Perkins v. Rieser

[Cite as Perkins v. Rieser, 2016-Ohio-728.]
IN THE COURT OF APPEALS OF OHIO
SECOND APPELLATE DISTRICT
MONTGOMERY COUNTY
KATHLEEN E. PERKINS, Executrix of :
The Estate of Ruth M. Day, deceased :
: Appellate Case No. 26616
Plaintiff-Appellant :
: Trial Court Case No. 2012-CV-8688
v. :
: (Civil Appeal from
JOHN PAUL RIESER, et al. : Common Pleas Court)
:
Defendants-Appellees :
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OPINION
Rendered on the 26th day of February, 2016
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JAMES R. HARTKE, Atty. Reg. No. 0011584, 917 Main Street, Suite 400, Cincinnati,
Ohio 45202
Attorney for Plaintiff-Appellant, Kathleen Perkins
JOHN PAUL RIESER, Atty. Reg. No. 0017850, and DIANNE MARX, Atty. Reg. No.
0022988, Rieser & Marx LLC, 7925 Graceland Street, Dayton, Ohio 45459-3834
Attorneys for Defendants-Appellees, John Paul Rieser, et al.
GREGORY S. PAGE, Atty. Reg. No. 0065264, 7501 Paragon Road, Lower Level, Dayton,
Ohio 45459
Attorney for Defendant-Appellees, Disher Furniture, Inc., et al..
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HALL, J.
{¶ 1} Kathleen Perkins, executor of the Estate of Ruth M. Day, appeals the entry
of summary judgment on her claims and the award made against her as sanction for
frivolous conduct. Finding no error, we affirm.
I. Background
{¶ 2} When Ruth Day died in 2001, all of her assets were held in a trust that she
and her husband, Louis Day, who had already died, had established. The beneficiaries
of the trust are Day’s three daughters, Diana Kallar, Carole Disher, and Kathleen Perkins.
And the trust’s co-trustees were John Paul Rieser and Michael Disher.
{¶ 3} In 2004, Perkins filed an action in the probate court against the co-trustees
for accounting and removal. In response, the co-trustees filed a declaratory-judgment
action in the general division of the court of common pleas for a declaration concerning
the disposition of the trust assets. The beneficiaries of the trust were parties to that action.
{¶ 4} The parties agreed to mediation and reached a settlement agreement. This
agreement was incorporated into a 2005 final judgment. Under the settlement agreement,
in addition to agreeing how the trust property would be distributed, the parties agreed to
release all claims—“whether now known or unknown”—that they had against each other.
Settlement Agreement, Release and Indemnification, ¶ 6. The trust assets were
distributed among Day’s three daughters according to the terms of the settlement
agreement.
{¶ 5} Ruth Day also had a will that left any assets that she owned at her death to
the trust. Likely because all of Day’s assets were already in the trust, the will was not
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submitted to probate at the time of the settlement agreement. But in 2007, Kathleen
Perkins filed an application in the probate court to probate the will. A magistrate
recommended that Perkins be appointed executor of Ruth Day’s estate. Carole Disher
filed objections, claiming that she lacked notice of Perkins’s application. But the probate
court overruled the objections. In February 2008, the court appointed Perkins executor.
{¶ 6} In September 2007, while the objections were pending in the probate court,
Perkins as executor of the Day estate filed an action in the United States district court
against Rieser and Michael Disher, both individually and as co-trustees, and others
seeking to recover assets allegedly belonging to the estate. The federal-court complaint
asserts two claims under the federal Racketeer Influenced and Corrupt Organizations Act
(RICO) and asserts state-law tort claims for tortious interference with a right of
expectancy, common-law fraud, and unjust enrichment.
{¶ 7} In August 2008, Rieser and Michael Disher filed a motion in the general
division of the court of common pleas asking that court to prohibit Perkins from proceeding
in the federal action, based on the Settlement Agreement. A magistrate filed a decision
overruling the motion, but the trial court sustained Rieser and Disher’s objections and
prohibited Perkins from proceeding in the federal action. Perkins appealed to this Court,
and we reversed, concluding that she had filed the federal action as executor and
therefore “the general division lacked the power to grant relief in that form because it is a
form of relief exclusive to the probate court’s exercise of the jurisdiction conferred on that
court by R.C. 2101.24(A).” Rieser v. Rieser, 191 Ohio App. 3d 616, 2010-Ohio-6227, 947
N.E.2d 222, ¶ 20 (2d Dist.).
