COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 66380 DANIEL J. RYAN, ET AL. : : : JOURNAL ENTRY Plaintiffs-Appellees : : and -vs- : : OPINION TERRA VISTA ESTATES, INC. : : : Defendant-Appellant : : DATE OF ANNOUNCEMENT MARCH 30, 1995 OF DECISION: CHARACTER OF PROCEEDING: Civil appeal from Common Pleas Court Case No. 247941 JUDGMENT: Affirmed in part, Reversed in part and Remanded. DATE OF JOURNALIZATION: __________________________ APPEARANCES: FOR PLAINTIFFS-APPELLEES: FOR DEFENDANT-APPELLANT: DANIEL J. RYAN, Pro Se WILLIAM F. STEINER, ESQ. MICHAEL J. FLAMENT, ESQ, 75 Public Square 2000 Standard Building Suite 1400 1370 Ontario Street Cleveland, Ohio 44113-2001 Cleveland, Ohio 44113 - 2 - PATRICIA ANN BLACKMON, J.: This appeal is from a decision of the trial court awarding attorney fees to Daniel Ryan, plaintiff-appellee, for legal services rendered on behalf of Terra Vista Estates, defendant- appellant. Terra Vista assigns the following four errors for our review: I. THE TRIAL COURT ERRED IN DETERMINING THAT PLAINTIFF HAD A CONTINGENCY FEE CONTRACT OF 40%. II. THE TRIAL COURT ERRED IN DETERMINING THE VALUE OF THE WALTON HILLS ASSET WAS $507,439.55 INSTEAD OF AMOUNT RECEIVED OF $207,000.00. III. THE COURT ERRED IN DETERMINING THAT THE FEDERAL COURT FUNDS OF $34,013.18 DATED APRIL 15, 1993 WAS NOT RECEIVED BY PLAINTIFF. IV. THE COURT ERRED IN DETERMINING THAT PLAINTIFF ONLY RECEIVED $11,000.00 OF THE FEDERAL COURT FUNDS OF $44,000.00 DATED JUNE 24, 1989 AND ERRED IN FAILING TO SHOW ANY RECEIPT OF THE RETAINER OF $4,000.00. After reviewing the record and the arguments of the parties, we affirm the trial court's determination that the parties had a 40% contingency fee contract and its findings with respect to the distribution of the federal court funds. However, we reverse the portion of the trial court's decision that assigns a value of $507,439.55 to the judgment obtained by Ryan on behalf of Terra Vista. Because we are unable to determine how the trial court computed the value of the judgment, we remand this case to the trial court for the limited purpose of redetermining the amount of the judgment. The apposite facts follow. - 3 - Adrian DeFranco is the majority shareholder and Vice-President of Terra Vista Estates, Inc. During the 1980s, Terra Vista was approached by a representative of the Cuyahoga Valley National Park who expressed an intent to purchase land owned by Terra Vista in Valley View, Ohio. Anticipating the sale, Terra Vista borrowed nearly $500,000 from its accountant, Thomas Moriarty, in order to maintain the land. Several warranty deeds were issued in favor of Moriarty as security for the loans. In 1984, Moriarty sold the land to the National Park Service for $800,000. In December 1985, DeFranco hired Ryan to represent Terra Vista Estates in proposed litigation against Moriarty in Federal court. Terra Vista wanted a temporary restraining order on the distribution of the $800,000. The Federal complaint was filed 1 on November 27, 1985. (Pl. Exh 159). In that action, Terra Vista and DeFranco sought to recover from the National Park Service, Moriarty, and escrow agent First Akron Corporation for certain personal property and buildings located on the Valley View land. Ryan and DeFranco began discussions about possible future litigation against Moriarty and Valley View Estates in connection with the land. In a January 24, 1986 letter, Ryan outlined his fee arrangement with DeFranco. The letter provided in pertinent part: [I]t is our understanding that I am to receive Four Thousand Dollars ($4,000.00) to cover the expenses and the attorney fee in handling the Federal matter. At the resolution of the 1 Hereinafter referred to as the Federal litigation. - 4 - Federal matter against the Park Board and Mr. Moriarty, I am to receive forty percent of any funds received on the action that is in excess of the Four Thousand Dollars ($4,000.00) that has already been paid by you and which is to be deducted from the attorney fee that is to be paid on the percentage basis. On February 20, 1986, Ryan sent DeFranco a letter changing the fee agreement. The letter provided: To insure an understanding as to the fees to be charged in handling the [Moriarty] matters, it is our understanding that I am to receive Four Thousand Dollars ($4000.00) to cover the expenses and the attorney fee in handling the Federal matter. At the resolution of the Federal matter against the Park Board and Mr. Moriarty, I am to receive thirty percent of any funds received on the action that is in excess of the Four Thousand Dollars ($4000.00) that has already been paid by you and which is to be deducted from the attorney fee that is to be paid on the percentage basis. At trial, Ryan testified that the agreement was changed because of DeFranco's unwillingness to pay a 40% contingency and his representations to Ryan that no extensive work would be required