State ex rel. Gmoser v. Village at Beckett Ridge Condo. Owners' Assn. , 2016 Ohio 8451 ( 2016 )

[Cite as State ex rel. Gmoser v. Village at Beckett Ridge Condo. Owners' Assn., 2016-Ohio-8451.]
IN THE COURT OF APPEALS
TWELFTH APPELLATE DISTRICT OF OHIO
BUTLER COUNTY
STATE OF OHIO ex rel. MICHAEL T. :
GMOSER, PROSECUTING ATTORNEY,
: CASE NO. CA2016-02-035
Relator,
: OPINION
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:
VILLAGE AT BECKETT RIDGE
CONDOMINIUM OWNERS' :
ASSOCIATION, INC., et al.,
:
Respondents.
:
ORIGINAL ACTION IN QUO WARRANTO
Michael T. Gmoser, Butler County Prosecuting Attorney, Rogers S. Gates, Government
Services Center, 315 High Street, 11th Floor, Hamilton, Ohio 45011, for relator
Finney Law Firm, LLC, Bradley M. Gibson, Brian C. Shrive, 4270 Ivy Pointe Blvd., Suite 225,
Cincinnati, Ohio 45245 and Graydon Head & Ritchey LLP, Lisa C. Diedrichs, Amanda J.
Penick, 1900 Fifth Third Center, 511 Walnut Street, Cincinnati, Ohio 45202, for respondents
Per Curiam.
{¶ 1} This original action for writ of quo warranto challenges the legal right of three
individuals to serve as board members of a home owners' association.
{¶ 2} The Village at Beckett Ridge is a condominium development consisting of 216
residential units. The Beckett Ridge Condominium Owners' Association, Inc. ("Association")
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acts as the unit owners' association for the development and Towne Properties Asset
Management Company ("Towne") provides management services on behalf of the
Association. The Association is led by a Board of Managers, consisting of five individuals
who are condominium owners ("board members"). The board members are elected by a
vote of the owners, with elections occurring every year at an annual meeting. Each board
member serves a two-year term, with elections staggered so that either two or three seats
are open each year.
{¶ 3} In March 2015, three of the Association's five board seats were open for
election and Joseph Vultaggio, Sharon Kollasch and Jeffrey Hack were elected to the open
positions. The other two board positons were occupied by Mark Morris and Pete Eschmeyer.
All five members conducted a board meeting on April 23, 2015 and a President, Vice-
President, Secretary and Treasurer were elected.
{¶ 4} At a board meeting on May 28, 2015, Morris, the board president, indicated that
he had been provided with a petition signed by 57 condominium owners, requesting a recall
of the March 2015 election. According to the minutes of the May meeting, Morris indicated
that as a result of the petition, Vultaggio, Hack and Kollasch are "now off the Board and this
process taken is official." According to the minutes, the three newly-elected board members
objected to this action, and Morris then adjourned the meeting. Evidence in the record
indicates the reason for the removal was that Vultaggio, Hack and Kollasch were not living in
their units and there was concern regarding nonresidents serving on the board.
{¶ 5} The three board members disputed the removal and appeared for a scheduled
meeting on June 25, 2015, but found that the meeting had been cancelled. Nevertheless,
the three members held a meeting, but they were subsequently advised by Morris and Towne
that the validity of that meeting would not be recognized.
{¶ 6} On June 30, 2015, Vultaggio's attorney wrote a letter to Morris, indicating that
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the removal of the three board members was not properly conducted, because the
Association bylaws do not include a mechanism for recalling an election. The letter indicated
that, according to the bylaws, a board member can only be removed after being given an
opportunity to speak at a meeting. The letter referred to the bylaws and stated that after an
opportunity to speak, a board member can then only be removed with a 75 percent vote of
the members in good standing.
{¶ 7} The Association sent a letter to owners on July 6, 2015 indicating that the recall
effort was successful and three new members would need to be elected at an August
meeting. However, a second letter, dated the following day, indicated that a special meeting
was scheduled for July 16 to address the recall request and to allow the three board
members an opportunity to speak regarding the removal. These letters were sent to only
certain residents. At the July 16 meeting, the three board members spoke, but no vote was
taken on the issue.
