Luck v. Klayman , 2017 Ohio 8231 ( 2017 )

[Cite as Luck v. Klayman, 2017-Ohio-8231.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 105239
STEPHANIE ANN LUCK
PLAINTIFF-APPELLEE
vs.
LARRY ELLIOT KLAYMAN
DEFENDANT-APPELLANT
JUDGMENT:
AFFIRMED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-14-828766
BEFORE: McCormack, P.J., Stewart, J., and Blackmon, J.
RELEASED AND JOURNALIZED: October 19, 2017
FOR APPELLANT
Larry Klayman, pro se
2020 Pennsylvania Ave., N.W. #800
Washington, D.C. 20006
ATTORNEYS FOR APPELLEE
Robert B. Weltman
David S. Brown
Jack W. Hinneberg
Weltman Weinberg & Reis Co., L.P.A.
323 Lakeside Avenue, Ste. 200
Cleveland, OH 44113
ALSO LISTED
For Judicial Watch Inc.
Thomas J. Wilson
Comstock Springer & Wilson Co. L.P.A.
100 Federal Plaza East, Ste. 926
Youngstown, OH 44503-1811
TIM McCORMACK, P.J.:
{¶1} In this creditor’s bill action, defendant-appellant Larry Klayman appeals
from the decision of the trial court granting summary judgment for plaintiff-appellee
Stephanie Luck. For the reasons that follow, we affirm.
Procedural and Substantive History
{¶2} Klayman and Luck were married and had two children together. Upon
their divorce in 2003, the two entered into a separation agreement. A case was initiated
in the Cuyahoga County Domestic Relations Court that ultimately resulted in a judgment
in favor of Luck for $325,500 in 2011. This court upheld that judgment on appeal.
Klayman v. Luck, 8th Dist. Cuyahoga Nos. 97074 and 97075, 2012-Ohio-3354. This
2011 judgment remains unsatisfied.
{¶3} In 2013, Klayman filed a defamation action against his former employer
Judicial Watch, Inc. (“Judicial Watch”) in the U.S. District Court for the Southern District
of Florida. A jury awarded Klayman $181,000 in damages.
{¶4} On June 23, 2014, Luck filed a creditor’s bill against Klayman and Judicial
Watch seeking to enjoin Judicial Watch from paying Klayman anything due on the 2013
judgment in favor of applying the funds to Luck’s 2011 judgment.
{¶5} On January 5, 2015, Luck propounded her first set of combined discovery
requests to Klayman in the creditor’s bill action. Included in these requests was Luck’s
request for admission No. 4, in which Luck requested that Klayman admit he had no real
or personal property sufficient to satisfy her 2011 judgment against him. After
requesting multiple extensions to respond to Luck’s discovery requests, Klayman
responded to Luck’s request for admission No. 4 with a general objection. On July 21,
2015, the trial court ordered Klayman to answer this request for admission with an
unqualified admission or denial. Klayman failed to respond.
{¶6} On December 5, 2016, the trial court granted Luck’s motion for summary
judgment and found that Luck’s request for admission No. 4 was deemed admitted and
established as a matter of law. The trial court found that Luck was entitled to judgment
as a matter of law on her creditor’s bill because she established all three elements
required under R.C. 2333.01, and no genuine issue of material fact existed as to any of the
three elements.
{¶7} On appeal, Klayman raises three assignments of error for our review. He
argues that the trial court erred in granting summary judgment in favor of Luck because
(I) the trial court did not have jurisdiction to enjoin Klayman from receiving the proceeds
of a federal judgment, (ii) the trial court improperly disregarded Klayman’s right to
financial privacy, and (iii) there exists a genuine issue of material fact as to whether
Luck’s initial judgment against Klayman is valid.
Summary Judgment Review
{¶8} We review the trial court’s summary judgment de novo, applying the same
standard that the trial court applies under Civ.R. 56(C). Grafton v. Ohio Edison Co., 77
Ohio St.3d 102, 105, 671 N.E.2d 241 (1996).
{¶9} Under Civ.R. 56(C), summary judgment is appropriate when (1) there is no
genuine issue of material fact, (2) the moving party is entitled to judgment as a matter of
law, and (3) after construing the evidence most favorably for the party against whom the
motion is made, reasonable minds can reach only a conclusion that is adverse to the
nonmoving party.