to collect the money claimed by Terra Vista. A complaint was filed against Moriarty on September 2, 1986 in 2 case no. 115658. During the discovery process, Ryan became aware that the action against Moriarty was somewhat more complicated than he had been lead to believe. In December 5, 1986, Ryan sent DeFranco a letter informing him that he would continue his involvement with the Moriarty litigation under the original 40% 2 Hereinafter referred to as the Moriarty litigation. Although the date is unclear, Ryan also filed a complaint on behalf of Terra Vista against the village of Valley View (hereinafter referred to as the Valley View litigation). - 5 - contingency agreement. Ryan attached a draft "Attorney Agreement" which provided for Ryan to receive 40% of any judgment obtained in the cases and 30% in the event of a settlement. Although the record does not contain a signed copy of the December 1986 "Attorney Agreement," DeFranco admitted at trial that he signed the agreement and returned it to Ryan. (Tr. 449). On June 15, 1988, a judgment was reached against Moriarty in Case No. 115658. The trial court awarded Terra Vista $400,560. In July 1988, Ryan told DeFranco that Moriarty had absconded and that the judgment was not collectable. Because DeFranco had not paid Ryan's attorney's fees, Ryan refused to represent DeFranco in collection efforts unless DeFranco agreed to pay Ryan an hourly rate for his collection efforts. DeFranco agreed. On July 25, 1988, Ryan and DeFranco executed a written "Attorney Agreement" which provided that Ryan was to receive 30% of any judgment or settlement reached in the Moriarty litigation and the Valley View litigation. In June 1989, the Federal Court ordered the distribution of $100,000, which had been placed in escrow with First Akron Corp and later deposited with the Federal Court. The order specified that $10,000 was to be paid to Thomas Moriarty. In addition, $44,000 would be applied to the judgment against Moriarty in case no. 115658. The remaining balance (approximately $46,000) was to be held on deposit with the federal court. In May 1991, a judgment was rendered in the Valley View litigation. The trial court awarded Terra Vista $95,000. On May - 6 - 8, 1991, the Village of Valley View issued a check for $114,000.00 payable to "Daniel J. Ryan Attorney for/and Terra Vista Estates, Inc." Ryan also received a payment of $5280 from KST Oil, one of Moriarty's holdings. Unhappy with the distribution of the $44,000, DeFranco initially refused to sign the settlement check. He eventually signed the check and received $61,486.16. Ryan received $34,200.00. On February 25, 1992, Ryan sent DeFranco a letter which provided: This is to inform you that since you never paid the two thousand dollars ($2000.00) which you promised to me when we changed the original contract, I am enforcing the orignal (sic) agreement. That means that I shall take forty percent (40%) of any money obtained in judgment or gained in any other manner ***. All expenses will come out of your portion. On March 3, 1992, DeFranco replied, denying that he owed Ryan $2000 and rejecting Ryan's attempt to reinstate the original 40% contingency agreement. DeFranco enclosed a copy of Ryan's 1/24/86 contract with a handwritten notation by Ryan indicating that he had received $4000 for services rendered. DeFranco claimed the notation was made at a February 17, 1986 meeting between Ryan and DeFranco. Daniel Ryan, along with his associate, Michael Flament, filed this action in order to recover their attorney fees. In their February 23, 1993 complaint, Ryan and Flament sought to recover $236,408 under the contingency fee agreement entered into by the parties. As evidence of the agreement, Ryan and Flament attached - 7 - to the complaint copies of two letters sent by Ryan to DeFranco -- the January 24, 1986 letter and the February 25, 1992 letter. In its answer to the complaint, Terra Vista acknowledged that some fees were owed to Ryan and Flament but took exception to the amount sought by the complaint. Terra Vista attached a copy of a February 20, 1986 letter to DeFranco from Ryan which outlined the parties' agreement with respect to prospective litigation against Moriarty. The letter provided: To insure an understanding as to the fees to be charged in handling the matters, it is our understanding that I am to receive Four Thousand Dollars ($4,000.00) to cover the expenses and the attorney fee in handling the Federal matter. At the resolution of the Federal matter against the Park Board and Mr. Moriarty, I am to receive thirty percent of any funds received on the action that is in excess of the Four Thousand Dollars ($4,000.00) that has already been paid by you and which is to be deducted from the attorney fees that is to be paid on the percentage basis. I understand that there is presently being held by the Bank, One Hundred Thousand Dollars ($100,000.00) which is not to be used in any way to determine a contingency fee. Shortly before trial, on March 22, 1993, the federal court ordered the release of the remaining money held on deposit in the federal litigation. Pursuant to the court's order, after the deduction of a registry fee, the remaining funds were distributed to the clerk of courts to be applied to the judgment in Case No. 115658. A check in the amount of $34,013.18 was sent to Ryan. Ryan also received a payment of 3,436,52 from KST Oil on April 14, 1993. Property belonging to Moriarty was seized and placed for sale - 8 - at a Sheriff's auction. The property, located in Walton Hills, Ohio was appraised at $400,000. At the Sheriff's sale, Terra Vista bought the property for $217,000, the minimum bid required by law. After the trial, the trial court ruled in favor of Ryan, ordering Terra Vista to pay $233,321.74 plus 10% interest. This appeal followed. The first issue for our review is whether the trial court erred in finding that Ryan had a contingency fee of 40%. The trial court made the following finding with respect to the contingency fee: Based on all of the evidence adduced at trial, the Court finds that there was an agreement between Daniel J. Ryan and Terra Vista Estates, Inc. that Daniel J. Ryan is to receive forty percent of any money or assets which are obtained in the prosecution of all matters on behalf of Terra Vista Estates, Inc. When reviewing a finding of fact made by the trial court, an appellate court must determine if the factual conclusion is supported by competent, credible evidence. See Myers v. Garson (1993), 67 Ohio St.3d 610. In this case, the January 24, 1986 letter from Ryan to DeFranco evidenced a contingency fee of 40%. A handwritten notation on February 17, 1986 and a letter of February 20, 1986 evidence a change in the amount of the contingency to 30%. On December 5, 1986, Ryan sent DeFranco a letter agreement seeking to reinstate the 40% contingency. The letter agreement was not signed by DeFranco, but Ryan continued to represent DeFranco and the record is devoid of any evidence that DeFranco objected to the change in the contingency amount. - 9 - A judgment was issued in the Moriarty case on June 15, 1988. At the time the judgment was issued, the parties were under a 40% contingency agreement, which was not altered. On July 25, 1988, the parties executed a written agreement changing the contingency amount to 30%. This written agreement, signed by both parties, applied to both the Valley View litigation and the uncollected Moriarty judgment. The amount of fees claimed by Ryan out of the Valley View judgment reflects a 30% fee for that litigation. Ryan claimed that the change in the Moriarty agreement was communicated to DeFranco in December 1986. According to Ryan, he increased the contingency to 40% after learning the proposed litigation against Moriarty would be more difficult than he was led to believe. However, the July 25, 1988 agreement between the parties specifically referred to both the Valley View litigation and the Moriarty litigation. Ryan admits that he reduced the contingency in exchange for DeFranco's agreement to pay collection costs based on an hourly rate but claims that DeFranco knew he would be charged 40% on any future recovery on the Moriarty judgment. RYAN: At that point hopefully we will work out the best in the future. At this point he was told, I'm charging forty percent. When we resolved these things, I am going to charge you forty percent, because you're not paying your bills. (Tr. 80-81). We find the trial court's finding of a 40% contingency was supported by competent, credible evidence in the record. The - 10 - record indicates repeated negotiations between the parties about the contingency fee. Although the 40% contingency claimed by Ryan is in conflict with the terms of the parties, written contract of July 25, 1988, the existence of such conflict is not determinative in this case. The terms of a written contract may be modified by the subsequent acts and agreements of the parties. Software Clearing House, Inc. v. Intrak, Inc. (1990) 66 Ohio App.3d 163. In this case, Ryan presented evidence that he had informed DeFranco of his intention to enforce the original 40% contingency agreement as early as July 1988. Ryan continued his representation of DeFranco for several years thereafter. Although conflicting testimony exists in the record, we recognize the trial court, as factfinder, has the primary responsibility for resolving the conflicts in the evidence. Having found that the trial court's decision was supported by some competent, credible evidence, we find no error in the trial court's determination that the agreement between the parties was for a 40% contingency. Terra Vista's first assignment of error is without merit. In its second assignment of error, Terra Vista argues the trial court erred in its