W. Bay Care & Rehab. Ctr. v. Estate of Nay

[Cite as W. Bay Care & Rehab. Ctr. v. Estate of Nay, 2019-Ohio-4306.]
STATE OF OHIO ) IN THE COURT OF APPEALS
)ss: NINTH JUDICIAL DISTRICT
COUNTY OF LORAIN )
WEST BAY CARE AND C.A. Nos. 18CA011273
REHABILITATION CENTER 18CA011332
Appellee
v. APPEAL FROM JUDGMENT
ENTERED IN THE
ESTATE OF CARL NAY, et al. COURT OF COMMON PLEAS
COUNTY OF LORAIN, OHIO
Appellants CASE No. 13CV179036
DECISION AND JOURNAL ENTRY
Dated: October 21, 2019
SCHAFER, Judge.
{¶1} Defendant-Appellants, Estate of Doris Nay, David Bray, and Michael Bray appeal
the judgments of the Lorain County Court of Common Pleas. For the following reasons, this
matter is reversed and remanded.
I.
{¶2} Although the record in this case is arduous, the facts and procedure relevant to the
current appeal are as follows. Carl Nay was admitted to Center Ridge Nursing Home (“Center
Ridge”) in early 2008. Doris Nay, his wife, signed the facility admission agreement as a
guarantor, limiting her obligation to Center Ridge to the extent of Carl’s income, assets, and
resources to which she had legal access. A few months later, Carl was admitted to West Bay
Care & Rehabilitation Center (“West Bay”).
{¶3} Meanwhile, Carl’s daughter applied to the Lorain County Probate Court to be
appointed guardian due to his incompetency. Doris filed a counter-application objecting to
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Carl’s admission to West Bay and requesting to be appointed his guardian. The Lorain County
Probate Court ultimately issued an order finding Carl was incompetent and in need of nursing
facility care. The court ordered that Carl remain at West Bay pending further court order and
appointed an independent guardian of Carl’s estate.
{¶4} Following Carl’s stay at Center Ridge, the nursing home filed a complaint against
Carl, Doris, and David Bray, Doris’ adult son from a previous marriage, to recover $5,397.00
due on Carl’s account and alleging that Carl and Doris had fraudulently transferred certain real
property to David. Although it appears from the certified record in that case that the complaint
was properly served, David never appeared in the matter. Center Ridge eventually filed a motion
for summary judgment arguing that due to the fraudulent transfers, Carl and Doris were unable to
pay Center Ridge for Carl’s care and thus, Carl, Doris, and David were financially obligated to
Center Ridge. None of the defendants in that case responded to the motion for summary
judgment. The trial court ultimately issued a journal entry purporting to grant summary
judgment.
{¶5} On January 12, 2010, West Bay filed a complaint against Carl, Doris, and David.
On January 13, 2013, West Bay voluntarily dismissed the complaint, without prejudice. The
following day, West Bay refiled the complaint in the present matter, adding as an additional
defendant, the guardian of Carl’s estate. West Bay asserted in its “first claim for relief” that it
was due $146,734.96 on an account for health care services rendered to Carl and alleged claims
for breach of contract and spousal obligation. The complaint then alleged a “second claim for
relief” pursuant to R.C. 1336.04, asserting that Carl and Doris had fraudulently transferred
certain real property to David for no consideration with the intent to defraud West Bay.
Accordingly, West Bay prayed for a judgment in the amount of $146,734.96 plus interest, costs,
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and attorney’s fees. West Bay further prayed for a judgment ordering David to convey to the
guardian of Carl’s estate, the real property alleged to have been fraudulently transferred.
{¶6} Kurt Anderson, the successor guardian of Carl’s estate, Doris, and David
eventually filed answers to the complaint and the matter proceeded through the litigation process.
