Waynesburg Holdings, L.L.C. v. Wells Fargo Bank, N.A.

2019 Ohio 4764

• Court: Ohio Court of Appeals
• Decided: November 18, 2019
• Docket: 2019CA00015
• Status: Published

Opinion

[Cite as Waynesburg Holdings, L.L.C. v. Wells Fargo Bank, N.A., 2019-Ohio-4764.]

COURT OF APPEALS STARK COUNTY, OHIO FIFTH APPELLATE DISTRICT

WAYNESBURG HOLDINGS, LLC, : JUDGES: : Hon. William B. Hoffman, P.J. Intervenor - Appellant : Hon. Craig R. Baldwin, J. : Hon. Earle E. Wise, J. -vs- : : WELLS FARGO BANK, N.A., : Case No. 2019CA00015 : Defendant - Appellee : OPINION

CHARACTER OF PROCEEDING: Appeal from the Stark County Court of Common Pleas, Case No. 2012 CV 1294

JUDGMENT: Affirmed

DATE OF JUDGMENT: November 18, 2019

APPEARANCES:

For Intervenor-Appellant For Plaintiff

ROBERT B. PRESTON III JAMES L. ALLEN WHITNEY L. WILLITS SCOTT LESSER Black, McCuskey, Souers & Arbaugh Miller Canfield Paddock and Stone, P.L.C. 220 Market Ave. S. Suite 1000 840 W. Long Lake Road, Suite 150 Canton, Ohio 44702 Troy, MI 48098

For Appellees James S. Giannneli and For Receiver The Hayman Company, LLC Staci Jo Woolf ROBERT STEFANCIN JAMES T. ROBERTSON Witmer & Ehrman, LLC 236 3rd St. SW 2344 Canal Road, Suite 1701 Canton, Ohio 44702 Cleveland, Ohio 44113 Stark County, Case No. 2019CA00015 2

Baldwin, J.

{¶1} Appellant Waynesburg Holdings, LLC appeals from the January 2, 2019

and January 18, 2019 Judgment Entries of the Stark County Court of Common Pleas.

STATEMENT OF THE FACTS AND CASE

{¶2} On April 24, 2012, appellee Wells Fargo Bank, N.A. filed a complaint

seeking foreclosure of its leasehold mortgage on commercial property. The property was

a retail strip mall. Appellee, in its complaint requested judgment against Waynesburg

Centre, Ltd. and its owner, Galen Oakes, on his personal guarantee. In addition, appellee,

as the first lien holder on the 99 year ground lease at issue, sought foreclosure of the

same. On April 24, 2012, appellee also filed a motion for the appointment of a receiver

pursuant to the authority granted in the mortgage. An Order appointing The Hayman

Company of Ohio as the receiver was filed on April 30, 2012. However, after Waynesburg

Centre, Ltd. filed a motion seeking a stay of the appointment of a receiver, the

appointment was stayed and a hearing was scheduled for June 4, 2012.

{¶3} Waynesburg Centre, Ltd. filed an answer to the complaint on May 21, 2012

and Galen Oakes filed an answer on May 21, 2012. As memorialized in an Order filed on

June 18, 2012, the trial court vacated the stay and ordered that the receivership be

effective as of June 19, 2012.

{¶4} Appellee filed a Motion for Summary Judgment. Galen Oakes filed a

response to the Motion for Summary Judgment on September 4, 2012. Galen Oakes was

dismissed from the action on July 18, 2013 pursuant to a Dismissal Entry. An Agreed

Judgment Entry and Decree of Foreclosure was filed on the same date, granting judgment

to appellee against Waynesburg Centre, Ltd. On January 20, 2017, a joint motion was Stark County, Case No. 2019CA00015 3

filed to amend the order appointing the receiver and extend the existing receivership over

certain adjacent additional property. The motion was granted pursuant to an Order filed

on February 6, 2017. The February 6, 2017 Order was vacated on February 13, 2017.

{¶5} On October 18, 2017, the Receiver moved the trial court for authority to sell

the receivership property by public auction free and clear of all claims, liens,

encumbrances and other interests and also to approve procedures for such sale,

schedule an auction, set bid deadlines and establish notice procedures An Order

approving auction sale procedures and establishing notice procedures was filed on

November 2, 2017. The Order provided the Receiver with authority to sell the property

at auction without the need for approval from the ground lessors.

{¶6} The auction was conducted by Zeta Bid and Resolve Commercial, LLC was

the successful bidder. On May 23, 2018, the Receiver filed a motion for an order

confirming the sale of the receivership property to Resolve Commercial, LLC for

$200,000.00 and the motion was granted on June 7, 2018. However, after Resolve

Commercial, LLC did not close the sale, the Receiver, on August 27, 2018, filed a motion

to hold Resolve Commercial, LLC in contempt.

