Master Nails, Inc. v. Master Nails Lana, L.L.C. ( 2024 )

[Cite as Master Nails, Inc. v Master Nails Lana, L.L.C., 2024-Ohio-1694.]
COURT OF APPEALS OF OHIO
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
MASTER NAILS, INC., :
Plaintiff-appellant, :
No. 112677
v. :
MASTER NAILS LANA, LLC, ET AL., :
Defendants-appellees. :
JOURNAL ENTRY AND OPINION
JUDGMENT: REVERSED AND REMANDED
RELEASED AND JOURNALIZED: May 2, 2024
Civil Appeal from the Cuyahoga County Court of Common Pleas
Case No. CV-23-976703
Appearances:
Christopher J. Freeman; The Flowers Law Firm, and
Corey Flowers, for appellant.
Cavitch, Familo & Durkin, Co., LPA, and Michael C.
Cohan, for appellees.
ANITA LASTER MAYS, P.J.:
Plaintiff-appellant, Master Nails, Inc., appeals an order of the
Cuyahoga County Court of Common Pleas dismissing its complaint against
defendants-appellees Master Nails Lana, LLC; Lana Yip; Mayflower Tran; and Lynn
Tran. Because the trial court erred when it found that it lacked jurisdiction over the
case, we reverse the judgment and remand this matter for further proceedings.
I. Factual Background and Procedural History
Lana Yip and Winston Yip are married. On October 20, 2022, Lana
filed a complaint for divorce in the Summit County Court of Common Pleas,
Domestic Relations Division. See Summit County C.P. No. DR-2022-10-2889. On
December 16, 2022, Lana filed an amended complaint in that case, adding these
defendants: Brenda Kong, Kong Yip LLC, and 888 Kong Yip LLC.
In that case, Lana requested “an absolute divorce from [Winston], an
equitable division of the marital property, a distributive award, spousal support,
reimbursement of her attorney fees and costs, and * * * such other relief as the court
deems equitable.” She averred that Winston and the other defendants hid and
transferred assets in which she has an interest, and she alleged that Brenda Kong
and the two limited-liability companies named in her amended complaint “hold
assets out of which [Lana] seeks * * * division of property, a distributive award,
and/or an award of spousal support * * *.”
On March 17, 2023, Master Nails, Inc. filed a complaint in the
Cuyahoga County Court of Common Pleas, seeking injunctive relief and damages for
alleged torts — conversion, unjust enrichment, breach of duty of loyalty and good
faith, tortious interference with business relationships, civil conspiracy, vicarious
liability, deceptive trade practices, and fraud — against Lana Yip; Mayflower Tran;
Lynn Tran; and a business called Master Nails Lana, LLC. This appeal arises from
the Cuyahoga County case.
The complaint alleged that Lana Yip started Master Nails, Inc. in 2009
and sold that business to Brenda Kong in 2011. The business operated as a nail salon
in Brecksville, Ohio. After the sale, the business kept Lana Yip on as an employee.
Allegedly, Lana Yip and the other defendants thereafter conceived and executed a
scheme to convert the business’s money and steal its customers. The complaint
further alleged that the defendants created a new business under a misleading name
(Master Nails Lana, LLC), changed the locks to the salon, and continued doing
business with Master Nails, Inc.’s customers.
The trial court held a preliminary-injunction hearing on March 28,
2023, before any of the defendants had filed an answer to the complaint. During the
hearing, the defendants’ counsel argued that the issue of whether Master Nails, Inc.
was fraudulently transferred from Lana Yip to Brenda Kong “is being disputed in the
divorce case in Summit County,” such that “[a] decision in the Summit County case
as to who owns what would directly impact what you will decide today.” The
plaintiff’s counsel responded that Master Nails, Inc. is not a party to the divorce case
and the domestic-relations court does not have jurisdiction to hear the claims raised
in its complaint. The court ordered the parties to brief the issue of whether it had
subject-matter jurisdiction in the matter.
