Butorac v. Osmic , 2024 Ohio 1120 ( 2024 )

[Cite as Butorac v. Osmic, 2024-Ohio-1120.]
IN THE COURT OF APPEALS OF OHIO
ELEVENTH APPELLATE DISTRICT
LAKE COUNTY
LINDA M. BUTORAC, CASE NO. 2023-L-067
Plaintiff-Appellee,
Civil Appeal from the
- vs - Court of Common Pleas
HUGH OSMIC, et al.,
Trial Court No. 2020 CV 000352
Defendants-Appellants.
OPINION
Decided: March 25, 2024
Judgment: Affirmed
Mate Rimac, and Nicholas J. Horrigan, Harpst Becker LLC, 1559 Corporate Woods
Parkway, Suite 250, Uniontown, OH 44685 (For Plaintiff-Appellee).
Hugh Osmic, pro se, 5209 Lakeside Avenue, Cleveland, OH 44114 (Defendant-
Appellant).
Kimberly S. Osmic, pro se, 8380 King Memorial Road, Mentor, OH 44060 (Defendant-
Appellant).
ROBERT J. PATTON, J.
{¶1} Defendant-appellants, Hugh and Kimberly Osmic (collectively,
“appellants”), appeal from the judgment of the Lake County Court of Common Pleas
which granted summary judgment in favor of plaintiff-appellee, Linda M. Butorac
(“Butorac”), and concluded that appellants were joint and severally liable for the
$488,801.00 judgment entry from Cuyahoga County. For the following reasons, we affirm.
{¶2} Butorac and Hugh Osmic (“Hugh”) are siblings. They were engaged in
separate litigation in Cuyahoga County Case No. CV-17-881894 (“Cuyahoga Case”)
wherein Butorac sued Hugh for declaratory judgment and tortious interference of a
contract.
{¶3} On January 28, 2020, after a jury trial, Butorac obtained judgment against
Hugh in the amount of $488,801.00 plus legal fees in the Cuyahoga Case.1
{¶4} One month after judgment in that case, Butorac filed the underlying
complaint alleging fraudulent transfer of real property pursuant to R.C. 1336.04(A)(1) and
(2), and 1336.05(A) against appellants on February 28, 2020. Butorac alleged that prior
to the jury trial in the Cuyahoga case, Hugh fraudulently transferred his interest in property
owned by appellants by quit claim deed to his wife, Kimberly Osmic (“Kimberly”).
{¶5} Butorac sought leave to file her motion for summary judgment on
September 9, 2021. The trial court granted the motion and Butorac filed her motion on
September 21, 2021. Hugh and Kimberly filed their responses in opposition to the motion
on January 7, 2022 and January 19, 2022, respectively.
{¶6} On February 9, 2022, the trial court granted Butorac’s motion for summary
judgment. The trial court noted that the following facts were not in dispute.
{¶7} In 2011, Hugh and Kimberly jointly owned property located at 8380 King
Memorial Road, Kirtland Hills, Ohio with survivorship. In 2017, Butorac, Hugh’s sister,
filed a complaint for declaratory judgment and tortious interference with a contract against
Hugh in Cuyahoga County Case No. CV-17-881894. Less than two weeks before the
1. This judgment was affirmed by the Eight District Court of Appeals on June 1, 2023. Butorac v. Osmic,
8th Dist. Cuyahoga No. 111777, 2023-Ohio-1812.
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scheduled trial, Hugh conveyed his interest in the 8380 King Memorial Road property to
Kimberly by quit claim deed for $10.00. At the conclusion of the jury trial in the Cuyahoga
County case, the jury found in favor of Butorac and awarded her $488,801.00. The Lake
County Auditor's website valued the Property at $650,310.00.
{¶8} The trial court concluded, in light of the transfer of property interest prior to
the jury award in the Cuyahoga case, no genuine issues of material fact existed as to
Butorac’s claim of fraudulent transfer pursuant to R.C. 1336.04(A)(1). The court below
determined that “[Butorac] has demonstrated six of the statutory factors, primarily with
admissions, testimony from Kimberly's deposition, and stipulations from Hugh's counsel:
(1) The transfer was to an insider - Kimberly, Hugh's wife;
(2) Hugh continued to live in the Property after the transfer;
(4) Before the transfer was made, Hugh had been sued by
Plaintiff;
(8) The transfer was made by Quit Claim Deed without
consideration;
(9) Hugh became insolvent shortly after the transfer was
made; and
(10) The transfer occurred only weeks before a jury found
Hugh liable to Plaintiff for almost $500,000.
