Stroud v. Four E Properties, Inc. , 2018 Ohio 1910 ( 2018 )

[Cite as Stroud v. Four E Properties, Inc., 2018-Ohio-1910.]
IN THE COURT OF APPEALS
FIRST APPELLATE DISTRICT OF OHIO
HAMILTON COUNTY, OHIO
JAMES R. STROUD, : APPEAL NO. C-170215
TRIAL NO. A-1602082
Plaintiff-Appellant, :
O P I N I O N.
vs. :
FOUR E PROPERTIES, INC., :
STEVEN VERKLEY,
:
and
:
NANCY L. VERKLEY,
:
Defendants-Appellees,
and :
STROVER HOLDINGS, LLC., :
Defendant. :
Civil Appeal From: Hamilton County Court of Common Pleas
Judgment Appealed From Is: Affirmed
Date of Judgment Entry on Appeal: May 16, 2018
Wood & Lamping, LLP, and Neil Fairweather, for Plaintiff-Appellant,
Reardon & Chasar, LPA, Matthew R. Chaser and Joseph M. Sprafka III, for
Defendants-Appellees.
OHIO FIRST DISTRICT COURT OF APPEALS
MILLER, Judge.
{¶1} James Stroud appeals from the trial court’s judgment ordering sanctions
against him, denying his motion for leave to file an amended complaint, and denying
his Civ.R. 60(B)(1) motion for relief from judgment. We affirm.
{¶2} Stroud filed a pro se complaint against Steven and Nancy Verkley,
Four E Properties, Inc., (“Four E”) and Strover Holdings, LLC, (“Strover”) for, among
other things, breaches of contract and fiduciary duty. At the time Stroud filed suit,
he was suing Steven Verkley in another case through counsel.
{¶3} Stroud and Steven Verkley each owned 50 percent of Strover. The gist
of Stroud’s complaint was that Steven Verkley had transferred Strover real property
holdings to himself and his wife, Nancy Verkley, without Stroud’s knowledge or
consent. Stroud also alleged that some of these properties were then transferred
from the Verkleys to Four E—a corporation owned by Steven and Nancy Verkley. All
of the transfers from Strover to the Verkleys, and from the Verkleys to Four E,
occurred in 2006. Stroud claimed that in 2014 and 2015, Four E sold several of these
properties, and that Stroud—who had remained on at least two of the mortgages—
had been damaged as a result.
{¶4} The Verkleys and Four E moved to dismiss Stroud’s complaint under
Civ.R. 12(B)(6). Stroud’s counsel entered a limited appearance, and informed the
trial court that he intended to file an amended complaint, but counsel did not
immediately enter a formal notice of appearance. No amended complaint was filed.
The court set a hearing on the motion to dismiss. Stroud neither appeared pro se nor
through counsel, nor did he otherwise oppose the motion.
{¶5} The Verkleys and Four E subsequently moved for sanctions,
contending that Stroud had filed unwarranted claims that were barred by the statute
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OHIO FIRST DISTRICT COURT OF APPEALS
of limitations, and that the complaint was filed in an improper attempt to gain
leverage in the other lawsuit that Stroud had brought against Steven Verkley. Steven
Verkley’s affidavit was filed with the motion for sanctions. Verkley averred that
Stroud had had actual knowledge of all Strover property transfers that had occurred
in 2006. Attached to the affidavit were documents purporting to show that Stroud
had knowingly transferred the deeds to the subject properties.
{¶6} The court conducted two hearings on the sanctions motion. Following
the hearings, the trial court found that Stroud’s complaint was “unsupported” and
was filed “at the same time he was in litigation with the defendant before another
judge.” The court also determined that Stroud was not a real party in interest to the
2014 or 2105 transfers, and his claims arising from the 2006 transfers were time-
barred. Citing R.C. 2323.51, the court awarded the Verkleys and Four E $32,460.10
in attorney fees and expenses, and $3,730.80 in expert witness fees.
{¶7} While the motion for sanctions was pending, Stroud moved under
Civ.R. 60(B)(1) for relief from the trial court’s judgment dismissing his complaint. In
pertinent part, Stroud contended that several of his claims did not fall outside the
statute of limitations, and that his failure to oppose the motion to dismiss constituted
“excusable neglect” because he had been unaware of the hearing date as he believed
opposing counsel was not going forward with the motion to dismiss. In response, the
Verkleys and Four E submitted emails to the court showing that counsel for the
Verkleys and Four E had emailed Stroud’s counsel stating that if Stroud did not soon
file an amended complaint as discussed, the Verkleys and Four E intended to request
a hearing on their Civ.R. 12(B)(6) motion.
{¶8} Following a hearing, the trial court denied Stroud’s Civ.R. 60(B)(1)
motion, finding that, based on the statute of limitations, Stroud’s complaint “simply
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OHIO FIRST DISTRICT COURT OF APPEALS
does not state a cause of action.” The trial court also found that there was not
excusable neglect in Stroud’s failure to defend the motion to dismiss.
{¶9} On January 18, 2017, Stroud moved the court for leave to file an
amended complaint under Civ.R. 15. The court denied his motion. This appeal
followed.
{¶10} In his first and third assignments of error, Stroud contends that the
trial court erred when it granted the Verkleys and Four E’s motion for sanctions, and
denied his motion for relief from judgment. Stroud focuses arguments in both
assignments of error on the trial court’s determination that his complaint had been
time-barred. While we are not entirely convinced that all claims in the complaint
were barred by the statute of limitations, we do not reach that issue because (1)
Stroud did not appeal the dismissal, and (2) there are other bases for the trial court’s
sanctions and Civ.R. 60(B) judgments. Because Stroud failed to transmit the
transcript of the proceedings for our review, he is unable to demonstrate error
concerning those other grounds.
