT OF ERROR I

      THE TRIAL COURT COMMITTED ERROR BY FAILING
      TO RESTRICT ITS RULE 13(A) ANALYSIS TO THE
      COUNTERCLAIM IN THE ORIGINAL ACTION.

                         ASSIGNMENT OF ERROR II

      THE TRIAL COURT ERRED BY FAILING TO CONSTRUE
      THE EVIDENCE IN THE LIGHT MOST FAVORABLE TO
      THE PLAINTIFFS-APPELLANTS, THE NON-MOVANTS.

                        ASSIGNMENT OF ERROR III

      THE TRIAL COURT ERRED BY FINDING THE CLAIMS
      ASSERTED IN THE HARROD II COMPLAINT TO BE
      COMPULSORY TO THE HARROD I COUNTERCLAIM
      BASED UPON THE LIKELIHOOD OF DUPLICATION OF
      EVIDENCE WHERE THE SAME FACTUAL AND LEGAL
      ISSUES ARE NOT PRESENTED.

      {¶18} Initially, we note that each assignment of error involves the issue of

whether the trial court erred in granting summary judgment in favor of the

university. Accordingly, we elect to address the assignments of error together.

      {¶19} An appellate court reviews a grant of summary judgment de novo,

without any deference to the trial court. Conley-Slowinski v. Superior Spinning &

Stamping Co. (1998), 128 Ohio App.3d 360, 363, 714 N.E.2d 991; see, also,

Hasenfratz v. Warnement, 3rd Dist. No. 1-06-03, 2006-Ohio-2797, citing Lorain

Nat’l. Bank v. Saratoga Apts. (1989), 61 Ohio App.3d 127, 572 N.E.2d 198. A

grant of summary judgment will be affirmed only when the requirements of Civ.R.

56(C) are met. This requires the moving party to establish: (1) that there are no



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genuine issues of material fact, (2) that the moving party is entitled to judgment as

a matter of law, and (3) that reasonable minds can come to but one conclusion and

that conclusion is adverse to the non-moving party, said party being entitled to

have the evidence construed most strongly in his favor. Civ.R. 56(C); see Horton

v. Harwick Chem. Corp., 73 Ohio St.3d 679, 653 N.E.2d 1196, 1995-Ohio-286,

paragraph three of the syllabus.

         {¶20} The party moving for summary judgment bears the initial burden of

identifying the basis for its motion in order to allow the opposing party a

“meaningful opportunity to respond.” Mitseff v. Wheeler (1988), 38 Ohio St.3d

112, 526 N.E.2d 798, syllabus.      The moving party also bears the burden of

demonstrating the absence of a genuine issue of material fact as to an essential

element of the case. Dresher v. Burt, 75 Ohio St.3d 280, 292, 662 N.E.2d 264,

1996-Ohio-107.      Once the moving party demonstrates that he is entitled to

summary judgment, the burden shifts to the non-moving party to produce evidence

on any issue which that party bears the burden of production at trial. See Civ.R.

56(E).

         {¶21} In ruling on a summary judgment motion, a court is not permitted to

weigh evidence or choose among reasonable inferences, rather, the court must

evaluate evidence, taking all permissible inferences and resolving questions of

credibility in favor of the non-moving party. Jacobs v. Racevskis (1995), 105

Ohio App.3d 1, 7, 663 N.E.2d 653. Additionally, Civ.R.56(C) mandates that

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summary judgment shall be rendered if the pleadings, depositions, answers to

interrogatories, written admissions, affidavits, transcripts of evidence, and written

stipulations of fact show that there is no genuine issue as to any material fact and

that the moving party is entitled to judgment as a matter of law.

       {¶22} Civil Rule 13(A) requires a party to plead as a counterclaim “any

claim which at the time of serving the pleading the pleader has against any

opposing party, if it arises out of the transaction or occurrence that is the subject

matter of the opposing party’s claim and does not require for its adjudication the

presence of third parties of whom the court cannot acquire jurisdiction.” Thus, the

Ohio Supreme Court has held that “[a]ll existing claims between opposing parties

that arise out of the same transaction or occurrence must be litigated in a single

lawsuit pursuant to Civ.R. 13(A), no matter which party initiates the action.”

Rettig Enterprises, Inc. v. Koehler, 68 Ohio St.3d 274, 626 N.E.2d 99, 1994-Ohio-

127, paragraph one of the syllabus.       If a party fails to assert a compulsory

counterclaim, that party is barred from litigating the counterclaim in a separate

action. Id. at 277. In addition, “it makes no difference to the application of Civ.R.

