Merchants Acceptance, Inc. v. Bucholz

2011 Ohio 5556

• Court: Ohio Court of Appeals
• Decided: October 28, 2011
• Docket: 24425
• Status: Published

Opinion

[Cite as Merchants Acceptance, Inc. v. Bucholz, 2011-Ohio-5556.]

IN THE COURT OF APPEALS FOR MONTGOMERY COUNTY, OHIO

MERCHANTS ACCEPTANCE, INC. :

Plaintiff-Appellant : C.A. CASE NO. 24425

v. : T.C. NO. 06CVF363

JESSICA BUCHOLZ, et al. : (Civil appeal from Municipal Court) Defendants-Appellees :

:

..........

OPINION

Rendered on the 28th day of October , 2011.

JAMES Y. OH, Atty. Reg. No. 0070325 and MATTHEW S. KUNKLE, Atty. Reg. No. 0077683, 1100 Superior Avenue, 19th Floor, Cleveland, Ohio 44114 Attorneys for Plaintiff-Appellant

JESSICA BUCHOLZ, 1337 Tabor Avenue, Apt. D, Dayton, Ohio 45420 Defendant-Appellee

MELISSA WALLACE, 4121 Dayton Xenia Road, Dayton, Ohio 45432 Defendant-Appellee

DONOVAN, J.

{¶ 1} This matter is before the Court on the Notice of Appeal of Merchants

Acceptance, Inc., (“Merchants”), filed January 10, 2011. On April 5, 2006, Merchants filed 2

a Complaint against Jessica Bucholz and Melissa Wallace, alleging that it is the holder of a

promissory note executed by Bucholz and Wallace, and that $1,436.11 is due and owing on

the note, plus interest. Attached to the Complaint is a “Membership Agreement,” dated

January 27, 2005, identifying Wallace and Bucholz as buyers, and World Gym Fitness

Center as seller. The Agreement provides in part, “The seller may at its own discretion

assign this contract to a financial institution.” The Agreement contains a section entitled

“Promissory Note” that provides that Wallace and Bucholz will make 36 consecutive

monthly payments of $55.39 a month for 36 months to satisfy a total balance due of

$1993.32. The section further provides that Bucholz and Wallace financed $1500.00 at an

annual percentage rate of 19.50 percent, that the finance charge is $493.32, and the amount

of tax is $125.00. The bottom of the second page of the Agreement provides:

“Sell Assignment 2-1 2005 Signed World Gym

For Value Received Pay to the Order of By Mike Mobley Without Recourse Merchants Acceptance, Inc. Owner, Officer or Firm Member”

{¶ 2} Bucholz and Wallace did not file an answer to the complaint.

{¶ 3} On June 27, 2006, Merchants filed a motion for default judgment, to which

Bucholz and Wallace did not respond, and which the trial court granted on July 3, 2006. On

October 7, 2010, Merchants filed a demand addressed to Wallace entitled “Notice of Court

Proceeding to Collect Debt.,” which states that Wallace owes $2,253.40, including interest

and court costs pursuant to the judgment obtained on July 3, 2006. On the same date,

Merchants filed an “Affidavit & Order & Notice of Garnishment & Answer of Employer,”

and a “Notice to the Judgment Debtor of Garnishment of Personal Earnings.” The notice

provides that Wallace may request a hearing to dispute the judgment creditor’s right to 3

garnish her personal earnings. The notice further states, “NO OBJECTIONS TO THE

JUDGMENT ITSELF WILL BE HEARD OR CONSIDERED AT THE HEARING.”

{¶ 4} On November 12, 2010, Wallace filed a Request for Hearing, disputing

Merchants’ right to garnish her personal earnings. The Request provides, above Wallace’s

signature, “I UNDERSTAND THAT NO OBJECTIONS TO THE JUDGMENT ITSELF

WILL BE HEARD OR CONSIDERED AT THE HEARING.”

{¶ 5} A garnishment hearing was scheduled for December 2, 2010. On that date,

Laura Fannin made an unsworn statement to the judge that she was a member of World

Gym, and that the owner of the gym was in prison “because he fraudulently took all these

memberships.” According to Fannin, she has “a case against him from the Attorney

General’s Office where they owe money to me because they closed down, they didn’t pay

their rent on their equipment, nothing, and they knew that they were going to close and they

kept taking money from people. * * *.” When counsel for Merchants objected to Fannin’s

remarks, the following exchange occurred:

{¶ 6} “THE COURT: Well, I understand she’s not an attorney and you got an

objection but you also got some explanation, what’s going on?

