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A ruling by a state appeals court keeps alive the hopes of Tony Packo's Inc. co-owner Robin Horvath that he might eventually win back control of the iconic Toledo restaurant chain.
In its decision, the Ohio 6th District Court of Appeals said Mr. Horvath can appeal an August, 2010, Lucas County Common Pleas Court decision that awarded Fifth Third Bank a $2.6 million judgment against Tony Packo's Inc., Mr. Horvath, and his uncle, Tony Packo, Jr. Mr. Horvath owns half the firm; Mr. Packo, Jr., and his son, Tony Packo III, the other half.
The ruling, issued Thursday, "is basically saying that we now have jurisdiction to hear it. It means that, for that part of the case, three of our members have said, 'Yes, we can hear it now,' " 6th District Court Judge Peter Handwork said.
Judge Handwork was not involved in the case. The three appellate justices who issued the ruling were Mark Pietrykowski, Arlene Singer, and Thomas Osowik.
The appeals court also found that three other issues were not ready to be appealed at this time:
A decision denying Mr. Horvath's request to inspect company records, reject contracts, and extend a deadline for making offers to buy the company.
An Oct. 7 decision to sell the company to TP Foods LLC.
A decision that gives control of a separate lawsuit filed by Mr. Horvath to a court-appointed receiver.
The issue ready for appeal stems from Fifth Third's decision to seek immediate repayment of a $2.6 million loan it had made to Tony Packo's Inc. after Mr. Horvath became embroiled in a dispute with Mr. Packo, Jr., and Mr. Packo III. The court awarded the bank the $2.6 million judgment, which included a combined $669,000 judgment against Mr. Horvath and Mr. Packo, Jr.
In September, 2011, Mr. Horvath asked to be released from the judgment, claiming that the bank had taken $140,000 of his funds and arguing that Fifth Third and the two Packos had acted in concert to bring about the judgment. Mr. Horvath alleged that the Packos had defaulted on the loan payments, causing the bank to seek the judgment, and planned to buy out Mr. Horvath's interest in the company with financing from Fifth Third.
In a court filing on Sept. 6, 2011, Fifth Third officials called Mr. Horvath's allegations "absolutely nonsensical" and said Mr. Horvath didn't present any evidence to back up his claims.
Mr. Horvath's request that he and Tony Packo's Inc. be released from the judgment was denied by Common Pleas Judge Gene Zmuda.
Toledo attorney Ralph DeNune III, who works as a receiver in many court cases, said that when the appeals court hears Mr. Horvath's case on the $2.6 million bank judgment, it could rule one of three ways.
First, it could affirm Judge Zmuda's ruling. "They could also go Horvath's way and say we're going to void the [judgment] against you and the company," Mr. DeNune said.
"But they may send it back to Judge Zmuda and say, 'Hey, have a hearing and determine whether Horvath's arguments are valid, which would basically send it back to trial," Mr. DeNune said. "The appeals court would be saying, 'OK, Mr. Horvath, you've got your trial. Let's hear the arguments.' "
Geoffrey Rapp, a law professor at the University of Toledo College of Law, said the appeals court could seek a fourth option -- send the issue back to Judge Zmuda with specific instructions on how to look at Mr. Horvath's request to be let out of the judgment. "They could say, 'We think you did something one way, but if done another there could be a different outcome. So do it under a different approach and see what decision you come to," Mr. Rapp said.
Also, the appeals court could decide that Mr. Horvath is seeking personal financial relief from the judgment and issue a narrow ruling clarifying his rights under the August, 2010, judgment.
"Rulings can clarify a party's rights. So it might be that he gets some settlement out of this order that protects his personal assets or his ownership stake in the company," Mr. Rapp said.
No matter how the 6th District Court rules, Mr. DeNune said, he believes its decision would not necessarily invalidate what has happened to Tony Packo's Inc. while in receivership under the control of court-appointed receiver Steven Skutch.
Mr. DeNune said that because Mr. Skutch was appointed by the court in August, 2010, at the request of Mr. Horvath, "… I think all of his actions to this point would be valid."
Contact Jon Chavez at: firstname.lastname@example.org or 419-724-6128.