Ettayem v. Ramsey

[Cite as Ettayem v. Ramsey, 2019-Ohio-675.]
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
Ashraf A. Ettayem, :
Plaintiff-Appellant, :
No. 17AP-155
v. : (C.P.C. No. 16CV-2803)
David W. Ramsey et al., : (REGULAR CALENDAR)
Defendants-Appellees. :
D E C I S I O N
Rendered on February 26, 2019
On brief: Ashraf A. Ettayem, pro se. Argued: Ashraf A.
Ettayem.
On brief: Newhouse, Prophater, Kolman & Hogan, LLC,
Michel Jendretzky, and D. Wesley Newhouse, for appellees
David W. Ramsey and Guaranteed Receivership Services,
LLC. Argued: Michel Jendretzky.
On brief: Thomas R. Merry Co., L.P.A. and Thomas R.
Merry, for appellee The Huntington National Bank. Argued:
Thomas R. Merry.
On brief: Cooper & Elliott, LLC and Barton R. Keyes, for
appellees Shively, Davis, Guaranteed Asset Management,
Guaranteed Brokerage Services, and Guaranteed Realty
Services. Argued: Barton R. Keyes.
APPEAL from the Franklin County Court of Common Pleas
HORTON, J.
{¶ 1} Plaintiff-appellant, Ashraf A. Ettayem, appeals from a judgment of the
Franklin County Court of Common Pleas that granted the motions to dismiss of all
defendants-appellees. For the following reasons, we affirm the judgment.
No. 17AP-155 2
I. FACTS AND PROCEDURAL HISTORY
{¶ 2} In December 2007 and January 2008, Limited Investment Group ("Limited
Investment") sought financing from appellee, Huntington National Bank ("Huntington"),
to remodel a shopping plaza owned by Limited Investment located at 3150-3218 Allegheny
Avenue ("Allegheny property") in Columbus, Ohio. (Am. Comp. at ¶ 16.) Appellant is the
sole shareholder of Limited Investment. (Am. Compl. at ¶ 1.) A second property owned by
Limited Investment, located at 329 S. Central Avenue ("Central Avenue property") was
offered as collateral. (Am. Compl. at ¶ 19.) The Central Avenue property was owned by
Limited Investment and housed a Shop N Save grocery/discount store. (Am. Compl. at
¶ 56.)
{¶ 3} Appellant signed the loan documents on October 1, 2008, and $535,000 of
the $900,000 loan was disbursed. (Am. Compl. at ¶ 22, 26.) In July 2009, Huntington
informed appellant that due to economic conditions and the lack of Huntington's interest
to finance shopping malls, Huntington would not make any further disbursements. (Am.
Compl. at ¶ 42-43.)
{¶ 4} In May 2009, a fire caused damage to part of the shopping mall under
construction and appellant received a check from the insurance company written to
Limited Investment and Huntington for $139,000. Appellant gave the check to Huntington
without endorsing it and believes Huntington applied the proceeds to the outstanding
balance on the loan. (Am. Compl. at ¶ 45-48.) Appellant contends that Huntington told him
that if he made interest-only payments, it would not foreclose on Limited Investment's
assets. (Am. Compl. at ¶ 50.)
{¶ 5} Huntington sued Limited Investment for its default on the loan and
foreclosed on the Central Avenue property. (Am. Compl. at ¶ 56.) Limited Investment filed
an action in the Franklin County Court of Common Pleas against Huntington alleging
breach of contract, fraud, and replevin and sought injunctive relief (Franklin C.P. No. 10CV-
3000). (Am. Compl. at ¶ 52.) Huntington and the Franklin County Treasurer sued Limited
Investment in Franklin C.P. Nos. 12CV1602 and 12CV1454, which were both consolidated
with Franklin C.P. No. 10CV3000 ("Consolidated Cases"). (Am. Compl. at ¶ 57.)
Defendant-appellee, David Ramsey, was appointed as receiver. (Am. Compl. at ¶ 57.)