Michael Bray, another adult son of Doris from a previous marriage, was granted leave to
intervene. Doris passed away while the matter was pending and Doris’ estate was substituted as
a defendant. David and Michael filed an answer to the amended complaint and a counterclaim
seeking declaratory judgment that Michael had an equitable interest in the properties, that the
conveyances from Doris to David were not fraudulent, and that they were not liable for any care
provided to Carl by West Bay. The counterclaim further asserted claims for constructive trust,
unjust enrichment, and quantum meruit against West Bay.
{¶7} Carl’s estate was granted leave to file a cross-claim against Doris “and her
estate’s beneficiaries for support and contribution and for recovery of certain assets.” The cross-
claim asserted claims for statutory spousal support, fraudulent transfer, conversion, fraud, and
civil conspiracy against Doris, David, and Michael. Doris’ estate, David, and Michael answered
the cross-claim.
{¶8} While the litigation proceeded through the pretrial process, Carl passed away.
Anderson, as the administrator of Carl’s estate, was then substituted as a defendant in place of
Anderson as the guardian of Carl’s estate.
{¶9} The trial court eventually granted West Bay partial summary judgment,
determining that pursuant to R.C. 3103.03, Doris, now Doris’ estate, was statutorily obligated to
aid in the support of Carl to the extent that she was able. The trial court, however, expressly
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stated that the issue of the amount of that judgment and the Doris’s ability to pay remained in
dispute.
{¶10} Thereafter, West Bay filed a supplemental motion for summary judgment, arguing
that the issue of fraudulent conveyance relating to several specific real properties had already
been determined in the Center Ridge case and that Doris’ estate and David were collaterally
estopped from contesting West Bay’s assertion of fraudulent transfer as to those properties.
Carl’s estate subsequently filed a motion for summary judgment on the same basis. In response,
Doris’ estate and David argued that the motions must be denied because there were no specific
findings of fact or conclusions of law relating to the alleged fraudulent transfers in the Center
Ridge case and thus, collateral estoppel did not apply. The trial court thereafter issued a journal
entry finding that estoppel applied and granting West Bay’s and Carl’s estate’s motions for
summary judgment.
{¶11} Carl’s estate filed an application for an award of punitive damages and attorney
fees and West Bay filed an application for attorney fees and a motion for pre and post-judgment
interest. The trial court granted the motions and issued a second amended judgment entry
purporting to address the disposition of the fraudulently transferred properties and appointing
Anderson as a receiver for one of the properties.
{¶12} The trial court then granted Carl’s estate leave to file an amended cross-claim and
third-party complaint asserting several claims against Mike’s Towing & Auto Repair, Inc, a
business operated by Michael that occupied one of the properties at issue.
{¶13} In response to a motion filed by Carl’s estate, the trial court issued an order
pursuant to Civ.R. 54(B) finding no just cause for delay as to the journal entry granting summary
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judgment on the issue of fraudulent conveyance. Doris’ estate, David, and Michael filed a timely
appeal of the order.
{¶14} West Bay and Carl’s estate subsequently filed a joint motion in the matter below
to dismiss their remaining claims pursuant to Civ.R. 41(A)(2) without prejudice. The trial court
dismissed the pending claims of West Bay and Carl’s estate and determined that Michael’s
pending counter-claims and cross-claims were rendered moot and/or barred by the finding of
fraudulent transfer. Consequently, the trial court sua sponte dismissed Michael’s claims with
prejudice and purported to issue a final judgment “consistent with all prior orders.” Doris’
estate, David, and Michael filed a timely appeal.
{¶15} This Court consolidated the appeals for briefing. Doris’ estate, David, and
Michael raise six assignments of error for our review. For ease of analysis, we elect to consider
assignments of error three, four, five, and six together.
II.
Assignment of Error I
The trial court erred in granting summary judgment to West Bay and Carl’s
estate on their claims that Doris’s estate fraudulently conveyed real estate to
David.
