COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 70865/70904 ATAC CORPORATION : : Plaintiff-Appellee/ : Cross-Appellant : : JOURNAL ENTRY -vs- : AND : OPINION MAHESH S. SHETTY, ET AL. : : Defendant-Appellant/ : Cross-Appellee : : DATE OF ANNOUNCEMENT OF DECISION FEBRUARY 13, 1997 CHARACTER OF PROCEEDING Civil appeals from Court of Common Pleas Case No. 280501 JUDGMENT Vacated; cross-appeal dismissed. DATE OF JOURNALIZATION APPEARANCES: For Plaintiff-Appellee/ For Defendant-Appellant/ Cross-Appellant: Cross-Appellee: WALTER P. BUBNA, ESQ. KEVIN T. ROBERTS, ESQ. 5700 Pearl Road 1700 East 13th Street Suite 304 Suite 3E Cleveland, Ohio 44129 Cleveland, Ohio 44114 For Third-Party Defendant Arthur Treacher's, Inc.: JAMES DeROCHE, ESQ. Ulmer & Berne 1300 East 9th Street Suite 900 Cleveland, Ohio 44114 - 2 - JAMES M. PORTER, P.J., Defendant-appellant/cross-appellee Mahesh S. Shetty appeals from the trial court's order granting plaintiff-appellee/cross- appellant ATAC Corporation's motion for appointment of a receiver in ATAC's suit on a promissory note. Defendant Shetty contends that a receiver was not authorized by R.C. 2735.01 et. seq.; that there was no showing of necessity for a receiver; and defendant, a resident of Texas, had no assets in Ohio over which the court could exercise jurisdiction. Plaintiff ATAC cross-appeals the trial court's order granting defendant's Civ.R. 60(B) motion vacating summary judgment in ATAC's favor for $173,490 on Shetty's promissory note. For the reasons hereinafter stated, we sustain the defendant's appeal and dismiss the plaintiff's cross-appeal. On March 26, 1993, Shetty entered into a Purchase Agreement for $225,000 to buy from ATAC a license to be Regional Representative for Arthur Treacher's Inc. ("ATI") in the Dallas, Texas territory, which included numerous surrounding counties. The transaction was negotiated with Patrick T. Cullen and Thomas Rodgers, III, representatives and agents of ATAC. In connection with the transaction, Shetty signed a promissory note for $135,000 and the Purchase Agreement with ATAC which represented itself to be the existing licensed Regional Representative for the Dallas territory. After fifteen months and opening eight restaurants, Shetty claims that the Arthur Treacher franchises in his territory and - 3 - other territories were failing and he realized that he had been misled in various respects by ATAC and its representatives and that the franchise was not as valuable as he had been led to believe. He discontinued payments on the note. On November 17, 1994, ATAC brought suit on the defaulted and accelerated note for the entire $135,000 face amount plus interest. On March 15, 1995, ATAC moved for summary judgment on its note claim seeking principal and interest totalling $173,490. On May 15, 1995, Shetty filed a Civ.R. 56(F) motion to extend time for response to the summary judgment motion and allow for discovery. On May 22, 1995, defendant Shetty filed an amended answer raising affirmative defenses and counterclaimed for fraud in the inducement and failure of consideration as well as a third party complaint against ATI, Cullen and Rodgers for their fraud in the transaction and any sums for which Shetty may be liable to ATAC. On June 28, 1995, at a case management conference, the trial court set September 29, 1995 as the date that "dispositive motions [were] due." On July 28, 1995, ATAC filed its motion for appointment of a receiver seeking a receivership over "Defendant's assets." The motion was accompanied by an attached letter from the General Counsel for ATI to Arthur Treacher franchisees accusing Shetty of various criminal acts and improper conduct. ATAC did not seek nor did the court set the receiver matter for hearing. - 4 - On July 7, 1995, defendant Shetty filed a motion to consolidate the instant case with Common Pleas Case No. 285874, a companion suit by ATI against defendant Shetty then pending before another judge. On July 26, 1995, a journal entry was issued in