Gilcrest v. Gilcrest

[Cite as Gilcrest v. Gilcrest, 2022-Ohio-3640.]
COURT OF APPEALS
DELAWARE COUNTY, OHIO
FIFTH APPELLATE DISTRICT
LAURA GILCREST : JUDGES:
: Hon. Earle E. Wise, Jr., P.J.
Plaintiff-Appellant : Hon. John W. Wise, J.
: Hon. Craig R. Baldwin, J.
-vs- :
:
ROGER GILCREST, ET AL. : Case No. 22 CAE 03 0019
:
Defendants-Appellees : OPINION
CHARACTER OF PROCEEDING: Appeal from the Court of Common
Pleas, Case No. 20 CV 0071
JUDGMENT: Affirmed
DATE OF JUDGMENT: October 12, 2022
APPEARANCES:
For Plaintiff-Appellant For Defendants-Appellees
ADAM FRIED JOSEPH C. PICKENS
ADRIENNE MCGEE Two Miranova Place
MARY KRAFT Suite 700
200 Civic Center Drive Columbus, OH 43215
Suite 800
Delaware County, Case No. 22 CAE 03 0019 2
Columbus, OH 43215
Wise, Earle, P.J.
{¶ 1} Plaintiff-Appellant, Laura Gilcrest, appeals the July 17, 2020, February 1,
2021, and February 14, 2022 judgment entries of the Court of Common Pleas of Delaware
County, Ohio, dismissing her claims and awarding attorney fees and costs to Defendants-
Appellees, Roger Gilcrest and P. Gilcrest, LLC.
FACTS AND PROCEDURAL HISTORY
{¶ 2} In 2004, Philip and Irene Gilcrest created PN Gilcrest Limited Partnership,
an Ohio family limited partnership. Appellant-Laura and appellee-Roger are Philip and
Irene's children.
{¶ 3} The partnership has one general partner, appellee-P. Gilcrest LLC, of which
Roger is the sole managing member. Appellant is a limited partner, along with other
limited partners.
{¶ 4} Irene and then Philip both passed away in 2017. Roger opened probate of
Philip's estate in Summit County Probate Court. Assets were distributed to appellant.
After the discovery of additional bank accounts, the estate was re-opened to distribute
those funds. Appellant filed a notice of objection. The probate action is still pending.
{¶ 5} On September 6, 2019, appellant filed a complaint against appellees in
Franklin County, Ohio, to discover and determine the extent to which Roger improperly
managed, distributed, and/or disposed of partnership assets. On October 9, 2019,
appellees filed a motion to dismiss or transfer venue. The motion to transfer venue was
granted and the case was transferred to Delaware County on February 12, 2020.
{¶ 6} Appellant's complaint raised thirteen causes of action, the first five being
derivative claims against the partnership and the remaining claims against Roger
Delaware County, Case No. 22 CAE 03 0019 3
individually: accounting (Count I), injunction (Count II), breach of statutory duty of care
(Count III), breach of fiduciary duty (Count IV), breach of contract (Count V), breach of
fiduciary duties (Count VI), breach of trust (Count VII), breach of fiduciary duty by trustee
(Count VIII), accounting (Count IX), tortious interference with expected inheritance (Count
X), complaint for money damages (Count XI), unjust enrichment (Count XII), and
disgorgement of excessive fees (Count XIII).
{¶ 7} On March 11, 2020, appellees filed their answer and a counterclaim,
alleging declaratory judgment and abuse of process.
{¶ 8} Also on March 11, 2020, appellees filed a motion to dismiss Counts VI
through XIII of the complaint, arguing Delaware County lacked jurisdiction because the
claims relating to trust, estate, and inheritance issues were subject to the exclusive
jurisdiction of the pending action in Summit County Probate Court. Appellees also filed a
motion for attorney fees on the transfer of venue to Delaware County. By judgment entry
filed July 17, 2020, the trial court granted the motions and dismissed Counts VI through
XIII of the complaint, finding the Summit County Probate Court had exclusive and/or
priority jurisdiction over the claims. The trial court ordered appellees to submit evidence
as to the requested attorney fees and costs.