{¶11} Regarding sanctions, statute-of-limitations aside, the Verkleys and
Four E contended that Stroud had filed a complaint that contained materially false
allegations, and that he had filed it as an improper means to gain leverage in another
lawsuit. Following two hearings, the trial court found that Stroud had filed an
“unsupported complaint at the same time he was in litigation with the defendant
before another judge.” Under R.C. 2323.51(A)(2)(a)(i), the filing of a lawsuit is
frivolous if it “obviously serves merely to harass * * * another party to the civil action
* * * or is for another improper purpose * * *.” And R.C. 2323.51(A)(2)(a)(iii) states
that conduct is frivolous if it “consists of allegations or other factual contentions that
have no evidentiary support * * *.”
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OHIO FIRST DISTRICT COURT OF APPEALS
{¶12} We would normally review the trial court’s judgment under R.C.
2323.51(A)(2)(a)(i) and (iii) for an abuse of discretion. See Riston v. Butler, 149
Ohio App. 3d 390, 2002-Ohio-2308, 777 N.E.2d 857, ¶ 22, (1st Dist.). However,
Stroud has not filed a transcript of the hearings on the motion for our review. The
trial court based its decision on, among other things, the arguments of counsel and
the testimony of the witnesses. Without the parts of the record necessary to resolve
this issue, we must presume the regularity of the proceedings. State ex rel. Bardwell
v. Cuyahoga Cty. Bd. of Commrs. 127 Ohio St. 3d 202, 2010-Ohio-5073, 937 N.E.2d
1274, ¶ 13-14 (without a complete record of the evidence upon which the trial court
awarded sanctions, on appeal the court presumes that no error occurred in the award
of sanctions); Knapp v. Edwards Laboratories, 61 Ohio St. 2d 197, 199, 400 N.E.2d
384 (1980) (without a complete record, an appellate court presumes the regularity of
the proceedings).
{¶13} We also presume the regularity of the proceedings in regard to the
court’s denial of Stroud’s Civ.R. 60(B)(1) motion for relief from judgment. Under
Civ.R. 60(B)(1), the movant must demonstrate that: (1) the party has a meritorious
defense or claim to present if relief is granted; (2) mistake, inadvertence, surprise or
excusable neglect; and (3) the motion was made within a reasonable time, and,
where the grounds of relief are Civ.R. 60(B)(1), (2) or (3), not more than one year
after the judgment, order or proceeding was entered or taken. See GTE Automatic
Elec., Inc. v. ARC Industries, Inc., 47 Ohio St. 2d 146, 351 N.E.2d 113 (1976),
paragraph two of the syllabus.
{¶14} Following a hearing, the trial court found that Stroud’s complaint did
not state a cause of action and that there was no excusable neglect. By piecing
together different sections of his complaint and referring to facts not pled, Stroud
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OHIO FIRST DISTRICT COURT OF APPEALS
makes a somewhat convoluted argument that his complaint had stated a cause of
action as a matter of law. While his complaint may have stated a cause of action, this
fact is irrelevant because his neglect was not excusable.
{¶15} According to Stroud, his failure to defend the motion to dismiss
constituted “excusable neglect” because he and opposing counsel were in on-going
negotiations Stroud believed the Verkleys and Four E were not going forward with
the motion to dismiss, and opposing counsel didn’t tell him otherwise. However, it
was not reasonable for Stroud to expect opposing counsel to inform him that the
Verkleys and Four E had requested a hearing on their motion to dismiss. (Citations
omitted.) See Kids Bop, LLC v. Broadhead, 1st Dist. Hamilton No. C-140686, 2015-
Ohio-3744, ¶ 11 (“[A] party’s inaction is not excusable neglect when it shows ‘a
complete disregard for the judicial system’ or when the party’s conduct falls
substantially below what is reasonable under the circumstances”). And even if
opposing counsel had had such an obligation—which he did not—the record
indicates that counsel had emailed Stroud’s attorney that, unless Stroud filed an
amended complaint by July 6, 2016, the Verkleys and Four E intended to go forward
with the motion to dismiss.
{¶16} While it appears from the parts of the record that are before us that the
trial court correctly decided this motion, we cannot address this issue on its merits
since Stroud failed to transmit to this court the transcript of the hearing on his Civ.R.
60(B)(1) motion. We therefore presume the regularity of the proceedings. Knapp, 61
Ohio St. 2d at 199, 400 N.E.2d 384.
{¶17} Stroud’s first and third assignments of error are overruled.
{¶18} In his second assignment of error, Stroud contends that the trial court
erred when it denied his Civ.R. 15 motion for leave to file an amended complaint.
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OHIO FIRST DISTRICT COURT OF APPEALS
Stroud filed this motion after he had dismissed Strover from the case, thereby
making the trial court’s dismissal of Stroud’s complaint as to the Verkleys and Four E
a final judgment. The civil rules limit post-judgment relief to motions brought under
Civ.R. 50(B) (judgment notwithstanding the verdict), Civ.R. 59 (motion for a new
trial), and Civ.R. 60(B) (motion for relief from judgment). Stroud’s Civ.R. 15 motion
was therefore a legal nullity, as was the trial court’s ruling on it. See Allstate Ins. Co.
v. Witta, 9th Dist. Summit No. 25738, 2011-Ohio-6068, ¶ 8-9, citing Pitts v. Ohio
Dept. of Transp., 67 Ohio St. 2d 378, 380, 423 N.E.2d 1105 (1981). Stroud’s second
assignment of error is overruled.
{¶19} The judgment of the trial court is affirmed.
Judgment affirmed.
MOCK, P.J., and ZAYAS, J., concur.
Please note:
The court has recorded its own entry on the date of the release of this opinion.
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