{¶9} Hugh and Kimberly filed a notice of appeal to this Court. This Court
dismissed for lack of a final appealable order and the Supreme Court of Ohio declined
jurisdiction. Butorac v. Osmic, 11th Dist. Lake No. 2022-L-010, 2022-Ohio-1722, ¶ 4,
appeal not allowed, 167 Ohio St.3d 1526, 2022-Ohio-3322, 195 N.E.3d 159.
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{¶10} While that case was pending before a panel of this Court, Butorac filed a
motion for contempt in the Cuyahoga Case for failure to restore title to the 8380 King
Memorial Road Property on March 10, 2022.
{¶11} Between March 2022 and May 2023, Hugh filed four separate bankruptcy
cases. Three were ultimately dismissed. The fourth bankruptcy filing was filed right before
the contempt hearing, which had been rescheduled eight times. Hugh and Kimberly did
not appear for the hearing, and the trial court proceeded in their absence.
{¶12} Despite participating throughout the case, Kimberly filed a motion to dismiss
alleging a lack of jurisdiction on May 22, 2023. Hugh did not file a similar motion. On May
26, 2023, the trial court denied Kimberly’s motion to dismiss for lack of personal
jurisdiction and denied her motion for leave to amend her answer for insufficient service.
The trial court again ordered the Lake County Recorder to void the quit claim deed that
transferred Hugh’s interest in his property to Kimberly on December 6, 2019. The court
below also concluded that Kimberly and Hugh were jointly and severally liable for the
entire $488,801.00 judgment from the Cuyahoga County case plus interest at the
statutory rate from February 9, 2020. The trial court did not award attorney fees as
Butorac failed to present any evidence of the fees during the hearing. The trial court
further denied Butorac’s motion for contempt.
{¶13} Kimberly and Hugh timely and separately appeal and raise the following
assignments of error:
[1]. “The trial court erred in failing to dismiss the case on the
grounds of lack of proper service given the facts and
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circumstances pertaining to the instant matter thereby
warranting reversal * * *.”
[2]. “The [trial] court also failed to preclude the plaintiff from
proceeding in the instant matter on the grounds of collateral
estoppel.”
[3]. “The [trial] court failed to allow the facts disputed in the
instant matter to proceed to a trial by jury thereby infringing on
the due process rights of appellant.”
{¶14} In their first assignments of error, appellants assert that the trial court erred
when it failed to dismiss the case on grounds of lack of proper service. We disagree.
{¶15} First, Hugh did not file a motion regarding jurisdiction. Therefore, Hugh
cannot raise this assignment of error. Hugh’s first assignment of error is not properly
before this Court and will not be addressed. Kimberly did file a motion to dismiss, and we
will address this assignment of error as it applies to Kimberly.
{¶16} Civ R. 12(B) provides:
“Every defense, in law or fact, to a claim for relief in any
pleading, whether a claim, counterclaim, cross-claim, or third-
party claim, shall be asserted in the responsive pleading
thereto if one is required, except that the following defenses
may at the option of the pleader be made by motion: (1) lack
of jurisdiction over the subject matter, (2) lack of jurisdiction
over the person, (3) improper venue, (4) insufficiency of
process, (5) insufficiency of service of process, (6) failure to
state a claim upon which relief can be granted, (7) failure to
join a party under Rule 19 or Rule 19.1. A motion making any
of these defenses shall be made before pleading if a further
pleading is permitted.”
{¶17} “A defense of lack of jurisdiction over the person, improper venue,
insufficiency of process, or insufficiency of service of process is waived (a) if omitted from
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a motion * * * or (b) if it is neither made by motion under this rule nor included in a
responsive pleading or an amendment thereof permitted by Rule 15(A) to be made as a
matter of course.” Civ. R. 12 (H)(1).
{¶18} The determination of sufficient process is a matter in the sound discretion
of the trial court. Richard v. Ohio Parole Bd., 5th Dist. Richland No. 2022 CA 0020, 2022-
Ohio-2762, ¶ 14 citing Michigan Millers Mut. Ins. Co. v. Christian, ]153 Ohio App.3d 299,
305, 2003-Ohio-2455, 794 N.E.2d 68, 2003-Ohio-2455, at ¶9 (3d Dist.), and Bell v.
Midwestern Educational Serv., Inc., 89 Ohio App.3d 193, 203, 624 N.E.2d 196 (2nd
Dist.1993).
{¶19} Kimberly did not raise her claim of lack of jurisdiction or insufficiency of
service of process as required. Therefore, it was waived.