{¶ 9} On December 11, 2020, appellees filed a motion to dismiss Counts I, III, IV,
and V, arguing the complaint failed to meet the requirements for derivative claims under
R.C. 1782.58 and Civ.R. 23.1 (failure to plead with particularity any demands made or
why any demands would have been futile, and failure to allege how she adequately and
fairly represented the interests of other limited partners). By judgment entry filed February
1, 2021, the trial court agreed and dismissed the counts.
Delaware County, Case No. 22 CAE 03 0019 4
{¶ 10} On September 29, 2021, the partnership's general partner, P. Gilcrest LLC,
filed a motion for summary judgment on the sole remaining claim, Count II (an
accounting). By judgment entry filed November 16, 2021, the trial court granted the
motion, finding the LLC provided and/or made available for inspection all available
requested materials.
{¶ 11} On January 14, 2022, appellees dismissed their counterclaims without
prejudice.
{¶ 12} By judgment entry filed February 14, 2022, the trial court awarded appellees
as against appellant $10,851.65 for attorney fees and costs associated with the transfer
of venue.
{¶ 13} Appellant filed an appeal and this matter is now before this court for
consideration. Assignments of error are as follows:
I
{¶ 14} "THE TRIAL COURT ERRED BY HOLDING APPELLANT LAURA
GILCREST'S COMPLAINT FAILED TO ALLEGE SUFFICIENT FACTS
DEMONSTRATING THAT A PRE-SUIT DEMAND WOULD HAVE BEEN FUTILE."
II
{¶ 15} "THE TRIAL COURT INCORRECTLY DETERMINED APPELLANT LAURA
GILCREST FAILED TO ADEQUATELY PLEAD HER ABILITY TO REPRESENT THE
INTERESTS OF SIMILARLY SITUATED LIMITED PARTNERS."
III
{¶ 16} "THE TRIAL COURT INCORRECTLY DETERMINED THAT THE SUMMIT
COUNTY PROBATE COURT HAD EXCLUSIVE AND/OR PRIORITY JURISDICTION
Delaware County, Case No. 22 CAE 03 0019 5
OVER COUNTS XII AND XIII OF APPELLANT LAURA GILCREST'S COMPLAINT
RELATED TO APPELLEE ROGER GILCREST AND APPELLEE P. GILCREST LLC."
IV
{¶ 17} "THE TRIAL COURT ERRED IN AWARDING APPELLEES COSTS AND
FEES RELATED TO THE TRANSFER OF VENUE, BECAUSE APPELLANT LAURA
GILCREST WAS NOT DELIBERATE OR HEEDLESS IN INITIALLY FILING HER
COMPLAINT IN FRANKLIN COUNTY."
I, II
{¶ 18} In her first assignment of error, appellant claims the trial court erred in
finding her complaint failed to allege sufficient facts demonstrating that a pre-suit demand
would have been futile.
{¶ 19} In her second assignment of error, appellant claims the trial court erred in
finding her complaint failed to adequately plead her ability to represent the interests of
similarly situated limited partners.
{¶ 20} Specifically, appellant claims the trial court erred in dismissing Counts I, III,
IV, and V (judgment entry filed February 1, 2021). We disagree.
{¶ 21} Appellees filed a motion to dismiss Counts I, III, IV, and V pursuant to Civ.R.
12(B)(1) (lack of jurisdiction over the subject matter) and (6) (failure to state a claim upon
which relief can be granted). In reviewing a motion to dismiss under Civ.R. 12, a trial
court is limited to a review of the four corners of the complaint; however, "[d]ocuments
attached to or incorporated in the complaint may be considered on a motion to dismiss
pursuant to Civ.R. 12(B)(6)." NCS Healthcare, Inc. v. Candlewood Partners, L.L.C., 160
Delaware County, Case No. 22 CAE 03 0019 6
Ohio App.3d 421, 2005-Ohio-1669, 827 N.E.2d 797, ¶ 20 (8th Dist.). In considering the
motion, a trial court "must accept as true all factual allegations in the complaint and
construe any reasonable inferences in favor of the non-moving party." Valentine v. Cedar
Fair, L.P., 6th Dist. Erie No. E-20-018, 2021-Ohio-2144, ¶ 22, citing Alford v. Collins-
McGregor Operating Co., 152 Ohio St.3d 303, 2018-Ohio-8, 95 N.E.3d 382. In order for
a trial court to dismiss a complaint under Civ.R. 12(B)(6), "it must appear beyond doubt
from the complaint that the plaintiff can prove no set of facts entitling him to recovery."
