Bosl v. First Fin. Invest. Fund I , 2011 Ohio 1938 ( 2011 )

[Cite as Bosl v. First Fin. Invest. Fund I, 2011-Ohio-1938.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 95464
GREGORY J. BOSL
PLAINTIFF-APPELLANT
vs.
FIRST FINANCIAL INVESTMENT
FUND I, ET AL.
DEFENDANTS-APPELLEES
JUDGMENT:
AFFIRMED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-714595
BEFORE: Blackmon, J., Kilbane, A.J., and Rocco, J.
RELEASED AND JOURNALIZED: April 21, 2011
ATTORNEYS FOR APPELLANT
Anand N. Misra
The Misra Law Firm, LLC
3659 Green Road, Suite 100
Beachwood, Ohio 44122
Robert S. Belovich
9100 South Hills Blvd., Suite 300
Broadview Heights, Ohio 44147
ATTORNEYS FOR APPELLEES
Michael D. Slodov
Robert G. Knirsch
Javitch, Block & Rathbone, LLC
1100 Superior Ave., 19th Floor
Cleveland, Ohio 44114
PATRICIA ANN BLACKMON, J.:
{¶ 1} Appellant Gregory Bosl appeals the trial court’s decision granting
summary judgment in favor of First Financial Investment Fund I, et al.
(“First Financial”) and assigns the following errors for our review:
“I. The trial court committed prejudicial error in granting
summary judgment to defendant on its motion.”
“II. The trial court committed prejudicial error in denying
summary judgment on plaintiff’s motion for partial
summary judgment.”
{¶ 2} Having reviewed the record and pertinent law, we affirm the trial
court’s decision. The apposite facts follow.
{¶ 3} On January 5, 2009, First Financial filed suit in the Berea
Municipal Court against Bosl for an unpaid assigned credit card debt in the
amount of $2,796.76. In response, on February 2, 2009, Bosl filed an answer,
affirmative defenses, and counterclaim. In his counterclaim, Bosl argued
that First Financial lacked the legal competence to file suit in the Berea
Municipal Court, because it was a foreign corporation that was not registered
with the Ohio Secretary of State.
{¶ 4} On February 20, 2009, First Financial filed a motion to dismiss
Bosl’s counterclaim. Bosl opposed the motion, and on April 15, 2009, the
Berea Municipal Court granted First Financial leave to register as a business
entity with the Ohio Secretary of State. Thereafter, First Financial sought
to assign the debt to its affiliate First Financial Asset Management (“FFAM”),
who at the time was thought to be licensed in Ohio. However, FFAM’s
license had been cancelled by virtue of its failure to pay taxes.
{¶ 5} On June 25, 2009, as a result of no party being substituted for
First Financial, the Berea Municipal Court dismissed the complaint without
prejudice and also dismissed Bosl’s counterclaim.
{¶ 6} On January 4, 2010, Bosl filed suit in Cuyahoga County’s
common pleas court against First Financial, FFAM, and the law firm of
Javitch, Block & Rathbone (“appellee”). Bosl alleged violations of both the
Fair Debt Collection Practices Act and the Ohio Consumer Sales Practices
Act. In addition, Bosl alleged that appellees engaged in fraud, abuse of
process, civil conspiracy, and malicious prosecution.
{¶ 7} Specifically, against the law firm of Javitch, Block & Rathbone,
Bosl alleged that the law firm acted in concert with First Financial and
FFAM to collect a debt by illegally filing suit against him on January 5, 2009.
Bosl also alleged that the law firm filed the suit with knowledge that First
Financial lacked competence to take such action.
{¶ 8} On February 25, 2010, appellees filed a motion to dismiss Bosl’s
complaint for failure to state a claim for which relief could be granted, or in
the alternative, for summary judgment. On March 8, 2010, appellees
supplemented their motion with additional evidentiary materials. On April
7, 2010, Bosl filed his motion in opposition as well as a cross-motion for
partial summary judgment.
{¶ 9} On June 25, 2010, the trial court granted appellees’ motion for
summary judgment, denied Bosl’s cross-motion for partial summary
judgment, and dismissed the case. Bosl now appeals.
Summary Judgment
{¶ 10} In the first assigned error, Bosl argues the trial court erred when
it granted summary judgment in favor of the appellees.
{¶ 11} We review an appeal from summary judgment under a de novo standard of
review. Baiko v. Mays (2000), 140 Ohio App.3d 1, 746 N.E.2d 618, citing Smiddy v. The
Wedding Party, Inc. (1987), 30 Ohio St.3d 35, 506 N.E.2d 212; N.E. Ohio Apt. Assn. v.
Cuyahoga Cty. Bd. of Commrs. (1997), 121 Ohio App.3d 188, 699 N.E.2d 534.
Accordingly, we afford no deference to the trial court’s decision and independently review the
record to determine whether summary judgment is appropriate.
{¶ 12} Under Civ.R. 56, summary judgment is appropriate when: (1) no genuine issue
as to any material fact exists, (2) the party moving for summary judgment is entitled to
judgment as a matter of law, and (3) viewing the evidence most strongly in favor of the
non-moving party, reasonable minds can reach only one conclusion that is adverse to the
non-moving party.
