[Cite as Pheils v. Glass City Sales, L.L.C., 2009-Ohio-4623.]




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




DAVID R. PHEILS, JR.,

        PLAINTIFF-APPELLANT,                                    CASE NO. 13-09-19

        v.

GLASS CITY SALES, LLC, ET AL.,                                  OPINION

        DEFENDANTS-APPELLEES.




                  Appeal from Seneca County Common Pleas Court
                            Trial Court No. 09 CV 0010

                                       Judgment Affirmed

                           Date of Decision: September 8, 2009




APPEARANCES:

        David R. Pheils, Jr., Appellant

        Arnold N. Gottlieb for Appellee
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WILLAMOWSKI, J.,

        {¶1} Plaintiff-Appellant, David R. Pheils, Jr. (“Pheils”), appeals the

judgment of the Seneca County Court of Common Pleas granting a motion to

vacate judgment on a cognovit note. For the reasons set forth below, the judgment

is affirmed.

        {¶2} On January 8, 2009, Pheils filed a complaint against Defendants-

Appellees, Glass City Sales, LLC, Dan Novotny, and Scott Salsbury (collectively,

“Appellees”), 1 to enforce a cognovit note in the amount of $50,160, plus interest.

Pheils had a business relationship with Appellees since 2002 in which Pheils

would provide funds for Appellees to purchase foreclosed manufactured homes

and property which were then resold for a profit.

        {¶3} In July 2006, Pheils provided the funding for Appellees to purchase

a single family home and property at 108 Woodland Avenue, Fostoria, in Seneca

County. On July 21, 2006, Appellees executed a cognovit note agreeing to repay

$50,160 plus 8% compound interest per annum. The note was signed by Scott

Salsbury, individually, Dan Novotny, individually, and Scott Salsbury in his

representative capacity for Glass City Sales, LLC.                        The note contained the




1
 The complaint, which was amended on January 23, 2009, also included additional parties and causes of
action, which are not the subject of this appeal. The trial court’s judgment expressly found that there was
“no just reason for delay” as to the judgment concerning the cognovit note. On June 17, 2009, this Court
determined that the judgment was a final appealable order and dismissed Appellees’ motion to dismiss the
appeal.


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following language:

        It is further agreed that default in payment of any installment
        for one days after the same shall become due, shall cause the
        entire sum then remaining unpaid to become at once due and
        payable. And we hereby authorize any attorney-at-law in the
        United States to appear in my/our behalf in any court of record
        in the County in which we reside or any one of us resides, or the
        County in which we or any one of us signed this instrument,
        after the above obligation becomes due and payable according to
        the terms and conditions hereof, and waive the issuing and
        service of process upon us and confess judgment against us in
        favor of the holder hereof, for the amount then appearing due
        hereon, together with the costs of suit, and thereupon to release
        all errors and waive all rights of appeal.

        {¶4} On January 23, 2009, the trial court held a cognovit hearing. An

attorney filed Appellees’ confession of judgment and the trial court granted

judgment on the cognovit claim. Thereafter, the trial court issued a Certificate of

Judgment.2

        {¶5} On March 11, 2009, Appellees filed a Motion to Vacate Judgment

on the cognovit note pursuant to Civ.R. 60(B). The Appellees claimed that (1) the

court did not have jurisdiction to enter the judgment because none of the parties

resided in Seneca County and (2) Appellees had paid Pheils in full for the loan.

Appellees attached copies of two checks, which they claimed satisfied the




2
  The Certificate of Judgment was issued on January 26, 2009. On February 20, 2009, Appellant was
notified that the Certified Mail Service upon Glass City Sales, LLC, sent to 108 Woodland Avenue,
Fostoria, had been returned unclaimed. On March 5, 2009, Appellant directed the Clerk to serve Glass City
Sales, LLC by regular U.S. Mail Service with Certificate of Mailing, under Civ.R. 4.1 and 4.6. There is no
record that the regular mail service was returned.


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cognovit debt and other monies owed, and an affidavit sworn by Scott Salsbury.

