Figgie v. Figgie , 2021 Ohio 1812 ( 2021 )

[Cite as Figgie v. Figgie, 2021-Ohio-1812.]
COURT OF APPEALS OF OHIO
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
SUSAN A. FIGGIE, ET AL., :
Plaintiffs-Appellants, :
No. 109834
v. :
BETSY FIGGIE, ET AL., :
Defendants-Appellees. :
JOURNAL ENTRY AND OPINION
JUDGMENT: AFFIRMED
RELEASED AND JOURNALIZED: May 27, 2021
Civil Appeal from the Cuyahoga County Court of Common Pleas
Probate Division
Case No. 2019ADV242885
Appearances:
Benesch, Friedlander, Coplan & Aronoff L.L.P., Yelena
Boxer and Kristen-Elise F. DePizzo, for appellant Susan
A. Figgie, through her conservator Harry E. Figgie IV.
Baker & Hostetler L.L.P., Michael K. Farrell, Robert R.
Galloway, and Corey N. Barnes, for appellee Betsy Figgie,
Trustee.
Calfee Halter & Griswold, L.L.P., and Mitchell G. Blair,
Colleen M. O’Neil, Kelly A. Callam, and Alexandra
Forkosh; Ulmer & Berne, L.L.P., Steven S. Kaufman,
Robin M. Wilson, and Ashtyn N. Saltz, for appellee Brent
Ballard, in his capacity as Co-Trustee for the Harry E.
Figgie, Jr. Trust, Trustee for the Nancy F. Figgie Trust, and
Trustee for the Matthew P. Figgie Trust.
EMANUELLA D. GROVES, J.:
Plaintiff-appellant, Susan A. Figgie (“Susan”), through her conservator,
Harry E. Figgie, IV (“Harry IV”), 1 appeals the probate court’s decision granting the
Civ.R. 12(B)(6) motion to dismiss filed by defendant-appellee Brent Ballard
(“Ballard”), as co-Trustee of the Harry E. Figgie II Trust Agreement dated
July 15, 1976, as amended; Trustee of the Nancy F. Figgie Trust Agreement dated
September 7, 1976, as amended; and Trustee of the Matthew P. Figgie Trust
Agreement dated October 20, 1985, as amended (collectively, the “Trust
Defendants”). Appellant contends that she sufficiently pled claims for fraud, tortious
interference with expectancy of inheritance, unjust enrichment, conversion, and
constructive trust arising out of a 2001 stock redemption against the Trust
Defendants and that the probate court, therefore, erred in granting the Trust
Defendants’ motion to dismiss. For the reasons that follow, we affirm the probate
court’s decision.
Procedural History and Factual Background
In the companion appeal of the underlying case, Figgie v. Figgie, 8th
Dist. Cuyahoga No. 109829, 2021-Ohio-1195, we accurately and comprehensively set
forth the factual background and procedural history. For consistency, we adopt that
summary and recount as follows:
Nancy Figgie (“Nancy”) and Harry E. Figgie, Jr. (“Harry II”) had three
children — Harry E. Figgie, III (“Harry III”), Mark P. Figgie (“Mark”),
1Susan is developmentally disabled and her brother, Harry IV, serves as her
conservator. For purposes of this appeal, we will use “Appellant” where we would
normally refer to Susan.
and Matthew P. Figgie (“Matthew”). On August 23, 1983, Harry III
executed a trust agreement that established the Figgie Family Trust
(the “Harry III Trust”), of which his three children, Harry IV, Katie, and
[Susan], were beneficiaries.2
Harry III died on December 21, 1999. Among the assets of the Harry
III Trust at the time of Harry III’s death were classes of voting and
nonvoting shares of Clark Reliance Corporation (“CRC”), a closely held
corporation built by the Figgie family. Harry II had conveyed the CRC
stock to the Harry III Trust while Harry III was alive.
Prior to his death, Harry III had a “bitter falling out” with his parents
(Harry II and Nancy) and brother Matthew. This estrangement
continued until Harry III died. Pursuant to the terms of the trust
agreement, after Harry III died, Harry II served as the trust advisor for
the Harry III Trust, charged with decisions relating to the investment,
sale, and purchase of stock for the trust. Wilmington Trust Co. was the
trustee of the Harry III Trust.
