COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA No. 73301 LALONDE MANAGEMENT & DISTRIBU-: TION : : JOURNAL ENTRY Plaintiff-appellee : : AND vs. : : OPINION WARD INVESTMENT CO. : : Defendant-appellant : : : DATE OF ANNOUNCEMENT : JULY 30, 1998 OF DECISION : : CHARACTER OF PROCEEDINGS : Civil appeal from : Court of Common Pleas : Case No. CV-319773 : JUDGMENT : REVERSED AND REMANDED DATE OF JOURNALIZATION : APPEARANCES: For plaintiff-appellee: For defendant-appellant: RICHARD E. HERTHNECK, ESQ. BURNEY & HERTHNECK 160 Plaza West Building 20220 Center Ridge Road Rocky River, OH 44116 PATRICK T. RYAN, ESQ. The Matchworks Bldg. 8500 Station Street, #265 Mentor, OH 44060 -2- JOHN T. PATTON, J.: Defendant-appellant Ward Investment Co., et al., appeals the judgment of the trial court in favor of plaintiff-appellee LaLonde Management & Distribution, Inc., in the amount of $170,000 for money owed and $10,000 for attorney fees. Defendant argues the trial court failed to give the proper notice before holding a hearing and entering judgment against it. Plaintiff is a local distributor and retailer of Kirby vacuums. When a vacuum sale is completed, the purchaser often finances the purchase of the vacuum through an independent consumer credit financing company, such as defendant. These sales are memorialized through an installment contract which is assigned to the finance company. The finance company then pays the distributor a percentage of the principle amount to be financed while holding the rest in a reserve account as security against possible bad debt by the consumer. From 1991 through 1996 plaintiff assigned its installment contracts to defendant. This relationship was not based on a written contract, but rather on oral representations made by both parties. On several occasions plaintiff requested that defendant submit an accounting of the amount in the reserve account. Defendant never complied with these requests, so plaintiff filed a complaint on December 3, 1996 alleging conversion, tortious interference with business, unjust enrichment and fraud and demanding a full accounting be given of the amount in the reserve account. Plaintiff claimed defendant owed $170,000 from the -3- reserve account, a reduction from the original amount of $187,401. Defendant made two partial payments to plaintiff of $10,000 and $7,000, respectively, thus decreasing the amount owed to $170,000. On January 27, 1997, plaintiff served defendant with a set of interrogatories and a request for documents. A week later defendant filed an answer, denying it owed the amount claimed. A case management conference was held on April 15, 1997, both parties were present and the trial court set September 1, 1997 as the trial date along with a deadline for discovery. Thereinafter, when plaintiff received no records or responses from defendant, it filed a motion to compel discovery on May 14, 1997. A month later, the trial court granted plaintiff's motion to compel. Two weeks later, still having not received any response from defendant, plaintiff filed a motion for sanctions. Because the original trial date of September 1, 1997 was a holiday, the trial court set the next day, September 2, 1997 as the trial date, but no notice of this change was mailed to either party. On that day, neither defendant nor defense counsel appeared and an ex parte hearing was held on the motion for sanctions. The trial court granted the motion for sanctions and proceeded to trial. At trial, John LaLonde, president of plaintiff, testified about the nature of his business and how defendant came into possession of the money in the reserve account. Lastly, he stated defendant owed his company $170,000. Plaintiff's attorney then addressed the sanctions issue and requested $10,000 for attorney's -4- fees as sanctions. The trial court granted judgment in favor of plaintiff for the money owed and for the attorney fees. Defendant timely filed its notice of appeal and filed its appellate brief without any response from plaintiff. In its appellate brief, defendant attached a motion for relief from judgment which is time-stamped as filed on October 6, 1997. However, there is nothing in the record or on the docket which indicates this motion was ever filed, so we will consider this as a direct appeal from the judgment. Defendant presents two assignments of error which are interrelated and will thus be addressed together. Defendant argues: THE TRIAL COURT ERRED BY HOLDING A TRIAL AND A HEARING ON SANCTIONS WITHOUT NOTICE TO APPELLANTS OR APPELLANTS' COUNSEL, IN VIOLATION OF