{¶20} Moreover “[i]f a party fails ‘to raise the defense of insufficiency of service of
process in a responsive pleading or in certain motions before a responsive pleading[,] * *
* then participation in the proceedings leads to waiver of proper service and the existence
of personal jurisdiction over the party.’” Hubiak v. Ohio Family Practice Ctr., Inc., 2014-
Ohio-3116, 15 N.E.3d 1238, ¶ 14 (9th Dist.).
{¶21} Both appellants acknowledged service and filed an answer without raising
the claim of lack of proper service. Kimberly continued to actively participate in the case
for nearly three years before raising the claim. As such, this claim was waived, and the
trial court did not abuse its discretion when it denied Kimberly’s motion to dismiss.
{¶22} Kimberly also argues in this assignment of error that the trial court should
have granted leave to file an amended answer wherein she could have raised improper
service. Kimberly’s motion for leave to amend her answer was filed on May 10, 2023,
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fifteen months after summary judgment was granted in favor of Butorac. The trial court
did not err or otherwise abuse its discretion in denying leave to amend at that stage of
the proceedings. Kimberly’s first assignment of error is without merit.
{¶23} In their second assignments of error, appellants allege that the trial court
erred when it failed to preclude Butorac from proceeding due to collateral estoppel.
Specifically, appellants argue that property was subject to divorce proceedings in
Cuyahoga County.
{¶24} “Collateral estoppel or issue preclusion ‘precludes the relitigation, in a
second action, of an issue that has been actually and necessarily litigated and determined
in a prior action that was based on a different cause of action.’” Knoefel v. Connick, 2017-
Ohio-5642, 94 N.E.3d 17, ¶ 14 (11th Dist.) quoting Fort Frye Teachers Assn., OEA/NEA
v. State Emp. Relations Bd., 81 Ohio St.3d 392, 395, 692 N.E.2d 140 (1998). “The
‘[a]pplication of the doctrine of res judicata/collateral estoppel to a particular issue is a
question of law’ and ‘reviewed under a de novo standard of review.’” Knoefel at ¶ 16,
quoting State v. Hill, 177 Ohio App.3d 171, 2008-Ohio-3509, 894 N.E.2d 108, ¶ 37 (11th
Dist.).
{¶25} It is unclear from the record before this court and from the briefing of
appellants what divorce proceedings they are referencing. Further, it is also unclear how
those proceedings preclude a judgment in the underlying case.
{¶26} There is no requirement that there was a final order prior to Butorac filing
the underlying action. R.C. 1336.04(B)(4) simply requires that a transfer was made after
the debtor had been sued or threatened with suit. Langaa v. Pauer, 11th Dist. Geauga
No. 2004-G-2602, 2005-Ohio-6296, ¶ 43. As such, the trial court did not err by failing to
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dismiss the underlying case on the grounds of collateral estoppel. The second
assignment of error, as alleged by appellants, is without merit.
{¶27} Finally, appellants assign error to the trial court’s entry granting Butorac’s
motion for summary judgment.
{¶28} “Summary judgment is appropriate when ‘there is no genuine issue as to
any material fact and * * * the moving party is entitled to judgment as a matter of law,’ i.e.,
when ‘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, that party being
entitled to have the evidence or stipulation construed most strongly in the party's favor.’
Civ.R. 56(C).” Ellis v. Skinner, 2023-Ohio-2032, 218 N.E.3d 197, ¶ 13 (11th Dist.). We
review summary judgment de novo. Fradette v. Gold, 157 Ohio St.3d 13, 2019-Ohio-
1959, 131 N.E.3d 12, ¶ 6. “‘A de novo review requires the appellate court to conduct an
independent review of the evidence before the trial court without deference to the trial
court's decision.’” Ellis at ¶ 13, citing Peer v. Sayers, 11th Dist. Trumbull No. 2011-T-
0014, 2011-Ohio-5439, ¶ 27.
{¶29} Butorac filed a complaint for fraudulent transfer pursuant to R.C.
1336.04(A)(1) and (A)(2) and R.C. 1336.05(A).
{¶30} R.C. 1336.04 provides in relevant part:
(A) A transfer made or an obligation incurred by a debtor is
fraudulent as to a creditor, whether the claim of the creditor
arose before, or within a reasonable time not to exceed four
years after, the transfer was made or the obligation was
incurred, if the debtor made the transfer or incurred the
obligation in either of the following ways:
(1) With actual intent to hinder, delay, or defraud any creditor
of the debtor;
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(2) Without receiving a reasonably equivalent value in
exchange for the transfer or obligation, and if either of the
following applies:
(a) The debtor was engaged or was about to engage in a
business or a transaction for which the remaining assets
of the debtor were unreasonably small in relation to the
business or transaction;
(b) The debtor intended to incur, or believed or reasonably
should have believed that the debtor would incur, debts
beyond the debtor's ability to pay as they became due.