Following Harry III’s death, the Harry III Trust owned 4,000 shares of
Class A CRC stock and 76,000 shares of Class B CRC stock (collectively,
the “CRC stock”). On October 21, 2001, CRC redeemed the CRC stock
from the Harry III Trust for a purchase price of $1,909,007 “through a
transaction that was initiated and directed by [Harry II]” (the “2001
CRC stock redemption”). At the time of the 2001 CRC stock
redemption, Harry II, Nancy, Mark, and Matthew were all
shareholders of CRC. Harry II was also an officer of CRC or a member
of its board of directors. At the time of the 2001 CRC stock redemption,
Harry IV was 18, Katie was a minor, and Susan was “cognitively and/or
medically disabled.”
Harry II died on July 14, 2009. Prior to their deaths, Harry II, Nancy,
and Matthew each executed trust agreements establishing separate
trusts — the Harry E. Figgie II Trust Agreement dated July 15, 1976, as
amended (the “Harry II Trust”), the Nancy Figgie Trust Agreement
dated September 7, 1976, as amended (the “Nancy Trust”), and the
Matthew P. Figgie Trust Agreement dated October 20, 1985, as
amended (the “Matthew Trust”).
2 The trust agreement for the Harry III Trust was not attached to the first amended
complaint. Accordingly, we assume, but cannot confirm, that the first amended
complaint accurately sets forth the terms of the trust agreement.
On December 20, 2018, Katie and Harry IV, individually and as
conservator of [Susan], filed suit in the Cuyahoga County Court of
Common Pleas, Probate Division, against (1) defendant-appellee Betsy
Figgie (“Betsy”), as co-trustee of the Harry E. Figgie II Trust Agreement
dated July 15, 1976, as amended, (2) Ballard, as co-Trustee of the Harry
E. Figgie II Trust Agreement dated July 15, 1976, as amended, Trustee
of the Nancy F. Figgie Trust Agreement dated September 7, 1976, as
amended, and Trustee of the Matthew P. Figgie Trust Agreement dated
October 20, 1985, as amended and (3) CRC related to the 2001 CRC
stock redemption (Case No. 2018ADV239801).
On April 20, 2019, appellants filed a first amended complaint in Case
No. 2018ADV239801, asserting claims for declaratory judgment,
fraud, tortious interference with expectancy of inheritance, unjust
enrichment, constructive trust, and civil conspiracy against CRC and
the Trust Defendants (collectively, “defendants”).
In the first amended complaint, [Appellant] alleged that as trust
advisor of the Harry III trust, Harry II owed fiduciary duties, including
an “undivided duty of good faith and loyalty,” to the Harry III Trust and
to the beneficiaries of the trust, and that, at the time of the 2001 CRC
stock redemption, Harry II “was operating under several serious and
insurmountable conflicts of interest.” [Appellant] further alleged that
CRC and Harry II’s conduct in connection with the 2001 CRC stock
redemption was “misleading, in bad faith and/or fraudulent in nature”
and that the purchase price the Harry III Trust received for its CRC
stock during the 2001 CRC stock redemption was “well below market
value,” resulting in losses to the Harry III Trust and to appellants as
beneficiaries of the trust. Specifically, [Appellant] alleged that Harry II
and CRC (1) “did not properly, fairly or adequately secure or evaluate a
valuation of the CRC [s]tock,” (2) relied on a valuation of CRC prepared
by a non-independent person/company, (3) did not secure an
independent valuation of the CRC stock, (4) manipulated or relied on
known and unreasonably manipulated data to reduce the valuation of
the CRC stock, and (5) “maliciously combined” to secure the
redemption of CRC stock at a substantial savings to CRC in order to
benefit CRC and other Figgie family shareholders at the expense of the
Henry III Trust and its beneficiaries.
[Appellant] claimed that as a result of the 2001 CRC stock redemption,
CRC and its remaining shareholders recognized “a significant increase”
in the value of their shares and that this appreciated value could be
traced to assets currently held by CRC, the Harry II Trust, the Nancy
Trust, and the Matthew Trust. [Appellant] alleged that [she] had been
deprived of the CRC stock (or its fair value in assets) as part of their
inheritance, that the defendants had been unjustly enriched by the
“wrongful, fraudulent conduct” that led to the 2001 CRC stock
redemption and that [Appellant] was, therefore, entitled to the
imposition of a constructive trust over “the improper benefits, gains,
appreciation, profits and unjust enrichment derived from the 2001
redemption of the CRC [s]tock.”
