O'Brien v. Ashley , 2021 Ohio 4064 ( 2021 )

[Cite as O'Brien v. Ashley, 2021-Ohio-4064.]
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
Kevin O'Brien, et al., :
Plaintiffs-Appellants, : No. 20AP-533
(C.P.C. No. 20CV-5032)
v. :
(ACCELERATED CALENDAR)
Stacia Ashley, et al., :
Defendants-Appellees. :
D E C I S I O N
Rendered on November 16, 2021
On brief: Jeffrey A. Catri Co., L.L.C. and Jeffrey A. Catri for
appellants. Argued: Jeffrey A. Catri.
On brief: Ice Miller LLP, John P. Gilligan, and Amy Flowers
for appellee Stacia Ashley. Argued: John P. Gilligan.
Argued: Organ Law, L.L.P. and Ashley T. Merino for
appellees Scott Torguson and Gregory Reichenbach.
APPEAL from the Franklin County Court of Common Pleas
SADLER, J.
{¶ 1} Plaintiffs-appellants, Kevin O'Brien and Kevin O'Brien & Associates
Co., L.P.A. (collectively "O'Brien"), appeal from a judgment of the Franklin County Court
of Common Pleas granting a motion to dismiss filed by defendants-appellees, Stacia Ashley,
Scott Torguson, and Gregory Reichenbach (collectively "appellees"). We conclude the
complaint failed to state claims on which relief could be granted; therefore, we affirm.
I. FACTS AND PROCEDURAL HISTORY
{¶ 2} The long and winding road to the present appeal began in September 2013,
when Ashley obtained a loan of $1,998.31 from 1st National Financial Services, Ltd.
No. 20AP-533 2
("1st National").1 1st Natl. Fin. Servs. v. Ashley ("Ashley III"), 10th Dist. No. 18AP-803,
2019-Ohio-5321, ¶ 2. In September 2014, 1st National, represented by O'Brien, sued Ashley
in the Franklin County Municipal Court, alleging she had defaulted on the loan. Id. Shortly
before the scheduled trial, 1st National and Ashley settled the case; as part of the settlement,
Ashley executed a cognovit promissory note stipulating the note "represents the settlement
of a commercial matter and * * * is not given for a consumer loan, transaction or debt."
(Ex. 1, Aug. 03, 2020 Compl.)
{¶ 3} On April 27, 2015, 1st National, again represented by O'Brien, sued Ashley a
second time in the municipal court, alleging she defaulted on the cognovit note ("the
cognovit case"). Ashley III at ¶ 3. Pursuant to the terms of the cognovit note, O'Brien filed
an answer on Ashley's behalf confessing judgment. The municipal court entered judgment
in favor of 1st National for $1,073.70 on April 30, 2015. Id. 1st National instituted wage
garnishment against Ashley to collect on the judgment.
{¶ 4} On September 9, 2015, Ashley, represented by Torguson, moved to vacate the
municipal court's April 30, 2015 judgment. Ashley alleged the municipal court lacked
subject-matter jurisdiction over the cognovit case, asserting she had originally obtained a
consumer loan and a cognovit note could only arise out of a commercial loan. Id. at ¶ 4. In
support of the motion, Ashley executed an affidavit ("Ashley affidavit") asserting the funds
from the original loan were used for "family and household purposes" and she signed the
cognovit note believing it was a "simple settlement agreement." (Ex. 2, Compl.) In
November 2015, 1st National filed a satisfaction of judgment, asserting it had received all
or substantially all the funds sought through garnishment, and a memorandum in
opposition to Ashley's motion to vacate. Ashley III at ¶ 4. The municipal court
subsequently issued an entry stating all pending motions were moot. Id. at ¶ 5. Ashley
appealed and this court reversed, holding the municipal court erred by dismissing Ashley's
motion as moot without examining whether it had subject-matter jurisdiction. Id. at ¶ 6,
citing 1st Natl. Fin. Servs. v. Ashley ("Ashley I"), 10th Dist. No. 16AP-18, 2016-Ohio-5497.
