First-Knox Natl. Bank v. MSD Properties, Ltd. ( 2015 )


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  • [Cite as First-Knox Natl. Bank v. MSD Properties, Ltd., 2015-Ohio-4574.]
    COURT OF APPEALS
    KNOX COUNTY, OHIO
    FIFTH APPELLATE DISTRICT
    FIRST-KNOX NATIONAL BANK, et al., :                            JUDGES:
    :                            Hon. W. Scott Gwin, P.J.
    Plaintiffs - Appellees       :                            Hon. Patricia A. Delaney, J.
    :                            Hon. Craig R. Baldwin, J.
    -vs-                              :
    :
    MSD PROPERTIES, LTD., et al.,     :                            Case No. 15CA6
    :
    Defendants - Appellants      :                            OPINION
    CHARACTER OF PROCEEDING:                                       Appeal from the Knox County Court
    of Common Pleas, Case No.
    14OT11-0371
    JUDGMENT:                                                      Affirmed in part;
    Reversed and Remanded in part
    DATE OF JUDGMENT:                                              November 3, 2015
    APPEARANCES:
    For Plaintiffs-Appellees                                       For Defendants-Appellants
    KIM M. ROSE                                                    JACK L. MOSER, JR.
    Critchfield, Critchfield & Johnston LTD.                       107 W. Johnstown Road
    10 S. Gay Street                                               Gahanna, OH 43230
    P.O. Box 469
    Mount Vernon, OH 43050
    Knox County, Case No. 15CA6                                                                 2
    Baldwin, J.
    {¶1}   Appellants MSD Properties, LTD and Michael Shawn Dennis appeal a
    judgment of the Knox County Common Pleas Court dismissing their claims against
    appellees First-Knox National Bank and Sunny Green LLC.
    STATEMENT OF THE FACTS AND CASE
    {¶2}   Appellants MSD Properties, LTD leased property from appellees, which
    they in turn leased to Todd Hempfield as Unit 16, Inc., who operated a bar on the
    premises known as “Banana Joe’s.” According to the pleadings in the case, in March of
    2014, Todd Hempfield as Unit 16, Inc., approached appellee First Knox directly about
    executing a lease agreement for the property.
    {¶3}   Appellees provided appellants and Hempfield notice of termination of the
    lease on August 30, 2014, effective September 30, 2014. Appellants remained on the
    property and on October 1, 2014, appellees served a three-day notice to vacate the
    premises. When appellants failed to vacate, appellees filed a forcible entry and detainer
    action in the Mount Vernon Municipal Court.            Appellants filed counterclaims for
    retaliatory eviction, tortious interference with a business relationship, and fraud.
    Because the amount of damages sought in the counterclaims exceeded the
    jurisdictional limits of the municipal court, and after the forcible entry and detainer action
    was resolved in the municipal court, the case was transferred to the Knox County
    Common Pleas Court.
    {¶4}   Following the transfer, appellees filed a motion to dismiss the complaint
    pursuant to Civ. R. 12(B)(6). Appellants sought leave to amend the pleadings, which
    Knox County, Case No. 15CA6                                                             3
    the trial court did not expressly overrule but implicitly overruled by granting appellees'
    Civ. R. 12(B)(6) motion to dismiss. The trial court dismissed the counterclaims on the
    basis that retaliatory eviction is not actionable under R.C. 5321.02 for a commercial
    lease, appellants had not alleged a set of facts that appellees interfered with a business
    relationship between them and a third party, and appellants failed to plead fraud with
    specificity.
    {¶5}     Appellants assign four errors on appeal:
    {¶6}     “I.     THE TRIAL COURT ERRED, ABUSED ITS DISCRETION AND
    MISCONSTRUED ITS APPLICATION OF OHIO RULES OF CIVIL PROCEDURE 15(A)
    BY IMPLICITLY DENYING APPELLANTS’ MOTION FOR LEAVE TO AMEND
    APPELLANTS’ ANSWER AND COUNTERCLAIMS.
    {¶7}     “II.     THE TRIAL COURT ERRED, ABUSED ITS DISCRETION AND
    MISCONSTRUED ITS APPLICATION OF OHIO RULES OF CIVIL PROCEDURE 15(A)
    BY REFUSING TO GRANT APPELLANTS’ MOTION FOR LEAVE TO AMEND
    APPELLANTS’ ANSWER AND COUNTERCLAIMS.