DUE PROCESS. THE TRIAL COURT ERRED BY AWARDING MONETARY DAMAGES WITHOUT EVIDENCE SUFFICIENT TO SATISFY THE BURDEN OF PROOF. First, defendant argues a trial court may not proceed to trial without notice to a party as a sanction for failure to respond to discovery and a motion to compel. In support of this argument, defendant cites Maintenance Unlimited, Inc. v. Salami (1984), 18 Ohio App.3d 29, which holds a trial court may not enter a default judgment against a defendant for failure to respond to discovery without holding a hearing on the issue of damages, and Cunningham v. Garruto (1995), 101 Ohio App.3d 656, which holds a trial court may not enter default judgment against a defendant for failure to answer interrogatories where defendant has made an appearance in the action and no notice of the default hearing had been provided. -5- Applying this rationale to the instant case, defendant maintains either the trial court entered judgment after a trial of which he had no notice or the trial court entered a default judgment as a sanction without giving the notice required by Civ.R. 55. The record indicates defendant filed answer instanter on January 21, 1997, though outside the twenty-eight day limit provided by Civ.R. 12(A). Nonetheless, the filing of this pleading amounts to an appearance on behalf of defendant for default judgment purposes pursuant to Civ.R. 55(A). Two months later on April 9, 1997, a case management conference was held. Both parties appeared and the trial court set a discovery deadline, a final pre-trial conference for August 18, 1997, and a trial date for September 1, 1997. Plaintiff then filed a motion to compel defendant to respond to a set of interrogatories he submitted to defendant on January 27, 1997. The trial court granted the motion to compel but defendant still did not respond to the discovery request even though six months had elapsed since the request was sent. After receiving no response from defendant, plaintiff filed a motion for sanctions and/or a default judgment. Plaintiff also filed a trial brief, a witness list, an exhibit list, and a motion in limine in preparation for trial. Defendant did not file a pleading in response to plaintiff's motion to compel and did not file a trial brief or any documents in preparation for trial. -6- On the re-scheduled trial day, plaintiff and plaintiff's counsel appeared ready for trial. Neither defendant nor defense counsel were present. The trial court proceeded to hold an ex partehearing for sanctions where it granted plaintiff's motion for sanctions. A hearing was then held on the merits of the case and after hearing the testimony of plaintiff's president, the trial court granted judgment in plaintiff's favor for $170,401.53 and $10,000 for attorney fees. Pursuant to Civ.R. 55, when a party defending a claim has failed to plead or otherwise defend that claim, the court may, upon motion, enter a default judgment on behalf of the party asserting the claim. Cunningham, supra, at 660. However, if the party defending the action has made an appearance in the action, as defendant has done in this case, the trial court must provide that party with seven days notice of the hearing on the motion for default judgment prior to entering judgment. Id. The record fails to indicate defendant received notice the trial was reset for the next day. Although defense counsel was obviously dilatory while handling this case, and based on his prior performance may not have appeared even had he had notice of the new trial date, we are constrained to follow the Ohio Rules of Civil Procedure and its notice requirements. Therefore, we find the trial court erred by failing to provide defendant with notice of the default hearing seven days prior to its commencement and sustain defendant's first assignment of error. As a result of this finding we decline to consider defendant's second assignment of -7- error. See App.R. (A)(1)(c). Accordingly, we reverse the judgment of the trial court in favor of plaintiff and remand this case back to the trial court for further proceedings. Judgment reversed and remanded. -8- This cause is reversed and remanded to the lower court for further proceedings consistent with this opinion. It is, therefore, considered that said appellant recover of said appellee its costs herein. It is ordered that a special mandate be sent to said 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 DIANE KARPINSKI, P.J. TIMOTHY E. McMONAGLE, J., CONCUR. JUDGE JOHN T. PATTON 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 of decision by the .