On April 5, 2023, after reviewing the parties’ briefs, the trial court
entered an order dismissing the case, holding that “the jurisdictional priority rule
prevents this Court from continuing to exercise jurisdiction over the present action”
and reasoning that “plaintiff Master Nails [Inc.] is a claimed marital asset governed
by the claims made in and orders issued by the Summit County Common Pleas
Court, Division of Domestic Relations * * *” and that the filing of the Cuyahoga
County action “would appear in direct violation of the restraining order” issued in
the Summit County matter.
Master Nails, Inc. appealed, raising the following assignment of error
for review:
The trial court erred in dismissing Appellant’s complaint on
jurisdictional grounds.
II. Law and Analysis
The plaintiff contends that the trial court has subject-matter
jurisdiction over its tort action and that the trial court’s order deprived it of any
forum in which to pursue its claims. The defendants argue that the jurisdictional-
priority rule applies, because (1) the plaintiff (a corporation) was allegedly
fraudulently transferred from Lana without her consent and (2) the plaintiff may be
an asset or hold assets that are subject to an equitable division in a pending divorce
case involving Lana in the Summit County Court of Common Pleas, Domestic
Relations Division.
Whether a court has jurisdiction over a matter is a legal question that
this court reviews de novo. E.g., State ex rel. Maron v. Corrigan, 173 Ohio St.3d 55,
2023-Ohio-2556, 227 N.E.3d 1145, ¶ 9. No one seems to dispute that the Cuyahoga
County Court of Common Pleas has general jurisdiction over the types of
claims pending in Master Nails, Inc.’s case. “‘When a court has the constitutional or
statutory power to adjudicate a particular class or type of case, that court has
subject-matter jurisdiction.’” Id. at ¶ 10, quoting Ostanek v. Ostanek, 166 Ohio St.3d
1, 2021-Ohio-2319, 181 N.E.3d 1162, ¶ 36. Instead, the defendants claim that the
divorce action pending in Summit County strips the trial court of its jurisdiction to
adjudicate these claims by operation of the jurisdictional-priority rule.
The jurisdictional-priority rule provides 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.’” Maron at
¶ 10, quoting State ex rel. Phillips v. Polcar, 50 Ohio St.2d 279, 364 N.E.2d 33(1977), syllabus.
“The jurisdictional-priority rule generally requires ‘the claims and
parties [to] be the same in both cases, so “[i]f the second case is not for
the same cause of action, nor between the same parties, the former suit
will not prevent the latter.”’” (Brackets sic.) State ex rel. Hasselbach
v. Sandusky Cty. Bd. of Elections, 157 Ohio St.3d 433, 2019-Ohio-3751,
137 N.E.3d 1128, ¶ 9, quoting State ex rel. Dunlap v. Sarko, 135 Ohio
St.3d 171, 2013-Ohio-67, 985 N.E.2d 450, ¶ 10, quoting State ex rel.
Judson v. Spahr, 33 Ohio St.3d 111, 113, 515 N.E.2d 911 (1987).
Maron at ¶ 11.
Here, there can be no dispute; the divorce case and the tort case are
not for the same cause of action, nor are they between the same parties. The cases
share only one party in common — Lana Yip.1 There are no shared causes of action
between the two cases.2
The defendants instead assert that this matter fits within a narrow
exception to the requirement that the parties and claims be the same: they say that
the divorce case and the case at bar present part of the same “whole issue.”
“‘[T]he jurisdictional-priority rule can apply even when the causes of
action and relief requested are not exactly the same, as long as the actions present
part of the same “whole issue.”’” Maron, 173 Ohio St.3d 55, 2023-Ohio-2556, 227
N.E.3d 1145, at ¶ 11, quoting Dunlap at ¶ 11, quoting State ex rel. Otten v.