Appellant alleged that Ramsey used Patrick Shivley, Guaranteed Receivership Services
No. 17AP-155 3
LLC, Guaranteed Brokerage Services, Guaranteed Asset Management Services, and
Guaranteed Realty Services to execute his duties as the appointed receiver. Appellant
further alleged that these defendants are all subject to Loc.R. 66, owe appellant a fiduciary
duty as a receiver, and they exceeded their authority as a receiver. (Am. Compl. at ¶ 59, 63-
64, 100, 120.) The Consolidated Cases remain pending because they are stayed pursuant to
bankruptcy filing.
{¶ 6} On March 22, 2016, appellant filed a complaint and then filed an amended
complaint on April 19, 2016. The amended complaint named Ramsey, Shivley, Bill Davis,
Guaranteed Receivership Services, LLC, Guaranteed Brokerage Services, Guaranteed Asset
Management, Guaranteed Realty Services ("Guaranteed Defendants"), and Huntington as
defendants. The amended complaint alleged breach of fiduciary duty, conversion, and
unjust enrichment against the Guaranteed Defendants, tortious interference with contract
and tortious interference with business opportunities against all the defendants, conversion
and unjust enrichment against Huntington, theft, fraud, and civil conspiracy, intentional
and negligent infliction of emotional distress against all the defendants. The claims related
to alleged damages resulting from the disposition of the Allegheny and Central Avenue
properties and the assets located at the Central Avenue property in the Shop N Save store.
{¶ 7} In May 2016, the defendants each filed a motion to dismiss and the trial court
granted each motion and dismissed appellant's amended complaint on February 2, 2017.
II. ASSIGNMENT OF ERROR
{¶ 8} Appellant filed a timely notice of appeal and raised the following assignment
of error for our review:
The trial court erred in granting defendants' motion to dismiss
plaintiff's first amended complaint.
III. ANALYSIS
{¶ 9} In his assignment of error, appellant contends that the trial court erred in
granting appellees' motions to dismiss and dismissing his amended complaint. A Civ.R.
12(B)(6) motion to dismiss for failure to state a claim is procedural and "tests the sufficiency
of the complaint." Volbers-Klarich v. Middletown Mgt., 125 Ohio St.3d 494, 2010-Ohio-
2057, ¶ 11, citing Assn. for Defense of Washington Local School Dist. v. Kiger, 42 Ohio
St.3d 116, 117 (1989). In order for a trial court to grant a motion to dismiss for failure to
No. 17AP-155 4
state a claim upon which relief may be granted, "it must appear beyond doubt from the
complaint that the plaintiff can prove no set of facts entitling him to recovery." O'Brien v.
Univ. Community Tenants Union, 42 Ohio St.2d 242 (1975), syllabus. In construing the
complaint upon a Civ.R. 12(B)(6) motion, a court must presume all factual allegations
contained in the complaint to be true and make all reasonable inferences in favor of the
nonmoving party. State ex rel. Turner v. Houk, 112 Ohio St.3d 561, 2007-Ohio-814, ¶ 5.
When considering a motion to dismiss, pursuant to Civ.R. 12(B)(6), the court looks only to
the complaint to determine whether the allegations are legally sufficient to state a claim.
Springfield Fireworks, Inc. v. Ohio Dept. of Commerce, 10th Dist. No. 03AP-330, 2003-
Ohio-6940, ¶ 12. An appellate court uses a de novo standard of review to determine whether
the dismissal of a complaint pursuant to Civ.R. 12(B)(6) was proper. Woods v. Riverside
Methodist Hosp., 10th Dist. No. 11AP-689, 2012-Ohio-3139, ¶ 9.
{¶ 10} Appellant filed the amended complaint on his behalf and allegedly on behalf
of Shop N Save. Appellant is a pro se litigant and not an attorney authorized to practice law
and therefore, cannot assert claims on behalf of Shop N Save. Bank of N.Y. v. Miller, 185
Ohio App.3d 163, 2009-Ohio-6117 (5th Dist.).