    {¶8}     “III.   THE TRIAL COURT ERRED, ABUSED ITS DISCRETION AND
    MISCONSTRUED ITS APPLICATION OF OHIO RULES OF CIVIL PROCEDURE
    12(B)(6)       WHEN     IT   GRANTED    PLAINTIFFS’    FIRST   MOTION     TO    DISMISS
    DEFENDANTS’             COUNTERCLAIMS      FOR    TORTIOUS     INTERFERENCE         WITH
    BUSINESS RELATIONS.
    {¶9}     “IV.     THE TRIAL COURT ERRED, ABUSED ITS DISCRETION AND
    MISCONSTRUED ITS APPLICATION OF OHIO RULES OF CIVIL PROCEDURE
    Knox County, Case No. 15CA6                                                            4
    12(B)(6)   WHEN    IT   GRANTED       PLAINTIFFS’       FIRST   MOTION     TO    DISMISS
    DEFENDANTS’ COUNTERCLAIMS FOR FRAUD.”
    I., II.
    {¶10} We address appellants’ first and second assignments of error together, as
    both claim error in the trial court’s implicit overruling of their motion to amend their
    answer and counterclaim.
    {¶11} Civ. R. 15(A) provides in pertinent part:
    A party may amend its pleading once as a matter of
    course within twenty-eight days after serving it or, if the
    pleading is one to which a responsive pleading is required
    within twenty-eight days after service of a responsive
    pleading or twenty-eight days after service of a motion under
    Civ.R. 12(B), (E), or (F), whichever is earlier. In all other
    cases, a party may amend its pleading only with the opposing
    party's written consent or the court's leave. The court shall
    freely give leave when justice so requires. Unless the court
    orders otherwise, any required response to an amended
    pleading must be made within the time remaining to respond
    to the original pleading or within fourteen days after service of
    the amended pleading, whichever is later.
    {¶12} While Civ.R. 15(A) favors a liberal policy when the trial court is confronted
    with a motion to amend a pleading, the role of this Court is to determine whether the
    trial court's decision was an abuse of discretion, not whether it was the same decision
    Knox County, Case No. 15CA6                                                                5
    we might have made. Wilmington Steel vs. Cleveland Electric Illuminating Company, 
    60 Ohio St. 3d 120
    , 122, 
    573 N.E.2d 622
    (1991). The term “abuse of discretion” connotes
    more than an error or law or judgment; it implies that the court's attitude is
    unreasonable, arbitrary, or unconscionable. 
    Id. {¶13} Appellants
    sought to amend their counterclaims on February 6, 2015, to
    “address issues raised in Plaintiffs’ Motion to Dismiss and related pleadings.” They
    further sought to add a cause of action for voluntary bailment and conversion.
    {¶14} While appellants’ motion states that the amended counterclaims are
    attached to the motion, the proposed amendment is not attached to the original motion
    in the file as transmitted to this Court for review. Appellants did append a file-stamped
    copy of the amended counterclaims to their brief. However, appellants did not plead
    fraud with specificity in this amended document, and their cause of action for conversion
    and bailment was based on facts known to them at the time they filed their original
    answer and counterclaims. The trial court did not abuse its discretion in overruling the
    motion to amend the answer and counterclaims.
    {¶15} The first and second assignments of error are overruled.
    III.
    {¶16} In their third assignment of error, appellants argue the court erred in
    dismissing their cause of action for tortious interference with a business relationship.
    {¶17} To dismiss a complaint for failure to state a claim upon which relief may be
    granted under Civ.R. 12(B)(6), it must be shown “beyond doubt that the plaintiff can
    prove no set of facts in support of his claim which would entitle him to relief.” York v.
    Ohio State Hwy. Patrol, 
    60 Ohio St. 3d 143
    , 144, 
    573 N.E.2d 1063
    (1991). In applying
    Knox County, Case No. 15CA6                                                              6
    this standard, all factual allegations in the complaint are taken as true and all
    reasonable inferences are made in favor of the nonmoving party. Appellate review of a
    Civ. R. 12(B)(6) dismissal is de novo. Hunt v. Marksman Prod. Div. of S/R Industries,
    Inc., 
    101 Ohio App. 3d 760
    , 
    656 N.E.2d 726
    (1995).
    {¶18} Civ. R. 12(B)(6) further sets forth what the trial court may consider in ruling
    on a motion to dismiss:
    When a motion to dismiss for failure to state a claim
    upon which relief can be granted presents matters outside
    the pleading and such matters are not excluded by the court,
    the motion shall be treated as a motion for summary
    judgment and disposed of as provided in Rule 56. Provided
    however, that the court shall consider only such matters
    outside the pleadings as are specifically enumerated in Rule
    56. All parties shall be given reasonable opportunity to
    present all materials made pertinent to such a motion by
    Rule 56.
