Musto et al v. Zaro

Filing 80

REPORT AND RECOMMENDATION: It is RECOMMENDED that default judgment in the total amount of $168,074.12 be entered against Defendant Paula Zaro. The Clerk is nevertheless DIRECTED to also send via regular and certified mail a copy of this Report and Recommendation to Defendant Paula Zaro at the address listed on the docket, namely, 45 Wapping Road, Kingston, MA 02364, and to certify on the record that it has done so. Objections to R&R due by 5/21/2019. Signed by Magistrate Judge Elizabeth Preston Deavers on May 7, 2019. (jlk) (This document has been sent by regular mail to the party(ies) listed in the NEF that did not receive electronic notification.)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
DAVE MUSTO, et al.,
Plaintiffs,
Case No. 2:17-cv-506
Judge James L. Graham
Chief Magistrate Judge Elizabeth P. Deavers

v.

PAULA ZARO,
Defendant.
REPORT AND RECOMMENDATION
This case arises from a dispute involving issues relating to the ownership and/or seizure
of a pure-bread male Cane Corso dog named Pepone and the consequent damages that may have
arisen from the failure to handle, show, and breed Pepone. Upon referral by the assigned District
Judge pursuant to 28 U.S.C. § 636(b) (ECF No. 73), this matter is before the undersigned for a
Report and Recommendation on the damages to be awarded to Plaintiffs against Defendant Paula
Zaro. For the reasons that follow, it is RECOMMENDED that the Court enter default judgment
against Defendant in the amount of $168,074.12.
I.
This Court has previously detailed the lengthy procedural history in this case (ECF Nos.
52, 72), which is incorporated by reference. Briefly, Plaintiffs originally filed their Verified
Complaint in the Delaware Court of Common Pleas, asserting claims for breach of contract,
unjust enrichment/quantum meruit, specific performance, intentional infliction of emotional
distress, fraudulent inducement, promissory estoppel, injunctive relief, declaratory judgment,
defamation, violation of Ohio Deceptive Trade Practices Act, false light, and tortious

interference with business relationships. (ECF No. 2.) Defendant removed the action to this
Court on June 12, 2017. (Id.; ECF Nos. 1.) Defendant’s answer to the Complaint was due on
January 24, 2019. (ECF No. 60.) When Defendant, who has been proceeding without the
assistance of counsel since August 28, 2018 (ECF No. 44), failed to file an answer, Plaintiffs
applied for entry of default (ECF No. 68), which the Clerk entered on January 30, 2019. (ECF
No. 69.) Thereafter, Plaintiffs moved for default judgment (ECF No. 70), which the Court
granted on March 18, 2019. (ECF No. 73.) The Court referred this matter to the undersigned to
conduct a hearing on damages. (Id.) The undersigned thereafter set a hearing for May 2, 2019,
and directed that the Clerk send a copy of the Order setting the hearing and a copy of the District
Judge’s Order granting default judgment (ECF No. 73) to Defendant by certified and regular
mail (ECF No. 75), notwithstanding the fact that the Court previously granted her request to
participate in electronic case filing (ECF No. 65).
The undersigned conducted an evidentiary hearing on May 2, 2019, and briefly
reconvened the hearing on May 3, 2019, for the limited purpose of admitting Plaintiffs’ exhibits
into evidence. Plaintiffs and their counsel appeared at the hearings. Although she had notice of
the hearing (ECF Nos. 75, 77, 78), Defendant did not appear or otherwise submit evidence. At
the hearings, Plaintiffs offered the testimony of Plaintiff Dave Musto as well as exhibits, which
were accepted into evidence and discussed in more detail below.
II.
“‘Even when a default judgment is warranted based on a party’s failure to defend, the
allegations in the complaint with respect to the amount of the damages are not deemed true. The
district court must instead conduct an inquiry in order to ascertain the amount of damages with
reasonable certainty.’” Vesligaj v. Peterson, 331 F. App’x 351, 355 (6th Cir. 2009) (quoting