valuation of the Walton Hills property at $507,439.55. DeFranco argues that, since Terra Vista bought the property at a sheriff's sale for $267,000, the property should have been valued at $267,000. We disagree. In its journal entry of September 30, 1993, the trial court specifically stated that $507,439.55 was not the value of the Walton Hills property but was the value of the judgment - 11 - against Moriarty. However, the trial court did not specify how it arrived at the $507,439.55 figure. Because we are unable to conclusively determine how the trial court arrived at this figure, we remand this case to the trial court for further findings of fact relevant to its determination. In its third assignment of error, Terra Vista claims the trial court erred in finding that Ryan had not received a check for $34,013.18 in Federal court funds dated April 15, 1993. At trial, Ryan acknowledged receipt of the check. STEINER: Do you have in your possession a check for about thirty-three dollars (sic)? RYAN: There is an amount of money for thirty-four thousand dollars that presently has to be applied to the business. Yes, there is an amount of thirty-four thousand dollars that has to be applied to the bills. STEINER: That's in your possession? RYAN: Yes. STEINER: Is that payable to you and/or Terra Vista? RYAN: No. STEINER: Paying to whom? RYAN: Me. (Tr. 342-343). The trial court's journal entry in the case sub judice, correctly listed the $34,013.18 as having been collected by Ryan. However, there is no evidence that the check had been negotiated by Ryan or that any of its proceeds had been applied to Ryan's - 12 - attorney fees. Under the circumstances, the trial court did not err in its itemization of the April 15, 1993 Federal court fund check. Terra Vista's third assignment of error is overruled. Terra Vista next argues the trial court erred in failing to show that Ryan received a retainer of $4,000. The evidence presented at trial indicates that the $4000 retainer was paid. Ryan testified that DeFranco paid him $2000 in later 1985. He acknowledged receiving the other $2000 in his 7/13/92 letter to Mary Cibella of the Cleveland Bar Association. Ryan wrote: Finally, in late January of 1986, Mr. DeFranco returned to my office pursuant to my request made on several occasions. I indicated to Mr. DeFranco that he must pay the additional two thousand dollars or I was going to itemize my hours and withdraw from the action. Mr. DeFranco gave me a check at that time. The evidence indicates that Ryan was paid $4000 as a retainer. However, although the initial January 24, 1986 agreement provides for deduction of the retainer amount for the attorney fee, the "Attorney Agreement" signed by the parties on July 25, 1988 does not include such a provision. The trial court's failure to deduct the $4000 retainer was not erroneous. Finally, Terra Vista argues that the trial court erred in finding that Ryan had received only $11,000 of the $44,000 in Federal Court Funds collected in June 1989. The evidence at trial indicated that Ryan received a check for $44,000 from the Federal court fund. He testified that the money was distributed in the following manner: - $11,000 to Tom Gill (for services previously rendered to - 13 - Terra Vista) - $11,000 to DeFranco - $11,000 to DeSwing Corp. (a corporation controlled by DeFranco) - $5,500 to Ryan - $5,500 to Flament In its journal entry, the trial correctly credited Ryan with receipt of the $5,500 which went to him and the $5,500 which went to his co-counsel, Flament. Both parties agree that DeFranco received $22,000 ($11,000 individually and $11,000 through DeSwing Corp.) The parties disagree about whether the $11,000 amount allegedly forwarded to Tom Gill should be deemed received by Ryan. Ryan claims that the $11,000 was forwarded to Gill with DeFranco's authorization. DeFranco denies authorizing such payment and denies that Gill had any claim against him for attorney fees. Faced with different assertions, the trial court opted to believe Ryan. Recognizing that decisions about credibility are primarily up to the factfinder, and finding that Ryan's explanation could reasonably be believed by the trial court, we defer to the judgment of the trial court and overrule Terra Vista's fourth assignment of error. Because we are unable to determine how the trial court determined the $507,439.55, we reverse that part of its decision and remand this case to the trial court for additional findings of fact. Judgment affirmed in part, reversed and remanded in part. - 14 - This appeal is affirmed in part, reversed and remanded in part. It is ordered that Appellant and Appellee share the 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 Court of Common Pleas 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. SPELLACY, P.J., and NUGENT, J., CONCUR. PATRICIA ANN BLACKMON 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. .