O'Brien v. University Community Tenants Union, Inc., 42 Ohio St.2d 242, 327 N.E.2d 753(1975), syllabus.
{¶ 22} Our standard of review is de novo, and therefore this court "must review the
issues independently of the trial court's decision." Perrysburg Township v. Rossford, 103
Ohio St.3d 79, 2004-Ohio-4362, 814 N.E.2d 44; Mellion v. Akron City School District
Board of Education, Summit App. No. 23227, 2007-Ohio-242, ¶ 6. "We review the grant
of the motion to dismiss afresh, again taking the factual allegations of the complaint as
true and drawing all reasonable inferences in favor of [appellant]." Habibi v. University of
Toledo, 10th Dist. Franklin No. 19AP-583, 2020-Ohio-766, ¶ 10.
{¶ 23} In their motion to dismiss, appellees argued appellant failed to meet the
requirements for derivative claims under R.C. 1782.58 ("[i]n a derivative action brought
pursuant to section 1782.56 of the Revised Code, the complaint shall set forth with
particularity the effort of the plaintiff to secure initiation of the action by a general partner
or the reasons for not making the effort"), and Civ.R. 23.1 which states the following in
pertinent part:
Delaware County, Case No. 22 CAE 03 0019 7
In a derivative action brought by one or more legal or equitable
owners of shares to enforce a right of a corporation, the corporation having
failed to enforce a right which may properly be asserted by it, the complaint
shall be verified and shall allege that the plaintiff was a shareholder at the
time of the transaction of which he complains or that his share thereafter
devolved on him by operation of law. The complaint shall also allege with
particularity the efforts, if any, made by the plaintiff to obtain the action he
desires from the directors and, if necessary, from the shareholders and the
reasons for his failure to obtain the action or for not making the effort. The
derivative action may not be maintained if it appears that the plaintiff does
not fairly and adequately represent the interests of the shareholders
similarly situated in enforcing the right of the corporation.
{¶ 24} "Specifically, complaining shareholders [under Civ.R. 23.1] must (1) spell
out the efforts made to have the directors or the other shareholders take the action
demanded, (2) explain why they failed in this effort or did not make it, and (3) show that
they 'fairly and adequately' represent the interests of other shareholders 'similarly
situated.' " Weston v. Weston Paper & Manufacturing Co., 74 Ohio St.3d 377, 379, 658
N.E.2d 1058 (1996).
{¶ 25} In her opposition to appellees' motion, appellant argued paragraphs 42, 43,
and 45 of her complaint fulfilled the necessary requirements:
Delaware County, Case No. 22 CAE 03 0019 8
42. Plaintiff made numerous requests to obtain documents and
financial records relative to the Partnership.
43. Despite Plaintiff's attempts to obtain documents and records
relative to the Partnership from the General Partner, as of the date of filing
the instant action, Plaintiff has not received the necessary documents and
records pursuant to the lawful requests.
45. Plaintiff will adequately and fairly represent the interests of the
Partnership in enforcing and prosecuting its rights.
{¶ 26} Further, appellant argued any effort to demand action from the
director/shareholders would have been futile. "Futility means that the directors' minds are
closed to argument and that they cannot properly exercise their business judgment in
determining whether the suit should be filed. It is not enough to show that the directors
simply disagree with a shareholder about filing a suit." Drage v. Proctor & Gamble, 119
Ohio App.3d 19, 25, 694 N.E.2d 479 (1st Dist.1997). Appellant argued paragraph 47 of
her complaint was sufficient to plead futility: "All conditions precedent to the bringing of
this action have been performed, have been waived, have occurred or would be futile."
