COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 70920 TREMCO INCORPORATED : : Plaintiff-appellee : : JOURNAL ENTRY -vs- : AND : OPINION DALE R. KENT : : Defendant-appellant : : DATE OF ANNOUNCEMENT : OF DECISION : MAY 29, 1997 CHARACTER OF PROCEEDING : Civil appeal from Court of Common Pleas : Case No. 273825 JUDGMENT : Affirmed. DATE OF JOURNALIZATION : APPEARANCES: FOR PLAINTIFF-APPELLEE: FOR DEFENDANT-APPELLANT: Douglas A. DiPalma, Esq. Timothy M. Bittel, Esq. Mark N. Bonaguro, Esq. Joondeph & Shaffer The East Ohio Bldg. 50 South Main Street 14th Floor Suite 700 Cleveland, Ohio 44114 Akron, Ohio 44308-1881 -2- ROCCO, J.: Appellant appeals from the trial court's judgment entry and its Findings of Fact and Conclusions of Law, entering judgment for appellee following a bench trial in the court below. As the trial court's decision is supported by the record, we affirm. Appellee Tremco Incorporated (hereinafter Tremco) is an Ohio corporation whose principal place of business is in Beachwood, Ohio. Tremco manufactures and sells specialty chemical products, including roofing systems and roofing-related products which are sold through Tremco's roofing division. Kent's Background Appellant Dale R. Kent (hereinafter Kent or appellant) graduated from Ball State University in 1987 with a Bachelor of Science degree. After graduating, appellant went to work for St. John's Business Machines, selling copiers. He then left to work for Premier Industrial Corporation (hereinafter Premier). At Premier, he had a three-week sales class where he learned how to demonstrate its products: advanced alloys for maintenance welding, brazing, and soldering. Kent later became a sales trainer and then a district manager for Premier, where his duties included hiring and training sales representatives. He then left to work for Advanced Building Technologies as a regional manager in Illinois, where he again was involved in training. Kent had signed employment agreements with each of the three companies where he worked prior to becoming employed by Tremco. -3- An executive recruiter set up an interview for Kent with Dick Farnsworth (hereinafter Farnsworth) of Tremco in March 1991. Farnsworth told him a sales position at Tremco would include ten to twelve months of training that was "the best in the industry" and also, "all kinds of support". Kent then met with Mike Morrison (hereinafter Morrison), who was to become Kent's trainer if he accepted a position with Tremco. Morrison told him the training was ten to fourteen months, consisting of three to four phases, some in Cleveland, some in the field. The Employment Agreement On May 14, 1991, Kent flew to Cleveland to meet with Anthony Jachnycky (hereinafter Jachnycky), then the director of Human Resources, to take some tests and fill out forms. During the day on May 14, 1991, Kent signed a Representative's Agreement (hereinafter the Agreement). He stated he was told the Agreement was a formality, and if he was offered the job, it would be out of the way. Kent did not recall anyone telling him he could retain counsel to look over the Agreement, or that any of its terms were negotiable. Paragraph 13 of the Agreement provides, in pertinent part: a. Employment under this Agreement may be terminated at any time, by either party, by giving at least 2 weeks advance notice in writing. b. In the event that: i) the Representative is terminated for a violation of the Company's Ethics policy or voluntarily leaves the Company's employment (at any time during the period beginning with the date of this Agreement and -4- ending three years following the date that the Representative has achieved Sales Representative Status with the Company); and, ii) the Representative engaged (directly or indirectly) in any Applicable business within three years following the date of termination of employment. the (sic) Representative agrees to reimburse forty-two thousand dollars ($42,000) to the Company within 15 days following the engagement in any Applicable business, said amount hereby agreed to by both parties as the reasonable cost to the Company of its investment in the training of the Representative. "Applicable Business" is defined as "any business being conducted by the Company at the date upon which the Representative's employment with the Company terminates or which the Company has conducted within the 24 month period preceding such termination date." David Gatian (hereinafter Gatian), the current director of Human Resources for Tremco, acknowledged that the Agreement is negotiable; although he could recall only two occasions where Paragraph 13 had been omitted. Further, he acknowledged that potential employees have the option of taking the Agreement with them to review and sign before returning it, or to have it reviewed by an attorney before they sign and return it. Kent's Experience with Tremco Kent eventually received a job offer from Tremco, in their roofing division, which he accepted. A letter from