[Appellant] claimed that [she] did not discover, and had no way of
discovering, “the false, flawed and concealed data and valuation
process” that was used in the 2001 CRC stock redemption until
November 25, 2018.3 [Appellant] requested an order declaring (1) that
the 2001 redemption of the CRC stock was “below value,” (2) that
“improper benefits and proceeds” from the 2001 CRC stock
redemption exist in the Harry II Trust, the Nancy Trust, the Matthew
Trust, and CRC, (3) the amount of the lost value, and (4) that
defendants are “equitably estopped from denying liability” or denying
the “claims stemming from the fraudulent conduct” alleged in the first
amended complaint. [Appellant] also sought compensatory and
punitive damages, attorney fees, costs, and expenses and an order
imposing a constructive trust over the defendants’ assets “derived or
traced from the improper benefits, gains, appreciation [or] profits”
from the 2001 CRC stock redemption.
On May 24, 2019, CRC and the Trust Defendants filed separate motions
to dismiss the first amended complaint pursuant to Civ.R. 12(B)(6).
The Trust Defendants argued that the first amended complaint failed
to state a claim for which relief could be granted against the Trust
Defendants because: (1) it contained no allegations of actionable
conduct by the Trust Defendants; (2) any liability on the part of Harry
II could not be imputed to the Trust Defendants; (3) appellants’ claims
were barred by the applicable statute of limitations, including R.C.
3 It is unclear from the first amended complaint how appellants allegedly
discovered these facts. The first amended complaint simply avers that certain,
unidentified “disclosures” were made “in late November 2018” regarding the 2001 CRC
stock redemption and that appellants “discovered” certain “information” on
November 25, 2018 “that led them to later find out” about the circumstances surrounding
the 2001 CRC stock redemption.
[In Appellant’s first amended complaint, filed as conservator for Susan, it is alleged
that because of Susan’s disability, she was unable to understand or consent to the
transaction in 2001. Further, that due to Susan’s disability, she has, to this day, not
discovered, and had no way to discover the allegedly false, flawed, and concealed data and
valuation used when the CRC stock was redeemed by CRC from the Harry III Trust.]
2117.06, 2305.09(c), (d), and 2305.14; (4) appellants failed to plead
their fraud claim against the Trust Defendants with particularity as
required under Civ.R. 9(B); (5) appellants could not establish essential
elements of their unjust enrichment claim against the Trust
Defendants, and (6) the imposition of a constructive trust is a remedy,
not an independent cause of action.
[Appellant] filed an opposition and maintained that the allegations of
the first amended complaint — describing how the 2001 CRC stock
redemption was fraudulent, “detail[ing] the concealment of material
facts relating to the value of the stock transaction, ‘with the knowledge,
acquiescence and/or assistance of all Defendants (or their
predecessors)’” and asserting that the Trust Defendants “knew about
the fraud,” “participated in it” and “retained the benefit of
misrepresentations” that caused [Appellant] “substantial damages” —
were sufficient to state a claim for which relief could be granted under
Civ.R. 12(B)(6). [Appellant] denied that the statute of limitations set
forth in R.C. 2117.06 applied to [her] claims, argued that all applicable
statutes of limitations were tolled through application of the discovery
rule and asserted that constructive trust was a “stand-alone claim” or
was “properly joined” pursuant to Civ.R. 18.
