Rafferty v. CNE Poured Walls, Inc. ( 2011 )

[Cite as Rafferty v. CNE Poured Walls, Inc., 2011-Ohio-5143.]
IN THE COURT OF APPEALS OF OHIO
FOURTH APPELLATE DISTRICT
JACKSON COUNTY
LARRY RAFFERTY, : Case No. 10CA16
:
Plaintiff-Appellant, :
: DECISION AND
v. : JUDGMENT ENTRY
:
CNE POURED WALLS, INC., :
: RELEASED: 09/15/11
Defendant-Appellee. :
______________________________________________________________________
APPEARANCES:1
Richard M. Lewis and Jennifer L. Routte, The Law Firm of Richard M. Lewis, LLC,
Jackson, Ohio, for appellant.
______________________________________________________________________
Harsha, P.J.
{¶1} Larry Rafferty filed suit against CNE Poured Walls, Inc. alleging the
company improperly poured the concrete walls for the foundation of his new home. A
jury awarded him both compensatory and punitive damages and found that he was
entitled to attorney fees. Before the trial court determined the amount of attorney fees,
Rafferty filed a motion to add James Eggers, part owner of CNE, as a party-defendant.
After the trial court denied the motion and set the amount of attorney fees, Rafferty filed
this appeal.
{¶2} Rafferty contends that the trial court erred when it denied his motion to
add Eggers as a party. In making its decision the court incorrectly noted that: 1) it
would have to set aside the verdict against CNE if it granted the motion, and 2) the
motion was “well beyond the time permitted by the Civil Rules to add a party.”
Accordingly, we reverse and remand so that the court can redetermine the merits of the
1
CNE did not file a brief or otherwise enter an appearance in this appeal. Nor did James Eggers seek
leave to intervene. See Civ.R. 1(C) and Civ.R. 24, which arguably would allow intervention here. See
also Queen City Lodge No. 69, FOP v. SERB, Hamilton Co. App. No. C-060530, 2007-Ohio-170.
Jackson App. No. 10CA16 2
motion by focusing upon the traditional factors for determining whether to add parties,
i.e. fundamental fairness, timeliness, prejudice to existing defendants, and good faith.
I. Facts
{¶3} In July 2008, Rafferty filed a complaint against CNE alleging that he
entered into a contract to have CNE pour concrete walls for the foundation of his new
home. According to Rafferty, CNE agreed to complete the work by June 1, 2008, but
did not begin until June 3. Rafferty also claimed that CNE agreed to pour the walls
parallel to Limerick Road, but it poured the walls at an angle and made various other
errors. Rafferty alleged claims for breach of contract, negligent construction, fraud in
the inducement, and violations of the Ohio Consumer Sales Practices Act (CSPA).
{¶4} In March 2010, a jury found in Rafferty’s favor, awarded him
compensatory damages and punitive damages, and concluded that he was entitled to
attorney fees. In May 2010, before the trial court determined the amount of attorney
fees, Rafferty filed a motion under Civ.R. 20 and Civ.R. 21 to add Eggers as a
defendant. Rafferty informed the court that he wanted to assert claims against Eggers
for “personal liability for the fraud and violations of the CSPA in which he engaged”
based on Eggers’ trial testimony. According to Rafferty, CNE and Eggers were both
liable to him for the full amount of damages the jury awarded. Rafferty noted that his
motion was filed within the applicable statute of limitations for claims against Eggers.
{¶5} The trial court denied the motion, finding:
Plaintiff now wants to make James Eggers personally liable for the verdict
returned solely against Defendant CNE Poured Walls, Inc.
In order to find or hold James Eggers liable for any of the damages
found by the jury in favor of Plaintiff, Mr. Eggers would have to be given
the opportunity to fully defend the action. This would require an entirely
new trial with Mr. Eggers given the opportunity to present all defenses
available to him.
Jackson App. No. 10CA16 3
It would appear to the Court that for Plaintiff to prevail on its motion
the verdict previously awarded would need to be set aside and a new trial
ordered. Plaintiff was aware of the relationship of James Eggers to the
Defendant prior to the jury trial. James Eggers was present and testified.
In addition, Mr. Eggers attempted to appear on behalf of the Defendant.
Plaintiff objected to this on the basis that Defendant was a corporation and
James Eggers was not licensed to practice law. The Court sustained this
objection and did not permit James Eggers to participate in the trial.
This matter, having proceed[ed] to jury trial, verdict and judgment,
would appear to this Court well beyond the time permitted by the Civil
Rules to add a party.
{¶6} After the court determined the amount of attorney fees CNE owed
Rafferty, he filed this appeal.
