COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 59340 JOHN PALASICS, ET AL. : : PLAINTIFF-APPELLEES : JOURNAL ENTRY : v. : AND : STEVEN KERR, ET AL. : OPINION : DEFENDANTS-APPELLANTS : DATE OF ANNOUNCEMENT OF DECISION: NOVEMBER 21, 1991 CHARACTER OF PROCEEDING: CIVIL APPEAL FROM THE COMMON PLEAS COURT CASE NO. 168298 JUDGMENT: AFFIRMED. DATE OF JOURNALIZATION: APPEARANCES: For Plaintiff-Appellees, John Palasics and J.P. Delivery Service, Inc.: CARY J. ZABELL CARY J. ZABELL COMPANY, L.P.A. 23600 MERCANTILE ROAD BEACHWOOD, OHIO 44122 For Defendant-Appellant, Steven Kerr: JOSEPH E. RUTIGLIANO RUTIGLIANO & ASSOCIATES COMPANY, L.P.A. 1370 WEST SIXTH STREET, #202 CLEVELAND, OHIO 44113 For Robert J. Morris, Receiver: DAVID R. KENNEDY 4071 SOUTH CLEVELAND-MASSILLON ROAD, P.O. BOX 1080 NORTON, OHIO 44203-1080 -2- SPELLACY, J.: On April 20, 1989, plaintiffs-appellees John Palasics, J.P. Delivery Service, Inc. and Americargo Corp. ("appellees") filed a verified complaint for declaratory judgment, rescission, fraudulent inducement and misrepresentation, and breach of contract against defendants-appellants Steven Kerr and Americargo, Inc. ("appellants"). In their first two causes of action, appellees alleged that appellant-Kerr intentionally, maliciously, knowingly and/or negligently made false representations of facts and omitted material facts regarding the purchase of appellant-Americargo, Inc. Appellees alleged in their third cause of action that appellants materially breached the purchase and sale agreement that they entered into. Finally, in their fourth cause of action, appellees claimed that appellants' conduct interfered with their ability to conduct business. In their complaint, appellees sought a rescission of the purchase and sale agreement, compensatory and punitive damages, and other remedies which the trial court deemed fair and just. Appellees also requested the trial court to issue a declaratory judgment that the cognovit note between them and appellants was not enforceable and null and void. Appellees further sought a preliminary and permanent injunction enjoining appellants from: 1) diverting, appropriating or exercising any dominion and control over all receivables of appellee-Americargo Corp. -3- generated after December 26, 1988; 2) seeking enforcement of the cognovit note; 3) entering the premises of appellee-Americargo Corp.; and 4) indirectly or directly interfering with the business of appellee-Americargo Corp./1\ On April 26, 1989, appellees filed an amended verified complaint. In their amended complaints, appellees added Star Diesel Truck Center, Inc. and Joyce Lynde as new party defendants. On May 1, 1989, the trial court issued a temporary restraining order and set a hearing on appellee's motion for a preliminary injunction. On May 2, 1989, appellees filed a motion to show cause why appellant-Kerr should not be held in contempt of the trial court's temporary restraining order. Appellees argued that immediately after the temporary restraining order was issued, appellant-Kerr interfered with the business of appellee- Americargo Corp. and demanded appellee-Palasics to leave the business premises. Appellees also claimed that appellant-Kerr and new party defendant-Star Diesel Trucking Center, Inc. wrongfully converted three trucks of appellee-Americargo Corp. On May 4, 1989, the trial court conducted a hearing on appellees' motion to show cause. At the hearing, the trial court instructed the parties to "cool down" and to give it time to sort /1\ Appellees also alleged in their seventh cause of action that if a rescission of the purchase and sale agreement is ordered, appellants would be unjustly enriched by the increase in the volume of sales generated by them. -4- out the problems. The trial court also appointed Robert Morris as the receiver for appellant-Americargo, Inc., in order to manage its assets. On May 31, 1989, appellants filed their answer and counterclaim, and on June 5, 1989, they filed their amended counterclaim. Appellants basically denied the allegations set forth in appellees' complaint. In their counterclaim, appellants alleged a breach of contract and negligence on the part of appellees. Appellants also sought foreclosure on liens of several vehicles associated with the business. Appellants alleged that appellees failed to make payments according to the terms and conditions of the purchase and sale agreement. On June 5, 1989, a bench trial commenced. The first witness to testify on behalf of appellees was appellee-Palasics, the President of appellee-J.P. Delivery Services, Inc., a company