Jachnycky, dated May 21, 1991, confirmed the job offer, and stated that the training was ten to fourteen months, "based upon your progress and achievement of objectives." The majority of the training -5- would take place in Southeast Chicago, and the balance of the formal training would consist of three sessions: three weeks, two weeks and one week, respectively. The phases of training provided by Tremco included Phase A, Phase B, Phase C, Phase D and Phase E. After being hired by Tremco, Kent began his Phase A training, which could have ranged from zero to six or eight weeks. Kent said his Phase A was three days long. On the first day of Kent's Phase A training, Morrison introduced him to the contractor at one of Tremco's accounts and showed him around the facility. Kent reported that, after that, he was on his own. Phase B consisted of three weeks, beginning on June 3, 1991; Kent attended three weeks of classes in Cleveland, where he learned about the Tremco product. Phase C consisted of approximately 16 weeks in the field, and required that Kent open new accounts. During Phase C, the trainee was also supposed to have 15 or 16 "contact days" where Kent was to spend the day with his trainer, Morrison. Kent remembered having one full "contact day" and two partial days with Morrison. Kent reported he filled out cards reporting he had contact days when he did not so that he would not get fired. Kent then returned to class for two weeks as part of Phase D training. Kent was scheduled for a four month Phase E, which was to include four "contact days" per month for two months and then one per month thereafter, until he became a sales representative. Kent became a sales representative around April 1, 1992. He did not recall having any "contact days" with Morrison during Phase E. After Phase E was completed, Kent was scheduled for a further -6- week of formal training, and further informal training at regional meetings and sales conferences where new products would be explained. Kent acknowledged he was disappointed in the training program, but did not worry about it because he was beginning to sell successfully. Kent's income level more than tripled during his tenure at Tremco. Kent now alleges that Morrison was ineffective as a trainer, and that he had a drinking problem. Jerry Strother testified that one morning before Morrison was supposed to teach a class, he smelled alcohol on Morrison's breath, but he determined that Morrison was not impaired, and permitted him to teach. A co- worker of Kent's, Jeff Cacioppo, sent a written complaint that Morrison had a drinking problem and was treating him badly. However, when Gatian questioned Kent about the issue, Kent told him there was no problem. Kent maintains this was because Morrison was seated where he could observe the conversation. Kent made no complaints about Morrison during his tenure at Tremco. It was not until Kent's exit interview that he told anyone at Tremco that he had experienced any problems with Morrison. Kent testified that in January 1994, he asked Morrison about a possible management position in Wisconsin; he had told Morrison before he was hired that he planned to obtain such a position. After repeatedly asking Morrison about the opportunity, Morrison eventually told him he would get the management job in Wisconsin. Kent's wife, who had a residency at the University of Chicago, found a job in Milwaukee. Kent reported that Morrison later told -7- him he would have to be a sales representative in Wisconsin before he became a manager. Kent also began to hear rumors that Mike Oceka, another sales representative from Tremco, was working in his territory, contrary to the exclusive territory that he had been promised when he accepted the position. While these things were happening, Kent received a call from Bob Guss of the Garland Company who was interested in hiring Kent. Although Morrison had also offered Kent a job as a sales representative in Wisconsin, Kent insisted that he wanted to get away from Morrison, and accepted the offer from Garland on April 14, 1994. At Kent's exit interview, he maintained that he was leaving due to problems with Morrison. Morrison's testimony revealed a different version of the events leading up to Kent's departure from Tremco. He asserted that after Kent's wife accepted a job in Wisconsin, Kent asked if there was a position available for him there. According to Morrison, he and Kent had agreed that Kent would go to Wisconsin in May or June, and would replace the manager in Wisconsin, although Kent was aware that he would not become a manager immediately. He further stated that Kent knew Mike Oceka would be replacing him in his Chicago territory, and that Kent had planned to help with Oceka's transition. Finally, Morrison testified that Kent showed him the letter from Bob Guss in which he offered Kent a job with Garland. Morrison claimed that he matched Garland's offer. Kent thereafter told him that he would remain with Tremco. -8- However, Kent