{¶ 8} The federal district court dismissed Perkins’s claims—the RICO claims with
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prejudice and the state-law claims without prejudice. Three months later, in December
2012, Perkins filed this action as executor of the Day estate against Rieser and Michael
Disher, both individually and as co-trustees, and others. The complaint asserts two claims
under Ohio’s RICO statute and asserts claims for tortious interference with a right of
expectancy, common-law fraud, and unjust enrichment.
{¶ 9} The defendants moved for summary judgment, which the trial court denied.
Later, Rieser and Michael Disher moved the court to reconsider their summary-judgment
motion. This time, in February 2014, the trial court granted the motion and entered
summary judgment on all claims, concluding that they are barred by res judicata and that
the fraud claim is barred by the applicable statute of limitations. Perkins filed a motion
asking the trial court to reconsider its summary-judgment decision. But the court overruled
her motion, and Perkins appealed the denial to this Court. We dismissed her appeal
because the trial court had not ruled on the defendants’ motion for sanctions and the
appealed judgment was not certified under Civ.R. 54(B).
{¶ 10} Back in 2013, the defendants had filed a motion for sanctions under R.C.
2323.51 and Civ.R. 11. In its February 2014 decision granting the defendants’ summary-
judgment motion, the trial court scheduled a hearing on the motion for the following month.
But when Perkins appealed, the trial court proceedings were suspended. In January
2015, after Perkins’s first appeal was dismissed, a sanctions hearing was held.
Afterwards, the trial court found that Perkins and her counsel engaged in frivolous conduct
under R.C. 2323.51 and that counsel violated Civ.R. 11. The court awarded the
defendants reasonable attorney’s fees of $14,279.
{¶ 11} Perkins appealed again.
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II. Analysis
{¶ 12} Perkins assigns three errors to the trial court. The first assignment of error
challenges the entry of summary judgment for the defendants. The second assignment
of error challenges the frivolous-conduct sanction. And the third assignment of error
challenges the trial court’s sanctioning Perkins individually.
A. Summary judgment
{¶ 13} The first assignment of error alleges that the trial court erred by granting the
defendants’ motion for reconsideration of summary judgment.
{¶ 14} “Pursuant to Civ.R. 56, summary judgment is appropriate when (1) there is
no genuine issue of material fact, (2) the moving party is entitled to judgment as a matter
of law, and (3) reasonable minds can come to but one conclusion and that conclusion is
adverse to the nonmoving party, said party being entitled to have the evidence construed
most strongly in his favor.” (Citation omitted.) Zivich v. Mentor Soccer Club, Inc., 82 Ohio
St.3d 367, 369-370, 696 N.E.2d 201 (1998). “[T]he movant must be able to point to
evidentiary materials of the type listed in Civ.R. 56(C) that a court is to consider in
rendering summary judgment. The evidentiary materials listed in Civ.R. 56(C) include ‘the
pleadings, depositions, answers to interrogatories, written admissions, affidavits,
transcripts of evidence in the pending case, and written stipulations of fact, if any.’ These
evidentiary materials must show that there is no genuine issue as to any material fact,
and that the moving party is entitled to judgment as a matter of law. While the movant is
not necessarily obligated to place any of these evidentiary materials in the record, the
evidence must be in the record or the motion cannot succeed.” Dresher v. Burt, 75 Ohio
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St.3d 280, 292-293, 662 N.E.2d 264 (1996).
{¶ 15} Perkins contends that the affidavit supporting the defendants’ summary-
judgment motion is invalid. And she contends that her claims are not barred by res
judicata or the statute of limitations.
{¶ 16} In support of their motion for summary judgment, the defendants submitted
an affidavit by Carole Disher about the Settlement Agreement. Perkins contends that the
affidavit is invalid because it violates Civ.R. 56(E) by not specifically stating that it is based
on Disher’s “personal knowledge” and by not stating that she is competent to testify to the
matters stated in the affidavit.