Henderson, 129 Ohio St.3d 453, 2011-Ohio-4082, 953 N.E.2d 809, ¶ 29, and State
ex rel. Sellers v. Gerken, 72 Ohio St.3d 115, 117, 647 N.E.2d 807 (1995).
But the Ohio Supreme Court has only applied the “whole-issue”
exception “‘in the narrow circumstances in which the two cases raise the exact same
The parties to the divorce case are: Lana Yip, Winston Yip, Brenda Kong,
1
888 Kong Yip LLC, and Kong Yip LLC.
The parties to the common pleas case are: Master Nails, Inc.; Master Nails Lana,
LLC; Lana Yip; Mayflower Tran; and Lynn Tran.
2 In the common pleas case, Master Nails, Inc. seeks a temporary restraining order
and preliminary injunction, and damages for certain alleged torts, including conversion,
breach of duty of loyalty and good faith, tortious interference with business relationships,
civil conspiracy, deceptive trade practices, and fraud.
In the divorce case, Lana Yip requests “an absolute divorce from [Winston Yip], an
equitable division of the marital property, a distributive award, spousal support,
reimbursement of her attorney fees and costs, and for such other relief as the court deems
equitable.” She claims that Brenda Kong and two limited-liability companies that Kong
allegedly owns (neither of which is Master Nails, Inc.) “hold assets out of which [Lana
Yip] seeks * * * division of property, a distributive award, and/or an award of spousal
support * * *.”
legal claim or involve resolution of the same issue.’” Maron at ¶ 12, quoting State ex
rel. Tri Eagle Fuels, L.L.C. v. Dawson, 157 Ohio St.3d 20, 2019-Ohio-2011, 131
N.E.3d 20, ¶ 14. The narrowness of the exception is best illustrated by a close review
of caselaw.
Before beginning this review, it is worth noting that much of the law
on the jurisdictional-priority rule has historically arisen from defendants seeking
writs of prohibition to prevent a judge from exercising judicial power over a matter.
See, e.g., State ex rel. Black v. White, 132 Ohio St. 58, 5 N.E.2d 163 (1936) (denying
a writ of prohibition to stop a common pleas court from hearing a suit for specific
performance on a real-estate contract, which contract had been entered into by
executors of an estate, even where the executors argued that the issue was incidental
to the settlement of the estate, a matter that was then currently pending in a probate
court). Nevertheless, the analysis in this line of cases is persuasive and applicable
when deciding whether a trial court correctly dismissed a matter for lack of
jurisdiction based on the jurisdictional-priority rule.
The relator in a writ-of-prohibition case must normally show (1) that
the respondent has exercised or is about to exercise judicial power, (2) that the judge
lacks authority to do so, and (3) that denial of the writ will result in an injury for
which no other adequate remedy exists in the ordinary course of the law. E.g.,
Maron, 173 Ohio St.3d 55, 2023-Ohio-2556, 227 N.E.3d 1145, at ¶ 8. But if the
relator shows that the respondent “patently and unambiguously lacks jurisdiction,”
they do not need to show the lack of another adequate remedy. See, e.g., id. When
the relator raises a jurisdictional-priority argument, often “[t]he applicability of the
rule * * * is the only issue [the appeals court] must decide.” See id. at ¶ 9. This is
because, on the one hand, “[i]f the jurisdictional-priority rule applies, [the trial-
court judge] patently and unambiguously lacks jurisdiction,” such that the writ
would be warranted. See id. And on the other hand, if the rule does not apply, then
the relator is not entitled to a writ because the relator has an alternative remedy in
the ordinary course of the law by way of a direct appeal. See, e.g., Tri Eagle Fuels,
157 Ohio St.3d 20, 2019-Ohio-2011, 131 N.E.3d 20, at ¶ 15; State ex rel. United States
Steel Corp. v. Zaleski, 98 Ohio St.3d 395, 2003-Ohio-1630, 786 N.E.2d 39, ¶ 8.
Courts in these writ-of-prohibition cases review the jurisdictional-priority question
de novo. E.g., Maron at ¶ 9.