{¶16} In their first assignment of error, Doris’s estate, David, and Michael assert that the
trial court erred in granting summary judgment in favor of West Bay and Carl’s estate on the
issue of fraudulent conveyance. We agree.
{¶17} Under Civ.R. 56(C), summary judgment is appropriate when:
(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 party against whom the motion for
summary judgment is made, that conclusion is adverse to that party.
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Temple v. Wean United, Inc., 50 Ohio St. 2d 317, 327 (1977). The movant bears the initial
burden of demonstrating the absence of genuine issues of material fact concerning the essential
elements of the nonmoving party’s case. Dresher v. Burt, 75 Ohio St. 3d 280, 292 (1996). If the
moving party satisfies this burden, the non-moving party “must set forth specific facts showing
that there is a genuine issue for trial.” Id. at 293. A review of a trial court’s grant of summary
judgment is considered de novo. Grafton v. Ohio Edison Co., 77 Ohio St. 3d 102, 105 (1996).
Accordingly, we apply the same standard as the trial court, viewing the facts in the light most
favorable to the non-moving party and resolving any doubt in the favor of the non-moving party.
Viock v. Stowe-Woodward Co., 13 Ohio App. 3d 7, 12 (6th Dist.1983).
{¶18} In this case, West Bay filed a supplemental motion for summary judgment,
arguing that the issue of fraudulent conveyance relating to several specific real properties had
already been determined in a previous matter and that Doris’ estate and David were collaterally
estopped from contesting West Bay’s assertion of fraudulent transfer as to those properties.
Thus, West Bay sought to use the doctrine of collateral estoppel offensively. See O’Nesti v.
DeBartolo Realty Corp., 113 Ohio St. 3d 59, ¶ 14, citing Hann v. Carson, 462 F. Supp. 854, 859
(M.D.Fla.1978), fn. 2. “Offensive claim preclusion involves a situation in which a plaintiff seeks
to bar a defendant from raising any new defenses, while defensive claim preclusion includes any
scenario in which a defendant seeks to completely bar relitigation of a claim already determined
in a prior lawsuit.” Id, citing Hann at fn. 2.
{¶19} Res judicata is a doctrine of judicial preclusion. Grava v. Parkman Twp., 73 Ohio
St.3d 379, 381 (1995). There are two theories on which res judicata operates: claim preclusion
(estoppel by judgment) and issue preclusion (collateral estoppel). Id. As stated above, this
matter implicates the doctrine of collateral estoppel. “The doctrine of collateral estoppel states
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that ‘if an issue of fact or law actually is litigated and determined by a valid and final judgment,
such determination being essential to that judgment, the determination is conclusive in a
subsequent action between the parties, whether on the same or a different claim.’” Miller v.
Community Health Partners, 9th Dist. Lorain No. 12CA010165, 2013-Ohio-1935, ¶ 14, quoting
Hicks v. De La Cruz, 52 Ohio St. 2d 71, 77 (1977).
The doctrine of collateral estoppel is applicable when (1) the party against whom
estoppel is sought was either a party or in privity with a party to the prior action;
(2) a final judgment was rendered on the merits in the previous action following a
full and fair opportunity to litigate the issue; (3) the issue on which estoppel is
sought was either admitted or actually tried and decided in the prior action, and
was necessary to the final judgment; and (4) the issue in the current case is
identical to the issue involved in the prior suit.
Brunner v. RJ Lipps, Inc., 1st Dist. Hamilton No. C-150601, 2016-Ohio-3231, ¶ 9, citing
Monahan v. Eagle Picher Industries, Inc., 21 Ohio App. 3d 179, 180-181 (1st Dist.1984).
{¶20} In this case, West Bay’s supplemental motion for summary judgment argues that
although it was not a party to the Center Ridge case, an exception to the requirement of mutuality
should apply in the present matter because the defendants had a full and fair opportunity to
litigate the facts relating to the issue of fraudulent conveyance in the Center Ridge case.
