It is always difficult to predict the future, but I am not optimistic by what I see, so the following comments are not as upbeat as I would normally like to make. Chamaecyparis lawsoniana 'Sullivan' is a selection made of what is commonly called the Port Orford Cedar or Lawson falsecypress. Ir was selected by a nursery in Lake County, Ohio because it seemed based on their experience to be hardier than the normal species of this plant. Lawson falsecypress has a natural range along the coastal areas of Southwest Oregon and Northwest California which would mean a zone 6 hardiness. The nursery making the selection which they called 'Sullivan' claims it is zone 5 hardy. So in general, this plant is still marginally hardy for the posted Zone 5B in Dayton. I do not know the specifics of this past winter in Dayton, but much of the midwest was far colder than normal, so you could be seeing winter damage and burn on your plants. Since one tree looks worse than the other, is it possible the worst looking plant was to the west and saw more winter sun or wind than the better looking tree? If yes, then look closely at the new buds and see if they are swelling and looking healthy. If the buds look good and it was just winter damage, some patience may be required to see if the tree can recover. Unfortunately that is the good news. There is unfortunately the potential that you have some very bad news which you will have to deal with and it is too difficult to tell from your images to be sure. Lawson falsecypress or Port Orford Cedars have a fatal flaw. The are highly susceptible to the effects of a root fungus called Phytophthora. There are two types P. lateralis and P. cinnamomi which can cause root damage. At present there is no known cure for this fatal disease. The State of Oregon and the forestry industry has done a lot of research in this regard because Lawson Falsecypress is a highly prized lumber tree. They have developed a few Disease resistant rootstock (Drr) and this is being used as under stock in new grafted forest plantings in an attempt to better manage this fatal root disease. Monrovia is also using one of these Drr for some of the Lawson falsecypress plantings. This is all fairly recent and based on the size of your plants I am fairly certain yours are not on Drr. It is important to point out the rootstock is more resistant but not immune. The root disease can spread faster in poorly drained soil and the spores will remain after a tree is removed. So once you get the disease you should not plant a Lawson falsecypress back in the same spot. What typically happens is the fungus invades the roots and blocks the flow of water to the top of the tree. So typically the crown dies first. I don't see that in your image, but that isn't a sure sign this "root rot" is not occurring. What makes me concerned is this disease usually develops in larger tree specimens and can spread when the roots of two trees grow together. In Oregon they have gone to 20-25 foot spacings on new plantings to minimize the opportunity for spread. You said you lost one of the original three trees last year and suspect it was to under watering. If you tried to correct this by overwatering, and the soil has poor drainage, you may have unwittingly helped the Phytophthora to spread. If the one you lost was to the right of your image, then it could mean the disease is traveling from right to left. I hope that is not the case, but it seems a viable possibility. Your county agricultural extension service may be able to check the soil and a piece of the rootstock for this disease. I would discuss with them how best to sample for their analysis before you do take any samples. If the root looks dark or black it is also a sign root rot is occurring. If Phytophthora proves to be the case you will have the "opportunity" to remove and replace with another plant. Before you do select a replacement you need to understand what the soil drainage situation is in that location. Few conifers can adapt to poorly drained and overwatered soil conditions.