13(A) * * * that the present claim was originally filed as a complaint in the earlier

action and dismissed without prejudice after the defendant filed its counterclaim.”

Id.

       {¶23} In Rettig, the plaintiff filed a suit against a number of defendants

(“Rettig I”). Id. at 274. The subject-matter of Rettig I involved the sale of a retail

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store and allegations regarding a failure by the defendants to account for certain

inventory. Id. at 274-75. This complaint was eventually settled by agreement of

the parties, which included a provision that the two sides would each designate a

person to calculate the cost value of all inventory sold and the store would be

returned to the plaintiffs. Id. at 275.

       {¶24} A second suit (“Rettig II”) arose, wherein the original plaintiff-

business in Rettig I and two additional plaintiffs alleged that the defendants failed

to pay the sums to which they agreed in Rettig I. Id. This time, the defendants

filed a counterclaim, alleging that they were owed money for certain items

purchased while they were operating the store and/or in the process of returning

the store to the plaintiffs. Id. Eventually, the plaintiffs filed to dismiss their

complaint, pursuant to Civ.R. 41(A). Id. at 276. The trial court dismissed the

plaintiffs’ complaint but did not dismiss the counterclaim, which proceeded to a

bench trial in favor of the defendants. Id.

       {¶25} The plaintiffs filed a third complaint (“Rettig III”) against the same

defendants and named an additional defendant.          Id.   The trial court granted

summary judgment in favor of the defendants, but this Court reversed that

decision because we found “‘no connection between the counterclaims [in the

second suit] and the terms of the settlement agreement. * * * Thus, we conclude[d]

that the counterclaims were not compulsory and that it was error on the part of the

trial court to conclude that the doctrine of res judicata applied.’” Id. at 276-77.

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       {¶26} The Ohio Supreme Court reversed our decision. Id. at 279. In so

doing, the Court established a two-prong test for determining whether a claim is

compulsory: (1) does the claim exist at the time of serving the pleading; and (2)

does the claim arise out of the transaction or occurrence that is the subject matter

of the opposing claim. Id. at 277, citing Geauga Truck & Implement Co. v.

Juskiewicz (1984), 9 Ohio St.3d 12, 14, 457 N.E.2d 827. The Court in Rettig then

found that the claims asserted in Rettig III existed at the time the relevant

pleadings were served in Rettig II. Id. at 278. Thus, the Court proceeded to

determine whether the claims in the third suit arose out of the same transaction or

occurrence that was the subject-matter of the defendants’ counterclaims in the

second suit. Id.

       {¶27} In order to determine the second prong of the test, the Court applied

the “logical relation” test, finding that this test “comports with the object and

purpose of Civ.R. 13(A), viz., to avoid a multiplicity of actions and to achieve a

just resolution by requiring in one lawsuit the litigation of all claims arising from

common matters.”       Id.   The logical relation test renders a counterclaim

compulsory where it “‘is logically related to the opposing party’s claim where

separate trials on each of their respective claims would involve a substantial

duplication of effort and time by the parties and the courts.’” Id., quoting Staff

Notes (1970) to Civ.R. 13 (other citations omitted).




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       {¶28} Further, the Court interpreted the term “transaction” rather broadly:

“‘It may comprehend a series of many occurrences, depending not so much upon

the immediateness of their connection as upon their logical relationship * * * That

they are not precisely identical, or that the counterclaim embraces additional

allegations * * * does not matter.’” Rettig, 68 Ohio St.3d at 278, 626 N.E.2d 99,

quoting Moore v. New York Cotton Exchange (1926), 270 U.S. 593, 610, 46 S.Ct.

367.    Accordingly, the Court held that “multiple claims are compulsory

counterclaims where they ‘involve many of the same factual issues, or the same

factual and legal issues, or where they are offshoots of the same basic controversy

between the parties.’” Rettig, 68 Ohio St.3d at 279, 626 N.E.2d 99, quoting Great

Lakes Rubber Corp v. Herbert Cooper Co. (C.A. 3, 1961), 286 F.2d 631, 634.

       {¶29} In examining the facts in Rettig II and Rettig III and applying the

“logical relation” test, the Court found that the claims were logically related and

that they were “offshoots of the same basic controversy between the parties over

an accounting of the various rights, obligations and liabilities springing from” the

sale of the retail store. Rettig, supra. Therefore, the Court determined that the

claims in Rettig III were compulsory to the claims litigated in Rettig II and

reinstated summary judgment in favor of the defendants. Id.