Put another way, the issue (whether the jurisdictional-priority rule
applies in a given set of circumstances) and standard of review (de novo) are the
same in a writ-of-prohibition case as they are in this direct appeal.
With that in mind, we turn to the relevant caselaw.
In Tri Eagle Fuels, this court considered whether to prevent a
forcible-entry-and-detainer action against a lessee in a municipal court, where the
lessee had previously filed an action for breach of contract, promissory estoppel, and
tortious interference against the lessor concerning the same property and same lease
in a common pleas court. State ex rel. Tri Eagle Fuels, L.L.C. v. Dawson, 2018-
Ohio-3054, 118 N.E.3d 304, ¶ 1, 3–4 (8th Dist.). The parties were identical between
the two cases and both cases involved a consideration of certain common factual
issues, like whether the lessee was adequately maintaining the property and whether
the lessor violated the lease by serving a three-day notice on the lessee. Id. at ¶ 2, 8.
Nevertheless, this court concluded that the jurisdictional-priority rule did not apply,
and the Ohio Supreme Court affirmed that decision. Id. at ¶ 17, 20; Tri Eagle Fuels,
157 Ohio St.3d 20, 2019-Ohio-2011, 131 N.E.3d 20. While the cases involved a
consideration of certain common factual issues, the Supreme Court concluded that
“the cases do not raise the exact same legal claim or involve resolution of the same
issue” and found “no persuasive reason why we should expand this exception to the
circumstances here.” Tri Eagle Fuels, 157 Ohio St.3d 20, at ¶ 14.
The cases in Tri Eagle Fuels involved a greater area of overlap than
we have here, including sharing identical parties. Moreover, we do not see how the
risk of inconsistent rulings on the areas of shared factual issues is any greater here
than it was in Tri Eagle Fuels.
The Supreme Court also found that the jurisdictional-priority rule did
not prevent a court from hearing a forcible-entry-and-detainer action to evict a
woman from her deceased mother’s home, even when the woman had previously
filed a declaratory-judgment and temporary-restraining-order action in another
court seeking to determine her rights in a settlement agreement with the executor
of the mother’s estate and to prevent the executor from evicting her. State ex rel.
Brady v. Pianka, 106 Ohio St.3d 147, 2005-Ohio-4105, 832 N.E.2d 1202, ¶ 3, 12–
13; see also State ex rel. Weiss v. Hoover, 84 Ohio St.3d 530, 532, 705 N.E.2d 1227(1999) (granting a writ of procedendo to compel a trial court to hear a forcible-entry-
and-detainer action even where there was a pending declaratory-judgment action in
another court regarding the legal title to the same property).
The Maron case is an even closer fit to the circumstances here.
Maron, 173 Ohio St.3d 55, 2023-Ohio-2556, 227 N.E.3d 1145. In Maron, a husband
and wife were involved in a divorce case pending in the domestic-relations division
of a common pleas court. During the pendency of that case, a limited-liability
company sued the wife in common pleas court, alleging that she was interfering with
an easement involving a multistory building in Cleveland, consisting of five parcels.
Id. at ¶ 3. The company owned two of the five parcels, and the woman and her
husband owned the other three. Id. The husband had a fifty percent ownership
interest in the plaintiff–company. In the divorce case, the woman claimed to have
an equitable interest in her husband’s half of the company. The woman argued that
the jurisdictional-priority rule prevented the easement litigation because any relief
granted in that case would “directly interfer[e] with the Domestic Relations Court’s
ability to issue a division of property.” Id. at ¶ 13. The Supreme Court disagreed,
reasoning that “[t]he main issue in [the company’s] case is whether [the woman] is
in breach of an easement.” Id. The woman also argued that if the domestic-relations
court were to award the husband’s interest in the company to the woman, “the
underlying dispute over the easement would become moot.” Id. at ¶ 14. The
Supreme Court held that this argument “fails to establish any real connection
between the issues in the two cases,” reasoning that “[t]he division of marital
property * * * would not resolve the legal issues presented in [the easement] case.”