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Credit Lyonnais Sec. (USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999)); see also Fed.
R. Civ. P. 55(b)(2) (permitting the Court to conduct a hearing to, inter alia, determine the
amount of damages); Flynn v. People’s Choice Home Loans, Inc., 440 F. App’x 452, 455, 2011
WL 4000849, at *2 (6th Cir. 2011) (“‘Where damages are unliquidated a default admits only
defendant’s liability and the amount of damages must be proved.’”) (quoting Antoine v. Atlas
Turner, Inc., 66 F.3d 105, 110 (6th Cir. 1995)). “A default judgment must not differ in kind
from, or exceed in amount, what is demanded in the pleadings.” Fed. R. Civ. P. 54(c). Plaintiffs
bear the burden of proving compensatory damages to a reasonable degree of certainty by a
preponderance of the evidence. Eggert v. Meritain Health, Inc., 428 F. App’x 558, 563 (6th Cir.
2011) (citations omitted). “Under Ohio law, punitive damages are recoverable in a tort action
when compensatory damages have already been awarded and ‘the actions or omissions of th[e]
defendant demonstrate malice or aggravated or egregious fraud.’” In re E. I. Du Pont De
Nemours and CompanyC-8 Pers. Injury Litig., No. 2:13-md-2433, 2015 WL 4943968, at *2
(S.D. Ohio Aug. 19, 2015) (quoting Ohio Rev. Code § 2315.21(C)). Plaintiffs must prove by
clear and convincing evidence that they are entitled to recover punitive damages. Id.; Ohio Rev.
Code § 2315.21(D)(4).
III.
At the hearing on May 2, 2019, Plaintiffs asked the Court to award damages in the
amount of $296,462.62. (Plaintiffs’ Exhibit 3 (breaking down request into categories of
damages).) The Court addresses each category in turn.
A.

Out of Pocket Damages
Plaintiffs ask the Court to award $8,388.50 in out of pocket costs attributable to their

damages related to their claims for breach of contract and fraudulent inducement. (Plaintiffs’

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Exhibit 3.) Plaintiffs itemize these damages as follows:
1.

February and March 2017 Entry Fees:

$667.00

2.

Infodog Online Entry Fees:

$103.50

3.

Handling Monthly Fees (February and March 2017):

$4,000.00

4.

DN Magazine Ad:

$675.00

5.

Dogs in Review Ad:

$610.00

6.

Mark Advertising (Ad Design Fees):

$576.00

7.

Photo shoot:

$250.00

8.

Mileage to Shows (ATL, Tallahassee, L’ville)*:
*(2,817 miles @ $0.535 per mile)

$1,507.00

TOTAL:

$8,388.50

(Id.)
In support of this request, Plaintiffs submitted copies of invoices related to most of the
expenses. (Plaintiffs’ Exhibit 4.) Plaintiff Dave Musto also testified as to the reasons for these
expenses, explaining that campaigning and showing a dog like Pepone, among other things,
significantly increases the value of the dog when it is ready to be studded and when selling
puppies.
The undersigned finds all of this evidence sufficient to support Plaintiffs’ request for out
of pocket damages. See Fed. R. Civ. P. 55(b)(2); Eggert, 428 F. App’x at 563. It is therefore
RECOMMENDED that the Court award to Plaintiffs $8,388.50 in out of pocket costs
attributable to their damages related to their claims for breach of contract and fraudulent
inducement.
B.

Damages from Loss of Breeding Rights
Plaintiffs ask the Court to award $120,000.00 attributable to their damages from loss of
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breeding rights related to their claims for breach of contract and fraudulent inducement.
(Plaintiffs’ Exhibit 3.) Plaintiffs itemize these damages as follows:
1.

6 puppies per litter x $2,000 = $12,000 x 4 litters = $48,000.00

2.

2 males kept from 4 litters x $2,400 average stud fee x 10 breedings (5 each) =
$24,000.00

3.

2 females from the 4 litters producing 6 puppies per litter (12 total puppies per litter) x
$2,000 = $24,000 x 2 litters = $48,000.00

4.

