KeyBank National Ass'n v. Mazer Corp.

935 N.E.2d 428, 188 Ohio App. 3d 278
CourtOhio Court of Appeals
DecidedApril 2, 2010
DocketNo. 23483
StatusPublished
Cited by18 cases

This text of 935 N.E.2d 428 (KeyBank National Ass'n v. Mazer Corp.) is published on Counsel Stack Legal Research, covering Ohio Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
KeyBank National Ass'n v. Mazer Corp., 935 N.E.2d 428, 188 Ohio App. 3d 278 (Ohio Ct. App. 2010).

Opinion

Fain, Judge.

{¶ 1} Intervenor-appellant Data Recognition Corporation appeals from a judgment holding that plaintiff-appellee, KeyBank National Association, holds a first-priority, perfected security interest in 200,000 to 300,000 pounds of paper in the possession of Chikol Equities, the receiver of the assets of the Mazer Corporation.1

[281]*281{¶ 2} DRC contends that the trial court erred in failing to determine whether DRC owned paper delivered to Mazer and in not ordering the paper returned to DRC. DRC further contends that the trial court erred in limiting its consideration of the law of bailments to express bailments, without also considering implied bailments, in analyzing the respective interests of DRC and Mazer in the paper. DRC also contends that the trial court erred in ordering Chikol to sell the paper, when the record contained no evidence that Mazer either owned the paper or had any right to sell it.

{¶ 3} We conclude that the trial court erred in failing to find in favor of DRC on its bailment claim. DRC submitted evidence of its ownership of the paper and an implied bailment agreement concerning the paper, which was not challenged by Chikol or KeyBank. Chikol and KeyBank also failed to cross-appeal the award of damages to DRC on its cost to cover. Accordingly, that part of the judgment of the trial court adjudicating ownership of the paper is reversed. That part of the judgment awarding damages to DRC and offsetting against that award an invoice for an account that DRC owes to Mazer is affirmed.

I

{¶ 4} For a number of years, Mazer Corporation was engaged in the printing business. In late December 2008, Mazer suddenly closed it doors and laid off its employees, who were located in Dayton, Ohio, and at a facility in Johnson City, Tennessee. Mazer and an affiliated company, ABMD, Ltd. (“ABMD”), also defaulted on approximately $4,777,906 in loans owed to KeyBank.

{¶ 5} In early January 2009, KeyBank filed a complaint against Mazer, ABMD, and National City Bank (“NCB”), alleging that KeyBank possessed a security interest in all of Mazer’s personal property assets, due to security agreements and the filing of UCC-1 financing statements. NCB was included as a party that may have an interest in some of ABMD’s assets.2 KeyBank also filed an emergency motion asking for appointment of Chikol as a receiver. The trial court granted the motion on January 7, 2009.

{¶ 6} In mid-February 2009, DRC filed a motion to intervene as a party-plaintiff, claiming ownership in paper delivered to Mazer, in Mazer’s possession, pursuant to a bailment arrangement. After being granted permission to intervene, DRC filed a motion for an order directing the receiver to return the property. DRC also filed various unauthenticated documents in support of its claim. KeyBank filed a response, contending that DRC had not yet established either the existence of a written contract of bailment or that the conduct between [282]*282DRC and Mazer proved the existence of an implied contract of bailment. KeyBank also claimed that DRC had failed to pay a Mazer invoice for a prior order, totaling approximately $15,000.

{¶ 7} Subsequently, in May 2009, the trial court held a hearing on the pending issues. At the hearing, the attorney for the receiver, Chikol, stated that the receiver had approximately 300,000 pounds of paper in the Tennessee facility, which had a value of between $100,000 and $200,000. Counsel for Chikol also noted that DRC owed Mazer $21,000 on an existing invoice. DRC contended at the hearing that the paper had been delivered to Mazer as a bailment and that the pending invoice should be set off by amounts that DRC had paid to cover when Mazer defaulted on a specific printing job (the “Ohio job”).

{¶ 8} Three witnesses testified at the hearing. DRC presented testimony from its procurement manager, John Wainwright, regarding the paper that was sent to Mazer and the Ohio job that DRC was attempting to offset against the $21,000 invoice. The receiver’s representative, David Kebrdle, testified solely about conversations with DRC about the Ohio job and the receiver’s ability to finish that particular job for DRC. A KeyBank vice president, Sally Barton, also testified briefly about a conversation she had with Wainwright about the Ohio job.