Id.
Similarly, the main issues in case at bar are whether Lana Yip and two
of her family members conceived and executed a scheme to defraud the plaintiff–
corporation by converting and misappropriating the corporation’s funds, whether
Lana then opened a competing business under a misleading name and changed the
locks to the business property, and whether the defendants continue to operate from
the corporation’s previous location, servicing its customers under a misleading
name. While these issues might also be relevant to the domestic-relations court’s
division of marital property as between Winston and Lana Yip, or to its
determination about whether Lana is entitled to a distributive award, spousal
support, or a reimbursement of her attorney fees and costs (the main issues in that
case), these domestic-relations determinations would not resolve the legal issues
raised in Master Nails, Inc.’s civil case.
In all of these cases, there was some factual overlap between a
pending case and a newly filed case. In none of these cases was that overlap
significant enough for the “whole issue” exception to apply. See also State ex rel.
Hasselbach, 157 Ohio St.3d 433, 2019-Ohio-3751, 137 N.E.3d 1128, at ¶ 9–11 (the
exception did not apply where the same plaintiff sought to challenge the same
ordinance through two different forums, because in one he sought a declaration that
the ordinance is invalid and in the other he sought mandamus relief, assuming that
the ordinance is valid yet subject to referendum); State ex rel. Sellers, 72 Ohio St.3d
at 117-118, 647 N.E.2d 807. Now, we turn to an examination of cases in which the
exception has applied.
The city of Cleveland held a rodeo in its public auditorium and held
the money generated from admission fees, allegedly in accordance with its contract
with the rodeo company. John Weenink & Sons Co. v. Court of Common Pleas, 150
Ohio St. 349, 82 N.E.2d 730 (1948), at syllabus. The rodeo company’s creditors
instituted a number of actions in the municipal court against the company, seeking
remuneration for merchandise and services provided in connection with the rodeo.
Id. In some of those cases, the city was named as a garnishee. Id. In at least one
case, the city was sued directly. Id. The city answered in the municipal-court cases,
denying liability and asserting that all the funds in its possession were not payable
to any creditors under the terms of the contract between the city and the rodeo
company. Id. The municipal court granted judgments in favor of the creditors,
sustained attachment as against the city and ordered the city to pay the amount of
the judgment to the creditors. Id. The city then filed an action for declaratory
judgment in the common pleas court, seeking a determination as to its rights in the
funds. Id. This court granted a writ of prohibition preventing the common pleas
litigation, and the Supreme Court affirmed that decision. Id.The Supreme Court reasoned that the municipal-court cases sought
either a money judgment against the city or identified the city as a garnishee; they
did “not involve any question as to the right of the city to hold and control the funds
in its hands under the terms of its contract with [the rodeo company].” Id. at 353.
Nevertheless, the jurisdictional-priority rule applied because the city sought a
declaratory judgment to determine the legitimacy of a legal defense pending in the
those municipal-court actions — a defense that the municipal court had jurisdiction
to adjudicate. See id. at 355. This was thus a circumstance where two pending
actions in different forums “‘involv[ed] the same issues.’” Id., quoting Borchard,
Declaratory Judgments 350 (2 Ed.1941).
Similarly, a married woman had a child with a man outside of her
marriage; she then remarried someone else. Otten, 129 Ohio St.3d 453, 2011-Ohio-
4082, 953 N.E.2d 809, at ¶ 2. The new husband — the child’s stepfather — filed a
petition to adopt the child in a probate court, arguing that the ex-husband’s consent
was not required because he was not the biological father. Id. at ¶ 9. The biological
father intervened in this proceeding and objected to the adoption. Id. As that
litigation was pending, the stepfather filed another petition to adopt the child in a
different county’s probate court, arguing that the biological father’s consent was not
required. Id. at ¶ 14. The biological father sought a writ of prohibition to prevent
that second adoption case. Id. at ¶ 16. While the court of appeals originally denied
the writ, reasoning that the two cases “focused on different issues concerning
whether consent was required,” the Supreme Court reversed that decision. Id. at
¶ 16, 25–26, 37. In doing so, the Supreme Court found that the two adoption cases
involved the same parties and the same cause of action. Id. at ¶ 28. Moreover, the
court found that the cases presented the same whole issue. Id. at ¶ 29.
