Bierlein v. Alex's Continental Inn, Inc.

Citations: 475 N.E.2d 1273; 16 Ohio App. 3d 294; 16 Ohio B. 325; 1984 Ohio App. LEXIS 12383Docket: No. 8504

Court: Ohio Court of Appeals; February 26, 1984; Ohio; State Appellate Court

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On January 14, 1981, Delores Bierlein inquired about reserving a wedding reception at Alex's Continental Inn for July 18, 1981. She received a "Banquet Dinner Menu" that indicated a $2 per person deposit was required to confirm the reservation, and she acknowledged awareness of this requirement. On January 21, 1981, Bierlein and her daughter met with Carmela Pragalos at Alex's, where they arranged to rent the "Silver Room" and Bierlein provided a $200 deposit. It remains disputed whether she reviewed the Buffet Menu, which stated that deposits were non-refundable, before writing the check; however, she confirmed reading this clause later that day.

On April 20, 1981, Bierlein notified Alex's of the cancellation due to her daughter's fiancé's relocation, and she confirmed this in a letter on April 22, 1981. Attempts to reschedule were unsuccessful due to prior bookings. Alex's refused Bierlein's request for a refund of the deposit. Subsequently, on October 13, 1981, Bierlein filed a small claims complaint seeking the return of her $200 deposit. Alex's responded with a counterclaim for $1,000 in damages, leading to the case being removed to a higher court.

Bierlein sought to dismiss her case but was unable due to the counterclaim, prompting her to obtain legal counsel. Her amended complaint included allegations under Ohio's Consumer Sales Practices Act (R.C. Chapter 1345), seeking damages equivalent to twice the deposit plus attorney fees. The trial was set for November 2, 1982, but before it began, Alex's dismissed its counterclaim without prejudice. The trial proceeded solely on Bierlein's claim, resulting in a June 14, 1983 judgment in her favor, awarding her $800 (including the return of the deposit and $600 in attorney fees).

Both parties appealed, with Alex's arguing that the trial court incorrectly applied the Ohio Consumer Sales Practices Act, claiming that its business did not fall under this statute. The court, however, upheld that the Act applies to unfair or deceptive acts in consumer transactions, regardless of when they occur in relation to the transaction.

R.C. 1345.01(A) defines "consumer transaction" broadly to include sales, leases, and services aimed at individuals for personal, family, or household purposes, while excluding certain transactions involving regulated entities and professionals. The renting of a banquet hall for a wedding reception involves both the sale of food and the provision of service, qualifying as a consumer transaction under the statute. 

Subsections (C) and (D) clarify that a "supplier" is anyone engaged in consumer transactions, while a "consumer" is an individual participating in such transactions. In this case, the defendant is identified as the "supplier" and the plaintiff as the "consumer," confirming the applicability of the consumer sales practices act.

The defendant's first assignment of error is overruled. In the second assignment, the defendant argues that if the act applies, the trial court misapplied the law. The court found no unconscionable practices but determined that the defendant violated R.C. 1345.02 regarding unfair or deceptive sales practices. This was based on the defendant's failure to comply with Ohio Adm. Code 109:4-3-07, which outlines conditions for accepting deposits. The trial court noted that the defendant accepted a $200 deposit without providing a receipt or disclosing the refund policy, thus imposing liability for this violation.

Defendant contends that applying Ohio Adm. Code 109:4-3-07 to the evidence was erroneous, arguing that this rule pertains only to suppliers of "goods" as defined in Ohio Adm. Code 109:4-3-01(C)(1), which does not include restaurants. While the court agrees that the defendant's business does not fit the definition of "goods," it disagrees with the defendant's assertion that the rule is exclusively applicable to suppliers of goods. The rule's language indicates it addresses deceptive acts or practices in consumer transactions involving any supplier, not restricted to specific goods. The court interprets subsection (A) of Ohio Adm. Code 109:4-3-07 as a requirement for those suppliers dealing in defined goods, while subsection (B) governs all other consumer transactions. Subsection (C) further clarifies that the term "deposit" includes payments for both goods and services, indicating that the rule applies to service transactions, such as those provided by the defendant. 

Additionally, Ohio Adm. Code 109:4-3-01 emphasizes a liberal construction of the rules to protect consumers and promote fair sales practices. The court finds that this interpretation aligns with the objectives of the Consumer Sales Practices Act, leading to the dismissal of the defendant's second assignment of error. 

Regarding the third assignment of error, the defendant argues that the trial court erroneously awarded $200 in damages under O.R.C. 1345.09 after rescinding a contract. The court clarifies that the $200 judgment was not a damage award but rather a restoration of the parties to their pre-transaction status, equating to a rescission and not a violation of R.C. 1345.09. Thus, the third assignment of error is deemed without merit.

In its fourth assignment of error, the defendant contends that the trial court incorrectly awarded attorney fees under O.R.C. 1345.09(F)(2), which permits such fees when a supplier knowingly violates the Consumer Sales Practices Act (CSPA). The defendant argues that it did not "knowingly" violate the Act, asserting that the term "knowingly" should mean actual awareness of wrongdoing. The court notes a lack of precedent from the Ohio Supreme Court or appellate courts regarding this "knowingly" requirement but finds support for the defendant's interpretation in the legislative definition of "knowledge," which allows for inferences of awareness. The trial court's conclusion that the defendant was unaware of its failure to provide a receipt as a violation aligns with the defendant's position. The court emphasizes that the award of attorney fees is a statutory remedy and should reflect the legislature's intent. Thus, the fourth assignment of error is sustained.