TOTAL DAMAGES: $120,000.00

(Id.)
In support of this request, Plaintiff Dave Musto testified that he had four breeding rights
of Pepone to any female he owned or co-owned. He explained that approximating six puppies
per litter is a conservative estimate as there are generally six to nine puppies per litter and some
females have as many as fourteen puppies in a litter. Having the breeding rights is important to
keep moving forward with Plaintiffs’ business, which is their livelihood that includes a breeding
program in addition to training and showing dogs. Plaintiff Dave Musto, who has been breeding
Cane Corsos since 2011, further testified that the above calculation is fair, noting, among other
things, that Plaintiffs have on one occasion purchased a single dog for $30,000.00. He also went
on to explain if he had bred Pepone, he would have collected and stored the semen as he has with
other dogs in the past but was not seeking reimbursement of those expenses and he would have
assumed the cost for such collection and storage.
The undersigned finds the uncontroverted testimony of Plaintiff Dave Musto, a breeder
with multiple years of experience in the industry, sufficient to support Plaintiffs’ request for
damages from loss of breeding rights. See Fed. R. Civ. P. 55(b)(2); Eggert, 428 F. App’x at 563.
It is therefore RECOMMENDED that the Court award to Plaintiffs $120,000.00 in damages

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from loss of breeding rights related to their claims for breach of contract and fraudulent
inducement.
C.

Damages from Defamation / False Light / Ohio Deceptive Trade Practices Act /
Tortious Interference
Plaintiffs next request $10,000.00 in damages related to their claims of defamation, false

light, Ohio Deceptive Trade Practices Act, and tortious interference. (Plaintiffs’ Exhibit 3.) As
previously noted, Plaintiff Dave Musto testified that showing and breeding dogs is their
profession and livelihood. Plaintiffs are constantly in the public eye at shows and on social
media. To maximize a dog’s success and financial value, Plaintiffs campaign with their dogs,
bringing judges’ attention to the animals prior to shows. At the shows, the judges and other
attendees, including potential clients, see how Plaintiffs interact with the dogs and what care they
give the dogs.
Plaintiff Dave Musto described the dog show in Louisville, Kentucky in March 2017 as
one of the biggest shows lasting four days (“the Louisville show”), with handlers flying in from
around the country and from outside the United States. When Plaintiffs could not find Pepone
mid-way through the Louisville show, Plaintiff Kathy Caton-Musto made an announcement
regarding the missing dog and the building went into lockdown (“the incident”). Handlers from
everywhere looked for Pepone and Plaintiff Dave Musto described the incident as his worst
nightmare to have Pepone missing in this public setting.
Two hours after Pepone went missing, Defendant texted him to say she had Pepone.
Plaintiff Dave Musto testified that the Cane Corso and dog show communities are small and
people quickly found out that Defendant took Pepone away from Plaintiffs at the Louisville
show. Plaintiff Dave Musto testified that some people, including clients, conclude that this must
have happened because Plaintiffs must not have taken care of Pepone. The Affidavit of Dave
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Musto (ECF No. 9-1 and presented at the hearing on May 2, 2019) further avers that after the
Louisville show, they learned that Defendant made multiple disparaging statements about
Plaintiffs mistreating Pepe while he was in their possession. (ECF No. 9-1 at ¶¶ 35–36.)
Plaintiff Dave Musto also testified that such assertions and the disappearance of Pepone at the
Louisville show hurt Plaintiffs’ reputation and cost them clients. He further testified that they
still have people approach them and say that they heard what happened and that Plaintiffs must
not have taken care of Pepone for Defendant to take him away from Plaintiffs.
Prior to the incident, Plaintiff Dave Musto testified that Plaintiffs enjoyed an impeccable
reputation in the community. He stated that Defendant’s assertions that they mistreated Pepone
were false, explaining that Pepone would not have continued to win points and rounds if he were
in poor condition, pointing to a win photo of Pepone taken in Georgia that Defendant later
advertised. (Plaintiffs’ Exhibit 5.) Plaintiff Dave Musto specifically testified that Pepone had
won events in the first two or three days during the Louisville show. To further demonstrate that
they took good care of the dog, he pointed to a letter from a veterinarian with over thirty years of
experience who attended the Louisville show, observed Pepone, and stated that the dog was in
excellent condition at the time of the incident. (Plaintiffs’ Exhibit 6.) Notably, he testified that
Defendant continued to show Pepone after she took the dog from Plaintiffs at the Louisville
show.
The undersigned finds the uncontroverted testimony of Plaintiff Dave Musto and exhibits
sufficiently support Plaintiffs’ request for damages related to their claims of defamation, false
light, Ohio Deceptive Trade Practices Act, and tortious interference. See Fed. R. Civ. P.
55(b)(2); Eggert, 428 F. App’x at 563; Yellow Book USA, Inc. v. Brandeberry, No. 3:10–CV–
025, 2011 WL 3240558, at *2 (S.D. Ohio July 28, 2011) (“[I]n cases of defamation per se, the