Taking all these cases together, it is clear that the dispositive issue is
not whether there is some overlap of factual issues between two cases, but rather
whether the cases share a central issue — whether the city of Cleveland has a legal
right to avoid paying the rodeo company’s creditors, for example, or whether the
stepfather can adopt the child without the biological father’s consent. See also State
ex rel. Dunlap, 135 Ohio St.3d 171, 2013-Ohio-67, 985 N.E.2d 450, at ¶ 8–13
(exception applied where the same relator instituted multiple public-records
mandamus actions in multiple courts against essentially the same parties).
Here, there is no central legal issue in common between the Yips’
divorce case and the tort case. Lana Yip did not even mention Master Nails, Inc. by
name in her amended complaint in the divorce matter, nor did she seek to add
Master Nails, Inc. as a defendant that “hold[s] assets out of which [she] seeks * * *
division of property” and other awards.
The defendants direct us to Davis v. Cowan Sys., 8th Dist. Cuyahoga
No. 83155, 2004-Ohio-515, in support of their argument that the “whole issue”
exception applies. There, three drivers — Jeffrey Davis, Pamela Miranda, and
Leland Crocker — were involved in a car accident; Crocker had been driving a
vehicle owned by a limited-liability company. Davis at ¶ 2. The limited-liability
company sued Miranda in Portage County, alleging that she was negligent and
caused property damage to its vehicle. Id. at ¶ 4. Davis then filed a personal-injury
complaint in the Cuyahoga County Court of Common Pleas against the limited-
liability company, Miranda, and Crocker. Id. at ¶ 3. The trial court in Cuyahoga
County dismissed the case, finding that it had no jurisdiction by operation of the
jurisdictional-priority rule. Id. at ¶ 5.
This court affirmed that decision, reasoning that the two lawsuits
involved “substantially the same parties and liability witnesses, and arise out of the
same occurrence.” Id. at ¶ 15. The court noted that the parties overlapped to such
an extent that “it may have been improper to proceed with the Portage County action
without adding [Davis] to the action.” Id. at ¶ 16. The court further noted that the
two cases involved the same issue: which of the parties were liable for the motor-
vehicle accident, and to what extent? Id. at ¶ 17. Finally, the court reassured itself
that Davis would not be prejudiced by the dismissal of his action in Cuyahoga
County “because he could intervene as a plaintiff in the Portage County action.” Id.
at ¶ 18.
Each of this court’s reasons for affirming the decision in Davis can be
distinguished from the case at bar. First, the parties and causes of action between
the divorce case and the tort case do not overlap to the extent seen in Davis. Second,
the two cases do not involve the same central issue; the divorce case concerns
division of property and the tort case concerns whether the business is entitled to
damages and injunctive relief as against the defendants for various alleged torts.
Finally, Master Nails, Inc. will be prejudiced by the dismissal of its action in
Cuyahoga County. The last point merits more specific consideration.
If we were to affirm the judgment, Master Nails, Inc. would likely not
be able to litigate its claims for injunctive relief and damages while the divorce case
is pending. Unlike in Davis, the corporation here would likely not be able to obtain
any relief from the pending domestic-relations proceeding. R.C. 3105.011 provides
that “[t]he 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.” R.C. 3105.011(A). This court has interpreted that
statute to “limit[] the jurisdiction of the domestic relations division to the
determination of domestic relations matters.” Lisboa v. Karner, 167 Ohio App.3d
359, 2006-Ohio-3024, 855 N.E.2d 136, ¶ 6–11 (8th Dist.); see also Hudson v.