{¶ 27} In its February 1, 2021 judgment entry, the trial court reviewed the four pled
claims and found the following:
The Court finds that Plaintiff has not pled with particularity when or
how she requested information from the general partner, or that she did so
on behalf of the partnership as required by R.C. 1782.56. Her complaint
Delaware County, Case No. 22 CAE 03 0019 9
also does not describe with particularity what documents or financial
records she allegedly sought. Therefore, Plaintiff has not met the
requirement that her complaint spell out her efforts to obtain the information
she sought.
***
Based on the standard for pleading futility, the Court finds that
Plaintiff's complaint does not sufficiently establish that further - or any -
demands by Plaintiff would have been futile. Therefore, Plaintiff's complaint
does not meet the requirement that she explain why further efforts were not
undertaken.
***
Plaintiff's complaint does not identify the other limited partners, nor
does it indicate that she consulted with them and/or determined whether
they support her taking action on their behalf. Because Plaintiff was
required to plead with specificity her ability to adequately represent the
interests of the other limited partners, her complaint fails to meet this
requirement of Civ.R. 23.1.
{¶ 28} In reviewing the complaint, we agree with the trial court's analysis.
Appellant's complaint does not cite to any pre-suit demands or efforts she made to obtain
the requested action, nor cite to reasons why such a demand would have been futile.
Merely alleging futility is not enough to satisfy the requirement. Likewise, the general
allegations of Roger's conduct pertaining to self-dealing and inappropriate asset
Delaware County, Case No. 22 CAE 03 0019 10
allocation do not satisfy the requirement. The complaint also does not identify any other
limited partners and whether she consulted them. Appellant has not shown that she fairly
and adequately represents the interests of other shareholders similarly situated in
enforcing the rights of the corporation. Paragraphs 42, 43, 45, and 47 of the complaint
are general and conclusory and are insufficient to meet the requirements of R.C. 1782.58
and Civ.R. 23.1.
{¶ 29} Upon review, we find the trial court did not err in dismissing Counts I, III, IV,
and V of the complaint.
{¶ 30} Assignments of Error I and II are denied.
III
{¶ 31} In her third assignment of error, appellant claims the trial court erred in
finding the Summit County Probate Court had exclusive and/or priority jurisdiction over
some of her claims. Specifically, appellant claims the trial court erred in dismissing
Counts XII and XIII (judgment entry filed July 17, 2020). We disagree.
{¶ 32} Appellees filed a motion to dismiss Counts VI through XIII of the complaint
pursuant to Civ.R. 12(B)(1) (lack of jurisdiction over the subject matter). Appellees argued
the counts relating to trust, estate, and inheritance issues were subject to the exclusive
jurisdiction of the Summit County Probate Court under R.C. 2101.24(A), wherein an
action was pending prior to the filing of the subject complaint.
{¶ 33} "The standard of review for a dismissal pursuant to Civ.R. 12(B)(1) is
whether any cause of action cognizable by the forum has been raised in the complaint."
State ex rel. Bush v. Spurlock, 42 Ohio St.3d 77, 80, 537 N.E.2d 641 (1989). We review
Delaware County, Case No. 22 CAE 03 0019 11
an appeal of a motion for dismissal under Civ.R. 12(B)(1) de novo. Moore v. Franklin
County Children Services, 10th Dist. Franklin No. 06AP-951, 2007-Ohio-4128, ¶ 15.
{¶ 34} The probate case was opened approximately seven months prior to the
subject complaint. Under the "jurisdictional-priority rule," "[a]s between courts of
concurrent jurisdiction, the tribunal whose power is first invoked by the institution of proper
proceedings acquires jurisdiction, to the exclusion of all other tribunals, to adjudicate upon
the whole issue and to settle the rights of the parties." State, ex rel. Phillips v. Polcar, 50
Ohio St.2d 279, 364 N.E.2d 33 (1977), syllabus.