{¶ 5} On remand from Ashley I, the municipal court conducted an evidentiary
hearing on the motion to dismiss. Following the hearing, the municipal court issued
1 In ancillary litigation, O'Brien asserts Ashley used $998.31 of the proceeds from the September 2013 loan to
pay off another loan she had previously obtained from 1st National. See Kevin O'Brien & Assocs. Co., LPA v.
Young, 10th Dist. No. 20AP-393 (Complaint for Writs of Mandamus and Prohibition filed August 21, 2020).
No. 20AP-533 3
judgment in favor of 1st National, concluding Ashley failed to sustain her burden to prove
the cognovit note arose out of a commercial loan. Id. at ¶ 7. Ashley appealed and this court
again reversed, holding the municipal court erred by placing the burden of proof on Ashley.
Id. at ¶ 8, citing 1st Natl. Fin. Servs. v. Ashley ("Ashley II"), 10th Dist. No. 17AP-638, 2018-
Ohio-3134.
{¶ 6} On remand from Ashley II, the municipal court again issued judgment in
favor of 1st National, concluding it sustained its burden to prove the court had subject-
matter jurisdiction over the cognovit note. Id. at ¶ 9. Ashley again appealed, asserting the
municipal court abused its discretion by denying her motion to dismiss. Id. In a decision
issued on December 24, 2019, this court overruled Ashley's assignment of error and
affirmed the municipal court's judgment, concluding 1st National met its burden and
demonstrated the municipal court had subject-matter jurisdiction because the cognovit
note did not arise out of a consumer loan or transaction. Id. at ¶ 18.
{¶ 7} On February 20, 2016, while her first appeal from the cognovit case was
pending, Ashley, represented by Torguson and Reichenbach, filed a complaint against
O'Brien in the Franklin County Court of Common Pleas, alleging violations of the federal
Fair Debt Collection Practices Act ("the FDCPA case"). See Ashley v. Kevin O'Brien &
Assocs. Co., LPA, Franklin C.P. No. 16CV-1795 (Aug. 27, 2020). Ultimately, following this
court's ruling in Ashley III, Ashley voluntarily dismissed her FDCPA claim without
prejudice. O'Brien then moved for sanctions against Ashley and her attorneys. Various
motions related to the sanctions proceedings have been filed, and an appeal is currently
pending before this court regarding the common pleas court's decision on some of those
motions. See Ashley v. Kevin O'Brien & Assocs. Co., LPA, 10th Dist. No. 20AP-354. O'Brien
also has filed an original action in this court seeking writs of mandamus and prohibition
against Judge David C. Young, to prevent him from allowing Ashley and her attorneys to
conduct discovery in the sanctions proceedings in the FDCPA case. See Kevin O'Brien &
Assocs. Co., LPA v. Young, 10th Dist. No. 20AP-393.
{¶ 8} In August 2020, O'Brien filed the complaint giving rise to the present appeal,
asserting claims against appellees for fraud and conspiracy to commit fraud. O'Brien
alleged the Ashley affidavit was "false and perjurious," and that Ashley, Torguson, and
Reichenbach conspired to commit fraud by filing the Ashley affidavit in support of the
No. 20AP-533 4
support of the motion to vacate in the cognovit case. (Compl. at ¶ 27, 29.) O'Brien further
asserted appellees conspired to commit fraud by filing the FDCPA case. O'Brien claimed
appellees "engaged in egregious misconduct and perpetrated a fraud upon Judge Morehart
of the Franklin County Municipal Court, the Plaintiffs and First National Financial Services,
Ltd." (Compl. at ¶ 42.) O'Brien alleged he "incurred over one hundred thousand dollars
($100,000.00) in legal expense[s]" contesting the motion to vacate in the cognovit case, the
three appeals to this court from judgments in the cognovit case, and the FDCPA case.