II. Assignment of Error
{¶7} Rafferty assigns one error for our review:
Appellant claims the court erred when it denied Plaintiff’s Motion to Join
James Eggers as a Defendant, filed on May 7, 2010.
III. Motion to Add a New Party-Defendant
{¶8} Initially, we must determine the appropriate standard of review. Rafferty
based his motion to add Eggers as a party-defendant on Civ.R. 20(A) and Civ.R. 21.
Civ.R. 20(A), provides:
Permissive joinder. All persons may join in one action as plaintiffs if they
assert any right to relief jointly, severally, or in the alternative in respect of
or arising out of the same transaction, occurrence, or succession or series
of transactions or occurrences and if any question of law or fact common
to all these persons will arise in the action. All persons may be joined in
one action as defendants if there is asserted against them jointly,
severally, or in the alternative, any right to relief in respect of or arising out
of the same transaction, occurrence, or succession or series of
transactions or occurrences and if any question of law or fact common to
all defendants will arise in the action. A plaintiff or defendant need not be
interested in obtaining or defending against all the relief demanded.
Judgment may be given for one or more of the plaintiffs according to their
respective rights to relief, and against one or more defendants according
to their respective liabilities.
Jackson App. No. 10CA16 4
{¶9} Civ.R. 21, “Misjoinder and Nonjoinder of Parties,” states:
Misjoinder of parties is not ground for dismissal of an action. Parties may
be dropped or added by order of the court on motion of any party or of its
own initiative at any stage of the action and on such terms as are just.
Any claim against a party may be severed and proceeded with separately.
{¶10} On appeal, Rafferty focuses solely on Civ.R. 20(A) in discussing our
standard of review. Rafferty contends that if the requirements of Civ.R. 20(A) are met, a
court has no discretion to deny a motion to add a party, and we must review the court’s
denial of his motion de novo. He cites Klein and Darling’s Ohio Civil Practice, Section
20:2, for the proposition that the term “may” in Civ.R. 20(A) relates to action by the
plaintiff, not action by the court, and that “[n]o good reason appears why a trial court
should have discretion to deny joinder which satisfies the requirements of Civ. R.
20(A).” (Appellant’s Br. 5). Rafferty claims that all of the requirements to join Eggers as
a defendant under Civ.R. 20(A) were satisfied, so the court erred as a matter of law
when it denied his motion.
{¶11} However, Civ.R. 20(A) does not invest plaintiffs with the right to
unilaterally add new party-defendants at any stage of the proceedings, even after trial.
The Staff Note to Civ.R. 20 states: “Joinder of parties under Rule 20(A) occurs at the
pleading stage.” If a plaintiff wishes to later add a new party-defendant who meets the
requirements of Civ.R. 20(A), the proper rule to invoke is Civ.R. 21, which “expressly
governs initial nonjoinder and subsequent addition of parties.”2 Darby v. A-Best
Products Co., 102 Ohio St.3d 410, 2004-Ohio-3720, 811 N.E.2d 1117, at ¶10. See,
also, EnQuip Technologies Group, Inc. v. Tycon Technoglass, S.R.L., Greene App.
Nos. 2009 CA 42 & 2009 CA 47, 2010-Ohio-28, at ¶33, quoting Fink, Greenbaum, and
2
The Supreme Court of Ohio has also indicated that parties can move to add parties under Civ.R. 15(A);
however, Rafferty does not rely on this rule. See Darby v. A-Best Products Co., 102 Ohio St.3d 410,
2004-Ohio-3720, 811 N.E.2d 1117, at ¶¶11-12.
Jackson App. No. 10CA16 5
Wilson, Guide to the Ohio Rules of Civil Procedure (2006 ed.), ¶21:2 (stating Civ.R. 21
is the “mechanism for correcting either the misjoinder or nonjoinder of parties” under
Civ.R. 20). See, generally, Staff Note to Civ.R. 21 (stating rule “must be read in
conjunction with * * * Rule 20, Permissive Joinder of Parties”). “The intent of Civ.R.21 is
to bring in a party ‘who, through inadvertence, mistake or for some other reason,’ was
not originally made a party and whose presence is necessary or desirable.” EnQuip
Technologies Group, Inc. at ¶32, quoting Bill Gates Custom Towing, Inc. v. Branch
Motor Express Co. (1981), 1 Ohio App.3d 149, 150, 440 N.E.2d 61.
{¶12} We review a trial court’s decision on a Civ.R. 21 motion seeking leave to
add new parties for an abuse of discretion. Darby at paragraph one of the syllabus.
The term “abuse of discretion” implies that the court’s attitude is arbitrary, unreasonable,
or unconscionable. State v. Adams (1980), 62 Ohio St .2d 151, 157, 404 N.E.2d 144.