which performed pickup and delivery services. Appellee- Palasics testified that in June, 1988, he became interested in purchasing appellant-Americargo, Inc. Appellant-Americargo, Inc. was involved in the business of local pickups and delivery, air freight, some general commodity freight and long hauls. Appellee-Palasics had learned through a mutual acquaintance, Bruce Yondo, that appellant-Kerr was willing to sell appellant- Americargo, Inc. In late June, 1988 or early July, 1988, appellee-Palasics, appellant-Kerr and Bruce Yondo had a dinner meeting in which everyone discussed their backgrounds and their business -5- experiences. Appellant-Kerr informed appellee-Palasics that he was willing to sell the entire company which he valued at $1.5 million. Appellant-Kerr also told appellee-Palasics that the company was very profitable and that its annual revenues were approximately $2 million dollars. Shortly after the first dinner meeting, appellee-Palasics went to discuss the acquisition of appellant-Americargo, Inc. with his accountant, David Polk. David Polk advised appellee- Palasics that he should obtain some financial information on the company from appellant-Kerr. Over the next couple of months, appellee-Palasics and appellant-Kerr met about twelve times. On each occasion, appellant-Kerr reassured appellee-Palasics that appellant- Americargo, Inc. was in good financial condition. Appellee- Palasics stated that he repeatedly requested some financial information from appellee-Kerr, but appellee-Kerr only provided him with oral assurances that the company was strong and doing well. Appellee-Palasics testified that he put "a lot" of reliance on appellant-Kerr's oral representations that the company was doing well. Appellant-Kerr told him that appellant-Americargo, Inc. was capable of affording payments of $50,000 a month, over and above the operating expenses. Thus, there would be no problem for appellee-Palasics to make payments of $30,000 a month toward the purchase of the company. Appellant-Kerr also told him that he was able to pay expenses for other companies and for -6- personal items from revenues generated by appellant-Americargo, Inc. Appellee-Palasics claimed that appellant-Kerr always told him, "John, the money is here." Appellee-Palasics said that throughout the negotiations with appellant-Kerr, he had respect for him both personally and professionally. Despite the good personal relationship between the two, appellee-Palasics, upon the advice of his accountant and attorney, continued to push appellant-Kerr for some financial information. Appellant-Kerr responded by telling appellee- Palasics that such information was not important, because it was not a proper reflection of the true financial picture of the company. However, appellant-Kerr said he would get some financial information for him. During October, 1988, appellee-Palasics, his accountant, David Polk, and appellant-Kerr had some meetings regarding the prospective acquisition of appellant-Americargo, Inc. Appellee- Palasics testified that appellant-Kerr stated at one meeting that "John's like a son to me. I would never sell him anything - if the money's not here, I wouldn't do this. The money's here." Appellant-Kerr was referring to the $30,000 that appellee- Palasics would need each month to pay for the company. In mid-October, 1988, appellee-Palasics received some financial statements from appellant-Kerr. The financial statements pertained to the fiscal years ending September 30, 1986, and September 30, 1987, and a nine-month period ending June 30, 1988. According to appellee-Palasics, when he received the -7- documents, he was told by appellant-Kerr that the sales volume was true but that the operating costs were not. Appellant-Kerr claimed that the operating costs included more than the cost of operating appellant-Americargo, Inc. The operating costs included costs for other companies and personal expenses, including clothes, car, and travel. After the financial statements were reviewed, another meeting between appellee-Palasics, David Polk and appellant-Kerr took place in early November, 1988. Appellee-Palasics said that he and David Polk believed appellant-Kerr that the financial statements were not accurate because the costs were overestimated in the documents. Appellee-Palasics further testified that appellant-Kerr represented to him and David Polk that appellant-Americargo, Inc. made approximately $180,000 a month and that the monthly expenses were about $100,000. Based upon appellant-Kerr's representations, appellee-Palasics projected that the monthly