Centerburg RE, L.L.C. v. Centerburg Pointe, Inc. ( 2014 )

[Cite as Centerburg RE, L.L.C. v. Centerburg Pointe, Inc., 2014-Ohio-4846.]
COURT OF APPEALS
KNOX COUNTY, OHIO
FIFTH APPELLATE DISTRICT
CENTERBURG RE, LLC JUDGES:
Hon. W. Scott Gwin, P. J.
Plaintiff-Appellee Hon. Sheila G. Farmer, J.
Hon. John W. Wise, J.
-vs-
Case No. 13 CA 28
CENTERBURG POINTE, INC.
Defendant-Appellant OPINION
CHARACTER OF PROCEEDING: Civil Appeal from the Court of Common
Pleas, Case No. 11 OT 11-0622
JUDGMENT: Affirmed
DATE OF JUDGMENT ENTRY: October 30, 2014
APPEARANCES:
For Defendant-Appellant For Plaintiff-Appellee
DOUGLAS V. BARTMAN EZIO A. LISTATI
THE BARTMAN LAW OFFICE J. JAREDD FLYNN
1991 Crocker Road, Suite 600 THRASHER, DINSMORE & DOLAN
Cleveland, Ohio 44145 1400 West 6th Street, Suite 400
Knox County, Case No. 13 CA 28 2
Wise, J.
{¶1} Appellant Centerburg Pointe, Inc. appeals from the decisions of the Knox
County Court of Common Pleas denying its motion to dismiss and its motion for
summary judgment and granting summary judgment in favor of Appellee Centerburg
RE, LLC.
STATEMENT OF THE FACTS AND CASE
{¶1} James Griffiths and Martha Griffiths were married on August 22, 1992.
The marriage was terminated and the final divorce decree was filed on August 25, 2011.
{¶2} Appellant Centerburg Pointe, Inc. and Appellee Centerburg RE, LLC are
corporate entities formed and owned by James Griffiths and Martha Griffiths during their
marriage. Appellant Centerburg Pointe, Inc. is an Ohio corporation wholly owned by
James Griffiths ("Husband"). Appellee Centerburg RE, LLC is an Ohio limited liability
company wholly owned by Martha Griffiths ("Wife").
{¶3} Appellant and Appellee were parties to a lease for the operation of a
nursing home known as Centerburg Pointe. Appellee was the landlord and Appellant
was the tenant with respect to said nursing home. The Lease, effective January 1, 2008,
was executed by Ms. Griffiths as the sole member for Appellee. The Lease was also
executed by Ms. Griffiths as secretary for Appellant.
{¶4} Pursuant to §2.04(a) of the Lease, Appellant was required to pay "all real
estate taxes and assessments levied or assessed against the ... [Property]."
Additionally, pursuant to §6.01 of the Lease, Appellant was required to maintain and
repair the Property.
Knox County, Case No. 13 CA 28 3
{¶5} Appellant failed to pay real estate taxes for the Property to the Knox
County Treasurer. Appellant also failed to properly maintain and repair the Property.
{¶6} Upon termination of the Griffiths’ marriage, the ownership and obligations
of Appellee and Appellant businesses was allocated by virtue of the domestic relations
proceedings in Cuyahoga County's Domestic Relations Division, Case No. DR-10-
33235.
{¶7} The domestic relations court first provisionally allocated Centerburg RE,
LLC and the operations of Centerburg Pointe to Ms. Griffiths in an order dated October
18, 2011, which confirmed an interim award of the arbitrator in the domestic relations
action. The parties agreed, the arbitrator awarded, and the Domestic Relations Court
ordered, that:
{¶8} “1. Effective December 1, 2010, Marti Griffiths will manage Centerburg
RE, ...
{¶9} “2. Effective December 1, 2010 Marti Griffiths will form a corporation to
replace the operating entities for Centerburg Pointe ... of which Jim Griffiths is the sole
shareholder. Jim Griffiths will continue to operate [that entity] through November 30,
2010 and as such will pay the related mortgages due by [that entity] through and
including November 30, 2010 ...
