The Nature and Necessity of Damages Hearings in OhioSeptember 6, 2018 | David Mullen, Esq.
Occasionally, some courts require parties to prove their damages at a hearing. This is sometimes the case when actions are resolved through motions for default judgment. These hearings usually involve simple presentations of evidence after liability has already been established. However, they can cause a great deal of frustration, especially when judgment as to liability was entered through default, as they require creditor and attorney time, preparation, review, and attendance in court. Some courts also view these damages hearings as another “chance” for a previously disinterested defendant to appear and litigate the matter.
Under Ohio law, damages hearings are only necessary in limited circumstances. Rule 8(D) of the Ohio Rules of Civil Procedure provides that any averments in a pleading that require a responsive pleading, other than those as to the amount of damages, are admitted when not denied in a responsive pleading. For example, in the case of a typical civil complaint, a party in default may be deemed to have submitted to jurisdiction, accepted venue and admitted the conduct at issue, even if such conduct is alleged to have been negligent, reckless, fraudulent or intentional, but he or she will never be deemed to have admitted to the damages.
However, in 18741, the Ohio Supreme Court held that in actions on accounts, damages are allegations that, if not denied, are conclusively admitted. In other words, the allegation of an amount due is not “an allegation of value or damage, but is a specific allegation on the amount due on the account . . . and must be controverted by answer.”2 This seemingly conflicts with Rule 8(D), until one examines the nature of an action on an account. In an action on an account or on a promissory note, the damages are specific, down to the penny, and supported by documentation. Actions on accounts are designed for situations where there is a multiplicity of recorded transactions between parties, such that bringing an action for each extension of credit that a debtor fails to repay would be unwieldy and economically burdensome. With respect to promissory notes, it is possible to create a clear history of the balance, starting with the amount loaned and detailing transactions that increased or decreased the balance over time. Under Rule 8 and the common law as described by numerous appellate decisions, a party's failure to deny the amount due on an account or a promissory is an admission that such amount is due and owing. Thus, a damages hearing would be unnecessary as the damages are admitted through the party's default.
Other civil actions, however, are not as specific with respect to damages. In many actions, plaintiffs specify a range of damages, such as “not exceeding $15,000” or “at least $25,000.” According to a recent Seventh District opinion and various other decisions out of six of Ohio's 12 appellate courts, it is this category of damages claims that Rule 8(D) contemplates as requiring a hearing on damages.3 A plaintiff who makes an allegation of damages “to be proved at trial” and then obtains a default judgment would be called upon to prove those damages in a matter that the court sees fit, whether through the submission of affidavit and evidence or at a hearing with witnesses on the record. A plaintiff who brings an action on an account or a promissory note would not need that proof, as the damages are admitted through the defendant’s failure to contest them.
Some courts will continue to set these hearings as a final opportunity for a consumer to appear before having judgment rendered against him or her. These hearings should always be taken seriously. There may be a lack of awareness of case law that disfavors damages hearings for actions on accounts and promissory notes, or a court may legitimately be seeking further evidence of the balance. A small minority of courts is less than receptive to this well-accepted theory, regardless of how it is presented. Finally, these hearings may provide another chance to reach a resolution with the debtor, which is worth far more than a judgment. A creditor would do well to retain experienced and adaptable counsel long before filing any action on an account or a promissory note.
For more information, please contact David Mullen, Esq. Mr. Mullen is an attorney based in the Brooklyn Heights office, where his practice is focused on general consumer collection and legal matters. He is a member of the Ohio State and Cleveland Metropolitan Bar Associations, and an active member of the Cleveland Rovers Rugby Football Club. Mr. Mullen is licensed to practice in the State of Ohio, and admitted to practice before the U.S. District Court for the Northern District of Ohio.
2Farmers & Merchants State and Savings Bank v. Raymond G. Barr Ent., Inc., 6 Ohio App 43 (4th Dist., 1982).
3Bank of America, N.A. v. Truax, 2018-Ohio-3101 (7th Dist., Monroe County, No. 17 MO 0011).
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