       {¶30} Here, the claims in Harrod II undisputedly existed at the time the

relevant pleadings were served in Harrod I. Therefore, we proceed to determine




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whether the claims in Harrod II arose out of the same transaction or occurrence

that was the subject-matter of the university’s counterclaims in Harrod I.

       {¶31} A review of the record in this case reveals that the claims asserted by

Harrod in Harrod II are logically related to and arose out of the same transactions

as the counterclaims litigated in Harrod I. As noted by the trial court in its entry

granting summary judgment, “each and every claim between the parties herein is

ultimately founded upon the various rights and obligations that spring from the

[agreements] that were at issue during the jury trial in ‘Harrod I.’”

       {¶32} During the trial in the first case, a transcript of which was filed as

part of the record in the case sub judice, the university’s claims involved questions

of whether the items of personal property left on the north side of the premises by

Harrod became the property of the university as of February 1, 2007, or whether it

remained Harrod’s personal property because it was not “real property.” The

claims also raised questions about what parts of the property Harrod could enter,

when he could enter them, and whether he had permission to come onto other

portions of the property to retrieve items. In order to answer these questions, the

original agreement, the modification, the lease, and numerous communications

between the attorneys for the respective sides had to be examined.

       {¶33} In comparison, Harrod asserted six causes of action in Harrod II.

The first is for conversion of personal property. In this claim, Harrod maintains

that the university converted his vehicles, machinery, and equipment that were

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located on the property by seizing, withholding, and/or destroying those items. In

his second cause of action, fraud in the inducement, Harrod asserts that he would

not have sold the property to the university if he had known that the university was

going to hire and permit a rival scrap metal business to operate on the north side of

the premises in competition with Harrod, who was operating on the south side of

the premises.    Harrod contends in his third cause of action for declaratory

judgment that the university wrongfully breached its obligations of good faith and

fair dealing by allowing a competitor to operate across the street from his business

on the south side and wrongfully breached its obligations by erecting physical

barriers on the south side to prevent his possession, use, and control of that side of

the premises. In his fourth claim, Harrod asserts that the university breached its

lease contract for the same reasons listed in the third claim. Harrod’s fifth claim is

for specific performance of contract as an alternative form of relief to his third and

fourth causes of actions.     Lastly, Harrod’s sixth cause of action, intentional

interference with business relationships or contracts, is based on all the previous

actions by the university detailed in Harrod’s complaint, which he contends caused

his business to suffer.

       {¶34} Despite the contentions of Harrod, everything at issue in Harrod II

centers around the sale of the property in its entirety and what agreements were

made to make that sale happen. This was also the central issue in litigating the

university’s counterclaims in Harrod I.        As previously discussed, the parties

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allegedly made several agreements and oral representations to one another about

the sale of the entire premises, the use of the premises before and after the sale,

and access to various portions of the premises both before and after the closing.

None of the claims by Harrod in the second action or the university in the first

action involve matters attenuated from the sale of this property or otherwise

disconnected from this sale. To the contrary, each claim involves what each party

believed was the agreement they had made for the sale of the property and

everything on it: what each believed they had a right to, what each believed the

other had promised, what each believed the other had wrongfully done, and what

documents they each had in support of their respective beliefs.

       {¶35} In sum, without the sale of the property and the promises/agreements

made to effectuate the sale, none of the claims by the parties would have arisen.

Thus, we conclude that these claims involve many of the same factual issues,

some of the same legal issues, and are clearly offshoots of the same basic

controversy between the parties. Therefore, the claims asserted in the complaint in

Harrod II were compulsory to the university’s counterclaims that were tried in

Harrod I. In addition, it makes no difference that some of the present claims were

originally filed as a complaint in the earlier action and dismissed without prejudice

after the university filed its counterclaim. See Rettig, 68 Ohio St.3d at 277, 626

N.E.2d 99. Because Harrod’s claims were compulsory and were not maintained in

the earlier action, they are now barred by virtue of Civ.R. 13(A). See id.

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       {¶36} For these reasons, we find that summary judgment in favor of the

university was proper. Accordingly, the three assignments of error are overruled,

and the judgment of the Common Pleas Court of Seneca County is affirmed.

                                                             Judgment Affirmed

ROGERS and PRESTON, J.J., concur.

/jlr




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