{¶ 8} Around July 21, 2015, the association sent correspondence to Vultaggio,
indicating he had been removed from the Board. The removal was based on 158 ballots and
an affidavit from Nancy Little, who was the Board Secretary prior to the March 2015 election
of the three new board members. The minutes of an August 27, 2015 board meeting
indicate that all three new board members had been removed. These minutes also state that
Nancy Little and Myra Clifton "resumed their member positions" after the removal, and that
the remaining vacant position would be filled at the annual meeting on March 16, 2016.
{¶ 9} The three removed board members continued to dispute their removal and
appeared at a scheduled board meeting on July 23, 2015. A posted notice indicated this
meeting was cancelled due to a lack of a quorum. However, the three board members
appeared for the meeting and believed they constituted a quorum.
{¶ 10} Continuing to dispute the removal, Vultaggio filed a complaint in Butler County
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Common Pleas Court on August 4, 2015. His complaint requested that the common pleas
court issue a declaratory judgment finding that the actions to remove Vultaggio, Kollasch and
Hack as members of the board were invalid and that the replacement of the three board
members was invalid.
{¶ 11} On October 1, 2015, the common pleas court dismissed Vultaggio's complaint,
finding that the substance of the complaint was for quo warranto, which can only be brought
in the court of appeals or the Ohio Supreme Court. The Butler County Prosecuting Attorney
then filed this quo warranto action on February 22, 2016, requesting this court to find that the
attempts to remove Vultaggio, Kollasch and Hack from the Board failed to comply with Ohio
law and the Association's bylaws, and that the three members are therefore entitled to be
returned to their offices as board members.
{¶ 12} Vultaggio filed a cross-claim to the quo warranto petition. In his cross-claim,
Vultaggio explained that this controversy began when he questioned Morris regarding the
quality and professionalism of the cleaning company workers in the complex. According to
Vultaggio, when Morris told him to "mind his own business," Vultaggio began investigating
and discovered that Morris owned the cleaning company. This discovery, along with further
altercations between Vultaggio and Morris, led to Vultaggio's decision to run for a seat on the
board, and the ongoing friction between the two was the impetus for the removal actions. In
his cross-claim, Vultaggio requests declaratory judgment, indemnification, costs and attorney
fees.
{¶ 13} The association's annual meeting was held on March 24, 2016. Although only
two of the board member terms, those of Morris and Eschmeyer, were expiring, the
Association held an election for all five board positions. This action was an effort by the
Association to end the ongoing dispute regarding whether Vultaggio, Kollasch and Hack had
been properly removed from their board seats. Vultaggio, Kollasch and Hack were on the
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ballot and voted in the election, but did not finish in the top five.
Governing Law
{¶ 14} The owners' association is a nonprofit corporation under the laws of the state
of Ohio and as such, is subject to the requirements of R.C. Chapter 1702. The association is
governed by bylaws which provide rules for the association, including rules regarding the
election of board members and the process for their removal.
{¶ 15} Quo warranto is an extraordinary remedy in which the legal right to hold office
is challenged. State ex rel. Battin v. Bush, 40 Ohio St. 3d 236, 238-239 (1988). "A writ of quo
warranto is the proper and exclusive remedy for determining the legal right of an officer of an
incorporated nonprofit association to hold office." Carlson v. Rabkin, 152 Ohio App. 3d 672,
2003-Ohio-2071 (1st Dist.); see also Greater Temple Christian Church v. Higgins, 9th Dist.
Summit No. 23022, 2006-Ohio-3284.
{¶ 16} When the right to an office in a private corporation is contested, the quo
warranto action must be brought by the attorney general or a prosecuting attorney. State ex
rel. Salim v. Ayed, 141 Ohio St. 3d 129, ¶ 11-12, 2014-Ohio-4736. As mentioned above, this
action was brought by the Butler County Prosecuting Attorney and Vultaggio filed a cross-
claim to the petition.