{¶7} The Receiver, as approved by the trial court, notified other bidders from the

auction that the Receivership Property was still for sale.

{¶8} On November 1, 2018, counsel for the ground lessors, who were Staci Jo

Wolf and James Gianelli, filed a motion for an oral hearing to consider offers to purchase

the receivership property and the interest of the ground lessors. A hearing was

scheduled for December 19, 2018. Thereafter, on November 13, 2018, the Receiver filed

a motion for an order approving the sale of the receivership property to appellant Stark County, Case No. 2019CA00015 4

Waynesburg Holdings, LLC, the “bidder with the highest and best offer on the resale of

the Receivership Property.” The Receiver, in such motion, stated, in relevant part, as

follows:

{¶9} “As an initial offer, the Purchaser proposed to pay the receivership estate

$200,000 as consideration for the purchase of the Receivership Property, subject to due

diligence. After due diligence was performed, the Purchaser lowered its bid to $50,000

based upon the condition of the property and other considerations. Based upon the

Purchaser’s due diligence and in consideration of the factors presented by the Purchaser,

the Receiver believes that $50,000 is the highest and best purchase price for the

Receivership Property.”

{¶10} Appellee, on December 13, 2018, filed a memorandum in support of the

sale of the Receivership Property to appellant.

{¶11} A hearing before the trial court was held on December 19, 2018. The trial

court, in a Judgment Entry filed on January 2, 2019, noted that a prospective buyer

secured by the ground lessors, namely Joseph Sarchione, had notified the Receiver that

the prospective buyer was prepared to purchase the property for $60,000.00, which was

$10,000.00 more than the price accepted by the Receiver. The trial court stated, in

relevant part, as follows: “the Receiver chose to accept the bid of Waynesburg Holding

LLC for the sale agreement. However, it is this Court’s opinion that this Court still

maintains the authority to make the determination of the final buyer.” The trial court

ordered that Sarchione had 45 days to contact the Receiver and conduct the necessary

paperwork to make the transaction. Stark County, Case No. 2019CA00015 5

{¶12} Thereafter, on January 11, 2019, appellant filed a Motion to Intervene as an

additional party defendant pursuant to Civ.R. 24, noting that it had been the successful

bidder at the auction. The trial court, as memorialized in a Judgment Entry filed on

January 18, 2019, denied the motion.

{¶13} Appellant then appealed from the January 2, 2019 and January 18, 2019

Judgment Entries, raising the following assignments of error on appeal:

{¶14} “I. THE TRIAL COURT ERRED BY FAILING TO FOLLOW THE

ESTABLISHED AUCTION SALE PROCEDURES AND, FURTHER, BY FAILING TO

COMPLY WITH THE RECEIVERSHIP STATUTE AS IT PERTAINS TO THE SALE OF

PROPERTY.”

{¶15} “II. THE TRIAL COURT SHOWED BIAS IN FAVOR OF A LOCAL, IN-

STATE NON-BIDDER AND PREJUDICE TO THE APPELLANT, WHICH IS AN ENTITY

OWNED BY OUT-OF-STATE MEMBERS, IN VIOLATION OF THE U.S.

CONSTITUTION.”

{¶16} “III. THE TRIAL COURT ERRED BY ALLOWING JOSEPH SARCHIONE,

WHO DID NOT BID AT THE DULY AUTHORIZED AUCTION, TO PURCHASE THE

{¶17} “IV. THE TRIAL COURT ERRED BY FAILING TO PERMIT WAYNESBURG

HOLDINGS, LLC TO INTERVENE IN THIS MATTER AFTER IT RENDERED A

JUDGMENT ALLOWING JOSEPH SARCHIONE, A NON-BIDDER, NON-PARTY, TO

PURCHASE THE PROPERTY AT ISSUE HEREIN.”

I Stark County, Case No. 2019CA00015 6

{¶18} Appellant, in its first assignment of error, argues that the trial court erred by

failing to follow the established auction procedures and by failing to comply with the

receivership statute as it pertains to the sale of the property. Appellant notes that Joseph

Sarchione was not a proper bidder pursuant to the trial court’s auction order and argues

that the only valid bid was appellant’s bid. According to appellant, if the trial court chose

not to confirm the sale to appellant, its only recourse was to order another auction of the

Receivership Property.

{¶19} R.C. 2735.04, which outline the powers of a receiver, states, in relevant

part, as follows:

{¶20} (A) The powers of a receiver shall be set forth in the order of the court that

appointed the receiver as those powers may be modified by the court or as otherwise

approved by the court upon application of the receiver or a party to the action.