did accept the position with Garland, and resigned from Tremco. He subsequently received a letter from Tremco demanding $42,000, pursuant to Paragraph 13 of the Agreement Kent had signed. Although Kent claims that he was unaware of the provision until he received the letter from Tremco, Greig Moravec, an employee of Garland at the time Kent was hired, testified that he attended a meeting with Bob Guss and Kent before Kent accepted the position with Garland. At that meeting, Kent told them about Paragraph 13 of the Agreement, and told them "It wasn't a big deal. Let them come and get me." In Kent's negotiations with Garland, he obtained an agreement from Garland to indemnify him in the event Kent was found to owe damages to Tremco. The Current Action On July 18, 1994, Tremco filed an action seeking to recover the $42,000 from Kent. Kent filed an answer and counterclaim asserting Tremco breached their employment agreement by failing to pay him a final $2,500 check, that Tremco failed to pay him $2,200 owed in commissions earned on a project known as Graybar, and that Tremco failed to pay Kent a $1,000 bonus. Kent also asserted several affirmative defenses, in particular, arguing that the provision which Tremco seeks to enforce is invalid as it constitutes a penalty and not a valid liquidated damages provision. Kent filed a motion for summary judgment which the trial court denied. A bench trial commenced on April 3, 1996. After the trial was completed, the parties submitted proposed Findings of Fact and Conclusions of Law in compliance -9- with the judge's order. On June 19, 1996, the judge adopted Tremco's proposed Findings of Fact and Conclusions of Law, and entered judgment against Kent. The court also found that Kent was entitled to a set-off in the amount of $3,500 as alleged in counts I and III of Kent's counterclaim. The court dismissed count II of the counterclaim, finding that Kent had not sustained his burden of proof. Kent also requested prejudgment interest on the $3,500. Kent timely filed his appeal. ASSIGNMENTS OF ERROR Kent asserts seven assignments of error. Kent's first through fourth assignments of error are interrelated, and so, will be considered together. These assignments of error state: I. THE TRIAL COURT ERRED WHEN IT FAILED TO FIND THAT TREMCO INC.'S EMPLOYMENT CONTRACT - SPECIFICALLY PARAGRAPH 13 THEREOF - CONSTITUTED AN INVALID PENALTY II. THE TRIAL COURT ERRED WHEN IT FAILED TO FIND THAT TREMCO INC.'S EMPLOYMENT CONTRACT - SPECIFICALLY PARAGRAPH 13 THEREOF - WAS CONSISTENT WITH THE CONCLUSION THAT IT WAS THE INTENTION OF THE PARTIES THAT DAMAGES IN THE AMOUNT STATED SHOULD FOLLOW THE BREACH THEREOF III. THE TRIAL COURT ERRED WHEN IT FAILED TO FIND THAT THE DAMAGES RESULTING FROM THE BREACH OF TREMCO INC.'S EMPLOYMENT CONTRACT - SPECIFICALLY PARAGRAPH 13 THEREOF - WERE NOT UNCERTAIN AS TO AMOUNT AND WERE NOT DIFFICULT TO PROVE IV. THE TRIAL COURT ERRED WHEN IT FAILED TO FIND THAT TREMCO INC.'S EMPLOYMENT CONTRACT - SPECIFICALLY PARAGRAPH 13 THEREOF - TAKEN AS A WHOLE IS MANIFESTLY UNCONSCIONABLE, AND UNREASONABLE IN AMOUNT AS TO JUSTIFY THE CONCLUSION THAT IT DOES NOT EXPRESS THE TRUE INTENTION OF THE PARTIES -10- Kent admits that he left his employment with Tremco within three years of becoming a sales representative. Further, he does not contest that he left to work for a competitor of Tremco. It is Kent's position that Paragraph 13 is invalid and unenforceable, however, as it constitutes a penalty, and not liquidated damages. The Current Test "As a general rule, parties are free to enter into contracts that contain provisions which apportion damages in the event of default." Lake Ridge Academy v. Carney (1993), 66 Ohio St.3d 376, 381. However, complete freedom of contract is not permitted for public policy reasons, such as when the stipulated damages actually constitute a penalty. Id. The Ohio Supreme Court, in Samson Sales, Inc. v. Honeywell, Inc. (1984), 12 Ohio St.3d 27, following Jones v. Stevens (1925), 112 Ohio St. 43, paragraph two of the syllabus, approved the test to be used when determining whether such a clause constitutes liquidated damages or a penalty. Where the parties have agreed on the amount of damages, ascertained by estimation and adjustment, and have expressed this agreement in clear and unambiguous terms, the amount so fixed should be treated as liquidated damages and not as a penalty, if the damages would be (1) uncertain as to amount and difficult of proof, and if (2) the contract as a whole is not so manifestly unconscion-able, unreasonable, and disproportionate in amount as to justify the conclusion that it does not express the true intention of the parties, and if (3) the contract is consistent with the conclusion that it was the intention of the parties that damages in the amount stated should follow the breach thereof. -11- The determination as to whether a particular clause constitutes liquidated damages or a penalty is one of law. See Lake Ridge Academy v. Carney, supra at 380. Therefore, this court will apply a de novo standard of review. See Cleveland Elec. Illum. Co. v. Pub. Util. Comm. (1996), 76 Ohio St.3d 521, citing Indus. Energy Consumers of Ohio Power Co. v. Pub. Util. Comm. (1994) 68 Ohio St.3d 559. 