First-Knox Natl. Bank v. MSD Properties, Ltd.

[Cite as First-Knox Natl. Bank v. MSD Properties, Ltd., 2015-Ohio-4574.]
COURT OF APPEALS
KNOX COUNTY, OHIO
FIFTH APPELLATE DISTRICT
FIRST-KNOX NATIONAL BANK, et al., : JUDGES:
: Hon. W. Scott Gwin, P.J.
Plaintiffs - Appellees : Hon. Patricia A. Delaney, J.
: Hon. Craig R. Baldwin, J.
-vs- :
:
MSD PROPERTIES, LTD., et al., : Case No. 15CA6
:
Defendants - Appellants : OPINION
CHARACTER OF PROCEEDING: Appeal from the Knox County Court
of Common Pleas, Case No.
14OT11-0371
JUDGMENT: Affirmed in part;
Reversed and Remanded in part
DATE OF JUDGMENT: November 3, 2015
APPEARANCES:
For Plaintiffs-Appellees For Defendants-Appellants
KIM M. ROSE JACK L. MOSER, JR.
Critchfield, Critchfield & Johnston LTD. 107 W. Johnstown Road
10 S. Gay Street Gahanna, OH 43230
P.O. Box 469
Mount Vernon, OH 43050
Knox County, Case No. 15CA6 2
Baldwin, J.
{¶1} Appellants MSD Properties, LTD and Michael Shawn Dennis appeal a
judgment of the Knox County Common Pleas Court dismissing their claims against
appellees First-Knox National Bank and Sunny Green LLC.
STATEMENT OF THE FACTS AND CASE
{¶2} Appellants MSD Properties, LTD leased property from appellees, which
they in turn leased to Todd Hempfield as Unit 16, Inc., who operated a bar on the
premises known as “Banana Joe’s.” According to the pleadings in the case, in March of
2014, Todd Hempfield as Unit 16, Inc., approached appellee First Knox directly about
executing a lease agreement for the property.
{¶3} Appellees provided appellants and Hempfield notice of termination of the
lease on August 30, 2014, effective September 30, 2014. Appellants remained on the
property and on October 1, 2014, appellees served a three-day notice to vacate the
premises. When appellants failed to vacate, appellees filed a forcible entry and detainer
action in the Mount Vernon Municipal Court. Appellants filed counterclaims for
retaliatory eviction, tortious interference with a business relationship, and fraud.
Because the amount of damages sought in the counterclaims exceeded the
jurisdictional limits of the municipal court, and after the forcible entry and detainer action
was resolved in the municipal court, the case was transferred to the Knox County
Common Pleas Court.
{¶4} Following the transfer, appellees filed a motion to dismiss the complaint
pursuant to Civ. R. 12(B)(6). Appellants sought leave to amend the pleadings, which
Knox County, Case No. 15CA6 3
the trial court did not expressly overrule but implicitly overruled by granting appellees'
Civ. R. 12(B)(6) motion to dismiss. The trial court dismissed the counterclaims on the
basis that retaliatory eviction is not actionable under R.C. 5321.02 for a commercial
lease, appellants had not alleged a set of facts that appellees interfered with a business
relationship between them and a third party, and appellants failed to plead fraud with
specificity.
{¶5} Appellants assign four errors on appeal:
{¶6} “I. THE TRIAL COURT ERRED, ABUSED ITS DISCRETION AND
MISCONSTRUED ITS APPLICATION OF OHIO RULES OF CIVIL PROCEDURE 15(A)
BY IMPLICITLY DENYING APPELLANTS’ MOTION FOR LEAVE TO AMEND
APPELLANTS’ ANSWER AND COUNTERCLAIMS.
{¶7} “II. THE TRIAL COURT ERRED, ABUSED ITS DISCRETION AND
MISCONSTRUED ITS APPLICATION OF OHIO RULES OF CIVIL PROCEDURE 15(A)
BY REFUSING TO GRANT APPELLANTS’ MOTION FOR LEAVE TO AMEND
APPELLANTS’ ANSWER AND COUNTERCLAIMS.
