Mackenbach v. Mackenbach

2012 Ohio 311

• Court: Ohio Court of Appeals
• Decided: January 30, 2012
• Docket: 6-11-03
• Status: Published

Opinion

[Cite as Mackenbach v. Mackenbach, 2012-Ohio-311.]

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

BRIAN MACKENBACH, ET AL.,

PLAINTIFFS-APPELLANTS, CASE NO. 6-11-03

v.

P. STEVEN MACKENBACH, ET AL., OPINION

DEFENDANTS-APPELLEES.

Appeal from Hardin County Common Pleas Court Trial Court No. 20081236-CVH

Judgment Reversed and Cause Remanded

Date of Decision: January 30, 2012

APPEARANCES:

Jeremy M. Tomb and Cheryl L. Collins for Appellants

Kenneth E. Hitchen and James L. Crates for Appellees Case No. 6-11-03

ROGERS, J.

{¶1} Plaintiff-Appellants, Brian Mackenbach and Kenton Plus Enterprises,

LLC (collectively “Appellants”), appeal from the judgment of the Court of

Common Pleas of Hardin County adopting the magistrate’s decision and granting

judgment in favor of Defendant-Appellees, P. Steven Mackenbach, Coldwell

Banker Plus One Professionals Incorporated, and Citizen’s National Bank of

Bluffton (collectively “Appellees”). On appeal, Appellants contend that the trial

court applied the wrong standard of review in reviewing the magistrate’s decision,

and that the trial court abused its discretion in adopting the magistrate’s decision

as it was unsupported by the evidence. Based upon the following, we reverse the

judgment of the trial court.

{¶2} Sometime in 2006, Brian and Steven verbally agreed to form a limited

liability company, Kenton Plus Enterprises, LLC (“Kenton Plus”). One of the

stated purposes of Kenton Plus was to own and lease real property. The real

property at issue here is located at 805 East Columbus Ave., Kenton, Ohio (“805

East Columbus”). In March 2006, articles of organization were filed with the

Ohio Secretary of State. An operating agreement was prepared and signed by

Steven in May 2007, but was never signed by Brian. The operating agreement

called for Brian to invest $55,000.00 in Kenton Plus, which he accomplished.1 In

1 There is disagreement among the parties whether Brian’s $55,000.00 was a loan or an investment.

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consideration thereof, the net profits from Coldwell Banker Plus One Professional

Incorporated (“Coldwell”), the sole tenant of the property located at 805 East

Columbus, would initially be used to repay Brian’s investment. In addition, after

Brian recuperated his initial investment the operating agreement provided that he

would share in one-half of the profits derived from the rent paid by Coldwell to

occupy the property at 805 East Columbus.

{¶3} In August 2008, Appellants filed a complaint against Appellees

seeking money damages and judicial dissolution of Kenton Plus, among other

forms of relief. Specifically, Brian argued that he never received any payments on

his initial investment of $55,000.00 despite Coldwell having earned profits in its

first year of operation. Stemming from this allegation, Brian asserted various

causes of action including, but not limited to, breach of contract, breach of

fiduciary duty, unjust enrichment, negligent misrepresentation, breach of implied

covenant of good faith and fair dealing, and fraud. In response, Appellees filed

answers denying the allegations lodged in Appellants’ complaint.

{¶4} Subsequently, the trial court referred the matter to the magistrate, who

conducted a hearing in April 2010. In December 2010, the magistrate filed its

decision recommending that Appellants’ complaint be dismissed. Magistrate’s

Decision, p. 8. In January 2011, Appellants timely filed objections to the

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magistrate’s decision. In February 2011, the trial court filed its judgment entry

adopting the magistrate’s decision.

{¶5} It is from this judgment Appellants appeal, presenting the following

assignments of error for our review.

Assignment of Error No. I

THE TRIAL COURT APPLIED AN IMPROPER STANDARD OF REVIEW IN REVIEWING AND AFFIRMING THE MAGISTRATE’S DECISION.

Assignment of Error No. II

THE TRIAL COURT ABUSED ITS DISCRETION IN ADOPTING THE MAGISTRATE’S DECISION BECAUSE THE MAGISTRATE’S DECISION WAS UNSUPPORTED BY THE EVIDENCE.

{¶6} In their first assignment of error, Appellants contend that the trial

court failed to conduct an independent review of the magistrate’s decision as

required by Civ.R. 53(D)(4)(d). We agree.