{¶21} (B) Under the control of the court that appointed the receiver as provided

in section 2735.01 of the Revised Code, the receiver may do any of the following:

{¶22} (D)(1)(a) Subject to the approval and supervision of the court and the

requirements of this section, a receiver may sell property free and clear of liens by private

sale pursuant to a written contract between the receiver and the prospective purchaser,

by private auction, by public auction, or by any other method that the court determines is

fair to the owner of the property and all other parties with an interest in the property, is

reasonable under the circumstances, and will maximize the return from the property to

the receivership estate, taking into account the potential cost of holding and operating the

property. Stark County, Case No. 2019CA00015 7

{¶23} (b) Before entering an order authorizing the sale of the property by the

receiver, the court may require that the receiver provide evidence of the value of the

property. That valuation may be provided by any evidence that the court determines is

appropriate. In a public or private auction, the court may establish a minimum bid.

{¶24} (c) If the receiver requests authority to sell the property pursuant to a

prospective purchase contract and if warranted by the circumstances, the court may

require that the receiver solicit and consider additional offers. If the receiver ultimately

sells the property to a party other than the original proposed purchaser, if approved by

the court, the receiver may pay to the unsuccessful original proposed purchaser a

reasonable amount of costs and expenses from the sale proceeds in an amount

determined by the court to compensate that proposed purchaser for participation in the

sale process to the extent that participation brought value to the receivership.

{¶25} It has long been recognized that the trial court is vested with sound

discretion to appoint a receiver. State ex rel. Celebrezze v. Gibbs, 60 Ohio St.3d 69, 73,

573 N.E.2d 62 (1991). The Supreme Court of Ohio has held that R.C. 2735.04, which

sets forth the powers a trial court may grant to a receiver, is broad enough to enable “the

trial court to exercise its sound judicial discretion to limit or expand a receiver's powers

as it deems appropriate,” subject to appellate review for abuse of discretion. State ex rel.

Id. at 74. An abuse of discretion occurs where a trial court's decision is “unreasonable,

arbitrary or unconscionable.” Blakemore v. Blakemore, 5 Ohio St.3d 217, 219, 450 N.E.2d

1140 (1983).

{¶26} The trial court, in paragraph 8 of its November 2, 2017 Judgment Entry

Approving Auction Sale, had specifically retained jurisdiction over any matter or dispute Stark County, Case No. 2019CA00015 8

arising from or relating to its Order. Furthermore, paragraph 10 of the Judgment Entry

states as follows:

{¶27} “Following the Auction End Date, and after the Receiver declares a Winning

Bidder in accordance with the Auction Sale Process, Receiver shall file a motion with the

Court within ten (10) days of identification of the Winning Bidder and the Auction End

Date, seeking confirmation and approval of the Sale of Real Estate and seeking certain

findings that (i) the sale of Real estate and selection of such Winning Bidder was in

accordance with this Order and the Auction Sale Process; and (ii) consummation of the

Sale of Real Estate as contemplated in the Winning Bid will provide the highest or

otherwise best value for the Real Estate and is in the best interests of the receivership

estate pursuant to the Sale Order.”

{¶28} In the case sub judice, as noted by appellees, appellant, in its December

13, 2018 Memorandum in support of Sale, stated that the receiver believed that

$50,000.00, which was appellant’s offer, was the highest and best price for the

Receivership Property. This occurred after the original winning bid of $200,000.00 was

not fulfilled.

{¶29} We concur with appellees that the trial court acted within its discretion in

modifying its sale procedures and allowing the Receiver to sell the property to a non-

bidder. R.C. 2735.04(D)(1)(c) authorized the trial court, which had to approve any sale of

the property, to permit the Receiver to solicit and consider other offers. The trial court,

through its actions, maximized the return from the property.

{¶30} Appellant’s first assignment of error is, therefore, overruled.

II Stark County, Case No. 2019CA00015 9

{¶31} Appellant, in its second assignment of error, contends that the trial court

showed bias in favor of Joseph Sarchione, a local, in-state non-bidder, and prejudice to

appellant, which an entity is owned by out-of-stated members, in violation of the U.S.

Constitution.

{¶32} According to appellant, the trial court, at the December 2018 hearing, made

numerous references to Joseph Sarchione not receiving a “fair shot” at the purchase and

made references to him being a local businessman and having local ties. Appellant also

maintains that the trial court questioned how appellant would benefit the local community

since it is owned by two members from Florida.

{¶33} However, the trial court, in acting as it did, clearly was trying to maximize

the return from the property as required by R.C. 2735.04(D)(1)(a). Such section

authorized a private sale of the property as long as it was reasonable under the

circumstances and maximized the return from the property. Moreover, as is stated above,

pursuant to R.C. 2735.04(c), the Receiver was authorized by the trial court to solicit and

consider additional offers. We note that the trial court, at the December 19, 2018 hearing,

voiced concerns over the fact that the price of the property had gone from $200,000.00,

the amount the original bid, to $50,000.00 and noted that “60,000 is better than $50,000.”