{¶ 9} Wainwright indicated that DRC has contractual relationships with 11 different state departments of education, pursuant to which DRC performs various services, including writing test questions (depending on the state), putting together and printing test booklets, distributing the booklets to individual school districts, retrieving the booklets after use, scoring exams, and reporting results to students and the states.

{¶ 10} At the time of the transactions in the case before us, DRC had three certified vendors, including Mazer, who printed test booklets. DRC conducts a thorough certification process, because DRC has a zero-tolerance policy for defective books. In order to certify vendors, DRC performs an extensive background check, and investigates the vendor’s quality processes and procedures, security, and equipment. DRC also conducts on-site visits. DRC performed this certification process with Mazer in 2007 and certified Mazer as a vendor.

{¶ 11} Wainwright also testified about customary business practices that DRC follows with all of its vendors, including Mazer. When DRC has a particular printing project, it takes competitive bids from two or three vendors and decides which vendor it will use for the project. When the vendor gives DRC a price, the vendor indicates how much paper is required for the project. Before DRC enters into a relationship with a vendor, it has “up-front” discussions with the vendor about the fact that DRC will buy and provide the paper for the project and will be putting it into the vendor’s plant.

[283]*283{¶ 12} Once DRC obtains the paper requirements from the vendor, DRC places a paper order through a merchant. DRC pays the paper merchant directly for the paper. The merchant then places that particular order with a paper mill, which ships the paper to the particular vendor. The paper is at the vendor’s place of business only for the particular job, on a short-term basis. After the materials are printed, the vendor returns the materials to DRC, which combines them with other materials and ships them to the individual states. The unused paper is also delivered to DRC. Wainwright testified that this practice is common in the industry and that all printers and vendors that DRC works with deliver the unused paper to DRC.

{¶ 13} According to Wainwright, this process was followed with Mazer. DRC and Mazer had many discussions about the fact that DRC would supply the paper. For the work that DRC did with Mazer, DRC always purchased the paper and had it delivered to Mazer. Mazer would then deliver the unused paper to DRC when the job was completed. Wainwright also identified and authenticated various documents that were admitted into evidence. These documents consisted of purchase orders from DRC to Strategic Paper, DRC’s paper merchant, for specific amounts of paper to be used on various projects. The exhibits also included detailed roll lists of paper and bills of lading generated by the paper mills when the mills shipped the paper to Mazer.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Williams v. Edgell
2024 Ohio 2129 (Ohio Court of Appeals, 2024)
Scott v. First Choice Auto Clinic, Inc.
2023 Ohio 3855 (Ohio Court of Appeals, 2023)
Mathews v. Cooper
2021 Ohio 2768 (Ohio Court of Appeals, 2021)
Wilson v. Evans Motorworks Ohio, L.L.C.
2021 Ohio 1435 (Ohio Court of Appeals, 2021)
Metro Real Estate v. Siaway, M.
2021 Pa. Super. 31 (Superior Court of Pennsylvania, 2021)
Matlock v. Reck
2018 Ohio 1650 (Ohio Court of Appeals, 2018)
Dibert v. Carpenter
2018 Ohio 1054 (Ohio Court of Appeals, 2018)
Brannon v. Persons
2018 Ohio 114 (Ohio Court of Appeals, 2018)
Aero Fulfillment Services Corp. v. Oracle Corp.
186 F. Supp. 3d 764 (S.D. Ohio, 2016)
Schlaegel v. Howell
2015 Ohio 4296 (Ohio Court of Appeals, 2015)
Northeast Ohio Regional Sewer Dist. v. Bath Twp.
2013 Ohio 4186 (Ohio Court of Appeals, 2013)
Edwards v. Lopez
2013 Ohio 571 (Ohio Court of Appeals, 2013)
Szeliga v. Szeliga
2012 Ohio 1973 (Ohio Court of Appeals, 2012)
In re J.H.-P.
2012 Ohio 638 (Ohio Court of Appeals, 2012)
Monroe Excavating, Inc. v. DJD&C Dev., Inc.
2011 Ohio 3169 (Ohio Court of Appeals, 2011)
Ameritech Publishing, Inc. v. Mayfield
2011 Ohio 2971 (Ohio Court of Appeals, 2011)

Cite This Page — Counsel Stack

Bluebook (online)
935 N.E.2d 428, 188 Ohio App. 3d 278, Counsel Stack Legal Research, https://law.counselstack.com/opinion/keybank-national-assn-v-mazer-corp-ohioctapp-2010.