revenues would be $180,000 and that the monthly expenses would be approximately $110,000. At the end of November, 1988, another meeting was conducted in order to work out the terms of the purchase and sale agreement. According to appellee-Palasics, appellant-Kerr stated at the meeting, "Why are we going through all this? The money's here." Appellee-Palasics said that appellant-Kerr agreed to include in the agreement a provision that would warrant and -8- guarantee the revenue and expense figures in the purchase and sale agreement. On December 21, 1988, appellees and appellants entered into a purchase and sale agreement, effective December 26, 1988. It was agreed that the purchase price for appellant-Americargo, Inc. would be $l.3 million and that $100,000 would be paid at the time of closing. A cognovit note was executed in which the balance would be paid off in 48 consecutive monthly installments of $30,000. In the purchase and sale agreement, appellants explicitly warranted that the financial statements for the fiscal years ending on September 30, 1986, September 30, 1987 and for the 1988 fiscal year through June 30, 1988 were complete and true. As a result of the purchase and sale agreement, all business relating to appellant-Americargo, Inc. was passed onto appellee-Americargo Corp. All the employees remained the same and all the contracts and customers remained the same. Appellant-Kerr was hired as a consultant and after the sale, he continued in the operation of the business. Appellee-Palasics testified that in the first three months of 1989, there was nothing in the operation of appellee- Americargo Corp. that would cause a decrease in revenues or an increase in the costs. In fact, appellee-Palasics claimed that they obtained some new customers and that they initiated some cost-savings plans. -9- For the first three months of 1989, appellee-Palasics received monthly financial statements. To his surprise, he noticed that the sales volumes were below what were stated earlier and that the operating costs were substantially more. Appellee-Palasics testified that the first three-month quarterly report of 1989 reflected an income loss of $112,025.29. Appel- lee-Palasics claimed that appellee-Americargo Corp. would not be able to operate in a profitable fashion and continue to make the $30,000 payments to appellant-Kerr. Appellant-Kerr next testified as if on cross-examination. Appellant-Kerr testified that he met with appellee-Palasics and Bruce Yondo for dinner in order to discuss the possible sale of appellant-Americargo, Inc. Following the first meeting, he then met with appellee-Palasics on several occasions. Appellant-Kerr stated that they did not initially discuss appellant- Americargo, Inc.'s financial condition in detail. They only made references to the asking price of $l.5 million and the revenues of the company. Appellant-Kerr said that he requested from appellee-Palasics a line of credit and some financial information, but he never received either. He claimed that he continued to deal with appellee-Palasics because he had confidence in him. Appellant- Kerr stated that he ultimately agreed to be appellee-Palasics' bank. Appellant-Kerr testified that in mid-October, 1988, he, appellee-Palasics and David Polk began serious discussions about -10- the operations of appellant-Americargo, Inc. At the first meeting in October, 1988, appellant-Kerr provided them with financial statements that represented a true and accurate revenue picture of appellant-Americargo, Inc. for the years 1986, 1987 and part of 1988. Appellant-Kerr further testified that appellee-Palasics' accountant, David Polk, accidentally took documents which re- flected his own work on the fiscal years of 1986, 1987 and part of 1988. David Polk was supposed to take appellant-Kerr's accountant's financial statements for those years, but he must have grabbed additional documents by accident. According to appellant-Kerr, the documents which David Polk inadvertently picked up somehow became part of the purchase and sale agreement. Apparently, those documents were the ones that reflected monthly revenues of $180,000 and monthly costs of $100,000. Appellant- Kerr claimed that those documents represented a balance sheet of appellant-Americargo, Inc. and other companies closely related to it. Appellant-Kerr then testified that when he signed the purchase and sale agreement on December 21, 1988, he signed it on his own behalf and on behalf of appellant-Americargo, Inc. Thus, he admitted that he was personally bound by the obligations and warranties contained in the