{¶ 13} The moving party carries an initial burden of setting forth specific facts that
demonstrate his or her entitlement to summary judgment. Dresher v. Burt, 75 Ohio St.3d 280,
292-293, 1996-Ohio-107, 662 N.E.2d 264. If the movant fails to meet this burden,
summary judgment is not appropriate; if the movant does meet this burden, summary
judgment will be appropriate only if the non-movant fails to establish the existence of a
genuine issue of material fact. Id. at 293.
{¶ 14} In the instant case, the gravamen of Bosl’s complaint, and
likewise his argument on appeal, is that First Financial illegally filed its
lawsuit against him in the Berea Municipal Court because they were not
registered with the Ohio Secretary of State. We are not persuaded.
{¶ 15} In granting summary judgment in favor of appellees, the trial
court stated in pertinent part as follows:
“* * * The Court concludes that First Financial was not
required to first obtain a license from the Ohio Secretary
of State before filing suit against Mr. Bosl. The Court
finds persuasive the opinion of Judge Burnside in the case
of Collins Financial Services, Inc. v. Ballard (Cuy. Cty. Ct.
Com. Pl.), CV-638304, 2009 WL 1401693. In Ballard, Judge
Burnside concluded that in a situation similar to the
present case, foreign corporations are not required to first
obtain a license before filing suit because the act of filing
a lawsuit does not fall under the definition of ‘transacting
business.’ Only foreign corporations transacting business
in Ohio are required to obtain a license before it can file
and maintain a suit in the courts of Ohio. Accordingly,
First Financial was not required to first obtain a license
before filing and maintaining suit against Mr. Bosl in the
Berea Municipal Court. As such, the act of filing and
maintaining the lawsuit was not unlawful under Ohio law.
Because the basis of Mr. Bosl’s complaint is predicated on
First Financial unlawfully filing suit in Ohio, the Court
dismisses the complaint in its entirety as to all
defendants.” Journal Entry, June 25, 2010.
{¶ 16} In general, foreign corporations must be licensed to do business in
the state of Ohio if they “transact business in this state.” First Merit Bank,
N.A. v. Washington Square Ents., Cuyahoga App. No. 88798, 2007-Ohio-3920;
R.C. 1703.03. A foreign corporation that “should have obtained” a license to
do business in Ohio may not “maintain any action in any court until it has
obtained such license to do business.” Id.; R.C. 1703.29(A).
{¶ 17} Similarly, a foreign limited liability company, such as First
Financial, must register before transacting business in Ohio. R.C.
1705.54(A). A foreign limited liability company transacting business in
this state may not maintain an action or proceeding in any court of this state
until it has registered. CACV of Colorado, L.L.C. v. Hillman, 3d Dist. No.
14-09-18, 2009-Ohio-6235; R.C. 1705.58.
{¶ 18} “It is well-recognized * * * that a foreign corporation transacts
business within a state when ‘it has entered the state by its agents and is
therefore engaged in carrying on and transacting through them some
substantial part of its ordinary or customary business, usually continuous in
the sense that it may be distinguished from merely casual, sporadic, or
occasional transactions and isolated acts.’” State ex rel. Physicians Commt. for
Responsible Medicine v. Ohio State Univ. Bd. of Trustees, 108 Ohio St.3d 288,
2006-Ohio-903, 843 N.E.2d 174, quoting Auto Driveaway Co. v. Auto Logistics
of Columbus (S.D.Ohio 1999), 188 F.R.D. 262, 265, quoting Dot Sys., Inc. v.
Adams Robinson Ent., Inc. (1990), 67 Ohio App.3d 475, 481, 587 N.E.2d 844.
A foreign corporation’s activities must be permanent, continuous, and regular
to constitute “doing business” in Ohio. Id.{¶ 19} In support of their motion for summary judgment appellees
attached the affidavits of Eugene Collins, the president of First Financial, a
limited liability company chartered in the state of Delaware. Collins averred
that First Financial acquires ownership rights to charged off receivables and
acquired the charged-off account of Bosl from HSBC Card Services. Collins
also averred that First Financial has never engaged in any direct wholesale
or retail sales in Ohio, has never engaged in solicitation or advertisement in
Ohio, and has never maintained any offices, mailing addresses, telephone
numbers, internet portals, or bank accounts in the state of Ohio.
{¶ 20} In addition, Collins averred that First Financial has never
engaged in the employment of employees or agents in the state of Ohio.
Further, Collins averred that he is also the president of FFAM, a collection
agency with offices in Atlanta, Georgia, Phoenix, Arizona, and West Palm
Beach, Florida, that services the accounts owned by First Financial. Finally,
Collins averred that with respect to Bosl’s account, FFAM placed the account
for legal action with the law firm of Javitch, Block & Rathbone, and that none
of First Financial’s or FFAM’s employees ever made any direct contact with
any person in the state of Ohio.
{¶ 21} Conversely, in support of his cross-motion for partial summary
judgment, Bosl attached the affidavit of his attorney’s secretary, who averred
that she had located evidence of 28 lawsuits filed by First Financial in Ohio
municipal courts.