{¶10} “On or after December 1, 2010, Marti Griffiths may, in her sole discretion,
choose to directly, or through an outside operator, operate the facilities at Centerburg
Pointe ...
{¶11} “ ***
Knox County, Case No. 13 CA 28 4
{¶12} “17. On or before October 27, 2010, the parties shall reconvene in order to
address the true-up of payables with respect to the entities operated by each of them ...”
{¶13} The Operations Transfer Agreement ("OTA") referenced in Appellee's
complaint in this case was entered into by Appellant and Centerburg Pointe Healthcare
Group, Inc., the successor operator and tenant of the Centerburg Pointe nursing home,
to effectuate the Interim Award's requirement that Appellant turn over the operations of
Centerburg Pointe. In accordance with the Interim Award, Appellant ceased operating
Centerburg Pointe and the Lease terminated on December 1, 2010.
{¶14} In the final divorce decree, the domestic relations court adopted the terms
settled upon by Mr. Griffiths and Ms. Griffiths in the SPSA:
{¶15} “The Court further finds that the parties have entered into a Separation
Agreement and Addendum, which are fair, just and equitable and orders the Agreement
and Addendum, which are attached and for identification purposes marked as Exhibit A,
be included herein as if fully rewritten and its terms entered into execution.” (Decree,
2012 Stipulation Ex. 5, p. 2).
{¶16} Specifically, the domestic relations court ordered that Appellee Centerburg
RE, LLC, was to be the sole property of, retained by, Ms. Griffiths.
{¶17} The Decree further provided that Appellant Centerburg Pointe, Inc., was to
be the sole property of, and retained by, Mr. Griffiths. (SPSA, 2012 Stipulation Exhibit 3,
at Section 2.3(a) and Section 2.18).
{¶18} The Decree’s terms, pursuant to the agreement of the Griffiths in the
SPSA, included the following:
Knox County, Case No. 13 CA 28 5
{¶19} In Section 2.3, that Centerburg RE would be Ms. Griffiths sole property
and that Ms. Griffiths would hold Mr. Griffiths harmless from any "expenses, losses,
claims, or liabilities whatever arising from, or in any way connected with, Centerburg RE
[and] Centerburg Pointe ..." (SPSA, Ex. 3 to 2012 Stipulation, sections 2.3(a) and 2.3(d);
Decree, Ex. 5 to 2012 Stipulation).
{¶20} In Section 2.18, that Centerburg Pointe, Inc. would be the sole property of
Mr. Griffiths and that Centerburg RE, LLC would be the sole property of Ms. Griffiths.
(Amendment, Ex. 4 to 2012 Stipulation; Decree, Ex. 5 to 2012 Stipulation).
{¶21} In Section 2.18, that "[e]xcept as is otherwise provided above in this
Agreement, and except as is otherwise provided in the three Operations Transfer
Agreements executed by Husband and Wife on November 30, 2010, in which case
those other provisions shall govern, Wife shall indemnify, defend and hold Husband and
Husband's Entities harmless from any and all debts and obligations (including but not
limited to personal guarantees and reasonable attorneys' fees) incurred by or on behalf
of Wife's entities." Id.
{¶22} In Article VII, that "[a]ny and all intercompany loans, infusions of capital or
obligations due and owing from Wife (or any entity or property that becomes Wife's
separate property pursuant to this Agreement) to Husband (or any entity or property that
becomes Husband's separate property pursuant to this Agreement) shall be forgiven
and of no further force or effect. Similarly, any and all intercompany loans, infusions of
capital or obligations due and owing from Husband (or any entity or property that
becomes Husband's separate property pursuant to this Agreement) to Wife (or any
entity or property that becomes Wife's separate property pursuant to this Agreement)
Knox County, Case No. 13 CA 28 6
shall be forgiven and of no further force or effect." (SPSA, Ex. 3 to Stipulation, pp. 35,
36; Decree, Ex. 5 to 2012 Stipulation).