agreement. After the closing of the sale of appellant-Americargo, Inc., appellant-Kerr continued to occupy his old office and also issued checks to pay the payroll and other bills. According to appel- -11- lant-Kerr, he consulted with appellee-Palasics before he wrote any checks. However, appellant-Kerr admitted that despite the trial court's order appointing a receiver for appellant-Americargo, Inc., he issued a check in the amount of $28,000 to new party defendant Star Diesel Trucking Center, Inc. Appellant-Kerr also admitted that he deposited some receivables into the account of appellant-Americargo, Inc. after the temporary restraining order was issued, and Star Diesel Trucking Center, Inc. took two trucks in order to repair them. At this point in appellant-Kerr's testimony, appellees' counsel was permitted to interrupt his testimony and put George Nelson on the stand. George Nelson testified that he is the supervisor of the Underwriting Department of the Cleveland Division of the Bureau of Worker's Compensation. He stated that an audit regarding appellant-Americargo, Inc. was conducted and the audit revealed that by February 28, 1989, appellant- Americargo, Inc. owed $115,746.33 towards Worker's Compensation. George Nelson further testified that appellant-Americargo, Inc. failed to pay approximately $58,000 in premiums and its Worker's Compensation coverage was cancelled. When appellant-Kerr returned to the stand, he testified that he was aware that appellant-Americargo, Inc. owed about $57,000 for Worker's Compensation coverage. However, he was not aware that the Worker's Compensation coverage for appellant-Americargo, Inc. had been cancelled. -12- Ellen Berisha, an employee with appellant-Americargo, Inc. since 1986, also testified on behalf of appellees. Ellen Berisha testified that she was hired by appellant-Kerr in order to straighten out appellant-Americargo, Inc.'s billing. Eventually, she became Vice President of Administrative Services and her responsibilities included the control and overseeing of the office operation. Ellen Berisha worked with payables, receivables, health insurance, collections, hiring and other office operations. Ellen Berisha testified that appellant-Americargo, Inc. did not pay its bills in a timely fashion. Creditors would usually be paid according to who "screamed the loudest," and often, appellant-Americargo, Inc. would be about 90 days behind. With regard to the transaction at issue, Ellen Berisha testified that appellant-Kerr informed her that he was interested in purchasing appellee-J.P. Delivery Service, Inc. Appellant- Kerr indicated that appellee-Palasics was interested in selling the company because he was going through a divorce. Ellen Berisha learned about the sale of appellant-Americargo, Inc. while she was on vacation in Colorado. Apparently, appellant- Kerr was very upset that she was out of town and told her that he hoped that she broke her toe skiing. Eventually, appellant-Kerr calmed down and informed Ellen Berisha that she still had a job. Ellen Berisha testified that she, David Polk, and appellant- Kerr's accountant, Leroy Volkmer, had a meeting so they could determine the ordinary operating expenses for appellant- -13- Americargo, Inc. As a result of the meeting, they were able to arrive at a schedule of operating expenses for the calendar year 1988. The agreed upon monthly expenses reflected in the schedule were $155,577. According to Ellen Berisha, during appellee-Palasics' management and ownership of the company there was nothing which would have increased the expenses for operating appellant- Americargo, Inc. Appellees also presented the testimony of appellee-Palasic's accountant, David Polk. David Polk testified that he was approached by appellee-Palasics who informed him that he was interested in purchasing appellant-Americargo, Inc. for approximately $1.5 million. On August 23, 1988, David Polk, appellee-Palasics and appellant-Kerr had their first meeting concerning a prospective purchase of the company. At the meeting, appellant-Kerr told David Polk that he was very impressed with appellee-Palasics' business achievements and that he wanted to sell his business to him. According to David Polk, the premise of the meeting was the sale of appellant-Americargo, Inc. David Polk further testified that he asked appellant-Kerr for financial statements and tax returns so he could determine whether appellant-Kerr's figures regarding revenues and expenses were accurate. Appellant-Kerr informed him that he did not have that information and that he would work on obtaining it. David