{¶ 35} In State ex rel. Dunlap v. Sarko, 135 Ohio St.3d 171, 2013-Ohio-67, 985
N.E.2d 450, ¶ 10-11, the Supreme Court of Ohio explained:
To be sure, it is a condition of the jurisdictional-priority rule that the
claims and parties be the same in both cases, so "[i]f the second case is not
for the same cause of action, nor between the same parties, the former suit
will not prevent the latter." See State ex rel. Judson v. Spahr, 33 Ohio St.3d
111, 113, 515 N.E.2d 911 (1987).
Nevertheless, we have also recognized that the jurisdictional-priority
rule can apply even when the causes of action and relief requested are not
exactly the same, as long as the actions present part of the same "whole
issue." State ex rel. Otten v. Henderson, 129 Ohio St.3d 453, 2011-Ohio-
4082, 953 N.E.2d 809, ¶ 29; State ex rel. Sellers v. Gerken, 72 Ohio St.3d
115, 117, 647 N.E.2d 807 (1995).
Delaware County, Case No. 22 CAE 03 0019 12
{¶ 36} Count XII of the subject complaint is a claim for unjust enrichment and
states as follows:
110. Roger, through directing to himself assets properly distributable
to Plaintiff, has been unjustly enriched by his conduct, including but not
limited to making improper distributions, withdrawals, and/or transfers to
himself and/or for his own benefit from the Trust, Limited Partnership and/or
Estate assets.
{¶ 37} Claim XIII is a claim for disgorgement of excessive fees and states as
follows:
112. Upon information and belief, Roger charged excessive executor
fees, trustee fees and General Partner fees related to the Limited
Partnership.
113. Upon information and belief, Roger further retained the services
of an investment advisor for purposes unrelated to the needs of the Trusts
and/or the Limited Partnership and paid excessive fees therefrom.
114. Roger Gilcrest and P Gilcrest Limited Liability Company should
be made to account for all fees paid and return all said fees to the probate
estate, trust estates of Philip and Irene Gilcrest and/or Limited Partnership
until the reasonableness of said fees, and costs can be established.
Delaware County, Case No. 22 CAE 03 0019 13
{¶ 38} In its July 17, 2020 judgment entry, the trial court reviewed Counts VI
through XIII and found the following:
Among the claims asserted in Laura's complaint are those for breach
of trust, breach of fiduciary duty, and tortious interference with expected
inheritance, all claims that mirror objections she raised in the probate case
and that are subject to the exclusive jurisdiction of the probate court.
Inasmuch as this Court would have concurrent jurisdiction over any of her
claims under Counts VI through XIII, the jurisdictional priority rule requires
this Court to dismiss them.
{¶ 39} In her appellate brief, appellant argues Counts XII and XIII relate to the
partnership and are unrelated to the trusts and/or estates which are the subject of the
probate case. Appellant acknowledges the unjust enrichment claim relates to Roger's
"improper distributions, withdrawals, and/or transfers to himself and/or for his own benefit
from the Trust, Estate, and/or Limited Partnership." (Emphasis sic.) Appellant's Brief at
12. For the disgorgement of excessive fees claim, appellant argues, "[w]hile Count XIII
alleged that Roger charged excessive executor and trustee fees, this claim also asserted
that Roger charged excessive General Partner fees to the Partnership." Id.{¶ 40} Appellant admits Counts XII and XIII involve trust and estate issues.
Appellant now argues the trial court should have carved out the claims against the
partnership. However, the claims against the partnership were dismissed for failure to
meet the requirements of R.C. 1782.58 and Civ.R. 23.1 as discussed above. We concur
Delaware County, Case No. 22 CAE 03 0019 14
with the trial court's analysis that the jurisdictional-priority rule applies. We find Counts
XII and XIII "present part of the same 'whole issue' " and should be heard by the probate
court.
{¶ 41} Upon review, we find the trial court did not err in dismissing Counts XII and
XIII of the complaint.
{¶ 42} Assignment of Error III is denied.