On June 18, 2020, the probate court granted the Trust Defendants’
motion to dismiss, dismissing all six counts against the Trust
Defendants. With respect to [Appellant’s] fraud claim, the probate
court held that although [Appellant] had sufficiently pled a fraud claim
against CRC — based on CRC’s alleged concealment of information
material to the 2001 CRC stock redemption — [Appellant] had not
sufficiently pled a fraud claim against the Trust Defendants. The
probate court explained:
The Court finds that the essence of Plaintiff’s fraud claim alleges that
[CRC] and [Harry II] had a duty to disclose information which was
concealed from the Plaintiff regarding the 2001 redemption of CRC
stock. Specifically, Plaintiff assert that CRC, [Harry II], and, upon
information and belief, all other Defendants (or their predecessors in
interest), knew the 2001 redemption of CRC stock was fraudulent,
deflated, and manipulated, and that such information was concealed
from Plaintiff. Upon review of the allegations in the First Amended
Complaint, Plaintiff has sufficiently alleged with particularity that CRC
had a duty to disclose, but instead concealed information, which was
material to the transaction of the redemption of CRC stock, and that
Plaintiffs justifiably relied upon the false and misleading information
provided by CRC which resulted in an alleged monetary injury to the
Plaintiff. This Court cannot find, however, that Plaintiff has sufficiently
plead the allegations of fraudulent conduct against [the Trust
Defendants], as Plaintiffs have not plead with particularity any alleged
fraudulent conduct by the Trust Defendants in the redemption of CRC
stock.
Plaintiff allege that the Trust Defendants, or their predecessors in
interest, knew of the allegedly fraudulent and/or manipulative
redemption of CRC stock in 2001. As such, Plaintiff assert that upon
their information and belief, the Defendants, or their predecessors in
interest, knew the 2001 redemption of CRC stock was fraudulent.
Plaintiffs have failed to identify any specific representations or
concealment of facts made by the Trust Defendants upon which
Plaintiffs relied. Plaintiff further request that this Court hold the Trust
Defendants liable for alleged fraudulent conduct and actions, not of the
named Trust Defendants, but of their predecessors in interest. The
allegations asserted against the Trust Defendants, or their predecessors
in interest, do not rise to the level of particularity as required by Civ.R.
9. Consequently, upon review of the First Amended Complaint, the
Court finds that Plaintiff has failed to plead the claim of fraud with
particularity as to the Trust Defendants[.]
With respect to [Appellant’s] claim for declaratory judgment, the
probate court held that [Appellant’s] request for an order declaring that
“improper benefits and proceeds” from the 2001 CRC stock
redemption are in the Harry II Trust, the Nancy Trust, and the Matthew
Trust and that defendants are “equitably estopped from denying
liability” or denying the “claims stemming from the fraudulent
conduct” asserted in the complaint were not “justiciable controversies
between adverse parties which fall under R.C. Chapter 2721” and,
therefore, dismissed that claim as to the Trust Defendants.
The probate court determined that [Appellant’s] claims of tortious
interference with expectancy of inheritance, unjust enrichment,
constructive trust, and civil conspiracy against the Trust Defendants
failed as well. The probate court held that [Appellant] could not
establish the expectancy-of-inheritance or causation elements for its
tortious interference claim because appellants’ expectancy of
inheritance “occurred in 1999 when they inherited the trust assets upon
Harry III’s death.” The probate court held that [Appellant’s] unjust
enrichment claim was barred by the statute of limitations and that any
alleged benefit conferred upon the Trust Defendants as a result of the
2001 CRC stock redemption was an indirect benefit that could not
support a claim for unjust enrichment against them. The probate court
further held that constructive trust is “a form of equitable relief” in
cases of fraud and unjust enrichment, not an independent claim, and
that [Appellant] could not prevail on their civil conspiracy claim against
the Trust Defendants because the Trust Defendants had not been
named in the civil conspiracy count and the underlying fraud claim
against the Trust Defendants had been dismissed. The probate court
also determined that there was no just reason for delay pursuant to
Civ.R. 54.
Id. at ¶ 3-17.
Appellant now appeals and assigns the following errors for our
review:
Assignment of Error No. 1
The probate court improperly dismissed appellant’s constructive trust
claim against the Trust Defendants.
Assignment of Error No. 2
The probate court also incorrectly dismissed appellant’s claim for
unjust enrichment against the Trust Defendants.
Assignment of Error No. 3
The probate court incorrectly determined that appellant failed to state
a claim of fraud against the Trust Defendants.
Assignment of Error No. 4
The probate court incorrectly dismissed appellant’s claim for tortious
interference with expectancy of inheritance.
Assignment of Error No. 5
The probate court incorrectly dismissed appellant’s claim for conversion. 4
Law and Analysis
The probate court dismissed the complaint pursuant to Civ.R.