(Compl. at ¶ 40.)
{¶ 9} Appellees moved to dismiss the complaint, asserting it was barred by the
statute of limitations because it was not filed within four years of the allegedly fraudulent
acts. They further argued the complaint failed to state a claim on which relief could be
granted because O'Brien failed to establish he justifiably relied on the allegedly fraudulent
affidavit, and the derivative claim for conspiracy to commit fraud could not survive absent
a valid fraud claim. O'Brien filed a memorandum in opposition, asserting his claims were
not barred by the statute of limitations because he "had no damages which were occasioned
by the conduct of Ashley and her lawyers" until this court's ruling in Ashley III. (Sep. 24,
2020 Pl.s' Memo. Contra Def.s' Mot. to Dismiss at 4). O'Brien further argued his complaint
stated a valid claim for fraud because the Ashley affidavit was executed and filed with the
intent to mislead the municipal court judge.
{¶ 10} The common pleas court granted appellees' motion to dismiss, concluding
O'Brien's claims were barred by the statute of limitations because they were not filed within
four years of the allegedly fraudulent acts. The common pleas court also found O'Brien
failed to state claims on which relief could be granted because he failed to allege he
detrimentally relied on the allegedly fraudulent statements and because the conspiracy to
commit fraud claim could not be maintained without the underlying fraud claim. O'Brien
timely appealed the common pleas court's grant of appellees' motion to dismiss.
II. ASSIGNMENTS OF ERROR
{¶ 11} O'Brien assigns the following as error:
[1.] Plaintiff[s]/appellants' fraud and conspiracy to commit
fraud claims were timely filed and are not barred by the four
(4) year statute of limitations contained in Section
2305.09(C), R.C.
No. 20AP-533 5
[2.] Appellants have alleged the necessary element of reliance
in their claim for fraud and conspiracy to commit fraud.
[3.] Appellees moved for, and received, a stay of proceedings
in case no.: 16 CV 1795 to appeal the characterization of
Ashley's debt to First National Financial; the time within
which the case was stayed does not count against appellants'
statute of limitations.
III. STANDARD OF REVIEW
{¶ 12} Under Civ.R. 12(B)(6), a defendant may move to dismiss for "failure to state
a claim upon which relief can be granted." "An appellate court reviews a trial court's
dismissal pursuant to Civ.R. 12(B)(6) de novo." Dunlop v. Ohio Dept. of Job & Family
Servs., 10th Dist. No. 16AP-550, 2017-Ohio-5531, ¶ 10. A motion to dismiss under
Civ.R. 12(B)(6) "tests the sufficiency of the complaint." Id. "[I]n reviewing a Civ.R. 12(B)(6)
dismissal, an appellate court looks to the complaint, presumes that the complaint's factual
allegations are true, and makes all reasonable inferences in the nonmoving party's favor."
Id. "A judgment granting a Civ.R. 12(B)(6) motion to dismiss may be affirmed only when
there is no set of facts under which the nonmoving party could recover." Id. "Where the
motion to dismiss is based on the application of a statute of limitations, the motion may be
granted when the complaint shows conclusively on its face that the action is time-barred."
Henton v. Ohio Dept. of Rehab. & Corr., 10th Dist. No. 16AP-768, 2017-Ohio-2630, ¶ 7.
IV. LEGAL ANALYSIS
{¶ 13} We begin with O'Brien's second assignment of error, which we find to be
dispositive of this appeal. In his second assignment of error, O'Brien asserts the trial court
erred by finding he failed to plead the necessary element of justifiable reliance in his fraud
claim. The elements of a fraud claim are:
(1) a representation or, where there is a duty to disclose,
concealment of a fact, (2) the representation was material to
the transaction, (3) the representation was made falsely, with
knowledge of its falsity, or with such disregard and recklessness
as to whether it is true or false that knowledge may be inferred,
(4) the representation was made with the intent of misleading
another into relying on it, (5) justifiable reliance on the
representation or concealment, and (6) an injury proximately
caused by the reliance.