{¶8} “III. THE TRIAL COURT ERRED, ABUSED ITS DISCRETION AND
MISCONSTRUED ITS APPLICATION OF OHIO RULES OF CIVIL PROCEDURE
12(B)(6) WHEN IT GRANTED PLAINTIFFS’ FIRST MOTION TO DISMISS
DEFENDANTS’ COUNTERCLAIMS FOR TORTIOUS INTERFERENCE WITH
BUSINESS RELATIONS.
{¶9} “IV. THE TRIAL COURT ERRED, ABUSED ITS DISCRETION AND
MISCONSTRUED ITS APPLICATION OF OHIO RULES OF CIVIL PROCEDURE
Knox County, Case No. 15CA6 4
12(B)(6) WHEN IT GRANTED PLAINTIFFS’ FIRST MOTION TO DISMISS
DEFENDANTS’ COUNTERCLAIMS FOR FRAUD.”
I., II.
{¶10} We address appellants’ first and second assignments of error together, as
both claim error in the trial court’s implicit overruling of their motion to amend their
answer and counterclaim.
{¶11} Civ. R. 15(A) provides in pertinent part:
A party may amend its pleading once as a matter of
course within twenty-eight days after serving it or, if the
pleading is one to which a responsive pleading is required
within twenty-eight days after service of a responsive
pleading or twenty-eight days after service of a motion under
Civ.R. 12(B), (E), or (F), whichever is earlier. In all other
cases, a party may amend its pleading only with the opposing
party's written consent or the court's leave. The court shall
freely give leave when justice so requires. Unless the court
orders otherwise, any required response to an amended
pleading must be made within the time remaining to respond
to the original pleading or within fourteen days after service of
the amended pleading, whichever is later.
{¶12} While Civ.R. 15(A) favors a liberal policy when the trial court is confronted
with a motion to amend a pleading, the role of this Court is to determine whether the
trial court's decision was an abuse of discretion, not whether it was the same decision
Knox County, Case No. 15CA6 5
we might have made. Wilmington Steel vs. Cleveland Electric Illuminating Company, 60
Ohio St. 3d 120, 122, 573 N.E.2d 622 (1991). The term “abuse of discretion” connotes
more than an error or law or judgment; it implies that the court's attitude is
unreasonable, arbitrary, or unconscionable. Id.
{¶13} Appellants sought to amend their counterclaims on February 6, 2015, to
“address issues raised in Plaintiffs’ Motion to Dismiss and related pleadings.” They
further sought to add a cause of action for voluntary bailment and conversion.
{¶14} While appellants’ motion states that the amended counterclaims are
attached to the motion, the proposed amendment is not attached to the original motion
in the file as transmitted to this Court for review. Appellants did append a file-stamped
copy of the amended counterclaims to their brief. However, appellants did not plead
fraud with specificity in this amended document, and their cause of action for conversion
and bailment was based on facts known to them at the time they filed their original
answer and counterclaims. The trial court did not abuse its discretion in overruling the
motion to amend the answer and counterclaims.
{¶15} The first and second assignments of error are overruled.
III.
{¶16} In their third assignment of error, appellants argue the court erred in
dismissing their cause of action for tortious interference with a business relationship.
{¶17} To dismiss a complaint for failure to state a claim upon which relief may be
granted under Civ.R. 12(B)(6), it must be shown “beyond doubt that the plaintiff can
prove no set of facts in support of his claim which would entitle him to relief.” York v.
Ohio State Hwy. Patrol, 60 Ohio St. 3d 143, 144, 573 N.E.2d 1063 (1991). In applying
Knox County, Case No. 15CA6 6
this standard, all factual allegations in the complaint are taken as true and all
reasonable inferences are made in favor of the nonmoving party. Appellate review of a
Civ. R. 12(B)(6) dismissal is de novo. Hunt v. Marksman Prod. Div. of S/R Industries,
Inc., 101 Ohio App. 3d 760, 656 N.E.2d 726 (1995).
{¶18} Civ. R. 12(B)(6) further sets forth what the trial court may consider in ruling
on a motion to dismiss:
When a motion to dismiss for failure to state a claim
upon which relief can be granted presents matters outside
the pleading and such matters are not excluded by the court,
the motion shall be treated as a motion for summary
judgment and disposed of as provided in Rule 56. Provided
however, that the court shall consider only such matters
outside the pleadings as are specifically enumerated in Rule
56. All parties shall be given reasonable opportunity to
present all materials made pertinent to such a motion by
Rule 56.
