Torea Consulting, LTD v. Stanfill , 2024 Ohio 3322 ( 2024 )

[Cite as Torea Consulting, LTD v. Stanfill, 2024-Ohio-3322.]
COURT OF APPEALS
STARK COUNTY, OHIO
FIFTH APPELLATE DISTRICT
TOREA CONSULTING, LTD. : JUDGES:
: Hon. John W. Wise, P.J.
Plaintiff-Appellant : Hon. Craig R. Baldwin, J.
: Hon. Andrew J. King, J.
-vs- :
:
DAVID STANFILL, ET AL. : Case No. 2024CA00023
:
Defendant-Appellee : OPINION
CHARACTER OF PROCEEDING: Appeal from the Court of Common
Pleas, Case No. 2022CV00974
JUDGMENT: Affirmed
DATE OF JUDGMENT: August 29, 2024
APPEARANCES:
For Plaintiff-Appellant For Defendant-Appellee
SCOTT J. FRIEDMAN JACK B. COOPER
600 IMG Building P.O. Box 35459
1360 East Ninth Street 4684 Douglas Circle, NW
Cleveland, OH 44114 Canton, OH 44735
Stark County, Case No. 2024CA00023 2
King, J.
{¶ 1} Plaintiff-Appellant, Torea Consulting, LTD, appeals the January 31, 2024
judgment entry of the Court of Common Pleas of Stark County, Ohio, granting summary
judgment to Defendant-Appellee, David Stanfill. We affirm the trial court.
FACTS AND PROCEDURAL HISTORY
{¶ 2} Appellant is a Canadian based company owned by Paul Billinger that
invests in cryptocurrency. Stanfill was the CEO of Squirrels Research Labs ("SQRL")
located in North Canton, Ohio. SQRL manufactured and sold computer devices known
as "cards" to mine cryptocurrency. Appellant purchased several cards, but they remained
at the SQRL facility. For a fee, SQRL would use the cards to mine cryptocurrency and
then send the cryptocurrency to appellant.
{¶ 3} In March 2021, the parties entered into an agreement wherein SQRL would
rent the cards from appellant and use the cards to mine cryptocurrency for its own benefit.
Thereafter, a dispute arose as to how much SQRL owed appellant. SQRL employees
asked Stanfill to intervene and deal with appellant.
{¶ 4} On April 12, 2021, appellant and Stanfill entered into an agreement for the
purchase of the cards. Appellant agreed to sell the cards to SQRL, and SQRL agreed to
pay appellant 160.2 units of a cryptocurrency known as Ethereum ("ETH"). The
agreement did not have a date certain for the payment as SQRL needed time to convert
U.S. dollars to ETH. The value of ETH was volatile. The agreement was negotiated over
a messaging application called Discord, an application commonly used by members of
the cryptocurrency mining community. Shortly after the agreement, SQRL sold some of
the cards to Michael Maranda.
Stark County, Case No. 2024CA00023 3
{¶ 5} SQRL was unable to acquire the ETH due to a delayed pending transaction
with a third party. Thus, on April 20, 2021, Stanfill paid appellant 24 ETH out of his
personal funds. Thereafter, in late April early May 2021, SQRL offered to pay appellant
in U.S. dollars. Appellant rejected the offer. On June 7, 2021, SQRL tendered payment
of the remaining 136.2 ETH. Appellant refused to accept the tender.
{¶ 6} On August 3, 2021, appellant filed a complaint against SQRL because it
had not been paid in full for the cards. SQRL filed for bankruptcy and appellant voluntarily
dismissed the complaint.
{¶ 7} On June 21, 2022, appellant filed a complaint against Stanfill and Maranda,
alleging fraudulent inducement, unjust enrichment, conversion, civil conspiracy, and
defalcation/breach of fiduciary duty over the unpaid cards. Appellant filed an amended
complaint on July 8, 2022, to refine the claims. Appellant was unable to locate Maranda.
{¶ 8} On October 13, 2023, Stanfill filed a motion for summary judgment, claiming
no genuine issues of material facts to exist. In support, Stanfill submitted his own affidavit,
copies of the Discord messages, and a transcript of his examination taken in the
bankruptcy proceeding. Appellant filed a response and attached an affidavit of Paul
Billinger, excerpts of the Stanfill examination, Discord messages, and an April 2021
purchase agreement between SQRL and Maranda. Appellant did not argue the civil
conspiracy claim as it failed to locate Maranda and planned to dismiss that count. By
judgment entry filed January 31, 2024, the trial court agreed with Stanfill's arguments and
granted the motion.
{¶ 9} Appellant filed an appeal with the following assignment of error:
Stark County, Case No. 2024CA00023 4
I
{¶ 10} "THE TRIAL COURT ERRED IN GRANTING DAVID STANFILL'S MOTION
FOR SUMMARY JUDGMENT BECAUSE THERE ARE GENUINE ISSUES OF
MATERIAL FACT."