{¶ 22} However, after reviewing the record, we conclude the trial court
correctly determined that by virtue of filing suit to collect on a debt, appellees
were not transacting business in the state of Ohio. The evidence established
that First Financial was merely a holding company that acquired Bosl’s
HSBC charged off credit card account and placed it for collection through
FFAM, who retained a law firm to take legal action to collect the debt.
Neither First Financial nor its affiliate, FFAM, was engaged in any activity
that is customarily considered “transacting business” as that term is defined
above.
{¶ 23} Given that appellees were not “transacting business”, but merely
attempting to collect a debt, by hiring a domestic law firm to file suit, they
were not required to register with the Ohio Secretary of State before filing
suit against Bosl. Consequently, construing the evidence most favorably to Bosl, we
find that the record discloses no genuine issue of material fact. Therefore, summary
judgment was properly granted in favor of the appellees.
{¶ 24} Nonetheless, at oral argument, Bosl’s appellate counsel indicated
that the opinion of Judge Burnside in the case of Collins Fin. Servs, Inc. v.
Ballard ( Jan. 21, 2009) ,Cuyahoga C.P. No. CV-638304, which the trial court
in the instant case found persuasive, was ultimately vacated. Bosl’s
appellate counsel essentially suggested that the trial court’s reliance on
Judge Burnside’s opinion was misplaced. However, our review of the docket
in Ballard reveals that Judge Burnside vacated the journal entry granting
summary judgment to Colllins Fin. Servs. Inc., because a settlement was
reached between the parties.
{¶ 25} Finally, since Bosl’s contentions were premised on appellees’
alleged incompetence to file suit without first registering with the Ohio
Secretary of State, his claim that appellees violated both the Fair Debt
Collection Practices Act and the Ohio Consumer Sales Practices Act, as well
as his claims of fraud, abuse of process, civil conspiracy, and malicious
prosecution, are without merit and rendered moot by our resolution herein.
Accordingly, we overrule the first assigned error.
Issue Preclusion and Collateral Estoppel
{¶ 26} In the second assigned error, Bosl argues the trial court erred in
denying summary judgment on his cross-motion for partial summary
judgment. Bosl maintains that the trial court incorrectly applied the law of
collateral estoppel or issue preclusion.
{¶ 27} Issue preclusion, also known as collateral estoppel, precludes the
relitigation of an issue that has been actually or necessarily determined
between the parties in a prior action from being relitigated in a second,
different cause of action. JP Morgan Chase Bank v. Ritchey, 11th Dist. No.
2006-L-247, 2007-Ohio-4225, citing Lasko v. Gen. Motors Corp., 11th Dist. No.
2002-T0143, 2003-Ohio-4103, at ¶15. “Under Ohio law, the doctrine of res
judicata embraces the doctrine of collateral estoppel.” McDowell v. DeCarlo,
9th Dist. No. 23376, 2007-Ohio-1262, quoting Grava v. Parkman Twp. (1995),
73 Ohio St.3d 379, 381, 653 N.E.2d 226.
{¶ 28} Pursuant to the doctrine of res judicata, “[a] valid, final judgment
rendered upon the merits bars all subsequent actions based upon any claim
arising out of the transaction or occurrence that was the subject matter of the
previous action.” Id. at syllabus. Accordingly, before res judicata or
collateral estoppel can apply, one must have a final judgment. Cote v.
Eisinger, 9th Dist. No. 05CA0076, 2006-Ohio-4020, at ¶8.
{¶ 29} Pursuant to Civ.R. 41, “[u]nless otherwise specified in the order, a
dismissal under division (A)(2) of this rule is without prejudice.” The Supreme
Court of Ohio has repeatedly held that “[a] dismissal without prejudice
constitutes an adjudication otherwise than on the merits and prevents the
dismissal from having res judicata effect.” Zamos v. Zamos, 11th Dist. No.
2008-P-0021, 2009-Ohio-1321, quoting Goudlock v. Voorhies, 119 Ohio St.3d
398, 2008-Ohio-4787, 894 N.E.2d 692, at ¶10; see, also, Chadwick v. Barba
Lou, Inc. (1982), 69 Ohio St.2d 222, 226, 431 N.E.2d 660; Hensley v. Henry
(1980), 61 Ohio St.2d 277, 278, 400 N.E.2d 1352.
{¶ 30} In the instant case, neither party dispute that the Berea
Municipal Court dismissed the original action without prejudice. Thus, the
dismissal was other than on the merits and did not constitute a final
judgment. Consequently, the common pleas court’s subsequent granting of
summary judgment in favor of appellees on the basis that they were not
transacting business in the state of Ohio and could bring and maintain legal
action without registering with the Ohio Secretary of State is not barred by
issue preclusion or collateral estoppel. Accordingly, we overrule the second
assigned error.
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 be sent to said court 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.
PATRICIA ANN BLACKMON, JUDGE
MARY EILEEN KILBANE, A.J., and
KENNETH A. ROCCO, J., CONCUR