Hudson, 6th Dist. Lucas No. L-21-1040, 2021-Ohio-4036, ¶ 34–39.
Here, the “[a]pplication of the jurisdictional-priority rule would
purport to give the domestic-relations court — the court whose jurisdiction was first
invoked — the opportunity to adjudicate ‘the whole issue and to settle the rights of
the parties,’ but the domestic-relations court lacks subject-matter jurisdiction to
adjudicate” the claims in Master Nails, Inc.’s case. (Citation omitted.) In re
Adoption of M.G.B.-E, 154 Ohio St.3d 17, 2018-Ohio-1787, ¶ 27 (jurisdictional-
priority rule does not apply where the probate court had exclusive jurisdiction over
adoption petitions in one matter and the domestic-relations court had exclusive
jurisdiction over an application to reestablish parenting time); see also State ex rel.
Judson v. Spahr, 33 Ohio St.3d 111, 113, 515 N.E.2d 911 (1987) (holding that a
common pleas court had jurisdiction to adjudicate a conversion claim despite there
being a pending divorce action, because “the rule does not apply where the conflict
of jurisdiction is between a court of general jurisdiction and one whose limited
powers are inadequate to afford full relief to the parties.”); cf. State ex rel. Heyside
v. Calabrese, 2022-Ohio-1245, 190 N.E.3d 55, ¶ 9 (8th Dist.) (stating that the
domestic-relations division in Cuyahoga County has “all the powers relating to all
divorce, dissolution of marriage, legal separation, and annulment cases” but “the
general division of a common pleas court usually has subject-matter jurisdiction
over matters of breach of contract so long as the claims meet the jurisdictional
minimums set forth in R.C. 2305.01.”).
Any area of overlap in the Venn diagram of fact and legal issues
between these two cases is too small for the whole-issue exception to apply, and the
jurisdiction of the domestic-relations court is inadequate to afford full relief to
Master Nails, Inc. Therefore, the jurisdictional-priority rule does not apply. We
express no opinion as to the ultimate merits of the plaintiff’s complaint.
Because the trial court has subject-matter jurisdiction, we sustain the
assignment of error, reverse the dismissal order, and remand this matter for further
proceedings.
III. Conclusion
Having sustained Master Nails, Inc.’s assignment of error, we reverse
the judgment and remand this matter for further proceedings consistent with this
opinion.
The court finds there were reasonable grounds for this appeal.
It is ordered that the appellant recover from the appellees the costs herein
taxed.
It is ordered that a special mandate issue out of this court directing the
Cuyahoga County Court of Common Pleas 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.
ANITA LASTER MAYS, PRESIDING JUDGE
KATHLEEN ANN KEOUGH, A.J., CONCURS;
MICHAEL JOHN RYAN, J., DISSENTS (WITH SEPARATE OPINION)
MICHAEL JOHN RYAN, J., DISSENTING:
Respectfully, I dissent. I would hold that the trial court correctly
found that the jurisdictional rule applied and properly dismissed appellant’s
complaint for lack of jurisdiction.
Lana’s complaint for divorce in the domestic relations division of
Summit County Common Pleas Court, which was filed prior to the complaint in this
case, alleged that Winston and Brenda engaged in hiding marital assets from Lana,
used a third party to conceal marital assets, committed financial misconduct, Lana
is the true owner of Master Nails, LLC, and Lana, Winston, and Brenda all have an
interest in certain business and properties.
The trial court in this case found that it was without subject-matter
jurisdiction because Lana claimed Master Nails as an asset in the domestic relations
case and ownership of Master Nails was being litigated in that case. In reaching its
decision, the trial court noted that the parties introduced documentation indicating
that Master Nails was formerly owned by Lana and Winston but a filing with the
Ohio Secretary of State purportedly showed that Brenda is now the sole owner of
Master Nails. The court noted that Master Nails failed to set forth any other
evidence of ownership or evidence that Lana transferred her interest in Master Nails
to Brenda.