Case No. 285874 granting the consolidation. On August 15, 1995, the trial court in this case granted Shetty's May 15, 1995 motion for continuance pursuant to Civ.R. 56(F) without specifying a date to respond to the summary judgment motion. On September 15, 1995 the trial court herein issued a number of rulings, one of which vacated the consolidation and another granted ATAC's summary judgment on the note in the amount of $173,940 plus interest and costs and stated "no just cause for delay." On September 29, 1995, Shetty filed his Civ.R. 60(B) motion to vacate the September 15 judgment entries, including the summary judgment for ATAC. Having received no response before the time to file appeal from the September 15 rulings, Shetty filed a notice of appeal on October 11, 1995. This appeal was designated Court of Appeals Case No. 69667. After a pre-hearing conference on November 2, 1995, this Court dismissed the appeal on November 6, 1995 for lack of a final appealable order, stating: "DEFAULT JUDGMENT ISSUES NOT RESOLVED AS TO DAMAGES. CIV.R. 54(B)." On May 22, 1996, a new trial judge having succeeded to the docket of the original judge, the trial court granted Shetty's Civ.R. 60(B) motion to vacate the September 15, 1995 judgment - 5 - entries including the summary judgment and reinstated the case on the court's active docket. At the same time, however, ATAC's motion to appoint a receiver was granted although no receiver was specifically named nor were the duties, terms and conditions of the receivership delineated. On June 20, 1996, Shetty appealed from the order granting the receivership. On July 1, 1996, ATAC cross-appealed the trial court's action vacating ATAC's favorable summary judgment. We will address the defendant's assignments of error together as they all pertain to the the propriety of the order granting a receivership. I. THE TRIAL COURT ERRED AS A MATTER OF LAW IN GRANTING APPELLEE'S MOTION FOR APPOINTMENT OF RECEIVER, WITHOUT FIRST HAVING ASCERTAINED THAT A RECEIVER WAS AUTHORIZED PURSUANT TO OHIO REVISED CODE SECTION 2735.01 ET. SEQ. II. THE TRIAL COURT ERRED AND ABUSED ITS DISCRETION WHEN IT GRANTED APPELLEE'S MOTION FOR APPOINTMENT OF RECEIVER OVER APPELLANT'S PERSONAL ASSETS AND PROPERTY WITHOUT FIRST HAVING DETERMINED, BY CLEAR AND CONVINCING EVIDENCE, THAT A RECEIVER WAS NECESSARY AND/OR AUTHORIZED, THAT THE APPLICANT WAS IN DANGER OF SUFFERING IRREPARABLE LOSS OR INJURY, OR THAT THE RECEIVER WAS NECESSARY FOR THE PRESERVATION OF THE APPLICANT'S RIGHTS. III. THE TRIAL COURT ERRED AND ABUSED ITS DISCRETION IN GRANTING APPELLEE'S MOTION FOR APPOINTMENT OF RECEIVER, WHERE APPELLANT HAS NO ASSETS IN THE STATE OF OHIO OVER WHICH A RECEIVER APPOINTED BY AN OHIO COURT MAY EXERCISE JURISDICTION. ATAC raises the threshold issue of whether there is a final appealable order since the trial court only granted ATAC's motion - 6 - to appoint a receiver but did not implement the order by specifically naming a receiver or designating his duties. We find this issue is disposed of by our recent decision in Jamestown Village Condo v. Market Media (1994), 96 Ohio App.3d 678, which both parties cite. There we stated as follows: We find that MMR's appeal regarding the court's granting Jamestown's motion to appoint a receiver is untimely. The trial court granted the motion on March 5, 1990, and MMR did not appeal this ruling until March 1993. The court's appointment of a receiver is a final appealable order. Forest City Invest. Co. v. Haas (1924), 110 Ohio St. 188, 143 N.E. 549, paragraph one of the syllabus; Metro. Life Ins. v. Begin (1938), 59 Ohio App. 5, 7, 12 O.O. 337, 338, 16 N.E.2d 1015, 1016; Morris v. Invest. Life Ins. Co. (1965), 1 Ohio App.2d 330, 332, 30 O.O.2d 341, 342, 204 N.E.2d 550, 552-553; Equity Centers Dev. Co. v. S. Coast Centers, Inc. (1992), 83 Ohio App.3d 643, 645, 615 N.E.2d 662, 663, fn. 1. Therefore, the court's ruling had to be appealed within thirty days of March 5, 1990. See App.R. 4. Pursuant to Stiver v. Stiver (1939), 63 Ohio App. 327, 17 O.O. 96, 26 N.E.2d 595, it is the "order" itself and not when the bond was posted which determines the finality: "It is argued that *** the order of appointment did not take effect until the receiver was properly qualified. This position is not tenable." Id. at 328, 17 O.O. at 97, 26 N.E.2d at 596. Id. at 689. We plainly held in Jamestown that the time to appeal ran from the time the motion to appoint the receiver was granted. The critical issue is not the name of the receiver or what he is authorized to do; the issue is whether one was authorized or - 7 - necessary in the first instance. We adhere to our Jamestown ruling and address the merits of the order granting the motion. The statute authorizing the appointment of a receiver is R.C. 2735.01 and states in pertinent part: A receiver may be appointed by the supreme court or a judge thereof, the court of appeals or a judge thereof in his district, the court of common pleas or a judge thereof in his county, or the probate court, in causes pending in such courts respectively, in the following cases: (A) In an action by a vendor to vacate a fraudulent purchase of property, or by a creditor to subject property or a fund to his claim, or between partners or others jointly owning or interested on any property or fund, on the application of the plaintiff, or of a party whose right to or interest in the property or fund, or the proceeds thereof, is probable, and when it is shown that the property or fund is in danger of being lost, removed, or materially injured. * * * The general principles that govern the appointment of a receiver and the scope of review were well-stated in Equity Centers Dev. v. S. Coast Centers (1992), 83 Ohio App.3d 643, 649-50: The appointment of a receiver is the exercise of an extraordinary, drastic and sometimes harsh power which equity possesses and is only to be exercised where the failure to do so would place the petitioning party in danger of suffering an irreparable loss or injury. Hoiles v. Watkins (1927), 117 Ohio St. 165, 174, 157 N.E. 557, 559. Because the appointment of a receiver is such an extraordinary remedy, the party requesting the receivership must show by clear and convincing evidence that the appointment is necessary for the preservation of the complainant's rights. - 8 - Malloy v. Malloy Color Lab, Inc. (1989), 63 Ohio App.3d 434, 437, 579 N.E.2d 248, 250. It has long been recognized that the trial court is vested with sound discretion to appoint a receiver. State ex rel. Celebrezze v. Gibbs (1991), 60 Ohio St.3d 69, 73, 573 N.E.2d 62, 66. The Ohio Supreme Court has recently stated: "A court in exercising its discretion to appoint or refuse to appoint a receiver must take into account all the circumstances and facts of the case, the presence of conditions and grounds justifying the relief, the ends of justice, the rights of all the parties interested in the controversy and subject matter, and the adequacy and effectiveness of other remedies." Id. at 73, 573 N.E.2d at 67, fn. 3. The order for an interim receiver may be reviewed only for the purpose of determining whether there is evidence tending to prove the facts essential to sustain the order, and a reviewing court may not consider the weight of the evidence. Malloy v. Malloy Color Lab, Inc. (1989), 63 Ohio App.3d 434, 436, 579 N.E.2d 248, 249. Such order may be reversed only when there is failure of proof which would be essential to support the order, and the order may not, in any event, be reversed upon the weight of the evidence. Id., citing Wilgus v. Arthur (1943), 72 Ohio App. 511, 53 N.E.2d 197 * * * It is undisputed that the person requesting a receivership must show by clear and convincing evidence that the appointment of a receiver is necessary for the preservation of the complainant's rights. Malloy, supra, 63 Ohio App.3d at 437, 579 N.E.2d at 250. *** Defendant Shetty argues that a receiver is only available in equitable actions and not when legal remedies alone are