563. The First Prong The first prong of the test requires that the damages resulting from a breach of the agreement be "uncertain as to amount and difficult of proof". It is Kent's position that the amount spent on the training program can easily be ascertained. In support, Kent relies on the testimony of Gatian, where the following exchange occurred: Q: And Mr. Gatian, you also agree, do you not, that provided Tremco maintain the data, it would be possible to estimate the actual cost of training Mr. Kent? A: That would be possible, yes. However, Tremco does not maintain the records necessary to compute the exact expenditure for each trainee, nor should such a burden be imposed. In Lake Ridge Academy, the court upheld a provision which provided for liquidated damages for the private school in the event a student cancelled his agreement to attend the school after a certain date. Lake Ridge Academy v. Carney, supra. The court declared that the damages were "uncertain as to amount and difficult of proof"; reasoning that since the tuition money was -12- pooled, and was used for staff salaries and benefits, budgets, materials, maintenance, improvements, and utilities, the precise damages caused by the loss of one student's tuition could not be accurately calculated. Id. at 382-383. Similarly, in the matter, sub judice, the cost of the training program to Tremco is calculated by estimating direct costs, and also lost opportunity costs resulting from removing trainers and trainees from the field, which are difficult to estimate. The precise damages, consisting of the amount spent by Tremco in training one particular trainee, could not be accurately ascertained. To require that Tremco maintain such precise records on each employee throughout its training program and the three years following to allow Tremco to calculate the exact amount spent on the training of each individual trainee would be exceedingly burdensome and costly. Additionally, Stanton D. Cort, a professor at the Weatherhead School of Management, Case Western Reserve University, reviewed Tremco's training program, and acknowledged that it would be very difficult to accurately compute the cost of the program. There is sufficient evidence in the record to indicate that the actual damages suffered by Tremco were uncertain and difficult to prove. The Second Prong The second prong of the test requires that "the contract, as a whole, is not so manifestly unconscionable, unreasonable, and disproportionate in amount as to justify the conclusion that it does not express the true intention of the parties". Kent -13- maintains the Agreement was unconscionable as he had no bargaining power, he was forced to quit due to the actions of his supervisor, and finally, that the $42,000 is disproportionate to the actual amount of damages. Kent's first argument is that he had no bargaining power, and was forced to accept the Agreement as it was presented to him. However, Gatian testified that when the Agreement is presented to a potential employee, the employee is not required to sign the contract immediately. The potential employee may take the Agreement with him or her to review it completely before signing it. Alternatively, the employee make take the Agreement to an attorney to be reviewed. Gatian stated that some candidates do take the contract with them and mail it back after it is signed. Finally, Gatian noted two cases where an employee has successfully negotiated the Agreement to eliminate Paragraph 13. "The crucial question [when ascertaining whether a contract is unconscionable] is whether 'each party to the contract, considering his obvious education or lack of it, [had] a reasonable opportunity to understand the terms of the contract, or were the important terms hidden in a maze of fine print * * *?'" Lake Ridge Academy v. Carney, supra at 383, quoting Williams v. Walker-Thomas Furniture Co. (C.A.D.C. 1965) 350 F.2d 445, 449. Kent testified that he was not informed that he had the option to either review the contract or to negotiate its terms. -14- However, the record reveals that Kent is a college educated individual. He had previously signed contracts of employment for each of the three positions that he held prior to working for 1 Tremco. Additionally, the provision at issue is neither writ in small print, nor hidden in the contract, nor difficult to understand. There is no evidence to indicate that the contract was unconscionable. Kent additionally argues that the contract was unconscionable as he was forced to quit due to the actions of his manager, Morrison, and that Tremco failed to take any action against Morrison. Kent argues that Morrison was abusive, deceptive, and an alcoholic, and that Tremco failed to take action. In the record, there is testimony that Jerry Strother had smelled liquor on Morrison's breath and also a written complaint regarding Morrison from Jeff Cacioppo. However, Strother testified he determined that Morrison was not impaired, and Tremco was unable to corroborate Cacioppo's complaint after conducting an investigation. When questioned, even Kent reported that there was no problem with Morrison. In fact, there is no indication that Kent had any problems with Morrison until after he notified Tremco that he was leaving. There is insufficient evidence to demonstrate that Morrison's actions were harmful and known to be so by Tremco. 