{¶ 11} In his first four causes of action, appellant alleged breach of fiduciary duty,
conversion, unjust enrichment, and tortious interference with contract against the
Guaranteed Defendants. Appellant alleges that all the Guaranteed Defendants acted as
receivers and breached a duty to him and exceeded the authority granted to them pursuant
to Loc.R. 66. Appellant alleges the Guaranteed Defendants converted his personal and
business property for their own benefit. Appellant's unjust enrichment claim is based on
his allegation that the Guaranteed Defendants unlawfully obtained a financial benefit as a
consequence of an unauthorized payment of sale proceeds and by misappropriating his
personal and business properties. Finally, appellant alleges that the Guaranteed
Defendants interfered with his purchase and management contracts with Jamal Qutifan,
who operated the Shop N Save and had a lease agreement with Limited Investment.
{¶ 12} The trial court held that appellant's claims against the Guaranteed
Defendants failed to state a claim upon which relief may be granted because appellant did
not obtain leave from the appointing court to sue the receiver. The trial court acknowledged
that, generally, courts have held that a party may not file an action against a receiver unless
No. 17AP-155 5
prior leave is obtained from the appointing court. This policy is known as the "Barton"
doctrine, adopted in Barton v. Barbour, 104 U.S. 126, 128 (1881).
{¶ 13} In 1887, Congress enacted 28 U.S.C. 959, in response to Barton. Appellant
argues that this law and exception to the leave requirement applies to these facts. 28 U.S.C.
959 provides that "[t]rustees, receivers or managers of any property * * * may be sued,
without leave of the court appointing them, with respect to any of their acts or transactions
in carrying on business connected with such property." The courts have distinguished
"carrying on business" from collecting and liquidating assets. The purpose of Section 959
is to redress torts committed in furtherance of the bankrupt's business. Bell v. McLemore
& Young PLLC, M.D.Tenn. 3:17-CV-959 (Nov. 2, 2017). Section 959 is a limited exception
to the Barton doctrine that permits suits against a trustee or receiver for actions taken while
"carrying on business." However, Section 959 "does not apply to suits against the trustee
for actions taken while administering the estate." Allard v. Weitzman (In re DeLorean
Motor Co.), 991 F.2d 1236, 1241 (May 3, 1993). 28 U.S.C. 959 is inapplicable to these facts,
it does not provide an exception to the leave requirement for appellant.
{¶ 14} Appellant also argues that the Barton case itself provides an exception to the
leave requirement for a situation involving the receiver acting outside the scope of his
authority. Appellant contends that "if by mistake or wrongfully, the receiver takes
possession of property belonging to another, such person may bring suit therefor against
him personally as a matter of right; for in such case the receiver would be acting ultra vires."
(Appellant's Brief at 17-18.) Appellant contends that he can file a claim against the receiver
personally. In Satterfield v. Malloy, 700 F.3d 1231 (10th Cir.2012), the Tenth Circuit
discussed the ultra vires exception to the Barton doctrine. In Satterfield, the plaintiff
attempted to sue the court-appointed trustee without first obtaining permission from the
bankruptcy court. The Tenth Circuit applied the Barton doctrine despite the allegation that
the trustee's actions were ultra vires. The court stated that the ultra vires exception is most
commonly relied upon when a trustee wrongfully seizes possession of a third party's assets.
However, the court held "[i]n suits brought by a debtor against the trustee, claims based on
acts that are related to the official duties of the trustee are barred by the Barton doctrine
even if the debtor alleges such acts were taken with improper motives." Satterfield at 1236.
Satterfield did not involve an allegation that the trustee had wrongfully seized assets of
No. 17AP-155 6
another, and similarly, in this case, appellant alleges the receiver improperly seized his
property, not that of a third party.
{¶ 15} Appellant cites cases where the receiver can be or was sued in his personal
capacity. However, the courts still require leave from the appointing court to do so.
Appellant relies on Murphy v. Holbrook, 20 Ohio St. 137, 142-43 (1870). In Murphy, the
court appointed receivers to operate a railroad and an employee of the railroad was killed
at work during the receivers' administration. The plaintiff was granted leave of court to file
an action against the receivers. The Supreme Court found that when granted leave of court,
a receiver is not protected "from liability for injuries arising out of the prosecution of their
business." Murphy at 145. However, the Supreme Court required leave of the appointing
court.