Polk stated that he did not receive any financial information -14- until mid-October, 1988, when appellee-Palasics had them delivered to him. The financial statements pertained to the fiscal years ending on September 30, 1986, September 30, 1987 and a nine-month period ending on June 30, 1987. In late October, 1988, another meeting between David Polk, appellee-Palasics and appellant-Kerr was conducted. During the meeting, appellant-Kerr told David Polk that he would not sell a company to appellee-Palasics that was not capable of making monthly payments. He reassured him that the money was there. David Polk said that he advised appellee-Palasics that since they did not get any detailed information regarding expenses, it was necessary to have appellant-Kerr agree to some guarantees in the purchase and sale agreement. Based on their discussions with appellant-Kerr, it was essential that he guarantee that the monthly revenues were in excess of $180,000 and that the monthly expenses were approximately $100,000. Throughout the negotiations, appellant-Kerr continuously indicated that everything had to be settled before the end of the year or there was no deal. Prior to the signing of the agreement, David Polk always told appellee-Palasics, "Unless you get some guarantees in that contract, walk away from the deal." That was David Polk's last involvement in this transaction prior to the signing of the purchase and sale agreement on December 21, 1988. He subsequently learned that appellee-Palasics did get those guarantees from appellant-Kerr. -15- After the sale of appellant-Americargo, Inc., David Polk provided accounting services for appellee-Palasics. He prepared financial statements for early 1989 and he was surprised that the revenues "were not anywhere near what the contract had stipulated and that the operating expenses, expenses to run the company, were far in excess of what was in the contract." As a result of his analysis, David Polk became very suspicious. In early March, 1989, a meeting was arranged with appellee- Palasics, David Polk, and appellant-Kerr and other employees. Appellant-Kerr simply told David Polk that his figures were wrong. In subsequent meetings, appellant-Kerr told David Polk that his figures were not accurate. David Polk testified that he learned from Leroy Volkmer, appellant-Kerr's accountant, that the financial statements attached to the purchase and sale agreement were not prepared by him. After learning this, David Polk and appellee-Palasics confronted appellant-Kerr and demanded copies of his tax returns. He responded that they were not available and that he wanted his money from appellee-Palasics immediately. Apparently, this was a heated confrontation with appellant-Kerr. The last witness to testify on behalf of appellees was appellant-Kerr's accountant, Leroy Volkmer. Leroy Volkmer testified that he was unable to prepare tax returns for the fiscal year ending September 30, 1988, because he did not have sufficient information regarding appellant-Americargo, Inc. -16- Leroy Volkmer had difficulty obtaining information from appellant-Kerr. Leroy Volkmer further testified that he did not prepare the three financial statements that were attached to the purchase and sale agreement. Leroy Volkmer then explicitly stated that it would be impossible for appellant-Americargo, Inc. to operate on $100,000 a month for operating expenses, give or take $20,000. At the close of all of appellees' evidence, appellants moved for a directed verdict. The trial court immediately denied appellants' motion for a directed verdict. The first witness appellants called to testify was Leroy Volkmer. Leroy Volkmer testified that he did ultimately prepare a financial statement for fiscal year ending September 30, 1988. This statement was prepared on February 6, 1989, which was after the sale of appellant-Americargo, Inc. Leroy Volkmer further testified that he did prepare a document that represented appellant-Americargo, Inc.'s monthly expenses for the period of January 1, 1988 through December 31, 1988, based on the categories set forth in the purchase and sale agreement. He arrived at a figure of $123,816 for monthly expenses. However, the figure did not contain expenses associated with interlines or brokers, since they were not categories contained in the agreement. The next witness to testify for appellants was new-party defendant Joyce Lynde, President of new-party defendant Star Diesel Truck Center, Inc. Joyce Lynde testified that her company -17- routinely serviced trucks from appellant-Americargo, Inc. Prior to the