Walter Music & Vending Co. v. Hungarian Culture Club

2019 Ohio 1309
Ohio Court of Appeals·Decided April 8, 2019·No. 2018-L-069·Published

Opinion

[Cite as Walter Music & Vending Co. v. Hungarian Culture Club, 2019-Ohio-1309.]

COURT OF APPEALS

LAKE COUNTY, OHIO

ELEVENTH APPELLATE DISTRICT

WALTER MUSIC AND VENDING CO., : JUDGES:

: Hon. W. Scott Gwin, P.J.

Plaintiff - Appellee/Cross : Hon. Patricia A. Delaney, J.

Appellant : Hon. Craig R. Baldwin, J.

:

-vs- : Sitting by Assignment by the : Supreme Court of Ohio :

HUNGARIAN CULTURE CLUB, : Case No. 2018-L-069 :

Defendant - Appellant/Cross :

Appellee : OPINION

CHARACTER OF PROCEEDING: Appeal from the Lake County Court of Common Pleas, Case No.

15CV001020

JUDGMENT: Affirmed

DATE OF JUDGMENT: April 1, 2019 APPEARANCES:

For Plaintiff-Appellee/ Cross Appellant For Defendant-Appellant/Cross Appellee

DOMINIC JOSEPH VITANTONIO MARY JANE TRAPP Argie D'Amico & Vitantonio EZIO A. LISTATI 6449 Wilson Mills Road LEO M. SPELLACY Mayfield Village, Ohio 44143-3402 JOSEPH N. CINDRIC Thrasher, Dinsmore & Dolan, LPA GLEN E. FORBES 1111 Superior Ave., Suite 412 Cooper & Forbes Co., LPA Cleveland, Ohio 44114 166 Main Street Painesville, Ohio 44077-3993

Baldwin, J.

{¶1} Hungarian Culture Club appeals the decision of the Lake County Court of Common Pleas finding that it breached its lease agreement with appellee, Walter Music and Vending Co., and awarding damages in the amount of $168, 456.37 plus interest at the rate of 4% from the date of judgment and costs. Appellee cross appeals asserting the trial court erroneously limited the amount of damages.

STATEMENT OF FACTS AND THE CASE

{¶2} Appellant is a social club with approximately 700 members, located in Fairport Harbor. Appellant maintains a bar and banquet hall at the club for the use of the members on a daily basis and for special events. Appellee leased space from appellant and installed a pool table, a juke box and various electronic games beginning in 2004 and ending in February 2015 when the principals of appellee were charged with several offenses related to gambling and electronic games, including one known as Puzzle Bug. The games were removed from appellant’s property on February 24, 2015, and, in May 2015, appellant entered into an arrangement with a club member for the provision of electronic raffle machines. Appellee objected to the installation of the new machines as a breach of the lease, but appellant did not relent and did not permit appellee to reinstall any video games at the club. Appellee thereafter filed this action.

{¶3} Appellant and appellee entered into an informal agreement for the placement of various games at the club in early 2004. The original agreement was not in writing, but the records show that the appellee initially installed a pool table and various electronic games, including the game that was the focus of litigation, a video based device known as Puzzle Bug. Puzzle Bug was incredibly lucrative. Each machine would gross

approximately thirty thousand dollars per year, the proceeds of which were shared by appellee and appellant.

{¶4} Appellee presented appellant with a written contract in 2010 memorializing their agreement as a lease of space in the club for which the appellant received a share of the proceeds from the games installed in that space. The space to be leased and the agreed payment was described as follows:

The floor areas, specifically determined and bounded by the location, or relocation, on the principal premises by mutual agreement, of [appellee’s]

equipment or substitute equipment, the agreed locations of the equipment being on the leased premises, along with the easement of access to service, repair and replace the same for the following additional considerations to [appellant]:

Music: Internet Juke, 40%, after 20% download deduction and DSL/cable fee (if applicable).

Games: pool table, 40%; skill-based games (Puzzle Bugs, etc.), 50%;

TicTac fruit (other Fill games), 40%.

(Plaintiff’s Exhibit 1).

{¶5} The percentages reference a share of the gross proceeds deposited within the machines by the club members using them. Appellee’s representative visited the club on a regular basis to collect the funds and, at that time, appellant would be paid its share of the proceeds.

{¶6} Appellee had the exclusive right to place games at the club:

[Appellant] agrees that [appellee] shall have SOLE AND EXCLUSIVE RIGHT to place on [appellant’s] premises equipment of the types described, and may replace it with similar equipment reasonably determined by [appellee] to be suitable for [appellant’s] premises and the nature of its operation, and operator may at its sole discretion remove all equipment and terminate this agreement if deciding the collection income does not justify retaining equipment in place. (Emphasis sic.)

(Plaintiff’s Exhibit 1).