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law presumes the existence of damages. . . . Ohio Jury Instructions on damages for defamation
per se provide that the jury is to decide the amount of money that is reasonable and fair for
Brandeberry’s injuries directly caused by the alleged defamation.”) (citing, inter alia, O.J.I. CV
431.07(2)); Sayavich v. Creatore, No. 07–MA 217, 2009 WL 3165555, at *5 (Ohio Ct. App.
Sept. 29, 2009) (“‘[A]ctual injury is not limited to out-of-pocket loss. Indeed, the more
customary types of actual harm inflicted by defamatory falsehood include impairment of
reputation and standing in the community, personal humiliation, and mental anguish and
suffering.’”) (quoting Gilbert v. WNIR 100 FM, 142 Ohio App. 3d 725, 745 (Ohio Ct. App.
2001)). It is therefore RECOMMENDED that the Court award to Plaintiffs $10,000.00 in
damages related to their claims of defamation, false light, Ohio Deceptive Trade Practices Act,
and tortious interference.
D.

Punitive Damages
Plaintiffs also request $138,388.50 in punitive damages. (Plaintiffs’ Exhibit 3.) Plaintiff

Dave Musto explained that this requested amount represents the total of their out of pocket
damages ($8,388.50) plus damages from loss of breeding rights ($120,000.00) plus damages
related to their claims of defamation, false light, Ohio Deceptive Trade Practices Act, and
tortious interference ($10,000.00).
Ohio law permits the recovery of punitive damages for certain common law torts,
including defamation. Connor Group v. Raney, No. 3:14-cv-283, 2015 WL 13651287, at *5
(S.D. Ohio Feb. 24, 2015). “Punitive damages may be awarded on a finding of actual malice.”
Whitt Sturtevant, LLP v. NC Plaza LLC, No. 14AP–919, 43 N.E.3d 19, 41 (Ohio Ct. App. Sept.
29, 2015). “Actual malice is defined as ‘(1) that state of mind under which a person’s conduct is
characterized by hatred, ill will or a spirit of revenge, or (2) a conscious disregard for the rights

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and safety of other persons that has a great probability of causing substantial harm.’” Id.
(quoting Preston v. Murty, 32 Ohio St.3d 334 (Ohio 1987)). “The purpose of punitive damages
is twofold—to punish the tortfeasor and to deter similar conduct.” Whetstone v. Binner, 146
Ohio St.3d 395, 397 (Ohio 2016). A plaintiff has the burden of proving by clear and convincing
evidence that he or she is entitled to an award of punitive damages. Id. at 398; In re E. I. Du
Pont De Nemours and CompanyC-8 Pers. Injury Litig., 2015 WL 4943968, at *2; Ohio Rev.
Code § 2315.21(D)(4); Cabe v. Lunich, 70 Ohio St.3d 598, 601 (Ohio 1994). However, “an
award of punitive damages is not automatic. Even when a plaintiff can establish entitlement to
punitive damages, whether to impose punitive damages, and in what amount, is left to the trier of
fact.” Whetstone, 146 Ohio St.3d at 398; see also McGee v. Foshee, No. 2008–CA–69, 2009
WL 580740, at *2 (Ohio Ct. App. Mar. 6, 2009) (“A trial court has discretion to determine the
amount of punitive damages[.]”).
Here, the record contains clear and convincing evidence to support Plaintiffs’ entitlement
to punitive damages. As set forth in more detail above, Plaintiff Dave Musto’s uncontroverted
testimony establishes that Defendant took Pepone from Plaintiffs with no prior notice or
explanation during the middle of the Louisville show, a large, well-attended show within the
professional community. Defendant’s actions lead others in the professional community,
including potential clients, to conclude that she took Pepone away because Plaintiffs did not take
care of the dog. Moreover, Defendant later communicated to third parties that Plaintiffs failed to
take proper care of Pepone. However, the uncontroverted facts, including that Plaintiffs had
successfully passed numerous inspections undertaken by, inter alios, the American Kennel Club,
that Pepone had successfully shown and won events, that an experienced veterinarian saw
Pepone at the Louisville show and stated that the dog was in excellent condition, and that