{¶ 17} Quo warranto is an extraordinary legal remedy. State ex rel. Herbert v.
Standard Oil Co., 138 Ohio St. 376 (1941). Sections 2 and 3, Article IV, of the Ohio
Constitution give the Ohio Supreme Court and the Courts of Appeal original jurisdiction to
consider a petition for a writ of quo warranto. Battin at 238. The writ itself is a high
prerogative writ and is granted, as an extraordinary remedy, where the legal right to hold an
office is successfully challenged. Id. The actual remedy afforded is that of ouster from the
office. Id.; R.C. 2733.14. Because a quo warranto action challenges the actual right to an
office, "it follows that it can afford no relief for official misconduct and cannot be employed to
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test the legality of the official action of public or corporate officers." United States ex rel.
State of Wisconsin. v. First Fed. Sav. And Loan Ass'n., 248 F.2d 804, 808 (7th Cir.1957), cert
denied, 355 U.S. 957, 78 S. Ct. 543 (1958).
{¶ 18} In a quo warranto action against a person for usurping a corporate office, the
court will render judgment on the rights of the claimants to hold that office, and oust and
exclude a usurper from the office. R.C. 2733.08 and 2733.14.
Were Vultaggio, Kollasch and Hack Properly Removed from the Board?
{¶ 19} The association's bylaws provide for a board of five members to govern the
association. The board is comprised of unit owners or their spouses who are elected, with
each unit owner who is in good standing entitled to one vote. The bylaws provide that "[e]ach
Manager [board member] serves for a two-year term; unless resignation, removal from office
or death." Bylaws Sec. 3.3.
{¶ 20} With regard to removal of a board member, the bylaws provide the following:
An elected manager whose removal has been proposed by a Unit
Owner shall be given an opportunity to speak at an annual or
special meeting of Unit Owners, after which that Manager may be
removed, with or without cause, by the vote of the Unit Owners
entitled to exercise at least seventy-five percent (75%) of the voting
power of all Unit Owners in good standing.
Bylaws Sec. 3.5.
{¶ 21} As discussed above, several attempts were made to remove Vultaggio,
Kollasch and Hack from the board. The first attempt, by petition, clearly did not meet the
requirements for removal set forth in the association's bylaws, as the three members were
not given an opportunity to speak prior to the alleged removal, and only 57 owners signed the
petition.
{¶ 22} Next, a special meeting was called and the three board members were given
the opportunity to speak at the meeting, as required in the bylaws. No vote was taken at the
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meeting, and ballots were instead given to Little, the former board secretary. These ballots
provided for a "yes" or "no" vote to the following statement:
I want the vote taken at the Association's 2015 annual meeting
recalled and the three members that were elected removed as
Board members of the Association and the documents changed
to say "a unit is required to be Owner occupied in order to serve
as a Board member for the Association.["]
{¶ 23} The ballots are unsigned, and do not identify the unit owner casting the vote.
The ballots received by Little were 158 "yes" votes. According to an affidavit from president
Morris, he previously supplied Little with information on the owners that were in good
standing. According to an exhibit submitted to this court, there were ten delinquent accounts
at that time. Accordingly, 206 owners were entitled to vote, and the 158 votes cast equaled
the 75 percent needed to remove the three board members under the bylaws.
{¶ 24} However, there are several problems with the manner in which the voting
occurred. As discussed above, no vote was taken at the special meeting called to address
recall of the three board members. Instead, votes were hand-delivered or mailed to Little.
With regard to voting outside of a meeting, the bylaws state that "[a] Unit Owner may vote by
mail on any matter voted on at any meeting of Unit Owners, by written vote mailed or
personally delivered to the Secretary of the Association within the period seven days before
the date of the meeting." Bylaws Sec. 2.2.3. Thus, the bylaws provide for votes to be mailed
or personally given to the secretary, but only in regard to a matter which is voted on at a
meeting of unit owners. The bylaws do not provide for a right to vote solely by mail or hand
delivery in the absence of a meeting.
