Hurricane Dev., L.L.C. v. Fourtounis , 2017 Ohio 927 ( 2017 )

[Cite as Hurricane Dev., L.L.C. v. Fourtounis, 2017-Ohio-927.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 104196
HURRICANE DEVELOPMENT, L.L.C.
PLAINTIFF-APPELLEE
vs.
EUGENIA M. FOURTOUNIS, ET AL.
DEFENDANTS-APPELLANTS
JUDGMENT:
REVERSED AND REMANDED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-13-818722
BEFORE: Kilbane, J., Keough, A.J., and Celebrezze, J.
RELEASED AND JOURNALIZED: March 16, 2017
ATTORNEYS FOR APPELLANT
David S. Anthony
Joseph Grandinetti
Anthony & Zomoida L.L.C.
1000 W. Wallings Road
Suite A
Broadview Heights, Ohio 44147
ATTORNEYS FOR APPELLEE
John M. Manos
John M. Manos Co., L.P.A.
739 East 140th Street
Cleveland, Ohio 44110
Melany A. Fontanazza
Kimberly Y. Smith Rivera
McGlinchey Stafford, P.L.L.C.
25550 Chagrin Boulevard
Suite 406
Cleveland, Ohio 44122
Hunter G. Cavell
Crosscountry Mortgage, Inc.
6850 Miller Road
Brecksville, Ohio 44141
MARY EILEEN KILBANE, J.:
{¶1} Defendant-appellant, Eugenia Fourtounis (“Eugenia”), appeals from the
trial court’s judgment sustaining plaintiff-appellee’s, Hurricane Development, L.L.C.
(“Hurricane”), objections to the magistrate’s decision and granting quiet title of the
subject property to Hurricane. For the reasons set forth below, we reverse and remand
for a new trial.
{¶2} At issue in the instant case is whether Eugenia executed a deed in favor of
Hurricane that transferred her interest in the subject property located at 2693 W. 14th
Street in Cleveland, Ohio. Hurricane contends that Eugenia did transfer her interest by
executing a deed, which prompted Hurricane to file a complaint for quiet title, slander of
title, and unjust enrichment against Eugenia in December 2013.1
{¶3} Hurricane is an Ohio limited liability company owned by Nikolas and
Marika Fourtounis (Eugenia’s former in-laws). Hurricane was created to operate the
rental properties Nikolas and Marika own on W. 14th Street. Over the course of 30
years, Nikolas and Marika purchased a total of three parcels of property on W. 14th
Street. The rental property at issue was purchased by Hurricane in May 2001. Nikolas
and Marika used attorney Tom Karris (“Karris”) to assist with their legal affairs and real
estate transfers.
1Hurricanealso filed its complaint against IndyMac Bank, F.S.B., which had
a mortgage on the property and was an interested party in the action.
{¶4} Nikolas and Marika’s son, Mark Fourtounis (“Mark”), married Eugenia in
March 1999, and they divorced in February 2012.2 Mark helped his parents with the
rental properties when they needed a loan to make improvements to the properties. In
December 2004, Hurricane quit-claimed the subject property to Mark personally. Mark
had applied for a loan on the property, but was initially denied because he was married to
Eugenia at the time. As a result, Mark transferred the property to both himself and
Eugenia on February 2, 2005, and they jointly applied and received a loan from IndyMac
Bank in the amount of $159,500.
{¶5} Hurricane claims that Mark and Eugenia executed a quitclaim deed
conveying the subject property to it in June 2005. Since then, Hurricane contends that it
has paid the property tax bill for the subject property. In August 2013, Hurricane
attempted to obtain financing using the subject property as collateral, but discovered that
the Cuyahoga County Recorder’s Office had not recorded the June 2005 quitclaim deed.
Hurricane’s unsuccessful attempts to have Eugenia transfer her interest in the subject
property prompted Hurricane to file a lawsuit against Eugenia.
{¶6} In its complaint, Hurricane alleges the following three causes of action:
quiet title, unjust enrichment, and slander of title. Hurricane moved for summary
judgment in December 2015, which was denied by the court. In April 2016, Hurricane
moved and the trial court granted Hurricane’s motion to dismiss its slander of title cause
2Eugenia is now known as Eugenia Aspiotis.
of action. A trial on the remaining causes of action was held before a magistrate on
April 29, 2015. The following pertinent evidence was adduced at trial.
{¶7} Eugenia testified that when they were married, Mark told her that they were
the owners of Hurricane, which was their rental property business for properties on W.