1 Further, in Kent's negotiations with Garland, he was sophisticated enough to procure an arrangement with Garland to indemnify him in the event he was found to owe Tremco money pursuant to Paragraph 13 of the Agreement. -15- Further, Kent maintains that he was forced to leave because he was deceived by Morrison. Kent had repeatedly asked to be transferred to Wisconsin to become a manager, and Morrison had refused, planning to start him in Wisconsin as a sales representative. Thereafter, Kent testified that he spoke with Bob Guss from Garland, who made him an offer. Kent showed the offer to Morrison in an attempt to get him "to get off his but (sic) and do something with my situation with Tremco." Thus, in spite of his argument that he had to take the Garland job to get away from Morrison, Kent actually continued to give Morrison an opportunity to make a counter-offer to Garland's offer so that 2 Kent could remain with Tremco. Kent eventually accepted the position with Garland which provided for a better base salary than had his contract with Tremco. Additionally, Kent's wife had already accepted a position in Wisconsin. Thus, the record does not support Kent's contention that he was forced to resign due to the actions of Morrison, but instead, Kent's testimony reveals other, valid reasons for his departure from Tremco. Finally, Kent maintains Paragraph 13 is unconscionable as the $42,000 amount is disproportionate to the amount of training that Kent received. However, Gatian testified to the estimated direct costs for the first three years of a trainee's career. Gatian's calculations were done after Kent had left Tremco, however, they do provide a general overview of estimated direct 2 In the position in Wisconsin with Tremco that appellant had requested, Morrison would remain as his supervisor. -16- costs. Gatian estimated direct costs would include travel, hotels, and expenses for both trainers and trainees. He determined that after profits are excluded, an estimated cost for 3 three years of training Stanton Cort testified that, taking into account the training program that Kent completed, his salary and bonus history, and the terms of his contract with Garland, $42,000 is a reasonable estimate of Tremco's damages. Kent submits the Ohio Board of Regents' Fall Study of Student Charges, giving tuition information from Ohio's public universities to support his contention that the $42,000 is disproportionate to the actual cost of training. However, college tuition is not a reliable gauge with which to judge the costs of a specialized employment training program. While the precise amount of damages are necessarily difficult to ascertain, there is no evidence that the $42,000 sum is actually disproportionate to the costs of such a training program. See Lake Ridge Academy v. Carney, supra at 384. Kent also argues that the contract should be determined to be unconscionable as Kent did not need the training, and did not receive all the training which he expected to receive. However, this argument is not supported by the facts. Kent's three positions after he graduated from college were in sales, but he had no experience selling the type of products that he would be selling at Tremco. Kent acknowledged that he was attracted to a 3 This estimate did not include lost opportunity costs, which Gatian testified would be difficult to calculate. -17- position with Tremco because of its thorough training program. Thus, he obviously believed he could benefit from Tremco's training. Kent did receive thorough training. He spent weeks in the classroom and in the field. His income tripled in the time that he was a Tremco employee. Further, Kent cannot now complain about missed "contact days" when he filled out cards reporting that the "contact days" took place, and never reported that there were problems. The Third Prong The final prong of the test is whether "the contract is consistent with the conclusion that it was the intention of the parties that damages in the amount stated should follow the breach thereof". There is no evidence to indicate that the contract, signed by Kent, did not express his intentions. The provision was clear and was not hidden in the contract. The Agreement was signed by both a Tremco representative and Kent. Kent argues that the provision, on its