Regarding the defendant’s remaining assignment of error, the defendant argues that the trial court improperly awarded attorney fees under O.R.C. 1925.02(B). This provision allows for attorney fees when a counterclaim exceeds $1,000 and is transferred to the regular docket, but the defendant maintains that the counterclaim did not exceed this threshold, nor did the plaintiff prevail on it. The court finds merit in the defendant's argument regarding the application of this statute.

R.C. 1925.02(B) was not in effect when the defendant filed the counterclaim, as it became effective on August 20, 1982, after the counterclaim was submitted. At the time of filing, R.C. 1925.02 allowed for attorney fees under similar conditions as the amended statute but required the defendant's claim to exceed $500. Accepting the defendant's argument would retroactively apply the new statute, contradicting the general rule favoring prospective application unless explicitly stated otherwise. The trial court correctly awarded attorney fees based on the statute's prior version.

The defendant argued that the court erred in awarding fees because there was no evidence the opposing party prevailed on the counterclaim, claiming that a voluntary dismissal of the complaint before trial prevented a merits trial. However, the dismissal was without prejudice per Civ. R. 41, and the court reasoned that the plaintiff, having prevailed on her complaint, would have likely also prevailed on the defendant's counterclaim had it not been dismissed. The court stated that allowing the defendant's strategy could enable manipulation and coercion against claimants, undermining the purpose of R.C. 1925.02.

To award attorney fees under the statute, the defendant's claim must be deemed without substantial grounds. The trial court found that the defendant's counterclaim lacked substantial grounds due to its dismissal before trial. Since the small claims court is designed for informal proceedings, the defendant's counterclaim forced the plaintiff to engage legal representation and proceed in a regular court setting. The court deemed the counterclaim frivolous, justifying the award of attorney fees, and found no errors in the trial court's decision. The defendant's fifth assignment of error was overruled.

Delores Bierlein, the plaintiff, contends that the court made errors detrimental to her interests in four specific areas during her appeal. Firstly, she asserts that the court should have awarded treble damages rather than merely rescission. She cites the Ohio Administrative Code (OAC) Section 109:4-3-07 and the corresponding provisions in the Ohio Revised Code (O.R.C.) Section 1345.09(B), arguing that upon a violation, treble damages must be awarded as it is the greater remedy available. The Consumer Sales Practices Act allows consumers to either rescind a transaction or recover up to three times their actual damages, but the trial court, by limiting recovery to rescission, overstepped its authority, as the statute clearly grants consumers the choice. Although the trial court's intent to limit damages due to the defendant's innocent violation is understandable, the legislative intent must be upheld. Consequently, the appellate court must correct the trial court's judgment, resulting in a monetary award of $400, reflecting the amount the plaintiff claimed, as per Civil Rule 54(C), which restricts recovery to the amount demanded. The trial court's decision to grant rescission is reversed, and $400 is awarded to the plaintiff. 

In her second assignment of error, Bierlein challenges the attorney fees awarded. Her attorney detailed the time spent on the case, totaling 28.20 hours at $85 per hour ($2,397) and 6 hours for paralegal work at $30 per hour ($180), culminating in $2,581.23, including additional charges.

Defendant claimed $2,394 in attorney services in its post-trial brief, but the trial court determined a reasonable fee to be $600 in favor of the plaintiff. On appeal, the plaintiff contends that the trial court abused its discretion in awarding attorney fees at this rate, citing R.C. Section 1925.10 and other statutes, due to the defendant's actions that unnecessarily prolonged litigation beyond small claims court, including filing and withdrawing a counterclaim on the trial date. The appeal emphasizes that the trial court's authority allows for the award of "reasonable" fees based on its discretion, and the plaintiff must demonstrate the reasonable value of legal services. The only evidence submitted was the post-trial brief detailing services rendered, dates, hourly rates, and hours worked, which the court noted are important but not solely determinative. The court referenced a previous ruling underscoring that attorney fees should reflect the actual value of necessary services. Given that the dispute was over a $200 claim, the trial court's conclusion of $600 as the reasonable fee was deemed acceptable. The appellate court found no abuse of discretion and dismissed the plaintiff's second assignment of error. The plaintiff's third assignment of error sought additional attorney fees for the appeal, arguing that a successful litigant is entitled to fees necessary for enforcing rights established by the trial court's judgment.

The plaintiff argues that the trial court's award of attorney fees under the Consumer Sales Practices Act (R.C. 1345.09) is essential for achieving the Act's purposes. She cites cases from other states that have permitted attorney fees on appeal in similar consumer law contexts. However, the court found that it had erred in awarding attorney fees under R.C. 1345.09(F)(2), making attorney fees for the appeal inappropriate as well. The plaintiff's third assignment of error is thus overruled. Regarding the fourth assignment of error, the plaintiff contests the trial court's award of eight percent interest on the judgment, asserting that it should be ten percent per O.R.C. Section 1343.03. The court agrees, stating that the transaction falls under this statute and modifies the trial court's judgment to award $400 in damages with interest at ten percent per annum. The award of attorney fees remains unchanged. The judgment is affirmed in part and modified in part. WILSON and WEBER, JJ. concur.