14th Street. She and Mark would take out loans to repair the properties. She also
testified that Nikolas would bring them monthly rent payments from the properties. She
further testified that Mark would bring her documents all the time to sign, and she would
sign them because he was her husband, he handled the business, and she trusted him.
{¶8} With respect to the subject property, Eugenia denies that she ever signed a
deed transferring the subject property to Hurricane. She remembers signing the deed
transferring the subject property into her and Mark’s name and the loan documents for the
subject property at home, and not at Karris’s office, because in their culture it was custom
for the mother to stay home for 40 days after a baby was born, and their daughter was
born on January 12, 2005, which was less than 40 days from February 2, 2005. Eugenia
further testified that the witness whose signature was on the documents, Elizabeth
Feliciano (“Feliciano”), was not present when she signed the loan documents, nor was she
present for any other document she signed. Feliciano was Karris’s employee. Karris
was not present either to notarize the signatures even though he notarized her signature.
She stated that she had been to Karris’s office on only one occasion, which related to a
will for Mark’s parents.
{¶9} Eugenia further testified that Mark prepared all of their tax returns as well
as the tax returns for Hurricane while they were married, and Eugenia never spoke to any
accountant or participated in the preparation of any of the tax returns. Eugenia does not
have any knowledge of what Mark prepared for their taxes relating to the subject property
because Mark solely handled these matters.
{¶10} Mark stated that Eugenia signed the loan paperwork for the subject property
at Karris’s office. He testified that the IndyMac loan officer, Karris, and Feliciano were
all present at closing. Mark testified that Eugenia did sign the deed transferring the
subject property back to Hurricane, and he believed it was in Karris’s possession. Mark
routinely transferred property between himself and Hurricane so that he could obtain
loans in his and Eugenia’s names and use the proceeds on behalf of Hurricane.
{¶11} In June 2010, Mark and Eugenia filed for bankruptcy. The petition did not
list the subject property as an asset belonging to Mark and Eugenia. Mark handled all of
the paperwork, and Eugenia did not know that this property was titled in her name at the
time of the bankruptcy. Additionally, their divorce proceedings were concluded without
a determination as to who owned the property. Eugenia testified that she did not get
ownership interest in any of the W. 14th Street properties in the divorce because she had
no papers or anything in her name.
{¶12} Karris testified that all loan documents and deeds were signed and notarized
in his office. Karris was disciplined by the Ohio Supreme Court in 2011 for notarizing
signatures of persons who did not sign deeds and other documents in front of him during
this same period of time, and the Ohio Supreme Court suspended his law license for six
months. According to Karris, his procedure for filing deeds differed based upon whether
the person for whom the deed was prepared was a client of his title company or a client of
his law practice because he owned both a law practice and a title agency.
{¶13} If a deed was recorded for the title company clients, Karris would have an
examiner personally take the documents to the county auditor and walk them through for
filing. If the deed was prepared for a client of his law practice, in most instances the
deed would be mailed to the county auditor with instructions to forward the deed to the
recorder for recording. He would also request that the recorded document be returned by
mail to Karris. It was his custom and practice to make copies of all the deeds he sent to
the auditor. It was further his custom and practice to keep a copy of the original deed
when it was returned from the auditor. With respect to the subject property, Karris
testified that he did not have a recorded or unrecorded copy of the deed transferring
interest to Hurricane. It was further Karris’s custom and practice to write a check for the
deed recording fee. No evidence was produced at trial, however, demonstrating that the
filing fee was ever paid or tendered. Karris discovered that there was no copy of the
deed in his file, and no deed was ever recorded for the subject property after Mark and
Eugenia’s divorce was finalized.
{¶14} When Karris attempted to locate the deed, he was told by someone at the
recorder’s office that “it was not there.” The recorder did not have a copy of any deed
transferring ownership of the property from Mark and Eugenia to Hurricane in its records.
{¶15} Karris stated that the conveyance exemption for the subject property lists
Mark and Eugenia as the grantor and Hurricane as the grantee. The form was not signed
by Eugenia and there is nothing in the record indicating that Eugenia was ever aware of
its filing by Karris’s office. Rather, it was signed by Feliciano.
{¶16} Richard O’Rourke (“O’Rourke”), the accountant for Hurricane and Mark,
testified that there was nothing on Mark and Eugenia’s tax returns indicating that they
ever owned any rental properties, despite there being a deed of such property in both their
names. Instead, the property at issue was reported along with three others as owned by
Hurricane with a collective loss reported on Nikolas and Markita’s tax returns for
2010-2013. This was done on the basis of spreadsheets provided by Hurricane.