{¶ 16} Here, appellant filed suit against the Guaranteed Defendants based on their
actions as receivers in the Consolidated Cases without first obtaining leave from that court
to file this action. There is no allegation in the complaint that appellant obtained the
necessary leave of court. Therefore, since appellant did not obtain leave from the appointing
court to sue the receivers, he could not obtain relief on his breach of fiduciary duty,
conversion, unjust enrichment, and tortious interference with contract against the
Guaranteed Defendants.
{¶ 17} Appellant's causes of action four through nine assert tortious interference
and tortious interference with business opportunities, theft and fraud against all the
defendants, conversion and unjust enrichment against Huntington. These causes of action
arise from the disposition of the Central Avenue property and the property of the Shop N
Save. Appellant does not own the Central Avenue property. Appellant stated in his
complaint that Limited Investment owned the two real properties. (Am. Compl. at ¶ 16, 19.)
Appellant's complaint states that Jamal Quitifan, operated the Shop N Save pursuant to a
Management Agreement and a Lease Agreement with Limited Investment. (Am. Compl. at
¶ 56.) Appellant alleges that he was attempting to sell his interest in the Shop N Save
Corporation to Quitifan. (Am. Compl. at ¶ 56.)
{¶ 18} Appellant alleges that defendants "took control of the personal property
located at the Shop N Save operated within the South Central Avenue property, which
belonged to Plaintiff. The personal property included without limitation the cash
No. 17AP-155 7
(Approximately $400) and checkbooks located at the Shop N Save on South Central
Avenue. It also included without limitation the store's fixtures and its entire inventory,
which the defendants sold on August 2012. The defendants also took all of plaintiff's
personal and business records and documents." (Am. Compl. at ¶ 79.)
{¶ 19} In order to commence a lawsuit, a party must have both standing and
capacity to sue. Mousa v. Mt. Carmel Health Sys., 10th Dist. No. 12AP-737, 2013-Ohio-
2661, ¶ 12. A person lacks standing unless he has a real interest in the subject matter of the
action. Id. Capacity to sue involves "a determination as to whether an individual may
properly sue, either as an entity or on behalf of another." Id. at ¶ 13. Standing is a
jurisdictional requirement and capacity to sue is not but, rather, relates to the party's right
to appear in a court. Id. "If a party to an action is not the real party in interest, such party
lacks standing to prosecute the action." Deutsche Bank Natl. Trust Co. v. Cassens, 10th
Dist. No. 09AP-865, 2010-Ohio-2851, ¶ 8, citing Bank of New York v. Stuart, 9th Dist. No.
06CA008953, 2007-Ohio-1483, ¶ 9.
{¶ 20} However, any right to assert such causes of action belongs to the corporation
which owned the Central Avenue property and the Shop N Save property or was the party
to the existing or prospective contract. Appellant, as the sole shareholder of Limited
Investment, did not have standing to assert these claims and Limited Investment and/or
Shop N Save are not parties to this action. "[O]nly a corporation and not its shareholders
can complain of an injury sustained by, or wrong done to, the corporation." Granata v.
Stamatakos, 10th Dist. No. 13AP-424, 2013-Ohio-5548, ¶ 15. Further, a shareholder does
not have an independent cause of action from the corporation " 'where there is no showing
that he has been injured in any capacity other than in common with all other shareholders
as a consequence of the wrongful actions of a third party directed towards the
corporation.' " Id., quoting Adair v. Wozniak, 23 Ohio St.3d 174, 178 (1986). Generally,
even if there is a single shareholder, that is insufficient to pierce the corporate veil and treat
the shareholder and the corporation as a single entity. Granata at ¶ 15, citing Starner v.
Guardian Industries, 143 Ohio App.3d 461 (10th Dist.2001).
{¶ 21} Although appellant argues to this court that the Shop N Save property
belonged to him personally, the complaint states that the Shop N Save is a separate entity
and it owns the fixtures and inventory. Appellant has not alleged any individual harm, other
No. 17AP-155 8
than the harm alleged to the corporation. Since appellant does not have standing to bring
these claims, the trial court did not err in finding he did not state a claim upon which relief
may be granted.
