COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 60283 HILLSIDE DAIRY, : : Plaintiff-Appellee : : JOURNAL ENTRY vs. : and : OPINION HAV-A-BAR, INC., ET AL., : : Defendants-Appellants : : : DATE OF ANNOUNCEMENT OF DECISION : MARCH 26, 1992 CHARACTER OF PROCEEDING : Civil appeal from : Common Pleas Court : Case No. 174,082 JUDGMENT : MODIFIED, AND AS : MODIFIED, AFFIRMED. DATE OF JOURNALIZATION : _______________________ APPEARANCES: For plaintiff-appellee: Donald K. Barclay 1525 Leader Building Cleveland, Ohio 44114 For defendants-appellants: Mary G. Balazs James A. Budzik JOHNSON, BALAZS AND ANGELO 3600 Terminal Tower Cleveland, Ohio 44113 -2- NAHRA, P.J.: Hav-A-Bar, Inc., Leslie Norman and Kirk Norman appeal from the trial court's judgment holding them liable in the amount of $50,914.74. For the reasons set forth below, we modify the judgment to apportion liability, and affirm the judgment as modified. Leslie and Kirk Norman are both officers of Hav-A-Bar, Inc. Hav-A-Bar, Inc., has been in business in Flint, Michigan since 1982 or 1983. In 1987, Hav-A-Bar, Inc. started buying ice cream from Hillside Dairy of Cleveland Heights, Ohio. In February, 1988, Hillside Dairy's Toledo distributor of milk products, Redok Enterprises, Inc. went out of business. James Cowan of Hillside Dairy approached the Normans about taking over the distributorship. Hillside ran the Toledo business for one week, and the Normans took over the business on March 7, 1988. They incorporated Hav-A-Bar Dairy Products, Inc. around March 18, 1988. Around April 1, 1988, Kirk Norman met with Bud Abell of Hillside Dairy to tell him the Normans wanted out of the Toledo business. According to Leslie Norman, Abell told them to continue. Leslie and Kirk Norman then signed a promissory note as security for products shipped by Hillside. The note was in the amount of $30,000.00. It stated that it had been taken out by Hav-A-Bar, Inc. (the original Flint corporation). It also stated that Kirk and Leslie Norman personally guaranteed the note. -3- The Normans terminated the Toledo distributorship in May, 1988. They failed to pay Hillside Dairy for $14,149.40 worth of ice cream products shipped to Flint and $36,765.34 worth of milk products shipped to Toledo. Hillside Dairy filed a complaint against Hav-A-Bar, Inc., and Leslie and Kirk Norman. The complaint sought the $50,914.74 due on the ice cream and milk products accounts, and sought to collect on the promissory note. Defendants filed a counterclaim against plaintiffs and joined Flavorful Foods, Inc. as third-party defendant. Flavorful was the entity which ran the Toledo distributorship for one week between Redok and the Normans. Defendants' counterclaim stated that the Normans were fraudulently induced by Hillside to enter into the Toledo distributorship. The case was tried to the court. The court entered judgment in favor of the plaintiffs in the amount of $50,914.74. The court found against defendants on their counterclaim and their third-party claim. Defendants brought this timely appeal. I. Appellants' first assignment of error reads as follows: THE TRIAL COURT ERRED TO THE PREJUDICE OF DEFENDANTS WHEN IT HELD LESLIE NORMAN AND KIRK NORMAN INDIVIDUALLY LIABLE FOR CORPORATE DEBT OF HAV-A-BAR DAIRY PRODUCTS INC., IN ABSENCE OF SUFFICIENT EVIDENTIARY ALLEGATIONS IN THE COMPLAINT AND THE SUBMISSION OF EVIDENCE IN THE TRIAL COURT OF EITHER FRAUD, ILLEGALITY OR OTHER FACTORS THAT WOULD JUSTIFY THE TRIAL COURT'S DECISION TO DISREGARD THE CORPORATE ENTITY. -4- The Normans have erroneously concluded that the trial court pierced Hav-A-Bar, Inc.'s corporate veil. However, Hillside Dairy's complaint did not attempt to pierce the corporate veil. The complaint consisted of an action on Hav-A-Bar, Inc.'s outstanding accounts for both the Flint and Toledo operations. The complaint also sought to recover on Hav-A-Bar, Inc.'s promissory note, which secured those accounts, and which included the Normans' personal guarantee. In an action on an account, when the defendant denies liability, the plaintiff has the burden of proving by a preponderance of the evidence that a contract was formed and that the defendant breached it. See, e.g., AMF, Inc. v. Mravec (1981), 2 Ohio App. 3d 29. In this case, the evidence is uncontroverted that a contract had been formed between Hav-A-Bar, Inc., by its officers Leslie and Kirk Norman, and Hillside Dairy, for the provision of ice cream products to Flint, Michigan. There was also substantial evidence from which the court could reasonably conclude that Hav- A-Bar, Inc. also contracted with Hillside Dairy for the provision of dairy products to the new Toledo distributorship, and that Hav-A-Bar, Inc. breached the contracts by failing to pay for the products. The Normans claim that a separate