O’Rourke never reviewed a deed showing that Hurricane actually owned the property.
Furthermore, O’Rourke did not receive any information from Eugenia and has never even
communicated with Eugenia.
{¶17} Patty Corrigan (“Corrigan”), the bookkeeper for Hurricane, testified that
expenses were divided among four properties in Hurricane’s books, including the subject
property. Corrigan admitted that she never discussed any expenses with Eugenia.
Corrigan was not involved with the execution or filing of any deed relating to the subject
property.
{¶18} After the conclusion of trial, the magistrate issued a decision, finding in
favor of Eugenia on both counts of Hurricane’s complaint. The magistrate stated:
[Hurricane] did not [meet] its burden of proving title solely in itself. * * *
At trial, [Mark] testified that [Eugenia] signed the deed and [Eugenia]
testified that she did not sign the deed. The Magistrate finds credible the
testimony of [Eugenia] and concludes that she did not sign a deed
conveying her one-half interest in the subject property to [Hurricane].
Additionally, the Magistrate finds the testimony of [Karris] to be unreliable
due to his lack of memory of the circumstances surrounding the mailing of
the deed. Moreover, the Magistrate overruled the objection of [Hurricane]
made at trial and finds [Karris’s] testimony as to the execution of the deed
to be unreliable due to his disciplinary suspension by the Ohio Supreme
Court for improperly notarizing documents. Equally unpersuasive is the
[Hurricane’s] inference that a deed was properly executed and delivered by
[Eugenia] because the Cuyahoga County Auditor changed the tax
information in its records. The only fact proved by the change in the tax
information is that the Auditor changed the tax information in its records;
no other inferences can be drawn from this alone.
(Emphasis sic.)
{¶19} Hurricane filed objections to the magistrate’s decision and Eugenia opposed.
The trial court sustained Hurricane’s objections and rendered judgment in Hurricane’s
favor on both causes of actions. In its written opinion, the trial court found that:
[Hurricane] met its burden of proving title solely in itself. * * * At trial
[Mark] testified that [Eugenia] signed the deed, and [Eugenia] testified
(regarding documents) that she would have signed wherever he told her to
sign. The court finds credible the testimony of [Mark] and [Karris], and
thereby concludes that [Eugenia] did sign a deed conveying her one-half
interest in the subject property to [Hurricane] in June 2005. In addition,
the court finds persuasive [Hurricane’s] claim that a deed was properly
executed and delivered by [Eugenia] because the Cuyahoga County Auditor
changed the tax information in its records.
As [Hurricane] has met is burden by proving a deed was executed and
delivered by [Eugenia] to [Hurricane] conveying her one-half interest in the
subject property, * * * [t]itle is hereby Quieted in the name of [Hurricane],
free and clear of any and all adverse interest of [Eugenia.]
{¶20} It is from this order, Eugenia appeals, raising the following three
assignments of error for review.
Assignment of Error One
The trial court abused its discretion in rejecting the magistrate’s decision
based solely on a redetermination of credibility of the witnesses, without
any basis to do so, when the magistrate was the one who had an opportunity
to view the witness and observe their demeanor, gestures and voice
inflections, and was in the best position to weigh the credibility of said
witnesses.
Assignment of Error Two
The trial court erred in finding that a properly executed deed existed, which
was delivered by Eugenia, when such a finding was against the weight of
the evidence.
Assignment of Error Three
The trial court erred in awarding judgment in favor of [Hurricane] when
[Hurricane] failed to meet its burden of proof as to quiet title.
{¶21} In the first assignment of error, Eugenia contends the trial court improperly
reassessed the credibility of the witnesses contrary to the magistrate’s findings. In the
second assignment of error, Eugenia contends the trial court improperly found that a deed
existed.
{¶22} Civ.R. 53 governs the rules pertaining to the actions of the court on a
magistrate’s decision. It provides in relevant part:
Action on objections. If one or more objections to a magistrate’s decision
are timely filed, the court shall rule on those objections. In ruling on
objections, the court shall undertake an independent review as to the
objected matters to ascertain that the magistrate has properly determined the
factual issues and appropriately applied the law.
Id. at (D)(4)(d). Therefore, the trial court must conduct a de novo review of the
magistrate’s decision. Kapadia v. Kapadia, 8th Dist. Cuyahoga No. 94456,
2011-Ohio-2255, ¶ 9, citing Inman v. Inman, 101 Ohio App. 3d 115, 655 N.E.2d 199 (2d
Dist.1995).