{¶10} R.C. 2333.01 sets forth the criteria for a sufficient creditor’s bill as follows:
When a judgment debtor does not have sufficient personal or real property
subject to levy on execution to satisfy the judgment, any equitable interest
which he has in real estate as mortgagor, mortgagee, or otherwise, or any
interest he has in a banking, turnpike, bridge, or other joint-stock company,
or in a money contract, claim, or chose in action, due or to become due to
him, or in a judgment or order, or money, goods, or effects which he has in
the possession of any person or body politic or corporate, shall be subject to
the payment of the judgment by action.
The three essential elements to a claim under R.C. 2333.01 are: (1) the existence of a
valid judgment against a debtor, (2) the existence of an interest in the debtor of the type
enumerated in the statute, and (3) a showing that the debtor does not have sufficient
assets to satisfy the judgment against him. Harris v. Craig, 8th Dist. Cuyahoga No.
79934, 2002-Ohio-5063, ¶ 18.
Jurisdiction
{¶11} Klayman’s first assignment of error argues that the trial court did not have
jurisdiction over the enforcement of Klayman’s federal judgment against Judicial Watch
because the state and federal court systems are independent of each other.
{¶12} Klayman offers two arguments in support of this assignment of error.
First, Klayman discusses the “old and well-established judicially declared rule that state
courts are completely without power to restrain federal-court proceedings in in personam
actions.” Donovan v. Dallas, 377 U.S. 408, 413, 84 S.Ct. 1579, 12 L.Ed.2d 409 (1964).
The Supreme Court in Donovan was referring to a state court’s inability to limit the right
of a plaintiff to prosecute his case in federal court. The Supreme Court further noted
that the fact that a state court’s injunction issues only to the parties before a federal court,
and not the federal court itself, is irrelevant. Donovan at 413.
{¶13} Ohio courts have echoed this interpretation. In a case with a similar fact
pattern to the case at hand, when a plaintiff was unable to execute upon a default
judgment obtained against a defendant in municipal court, a judgment debtor examination
found that the defendant’s only asset was a breach of contract claim then pending in the
United States District Court for the Southern District of Ohio. Lakeshore Motor Freight
(Co.) v. Glenway Industries, Inc., 2 Ohio App.3d 8, 440 N.E.2d 567 (1st Dist.1981).
The municipal court subsequently ordered that any judgment rendered against the
defendant in that action shall be in favor of the municipal court plaintiff and, further,
“that the said Plaintiff may, through counsel, prosecute the breach of contract claim.”
Id.{¶14} The First District Court of Appeals agreed with the defendant-appellant in
the Lakeshore Motor Freight case that a trial court is without “authority to allow the
judgment creditor to usurp prosecution of a chose in action belonging to the judgment
debtor, but must instead limit any order to the debtor’s equitable interest, i.e., the potential
proceeds, in any such action.” Id. at 9. See also Wheaton v. Lee Rd. Dev. Ltd. Liab.
Co., 11th Dist. Lake No. 2000-L-075, 2001 Ohio App. LEXIS 3549 (Aug. 10, 2001)
(proceeds from judgment debtor’s chose in action is subject to attachment or
encumbrance by way of a creditor’s bill; however, the right to prosecute the
chose-in-action is not subject to attachment or encumbrance.)
{¶15} Based on the foregoing, Klayman’s reliance on Donovan, 377 U.S. 408, 84
S.Ct. 1579, 12 L.Ed.2d 409, is misplaced. Klayman was able to exercise his right to
litigate a defamation action against Judicial Watch in the United States District Court for
the Southern District of Florida. The trial court’s order enjoining Judicial Watch from
paying Klayman pursuant to his judgment did not usurp Klayman’s prosecution of his
case.
{¶16} Second, Klayman relies on the Supremacy Clause to argue that even when a
state law is not in direct conflict with a federal law, the state law could still be found
unconstitutional if it “is an obstacle to the accomplishment and execution of Congress’s
full purposes and objectives.” Crosby v. Natl. Foreign Trade Council, 530 U.S. 363,
366, 120 S.Ct. 2288, 147 L.Ed.2d 352 (2000). Klayman appears to be arguing that his
right to receive payment on a federal judgment is superior to Luck’s right to receive
payment on a state court judgment. This argument fails. While Klayman goes to great
lengths to emphasize the federal nature of his judgment against Judicial Watch, he makes
no attempt to articulate how proceeds from a federal judgment are immune to a valid lien
under R.C. 2333.01.