face, is invalid. It is Kent's contention that the provision requires that a sales representative pay the $42,000 only in the event that the employee leaves Tremco to work for a competitor. Further, the provision requires the full $42,000 payment regardless of when the employee left, and how much, or how little training the employee received. The clause also requires that the full amount be re-paid regardless of how much product the employee has sold. Finally, Kent argues that the provision does not even require an -18- actual breach, as the employee is not prohibited from going to work for a competitor. The breach occurs when the employee leaves Tremco within three years after achieving the position of Sales Representative. When the employee signs the Agreement, he or she concedes that leaving within this time period constitutes a breach of the contract, and that Tremco is entitled to compensation for their training expenditures. Furthermore, the $42,000 is the amount which Tremco has determined will compensate them for their expenses, and which, by signing the contract, the employee agrees to reimburse if required. Liquidated damages, by definition, establish a fair amount of compensation, and the amount of product sold should not be relevant. The sole purpose of such a liquidated damages clause is to compensate the nonbreaching party for losses suffered as the result of a breach. See Lake Ridge Academy v. Carney, supra at 381. When the employee signs the agreement, he is accepting the fact that, as long as the provision is not actually a penalty, $42,000 is the proper amount which will reimburse Tremco for expenses they have incurred in training the individual. The provision is valid on its face. Distinguishable from Cad Cam, Inc. v. Underwood Kent also argues that the provision is clearly a penalty, as it is enforced only if a sales representative accepts a position with a company that competes with Tremco. The court in Cad Cam, Inc. v. Underwood (1987), 36 Ohio App.3d 90, also dealt with a provision that provides that the employee is required to -19- reimburse the employer only when the employee goes to work for a competitor. The employer argued that the damages were necessary to compensate for its expenses in training the employee and for bonuses paid to the employee. The Montgomery County Court of Appeals noted that the employer will have suffered these same expenses in every case when an employee leaves its employ, but the damages provision is triggered only when the employee goes to work for a competitor. Id. at 91-92. The court concluded that the purpose of the provision could have been interpreted by the trial court to be to prevent its employees from going to work for a competitor. However, the training noted in Cad Cam was completed in the employee's first week on the job, and the programs learned by the employee could not be used in his new position. In contrast, in the case, sub judice, the record includes sufficient evidence documenting Tremco's training program and its costs. Tremco's training program consists of several months of both classroom learning and field work. Further, Kent testified that when he began his position with Garland, he told them the scheduled training was unnecessary as he had already been trained. On the particular facts in the matter before this court, applying the three prong test approved in Samson Sales, Inc. v. Honeywell, Inc., supra, Paragraph 13 is a liquidated damages provision, and not a penalty. Kent's first, second, third, and fourth assignments of error are overruled. Kent's fifth assignment of error states: -20- V. THE TRIAL COURT ERRED WHEN IT FAILED TO FIND THAT THE BURDEN IS ON TREMCO, INC. TO PROVE THAT ITS EMPLOYMENT CONTRACT - SPECIFICALLY PARAGRAPH 13 THEREOF - IS VALID AND NOT A PENALTY Kent maintains that the burden of proving whether the stipulated damages provision constitutes liquidated damages or a penalty is on Tremco, consistent with the general rule that the plaintiff has the burden to prove its damages. The Burden of Proof In support of his contention, Kent relies primarily on two unreported decisions. In Tom Harrigam Oldsmobile v. Desman, Inc. 1981 WL 2712 (Mont. Cty. 1981), unreported, the court held that the plaintiff failed to prove either that the actual damages occasioned by the breach were uncertain and difficult to ascertain, or that the stipulated damages were reasonably proportional to the loss actually sustained. In Domestic Linen Supply and Laundry Co. v. Kenwood Dealer Group, Inc. 1996 WL 42335 (Ohio App. 12 Dist. 1996), unreported, the court held that the stipulated damages provision was enforceable, as the plaintiff had successfully proven that actual damages exceeded the amount of liquidated damages recoverable pursuant to the contract. These cases seem to indicate only that the party seeking to enforce the stipulated damages provision demonstrate that the three prongs of the test are satisfied. This Tremco has done. It is Kent who