{¶23} When examining the trial court’s ruling on objections to a magistrate’s
decision, appellate courts review the trial court’s determination under an abuse of
discretion standard. Gobel v. Rivers, 8th Dist. Cuyahoga No. 94148, 2010-Ohio-4493, ¶
16, citing Remner v. Peshek, 7th Dist. Mahoning No. 97-C.A.-98, 1999 Ohio App. LEXIS
4802 (Sept. 30, 1999). “The term ‘abuse of discretion’ * * * implies that the court’s
attitude is unreasonable, arbitrary or unconscionable.” (Citations omitted.) Blakemore
v. Blakemore, 5 Ohio St. 3d 217, 219, 450 N.E.2d 1140 (1983), quoting State v. Adams, 62
Ohio St. 2d 151, 404 N.E.2d 144 (1980).
{¶24} In the instant case, the magistrate found that Eugenia did not sign a deed
transferring her interest in the subject property. The magistrate found Eugenia’s
testimony more credible than Mark’s testimony. Additionally, the magistrate found that
Karris’s testimony lacked credibility because of his lack of memory of the circumstances
surrounding the mailing of the deed and disciplinary suspension by the Ohio Supreme
Court for improperly notarizing documents. The magistrate found that no inferences
could be drawn from the fact that the Cuyahoga County Auditor changed the tax
information in its records.
{¶25} The trial court overruled the magistrate’s decision and sustained Hurricane’s
objections. The court found credible Mark’s testimony that Eugenia transferred the
subject property to Hurricane. It further found that “Karris specifically recalled
preparing the deed transferring the subject property from Mark and [Eugenia] to
[Hurricane].” The court concluded that
[it] finds credible the testimony of [Mark] and [Karris], and thereby
concludes that [Eugenia] did sign a deed conveying her one-half interest in
the subject property to [Hurricane] in June 2005. In addition, the court
finds persuasive [Hurricane’s] claims that a deed was properly executed and
delivered by [Eugenia] because the Cuyahoga County Auditor changed the
tax information in its records.
{¶26} In sustaining Hurricane’s objections, the trial court decided, contrary to the
magistrate, that Mark’s and Karris’s testimonies were more credible than Eugenia’s
testimony.
{¶27} Typically, the lower court is better able than this court to “view the
witnesses and observe the gestures, demeanor, and voice inflections and to use those
observations to weigh credibility of their testimony.” Rodriguez v. Frietze, 4th Dist.
Athens No. 04CA14, 2004-Ohio-7121, ¶ 27, citing Seasons Coal Co. v. Cleveland, 10
Ohio St. 3d 77, 80, 461 N.E.2d 1273 (1984). In the instant case, the trial court was
limited to reviewing witness testimony without the advantage of physically viewing the
witness in order to determine credibility. Therefore, the trial court could rely on the
magistrate’s determinations regarding credibility when reviewing the magistrate’s
decision. Rodriguez at ¶ 27, citing Holm v. Smilowitz, 83 Ohio App. 3d 757, 615 N.E.2d
1047 (4th Dist.1992). We are mindful, however, that because the trial court is the
ultimate trier of fact, it may reject credibility determinations made by a magistrate and
modify the magistrate’s decision in entering judgment. State ex rel. Dewine v. Ashworth,
4th Dist. Lawrence No. 11CA16, 2012-Ohio-5632.
{¶28} In order to find transfer of ownership, Hurricane was required to establish,
in addition to the statutory requirements of R.C. 5301.01, that a deed existed, the deed
was delivered to Hurricane, and that Eugenia had the intent to convey title. Welsh v.
Estate of Calvin, 10th Dist. Franklin No. 02AP-1328, 2004-Ohio-62. Hurricane’s
argument is premised upon the allegation that Eugenia executed a deed conveying her
interest in the subject property to Hurricane that was mailed to the Cuyahoga County
Auditor in June 2005. Hurricane alleges that this deed was lost between the County
Auditor’s Office and the County Recorder’s Office.
{¶29} While the trial court may reject the credibility determinations made by the
magistrate, the record in the instant case is clear in that no one has a recorded or
unrecorded copy of the deed transferring Eugenia’s interest in the subject property to
Hurricane. In fact, Karris testified that when he went to find the deed in the recorder’s
office, “it was not there.” The recorder did not have a copy of any deed transferring
ownership of the property from Mark and Eugenia to Hurricane in its records.