sale of appellant-Americargo, Inc., employees from Star Diesel Truck Center, Inc., would pick up the vehicles on their own, service the vehicles, and then return them to appellant- Americargo, Inc.'s premises. After the sale, it was more difficult to service the vehicles because any work had to be authorized by appellee-Palasics. Joyce Lynde said that appellee-Palasics made it more difficult for her company to service the vehicles. He terminated certain services offered by Star Diesel Truck Center, Inc. and told Joyce Lynde that any work that was supposed to be performed had to be approved by him. According to Joyce Lynde, she and appellee-Palasics were moving further and further apart by March, 1989. By April, 1989, Star Diesel Truck Center, Inc. began holding vehicles from Americargo because appellee-Palasics owed it about $30,000. Joyce Lynde stated that appellant-Kerr did not instruct her to take five vehicles from Americargo's premises. Joyce Lynde also testified that she helped appellant-Kerr prepare the nine month financial statement ending on June 30, 1988, which was attached to the purchase and sale agreement. She claimed that she was involved in this because Star Diesel Truck Center, Inc. was in financial trouble and it was seeking help from appellant-Americargo, Inc. Although appellee-Palasics was not aware of it, Joyce Lynde included $330,000 of Mahoning Valley Cartage's revenues in appellant-Americargo, Inc.'s -18- revenues. Joyce Lynde also admitted that she added $100,000 in revenues to the financial statement of the fiscal year ending September 30, 1987. On July 28, 1989, the trial court issued its journal entry in which it found that there was a misrepresentation of material fact in the terms of the contract by appellants-Kerr and Ameri- cargo, Inc. The trial court further found that appellants knew that appellees would rely on their representations and that appellees did reasonably rely upon that material misrepresenta- tion in entering the contract. The trial court ordered the purchase and sale agreement to be rescinded, so as to put each party in the position that he was prior to entering the agreement. Thus, appellees were entitled to the return of the $100,000 down payment and appellant- Americargo, Inc. was entitled to the return of its assets./2\ The trial court proceeded to set forth a plan in which appellees would be paid their $100,000 and the receiver would be compensated for his fees. On August 3, 1989, appellees filed a motion to modify the trial court's judgment pursuant to Civ. R. 59(A). Appellees sought to modify the July 28, 1989, in order to clarify certain findings and remedies provided by the trial court. Appellees also requested the trial court to schedule supplemental hearings /2\ The trial court found that appellant-Kerr's conduct took him outside the protection of the corporate entity, thus he was personally liable for the $100,00 due to appellees. -19- regarding the issue of punitive damages and attorneys' fees. Appellees claimed that the trial court bifurcated those issues for a later hearing if fraud was found against appellants. On January 17, 1990, the trial court conducted a hearing on appellees' motion to modify the judgment. At the hearing, appel- lees argued that in order to put them in the same position as prior to the sale agreement, they were entitled to more compensa- tion than the $100,000 down payment. Appellees claimed that they suffered lost profits, incurred additional debts, and made payments to appellant-Kerr for the purchase of appellant- Americargo, Inc. Thus, appellees sought an additional $382,619.86 for compensatory damages, and appellees also requested an award of punitive damages as a result of appellant- Kerr's fraudulent conduct. On January 26, 1990, the trial court issued its order modi- fying the July 28, 1989 judgment. The trial court ordered that the accounts receivable of appellee-Americargo Corp. would become the property of appellant-Americargo, Inc., and that appellants- Kerr and Americargo, Inc. would be responsible for the full payment of all accounts payable of appellee-Americargo Corp. The trial court also provided the receiver with more duties, including the authority to release to appellees all their trucks being held at either the premises of appellant-Americargo, Inc. or Star Diesel Truck Center, Inc. The trial court further decreed that the receiver would be discharged from his responsibilities upon full payment of the $100,000 to appellees -20- and the payment by appellants of all payables to appellee- Americargo, Corp. Finally, the trial court