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Defendant continued to show Pepone after taking him from Plaintiffs, belie Defendant’s
assertions. This evidence establishes that Defendant, at the least, consciously disregarded the
truth to the detriment of Plaintiffs’ reputation in the professional community. See Whitt
Sturtevant, LLP, 43 N.E.3d at 41. Considering the record as a whole, the undersigned therefore
finds that the Court’s discretion is best exercised in award punitive damages in the amount of
$50,000.00, i.e., five times the amount of the recommended damages related to Plaintiffs’ claim
of defamation, which will serve the purpose of punishing Defendant and deterring similar
conduct. See Whitt Sturtevant, LLP, 43 N.E.3d at 41; Whetstone, 146 Ohio St.3d at 397; McGee,
2009 WL 580740, at *2; see also See Fed. R. Civ. P. 55(b)(2); Eggert, 428 F. App’x at 563.
Accordingly, it is RECOMMENDED that the Court award punitive damages to Plaintiffs in the
amount of $50,000.00.
E.

Attorney’s Fees and Costs
Finally, Plaintiffs seek recovery of their attorney’s fees and costs in the amount of

$19,685.62. (Plaintiffs’ Exhibits 3 and 7.) In light of the evidence and awards recommended
above, the undersigned finds that an award of such fees and costs is appropriate. Having
reviewed counsel’s invoices for securing a favorable outcome for Plaintiffs (see Exhibit 7), the
undersigned further finds that these fees and costs are reasonable and necessary. It is therefore
RECOMMENDED that the Court award to Plaintiffs $19,685.62 in attorney’s fees and costs.
III.
For the foregoing reasons, it is RECOMMENDED that default judgment in the total
amount of $168,074.12 be entered against Defendant Paula Zaro based on the following
breakdown:

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Out of Pocket Costs

$8,388.50

Breeding Rights Damages

$120,000.00

Defamation, false light, Ohio Deceptive Trade
Practices Act, tortious interference

$10,000.00

Punitive Damages

$50,000.00

Attorney’s Fees and Costs

$19,685.62

TOTAL:

$208,074.12

Although Defendant, at her own request, is registered for electronic filing (see ECF No.
65), the Clerk is nevertheless DIRECTED to also send via regular and certified mail a copy of
this Report and Recommendation to Defendant Paula Zaro at the address listed on the docket,
namely, 45 Wapping Road, Kingston, MA 02364, and to certify on the record that it has done so.
PROCEDURE ON OBJECTIONS
If any party seeks review by the District Judge of this Report and Recommendation, that
party may, within fourteen (14) days, file and serve on all parties objections to the Report and
Recommendation, specifically designating this Report and Recommendation, and the part in
question, as well as the basis for objection. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b).
Response to objections must be filed within fourteen (14) days after being served with a copy.
Fed. R. Civ. P. 72(b).
The parties are specifically advised that the failure to object to the Report and
Recommendation will result in a waiver of the right to de novo review by the District Judge and
waiver of the right to appeal the judgment of the District Court. See, e.g., Pfahler v. Nat=l Latex
Prod. Co., 517 F.3d 816, 829 (6th Cir. 2007) (holding that “failure to object to the magistrate
judge’s recommendations constituted a waiver of [the defendant’s] ability to appeal the district
court’s ruling”); United States v. Sullivan, 431 F.3d 976, 984 (6th Cir. 2005) (holding that
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defendant waived appeal of district court’s denial of pretrial motion by failing to timely object to
magistrate judge’s report and recommendation). Even when timely objections are filed,
appellate review of issues not raised in those objections is waived. Robert v. Tesson, 507 F.3d
981, 994 (6th Cir. 2007) (“[A] general objection to a magistrate judge’s report, which fails to
specify the issues of contention, does not suffice to preserve an issue for appeal . . . .”) (citation
omitted)).
IT IS SO ORDERED.

Date: May 7, 2019

/s/ Elizabeth A. Preston Deavers
ELIZABETH A. PRESTON DEAVERS
CHIEF UNITED STATES MAGISTRATE JUDGE

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