Additionally, Karris did not have a copy of the signed deed or the deed after it was
recorded, even though it was his custom and practice to keep copies in his file.
{¶30} The magistrate found that a deed transferring Eugenia’s interest in the
subject property did not exist. Whereas, the trial court found that a deed did exist. The
court found that Karris specifically recalled preparing the deed and transferring the
subject property from Mark and Eugenia to Hurricane. While Karris testified that he
prepared the deed, he did not testify as to any specifics of the deed and did not have a
copy of the deed in his file. He did not remember the circumstances surrounding the
mailing of the deed. Furthermore, the magistrate found it compelling that Karris was
disciplined by the Ohio Supreme Court in 2011 for notarizing signatures of persons who
did not sign deeds and other documents in front of him during this same period of time,
and the Ohio Supreme Court suspended his law license for six months. Eugenia testified
that Karris was not present to notarize the signatures for the IndyMac loan, even though
he notarized her signature on the document. She testified that she had been to Karris’s
office on only one occasion, which related to a will for Mark’s parents. Furthermore,
Eugenia testified that Feliciano was not present as a witness when Eugenia signed the
loan documents or any other document she signed for Mark.
{¶31} The court also found convincing that the conveyance exemption form for the
subject property indicates that an executed deed was received by the auditor. The record
reveals that this statement was only signed by Feliciano, who did not testify at trial.
Eugenia and Mark were not required to sign this form.
{¶32} Moreover, Eugenia testified that she never signed any deed transferring her
interest in the subject property to Hurricane. While Eugenia testified that she did not
own any properties on W. 14th Street because nothing was in her name, Eugenia’s
testimony was in the context of who owned the properties on W. 14th Street at the time
she married Mark, to which she replied Mark owned them. Mark later transferred the
title of the subject property to both his and Eugenia’s names so that they could obtain
financing. Eugenia did not become aware that the property was in her name until the
divorce because she did not have any such papers in her name or possession. Mark
would regularly bring documents for Eugenia to sign. Eugenia would sign documents
whenever Mark told her to because she thought she was transferring the property to her
and her husband’s business and she trusted Mark because he was her husband.
{¶33} We note that the determination of the weight of the evidence and the
credibility of witnesses is for the trier of fact. Kalain v. Smith, 25 Ohio St. 3d 157, 162,
495 N.E.2d 572 (1986), citing State v. DeHass, 10 Ohio St. 2d 230, 227 N.E.2d 212
(1967). Weight of the evidence concerns “‘the inclination of the greater amount of
credible evidence, offered in a trial, to support one side of the issue rather than the other.
It indicates clearly to the trier of fact that the party having the burden of proof will be
entitled to their verdict, if, on weighing the evidence in their minds, they shall find the
greater amount of credible evidence sustains the issue which is to be established before
them.’” Eastley v. Volkman, 132 Ohio St. 3d 328, 2012-Ohio-2179, 972 N.E.2d 517, ¶
12, quoting State v. Thompkins, 78 Ohio St. 3d 380, 387, 1997-Ohio-52, 678 N.E.2d 541.
When a court of appeals determines that a verdict is against the weight of the evidence, it
should remand the case for a new trial. Id. at ¶ 22, citing Hanna v. Wagner, 39 Ohio
St.2d 64, 66, 313 N.E.2d 842 (1974).
{¶34} In the instant case, while the trial court has the authority to reject the
magistrate’s decision, we find that the trial court abused its discretion in doing so. Based
on the foregoing evidence and the long-standing proposition that the trier of fact is in the
best position to take into account inconsistencies, along with the witnesses’ manner and
demeanor, and determine whether the witnesses’ testimonies are credible, we find that the
trial court’s judgment in favor of Hurricane is against the manifest weight of the evidence
because the facts and evidence do not support the trial court’s findings. Thus, we reverse
the trial court’s judgment and remand for a new trial before the trial court.
{¶35} Accordingly, the first and second assignments of error are sustained.
{¶36} In the third assignment of error, Eugenia contends the trial court improperly
found that Hurricane met its burden of proof as to quiet title. However, in light of our
disposition of the first assignment of error, we find this assigned error moot. App.R. 12.
{¶37} Judgment is reversed. The matter is remanded for a new trial before the
trial court.
It is ordered that appellant recover of appellee 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.
MARY EILEEN KILBANE, JUDGE
KATHLEEN ANN KEOUGH, A.J., and
FRANK D. CELEBREZZE, JR., J., CONCUR