ordered punitive damages in the amount of $100,000 to be paid to appellees by appellant-Kerr personally. Appellants filed a timely notice of appeal and subsequently raised the following assignments of error: I. THE TRIAL COURT ERRED IN ITS DENIAL OF DEFENDANTS' MOTION MADE PURSUANT TO OHIO RULES OF CIVIL PROCEDURE 50(A), FOR DIRECTED VERDICT, WHEN THE PLAINTIFF FAILED TO ADDUCE ANY EVIDENCE SUFFICIENT TO ESTABLISH THE ESSENTIAL ELEMENTS OF FRAUD, UPON WHICH HIS ENTIRE CASE WAS PREMISED. II. THE TRIAL COURT ERRED BY ENTERING JUDGMENT FOR THE PLAINTIFFS/APPELLEES DUE TO PLAINTIFFS/APPELLEES FAILURE TO PROVE THEIR CASE BY CLEAR AND CONVINCING EVIDENCE AND THAT THE JUDGMENT THEREFORE IS CONTRARY TO LAW. III. THE TRIAL COURT ERRED IN MODIFYING ITS JULY 26, 1989 JUDGMENT TO AWARD PUNITIVE DAMAGES AND TO HOLD DEFENDANT/APPELLANT KERR PER- SONALLY LIABLE FOR DEBTS OF AMERICARGO, INC. BECAUSE PLAINTIFFS/APPELLEES ACCEPTED THE BENEFIT OF THE TRIAL COURT'S JULY 26, 1989 JUDGMENT OF RESCISSION, WHICH CAUSED DETRI- MENT TO THE DEFENDANTS/APPELLANTS, AND DEFENDANTS/APPELLANTS PURSUED THEIR RESCIS- SION CAUSE OF ACTION TO JUDGMENT AND THERE- FORE ELECTED THE REMEDIAL RIGHT OF RESCISSION AND ARE THEREFORE PRECLUDED FROM ANY OTHER REMEDY WHICH IS INCONSISTENT WITH RESCISSION. In their first assignment of error, appellants contend that the trial court erred in denying their motion for directed verdict made at the close of appellees' evidence. -21- In a trial to the court without a jury, a motion for directed verdict is totally irrelevant and inapposite. Janell, Inc. v. Woods (1980), 70 Ohio App. 2d 216. A motion for judgment at the close of the plaintiff's case in a non-jury civil action is one for dismissal under Civ. R. 41(B)(2), not a motion for a directed verdict under Civ. R. 50. Id. Thus, in the instant case, we will review the trial court's denial of appellants' motion for directed verdict as though the motion had been one to dismiss under Civ. R. 41(B)(2). Cf. Stone v. McCullion (1985), 27 Ohio App. 3d 112. The test for a motion to dismiss in a bench trial is whether the trial court's ruling is erroneous as a matter of law or against the manifest weight of the evidence. Janell, supra. The trial court is the trier of facts and is entitled to weigh the evidence then before it. Id. An appeals court will not reverse a trial court's judgment as being contrary to the manifest weight of the evidence if the judgment is supported by competent, credible evidence going to all the essential elements of the case. Seasons Coal Co. v. Cleveland (1984), 10 Ohio St. 3d 77. Appellants argue that appellees failed to prove the essential elements of fraud. In order to recover on their claim for fraud, appellees had the burden of proving a) a representation or, where there is a duty to disclose, concealment of fact; b) which is material to the transaction at hand; c) made falsely, with knowledge of its falsity, or with such utter disregard and recklessness as to whether it is true or false that -22- knowledge may be inferred; d) with the intent of misleading another into relying upon it; e) justifiable reliance upon the representation or concealment; and f) a resulting injury proximately caused by the reliance. Gaines v. Preterm-Cleveland, Inc. (1987), 33 Ohio St. 3d 54, 55. In the instant case, appellees adduced substantial evidence that appellant-Kerr knew that the financial figures he provided to appellee-Palasics and David Polk were not true and accurate. Appellant-Kerr intentionally misrepresented the financial statements that were attached to the purchase and sale agreement and continuously reassured appellee-Palasics that "the money is here." Appellant further told appellee-Palasics that he would have no difficulty making monthly payments of $30,000 toward the purchase of appellant-Americargo, Inc. The evidence presented in this case further demonstrated that appellee-Palasics was justified in relying on appellant- Kerr's representations when he entered into the purchase and sale agreement. As a result of such reliance, appellee-Palasics suffered injury in terms of loss of time and resources. We find that the trial court chose to believe appellees' witnesses and evidence that they entered the purchase and sale agreement in reliance on appellant-Kerr's repeated assurances. The weight of the evidence and the credibility of the witnesses were for the trier of facts. State v. DeHass (1967), 10 Ohio St. 2d 230. -23- We, therefore, determine that the trial court's refusal to dismiss appellees' case, at the close of their evidence, was not erroneous as a