Patel v. Patel , 2023 Ohio 618 ( 2023 )

[Cite as Patel v. Patel, 2023-Ohio-618.]
COURT OF APPEALS OF OHIO
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
MANISHA G. PATEL, ET AL., :
Plaintiffs-Appellants, :
No. 111938
v. :
ATULKUMAR G. PATEL, ET AL., :
Defendants-Appellees. :
JOURNAL ENTRY AND OPINION
JUDGMENT: AFFIRMED
RELEASED AND JOURNALIZED: March 2, 2023
Civil Appeal from the Cuyahoga County Court of Common Pleas
Case No. CV-22-960102
Appearances:
Jeffrey F. Slavin, for appellants.
The Law Office of Jaye M. Schlachet and Jaye M.
Schlachet, for appellee Dhruvitaben Patel; and Mark J.
Vanrooy, for appellee Atul Patel.
ANITA LASTER MAYS, A.J.:
INTRODUCTION
Plaintiffs-appellants Manisha G. Patel a.k.a. Manishabahen G. Patel
(“Manisha”) and Gary Patel a.k.a. Ganshyam Patel (“Gary”) requested that this
appeal be placed on our accelerated calendar under App.R. 11.1 and Loc.App.R. 11.1.
By doing so, appellants have agreed that we may render a decision in “brief and
conclusionary form” consistent with App.R. 11.1(E). Crawford v. Eastland
Shopping Mall Assn., 11 Ohio App.3d 158, 463 N.E.2d 655 (10th Dist. 1983); App.R.
11.1(E).
Appellants’ appeal is from a Civ.R. 56 grant of summary judgment on
the ground of res judicata in favor of defendants-appellees Atulkumar G. Patel a.k.a.
Atul G. Patel (“Atul”) and Dhruvitaben Patel a.k.a. Dhruvita A. Patel (“Dhruv”). We
affirm the trial court’s judgment.
Appellants have filed multiple lawsuits over the past five years for
disputes over ownership rights, profit entitlement, and mismanagement of three
limited liability companies: Dharmadev LLC (“DLLC”), Dharmadev 1 LLC
(“D1LLC”), and Dharmadev 2 LLC (“D2LLC”). Appellant Manisha and appellee
Atul are each 50% member-owners of DLLC. Appellant Manisha is a 75% member-
owner and appellee Atul is a 25% member-owner of D1LLC. Appellant Gary is a
25%-member owner, appellee Atul is a 25% member-owner, and appellee Dhruv a
50% member-owner of D2LLC. Appellants have alleged that during the time
periods stated in the complaints, appellee Atul operated as the business manager of
DLLC and D1LLC and appellee Dhruv operated as the business manager of D2LLC.
Each limited liability company owns and operates a Mr. Hero’s
franchise restaurant. Appellees contend that the conduct of the business operations
have been largely undocumented. No operating agreements, membership interest
ledgers, resolutions, officer elections, tax matters partner designations, or other
governing documents were prepared when the businesses were formed or at any
time thereafter.
On March 5, 2018, appellants, DLLC, and D1LLC filed suit against
appellees, D2LLC, and several other parties in Manisha G. Patel, et al. v.
Dharmadev 2 LLC, et al., Cuyahoga C.P. No. CV-18-893990 (“2018 Case”). As to
the parties in the instant case, the suit generally involved claims of mismanagement
for activities that began in January 2017. The case was voluntarily dismissed on
April 11, 2019.
The 2018 Case was refiled on July 3, 2019, in Manisha G. Patel, et
al. v. Dharmadev 2 LLC et al., Cuyahoga C.P. No. CV-19-917732, filed July 3, 2019
(“2019 Case”). As relates to the instant parties’ respective interests, appellants
stated that appellees failed to contribute to repayment of a March 15, 2015 business
loan, provide an accounting, and make income and profit disbursements.
Appellants also alleged that appellees inflated expenses, diverted profits for personal
gain, and operated the businesses as personal ATM machines. The causes of action
advanced were for fraud, breach of duties of loyalty, care, and the obligation of good
faith and fair dealing, breach of contract and implied covenant of good faith,
conversion, accounting, and a declaratory judgment regarding ownership interests.