{¶23} On November 28, 2011, Appellee filed a Complaint in the Common Pleas
Court of Knox County, alleging a claim for breach of contract against Appellant. The
complaint alleges that Appellant failed to pay property taxes and failed to perform
building maintenance with respect to the Centerburg Pointe nursing home owned by
Appellee and formerly operated by Appellant. Appellee's complaint alleges specifically
that the unpaid taxes and unperformed maintenance related to the period up to
December 1, 2010, after which Appellant no longer operated the nursing home pursuant
to an interim order ("Interim Award") entered in the Domestic Relations Action.
{¶24} On January 25, 2012, Appellant filed a motion to dismiss Appellee's
complaint for lack of subject matter jurisdiction. The Motion to Dismiss asserted that the
claims of Appellee were subject to the continuing jurisdiction of the Domestic Relations
Court.
{¶25} On February 15, 2012, the trial court denied the Motion to Dismiss.
{¶26} On July 31 and August 1, 2012, the parties submitted cross-motions for
summary judgment.
{¶27} On August 13, 2012, the parties filed a stipulation as to certain documents
and facts relevant to the issues raised in those motions for summary judgment, the
"2012 Stipulation".
{¶28} Appellant's motion argued that Appellee's claims were foreclosed by the
release of obligations between Mr. Griffiths, Ms. Griffiths, and their business entities in
the Decree.
Knox County, Case No. 13 CA 28 7
{¶29} Appellee's motion sought summary judgment on liability and damages.
{¶30} On November 26, 2012, the trial court entered two judgment entries: one
denying Appellant's motion for summary judgment, and the other granting Appellee's
motion for summary judgment and entering judgment in favor of Appellee. In that
second judgment entry, the trial court entered judgment in favor of Appellee and
awarded Appellee the damages it sought for taxes and maintenance.
{¶31} On December 5, 2012, Appellee filed a motion for attorneys' fees. After
Appellant filed a notice of appeal on December 26, 2012, Appellee filed a motion to
dismiss the appeal for lack of a final appealable order. That motion was granted, and
the case returned to the trial court for consideration of Appellee's motion for attorneys'
fees.
{¶32} On June 21, 2013, the parties stipulated that the reasonable amount of
attorneys' fees incurred by Appellee was $64,000.
{¶33} On August 7, 2013, the trial court issued a final appealable order
incorporating the November 26, 2012, judgment entries and awarding Appellee $64,000
in attorneys' fees.
{¶34} Appellant filed an appeal and this matter is now before this Court for
consideration. Appellant assigns the following errors for our review:
{¶35} "I. THE TRIAL COURT ERRED WHEN IT DENIED APPELLANT'S
MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION.
{¶36} “II. THE TRIAL COURT ERRED IN DENYING APPELLANT'S MOTION
FOR SUMMARY JUDGMENT.
Knox County, Case No. 13 CA 28 8
{¶37} “III. THE TRIAL COURT ERRED BY GRANTING APPELLEE'S MOTION
FOR SUMMARY JUDGMENT.”
I.
{¶38} Under its First Assignments of Error, Appellant claims the trial court lacked
subject matter jurisdiction in this matter. We disagree.
{¶39} The standard of review for dismissal for want of subject matter jurisdiction
pursuant to Civil Rule 12(B)(1) is whether any cause of action cognizable by the forum
has been raised in the complaint. Prosen v. Dimora, 79 Ohio App. 3d 120, 606 N.E.2d
1050 (1992); State ex rel. Bush v. Spurlock, 42 Ohio St. 3d 77, 537 N.E.2d 641 (1989).
This determination involves a question of law that we review de novo. Shockey v. Fouty,
106 Ohio App. 3d 420, 666 N.E.2d 304 (1995). Under a de novo analysis, we must
accept all factual allegations of the complaint as true and all reasonable inferences must
be drawn in favor of the nonmoving party. Byrd v. Faber, 57 Ohio St. 3d 56, 565 N.E.2d
584 (1991).