12(B)(6). “A Civ.R. 12(B)(6) motion to dismiss for failure to state a claim on which
4 Appellant does not challenge the probate court’s dismissal of the claims for
declaratory judgment or civil conspiracy. Accordingly, we do not further address those
claims here.
relief can be granted ‘“is procedural and tests the sufficiency of the complaint.”’
Harper v. Weltman, Weinberg & Reis Co., L.P.A., 8th Dist. Cuyahoga No. 107439,
2019-Ohio-3093, ¶ 11, quoting State ex rel. Hanson v. Guernsey Cty. Bd. of
Commrs., 65 Ohio St.3d 545, 548, 605 N.E.2d 378 (1992), citing Assn. for Defense of
Washington Local School Dist. v. Kiger, 42 Ohio St.3d 116, 117, 537 N.E.2d 1292(1989).
“A trial court’s review of a Civ.R. 12(B)(6) motion to dismiss is limited
to the four corners of the complaint along with any documents properly attached to,
or incorporated within, the complaint.” Lakeside Produce Distrib. v. Wirtz, 8th Dist.
Cuyahoga No. 109460, 2021-Ohio-505, ¶ 11, citing Glazer v. Chase Home Fin. L.L.C.,
8th Dist. Cuyahoga Nos. 99875 and 99736, 2013-Ohio-5589, ¶ 38. “Within those
confines, a court accepts as true all material allegations of the complaint and makes
all reasonable inferences in favor of the nonmoving party.” Srokowski v. Shay, 8th
Dist. Cuyahoga No. 100739, 2014-Ohio-3145, ¶ 10, citing Fahnbulleh v. Strahan, 73
Ohio St.3d 666, 667, 1995-Ohio 295, 653 N.E.2d 1186.
“It is a long-standing principle that a plaintiff is not required to prove
his or her case within the complaint at the pleading stage.” Dean v. Cuyahoga Cty.
Fiscal Office, 8th Dist. Cuyahoga No. 107824, 2019-Ohio-5115, ¶ 16, citing York v.
Ohio State Hwy. Patrol, 60 Ohio St.3d 143, 144-145, 573 N.E.2d 1063 (1991).
“‘Consequently, as long as there is a set of facts, consistent with the plaintiff's
complaint, which would allow the plaintiff to recover, the court may not grant a
defendant's motion to dismiss.”’ Id., quoting York at 425.
An appellate court reviews de novo of a trial court’s decision granting
a motion to dismiss under Civ.R. 12(B)(6). Naiman Family Partners, L.P. v. Saylor,
8th Dist. Cuyahoga No. 108607, 2020-Ohio-4987, ¶ 11, citing Perrysburg Twp. v.
Rossford, 103 Ohio St.3d 79, 2004-Ohio-4362, 814 N.E.2d 44, ¶ 5. “In applying the
de novo standard of review, this court independently reviews the record without
affording deference to the trial court’s judgment.” Penniman v. Univ. Hosps. Health
Sys., 8th Dist. Cuyahoga No. 107406, 2019-Ohio-1673, ¶ 7, citing Bandy v. Cuyahoga
Cty., 8th Dist. Cuyahoga No. 106635, 2018-Ohio-3679, ¶ 10, citing Herakovic v.
Catholic Diocese of Cleveland, 8th Dist. Cuyahoga No. 85467, 2005-Ohio-5985, ¶ 13.
Preliminarily, as previously noted, this is a companion appeal based
on the same operative facts and circumstances as Figgie, 8th Dist. Cuyahoga No.
109829, 2021-Ohio-1195.5 In the instant matter, assignments of error Nos. 1, 2, 3,
and 4 are identical to the four assignments of error raised in the companion appeal.
Id. at ¶ 18.
There, following a detailed analysis of the parties’ arguments and
appropriate case law, we found that the probate court did not err in dismissing the
complaint as to the Trust Defendants. Having addressed the identical errors,
concerning the same operative facts and circumstances, we now, in accordance and
5
At footnote 2 in the brief to this court, Appellant stated: “Issues Presented for
Review 1-4 largely mirror those Issues raised by Appellants Harry E. Figgie, IV and
Catherine E. Figgie in their brief filed on September 14, 2020 in companion Appeal No.