{¶ 25} Moreover, because the three board members had not yet been removed, Little
was not the board secretary at the time, and was not even a board member when the votes
were delivered to her. Little was not appointed to the board until after removal of the three
board members. Therefore, the delivery of votes to Little did not meet the requirements of
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the bylaws that written votes be delivered to the board secretary.
{¶ 26} R.C. 1702.25 allows for members to take action without a meeting, but, only
with a signed writing by the members which is filed or entered in the records:
Unless the articles or the regulations prohibit the authorization or
taking of any action of the incorporators, the members, or the
directors without a meeting, any action that may be authorized or
taken at a meeting of the incorporators, the members, or the
directors, as the case may be, may be authorized or taken
without a meeting with the affirmative vote or approval of, and in
a writing or writings signed by, all of the incorporators, all of the
members, or all of the directors, as the case may be, who would
be entitled to notice of a meeting for that purpose, or, in the case
of members, any other proportion or number of voting members,
not less than a majority, that the articles or the regulations
permit. Any such writing shall be filed with or entered upon the
records of the corporation.
Clearly, the voting outside of a meeting in this case did not meet this requirement as there
are no signed writings by members authorizing a vote to remove the three board members
outside of a meeting.
{¶ 27} Accordingly, we find that the vote to remove Vultaggio, Kollasch and Hack from
the board was not properly conducted. As such, Vultaggio, Kollasch and Hack were not
properly removed from the board and remain board members.
Election of New Board Members – Estoppel or Waiver?
{¶ 28} As discussed above, at the annual meeting on March 24, 2016, the Board held
an election for all five board member positions. Although only two positions were open,
minutes of the meeting indicate:
This year's voting cycle was originally for the purpose to elect two
Owners to the Board of Trustees, but because of the ongoing
legal challenges made by an Owner (Joseph Vultaggio) who has
repeatedly disagreed with the successful efforts conducted to
recall the vote taken at the 2015 annual owners meeting, the
Association was advised by legal counsel, that in an effort to
make the voting process fair and legal that all five Board seats
would be made available for election, this action would afford Mr.
Vultaggio, Ms. Kollasch and Mr. Hack the opportunity to re-run
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for the sets [sic] they were recalled from in 2015 if they so
choose.
{¶ 29} Respondents argue that, because of participation in the March 24 election,
Vultaggio, Kollasch and Hack waived their right to contest their removal from the board and
are estopped from contesting their right to board positions. They argue that Vultaggio,
Kollasch and Hack did nothing to prevent the election from going forward, ran for board
positions and petitioned other owners to vote for them, and that these actions were
inconsistent with the relief now sought.
{¶ 30} One effectuates a waiver by voluntarily relinquishing a known right. State ex
rel. Athens Cty. Bd. of Commrs. v. Gallia, Jackson, Meigs, Vinton Joint Solid Waste Mgt. Dist.
Bd. of Dirs., 75 Ohio St. 3d 611, 616 (1996). "Waiver assumes one has an opportunity to
choose between either relinquishing or enforcing of the right[,]" and may be enforced by the
person with a duty to perform and who changed their position as a result of the waiver.
Chubb v. Ohio Bur. Of Workers' Comp., 81 Ohio St. 3d 275, 1998-Ohio-628, ¶ 4, citing
Andrew v. State Teachers Retirement Sys. Bd., 62 Ohio St. 2d 202, 205 (1980).
{¶ 31} Estoppel is a separate and distinct doctrine, as estoppel does not require one
to intentionally relinquish a right, but rather requires conduct by both parties. Chubb at ¶ 5.
"Equitable estoppel prevents relief when one party induces another to believe certain facts
exist and the other party changes his position in reasonable reliance on those facts to his
detriment." State ex rel. Chavis v. Sycamore City School Dist. Bd. of Edn., 71 Ohio St. 3d 26,
34 (1994). Moreover, the purpose of the doctrine is to prevent actual or constructive fraud
and to promote the ends of justice. Ohio State Bd. of Pharmacy v. Frantz, 51 Ohio St. 3d
143, 145 (1990).