{¶19} The elements of tortious interference with a business relationship are: (1)
the existence of a prospective business relationship; (2) the wrongdoer's knowledge
thereof; (3) an intentional interference causing a breach or termination of the
relationship; and (4) damages resulting therefrom. Gen. Medicine, P.C. v. Morning View
Care Ctr ., 5th Dist. Tuscarawas No. 2003AP12–0088, 2004–Ohio–4669, ¶ 48..
{¶20} Appellants’ counterclaim alleged that appellees intentionally disrupted the
relationship between MSD and Unit 16, Inc. by entering into a “second lease” with Unit
Knox County, Case No. 15CA6 7
16, Inc. for the purpose of conducting the business known as Banana Joe’s. The claim
further alleged that appellees interfered with the business relationship between MSD
and Unit 16 by locking MSD out of possession of the premises. The counterclaim
alleged that appellees knowingly leased the premises to MSD for the specific purpose of
MSD subleasing to Unit 16, for the operation of the business known as Banana Joe’s.
Appellants alleged that they had been damaged by appellees’ actions. These
allegations, when taken as true and construing all inferences in favor of appellants, set
forth a claim for tortious interference with a business relationship.
{¶21} In the trial court and before this Court, appellees rely on the findings of
fact of the Mount Vernon Municipal Court and the evidence presented in that case to
support their argument that appellants cannot demonstrate entitlement to relief for
tortious interference with a business relationship. However, appellees’ argument relies
on evidence outside the pleadings. In the instant case, the trial court did not convert the
motion to a motion for summary judgment and dispose of it in accordance with Civ. R.
56, and thus could not consider matters outside of the pleadings. Appellees’ argument
is in the nature of a claim that the issues raised by appellants are res judicata; however,
res judicata cannot be raised in a Civ. R. 12(B)(6) motion. See Wellman v. Wheeling &
Lake Erie Railway Co., 5th Dist. Stark No. 999CA00161, 2000 WL 93986 (December
29, 1999). The court erred in granting appellees’ Civ. R. 12(B)(6) motion as to the claim
for tortious interference with a business relationship.
{¶22} Appellants’ third assignment of error is sustained.
Knox County, Case No. 15CA6 8
IV.
{¶23} In their fourth assignment of error, appellants argue that the court erred in
dismissing their claim for fraud for lack of specificity.
{¶24} To prove fraud, a plaintiff must establish the following elements: (1) a
representation, or silence where there is a duty to disclose, (2) which is material to the
transaction, (3) made falsely, with knowledge of its falsity, or with such utter disregard
as to its truth that knowledge may be inferred, (4) with the intent to mislead another into
relying on it, (5) justifiable reliance on the representation, and (6) resulting injury
proximately caused by the reliance. E.g., Williams v. Aetna Financial Co., 83 Ohio St. 3d
464, 475, 700 N.E.2d 859 (1998).
{¶25} In addition, a plaintiff alleging fraud must plead with particularity the
circumstances constituting fraud. Civ. R. 9(B). The circumstances constituting fraud
include the time, place, and content of the false representation; the fact misrepresented;
the identification of the individual giving the false representation; and the nature of what
was obtained or given as a consequence of the fraud. Aluminum Line Products Co. v.
Smith Roofing Co., Inc, 109 Ohio App. 3d 246, 259, 671 N.E.2d 1343 (1996).
{¶26} Appellants’ claim for fraud does not set forth the facts constituting their
fraud claim. They did not set forth the time, place, or content of the false
representation, and generally allege that they were misled by appellees at the time they
entered the lease. The claim does not set forth the fact misrepresented or the nature of
what was obtained or given as a consequence of the fraud. The court did not err in
dismissing the fraud claim for failure to plead with specificity as require by Civ. R. 9(B).
{¶27} The fourth assignment of error is overruled.
Knox County, Case No. 15CA6 9
{¶28} The judgment of the Knox County Common Pleas Court dismissing
appellant’s claim for tortious interference with a business relationship is reversed. The
judgment is affirmed in all other respects. This cause is remanded to that court for
further proceedings according to law. Costs are to be divided equally between the
parties.
By: Baldwin, J.
Gwin, P.J. and
Delaney, J. concur.