No. 20AP-533 6
Wiles v. Miller, 10th Dist. No. 12AP-989, 2013-Ohio-3625, ¶ 33, citing Williams v. Aetna
Fin. Co., 83 Ohio St.3d 464, 475 (1998).
{¶ 14} O'Brien asserts the fraud in the cognovit case was "committed against [1st
National] and against Judge Morehart, not against [O'Brien]." (Appellant's Brief at 32.)
O'Brien's complaint alleged the Ashley affidavit was filed "with the intent of misleading
another, specifically, the Court (Judge Morehart), into relying upon it." (Compl. at ¶ 37.)
O'Brien further alleged in the complaint that "there was justifiable reliance by the Court
(Judge Morehart) upon the affidavit submitted by Ashley and her Counsel." (Compl. at
¶ 39.) O'Brien argues this was sufficient to establish the reliance element of a fraud claim.
{¶ 15} "It is well-established law in Ohio that a fraud claim may not be based on a
misrepresentation made to a third party." Wiles at ¶ 37. " 'The elements of fraud must be
directed against the alleged victim.' " Id. at ¶ 33, quoting Moses v. Sterling Commerce Am.,
Inc., 10th Dist. No. 02AP-161, 2002-Ohio-4327, ¶ 21. Accordingly, we have held " '[a]
plaintiff fails to state a valid cause of action for fraud when he alleges that a third party
relied on misrepresentations made by a defendant and that he suffered injury from that
third party's reliance.' " (Emphasis added.) Id., quoting Moses at ¶ 21. Similarly, the
Supreme Court of Ohio has stated "a fraud claim cannot be predicated on * * *
misrepresentations made to third parties." Lucarell v. Nationwide Mut. Ins. Co., 152 Ohio
St.3d 453, 2018-Ohio-15, ¶ 68.
{¶ 16} O'Brien asserts the alleged misrepresentations were made to Judge Morehart
of the municipal court, with the intent of inducing her to rely on them. O'Brien makes no
claim that the misrepresentations were made to him, that there was intent to mislead him
to rely on them, or that he justifiably relied on them. Rather, the complaint and the record
in the cognovit case demonstrate both O'Brien and 1st National vigorously disputed the
claims in the Ashley affidavit. Because O'Brien's complaint fails to set forth several of the
material elements of a fraud claim, it fails to state a claim on which relief can be granted.
{¶ 17} " 'A civil conspiracy claim is derivative and cannot be maintained absent an
underlying tort that is actionable without the conspiracy.' " Adams v. Margarum, 10th
Dist. No. 16AP-515, 2017-Ohio-2741, ¶ 21, quoting Morrow v. Reminger & Reminger Co.,
LPA, 183 Ohio App.3d 40, 60, 2009-Ohio-2665, ¶ 40 (10th Dist.). Because O'Brien failed
to state a fraud claim on which relief could be granted, his claim for conspiracy to commit
No. 20AP-533 7
fraud necessarily also fails. Id. ("Having concluded that the complaint fails to state a claim
for fraud, the derivative claim of civil conspiracy must fall also.")
{¶ 18} Accordingly, we overrule O'Brien's second assignment of error.
{¶ 19} Having concluded O'Brien's complaint failed to state claims for fraud or
conspiracy to commit fraud on which relief could be granted, the question of whether those
claims were also barred by the statute of limitations is rendered moot. Accordingly, we
overrule O'Brien's first and third assignments of error as moot.
V. CONCLUSION
{¶ 20} For the foregoing reasons, we overrule O'Brien's second assignment of error,
rendering the first and third assignments moot. Accordingly, we overrule O'Brien's first
and third assignments as moot. We affirm the judgment of the Franklin County Court of
Common Pleas.
Judgment affirmed.
BEATTY BLUNT and JAMISON, JJ., concur.
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