{¶7} Appellee never objected to the installation of the Puzzle Bug machines at its club, despite what can be interpreted as some knowledge regarding the risk of operating the game. Matthew Carlson, the bar manager conceded that the club paid cash prizes only to club members or known visitors, and awarded gas cards to unknown guests, presumably to avoid disclosing cash payments to the authorities. (Trial Transcript, p 369-376).

{¶8} The lease agreement provided for a five year term and automatic renewal:

This lease shall be binding upon the parties, their heirs, executors, administrators, successors and assigns for a term of 5 years commencing the 5 day of March 2010 AND SHALL AUTOMATICALLY RENEW AT THE END OF THE TERM OR ANY EXTENDED TERM FOR A LIKE TERM OF THE SAME NUMBER OF YEARS, UNLESS (sic) either party gives the other party written notice of the termination of this lease by certified mail not less than ninety (90) days before the end of any term. (Emphasis sic.)

(Plaintiff’s Exhibit 1).

{¶9} The parties did not dispute that the lease automatically renewed in 2015 and would have been effective until 2020.

{¶10} The lease was signed by representatives of appellant and appellee and it contains a proper verification by a notary. The notary, Chris Torecki, expressed some doubt as to whether he witnessed the execution of the lease agreement, but the record does not contain a significant inquiry into this matter. The parties did stipulate that the persons who signed were representatives of the parties, authorized to sign on behalf of the parties.

{¶11} On February 19, 2015, a local newspaper published an article describing legal action against appellee’s principals for a number of criminal offenses related to gambling. Christopher Carlson, president of appellant at the time, became concerned that the appellant may be at risk by continuing its relationship with appellee. The agent who collected the proceeds from the games at the club disabled the Puzzle Bug machines and appellant requested that appellee remove the games from the club. Appellee attempted to reassure appellant that Puzzle Bug was a legal device, but appellant was not convinced and asked that the games be removed. The parties did discuss the situation and appellee insisted that it would not continue its relationship with appellee while the charges against its principals were pending.

{¶12} In May 2015 appellant entered into an agreement with Ron McDowell, a club member, for the provision of several Electronic Raffle Machines, or ERMs. The ERMs operated in essentially the same fashion as Puzzle Bugs with some difference in the payout procedure when a player finished playing. Puzzle Bugs would payout only in increments of ten dollars and the player forfeited any excess; the ERMs paid out the entire

balance remaining in the player’s account when the game terminated. Both the Puzzle Bug and the ERM produced a ticket for a winner that was given to a club employee in exchange for cash.

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

Walter Music & Vending Co. v. Hungarian Culture Club, 2019 Ohio 1309 (Ohio Ct. App. 2019).

2019 Ohio 1309 (Walter Music & Vending Co. v. Hungarian Culture Club) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Related

Riedel v. Consolidated Rail Corp.
2010 Ohio 1926 (Ohio Supreme Court, 2010)
Children's Medical Center v. Ward
622 N.E.2d 692 (Ohio Court of Appeals, 1993)
Brown v. Gallagher
902 N.E.2d 1037 (Ohio Court of Appeals, 2008)
Taylor v. Kemp, Unpublished Decision (12-12-2005)
2005 Ohio 6787 (Ohio Court of Appeals, 2005)
Snyder v. Snyder
865 N.E.2d 944 (Ohio Court of Appeals, 2007)
Suesskind v. Wilson
176 N.E. 889 (Ohio Supreme Court, 1931)
Goldberg v. Industrial Commission
3 N.E.2d 364 (Ohio Supreme Court, 1936)
City of Mingo Junction v. Sheline
196 N.E. 897 (Ohio Supreme Court, 1935)
State ex rel. Humble v. Brown
368 N.E.2d 294 (Ohio Supreme Court, 1977)
Blakemore v. Blakemore
450 N.E.2d 1140 (Ohio Supreme Court, 1983)
State v. Martin
483 N.E.2d 1157 (Ohio Supreme Court, 1985)
State v. Sage
510 N.E.2d 343 (Ohio Supreme Court, 1987)
Latina v. Woodpath Development Co.
567 N.E.2d 262 (Ohio Supreme Court, 1991)
State v. Kinley
651 N.E.2d 419 (Ohio Supreme Court, 1995)
Roberts v. United States Fidelity & Guaranty Co.
665 N.E.2d 664 (Ohio Supreme Court, 1996)
State ex rel. Quarto Mining Co. v. Foreman
679 N.E.2d 706 (Ohio Supreme Court, 1997)
State ex rel. Quarto Mining Co. v. Foreman
1997 Ohio 71 (Ohio Supreme Court, 1997)
Roberts v. United States Fid. & Guar. Co.
1996 Ohio 101 (Ohio Supreme Court, 1996)