I
{¶ 11} In his sole assignment of error, appellant claims the trial court erred in
granting summary judgment to Stanfill. We disagree.
{¶ 12} Summary judgment motions are to be resolved in light of the dictates of
Civ.R. 56. Regarding summary judgment, the Supreme Court stated the following in State
ex rel. Zimmerman v. Tompkins, 75 Ohio St.3d 447 (1996):
Civ.R. 56(C) provides that before summary judgment may be
granted, it must be determined that (1) no genuine issue as to any material
fact remains to be litigated, (2) the moving party is entitled to judgment as
a matter of law, and (3) it appears from the evidence that reasonable minds
can come to but one conclusion, and viewing such evidence most strongly
in favor of the nonmoving party, that conclusion is adverse to the party
against whom the motion for summary judgment is made. State ex. rel.
Parsons v. Fleming (1994), 68 Ohio St.3d 509, 511, 628 N.E.2d 1377, 1379,
citing Temple v. Wean United, Inc. (1977), 50 Ohio St.2d 317, 327, 4 O.O.3d
466, 472, 364 N.E.2d 267, 274.
Stark County, Case No. 2024CA00023 5
{¶ 13} In Leech v. Schumaker, 2015-Ohio-4444, ¶ 13 (5th Dist.), this court
explained the following:
It is well established the party seeking summary judgment bears the
burden of demonstrating that no issues of material fact exist for trial.
Celotex Corp. v. Catrett (1986), 477 U.S. 317, 330, 106 S.Ct. 2548, 91
L.Ed.2d 265 (1986). The standard for granting summary judgment is
delineated in Dresher v. Burt (1996), 75 Ohio St.3d 280 at 293: " * * * a party
seeking summary judgment, on the ground that the nonmoving party cannot
prove its case, bears the initial burden of informing the trial court of the basis
for the motion, and identifying those portions of the record that demonstrate
the absence of a genuine issue of material fact on the essential element(s)
of the nonmoving party's claims. The moving party cannot discharge its
initial burden under Civ.R. 56 simply by making a conclusory assertion the
nonmoving party has no evidence to prove its case. Rather, the moving
party must be able to specifically point to some evidence of the type listed
in Civ.R. 56(C) which affirmatively demonstrates the nonmoving party has
no evidence to support the nonmoving party's claims. If the moving party
fails to satisfy its initial burden, the motion for summary judgment must be
denied. However, if the moving party has satisfied its initial burden, the
nonmoving party then has a reciprocal burden outlined in Civ.R. 56(E) to
set forth specific facts showing there is a genuine issue for trial and, if the
nonmovant does not so respond, summary judgment, if appropriate, shall
Stark County, Case No. 2024CA00023 6
be entered against the nonmoving party." The record on summary
judgment must be viewed in the light most favorable to the opposing party.
Williams v. First United Church of Christ (1974), 37 Ohio St.2d 150.
{¶ 14} As an appellate court reviewing summary judgment motions, we stand in
place of the trial court and review the issues de novo, under the same standards and
evidence as the trial court. Grafton v. Ohio Edison Co., 77 Ohio St.3d 102, 105 (1996).
Fraudulent Inducement
{¶ 15} The elements of fraudulent inducement are: "(1) a representation material
to the transaction; (2) made falsely, with knowledge of its falsity, or with utter disregard
and recklessness regarding its truth or falsity; (3) with the intent to mislead another into
reliance; (4) justifiable reliance on the representation or concealment; (5) and injury
proximately resulting from such reliance." Isaac v. Alabanza Corp., 2007-Ohio-1396, ¶
20 (7th Dist.), citing Burr v. Stark County Board of Commissioners, 23 Ohio St.3d 69(1986).
{¶ 16} Appellant argues Stanfill made the offer to pay 160.2 ETH to purchase the
cards with the intent to deceive appellant because "he did not intend to pay Torea in
Ethereum for the Cards unless and until it was financially advantageous for him and/or
SQRL to do so." June 21, 2022 Complaint at ¶ 30; Appellant's Brief at 11-12.
{¶ 17} In examining the record submitted, the trial court found appellant "is unable
to support this allegation with any evidence." See January 31, 2024 Judgment Entry at
7. The trial court found appellant has not met "its burden of proving that Stanfill knowingly
and intentionally misled or deceived it in entering into the offer in this case, as Plaintiff
Stark County, Case No. 2024CA00023 7
has not provided the Court with any evidence that would support this claim or create a
question of fact as to said claim." Id.{¶ 18} Upon our review of the evidence submitted, we agree with the trial court's
determination. The agreement did not have a date certain for payment. And while it took
longer for Stanfill to acquire the ETH than he thought, his estimation was an error, not
fraud. In fact, he paid appellant 24 ETH out of his own pocket. SQRL offered to pay
appellant in U.S. dollars and tendered the 136.2 ETH on June 7, 2021. Appellant rejected
each offer.