However, “[c]ourts have generally been cautious in allowing the use of offensive collateral
estoppel.” Brunner at ¶ 10, citing Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 (1979) and
Goodson v. McDonough Power Equip., 2 Ohio St. 3d 193, 197 (1983). As the First District
explained:
Allowing a plaintiff to rely on a previous judgment obtained against a defendant
in an action to which the plaintiff was not a party, and that the plaintiff would not
have been bound by had the defendant prevailed, does not promote judicial
economy. Rather, it encourages plaintiffs to adopt a “wait and see” mentality.
Offensive collateral estoppel has also been viewed as unfair to a defendant. In
some situations, a defendant may lack incentive to vigorously defend an action,
but could be bound by a judgment obtained in that action in a later case in which
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the defendant had more at stake and would seek to present a more thorough
defense.
(Internal quotations and citations omitted.) Brunner at ¶ 10. Additionally, “[i]n many cases
within which a motion for summary judgment is presented relying upon collateral estoppel, there
may well have been attendant elements in the prior cause which could materially have altered the
prior judgment, in which event the common party to the prior cause should not be deprived of his
right to a trial by jury in the new cause.” Goodson at 201. Accordingly, the Supreme Court
outlined a number of factors that should be considered in the determination of whether the
application of collateral estoppel applies in the absence of mutuality. See Id. Those factors
include:
the tangible, as well as the intangible, elements which have their meaningful
effect upon the result of any cause, the nature of the claim and the claimants, as
well as the nature of the defendant; the amount involved in such claim; the
manner of the advocacy, often depending upon the amounts involved in such
cause; the philosophical elements surrounding the cause; the agreed settlement, if
any, in the matter; the vast differences between juries and their determinations of
issues of liability and damages; and the unwillingness to appeal a verdict, if such
would not be feasible.
Id.
{¶21} Regardless, we need not reach a determination on the issue of whether nonmutual
offensive collateral estoppel is appropriate in this case because a review of the record shows that
the judgment issued in the Center Ridge matter on which West Bay relies is not a final judgment.
Pursuant to Civ.R. 54(B),
any order or other form of decision, however designated, which adjudicates fewer
than all claims or the rights and liabilities of fewer than all the parties, shall not
terminate the action as to any of the claims or parties, and the order or other form
of decision is subject to revision at any time before the entry of judgment
adjudicating all the claims and the rights and liabilities of all the parties.
In this case, the judgment on which West Bay relies states in full:
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This cause came on for hearing on the 10th day of May, 2010, upon Plaintiff’s
Motion for Summary Judgment against Defendants Carl Nay, Doris Nay and
David. For good cause shown, the Court being fully advised in the premises
hereby renders judgment against Carl Nay, Doris Nay and David in favor of
Plaintiff in the amount of Five Thousand Three Hundred Ninety-Seven Dollars
($5,397.00) plus interest at five percent (5%) per annum and costs.
The motion is granted.
Notably, the trial court only issued a monetary judgment and did not make any findings
regarding fraudulent transfer. Nonetheless, a review of the record in the Center Ridge matter,
which was certified and made a part of the record in this matter, shows that the issue of
fraudulent transfer was the sole issue that Center Ridge submitted for summary judgment.
However, further review of the certified record indicates that Center Ridge alleged a number of
claims in its complaint including breach of contract, unjust enrichment, action on account,
promissory estoppel, constructive trust, fraudulent conveyances, and liability of attorney-in-fact.
Thus, even assuming without deciding that the judgment entry effectively disposed of Center
Ridge’s claim regarding fraudulent conveyance, it did not dispose of all the claims in the
complaint and it did not state that there was no just reason for delay pursuant to Civ.R. 54(B).
Accordingly, the judgment entry is not a final order and West Bay may not rely on it to assert
that Doris’ estate and David are collaterally estopped from contesting West Bay’s assertion of
fraudulent transfer as to those properties. See Miller, 2013-Ohio-1935 at ¶ 14, quoting Hicks, 52
Ohio St. 2d at 77; Brunner, 2016-Ohio-3231 at ¶ 8, citing Monahan, 21 Ohio App. 3d at 108-181.