Courts have “no discretion to apply an improper analysis or process in deciding an issue
even where they may have discretion in the ultimate decision on the merits.” State v.
Henderson, Vinton App. No. 07CA659, 2008-Ohio-2063, at ¶5.
{¶13} The trial court did not specifically address the issue of whether Eggers
qualified for permissive joinder under Civ.R. 20(A). Rafferty argues that in his
“Amended Complaint adding Eggers as a Defendant claims were asserted against CNE
and Eggers” that met the requirements of Civ.R. 20(A). (Appellant’s Br. 6). However,
Rafferty never filed an amended complaint or a proposed amended complaint.
Nonetheless, it is apparent that Rafferty claims that Eggers violated the CSPA and
those violations form the basis for both CNE’s liability and Eggers’ personal liability.
Thus it is clear that Rafferty is claiming a right to relief against both CNE and Eggers “in
respect of or arising out of the same transaction, occurrence, or succession or series of
Jackson App. No. 10CA16 6
transactions or occurrences” and that questions of law or fact common to CNE and
Eggers will arise. Therefore, Eggers would qualify for permissive joinder under Civ.R.
20(A).
{¶14} The trial court gave a number of reasons for its decision to deny Rafferty’s
motion. Significantly, the court concluded that it would have to set aside the verdict
against CNE if it granted Rafferty’s motion. However, the court would not have authority
to set aside a verdict for that reason. And as Rafferty points out, if the court granted the
motion it would simply hold a separate trial for the claims against Eggers. See Civ.R.
42(B).
{¶15} In addition, the court stated that “[t]his matter, having proceed[ed] to jury
trial, verdict and judgment, would appear to this Court well beyond the time permitted by
the Civil Rules to add a party.” However, at the time Rafferty filed his motion, the court
had not entered a final order, and Civ.R. 21 states that “[p]arties may be dropped or
added by order of the court on motion of any party or of its own initiative at any stage of
the action and on such terms as are just.” (Emphasis added). Thus even though the
jury awarded a verdict against CNE, Eggers could still be added as a party under the
Civil Rules. See Ahern v. Ameritech Corp. (2000), Cuyahoga App. Nos. 75807-75809,
137 Ohio App.3d 754, 766, 739 N.E.2d 1184.
{¶16} Moreover, the trial court appears to rely upon other improper factors when
it stated:
Plaintiff was aware of the relationship of James Eggers to the Defendant
prior to the jury trial. * * * In addition, Mr. Eggers attempted to appear on
behalf of the Defendant. Plaintiff objected to this on the basis that
Defendant was a corporation and James Eggers was not licensed to
practice law. The Court sustained this objection and did not permit James
Eggers to participate in the trial.
However, Rafferty’s awareness of Eggers’ relationship to CNE is a separate issue from
Jackson App. No. 10CA16 7
when Rafferty became aware of facts that would support a lawsuit against Eggers, i.e.
his mere capacity as a co-owner would not expose him to potential liability. Rafferty
would have to learn additional facts to support an effort to pierce the corporate veil. And
the fact that Rafferty properly objected when Eggers attempted to engage in the
unauthorized practice of law bears no relationship to when Rafferty should have known
enough to join Eggers, or whether it is appropriate to add Eggers as a party at this stage
of the proceedings.
{¶17} Because the court considered improper factors to reach its decision, we
reverse and remand so the trial court can decide whether to grant the motion using
traditional factors. Unless it is apparent the proposed claims against Eggers are “wholly
futile,” the court should disregard the merits of the proposed claims and rule on the
motion based on traditional grounds, which include fundamental fairness, judicial
efficiency, timeliness, prejudice to the existing defendants and lack of good faith on the
part of the movant. Darby, supra, at ¶¶11, 16, 21. In considering the plaintiff’s request
for leave to amend, a primary consideration should be whether there is actual prejudice
to the existing defendants. Id. at ¶20.
JUDGMENT REVERSED
AND CAUSE REMANDED.
Jackson App. No. 10CA16 8
JUDGMENT ENTRY
It is ordered that the JUDGMENT IS REVERSED and that the CAUSE IS
REMANDED. Appellee shall pay the costs.
The Court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this Court directing the Jackson
County Common Pleas Court to carry this judgment into execution.
Any stay previously granted by this Court is hereby terminated as of the date of
this entry.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of
the Rules of Appellate Procedure. Exceptions.
Abele, J. & McFarland, J.: Concur in Judgment and Opinion.
For the Court
BY: _____________________________
William H. Harsha, Presiding Judge
NOTICE TO COUNSEL
Pursuant to Local Rule No. 14, this document constitutes a final judgment
entry and the time period for further appeal commences from the date of filing
with the clerk.