corporation, Hav-A-Bar Dairy Products, Inc., was solely responsible for the products shipped to Toledo. Therefore, they argue, Hav-A-Bar, Inc. and -5- the Normans should not be held liable for the $36,765.34 worth of dairy products shipped to Toledo. The evidence at trial did not support the Normans' claim that a separate entity, not Hav-A-Bar, Inc., contracted with Hillside for the provision of dairy products to Toledo. Hillside contacted Hav-A-Bar's principals with the Toledo offer. The Toledo operation was up and running before a new corporation was formed. James Cowan of Hillside Dairy testified that he was unaware that the separate corporation ever existed. Furthermore, Hillside obtained security in the form of a promissory note from Hav-A-Bar, Inc., not from the new corporation, when the new business had problems. Accordingly, the trial court did not err in awarding Hillside Dairy the $50,914.74 owed by Hav-A-Bar, Inc. Appellants' first assignment of error is overruled. We note that the trial court's judgment awarded Hillside Dairy $50,914.74 without apportioning liability between the corporate and individual defendants. The only basis for the Normans' individual liability is their personal guarantee of Hav- A-Bar, Inc.'s $30,000.00 promissory note. We hereby revise the trial court's judgment to apportion liability as follows: of the $50,914.74 awarded to plaintiffs, all of the defendants are jointly and severally liable for $30,000.00 of that total, pursuant to the promissory note, and Hav-A-Bar, Inc. is liable for the $20,914.74 balance as well. -6- II. Appellants' second assignment of error reads as follows: THE TRIAL COURT ERRED TO THE PREJUDICE OF DEFENDANTS IN DISMISSING THEIR COUNTERCLAIM. In their counterclaim, the defendants asserted that James Cowan of Hillside Dairy fraudulently induced them to take over the Toledo distributorship. They claimed that Cowan represented that the business was sound financially; that it was a great opportunity; that it would be a "no risk" 30 day venture; and that they could make $50,000.00 - $100,000.00 annually on the business. They also claimed that Cowan did not tell them about the prior distributor's huge debt to Hillside and its labor problems. They admitted that Cowan told them the business had been badly managed. Cowan testified that he made no misrepresentations to the Normans. He stated, and the exhibits confirmed, that he was unaware of labor problems until after he approached the Normans about the Toledo business, and that he notified them when he received the information. He also testified that he probably told the Normans about the prior distributor's debt. He explained that by "no risk", he meant that the Normans were not required to make any advance payment to Hillside for the distributorship, but stated that he never told them that they would not be responsible to pay for milk products sent to Toledo. To succeed on a claim for fraud, the following elements must be proven: (a) a representation, or, where there is a duty to disclose, concealment of a fact, -7- (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 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. Burr v. Bd. of Cty. Commrs. of Stark Cty. (1986), 23 Ohio St. 3d 69, paragraph two of the syllabus; see also Wing v. Anchor Media of Texas (1991), 59 Ohio St. 3d 108. The credibility of witnesses and evidence must be determined by the trier of fact. Seasons Coal Co. v. Cleveland (1984), 10 Ohio St. 3d 77. In this case, the trier of fact could have reasonably believed Cowan and concluded that no misrepresentations were made to defendants. Appellants' second assignment of error is overruled. III. Appellants' third assignment of error reads as follows: THE TRIAL COURT'S DECISION WAS AGAINST THE MANIFEST WEIGHT OF THE EVIDENCE. The trial court's judgment carries a presumption of correctness, and will not be reversed as against the manifest weight of the evidence, where the decision is supported by competent and credible evidence. Seasons Coal Co. v. Cleveland, -8- see supra, at 80-81. In this case, there was substantial probative evidence that Hav-A-Bar, Inc. and the Normans formed a contract for delivery of products with Hillside, and were liable to pay the account balances, see subsection I, supra. Competent, credible evidence also indicated that the Normans were not fraudulently induced to enter the Toledo distributorship, see subsection II, supra. Appellants' third assignment of error is overruled. Judgment affirmed as modified, regarding the apportionment of liability. -9- It is ordered that appellee recover of appellants its 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. BLACKMON, J., and HARPER, J., CONCUR. JOSEPH J. NAHRA PRESIDING 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. .