{¶ 17} Civ.R. 56(E) pertinently provides that “[s]upporting and opposing affidavits
shall be made on personal knowledge, shall set forth such facts as would be admissible
in evidence, and shall show affirmatively that the affiant is competent to testify to the
matters stated in the affidavit.” “In the absence of a specific statement of personal
knowledge, personal knowledge may be inferred from the contents of an affidavit.” Bank
One, N.A. v. Swartz, 9th Dist. Lorain No. 03CA008308, 2004-Ohio-1986, ¶ 15. No
talismanic words are necessary. OhioHealth Corp. v. Ryan, 10th Dist. Franklin No. 10AP-
937, 2012-Ohio-60, ¶ 32 (finding that the affidavit established personal knowledge despite
not using the “ ‘magic words’ ”).
{¶ 18} Disher’s five-paragraph affidavit states:
1. Attached hereto and incorporated herein by reference is a true and
accurate copy of the Settlement Agreement, Release and Indemnification
signed, on or about December 20, 2005, by all parties involved in
Montgomery County Common Pleas Court Case No. 2004 CV 3372 (“the
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Lawsuit”);
2. Pursuant to and in accordance with the Settlement Agreement, Release
and Indemnification, all assets related to the Lawsuit have been accounted
for and distributed as directed therein;
3. All parties to the Settlement Agreement, Release and Indemnification
have complied with its terms and obligations, with the exception of the
litigation brought by Kathleen Perkins;
4. All parties to the Settlement Agreement, Release and Indemnification had
the opportunity to review the Settlement Agreement, Release and
Indemnification with his/her attorney prior to executing the Settlement
Agreement, Release and Indemnification;
5. Kathleen Perkins represented to all parties that she reviewed the
Settlement Agreement, Release and Indemnification with her attorney prior
to executing the Settlement Agreement, Release and Indemnification.
{¶ 19} We think that Disher’s personal knowledge of the matters stated in her
affidavit may be inferred. “ ‘Personal knowledge’ is ‘[k]nowledge gained through firsthand
observation or experience, as distinguished from a belief based on what someone else
has said.’ ” Bonacorsi v. Wheeling & Lake Erie Ry. Co., 95 Ohio St. 3d 314, 2002-Ohio-
2220, 767 N.E.2d 707, ¶ 26, quoting Black’s Law Dictionary 875 (7th Ed.1999). Disher’s
knowledge of the affidavit matters comes from her own observations and experience as
beneficiary of the trust and a party to the Settlement Agreement. Her competence to
testify about these matters is also plain.
{¶ 20} Perkins contends that her claims are not barred by res judicata because the
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estate was not a party in the 2004 case. It is true that the estate was not a party to the
settlement agreement. And it is also true that, at that time, Perkins had not yet been
appointed the executor of the estate. But in the current action, Perkins herself is the real
party in interest.
{¶ 21} In our decision concluding that the general division of the common pleas
court lacked jurisdiction to prohibit Perkins as executor from prosecuting the federal-court
action, we briefly discussed the doctrine of res judicata. We said that “ ‘[a]lthough the
doctrine of res judicata generally requires an identity of parties, strict identity is not always
required. The doctrine has been applied when the party in the subsequent action, though
not named as a party in the prior action, was a real party in interest in that prior action. In
applying the doctrine, the court will look beyond the nominal parties to the substance of
the cause to determine the real party in interest. Identity of parties is not a mere matter of
form, but of substance.’ ” (Citations omitted.) Rieser, 191 Ohio App. 3d 616, 2010-Ohio-
6227, 947 N.E.2d 222, at ¶ 16, quoting Deaton v. Burney, 107 Ohio App. 3d 407, 412, 669
N.E.2d 1 (2d Dist.1995). We noted that neither the probate court nor the federal court had
attempted to look “beyond the nominal difference in her status as executor to the
substance of the action before the court to determine whether Kathleen Perkins is a real
party in interest in both the general division and federal actions.” Id. at ¶ 17.
{¶ 22} Ruth Day’s will is a pour-over will, which means that all of the estate’s assets
go to the trust. In other words, the sole beneficiary of the will is the trust. Perkins does not
contest the will, and no creditor is seeking payment from the estate. So if Perkins
successfully recovers the assets that she alleges belong to the estate, those assets will
simply flow into the trust and be distributed to the trust beneficiaries. The fiduciaries of
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the trust, and the beneficiaries, including Perkins, have already settled all the trust-related
issues. So it is difficult to perceive any independent interest the estate has in this action.