{¶ 7} “MS. WILLIAMS: I mean, I just think the time to object to the underlying

judgment would have been done with the pending case.

{¶ 8} “THE COURT: Yeah, but when it comes out you got stuff from the Attorney

General’s Office that says it’s fraud and this process, I think that it certainly raises some

issues from our point. You’re aware of this man being in prison, what’s going on?

{¶ 9} “MS. WILLIAMS: I am not, no. 4

{¶ 10} “THE COURT: Okay. You’re just here to try to protect the judgment.

{¶ 11} “MS. WILLIAMS: That is correct.

{¶ 12} “THE COURT: Okay. Well, that’s not going to work. We’re going to

vacate this and have it reset for trial.

{¶ 13} “MS. WALLACE: So are they going to quit taking my money?

{¶ 14} “* * *

{¶ 15} “THE COURT: At the point I don’t know what’s going to happen to this. It

just seems like there was fraud and I’m not going to be a part of some fraud based upon what

you’re saying. I want you to pull copies of that up front for the civil section.

{¶ 16} “MS. FANNEN (sic): Okay.

{¶ 17} “THE COURT: About this outfit and the Plaintiff in this case, I want that

placed in the civil file.

{¶ 18} “MS. FANNEN (sic): Okay.

{¶ 19} “THE COURT: I’m going to have this judgment vacated based upon what’s

been presented here.

{¶ 20} “* * *

{¶ 21} “THE COURT: I’m going to have the matter reset for trial and we can go

from there.” On the same day Ms. Fannin gave her unsworn statement, the trial court

issued an Order that provides, “[t]he Judgment is hereby vacated and this matter is to be set

for trial. Potential evidence of fraud on behalf of Plaintiff appears to exist.

{¶ 22} “The money being held on the garnishment is to be returned to the Defendant

Melissa Wallace.” 5

{¶ 23} We note that the transcript of docket and journal entries, at item 16, dated

December 2, 2010, indicates, “Copy of a Document Judge Hensley, Jr wanted put in the

file.” Item 16 is a letter to Fannin, dated March 9, 2006, from an investigator at the

Attorney General’s Office, which provides in part, “As you know, we have a pending

lawsuit against World Gym. I have included an affidavit for your review, completion and

signature. * * * .” The attached affidavit, signed by Fannin, provides that she signed a

contract with Word Gym on August 30, 2004, for the purchase of a 12 month gym

membership, that she paid for the membership in full pursuant to the contract, that the the

gym closed on April 8, 2005, and that she has not received the “pro rata amount of $336.93

due to me for the time remaining on my membership.”

{¶ 24} On December 15, 2010, the trial court issued an entry releasing the

garnishment.

{¶ 25} After Wallace did not file a brief herein in the time period allowed, this court

issued an order to Wallace to show cause why the matter should not be submitted and

considered in the absence of her brief. This Court received correspondence from Wallace,

dated July 1, 2011. The correspondence provides, “This letter is regards (sic) to the

Appellate Case No. 24425. I Melissa Wallace believe it is not necessary for this case to be

submitted to the court of appeals, because of the claims (sic) are based on fraudulent claims.

{¶ 26} “Attached to this letter is a brief article from the Dayton Daily News as proof

that these are fraudulent claims.” This Court deemed Wallace’s correspondence as a

notification that she does not intend to file a formal brief.

{¶ 27} Merchants asserts two assignments of error. Its first assignment of error is as 6

follows:

{¶ 28} “WHETHER THE TRIAL COURT ERRED AS A MATTER OF LAW

WHEN VACATING THE JUDGMENT IN THE GARNISHMENT HEARING.”

{¶ 29} According to Merchants, the “court’s decision to vacate the judgment

obtained in 2006 exceeded the purpose of the garnishment hearing,” and the trial court

lacked jurisdiction to vacate the judgment in favor of Merchants.

{¶ 30} “Questions of law require de novo review on appeal.” Westbrock v. W. Ohio

Health Care Corp. (2000), 137 Ohio App.3d 304, 311.