{¶40} Appellant herein argues that the trial court did not have subject matter
jurisdiction in this case because Appellee’s claims relate to the marital debt and
therefore fall within the jurisdiction of the domestic relations court.
{¶41} In this case, we find that based on the subject matter of the dispute herein,
the general division and the domestic relations division had concurrent jurisdiction.
{¶42} Once a court acquires jurisdiction of a cause of action, its authority
continues until the matter is “completely and finally disposed of.” Thus, a court of
concurrent jurisdiction is not at liberty to interfere with the first court's proceedings. John
Knox County, Case No. 13 CA 28 9
Weenink & Sons Co. v. Court of Common Pleas of Cuyahoga Cty. (1948), 150 Ohio St.
349, 82 N.E.2d 730, paragraphs two and three of syllabus.
{¶43} The jurisdictional priority rule provides that “as between [state] courts of
concurrent jurisdiction, the tribunal whose power is first invoked by the institution of
proper proceedings acquires jurisdiction, to the exclusion of all other tribunals, to
adjudicate upon the whole issue and to settle the rights of the parties.” State ex rel.
Racing Guild of Ohio v. Morgan (1985), 17 Ohio St. 3d 54, 56, 476 N.E.2d 1060, quoting
State ex rel. Phillips v. Polcar (1977), 50 Ohio St. 2d 279, 364 N.E.2d 33, syllabus.
Hence, “where a suit is commenced in one jurisdiction which involves the ‘whole issue’
between the parties, a second court may not interfere with the resolution of the issue
filed in the first court.” Davis v. Cowan Sys., Cuyahoga App. No. 83155, 2004-Ohio-515;
see, also, CWP Ltd. Pshp. v. Vitrano (May 15, 1997), Cuyahoga App. No. 71314.
{¶44} “The determination of whether two cases concern the same ‘whole issue’
is a two-step analysis. First, there must be cases pending in two different courts of
concurrent jurisdiction involving substantially the same parties; and second, the ruling of
the court subsequently acquiring jurisdiction may affect or interfere with the resolution of
the issues before the court where suit was originally commenced.” Id.
{¶1} First, we find that the parties involved in the instant action are different
than the parties in the divorce action. Second, we find that a ruling of the General
Division will not affect or interfere with the resolution of the Griffiths’ divorce action in
the Domestic Relations Court
Knox County, Case No. 13 CA 28 10
{¶45} The basis of the Complaint filed in the general division of the common
pleas court alleges a breach of a contractual lease agreement between Appellant
Centerburg Pointe, Inc. and Appellee Centerburg RE, LLC.
{¶46} Appellee and Appellant are business entities which exist separate and
apart from Mr. and Mrs. Griffiths. “A corporation is a separate legal entity from its
shareholders, even where there is but one shareholder.” Stuffleben v. Cowden, 8th Dist.
No. 82537, 2003-Ohio-6334, 2003 WL 22805065, ¶ 25, quoting LeRoux's Billyle Supper
Club v. Ma, 77 Ohio App. 3d 417, 420, 602 N.E.2d 685 (6th Dist.1991); see also
Belvedere, 67 Ohio St. 3d at 287, 617 N.E.2d 1075.
{¶47} R.C.§ 3105.011 sets forth the jurisdiction of domestic relations courts. It
states:
{¶48} “The court of common pleas, including divisions of courts of domestic
relations, has full equitable powers and jurisdiction appropriate to the determination of
all domestic relations matters. This section is not a determination by the general
assembly that such equitable powers and jurisdiction do not exist with respect to any
such matter.”
{¶49} In Tanagho v. Tanagho (Feb. 23, 1993), 10th Dist. No. 92AP-1190, 1993
Ohio App. LEXIS 1201, 1993 WL 50950, the domestic relations court decided a quiet
title action brought against a third-party defendant within the context of a divorce action.