{¶31} Subsection (B) lists eleven factors that the trial court should consider when
determining actual intent. These factors include:
(1) Whether the transfer or obligation was to an insider;
(2) Whether the debtor retained possession or control of the
property transferred after the transfer;
(3) Whether the transfer or obligation was disclosed or
concealed;
(4) Whether before the transfer was made or the obligation
was incurred, the debtor had been sued or threatened with
suit;
(5) Whether the transfer was of substantially all of the assets
of the debtor;
(6) Whether the debtor absconded;
(7) Whether the debtor removed or concealed assets;
(8) Whether the value of the consideration received by the
debtor was reasonably equivalent to the value of the asset
transferred or the amount of the obligation incurred;
(9) Whether the debtor was insolvent or became insolvent
shortly after the transfer was made or the obligation was
incurred;
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(10) Whether the transfer occurred shortly before or shortly
after a substantial debt was incurred;
(11) Whether the debtor transferred the essential assets of the
business to a lienholder who transferred the assets to an
insider of the debtor.
{¶32} The trial court concluded that Butorac had “demonstrated six of the statutory
factors [or badges of fraud], primarily with admissions, testimony from Kimberly’s
deposition, and stipulations from Hugh’s counsel.” Specifically, the trial court found the
transfer was to an insider (Kimberly, Hugh’s wife); Hugh continued to live at the property
after the transfer; Hugh was sued by Butorac prior to the transfer; the transfer was made
without consideration via quit claim deed; Hugh became insolvent after the transfer; and
the transfer occurred weeks after the jury in the Cuyahoga Case found Hugh liable to
Butorac for nearly $500,000. We conclude that Butorac demonstrated a sufficient number
of badges of fraud.
{¶33} “‘If the party alleging fraud is able to demonstrate a sufficient number of
badges, the burden of proof then shifts to defendant to prove that the transfer was not
fraudulent.’” Langaa at ¶ 46, quoting Baker & Sons Equip. Co. v. GSO Equip. Leasing,
Inc., 87 Ohio App.3d 644, 650, 622 N.E.2d 1113 (10th Dist.1993). Neither Hugh nor
Kimberly produced any evidence that the transfer was not fraudulent. In the court below,
appellants argued that the transfer of the property from Hugh to Kimberly did not render
Hugh insolvent. The trial court was not persuaded. Specifically, the trial court noted that
Hugh has been unable to work due to health problems, that he has continuing medical
bills, and that the Cuyahoga Case judgment was due and owing. This evidence, among
others, demonstrates Hugh’s insolvency. Further, neither Hugh nor Kimberly offered any
additional evidence regarding Hugh’s financial situation, despite opportunity to do so.
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{¶34} R.C. 1336.05(A) provides:
A transfer made or an obligation incurred by a debtor is
fraudulent as to a creditor whose claim arose before the
transfer was made or the obligation was incurred if the debtor
made the transfer or incurred the obligation without receiving
a reasonably equivalent value in exchange for the transfer or
obligation and the debtor was insolvent at that time or the
debtor became insolvent as a result of the transfer or
obligation.
{¶35} As noted above, the transfer was made well after Butorac initiated her suit
in the Cuyahoga Case and weeks before Butorac was awarded judgment in her favor
against Hugh. The transfer was made via quit claim deed without consideration satisfying
the requirements of R.C. 1336.05(A).
{¶36} In their briefing, appellants also argue that that trial court was divested of
jurisdiction to grant the summary judgment motion as the property in question was subject
to additional litigation in Cuyahoga County. It is unclear if appellants are referring to the
unknown divorce proceedings alleged in their second assignment of error or if they are
referencing the jury verdict in Cuyahoga County Case No. CV-17-881894 (the “Cuyahoga
Case”) finding in favor of Butorac. The judgment in the Cuyahoga Case was affirmed by
the Eighth District Court of Appeals. Butorac, 2023-Ohio-1812, ¶ 68. It is unclear how
either case would preclude the trial court from proceeding on the motion for summary
judgment on the fraudulent transfer.
{¶37} As such, the trial court did not err when it concluded that no genuine issues
of material fact exist and that Butorac was entitled to judgment as a matter of law. In other
words, the trial court correctly determined that the conveyance of property was fraudulent
pursuant to R.C. 1336.05. Appellants’ third assignment of error is without merit.
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{¶38} For the reasons set forth above, the judgment of the Lake County Court of
Common Pleas is hereby affirmed.
MATT LYNCH, J.,
JOHN J. EKLUND, J.,
concur.
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