{¶7} We review a trial court’s adoption of a magistrate’s decision under an

abuse of discretion standard. Figel v. Figel, 3d Dist. No. 10-08-14, 2009-Ohio-

1659, ¶ 9, citing Marchel v. Marchel, 160 Ohio App.3d 240, 2005-Ohio-1499, ¶ 7

(8th Dist.). A trial court will be found to have abused its discretion when its

decision is contrary to law, unreasonable, not supported by the evidence, or

grossly unsound. See State v. Boles, 2d Dist. No. 23037, 2010-Ohio-278, ¶ 17-18,

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citing Black’s Law Dictionary (8 Ed.Rev.2004) 11. When applying the abuse of

discretion standard, a reviewing court may not simply substitute its judgment for

that of the trial court. Blakemore v. Blakemore, 5 Ohio St.3d 217, 219 (1983).

{¶8} Civ.R. 53(D)(4)(d) states:

If one or more objections to a magistrate’s decision are timely filed, the court shall rule on those objections. In ruling on objections, the court shall undertake an independent review as to the objected matters to ascertain that the magistrate has properly determined the factual issues and appropriately applied the law. Before so ruling, the court may hear additional evidence but may refuse to do so unless the objecting party demonstrates that the party could not, with reasonable diligence, have produced that evidence for consideration by the magistrate. (Emphasis added.)

{¶9} Pursuant to Civ.R. 53(D)(4)(b), the trial court’s review of a

magistrate’s decision is de novo. Goldfuss v. Traxler, 3d Dist. No. 16-08-12,

2008-Ohio-6186, ¶ 7, citing Stumpff v. Harris, 2d Dist. No. 21407, 2006-Ohio-

4796, ¶ 16. While a trial court is required to independently review the record and

make its own factual and legal findings, the trial court may rely upon the

magistrate’s credibility determinations when it reviews the magistrate’s decision.

Gilleo v. Gilleo, 3d Dist. No. 10-10-07, 2010-Ohio-5191, ¶ 47, citing Hendricks v.

Hendricks, 3d Dist. No. 15-08-08, 2008-Ohio-6754, ¶ 25, citing Osting v. Osting,

3d Dist. No. 1-03-88, 2004-Ohio-4159. After completing its de novo review the

trial court may adopt, reject, or modify the magistrate’s decision. Tewalt v.

Peacock, 3d Dist. No. 17-10-18, 2011-Ohio-1726, ¶ 31. A trial court’s failure to

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conduct an independent review in accordance with Civ.R. 53 is an abuse of its

discretion. Figel at ¶ 10, citing In re Scarborough, 12th Dist. No. CA99-05-054,

1999 WL 1057229, *3 (Nov. 22, 1999).

{¶10} An appellate court presumes that a trial court performed an

independent analysis of a magistrate’s decision. Gilleo at ¶ 46, citing Mahlerwein

v. Mahlerwein, 160 Ohio App.3d 564, 2005-Ohio-1835, ¶ 47 (4th Dist.), citing

Hartt v. Munobe, 67 Ohio St.3d 3, 7 (1993). Therefore, the party asserting error

must affirmatively demonstrate that the trial court failed to conduct an

independent analysis. Gilleo at ¶ 46, citing Mahlerwein at ¶ 47.

{¶11} Appellants contend that the trial court failed to conduct a de novo

review of the magistrate’s decision. In support, Appellants cite to the following

language in the trial court’s judgment entry:

In reviewing the transcript of the evidentiary hearing before the Magistrate as to all claimed objections this Court must determine whether the findings of fact are reasonable and not an abuse of discretion.

Accordingly, the Court in considering same notes that deference should be given to those determinations made by the Magistrate, as the trier of fact, based upon his ability to best view the witnesses and observe their demeanor, gestures, and voice inflictions (sic), etcetera and then use same in weighing the credibility of the testimony.

Judgment Entry, p. 2. Appellants contend that the preceding language connotes

the trial court’s improper deference to the magistrate’s decision. Rather than

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reviewing the magistrate’s decision de novo, Appellants maintain that the trial

court inappropriately reviewed the magistrate’s decision for an abuse of discretion.

{¶12} In response, Appellees contend that the trial court properly

conducted an independent review of the magistrate’s decision. In support,

Appellees cite to language in the trial court’s judgment entry, which immediately

follows the language cited by Appellants. That language reads:

In reaching the conclusions found herein, the Court independently reviewed all of the evidence of record including the transcript of proceeding, exhibits, and arguments of counsel, whether or not specifically referred to in this decision. Judgment Entry, p. 2.