{¶ 32} Nothing in the record regarding the March 24, 2016 election indicates that
Vultaggio, Kollasch or Hack intended their participation in the election to waive their right to
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contest the validity of their removal from the board. Nor is there any indication that both
parties intended this election to be the sole resolution to the controversy. Clearly, the
statement in the meeting minutes indicated that the Association hoped the election would
end the controversy. However, nothing indicates that the three removed board members in
any way considered their participation in the election as the sole means to end the dispute.
{¶ 33} Vultaggio's complaint for declaratory action was pending at the time of the
election, and nothing in the record indicates an agreement between the parties to dismiss the
case in return for participation in the election. Moreover, there was no agreement on behalf
of the three board members to forego further attempts to resolve their removal in exchange
for participation in this election.
{¶ 34} The vote appears to be a one-sided attempt by the Association to end the
controversy that would have happened with or without the three board members'
participation. Accordingly, we find the three board members' participation in this vote did not
waive their right to contest their removal from the board, nor are they estopped from
asserting this right.
Additional Issues
{¶ 35} Vultaggio's cross-claim includes a request for declaratory action. He requests
that this court issue an order declaring that Morris, Echmeyer, Clifton, Little and Towne
Properties acted in bad faith pursuant to section 7 of the bylaws, and an order declaring that
any action taken by the illegitimate board is invalid and void, including the provision that non-
owners cannot be board members. Vultaggio also requests indemnification, costs and
attorney fees.
{¶ 36} Together, the Association, Morris, Eschmeyer, Clifton, Little, and Towne
Properties have moved to dismiss Vultaggio's cross-claims on the basis that this court lacks
subject matter jurisdiction over these claims. They argue that this court has limited original
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jurisdiction which cannot be extended through the inclusion of additional claims when an
original action brought in this court.
{¶ 37} As previously mentioned, Vutlaggio initially brought an action in the Butler
County Court of Common Pleas requesting a declaratory judgment that the actions to remove
Vultaggio, Kollasch and Hack as members of the board were invalid. He also requested that
the court order the association, the board, Towne and Morris to comply with the bylaws and
laws of the state of Ohio, and requested costs, attorney fees, and all other legal or equitable
relief available. Vultaggio now argues that the lower court determined his claims were
intertwined with quo warranto, and because his request for declaratory action arises out of
the same occurrence or facts as this quo warranto action, this court has jurisdiction pursuant
to Civ.R. 13(G).
{¶ 38} There is considerable interplay between the facts involved and the relief
requested in an action for declaratory judgment and petition for quo warranto. In considering
whether a "party seeks relief that must be pursued through a quo warranto action, courts
identify the core issues raised by the parties for judicial resolution. If the principal or primary
issue is the validity of the election of corporate officers, then the action, no matter how
pleaded, is actually a quo warranto action." Mosque v. Salim, 10th Dist. Franklin No. 12AP-
807, 2013-Ohio-2746, ¶ 20. "[C]ourts examine the core of relief sought and/or granted. If
that relief is a declaratory judgment stating which claimant has a right to office and/or an
injunction ordering the removal of a person from office, then the action must be pursued
through a quo warranto action." Id. Vultaggio's request that the common pleas court issue a
declaratory judgment holding that the actions to remove Vultaggio, Kollasch and Hack as
members of the board were invalid and that the replacement of the three board members
was invalid, was in effect, a request for relief that could only be granted by a writ of quo
warranto.
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{¶ 39} However, in his cross-claim before this court, Vultaggio requests additional
declaratory relief beyond that of his claims in common pleas court. The cross-claim requests
that this court find respondents acted in bad faith pursuant to section 7 of the bylaws, and
issue an order declaring that any action taken by the "illegitimate board" from May 28, 2015
to the present is invalid and void.
{¶ 40} In a similar case involving a writ of prohibition, the Ohio Supreme Court
considered whether it had jurisdiction over a counterclaim in an original action. State ex rel.