{¶ 22} Finally, we note that appellant failed to provide the contracts that he alleges
were interfered with by defendants. The elements of tortious interference with a contract
are: "(1) the existence of a contract, (2) the wrongdoer's knowledge of the contract, (3) the
wrongdoer's intentional procurement of the contract's breach, (4) the lack of justification,
and (5) resulting damages." Fred Siegel Co., L.P.A. v. Arter & Hadden, 85 Ohio St.3d 171,
176 (1999). Without a contract in evidence, the first element of the tort has not been
demonstrated. Appellant also did not allege with particularity any business opportunity
with which defendants interfered for his tortious interference with business opportunities.
{¶ 23} In his tenth cause of action, appellant asserts a claim for intentional infliction
of emotional distress against all defendants. Appellant alleges that defendants' extreme and
outrageous conduct intentionally or recklessly caused him severe emotional distress. (Am.
Compl. at ¶ 165.) "To establish a claim for intentional infliction of emotional distress, a
plaintiff must demonstrate that the defendant, through extreme and outrageous conduct,
intentionally or recklessly caused the plaintiff severe emotional distress." Mowery v.
Columbus, 10th Dist. No. 05AP-266, 2006-Ohio-1153, ¶ 48.
{¶ 24} The court initially determines as a matter of law whether conduct is "extreme
and outrageous." Morrow v. Reminger & Reminger Co. L.P.A., 183 Ohio App.3d 40, 2009-
Ohio-2665 (10th Dist.), ¶ 48, citing Bell v. Ohio State Bd. of Trustees, 10th Dist. No. 06AP-
1174, 2007-Ohio-2790, ¶ 24, citing Crawford v. ITT Consumer Fin. Corp., 653 F.Supp.
1184, 1192 (S.D.Ohio 1986). The court may dismiss a claim for intentional infliction of
emotional distress when the alleged conduct does not reach the level of extreme and
outrageous. Morrow at ¶ 48. The Supreme Court in Yeager v. Local Union 20, 6 Ohio St.3d
369, 374-75, overruled on other grounds, quoted the standard for "extreme and
outrageous" conduct citing the Restatement of the Law 2d, Torts, Section 46, comment d
(1965), as follows:
It has not been enough that the defendant has acted with an
intent which is tortious or even criminal, or that he has
intended to inflict emotional distress, or even that his conduct
has been characterized by 'malice,' or a degree if aggravation
No. 17AP-155 9
which would entitle the plaintiff to punitive damages for
another tort. Liability has been found only where the conduct
has been so outrageous in character, and so extreme in degree,
as to go beyond all possible bounds of decency, and to be
regarded as atrocious, and utterly intolerable in a civilized
community. Generally, the case is one in which the recitation
of the facts to an average member of the community would
arouse his resentment against the actor, and lead him to
exclaim, 'Outrageous!'
The liability clearly does not extend to mere insults,
indignities, threats, annoyances, petty oppressions, or other
trivialities.
{¶ 25} In this case, the trial court found that the alleged conduct does not reach the
level of extreme and outrageous conduct. Here, the claims all relate to the disposition of the
real property owned by Limited Investment and the business property of the Shop N Save
and are the result of the foreclosure. The conduct does not demonstrate that the defendants
acted in a manner as to "go beyond all possible bounds of decency, and to be regarded as
atrocious, and utterly intolerable in a civilized community." The trial court did not err in
dismissing appellant's claim for intentional infliction of emotional distress against all
defendants.
{¶ 26} In his eleventh cause of action, appellant asserts a claim for negligent
infliction of emotional distress against all defendants. Appellant contends that defendants
negligently caused emotional distress or knew or should have known that their action or
inaction would result in serious emotional distress to him. (Am. Compl. at ¶ 168.)
{¶ 27} In Paugh v. Hanks, 6 Ohio St.3d 72 (1983), the Supreme Court of Ohio
explained the requirement of "serious" emotional distress, as follows:
[S]erious emotional distress describes emotional injury which
is both severe and debilitating. Thus, serious emotional
distress may be found where a reasonable person, normally
constituted, would be unable to cope adequately with the
mental distress engendered by the circumstances of the case.