Unjust Enrichment
{¶ 19} To establish a claim for unjust enrichment a plaintiff must demonstrate: "(1)
a benefit conferred by a plaintiff upon a defendant, (2) knowledge by the defendant of the
benefit, and (3) retention of the benefit by the defendant under circumstances where it
would be unjust to do so without payment." Robinette v. PNC Bank, 2016-Ohio-767, ¶
23 (5th Dist.), citing Hambleton v. R.G. Barry Corp., 12 Ohio St.3d 179, 183 (1984).
Generally, Ohio law does not permit recovery under the theory of unjust enrichment when
an express contract covers the same subject matter. Padula v. Wagner, 2015-Ohio-2374,
¶ 48 (9th Dist.), citing Ulmann v. May, 147 Ohio St. 468, 478-479 (1947).
{¶ 20} Although there was an express contract between the parties, appellant
argues "an express contract will preclude an unjust enrichment claim only in the absence
of fraud, bad faith, or illegality." Appellant's Brief at 15. Having found no evidence of
fraud, bad faith, or illegality, we find, as the trial court did, that the unjust enrichment claim
"fails as a matter of law, as the claim for recovery against Stanfill is based upon the same
Stark County, Case No. 2024CA00023 8
set of facts that support a breach of contract claim." See January 31, 2024 Judgment
Entry at 8.
{¶ 21} Despite this finding, the trial court analyzed the unjust enrichment claim in
light of the evidence submitted and found no evidence of a benefit conferred upon Stanfill.
There was no evidence that Stanfill received the cards or the money paid for the cards.
In fact, as noted by the trial court, Stanfill paid appellant 24 ETH that he personally owned
and was never reimbursed by SQRL. We agree with the trial court's analysis.
Conversion
{¶ 22} The elements to establish conversion are: "(1) plaintiff's ownership or right
to possession of the property at the time of the conversion; (2) defendant's conversion by
a wrongful act or disposition of plaintiff's property rights; and (3) damages." Dice v. White
Family Cos., 2007-Ohio-5755 (2d Dist.), citing Haul Transport of VA, Inc. v. Morgan, 1995
WL 328995 (2d Dist. June 2, 1995).
{¶ 23} The trial court found the conversion claim failed because SQRL had
possession of the cards upon appellant's agreement to sell the cards to SQRL. See
January 31, 2024 Judgment Entry at 10. We agree with the trial court's decision.
Appellant did not have ownership of the cards and Stanfill did not commit conversion of
the cards by a wrongful act.
Defalcation/Breach of Fiduciary Duty
{¶ 24} In order to prove a claim for breach of fiduciary duty, a plaintiff must
establish: "(1) the existence of a duty arising from a fiduciary relationship; (2) a failure to
observe the duty; and (3) an injury resulting proximately therefrom." Harwood v. Pappas
& Associates, Inc., 2005-Ohio-2442, ¶ 26 (8th Dist.). Accord Grossniklaus v. Waltman,
Stark County, Case No. 2024CA00023 9
2010-Ohio-2937 (5th Dist.). A fiduciary duty is not owed to another absent the showing
of a fiduciary relationship. In re Termination of Employment of Pratt, 40 Ohio St.2d 107,
115 (1974). A "fiduciary relationship" is "one in which special confidence and trust is
reposed in the integrity and fidelity of another and there is a resulting position of
superiority or influence, acquired by virtue of this special trust." Id. Defalcation is the
"misappropriation of trust funds or money held in any fiduciary capacity." Black's Law
Dictionary Online, https://alegaldictionary.com/defalcation/ (accessed Aug. 23, 2024).
{¶ 25} The trial court found the relationship between the parties was that of seller
and buyer as appellant sold the cards to SQRL; there was no evidence the sale gave rise
to an express or a de facto fiduciary relationship. See January 31, 2024 Judgment Entry
at 11. The trial court noted "parties to an arms-length business transaction do not
ordinarily acquire a fiduciary duty towards one another." In reviewing the record, the trial
court concluded "there was no existence of a fiduciary-like relationship between the
parties." We agree with the trial court. There is no evidence to suggest the parties'
relationship was one "of 'special confidence and trust,' similar to the trust a client places
in a broker or financial advisor" as appellant argues. Appellant's Brief at 17.
{¶ 26} Upon review, we do not find any genuine issues of material fact to exist and
therefore, find the trial court did not err in granting summary judgment to Stanfill.
{¶ 27} The sole assignment of error is denied.
Stark County, Case No. 2024CA00023 10
{¶ 28} The judgment of the Court of Common Pleas of Stark County, Ohio is
hereby affirmed.
By King, J.
Wise, P.J. and
Baldwin, J. concur.