Perkins’s interest in this action, however, is clear. In the Settlement Agreement, Perkins
agreed that “after investigation and review of Day Trust documents, including but not
limited to financial documents, there was no breach of fiduciary duty by John Paul Rieser,
Esq. as Co-Trustee of the Day Trust or Michael B. Disher as Co-Trustee of the Day Trust;
and at no time were there ever any missing assets of the Day Trust.” Settlement
Agreement, ¶ 14. And Perkins released all her claims—“whether now known or
unknown”—against Rieser and Michael Disher, the defendants in this case. Technically
the Settlement Agreement was before the estate was opened and therefore the
settlement does not prohibit the Day estate from pursuing claims against Rieser or Disher.
But it is undoubtedly Perkins who is the real party in interest in this action that she has
already settled. Which means that her claims are barred by res judicata.
{¶ 23} Perkins also contends that her fraud claim is not barred by the applicable
statute of limitations. Because we have concluded that all her claims are barred by res
judicata, this contention is moot.
{¶ 24} The first assignment of error is overruled.
B. Sanctions
{¶ 25} The second assignment of error alleges that the trial court erred by
sanctioning Perkins for frivolous conduct. Perkins contends that the court failed to hold a
proper evidentiary hearing and failed to make the appropriate findings.
{¶ 26} R.C. 2323.51 allows a court to award “court costs, reasonable attorney’s
fees, and other reasonable expenses” to any party “who was adversely affected by
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“frivolous conduct.” R.C. 2323.51(B)(1). Before making an award, the court must hold a
hearing “to determine whether particular conduct was frivolous, to determine, if the
conduct was frivolous, whether any party was adversely affected by it, and to determine,
if an award is to be made, the amount of that award.” R.C. 2323.51(B)(2)(a).
{¶ 27} In this case, the trial court held a frivolous-conduct hearing on January 6,
2015. Perkins says that the hearing concerned attorney’s fees only and that the court did
not allow evidence as to whether her conduct was frivolous. Our review of the hearing
transcript shows that some evidence regarding frivolousness was admitted. Exhibit B is
a statement of the defendants’ legal fees incurred in defending against the federal action.
The trial court noted, and defendants’ counsel agreed, that “[t]he purpose of Exhibit B is
just to indicate that it’s harassment, continual—[expenses].” (Hearing Tr. 27). Later in the
hearing, though, the court said that attorney’s fees was “all we’re talking about today.” (Id.
at 56). It appears that the court had already determined that bringing the 2012 action was
frivolous. At a sidebar, the court said, “the case was dismissed by me, the underlying
case, because I don’t see any merit to it which makes it kind of frivolous I guess or could
be * * *. If you want to kind of brief this after this hearing, you’re welcome to it.” (Id. at 33).
{¶ 28} Perkins did not present any evidence at the hearing. She did not call any
witnesses or present any exhibits for admission into evidence. Also, Perkins did not make
any objections to the trial court about the scope of the hearing. Therefore we cannot
conclude that the hearing constitutes reversible error.
{¶ 29} Perkins also contends that the trial court failed to make the appropriate
findings. Specifically, she says that the court failed to make the appropriate findings to
determine whether her conduct was frivolous and failed to find that she engaged in
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frivolous conduct.
{¶ 30} R.C. 2323.51 defines “conduct” as “[t]he filing of a civil action, the assertion
of a claim, defense, or other position in connection with a civil action, the filing of a
pleading, motion, or other paper in a civil action, including, but not limited to, a motion or
paper filed for discovery purposes, or the taking of any other action in connection with a
civil action.” R.C. 2323.51(A)(1)(a). And the statute defines “frivolous conduct” to include
“conduct” by a party or counsel that
(i) * * * obviously serves merely to harass or maliciously injure another party
to the civil action or appeal or is for another improper purpose, including,
but not limited to, causing unnecessary delay or a needless increase in the
cost of litigation[;] or
(ii) * * * is not warranted under existing law, cannot be supported by a good
faith argument for an extension, modification, or reversal of existing law, or
cannot be supported by a good faith argument for the establishment of new
law.
R.C. 2323.51(A)(2)(a).