{¶ 28} In High v. Howard, 64 Ohio St.3d 82 (1992), overruled on other grounds,
the Supreme Court of Ohio set forth that "[i]n the absence of statutory provision therefor,
Ohio courts have limited recovery for negligent infliction of emotional distress to such
No. 17AP-155 10
instances as where one was a bystander to an accident or was in fear of physical
consequences to his own person." Id. at 85-86, citing Paugh. In this case, the alleged
emotional distress was not the result of appellant being a bystander to an accident or was
in fear of physical consequences to himself, it was the result of the disposition of the real
property owned by Limited Investment and the business property of the Shop N Save and
are the result of the foreclosure. The trial court did not err in finding that appellant's
complaint did not state a claim for relief regarding his negligent infliction of emotional
distress claim.
{¶ 29} In his twelfth cause of action, appellant seeks to hold Ramsey, Shively and
Davis personally liable for the acts of their limited liability companies. Generally, a member
of a limited liability company has no personal liability "by reason of being a member or
manager of the limited liability company." R.C. 1705.48. A limited exception to this general
rule has been established by piercing the corporate veil. "Shareholders may thus be held
liable for their own bad acts notwithstanding the protections afforded by the corporate form
when they use the corporation 'for criminal or fraudulent purposes' to the detriment of a
third party." Dombroski v. WellPoint, Inc., 119 Ohio St.3d 506, 510, 2008-Ohio-4827, ¶ 17,
citing Belvedere Condominium Unit Owners' Assn. v. R.E. Roark Cos., Inc., 67 Ohio St.3d
274, 289 (1993). Piercing the corporate veil is a "rare exception" and only used "in the case
of fraud and certain other exceptional circumstances." Dombroski, quoting Dole Food Co.
v. Patrickson, 538 U.S. 468, 475 (2003), superseded in part by statute on other grounds.
{¶ 30} In Belvedere, the Supreme Court of Ohio developed a three-pronged test for
courts to use when deciding whether to pierce the corporate veil, as follows:
The corporate form may be disregarded and individual
shareholders held liable for wrongs committed by the
corporation when (1) control over the corporation by those to
be held liable was so complete that the corporation has no
separate mind, will, or existence of its own, (2) control over
the corporation by those to be held liable was exercised in
such a manner as to commit fraud or an illegal act against the
person seeking to disregard the corporate entity, and (3)
injury or unjust loss resulted to the plaintiff from such control
and wrong.
No. 17AP-155 11
{¶ 31} In Dombroski, the Supreme Court of Ohio modified the second prong of the
Belvedere test and determined that: "To fulfill the second prong of the Belvedere test for
piercing the corporate veil, the plaintiff must demonstrate that the defendant shareholder
exercised control over the corporation in such a manner as to commit fraud, an illegal act,
or a similarly unlawful act." Id. at syllabus.
{¶ 32} Appellant failed to allege a sufficient factual content that permits a
reasonable inference that the corporate veil should be pierced and he did not address any
of the elements of the veil-piercing doctrine. Appellant alleges that: "They have engaged in
fraudulent conduct, and have attempted to conceal it from scrutiny." (Am. Compl. at ¶ 97.)
He then lists other cases of fraud of Ramsey and Shivley. He alleges that the Guaranteed
Defendants share office space. (Am. Compl. at ¶ 61.) Finally, appellant alleges that Ramsey
and Shivley sign legal documents for Davis. (Am. Compl. at ¶ 66.) However, these
allegations are not allegations regarding the elements of the test to pierce the corporate veil.
The trial court did not err in finding that appellant failed to state a claim against Ramsey,
Shivley, and Davis personally for the actions taken by the limited liability corporations. As
such, appellant's assignment of error is overruled.
IV. CONCLUSION
{¶ 33} Finding no error in the trial court's dismissal of appellant's complaint for
failure to state a claim upon which relief could be granted, we overrule appellant's
assignment of error and the judgment of the Franklin County Court of Common Pleas is
affirmed.
Judgment affirmed.
KLATT, P.J. and BRUNNER, J., concur.
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