Coyne v. Todia, 45 Ohio St. 3d 232 (1989). The court found the counterclaim, a request for
declaratory judgment, was outside the court's original jurisdiction, quoting a previous case in
which the court determined, "courts of appeals have no jurisdiction to hear declaratory
judgment actions because that would extend their constitutionally declared jurisdiction over
original actions." Id. at 237. The court further found that '"neither the Civil Rules nor statutes
can expand this court's original jurisdiction and require it to hear an action not authorized by
the Ohio Constitution."' Id., quoting State ex rel. Cleveland Municipal Court v. Cleveland City
Council, 34 Ohio St. 2d 120, 122 (1973). The court further considered an argument that the
counterclaim was properly before the court under Civ.R. 13(B), but found that the Civil Rules
cannot override the constitution and grant subject matter jurisdiction where it does not exist.
Id.
{¶ 41} Although Vultaggio argues that the claims are intertwined, his broad request
for declaratory judgment in his cross-claim need not be addressed in order to determine
whether the three board members were properly removed. This court is limited to
determining whether the actions of the board removing Vultaggio, Kollasch and Hack from
the board were proper. It is not necessary to decide claims involving actions taken by the
board after the alleged improper removal to determine the validity of the three board
members' right to office.
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{¶ 42} Accordingly, to the extent that the cross-claims request declaratory judgment
regarding actions taken by the board after the three board members were removed, this court
is without jurisdiction to decide these matters. Instead, if necessary, the validity of actions
taken by the board can be challenged in a declaratory action after the issue of quo warranto
is determined. See Mosque v. Salim, 2013-Ohio-2746 at ¶ 27.
{¶ 43} In his cross-claim, Vultaggio also requests attorney fees and costs. He alleges
entitlement under several theories of recovery, including indemnification, quo warranto and
condominium law, and asks this court to find bad faith and willful misconduct on the part of
Morris, Exchmeyer, Little, Clifton and Towne. Vultaggio claims he is entitled to recovery for
the cost of pursuing both this action and the action in common pleas court.
{¶ 44} "Ohio has long adhered to the 'American rule' with respect to recovery of
attorney fees: a prevailing party in a civil action may not recover attorney fees as a part of the
costs of litigation." Wilborn v. Bank One Corp., 121 Ohio St. 3d 546, 2009-Ohio-306, ¶ 7.
However, under exceptions to this rule, attorney fees may be awarded when a statute or an
enforceable contract specifically provides for the award of attorney fees, or when the
prevailing party demonstrates the other party has acted in bad faith. Id.; Nithiananthan v.
Toirac, Warren Nos. CA2014-02-021, CA2014-02-028, and CA2014-08-114, 2015-Ohio-
1416, ¶ 57.
{¶ 45} R.C. 2733.14 specifically address recovery of costs in a quo warranto action,
and provides that "[w]hen a defendant in an action in quo warranto is found guilty of usurping,
intruding into, or unlawfully holding or exercising an office, franchise, or privilege, judgment
shall be rendered that he be ousted and excluded therefrom, and that the relator recover his
costs." However, as previously mentioned, this action was initiated by the Butler County
Prosecuting Attorney, who is the relator in this case. Therefore, Vulatggio cannot recover
under R.C. 2733.14.
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{¶ 46} Vultaggio further claims entitlement to attorney fees and costs under R.C.
2733.17, R.C. 5311.19(A), and under a theory of indemnification under the bylaws. However,
given our limited jurisdiction in this quo warranto matter, these issues should be pursued as a
separate action.
{¶ 47} Finally, the parties have argued several other issues, including dismissal of
parties and the validity of the March 2015 election as it relates to the two board seats which
were open for election. However, as mentioned above, quo warranto is an extraordinary
remedy, and as such, our jurisdiction is limited to deciding the issue of whether the three
board members were improperly removed and entitled to their board seats. We again find
these ancillary issues to be beyond our jurisdiction in this matter
Conclusion
{¶ 48} Relator's motion for a writ of quo warranto is granted. The court finds that
Vultaggio, Kollasch and Hack were improperly removed from as board members and they are
therefore entitled to serve as board members until the expiration of their terms in March
2017.
{¶ 49} Judgment accordingly.
M. POWELL, P.J., RINGLAND and HENDRICKSON, JJ., concur.
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