{¶ 31} Here, in its written frivolous-conduct decision, the trial court said: “Upon a
review of the Pleadings, the Decisions/Entries in this case coupled with the testimony
received during the hearing, the court finds that by the filing of the instant cause of action
and subsequent actions/inactions related to it, Plaintiff and Plaintiff’s counsel have
engaged in frivolous conduct as defined in R.C. Sections 2323.51(A)[(2)(a)](i) and (ii).”
Decision and Order (Feb. 19, 2015).
{¶ 32} “No single standard of review applies to appeals of rulings on R.C. 2323.51
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motions.” Groves v. Groves, 10th Dist. Franklin No. 09AP1107, 2010-Ohio-4515, ¶ 18.
“The standard an appellate court uses depends upon whether the trial court’s
determination resulted from factual findings or a legal analysis. When the question
regarding what constitutes frivolous conduct calls for a legal determination, ‘e.g., whether
a claim is warranted under existing law or could be supported by a good faith argument
for the extension, modification, or reversal of existing law or the establishment of new
law,’ we employ a de novo standard of review.” Bell v. Nichols, 10th Dist. Franklin No.
10AP-1036, 2013-Ohio-2559, ¶ 18, quoting id.
{¶ 33} The trial court’s determination here depends on the legal determination that
the claims in this action are barred by res judicata. Consequently the trial court found that
the action “is not warranted under existing law, cannot be supported by a good faith
argument for an extension, modification, or reversal of existing law, or cannot be
supported by a good faith argument for the establishment of new law,” R.C.
2323.51(A)(2)(a)(ii). We agree with this determination
{¶ 34} The second assignment of error is overruled.
C. Sanctions against Perkins individually
{¶ 35} Under R.C. 2323.51, a frivolous-conduct award may be made against “a
party, the party’s counsel of record, or both.” R.C. 2323.51(B)(4). The third assignment of
error alleges that the trial court erred by making the frivolous-conduct award against
Perkins in her individual capacity. Perkins argues that she is a party to the case only in a
representative capacity, so the court did not have jurisdiction over her.
{¶ 36} “[A] hearing on sanctions is considered collateral to the underlying
proceedings.” Stone v. House of Day Funeral Serv., Inc., 140 Ohio App. 3d 713, 719, 748
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N.E.2d 1200 (6th Dist.2000). Accord Beaver Excavating Co. v. Perry Twp., 79 Ohio
App.3d 148, 153, 606 N.E.2d 1067 (5th Dist.1992) (“We conclude that for the purposes
of implementation of R.C. 2323.51, contempt proceedings against a non-party witness
constitute a civil action.”); Master v. Chalko, 8th Dist. Cuyahoga No. 75973, 2000 WL
573200, *5 (May 11, 2000) (quoting Beaver Excavating). It is irrelevant that Perkins is not
a party in her individual capacity in the underlying lawsuit because she was made a party
to the frivolous-conduct action. She received notice of the frivolous-conduct proceeding
against her and appeared and defended herself on the merits. Compare Master at *5
(concluding that sanctions were properly awarded against the appellant in his individual
capacity). Nor does it matter that the pleadings do not name Perkins in her individual
capacity. “A misnomer is not fatal to the jurisdiction of the court over the person of the
defendant whose name is involved, and such mistake becomes a mere irregularity when
the real party to be sued answers to the merits at issue in the case.” (Citations omitted.)
Lamberty v. Streetsboro Sales & Supplies, 11th Dist. Portage No. 1729, 1987 WL 18012,
*2 (Sept. 30, 1987) (noting that the appellant appeared and offered a defense in the action
and also filed a counterclaim).
{¶ 37} We note too that the motion for a frivolous-conduct award was filed against
Perkins in February 2013. She has never raised this issue until now, not even in her
written opposition to the award that she filed after the hearing.
{¶ 38} The third assignment of error is overruled.
III. Conclusion
{¶ 39} We have overruled the three assignments of error presented. The trial
court’s judgment is affirmed.
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FAIN, J., and WELBAUM, J., concur.
Copies mailed to:
James R. Hartke
John Paul Rieser
Dianne Marx
Gregory S. Page
Hon. Neal B. Bronson
(sitting for Hon. Gregory F. Singer)