109829.” Where appropriate, in the interest of judicial efficiency, the arguments
presented by these appellants are incorporated within.
in harmony with that decision, overrule assignments of error Nos. 1, 2, 3, and 4 of the
present appeal.
We turn our attention to the fifth assignment of error, wherein
Appellant argues the probate court erred when it dismissed her claim for conversion.
“Conversion is “‘the wrongful control or exercise of dominion over the
property belonging to another inconsistent with or in denial of the rights of the
owner.’” Poston ex rel. Poston v. Shelby-Love, 8th Dist. Cuyahoga No. 104969, 2017-
Ohio-6980, ¶ 18, quoting Beavers v. PNC Bank, N.A., 8th Dist. Cuyahoga No. 99773,
2013-Ohio-5318, ¶ 29 “‘“‘“The elements of a conversion are: (1) plaintiff’s ownership
or right to possession of the property at the time of conversion; (2) defendant’s
conversion by a wrongful act or disposition of plaintiff's property rights; and (3)
damages.”’”’” Poston at id., quoting Schiff v. Dickson, 8th Dist. Cuyahoga Nos. 96539
and 96541, 2011-Ohio-6079, ¶ 30, quoting Dream Makers, Inc. v. Marshek, 8th Dist.
Cuyahoga No. 81249, 2002-Ohio-7069, ¶ 19, quoting Haul Transport of Va., Inc. v.
Morgan, 2nd Dist. No. 14859, 1995 Ohio App. LEXIS 2240, 9, quoting 18 American
Jurisprudence 2d, Conversion, Section 2, at 146-147 (1985).
Further,
[i]f defendant came into possession of the property lawfully, the
plaintiff must prove two additional elements to establish conversion:
(1) that the plaintiff demanded the return of the property after the
defendant exercised dominion or control over the property; and (2)
that the defendant refused to deliver the property to the plaintiff.
6750 BMS, L.L.C. v. Drentlau, 8th Dist. Cuyahoga No. 103409, 2016-Ohio-1385,
¶ 28, citing R&S Distrib., Inc. v. Hartge Smith Nonwovens, L.L.C., 1st Dist.
Hamilton No. C-090100, 2010-Ohio-3992, ¶ 23. “The measure of damages in a
conversion action is the value of the converted property at the time it was
converted.” BMS at id., citing Tabar v. Charlie’s Towing Serv., 97 Ohio App.3d 423,
427-428, 646 N.E.2d 1132 (8th Dist.1994).
The probate court’s well-reasoned opinion stated in pertinent part as
follows:
[T]he Court does not find that Plaintiff’s allegations meet the elements
for a claim of conversion. On October 20, 2001, CRC redeemed from
the Harry III Trust the CRC shares through a transaction that was
allegedly directed by Harry Jr. as the Trust Advisor of the Harry III
Trust. This was a transaction which involved the redemption of the
shares for a purchase; it was not a wrongful exercise of dominion over
property in exclusion of the rights of Plaintiff, and CRC was not
withholding the shares from Plaintiff possession under a claim
consist[ent] with its rights. Even if the Court were to find the shares
were purchased for less than their worth due to the allegedly fraudulent
conduct of CRC, the transfer of Plaintiff’s property rights of the CRC
Shares during the redemption do not amount to conversion. As such,
Count II of the First Amended Complaint should be dismissed in its
entirety.
As the probate court aptly noted, even if it were to find that the shares
were purchased for less than what they were worth, due to the allegedly fraudulent
conduct of CRC, the transfer of the plaintiff’s property rights of the CRC shares
during the redemption does not amount to conversion. Significantly, here, because
CRC paid the Harry III Trust for the shares it once held, the Harry III Trust was not
dispossessed of its property interest in the CRC shares. Because the Harry III Trust
received proceeds from the redemption of the shares, this was not a wrongful control
or exercise of dominion over property belonging to another.
Appellant acknowledges as much, positing that “this was a transaction
which involved the redemption of the shares for a purchase price * * * rather than a
wrongful exercise of dominion over property in exclusion of the rights of plaintiff.”
The position is not well taken because it is undisputed that the Harry III Trust was
compensated at the time of the redemption, albeit in an amount not presently
pleasing. As such, the conversion claim cannot be maintained.