Transcript at 19. The trial court also questioned why the Receiver, who was supposed to

get the highest price for the property, did not go back and contact appellant to determine

if appellant could meet or exceed Sarchione’s price. In, short, we find no abuse of

discretion.

{¶34} Appellant’s second assignment of error is, therefore, overruled.

III Stark County, Case No. 2019CA00015 10

{¶35} Appellant, in its third assignment of error, argues that the trial court erred by

allowing Joseph Sarchione, who did not bid at the authorized auction, to purchase the

property.

{¶36} However, as is stated above, R.C. 2735.04(D)(1)(a) states as follows:

{¶37} “Subject to the approval and supervision of the court and the requirements

of this section, a receiver may sell property free and clear of liens by private sale pursuant

to a written contract between the receiver and the prospective purchaser, by private

auction, by public auction, or by any other method that the court determines is fair to the

owner of the property and all other parties with an interest in the property, is reasonable

under the circumstances, and will maximize the return from the property to the

receivership estate, taking into account the potential cost of holding and operating the

{¶38} “By its express language, R.C. 2735.04(D)(1)(a) sets forth various methods

by which a receiver, with court approval, may sell property free and clear of liens. They

are: a written contract between the receiver and the prospective purchaser; private

auction; public auction; or a catch-all provision that permits the court to authorize a sale

if the trial court makes additional determinations including a determination that the method

of sale will maximize the return from the property to the receivership estate.” Lucas v.

Reywal Co., L.P., 10th Dist. No. 17AP-479, 2019-Ohio-27, paragraph 23. The trial court

was within its authority to allow a private sale of the property to Sarchione.

{¶39} Appellant’s third assignment of error is, therefore, overruled.

IV Stark County, Case No. 2019CA00015 11

{¶40} Appellant, in its fourth assignment of error, maintains that the trial court

erred by failing to permit appellant to intervene in this action after the trial court allowed

Joseph Sarchione, a non-bidder, non-party, to purchase the property at issue.

{¶41} As is stated above, on January 11, 2019, appellant filed a Motion to

Intervene as an additional party defendant pursuant to Civ.R. 24, noting that it had been

the successful bidder at the auction. The trial court, as memorialized in a Judgment Entry

filed on January 18, 2019, denied the motion.

{¶42} We review a trial court's decision on a motion to intervene for abuse of

discretion. State ex rel. N.G. v. Cuyahoga Cty. Court of Common Pleas, 147 Ohio St.3d

432, 2016-Ohio-1519, 67 N.E.3d 728, ¶ 21, citing State ex rel. Merrill v. Ohio Dept. of

Natural Resources, 130 Ohio St.3d 30, 2011-Ohio-4612, 955 N.E.2d 935.

{¶43} Civ.R. 24 states, in relevant part, as follows: “(C) Procedure. A person

desiring to intervene shall serve a motion to intervene upon the parties as provided in

Civ.R. 5. The motion and any supporting memorandum shall state the grounds for

intervention and shall be accompanied by a pleading, as defined in Civ.R. 7(A), setting

forth the claim or defense for which intervention is sought. The same procedure shall be

followed when a statute of this state gives a right to intervene.”

{¶44} In turn, Civ. R. 7(A) provides as follows: “(A) Pleadings. There shall be a

complaint and an answer; a reply to a counterclaim denominated as such; an answer to

a cross-claim, if the answer contains a cross-claim; a third-party complaint, if a person

who was not an original party is summoned under the provisions of Civ.R. 14; and a third-

party answer, if a third-party complaint is served. No other pleading shall be allowed,

except that the court may order a reply to an answer or a third-party answer.” Stark County, Case No. 2019CA00015 12

{¶45} Upon review of the record, appellant’s motion to intervene was not

accompanied by a pleading, as defined in Civ.R. 7(A), setting forth the claim or defense

for which intervention was sought. Accordingly, the trial court properly denied appellants'

motion for failure to comply with Civil Rule 24(C) on that basis alone. Avanti Corp. v.

Morelli Realty Corp., 5th Dist., Stark App.2005CA00147, 2005–Ohio–6698. See also

Deutsche Bank Natl. Trust Co. v. Hill, 5th Dist. Perry No. 14 CA 00021, 2015-Ohio-1575,

2015 WL 1875906.

{¶46} Appellant’s fourth assignment of error is, therefore, overruled.

{¶47} Accordingly, the judgment of the Stark County Court of Common Pleas is

affirmed.

By: Baldwin, J.

Hoffman, P.J. and

Wise, Earle, J. concur.