The court held as follows:
Both Lana Tran Yip and Brenda Kong assert ownership interest in the
business of plaintiff Master Nails LLC which is alleged to have been
recently transferred to Brenda Kong by Winston Yip with or without
the consent of Lana Tran Yip. In addition, all three of these individuals
have leasehold interests in the lease for the plaintiff’s business and
while forthcoming with the plaintiff’s lease information, no party has
produced documentation showing the formal ownership of plaintiff
LLC and any recent transfers of that ownership. The Court can only
conclude that plaintiff Master Nails LLC is a claimed marital asset
governed by the claims made in and orders issued by the Summit
County Common Pleas Court, Division of Domestic Relations Case No.
DR-2022-10-2889. Accordingly, this Court has no jurisdiction over the
within action and it is hereby dismissed for want of jurisdiction.
The Cuyahoga County action was brought by Master Nails,
purportedly owned by Brenda, against Master Nails Lana, Lana individually, and
two of Lana’s family members. The domestic relations case, which was filed first,
was brought by Lana against Winston. Lana subsequently added Brenda and her
business, 888 Kong Yip LLC, as third-party defendants in the case. Although the
domestic relations case is a cause of action for divorce, the jurisdictional-priority
rule does not require that both actions involve identical parties, allege the same
causes of action, or request the same types of relief. Davis v. Cowan Sys., 8th Dist.
Cuyahoga No. 83155, 2004-Ohio-515, ¶ 14; see also Langaa v. Pauer, 11th Dist.
Geauga No. 2001-G-2405, 2002-Ohio-5603, ¶ 12, citing Crestmont Cleveland
Partnership v. Ohio Dept. of Health, 10th Dist. Franklin No. 98AP-1272, 1999 Ohio
App. LEXIS 4175 (Sept. 9, 1999) (holding that jurisdictional-priority rule does not
require both actions have identical parties, rather, the identity-of-parties
requirement is satisfied as long as the claim or matter sought to be precluded in the
second action is between the same parties).
The majority contends that none of the parties in the two cases are
the same, except for Lana. I do not agree. Lana named Brenda individually in the
divorce case; she did not name Master Nails, Inc., presumably because she (Lana)
claims ownership of Master Nails. Master Nails is an asset to the divorce in the
divorce case; it would be illogical to name her own business as third-party defendant
in that case.
Moreover, a ruling in the Cuyahoga County case could certainly affect
or interfere with the resolution of the issues in the case pending in the domestic
relations case. In the Cuyahoga County action, appellant seeks an injunction, and
asserts other claims, against appellees. Brenda claims ownership of Master Nails.
Lana disputes this claim. The issue of ownership has yet to be determined and who
owns Master Nails is in dispute in the domestic relations case. Because the parties
dispute who owns Master Nails, allowing the Cuyahoga County action to proceed
could lead to different conclusions on the issue of ownership, causing inconsistent
rulings. Simply put, a ruling by the Cuyahoga County Common Pleas Court that one
party owns Master Nails could be inconsistent with a ruling by the Summit County
Domestic Relations Court on ownership; possible inconsistent rulings by two courts
of concurrent jurisdiction is what the jurisdictional-priority rule was designed to
avoid.
The majority agrees with appellant’s argument that they would be
prejudiced by dismissal of their complaint because they would not be able to litigate
claims for injunctive relief and damages while the divorce case is pending. But
appellant’s attempt is premature – she is attempting to bring claims that presume
ownership of Master Nails, LLC, when ownership has not been established. Until
ownership of Master Nails, LLC, has been established in the domestic relations case,
appellant’s claims are not ripe for review.
Because the issue of ownership of marital assets, which may include
Master Nails, LLC, is pending in Summit County, the trial court properly dismissed
the complaint for lack of jurisdiction.