{¶ 31} R.C. 2716.01(A) provides: “A person who obtains a judgment against another

person may garnish the personal earnings of the person against whom judgment was

obtained only through a proceeding in garnishment of personal earnings and only in

accordance with this chapter.” R.C. 2716.06 governs service of notice to the judgment

debtor of the garnishment order, and it sets forth a sample form entitled, “Notice to the

Judgment Debtor.” The form provides in part, “If you dispute the judgment creditor’s right

to garnish your personal earnings and believe that you are entitled to possession of the

personal earnings because they are exempt or if you feel that this order is improper for any

other reason, you may request a hearing before this court by disputing the claim in the

request for hearing form, appearing below, or in a substantially similar form, and delivering

the request for hearing to this court * * * .” The form further provides, “NO OBJECTIONS

TO THE JUDGMENT ITSELF WILL BE HEARD OR CONSIDERED AT THE

HEARING. The hearing will be limited to a consideration of the amount of your personal

earnings, if any, that can be used in satisfaction of the judgment you owe to the judgment 7

creditor.” R.C. 2716.06(C) further provides, “The hearing shall be limited to a

consideration of the amount of the personal earnings of the judgment debtor, if any, that can

be used in satisfaction of the debt owed by the judgment debtor to the judgment creditor.”

{¶ 32} Merchants directs our attention to Credit Acceptance Corp. v. Duncan,

Licking App. No. 06CA0039, 2006-Ohio-3934, in which the Fifth District Court of Appeals

determined that the trial court lacked jurisdiction to vacate an order reviving a judgment

against the Duncans in a subsequent garnishment hearing pursuant to R.C. 2716.06. The

Duncan court noted, “‘[w]here jurisdiction of the subject-matter exists, but a statute has

prescribed the mode and particular limits within which it may be exercised, a court must

exercise jurisdiction in accordance with the statutory requirements; otherwise, although the

proceedings are within the general subject-matter jurisdiction of the court, any judgment

rendered is void because the statutory conditions for the exercise of jurisdiction have not

been met. (Citations omitted).” Id., at ¶ 15. The “garnishment hearing contemplated by

the statute is not a vehicle for re-litigating the lawsuit which resulted in the original

judgment. The statute sets forth the limits within which the trial court has authority to act,

[s]pecifically, R.C. 2716.06, ‘merely gives the trial court jurisdiction to determine the

amount of wages * * * if any * * * that can be used to satisfy all or part of the debt. * * * .’

Schumacker v. Stacey, (May 8, 1985), Summit App. No. 11936, unreported.” Duncan, at ¶

17.

{¶ 33} As in Duncan, the trial court lacked jurisdiction as a matter of law to vacate

the judgment at issue herein; the court was limited by the clear language of the garnishment

statute, R.C. 2716.06(C), to “a consideration of the amount of the personal earnings * * * if 8

any, that can be used in satisfaction of the debt * * *.” Since the trial court lacked

jurisdiction to vacate the judgment in favor of Merchants, its Judgment Entry of December

2, 2010, is void. Merchants first assignment of error is sustained.

{¶ 34} Merchants second assignment of error is as follows:

{¶ 35} “WHETHER THE TRIAL COURT ERRED AND ABUSED ITS

DISCRETION BY NOT TAKING INTO CONSIDERATION THE TIMELINESS OF

DEFENDANT’S JUDGMENT OBJECTIONS.”

{¶ 36} Merchants points out that Civ.R. 60(B)(3) allows a court to relieve a party of

a final judgment in part for fraud of an adverse party. To prevail on a motion pursuant to

Civ. R. 60(B), a movant must establish that: (1) he has a meritorious defense or claim to

present if relief is granted; (2) he is entitled to relief pursuant to 60(B)(1) - (5); and (3) the

motion was made within a reasonable time, and, where the grounds of relief are Civ.R.

(60)(B)(1), (2) or (3), not more than one year after the judgment or proceeding was entered

or taken. GTE Automatic Elec. v. Arc Industries, Inc. (1976), 47 Ohio St.2d 146, 150-51,

(emphasis added). All three requirements must be met. Id., at 151. To the extent that the

trial court may have treated Wallace’s request for a garnishment hearing as a motion to

vacate pursuant to Civ.R. 60(B)(3), on the basis of alleged fraud, we agree with Merchants

that it is untimely.

{¶ 37} The order from which this appeal is taken is reversed and this cause is

remanded for further proceedings consistent with this court’s opinion.

FAIN, J. and FROELICH, J., concur. 9

Copies mailed to:

James Y. Oh Matthew S. Kunkle Jessica Bucholz Melissa Wallace Hon. James A. Hensley, Jr.