sought, i.e., a claim for money damages. Although at one time the - 9 - appointment of a receiver was a purely equitable remedy, an appointment of a receiver is now governed by statute. Hoiles v. Watkins (1927), 117 Ohio St.165, 171; Jamestown, supra at 690; Manufacturers Life Ins. Co. v. Patterson (1988), 51 Ohio App.3d 99, 100; The Jebb Realty Service Co. v. McIntosh (1926), 26 Ohio App. 92, 94; 80 O.Jur.3d Receivers, Section 8, at 334. Therefore, we look to R.C. 2735.01 to determine if an appointment of a receiver is appropriate. Pursuant to R.C. 2735.01, common pleas courts have jurisdiction to appoint a receiver both in law and equity. Malloy v. Malloy Color Lab, Inc. (1989), 63 Ohio App.3d 434,436; See, also, Civ.R. 66. None of the possible situations in law or equity for appointment of a receiver listed in R.C. 2735.01 apply here. The circumstances in which R.C. 2735.01(A) and (F) allow for an appointment of a receiver include: (A) *** by a creditor to subject property or a fund to his claim, *** or of a party whose right to or interest in the property or fund, or proceeds thereof, is probable, and when it is shown that the property or fund is in danger of being lost, removed, or materially injured. * * * (F) In all other cases in which receivers have been appointed by the usages of equity. We find that an action for money only is not an equitable remedy pursuant to R.C. 2735.01(F) and that the note itself does not constitute a "fund" as stated in R.C. 2735.01(A). - 10 - In order to justify the appointment of a receiver, the person seeking the appointment must prove the existence of a fund for which the receiver is sought. Schultze v. Schultze (1964), 5 Ohio App.2d 261, 263; Maines Paper and Food Service - Midwest, Inc. v. Regal Foods, Inc., dba Burger King (March 24, 1994), Cuyahoga App. No. 66262, unreported at 2. Although plaintiff may eventually be able to obtain a judgment on the promissory note, this is not a specific fund. Plaintiff must show an interest in a specific fund. As this Court in Maines Paper held, "cash receipts from the operation of its restaurants" do not constitute a "fund" as "prospective earnings [are] not property and, thus not subject to receivership." Id. at 4. We also find that defendant's existing assets cannot constitute a "fund" pursuant to the statute as the property was not used to secure the note. This Court in Jebb Realty, supra, held in a similar case that a receiver should not be appointed upon an action for "money only." In Jebb the plaintiff brought a suit against Jebb Realty for a money judgment in the amount of $3,000. The plaintiff requested a receiver to be appointed to take possession of Jebb's assets pending litigation which the trial court granted. This Court reversed the trial court and held that pursuant to General Code Section 11894, which contains the exact language of R.C. 2735.01(A) and (F), such an appointment was improper. This Court held as follows: The appointment of receivers is statutory, and they can only be appointed in cases where the - 11 - statute authorizes such an appointment. It will be noticed that the petition is for money only. There is no equitable relief claimed in any shape whatever. Now under our statute (General Code, Section 11894), you cannot appoint a receiver in such a case as this. In case it should come to the knowledge of the plaintiff that the fruits of any judgment that he might obtain in the pending litigation might not avail because of a "doing away with" the property, there is a legal remedy provided; that is, he could go into court and file an affidavit for an attachment, that is, if he sets up one of the grounds upon which the statute authorizes the issuance of an attachment process, then he could, by giving bond, sequester and tie up the property and make it available for payment of the judgment if he should get one. Id. at 94. A similar holding was made in Sweesy v. Potter Oil Co, Inc. (1931), 38 Ohio App. 206, 208-209. In Sweesy the plaintiff's