{¶22} Therefore, we conclude that the trial court erred in granting summary judgment to
West Bay on the issue of fraudulent conveyance. The first assignment of error is sustained.
Assignment of Error II
The trial court never entered a monetary judgment against any defendant, as
a result, the judgments it has issued are not final and appealable.
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{¶23} In their second assignment of error, Doris’s estate, David, and Michael contend
that there is no final appealable order in this case since the trial court did not enter a monetary
judgment against any defendant. However, our resolution of the first assignment of error renders
assignment of error two moot and we decline to address it. See App.R. 12(A)(1)(c).
Assignment of Error III
The trial court erred in granting attorney’s fees to West Bay and Carl’s
estate.
Assignment of Error IV
The trial court erred in awarding pre-judgment and post-judgment interest
to West Bay.
Assignment of Error V
The trial court erred in appointing Kurt Anderson as a receiver for the
property at 501 Irving Parkway, Sheffield Lake, Ohio.
Assignment of Error VI
The trial court erred in dismissing Michael Bray’s claims without prejudice.
{¶24} In their third assignment of error, Doris’ estate, David, and Michael argue that the
trial court erred in granting attorney’s fees to West Bay and Carl’s estate. The fourth assignment
of error contends that the trial court erred in awarding pre-judgment and post-judgment interest
to West Bay. In their fifth assignment of error, they argue that the trial court erred in appointing
Anderson as a receiver for the property at 501 Irving Parkway, Sheffield Lake, Ohio. In their
sixth assignment of error, Doris’s estate, David, and Michael contend that the trial court erred
when it dismissed Michael’s claims without prejudice.
{¶25} In this case, the trial court awarded attorney fees and interest to West Bay and
Carl’s estate pursuant to its judgment entry in their favor on the claim of fraudulent conveyance.
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Similarly, the trial court appointed Anderson as a receiver for one of the properties based on the
trial court’s judgment on fraudulent conveyance. See R.C. 1336.07(A)(3)(b). Finally, the trial
court dismissed Michael’s pending counter-claims and cross-claims after it determined that they
were rendered moot and/or barred by the finding of fraudulent transfer.
{¶26} However, because we concluded that the trial court erred by granting summary
judgment on the fraudulent transfer claims, and because these orders cannot stand independently,
they must be vacated on remand. Thus, our resolution of the first assignment of error renders
assignments of error three, four, five, and six not ripe for review and we decline to address them.
See App.R. 12(A)(1)(c).
III.
{¶27} The first assignment of error is sustained. The second, third, fourth, fifth, and
sixth assignments of error are not yet ripe for review. Therefore, the judgment of the Lorain
County Court of Common Pleas is reversed and this matter is remanded for further proceedings
consistent with this decision.
Judgment reversed
and cause remanded.
There were reasonable grounds for this appeal.
We order that a special mandate issue out of this Court, directing the Court of Common
Pleas, County of Lorain, State of Ohio, to carry this judgment into execution. A certified copy of
this journal entry shall constitute the mandate, pursuant to App.R. 27.
Immediately upon the filing hereof, this document shall constitute the journal entry of
judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the
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period for review shall begin to run. App.R. 22(C). The Clerk of the Court of Appeals is
instructed to mail a notice of entry of this judgment to the parties and to make a notation of the
mailing in the docket, pursuant to App.R. 30.
Costs taxed to Appellee.
JULIE A. SCHAFER
FOR THE COURT
CALLAHAN, P. J.
HENSAL, J.
CONCUR.
APPEARANCES:
BRENT L. ENGLISH, Attorney at Law, for Appellants.
DANIEL A. COOK and MICHAEL R. NAKON, Attorneys at Law, for Appellee.