matter of law. We further conclude that the ruling was not against the manifest weight of the evidence, since there was some competent, credible evidence going to all the essential elements of fraud. Appellants' first assignment of error is not well taken and is overruled. In their second assignment of error, appellants argue that the trial court's judgment was against the manifest weight of the evidence. A review of the record in the instant case clearly reveals that the trial court did not believe the testimony of appellant- Kerr. In its judgment, the trial court specifically stated that there was a "lack of truthfulness in testifying at trial" on the part of appellant-Kerr. We find that the trial court chose to believe the testimonies and evidence presented by appellees as opposed to that presented by appellants. We further find that appellees provided competent, credible evidence going to all the essential elements of the case. Accordingly, we conclude that the trial court's judgment was not against the manifest weight of the evidence. Appellants' second assignment of error is without merit and is overruled. -24- Appellants contend in their third assignment of error that the trial court erred in modifying its July 28, 1989 judgment to award punitive damages. Appellants claim that appellees elected the remedial rights of rescission and, therefore, they abandoned any right to punitive damages. In the instant case, appellees sought both legal and equitable relief. We find that the trial court did not err in ruling upon appellees' claim for rescission of the purchase and sale agreement and also addressing appellees' request for punitive damages, due to appellants' fraudulent conduct. See, Sabatino v. Capello (Jan. 18, 1989), Cuyahoga App. No. 54943./3\ Appellants further argue that the trial court erred in ordering appellant-Kerr to pay punitive damages in the amount of $100,000. In a case of alleged fraud, in order to be awarded punitive damages, the plaintiff must show that the fraud was aggravated by the existence of malice or ill will, or inferable from intention- al, reckless, wanton, willful and gross acts. Leichtamer v. American Motors Corp. (1981), 67 Ohio St. 2d 456. The false representations must be egregious to justify punitive damages. Logsdon v. Graham Ford Co. (1978), 54 Ohio St. 2d 336. /3\ In civil cases where both equitable relief and monetary damages are sought, the standard of proof in establishing fraudulent conduct is by the higher standard of clear and convincing evidence. See Gregorio v. Saedi (Dec. 31, 1986), Lucas App. No. L-86-035, unreported. -25- In this case, we find the trial court was presented with evidence that appellant-Kerr's conduct was so gross and egregious as to warrant an award of punitive damages. Appellant-Kerr purposely concealed relevant financial information from appellee- Palasics and further misrepresented the financial statements that were attached to the purchase and sale agrement. We conclude that such a misrepresentation on the part of appellant-Kerr, accompanied with sufficient evidence of bad faith and ill will, justified the granting of an award of punitive damages. We further find that the trial court did not err in holding appellant-Kerr personally liable for punitive damages, since it has long been recognized in Ohio that where fraudulent conduct occurs, the trial court will look through the corporate structure. Kalfas v. Board of Liquor Control (1963), 4 Ohio App. 2d 108. Clearly, appellant-Kerr conducted all transactions with appellee-Palasics and executed the purchase and sale agreement. Thus, we conclude that the trial court properly held appellant- Palasics to be personally liable to appellees for punitive damages. Appellants' third assignment of error is not well taken and is overruled. Trial court judgment is affirmed. -26- It is ordered that appellees recover of appellant their costs herein taxed. The court finds there were reasonable grounds for this appeal. It is ordered that a special mandate issue out of this court directing the Common Pleas Court to carry this judgment into execution. A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure. ANN MCMANAMON, P.J., and PATTON, J., CONCUR LEO M. SPELLACY JUDGE N.B. This entry is made pursuant to the third sentence of Rule 22(D), Ohio Rules of Appellate Procedure. This is an announcement of decision (see Rule 26). Ten (10) days from the date hereof this document will be stamped to indicate journalization, at which time it will become the judgment and order of the court and time period for review will begin to run. .