On appeal, the Tenth District held that the domestic relations court had exceeded its
jurisdiction in deciding the quiet title action. The court reasoned that “in an action for
divorce, the common pleas court, or its domestic relations division, is limited in its
jurisdiction to the determination of domestic relations matters and any collateral claims
Knox County, Case No. 13 CA 28 11
must be brought in a separate action in the appropriate court or division thereof, where
the claim involves determination of the rights of a third-party.” Id. at 6, 855 N.E.2d 136.
{¶50} In Lisboa v. Karner (2006), 167 Ohio App. 3d 359, 855 N.E.2d 136, 2006-
Ohio-3024, the relator filed a writ of prohibition to prohibit the domestic relations judge
from ruling on a contract fee dispute among third-party creditors, the marital estate and
the relator in her underlying divorce action. The Eighth District granted the writ of
prohibition and held that “R.C. 3105.011 * * * has been consistently interpreted as
excluding collateral claims and non-domestic relations matters from the domestic
relations court.” Id. at ¶ 13, 855 N.E.2d 136.
{¶51} Upon review, we find that the instant case involves the rights of third
parties. Further, the subject of the instant case is breach of a lease agreement, which
falls within the scope of the general division court's jurisdiction.
{¶52} While it is true that ownership of Appellant and Appellee was allocated to
Mr. and Mrs. Griffiths individually by way of the separation agreement and subsequent
divorce decree, as the businesses were marital property, Appellant and Appellee were
not parties to the divorce action. The issues of determining whether or not these
business entities were assets that should be included in the marital estate and the
valuation for purposes of property distribution were primarily domestic relations issues.
However, a separate breach of contract action between the business entities
themselves would not be.
{¶53} Although there is no provision of law which specifically requires all other
civil cases to be brought within or assigned to the general division of the common pleas
court, it may reasonably be concluded that when a case is not primarily of a domestic
Knox County, Case No. 13 CA 28 12
relations nature, it should be originally brought in the general division, or assigned to a
judge thereof. In re Dunn (1995), 101 Ohio App. 3d 1, 5, 654 N.E.2d 1303, 1305.
{¶54} Contract cases are not within the exclusive jurisdiction of the domestic
relations division. The general division judge who was assigned to his case, therefore,
had jurisdiction to consider Appellee’s claims. The general division court was the court
whose jurisdiction was first invoked and that “[a]s between courts of concurrent
jurisdiction, the tribunal whose power is first invoked by the institution of proper
proceedings acquires jurisdiction, to the exclusion of all other tribunals, to adjudicate
upon the whole issue and to settle the rights of the parties.” Citing State, ex. rel. Racing
Guild of Ohio v. Morgan (1985), 17 Ohio St. 3d 54, 476 N.E.2d 1060.
{¶2} Appellant’s First Assignment of Error is denied.
II., III.
{¶3} In its Second and Third Assignments of Error, Appellant claims the trial
court erred in denying its motion for summary judgment and granting Appellee’s motion
for summary judgment. We disagree.
“Summary Judgment Standard”
{¶4} Summary judgment proceedings present the appellate court with the
unique opportunity of reviewing the evidence in the same manner as the trial court.
Smiddy v. The Wedding Party, Inc. (1987), 30 Ohio St. 3d 35, 36. Civ.R. 56(C) provides,
in pertinent part:
{¶5} “Summary judgment shall be rendered forthwith if the pleadings,
depositions, answers to interrogatories, written admissions, affidavits, transcripts of
evidence in the pending case, and written stipulations of fact, if any, timely filed in the
Knox County, Case No. 13 CA 28 13
action, show that there is no genuine issue as to any material fact and that the moving
party is entitled to judgment as a matter of law. * * * A summary judgment shall not be
rendered unless it appears from such evidence or stipulation and only therefrom, that
reasonable minds can come to but one conclusion and that conclusion is adverse to the
party against whom the motion for summary judgment is made, such party being
entitled to have the evidence or stipulation construed most strongly in his favor.”