creditor successfully had a receiver appointed by the trial court to take over the plaintiff's business during the pendency of an action for money due. The court in Sweesy held that the appointment of a receiver was in error as it did not fall under General Code Section 11894(1). [General Code Section 11894(1) is comparable to R.C. 2735.01(A).] As the trial court held, the creditor's interest in the property was only "probable" and therefore, the proper action would be to bring an action for attachment. To do otherwise would render the civil proceedings for attachment unnecessary. Id. at 209. See, also, 80 O.Jur.3d Receivers, Section 12, at 341. Therefore, we find that pursuant to R.C. 2735.01, the trial court had no authority to appoint a receiver for money only and - 12 - that the proper course of action for the plaintiff would have been to seek an attachment if his claims came within that statute. Defendant-appellant Shetty's assignments of error I and II are sustained and assignment of error III is moot. CROSS APPEAL IN CASE NO. 70904 I. THE TRIAL COURT ERRED IN GRANTING DEFENDANT- APPELLANT'S MOTION TO VACATE UNDER OHIO CIVIL RULE 60(B). Defendant Shetty raises the issue of whether the court's action under Civ.R. 60(B) vacating the summary judgment is a final appealable order because all of the claims between all of the parties are not finally disposed of as required by Civ.R. 54(B) and the court did not certify "no just reason for delay" in making its entry. We find merit to this contention. It is true that a Civ.R. 60(B) order vacating a summary judgment is ordinarily considered a final appealable order. See Bluffs v. Wildwood Homeowner's Assoc. (1994), 96 Ohio App.3d 278, 281; National City Bank v. Reat Corp. (1989), 64 Ohio App.3d 212, 216; Biller v. Fitch (1989), 61 Ohio App.3d 357, 358; Bourque v. Bourque (1986), 34 Ohio App.3d 284, 286; Bates & Springer, Inc. v. Stallworth (1978), 56 Ohio App.2d 223, 231. But, that is true when there are no remaining claims to be adjudicated. As stated in Jarrett v. Dayton Osteopathic Hospital, Inc. (1985), 20 Ohio St.3d 77, syllabus: An order vacating a judgment that was entered against less than all the parties and in which - 13 - the trial court did not make an express determination that there was "no just reason for delay" is not a final appealable order. In Jarrett, the trial court, as in the instant case, vacated a judgment award pursuant to a Rule 60(B) motion for relief from judgment, but the judgment adjudicated fewer than all the claims or rights between the parties, did not terminate the action, and there was no express determination by the trial court that there was no just cause for delay. See, also, Lee v. Joseph Horne Co., Inc. (1995), 99 Ohio App.3d 319, 322-323; Matrka v. Stephens (1991), 77 Ohio App.3d 518, 520-522. Here, the trial court's May 22, 1996 order granted defendant's Civ.R. 60(B) motion to vacate: plaintiff's summary judgment on the promissory note; the default jugment in favor of the third party defendants, Cullen and Rodgers; and its order dismissing defendant's counterclaim against the plaintiff. The trial court has also not ruled on ATI's motion for summary judgment on defendant's third party complaint. Therefore, there are more issues still pending besides the plaintiff's motion for summary judgment. Such claims are an integral element of the litigation below and until disposed of prevent finalization of the other issues. ATAC's cross-appeal is dismissed. The trial court's order granting the motion to appoint a receiver is vacated; the cross-appeal is dismissed; and the case is remanded for further proceedings consistent with this opinion. - 14 - It is ordered that appellant/cross-appellee recover of appellee/cross-appellant his costs herein taxed. It is ordered that a special mandate be sent to 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. NAHRA, J., and SPELLACY, J., CONCUR. JAMES M. PORTER PRESIDING JUDGE 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