asserted as an affirmative defense that the provision is invalid and unenforceable. It is well-settled in Ohio that the defendant asserting an affirmative defense had the -21- burden of proof to establish a defense. MatchMaker Internatl., Inc. v. Long (1995), 100 Ohio App.3d 406 citing Dykeman v. Johnson (1910), 83 Ohio St. 126, 135, 93 N.E. 626, 628. Thus, as Tremco has demonstrated that the provision is valid and enforceable, the burden was correctly placed on Kent to prove that the provision is a penalty. Kent's fifth assignment of error is overruled. Kent's sixth assignment of error states: VI. THE TRIAL JUDGE ERRED WHEN IT FAILED TO AWARD DALE KENT PREJUDGMENT INTEREST ON COUNTS I AND III OF HIS COUNTERCLAIM. Kent alleges that he is entitled to prejudgment interest on the $3,500 awarded to him on his counterclaim. Prejudgment Interest R.C. 1343.03(A) provides, in pertinent part: *** when money becomes due and payable upon any bond, bill, note, or other instrument of writing, upon any book account, upon any settlement between parties, upon all verbal contracts entered into, and upon all judgments, decrees, and orders of any judicial tribunal for the payment of money arising out of tortious conduct or a contract or other transaction, the creditor is entitled to interest at the rate of ten per cent per annum, and no more, unless a written contract provides a different rate of interest in relation to the money that becomes due and payable, in which case the creditor is entitled to interest at the rate provided in that contract. The trial court ordered that the $3,500 is a set-off to the judgment of $42,000. Thus, Kent admits that if the trial court's decision is affirmed, he will not be prejudiced by its failure to award prejudgment interest on $3,500. However, he seeks prejudgment interest in the event that this court reverses the decision of the trial court. As the trial court's decision is -22- affirmed, Kent will suffer no prejudice by the trial court's failure to compute prejudgment interest on his $3,500 judgment. Thus, Kent's sixth assignment of error is overruled. Kent's final assignment of error asserts: VII. THE TRIAL COURT ERRED WHEN IT FOUND THAT KENT HAD BEEN INDEMNIFIED BY A NON-PARTY TO THIS CASE AGAINST AN AWARD OF DAMAGES. At trial, Kent admitted that Garland had agreed to indemnify him in the event that the liquidated damages provision is determined to be valid and enforceable. Kent maintains the trial court incorrectly concluded that Kent had an agreement to be indemnified, as R.C. 1335.05 requires that such an agreement be in writing. Indemnification R.C. 1335.05 provides: No action shall be brought whereby to charge the defendant, upon a special promise, to answer for the debt, default, or miscarriage of another person *** unless the agreement upon which such action is brought, or some memorandum or note thereof, is in writing and signed by the party to be charged therewith or some other person thereunto by him or her lawfully authorized. This statute is inapplicable to the matter sub judice. The action in the trial court was not an "action *** brought whereby to charge the defendant, upon a special promise, to answer for the debt *** of another person". Kent admitted that Garland had agreed to indemnify him in the event the contract provision was found to be enforceable. The action did not seek to hold Garland to that promise. -23- Kent maintains that the trial court erred, as the matter may become issue preclusion if there is ever litigation between Kent and Garland regarding the indemnification agreement, because Garland was not a party and was unable to assert any defense. However, this argument is properly made by Garland, and properly brought up only if, and when, the need arises. Furthermore, there is no evidence that the trial court based its decision on the fact that Garland agreed to indemnify Kent. As demonstrated above, there is ample evidence in the record to support the trial court's ruling without considering whether or not Garland would indemnify Kent. Any error by the trial court in this regard is harmless error. Kent's seventh assignment of error is overruled. Appellant's assignments of error are overruled. This matter is affirmed. -24- It is ordered that appellee recover of appellant 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 Cuyahoga County 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. DAVID T. MATIA, P.J., AND JAMES M. PORTER, J. CONCUR JUDGE KENNETH A. ROCCO N.B. This entry is an announcement of the court's decision. See App.R. 22(B), 22(D) and 26(A); Loc. App.R. 27. This decision will be journalized and will become the judgment and order of the court pursuant to App.R. 22(E), unless a motion for reconsideration with supporting brief, per App.R. 26(A) is filed within ten (10) days of the announcement of the court's decision. The time period for review by the Supreme Court of Ohio shall begin to run upon the journalization of this court's announcement .