{¶6} Pursuant to the above rule, a trial court may not enter a summary
judgment if it appears a material fact is genuinely disputed. The party moving for
summary judgment bears the initial burden of informing the trial court of the basis for its
motion and identifying those portions of the record that demonstrate the absence of a
genuine issue of material fact. The moving party may not make a conclusory assertion
that the non-moving party has no evidence to prove its case. The moving party must
specifically point to some evidence which demonstrates the non-moving party cannot
support its claim. If the moving party satisfies this requirement, the burden shifts to the
non-moving party to set forth specific facts demonstrating there is a genuine issue of
material fact for trial. Vahila v. Hall, 77 Ohio St. 3d 421, 429, 1997-Ohio-259, citing
Dresher v. Burt, 75 Ohio St. 3d 280, 1996-Ohio-107.
{¶7} It is based upon this standard that we review Appellant’s assignments of
error.
{¶8} Pursuant to the Operating Transfer Agreement (OTA), signed by Appellant
Centerburg Pointe, Inc. and Appellee Centerburg RE, LLC, effective December 1, 2010,
Appellant and Appellee were required to terminate the existing Lease in this matter
Knox County, Case No. 13 CA 28 14
“provided, however, said termination shall not be deemed a waiver or release of any
claims or defenses that may exist under the … Lease.”
{¶9} Based on the foregoing language, Appellant retained all liabilities and
obligations related to the Property prior to the date of the signing of the OTA.
{¶10} The Separation Agreement in this matter was signed by Jim Griffiths and
Martha Griffiths, and while it does incorporate the OTA, Section 2.18 of the Separation
Agreement specifically states:
{¶11} “***
{¶12} “Except as is otherwise provided above in this Agreement and except as is
otherwise provided in the three Operations Transfer Agreements executed by Husband
and Wife on November 30, 2010, in which case those other provisions shall govern,
Husband shall indemnify, defend and hold Wife and Wife's entities harmless from any
and all debts and obligations (including but not limited to personal guarantees and
reasonable attorneys' fees) incurred by or on behalf of Husband's Entities.
{¶13} “***
{¶14} “Nothing in this Agreement shall diminish any of the defenses or indemnity
obligations owed by any person or entity set forth in the Operations Transfer
Agreements dated November 30, 2010 for the ... Centerburg Pointe nursing facilities.”
{¶15} The relevant provision of the OTA states:
{¶16} “Operator hereby agrees, indemnifies and holds New Operator and New
Operator's affiliates, and their respective partners, members, shareholders, officers,
employees, agents, successors and assigns (each, an "Indemnified Party") harmless
(on a joint and several basis from and against any and all losses, damages, claims,
Knox County, Case No. 13 CA 28 15
causes of action, judgments, costs and expenses (including reasonable fees of
attorneys) that may be suffered or incurred by or asserted or awarded against New
Operator or any Indemnified Party, in each case arising out of the following:
{¶17} “***
{¶18} “(iii) any liability arising out of the operation of the [Centerburg] Facility
prior to the Commencement Date.”
{¶19} Additionally, we find that the obligation in this action, i.e. real estate taxes,
was not an obligation due and owing from Husband to Wife as addressed in the
Separation Agreement. Rather, said real estate taxes were an obligation owed to the
Knox County Treasurer, and pursuant to Section 2.04 of the Lease, “Appellant must pay
… all real estate taxes.”
{¶20} We further find that trial court did not err in finding the tax bill and repair
bill attached to both Appellee’s Motion for Summary Judgment and Appellee’s
Complaint, along with Appellant’s response’s to Appellee’s Request for Admissions,
supported Appellee’s motion for summary judgment and provided sufficient evidence of
damages.
{¶21} Based on the foregoing, we find the trial court did not err in granting
summary judgment in favor of Appellee for breach of the lease agreement and awarding
damages for same.
Knox County, Case No. 13 CA 28 16
{¶22} Appellant’s Second and Third Assignments of Error are denied.
{¶23} For the foregoing reasons, the judgment of the Court of Common Pleas of
Knox County, Ohio, is affirmed.
By: Wise, J.
Gwin, P. J., and
Farmer, J., concur.
JWW/d 1020
Knox County, Case No. 13 CA 28 17