In the affidavit, Salsbury attested that neither he nor Dan Novotny resided in

Seneca County; that Glass City Sales, LLC had its primary place of business in

Holland, Ohio [Lucas County]; and, that the cognovit note was signed in Wood

County.

       {¶6} At the April 1, 2009, hearing on the Motion to Vacate Judgment,

there were discussions between the trial court and the parties concerning whether

or not Glass City Sales had its principal place of business in Seneca County, and

therefore, whether the trial court had any subject matter jurisdiction over the

matter. The court ordered counsel to file any additional evidence regarding the

issue of residency within one week.

       {¶7} Appellees filed a Supplemental Memorandum and submitted the

Affidavit of Daniel Novotny and the 2004 organizing documents for Glass City

Sales that were filed with the Ohio Secretary of State. The documents did not

provide an address for the entity. However, in his affidavit, Novotny stated: that

he was one of the organizing members of Glass City Sales, LLC; that the

designated statutory agent was Angela Hennen of Perrysburg, Wood County,

Ohio; that Glass City Sales had its principal place of business in Holland, in Lucas

County; that Glass City Sales had never “resided” nor had a business office in




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Seneca County; and, that the only contact with Seneca County was a single real

estate purchase in Fostoria.

       {¶8} Pheils filed a Memorandum Regarding Cognovit Jurisdiction and an

affidavit describing the parties’ business relationship and the transaction involving

the subject cognovit note. Pheils did not provide any sworn evidence as to the

business location of Glass City Sales. However, in his memorandum, he argues

that Glass City Sales “resides” in Seneca County because there was no address

listed for Glass City Sales with its LLC filing and an internet search he conducted

did not locate an address for Glass City Sales in Ohio. Pheils also attached the

deed by which Glass City Sales took title to the property showing its tax mailing

address as 108 Woodland Avenue, Fostoria. Pheils also noted that the certified

mailing of the Amended Complaint was returned “unclaimed,” but the regular

postal mailing to the Woodland Avenue address was never returned and Appellees

filed their Civ.R. 60(B) Motion shortly thereafter. Pheils also moved to strike

Salsbury’s and Novotny’s Affidavits, asserting that they were not made upon

personal knowledge and did not contain operative facts.

       {¶9} On April 17, 2009, the trial court denied Pheils’ motion to strike and

granted Appellees’ motion to vacate the cognovit judgment.           It is from this

judgment that Pheils appeals, presenting the following assignments of error for our

review.



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                             First Assignment of Error

         The trial court erred in granting Defendants’ motion for relief
         from the final cognovit judgment without evidence supporting it.

                            Second Assignment of Error

         The trial court erred in refusing to strike Defendants’ Salsbury
         and Novotny’s affidavits which failed to demonstrate they were
         made upon personal knowledge and contained only legal and
         factual conclusions rather than operative facts.

For clarity of discussion, we elect to address the assignments of errors out of

order.

         {¶10} In his second assignment of error, Pheils argues that the trial court

should have granted his motion to strike the affidavits because they were not made

on personal knowledge and contained conclusory assertions without operative

facts. A trial court’s decision to grant or deny a motion to strike an affidavit is

reviewed for an abuse of discretion. Snyder v. Ford Motor Co., 3d Dist. No. 1-05-

41, 2005-Ohio-6415, ¶ 9.        The Ohio Supreme Court has defined “personal

knowledge” as “knowledge gained through firsthand observation or experience, as

distinguished from a belief based upon what someone else has said.” Bonacorsi v.

Wheeling & Lake Erie Ry. Co., 95 Ohio St.3d 314, 2002-Ohio-2220, 767 N.E.2d

707, ¶ 26 (quoting Black’s Law Dictionary).

         {¶11} In the evidence provided by Appellees, Daniel Novotny attested that

he was an organizing member of Glass City Sales, LLC, which would give him



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personal knowledge as to the location where Glass City Sales resides and conducts

its business. His sworn affidavit clearly sets forth the “fact” that Glass City Sales

has its principal place of business in Lucas County, that it has never or had a

business office in Seneca County, and its only contact with Seneca County was

one real estate purchase. Likewise, Scott Salsbury, who signed the note in his

representative capacity for Glass City Sales, also corroborated the fact that the

business location for the company was in Holland, Ohio.