IV
{¶ 43} In her fourth assignment of error, appellant claims the trial court erred in
awarding appellees attorney fees and costs associated with the transfer of venue
(judgment entry filed February 14, 2022). We disagree.
{¶ 44} "A trial court's decision as to the appropriateness of an award of attorney
fees will not be reversed absent an abuse of discretion." Sheet Metal Workers Local
Union No. 33 v. Sutton, 5th Dist. Stark No. 2010CA00323, 2011-Ohio-3809, ¶ 32. In
order to find an abuse of discretion, we must determine the trial court's decision was
unreasonable, arbitrary or unconscionable and not merely an error of law or judgment.
Blakemore v. Blakemore, 5 Ohio St.3d 217, 450 N.E.2d 1140 (1983).
{¶ 45} Civ.R. 3 governs venue. Subsection (D)(2) states: "When an action is
transferred to a county which is proper, the court may assess costs, including reasonable
attorney fees, to the time of transfer against the party who commenced the action in a
county other than stated to be proper in division (C) of this rule." As stated in a 1970 staff
note to Civ.R. 3(C)(2), now (D)(2):
Delaware County, Case No. 22 CAE 03 0019 15
Since any action may be commenced and decided in any court that
has jurisdiction of the subject matter, this provision is needed to place a
curb upon the party who deliberately or heedlessly files an action in a county
where venue is not proper thereby causing these additional expenses.
Costs should not be assessed under this rule if venue is in doubt so that the
error was one that any diligent attorney could have made.
{¶ 46} Appellant filed her initial complaint in Franklin County, Ohio. Appellees filed
a motion to dismiss or transfer venue because all business related to the partnership and
the trusts and estates occurred in Delaware County. Roger lived and worked in Delaware
County. Appellant contested the change of venue. The motion was granted and the case
was transferred to Delaware County. Appellees filed a motion for attorney fees and by
judgment entry filed July 17, 2020, the trial court granted the motion and ordered
appellees to submit evidence as to the requested attorney fees and costs. Appellees
submitted the evidence on February 1, 2022.
{¶ 47} In its February 14, 2022 judgment entry awarding the attorney fees, the trial
court stated the following:
In granting Defendants' motion for attorney fees and costs incurred
in obtaining the transfer of this case from the Franklin County Court of
Common Pleas, the Court emphasized that Plaintiff knew that Roger
Gilcrest resides in Delaware County and performed tasks related to his
parents' estates and the P. Gilcrest LLC in Delaware County. Further, she
Delaware County, Case No. 22 CAE 03 0019 16
knew the Franklin County Common Pleas Court had rejected her assertion
of venue there as "pure speculation and conjecture." Given the opportunity
to voluntarily transfer venue, she refused, forcing Defendants to expend
significant resources to obtain the transfer.
These facts informed the Court's decision that attorney fees
connected with the transfer should be borne by Plaintiff. Reviewing that
issue again as prompted by Plaintiff's response to Defendant's notice
regarding attorney fees, the Court maintains its position that Plaintiff's
actions were "deliberate and heedless" so as to merit the award.
{¶ 48} In her appellate brief, appellant argues she did not deliberately and
heedlessly initiate the action in an improper venue because she received two letters from
Roger on his employer's letterhead bearing a Franklin County address. However, as
found by the trial court, appellant knew Roger lived and performed tasks for the
partnership and estates in Delaware County. When confronted with these facts, appellant
chose to contest the transfer of venue. We cannot say the trial court abused its discretion
in finding appellant actions were "deliberate and heedless" to warrant an award of
attorney fees pursuant to Civ.R. 3(D)(2).
{¶ 49} Upon review, we find the trial court did not abuse its discretion in awarding
appellees attorney fees and costs associated with the transfer of venue.
{¶ 50} Assignment of Error IV is denied.
{¶ 51}
Delaware County, Case No. 22 CAE 03 0019 17
{¶ 52} The judgment of the Court of Common Pleas of Delaware County, Ohio is
hereby affirmed.
By Wise, Earle, P.J.
Wise, John, J. and
Baldwin, J. concur.
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