{¶17} “A creditor’s bill action enables a judgment creditor to secure a lien on those
assets of the judgment debtor that cannot be reached by the mere execution of the
judgment.” Am. Transfer Corp. v. Talent Trans., Inc., 8th Dist. No. 94980,
2011-Ohio-112, ¶ 8, citing Union Properties, Inc. v. Patterson, 143 Ohio St. 192, 54
N.E.2d 668 (1944). Specifically, the statute provides that any interest a judgment debtor
has in a judgment or order shall be subject to the payment of the judgment by action.
R.C. 2333.01. For Klayman’s argument here to succeed, a “judgment” under R.C.
2333.01 would need to be interpreted to exclude federal judgments. Because nothing in
the statutory language or relevant case law supports such an interpretation, this
assignment of error is overruled.
Discoverability of Financial Information
{¶18} In his second assignment of error, Klayman argues that the trial court erred
when it deemed admitted a request for admission that he did not have sufficient assets to
satisfy Luck’s 2011 judgment. Specifically, Klayman asserts that he has a substantial
interest in maintaining his financial privacy that overrides Luck’s interest in conducting
discovery pursuant to the Ohio Rules of Civil Procedure.
{¶19} Civ.R. 26(B)(1) provides:
Parties may obtain discovery regarding any matter, not privileged, which is
relevant to the subject matter involved in the pending action, whether it
relates to the claim or defense of the party seeking discovery or to the claim
or defense of any other party, including the existence, description, nature,
custody, condition and location of any books, documents, electronically
stored information, or other tangible things and the identity and location of
persons having knowledge of any discoverable matter. It is not ground for
objection that the information sought will be inadmissible at the trial if the
information sought appears reasonably calculated to lead to the discovery of
admissible evidence.
{¶20} The third element for a claim under R.C. 2333.01 is a showing that the
debtor does not have sufficient assets to satisfy the judgment against him. Harris v.
Craig, 8th Dist. Cuyahoga No. 79934, 2002-Ohio-5063, at ¶ 18. A request for
admission that mirrors the third element of Luck’s claim here would be permissible under
Civ.R. 26(B)(1), because it directly relates to an essential element of Luck’s claim.
{¶21} While privileged material is clearly excluded from the scope of discovery,
Klayman does not attempt to argue that the information sought was in any way privileged.
Instead, he attempts to craft a separate exception to discoverable matter under Civ.R.
26(B)(1) using irrelevant case law. Klayman’s attempt fails. Because his financial
status was clearly relevant to the creditor’s bill action, and the information was not
privileged or otherwise exempt from discovery, Klayman’s second assignment of error is
overruled.
Fraud
{¶22} In Klayman’s third and final assignment of error, he argues that a genuine
issue of material fact existed in the creditor’s bill action. Specifically, Klayman argues
that the trial court erred by finding that Luck had a valid lien because the underlying
judgment was obtained through fraud. In support of this assignment of error, Klayman
only notes that he has appealed the validity of Luck’s judgment in the United States Court
of Appeals for the Eleventh Circuit.
{¶23} “A final judgment is conclusive and binding on the parties and can only be
attacked on direct appeal, not collaterally.” Fed. Deposit Ins. Co. v. Willoughby, 19
Ohio App.3d 51, 53, 482 N.E.2d 1267 (8th Dist.1984). The Ohio Supreme Court has
held that “in our jurisprudence, there is a firm and longstanding principle that final
judgments are meant to be just that — final.” Ohio Pyro, Inc. v. Ohio Dept. of
Commerce, 115 Ohio St.3d 375, 2007-Ohio-5024, 875 N.E.2d 550, ¶ 8. The court
further determined that the reasons for disfavoring collateral attacks do not apply in two
principal circumstances — when the issuing court lacked jurisdiction or when the order
was the product of fraud. Id. at ¶ 9.
{¶24} Klayman’s direct appeal of Luck’s 2011 judgment was appealed to this
court, and all seven assignments of error were overruled. Klayman v. Luck, 8th Dist.
Cuyahoga Nos. 97074 and 97075, 2012-Ohio-3354. The pending appeal Klayman refers
to in support of his argument is the most recent in a series of unsuccessful attempts to
undermine Luck’s 2011 judgment. In the absence of any genuine support for the
assertion that the 2011 judgment was obtained through fraud, Klayman’s third assignment
of error is overruled.
{¶25} Judgment affirmed.
It is ordered that appellee recover of appellant 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.
________________________________________
TIM McCORMACK, PRESIDING JUDGE
MELODY J. STEWART, J., and
PATRICIA ANN BLACKMON, J., CONCUR