The Ohio Eighth District Court of Appeals has affirmed a lower court’s decision in a case involving a cognovit note, a type of promissory note that allows a creditor to obtain a judgment against a debtor without prior notice or a hearing. The case, *Overdrive Espresso LLC v. Shawna J. Finein*, centered on an employment agreement and a subsequent dispute over a $10,000 training expense.
The Basics of the Case
The case began on May 15, 2024, when Overdrive Espresso LLC (“Overdrive”) filed a complaint against Shawna J. Finein (“Finein”) based on a cognovit note. The note was related to an employment agreement between Overdrive and Finein, where Finein received specialized training costing $10,000. The agreement stipulated that if Finein left her employment before a certain date, she would have to repay the training costs. The cognovit note allowed Overdrive to obtain a judgment against Finein without a trial if she defaulted on the repayment.
Finein terminated her employment with Overdrive, and Overdrive claimed she was in default under the terms of the note. On the same day the complaint was filed, the trial court granted judgment in favor of Overdrive for $10,000, plus interest and attorney fees. Finein was notified of the judgment but did not initially appeal.
Finein’s Motion for Relief and the Appeal
Later, on August 2, 2024, Finein filed a motion for relief from the judgment. In this motion, she raised several arguments, or “defenses,” against the judgment. These included claims that the note was invalid because it was not a commercial transaction, that it was unenforceable under New York law and the Trafficking Victims Protection Act, and that Overdrive had not properly demonstrated damages. The trial court denied Finein’s motion without providing any explanation.
Finein then appealed the trial court’s decision to the Ohio Eighth District Court of Appeals. She presented two main arguments, or “assignments of error,” to the appellate court:
1. The trial court erred by denying her motion without providing any explanation for its decision.
2. The trial court erred in failing to vacate the judgment because she had established meritorious defenses.
The Court’s Ruling: No Explanation Required, No Meritorious Defenses
The appellate court addressed each of Finein’s arguments.
First Assignment of Error: No Explanation Needed
The court first addressed Finein’s claim that the trial court should have provided a reason for its decision. The court cited existing precedent, stating that trial courts are not required to issue findings of fact and conclusions of law when ruling on motions for relief from judgment under Civ.R. 60(B). Therefore, the appellate court found that the trial court’s decision to deny Finein’s motion without explanation was not an error.
Second Assignment of Error: No Meritorious Defenses Presented
The court then turned to Finein’s second argument, that the trial court should have granted her motion because she had valid defenses. The court explained that to succeed on a motion for relief from judgment in a cognovit note case, the party must show a “meritorious defense” and that the motion was filed within a reasonable time.
The court then examined each of Finein’s alleged defenses. Finein argued that the note was invalid because it arose from a consumer transaction, not a commercial one. The court disagreed. It cited Ohio law, which defines a “consumer transaction” as one for personal, family, or household purposes. The court reasoned that the training Finein received was a condition of her employment and therefore not primarily for personal purposes. Thus, the court found that the cognovit note was valid because it arose from a commercial transaction.
The court also dismissed Finein’s other defenses, including her claims under New York law and the Trafficking Victims Protection Act. The court determined that these arguments did not constitute “meritorious defenses” because they did not challenge the integrity or validity of the note itself, the underlying debt, or the process used to obtain the judgment.
The Dissenting Opinion
Judge Kathleen Ann Keough dissented from the majority opinion. She argued that the employment agreement and training constituted a “consumer transaction” because the training served a personal, family, and educational purpose for Finein. Judge Keough stated that because the agreement was a consumer transaction, the cognovit note was invalid.
The Outcome
The appellate court sided with Overdrive, upholding the trial court’s decision. The court found that the trial court was not required to explain its decision and that Finein had not presented any meritorious defenses to the cognovit note. The court affirmed the judgment against Finein.