On May 3, 2021, appellants moved for leave to amend the complaint
to include activities during 2015 and 2016. Appellees countered that the motion was
untimely, not based on new information, and prejudicial to appellees. Also, that
discovery had been ongoing for three years, the parties had engaged in several
settlement conferences and mediation, and a final pretrial was set for nine days after
the motion for leave was filed. Appellees emphasized that appellants admitted in
their motion for leave that “[appellants’] counsel does not claim that he only recently
obtained information that led to [the request to] increase the duration of requested
damages.” On May 13, 2021, the trial court denied the motion.
On July 17, 2021, the original complaint was amended to include only
appellants and appellees. Appellants stated that appellees had acted as managers of
the businesses since at least January 1, 2017. Appellants claimed that from
January 1, 2017, forward appellees failed to contribute to repayment of a March 15,
2015 business loan, provide an accounting, and make income and profit
disbursements. Appellants also alleged that appellees inflated expenses, diverted
profits for personal gain, and operated the businesses as personal ATM machines.
Appellants advanced the following causes of action: (1) fraud,
(2) breach of the duty of loyalty, duty of care, and breach of the obligation of good
faith and fair dealing, (3) conversion, and (4) for an accounting. Appellants prayed
for compensatory and punitive damages, attorney fees, an accounting, costs, and
any other relief deemed equitable.
A bench trial proceeded on January 24, 2022. At the close of
appellants’ case, appellees moved to dismiss. The trial court granted dismissal
under Civ.R. 41(B)(2) on the ground that appellants failed to meet the burden of
proof on each claim “of the amended complaint” and entered judgment for
appellees.1 Appellants appealed in Patel v. Dharmadev 2 LLC, 8th Dist. Cuyahoga
No. 111281, 2022-Ohio-3918. Based on appellants’ failure to cite legal authority to
support their arguments pursuant to App.R. 16(A)(7), the trial court’s judgment was
affirmed. Id. at ¶ 8.
The instant case was filed on March 1, 2022.2 Appellants claimed that
appellees acted as managers of the businesses during 2015 and 2016. During that
period, appellees failed to contribute to a March 15, 2015 business loan repayment,
provide an accounting, and make income and profit disbursements. Appellees also
allegedly inflated expenses, diverted profits for personal gain, and operated the
businesses as personal ATM machines.
Appellants advanced a single count for unjust enrichment that
included a request for restitution, a judgment of at least $25,000 together with
attorney fees and costs. Appellants’ prayer for relief was for compensatory damages,
punitive damages, an accounting, costs, and any other relief deemed equitable.
1 Under Civ.R. 41(B)(2), a trial court is not required to view the evidence in a light
most favorable to the plaintiff. The trial court’s role is to weigh the evidence, resolve any
evidentiary conflicts, and, if the plaintiff has failed to show under the facts and law a right
to relief by a preponderance of the evidence, enter judgment in favor of the defendant.
See Patel v. Dharmadev 2 LLC, 8th Dist. Cuyahoga No. 111281, 2022-Ohio-3918, ¶ 6,
citing Holliday v. Calanni Ents., 2021-Ohio-2266, 175 N.E.3d 663, ¶ 18 (8th Dist.).
2 When the trial court in the 2019 Case denied the May 2021 motion to amend the
complaint to include the 2015 to 2016 period, appellants filed a complaint on May 30,
2021, in Manisha G. Patel, et al. v. Atulkumar G. Patel, et al., Cuyahoga C.P. No. 21-
948198 (“2021 Case”). The 2021 Case complaint essentially mirrored the proposed
amended complaint in the 2019 Case except that the time periods for the acts complained
of are for January 1, 2015, to at least December 31, 2016. The trial court granted appellees’
motion to dismiss the 2021 Case complaint without prejudice pursuant to Civ.R. 41(A) on
February 28, 2022.
The trial court ruled that the final judgment in the 2019 Case served
as res judicata to bar the claims in the current matter.
This matter is before the court on the August 24, 2022 motion for
summary judgment of defendant Dhruvitaben Patel and the August 25,
2022 motion for summary judgement of defendant Atulkumar G. Patel.