       {¶12} Both affidavits did lack the “boilerplate” language stating that they

were made upon “personal knowledge,” and did not contain many details.

However, the facts and testimony within the affidavits clearly set forth the basis

for the parties’ competence to testify as to the business location of Glass City

Sales based upon their personal knowledge.        The trial court did not abuse its

discretion in denying Pheils’ motion to strike the affidavits.       Pheils’ second

assignment of error is overruled.

       {¶13} Pheils’ main issue, raised in his first assignment of error, complains

that that the trial court should not have granted Appellees’ motion for relief from

judgment because there were insufficient facts supporting their claim that Glass

City Sales, LLC resided in a location other than Seneca County.

       {¶14} The purpose of a cognovit note is to allow the holder of the note to

obtain judgment quickly, without the necessity of a trial. First Nat. Bank of



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Pandora v. Freed, 3d Dist. No. 5-03-36, 2004-Ohio-3554, ¶ 5. By signing a

cognovit note, a debtor agrees to relinquish notice, a hearing, or appearance at an

action to collect in the event of nonpayment. Id. If a debtor disputes a cognovit

judgment, relief from judgment may be sought under Civil Rule 60(B), but only

for specified limited circumstances. Rothstein v. Rothstein, 8th Dist. No. 86090,

2005-Ohio-6381, ¶¶ 8-9.

       {¶15} Cognovit judgments are governed by the Ohio Revised Code. R.C.

2323.13(A) sets forth special jurisdictional rules for cognovit judgment, and

specifically provides:

       Notwithstanding any agreement to the contrary, if the maker or
       any of several makers resides within the territorial jurisdiction
       of a municipal court ***, or signed the warrant of attorney
       authorizing confession of judgment in such territory, judgment
       on such warrant of attorney shall be confessed in a municipal
       court having jurisdiction in such territory, provided the court
       has jurisdiction over the subject matter; otherwise, judgment
       may be confessed in any court in the county where the maker or
       any of several makers resides or signed the warrant of attorney.
       The original or a copy of the warrant shall be filed with the
       clerk.

R.C. 2323.13(A).

       {¶16} All of the requirements of the statutory provision must be met in

order for a valid judgment to be granted upon a cognovit note or for a court to

have subject-matter jurisdiction. Klosterman v. Turnkey Ohio, L.L.C., 10th Dist.

No. 08AP-774, 2009-Ohio-2508, ¶ 19. If the judgment on the cognovit note is not



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obtained in the county where the maker resides or the county in which the

cognovit note is executed, then the court does not have subject matter jurisdiction

and the cognovit judgment is void ab initio. Patton v. Diemer (1988), 35 Ohio

St.3d 68, 518 N.E.2d 941, paragraph three of the syllabus; Fifth Third Bank v.

Labate, 5th Dist. Nos. 2005CA00180, 2006CA00040, 2006-Ohio-4239, ¶¶ 19-20.

The party who asserts the existence of personal jurisdiction has the burden of

establishing jurisdiction once the opposing party challenges it. In re Blue Flame

Energy Corp., 171 Ohio App.3d 514, 2006-Ohio-6892, 871 N.E.2d 1227, ¶ 13.

       {¶17} An appellate court reviews the issue of subject matter jurisdiction de

novo, without deference to the trial court’s decision. Klosterman, ¶ 19; Advantage

Bank v. Waldo Pub, L.L.C., 3d Dist. No. 9-08-67, 2009-Ohio-2816, ¶ 25. The

authority to vacate a void judgment is not derived from Civ.R. 60(B) but rather

constitutes an inherent power possessed by Ohio courts.           Patton, supra, at

paragraph four of the syllabus.