Nonetheless, Appellant argues Ohio courts have recognized that a
claim for conversion may be maintained in cases involving the transfer of corporate
stock. In support, Appellant cites Crowe v. FirstEnergy Corp., 5th Dist. Holmes No.
10CA023, 2011-Ohio-5092. However, Crowe is distinguishable from the instant
matter and does not support the position Appellant advances.
In Crowe, husband and wife were divorced on July 28, 2008. Per the
terms of the parties’ separation agreement, husband agreed to transfer 50 percent of
his shares of common stock in FirstEnergy Corp. to wife. At the time of the divorce,
husband owned 844.137 shares of common stock in FirstEnergy Corp. Husband
subsequently delivered to FirstEnergy’s Shareholder Services Department a stock
power, dated August 28, 2008, requesting a transfer of one-half of his FirstEnergy
shares of common stock to his wife. Because a dividend reinvestment was due to be
made on or about September 1, 2008, FirstEnergy waited until September 13, 2008,
to transfer the shares of the stock, after the reinvested shares were purchased and
posted to all accounts.
However, FirstEnergy mistakenly permitted the transfer of all of the
husband’s shares of stock to the wife (850.558 shares at that time). At the time of
transfer, the transfer price of the stock was $69.42 per share. On September 26,
2008, the wife, who was unaware that FirstEnergy had mistakenly transferred 100
percent of the husband’s shares of FirstEnergy stock to her, had all 850 shares
deposited into a brokerage account through a direct registration system option. In
March 2009, the wife, still unaware of the mistake, sold the shares of FirstEnergy
stock.
In April 2009, the husband became aware that FirstEnergy had
transferred 100 percent of his FirstEnergy stock to his wife, notified the wife’s
attorney of the error, and demanded that 50 percent of the shares be transferred back
to his account. The husband also contacted FirstEnergy and informed the company
it had mistakenly transferred all of his FirstEnergy shares of stock to his wife.
On May 1, 2009, FirstEnergy’s stock closed at $42.38 per share.
FirstEnergy and the wife worked together to transfer 425 shares of FirstEnergy stock
back to the husband. In light of the mistake of the transfer, FirstEnergy offered to
reimburse the husband for the quarterly dividends issued to shareholders during the
period that the shares of stock were not in the husband’s account, but the husband
declined the offer and did not accept a September 1, 2009 dividend check from
FirstEnergy.
In August 2009, the husband sued both FirstEnergy and the wife for
conversion. The trial court granted summary judgment in favor of FirstEnergy and
the wife and husband appealed. On appeal, the court found that the husband failed
to make a showing of conversion on the part of FirstEnergy or the wife. The court
found that FirstEnergy had provided Civ.R. 56 evidence to show that the shares have
been returned to the husband and FirstEnergy has offered to pay the husband the
missing dividends.
In this matter, unlike Crowe, 5th Dist. Holmes No. 10CA023, 2011-
Ohio-5092, where the husband was mistakenly dispossessed of the shares, which
were quickly returned once the mistake was discovered, the Harry III Trust
maintained an ownership interest in either the CRC stock or its proceeds, once
redeemed. Having never been dispossessed of its ownership interest in either the
actual CRC shares of stock or the redemptive proceeds, Appellant’s conversion claim
does not survive.
Finally, although Appellant alleged in the first amended complaint
and also at oral argument, that due to Susan’s cognitive and medical disability, she
was unable to understand or consent to the transaction at issue. However, we find
herein that the conversion claim does not survive because the trust beneficiary was
not dispossessed of an ownership interest in either the CRC shares or the redemptive
proceeds. Since the trust beneficiary always possessed an ownership interest in
either the CRC shares or the redemptive proceeds, Susan’s inability to have
comprehend or to have consented to the transaction is not relevant. As such, the
probate court did not err in dismissing Harry IV’s conversion claim.
Accordingly, we overrule assignment of error five.
Judgment affirmed.
It is ordered that appellees recover from appellant costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this court directing the
Cuyahoga County Common Pleas Court, Probate Division, to carry this judgment
into execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27
of the Rules of Appellate Procedure.
_________________________
EMANUELLA D. GROVES, JUDGE
KATHLEEN ANN KEOUGH, P.J., and
EILEEN A. GALLAGHER, J., CONCUR