In construing the undisputed evidence in a light most favorable to the
non-moving parties, plaintiffs Manisha and Gary Patel, the court finds
there is no genuine issue of material fact and reasonable minds can only
come to the conclusion that plaintiffs’ claims against defendants in this
matter are barred by the doctrine of res judicata. The final judgment
reached on the merits in a bench trial in Case No. CV-19-917732
operates to bar the claims asserted in this matter by plaintiffs against
defendants. Both actions involve the same exact parties, the claims
asserted here in could have been litigated in Case No. 917732 (the first
action); and, the claims in this action arise out of the transaction or
occurrence that was the subject matter of the previous action. See
Portage Cty. Bd. of Commrs. v. Akron, 109 Ohio St.3d 106, 2006-Ohio-
954, 846 N.E.2d 478, ¶ 84. Accordingly, judgment is entered in favor
of defendants Dhruvitaben Patel and Atulkumar G. Patel on plaintiffs
Manisha and Gary Patel’s claims.
Journal entry No. 129276994 (Sept. 12, 2022).
Under 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.’”
Hughes v. Calabrese, 95 Ohio St.3d 334, 2002-Ohio-2217, 767 N.E.2d 725, ¶ 12,
quoting Kelm v. Kelm, 92 Ohio St.3d 223, 227, 749 N.E.2d 299 (2001).
“‘The doctrine of res judicata involves both claim preclusion
(historically called estoppel by judgment in Ohio) and issue preclusion (traditionally
known as collateral estoppel).’” Lycan v. Cleveland, Slip Opinion No. 2022-Ohio-
4676, ¶ 22, quoting Grava v. Parkman Twp., 73 Ohio St.3d 379, 381, 653 N.E.2d
226 (1995). “Issue preclusion applies even if the causes of action differ.” State ex
rel. Peterson v. McClelland, 8th Dist. Cuyahoga No. 103918, 2016-Ohio-1549, ¶ 11.
The trial court relied on Portage Cty. Bd. of Commrs. v. Akron, 109
Ohio St.3d 106, 2006-Ohio-954, 846 N.E.2d 478, ¶84, for its res judicata
determination. Portage provides, “‘[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
¶ 84, quoting Grava v. Parkman Twp., 73 Ohio St.3d 379, 653 N.E.2d 226 (1995),
at paragraph one of the syllabus.
Portage further explains the required elements:
The Sixth Circuit Court of Appeals construed Grava as setting forth the
following requirements for the issue-preclusion prong of res judicata:
“(1) a prior final, valid decision on the merits by a court of competent
jurisdiction; (2) a second action involving the same parties, or their
privies, as the first; (3) a second action raising claims that were or could
have been litigated in the first action; and (4) a second action arising
out of the transaction or occurrence that was the subject matter of the
previous action.”
Id., quoting Hapgood v. Warren, 127 F.3d 490, 493 (6th Cir. 1997).
“Grava further noted that 1 Restatement of the Law 2d, Judgments
(1982), Comment b to Section 24 of the Restatement of Judgments, defined
‘transaction’ as a ‘common nucleus of operative facts.’” Id. at ¶ 84, quoting Grava
at 382. “Issue preclusion applies even if the causes of action differ.” (Citations
omitted.) In re Ohio Power Co., 144 Ohio St.3d 1, 2015-Ohio-2056, 40 N.E.3d 1060,
¶ 40; State ex rel. Peterson v. McClelland, 8th Dist. Cuyahoga No. 103918, 2016-
Ohio-1549, ¶ 11.
The record reflects that viewing the evidence most strongly in favor
of the nonmoving party, there are no genuine issues of material fact in this case and
appellees were entitled to judgment as a matter of law based on the doctrine of res
judicata. This court finds that a prior final valid decision was made on the merits in
the 2019 Case, the current action involves the same parties, the second action could
have been litigated in the first action, and the instant action arises from the same
transaction or common nucleus of operative facts that was the subject matter of the
previous action.
Judgment affirmed.
It is ordered that appellees recover from appellants 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
common pleas 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.
ANITA LASTER MAYS, ADMINISTRATIVE JUDGE
EILEEN A. GALLAGHER, J., and
MARY J. BOYLE, J., CONCUR