{¶13} Although the foregoing language arguably suggests that the trial

court conducted an independent review of the magistrate’s decision, further review

of the judgment entry suggests otherwise. Specifically, our focus is drawn to a

paragraph near the end of the judgment entry. This paragraph appears after the

trial court has addressed Appellants’ objections, but before it adopts the

magistrate’s decision. The paragraph reads:

It is therefore the order of this Court that the Findings of Fact and Conclusions of Law contained in the December 12, 2010 Magistrate’s Decision are not unreasonable and do not constitute an abuse of his discreation (sic). (Emphasis added.)

Judgment Entry, p. 5. We find that the preceding language indicates that the trial

court improperly reviewed the magistrate’s decision for an abuse of discretion.

See Jones v. Smith, 187 Ohio App.3d 145, 2010-Ohio-131, ¶ 14 (4th Dist.). By

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failing to conduct a de novo review of the magistrate’s decision and independently

evaluate the evidence and apply the law the trial court abused its discretion. Figel,

3d Dist. No. 10-08-14, 2009-Ohio-1659, at ¶ 10.

{¶14} Furthermore, our decision today is consistent with this Court’s recent

decision in Barrientos v. Barrientos, 3d Dist. No. 5-11-22, 2011-Ohio-5734, in

which this Court reversed the trial court’s judgment due to its explicit application

of an abuse of discretion standard when it reviewed the magistrate’s decision.

{¶15} Accordingly, we sustain Appellants’ first assignment of error.

{¶16} Our resolution of Appellants’ first assignment of error renders their

second assignment of error moot, and we decline to address it. App.R.

12(A)(1)(c).

{¶17} Having found error prejudicial to Appellants herein, in the particulars

assigned and argued in their first assignment of error, we reverse the judgment of

the trial court and remand the matter for further proceedings consistent with this

opinion.

WILLAMOWSKI, J., Concurs.

/jlr

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SHAW, J., DISSENTS.

{¶18} As noted by the majority, the trial court reviews objections to a

magistrate’s decision essentially de novo, except for the trial court’s discretion to

defer to the magistrate’s determinations on the credibility of witnesses.

Specifically, Civ.R. 53 (D)(4)(d) states that the trial court shall “shall undertake an

independent review as to the objected matters to ascertain that the magistrate has

properly determined the factual issues and appropriately applied the law.”

{¶19} In this case, the trial court expressly stated in its Judgment Entry that

it should extend deference to the magistrate’s determinations as to the credibility

of witnesses. The trial court also stated that it “must determine whether the

findings of fact are reasonable and do not constitute an abuse of discretion.” The

statements of deference and determinations of reasonableness are entirely

consistent with the mandate of Civ.R. 53.

{¶20} The trial court further stated in its Judgment Entry that in reaching its

conclusions it “independently reviewed all of the evidence of record including the

transcript of proceedings, exhibits, and arguments of counsel, whether or not

specifically referred to in this decision.” The trial court then determined that “the

Findings of Fact and Conclusions of Law contained in the December 12, 2010

Magistrate’s Decision are not unreasonable and do not constitute and abuse of

discretion.”

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{¶21} At paragraph 10 of the majority decision, the majority notes that this

court must presume that the trial court performed an independent analysis of the

magistrate’s decision and that the party asserting error must affirmatively

demonstrate that the trial court failed to do so. At paragraph 7 of the majority

decision, the majority notes that this court reviews the trial court’s decision under

an abuse of discretion standard and that a trial court will not be found to have

abused its discretion unless that decision is contrary to law, unreasonable, not

supported by the evidence or is otherwise grossly unsound.

{¶22} In my view, the trial court’s two extraneous references to the

magistrate’s discretion in its entry, even if erroneous, and even if sufficient to

challenge the presumption of independent review to be afforded by this court, are

not sufficient to invalidate the trial court’s specific statements that it properly

applied all of the express mandates of Civ.R. 53 in rendering its decision. The

practical reality is that any magistrate’s decision which has been found by the trial

court upon independent review to have “properly determined the factual issues and

appropriately applied the law” under Civ.R. 53, would also not be unreasonable,

arbitrary or unconscionable, and hence would not constitute an abuse of the

magistrate’s discretion. Thus, I believe more is required than to simply show the

trial court used both the terms of Civ. R. 53 and the terms of abuse of discretion in

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order to affirmatively demonstrate that the trial court failed to comply with the

Rule.

{¶23} As such, I believe the trial court’s superfluous references to the

magistrate’s discretion in the circumstances of this case are not sufficient to

constitute an abuse of the trial court’s discretion warranting reversal of the trial

court’s judgment by this court. Accordingly, I respectfully dissent.

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