Bob Bay & Son, Co. v. Circle Inv. Corp.

114 N.E.3d 268, 2018 Ohio 2632
CourtCourt of Appeals of Ohio, Fourth District, Pickaway County
DecidedJune 19, 2018
DocketNo. 17CA11
StatusPublished
Cited by1 cases

This text of 114 N.E.3d 268 (Bob Bay & Son, Co. v. Circle Inv. Corp.) is published on Counsel Stack Legal Research, covering Court of Appeals of Ohio, Fourth District, Pickaway County primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bob Bay & Son, Co. v. Circle Inv. Corp., 114 N.E.3d 268, 2018 Ohio 2632 (Ohio Super. Ct. 2018).

Opinion

McFarland, J.

{¶ 1} Bob Bay and Son, Co. (hereinafter "Bob Bay") and Julia Bay, appeal the trial court's grant of partial summary judgment in favor of Appellee, Circle Investment Corp., as well as the trial court's denial of their competing motions for summary judgment. On appeal, Appellants contend that 1) the trial court erred when it granted partial summary judgment to Appellee and denied their summary judgment motions on the issue of whether Appellee had a common law landlord distress lien extending to Bob Bay's personal property; 2) the trial court erred when it granted summary judgment to Appellee and denied their motions for summary judgment because common law landlord distress liens have been abolished in Ohio; 3) the trial court erred when it failed to find that Appellant Julia Bay has a perfected security interest as to Appellant Bob Bay's personal property and sale proceeds thereof; and 4) the trial court erred when it found that Appellee's alleged common law landlord distress lien had priority over Appellant Julia Bay's perfected security interest.

{¶ 2} Because we have found that 1) common law landlord distress liens have been abolished in Ohio; 2) Appellee did not possess a statutory landlord's lien; 3) Appellee did not have a landlord's lien that arose by operation of law; and 4) Appellee did not have a consensual landlord's lien as the lease agreement between Appellant Bob Bay and Circle Investment Corporation expressly provided that the personal property and fixtures should remain the property of the tenants; and 5) Appellee did not enter into a separate security agreement with Appellant Bob Bay regarding its personal property, Appellants' first and second assignments of error have *270merit and are sustained. However, because we find that Appellants' third and fourth assignments of error are not ripe for review, in light of the fact that it appears from the record before us that the trial court failed to determine whether or not Appellant Julia Bay had a valid and perfected security interest in Appellant Bob Bay's personal property, and whether she was, in fact, next in line in terms of priority. Thus, we must remand this matter for further proceedings. Accordingly, the trial court's grant of partial summary judgment in favor of Appellee as to the issue of whether it had a perfected common law landlord's distress lien and denial of summary judgment as to Appellants on the same issue are reversed, and this matter is remanded to the trial court for further proceedings consistent with this opinion.

FACTS

{¶ 3} The following facts are taken from the affidavits of the parties attached in support of each party's motion for summary judgment, as well as the trial court's decision and entry granting summary judgment in favor of Appellee and denying Appellants' competing motions for summary judgment. The parties herein are in agreement as to the facts of this case and simply disagree on a question of law. Appellant, Bob Bay, operated a grocery store, doing business under the name Carnival Market, located at 120 Morris Road in Circleville, Ohio. Appellee, Circle Investment Corporation, was the owner of the premises and leased the premises to Appellant, Bob Bay. The original lease of this premises was between Appellee and Big Bear and originated on March 17, 1987. On December 21, 2003, Penn Traffic Company, which operated Big Bear, assigned its interest in the lease to Appellant, Bob Bay, pursuant to an assignment and assumption of lease agreement. Appellant, Bob Bay, at that point became the lessee of the premises subject to the terms of the original lease. The pertinent provisions of the lease will be discussed below.

{¶ 4} On December 31, 2014, Appellant, Bob Bay, entered into a security agreement with Appellant, Julia Bay, which granted a security interest in all corporate assets of the business.2 On that same date, Bob Bay signed a revolving credit promissory note agreeing to pay Julia Bay the amount of $1,194,405.00 pursuant to loans made by Julia Bay to the corporation. Julia Bay thereafter filed a financing statement with the Ohio Secretary of State on March 30, 2016.3

{¶ 5} In November of 2016, Bob Bay informed Appellee during a telephone conversation that the premises would be vacated between December 15, 2016 and December 30, 2016, as the grocery store had become unprofitable and ceased its day to day operations. It also appears that the rent was current up until November 1, 2016, but was not paid for the month of November. Appellee thereafter changed locks on the building, which led Appellant, Bob Bay, to file a lawsuit against Appellee alleging breach of lease, interference with its contractual relationship with the liquidation company, seeking a permanent injunction to prevent obstruction of the sale of its personal property and equipment it *271intended to liquidate, and for punitive damages. Then, on December 1, 2016, Appellee signed a notice of distress lien as to Bob Bay's removable personal property, claiming it had a perfected distress lien for all unpaid rents upon the chattels owned by Bob Bay, and upon the proceeds, if sold. On that same day Appellee filed a counterclaim for breach of lease, seeking to recover rental payments and real estate taxes due and to foreclose upon its distress lien, as well as a third party complaint against Appellant, Julia Bay, who claimed to hold a perfected security interest over the personal property.

{¶ 6} The trial court held a hearing on December 6, 2016, and then issued a decision granting Appellee a distress lien upon Appellant Bob Bay's chattels and proceeds of the sale thereof. In that decision, the trial court found that Appellee likely had a perfected distress lien, that the priority of sale proceeds was in dispute, and noted that Appellee had agreed to allow the scheduled liquidation sale to occur and that Appellant, Bob Bay, agreed to deposit the net proceeds of the sale to be held in escrow by the Clerk of Courts until the issue was decided. Appellants subsequently filed a motion to vacate the decision finding Appellee had a distress lien, arguing that distress liens of personal property were no longer recognized in Ohio and had been abolished. It was further argued that liens upon personal property were now governed by R.C. Chapter 1309, which consists of Ohio's adoption of the Uniform Commercial Code. Appellee filed a memorandum contra Appellants' motion to vacate arguing R.C. Chapter 1309 did not apply to landlord's liens. After additional motion practice, the trial court issued a decision and entry on January 19, 2017, denying Appellants' motion to vacate.

{¶ 7} Thereafter, all parties filed motions for summary judgment. Appellee's motion for summary judgment requested judgment in its favor in the amount of $2,141,913.28 for breach of the lease and for a declaration that it had a valid commercial rent distress lien and first priority against the proceeds of the liquidation sale in the amount of $55,922.32. Appellant, Bob Bay, filed a motion for partial summary judgment seeking a determination that distress liens have been abolished in Ohio. Finally, on July 17, 2017, Appellant, Julia Bay, filed a motion for summary judgment, seeking an order that she had a perfected security interest in the proceeds of the sale of the personal property, that Appellee did not possess a distress lien, and that her perfected security interest had priority over the alleged distress lien.

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Cite This Page — Counsel Stack

Bluebook (online)
114 N.E.3d 268, 2018 Ohio 2632, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bob-bay-son-co-v-circle-inv-corp-ohctapp4pickawa-2018.