       {¶18} In this case, the amount of the cognovit note was over the monetary

limit of a municipal court. Therefore, in order to obtain a confessed judgment,

Pheils was required to adjudicate the note in the county in which at least one of the

makers resided, or in which the note was signed, in order for the court to have

subject matter jurisdiction. See Sunset Land Partnership v. Trowsdell, No. 20895,

2002-Ohio-4152 (no jurisdiction because none of the makers resided in the county



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and the note was not signed in the county; only the plaintiff resided in the county);

The First Nat. Bank of Waverly v. Netherton, 4th Dist. No. 05CA738, 2005-Ohio-

6518, ¶ 9 (finding jurisdiction because one of the signatories to the warrant of

confession had its “principal place of business” in the county where the plaintiff

had filed the confession of judgment.).        The parties do not dispute that the

cognovit note was signed in Wood County and that Salsbury and Novotny do not

reside in Seneca County. The sole issue is whether Glass City Sales resides in

Seneca County.

       {¶19} As discussed above, there are two sworn statements from principal

business agents of Glass City Sales stating that Glass City Sales’ principal place of

business is in Holland, Ohio, and that it is not located in Seneca County. In

contrast, Pheils has not provided any sworn evidence that Glass City Sales resides

in Seneca County, but merely speculates that it is located in the county based upon

a few unproven occurrences.

       {¶20} The lack of a physical address for Glass City Sales, LLC in its 2004

filing with the State of Ohio, and the fact that Pheils did not find an address during

an “Internet search,” does not in any way prove that the company is located in

Seneca County. Pheils also speculates that Glass City Sales received the U.S.

Postal Service mailing of the amended complaint sent to the Fostoria address.




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Even if this was true, it does not prove the Glass City Sales resides at that location.

The mail could have been forwarded or picked up.

       {¶21} Pheils also submitted two documents which he claims demonstrates

that Glass City Sales resides in Fostoria. However, the documents were prepared

by other parties, and there is no proof that the addresses typed on the paperwork

have any actual bearing to the principal place of business of Glass City Sales, or

that Glass City Sales had any part in providing the addresses or information. The

first document is the Limited Warranty Deed, using typical language to convey the

Fostoria property “unto Glass City Sales, the ‘Grantee,’ its successors and assigns,

with a tax mailing address of 108 Woodland Ave. Fostoria Oh 44830 , [address

typed on the line] the following described real property ***.” Attached to the

deed in the court documents, however, is a July 21, 2006, letter from Pheils to the

selling party, conveying the payment check, the legal description of the property,

and indicating that the property was at 108 Woodland Avenue, Fostoria, and that it

was being purchased by Glass City Sales, LLC. The fact that Glass City Sales

purchased the property and its name was placed on the deed using the property’s

address does not, without more, prove that it conducted its business from the site.

The Ohio Revised Code required the property to be in Glass City Sales’ name.

See R.C. 1705.34 (which mandates that all “[r]eal and personal property owned or




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purchased by a limited liability company shall be held and owned in the name of

the company.”).

       {¶22} The other documents allegedly associating Glass City Sales with the

Woodland Avenue address are the court documents concerning the filing for the

confession of judgment and documents directing service thereof. However, once

again, these documents were prepared by Pheils, and he provided the Fostoria

address in Seneca County for Glass City Sales for these documents.

       {¶23} In examining the evidence de novo, we do not find that Pheils has

submitted any evidence that would establish that Glass City Sales, LLC resided in

Seneca County. It does not appear that Glass City Sales had any contact with

Seneca County, other than one real estate transaction. Appellees provided two

sworn affidavits stating that Glass City Sales did not reside in Seneca County.

       {¶24} Thus, the Seneca County Court of Common Pleas did not have

subject matter jurisdiction to hear the confession of judgment for the cognovit note

and did not err in vacating the judgment on the cognovit note. Pheils’ first

assignment of error is overruled.

       {¶25} Having found no error prejudicial to the appellant herein, in the

particulars assigned and argued, we affirm the judgment of the trial court.

                                                               Judgment Affirmed

PRESTON, P.J. and ROGERS, J., concur.
/jlr


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