    {¶19} The elements of tortious interference with a business relationship are: (1)
    the existence of a prospective business relationship; (2) the wrongdoer's knowledge
    thereof; (3) an intentional interference causing a breach or termination of the
    relationship; and (4) damages resulting therefrom. Gen. Medicine, P.C. v. Morning View
    Care Ctr ., 5th Dist. Tuscarawas No. 2003AP12–0088, 2004–Ohio–4669, ¶ 48..
    {¶20} Appellants’ counterclaim alleged that appellees intentionally disrupted the
    relationship between MSD and Unit 16, Inc. by entering into a “second lease” with Unit
    Knox County, Case No. 15CA6                                                              7
    16, Inc. for the purpose of conducting the business known as Banana Joe’s. The claim
    further alleged that appellees interfered with the business relationship between MSD
    and Unit 16 by locking MSD out of possession of the premises. The counterclaim
    alleged that appellees knowingly leased the premises to MSD for the specific purpose of
    MSD subleasing to Unit 16, for the operation of the business known as Banana Joe’s.
    Appellants alleged that they had been damaged by appellees’ actions.                These
    allegations, when taken as true and construing all inferences in favor of appellants, set
    forth a claim for tortious interference with a business relationship.
    {¶21} In the trial court and before this Court, appellees rely on the findings of
    fact of the Mount Vernon Municipal Court and the evidence presented in that case to
    support their argument that appellants cannot demonstrate entitlement to relief for
    tortious interference with a business relationship. However, appellees’ argument relies
    on evidence outside the pleadings. In the instant case, the trial court did not convert the
    motion to a motion for summary judgment and dispose of it in accordance with Civ. R.
    56, and thus could not consider matters outside of the pleadings. Appellees’ argument
    is in the nature of a claim that the issues raised by appellants are res judicata; however,
    res judicata cannot be raised in a Civ. R. 12(B)(6) motion. See Wellman v. Wheeling &
    Lake Erie Railway Co., 5th Dist. Stark No. 999CA00161, 
    2000 WL 93986
    (December
    29, 1999). The court erred in granting appellees’ Civ. R. 12(B)(6) motion as to the claim
    for tortious interference with a business relationship.
    {¶22} Appellants’ third assignment of error is sustained.
    Knox County, Case No. 15CA6                                                                    8
    IV.
    {¶23} In their fourth assignment of error, appellants argue that the court erred in
    dismissing their claim for fraud for lack of specificity.
    {¶24} To prove fraud, a plaintiff must establish the following elements: (1) a
    representation, or silence where there is a duty to disclose, (2) which is material to the
    transaction, (3) made falsely, with knowledge of its falsity, or with such utter disregard
    as to its truth that knowledge may be inferred, (4) with the intent to mislead another into
    relying on it, (5) justifiable reliance on the representation, and (6) resulting injury
    proximately caused by the reliance. E.g., Williams v. Aetna Financial Co., 
    83 Ohio St. 3d 464
    , 475, 
    700 N.E.2d 859
    (1998).
    {¶25} In addition, a plaintiff alleging fraud must plead with particularity the
    circumstances constituting fraud. Civ. R. 9(B). The circumstances constituting fraud
    include the time, place, and content of the false representation; the fact misrepresented;
    the identification of the individual giving the false representation; and the nature of what
    was obtained or given as a consequence of the fraud. Aluminum Line Products Co. v.
    Smith Roofing Co., Inc, 
    109 Ohio App. 3d 246
    , 259, 
    671 N.E.2d 1343
    (1996).
    {¶26} Appellants’ claim for fraud does not set forth the facts constituting their
    fraud claim.     They did not set forth the time, place, or content of the false
    representation, and generally allege that they were misled by appellees at the time they
    entered the lease. The claim does not set forth the fact misrepresented or the nature of
    what was obtained or given as a consequence of the fraud. The court did not err in
    dismissing the fraud claim for failure to plead with specificity as require by Civ. R. 9(B).
    {¶27} The fourth assignment of error is overruled.
    Knox County, Case No. 15CA6                                                            9
    {¶28} The judgment of the Knox County Common Pleas Court dismissing
    appellant’s claim for tortious interference with a business relationship is reversed. The
    judgment is affirmed in all other respects. This cause is remanded to that court for
    further proceedings according to law. Costs are to be divided equally between the
    parties.
    By: Baldwin, J.
    Gwin, P.J. and
    Delaney, J. concur.