In re Estate of Moritz v. Ohio State Univ.

[Cite as In re Estate of Moritz v. Ohio State Univ., 2020-Ohio-5012.]
COURT OF APPEALS
DELAWARE COUNTY, OHIO
FIFTH APPELLATE DISTRICT
IN THE MATTER OF THE ESTATE OF JUDGES:
MICHAEL E. MORITZ, DECEASED Hon. William B. Hoffman, P.J.
Hon. Patricia A. Delaney, J.
JEFFREY MORITZ Hon. Earle E. Wise, Jr., J.
Plaintiff-Appellant
-vs- Case No. 19 CAF 11 0060
THE OHIO STATE UNIVERSITY AND
STATE OF OHIO, EX REL. OHIO
ATTORNEY GENERAL, DAVE YOST
O P I N IO N
Defendants-Appellees
CHARACTER OF PROCEEDINGS: Appeal from the Delaware County
Probate Court, Case No. 00202161 PES
JUDGMENT: Affirmed
DATE OF JUDGMENT ENTRY: October 20, 2020
APPEARANCES:
For Plaintiff-Appellant For Defendants-Appellees The Ohio
State University
MARK R. REITZ
Kegler Brown Hill & Ritter Co., LPA JOHN J. KULEWICZ
65 East State Street, Suite 1800 JOHN R. FURNISS, III
Columbus, Ohio 43215 Vorys, Sater, Seymour and Pease, LLP
52 East Gay Street, P.O. Box 1008
DAVID MARBURGER Columbus, Ohio 43216-1008
Marburger Law LLC
14700 Detroit Avenue, Suite One
Cleveland, Ohio 44107
Delaware County, Case No. 19 CAF 11 0060 2
For Defendants-Appellees State of For Amicus Curiae, American Council
Ohio, ex rel. Dave Yost, Ohio Attorney Of Trustees and Alumni
General
TERRENCE P. MCHUGH
TODD K. DEBOE Terrence P. McHugh, LLC
MATTHEW L. JALANDONI 14700 Detroit Avenue, Suite Two
Assistant Attorneys General Cleveland, Ohio 44107
Charitable law Section
150 East Gay Street, 23rd Floor For Amicus Curiae
Columbus, Ohio 43215
ANDRAS KOSARAS
Arnold & Porter Kaye Scholer, LLP
601 Massachusetts Avenue, N.W.
Washington, DC 20001-3743
Delaware County, Case No. 19 CAF 11 0060 3
Hoffman, P.J.
{¶1} Applicant-appellant Jeffrey Moritz appeals the October 22, 2019 Judgment
Entry entered by the Delaware County Court of Common Pleas, Probate Division, which
overruled his objections to the magistrate’s two August 14, 2018 decisions, and approved
and adopted said decisions as order of the court. Appellees are The Ohio State University
(“OSU”) and the Ohio Attorney General (“Ohio AG”).
STATEMENT OF THE FACTS AND CASE
{¶2} Appellant is an adult son of Michael E. Moritz (“Decedent”). Decedent was
a summa cum laude graduate of The Ohio State University College of Law. He went on
to a successful legal career and also served as a director of The Ohio State University
Foundation, beginning in 1990. On June 7, 2001, Decedent executed a document entitled
“Gift Agreement” with OSU. Pursuant to the Gift Agreement, Decedent contributed “the
sum of $30,000,000 to provide funds for a gift to The Ohio State University and the
University’s College of Law.”
{¶3} The Gift Agreement specifically provided:
(a) $10,000,000 will be used to create and name four Endowed
Faculty Chairs in the College of Law at $2,500,000 each.
(b) $9,800,000 will be used to create a Merit Scholars Program which
will provide full tuition and a stipend to 30 students in the College of Law.
(Approximately ten outstanding students in each of the three classes).
(c) $10,000,000 will be used to create an unrestricted endowed
Dean’s Fund for Innovation and Excellence.
Delaware County, Case No. 19 CAF 11 0060 4
(d) $120,000 will be used to endow leadership awards for one
student in each of the three classes.
{¶4} As part of the Gift Agreement, OSU agreed to name, establish, and maintain
in perpetuity several professorship chairs, a Dean’s Fund for Excellence, and a merit
scholarship and awards program named after Decedent. Decedent, the Dean of the
College of Law, the President and Provost of OSU, and the President of The Ohio State
University Foundation executed the Gift Agreement. Decedent transferred over $30.3
million in Cardinal Health Inc. common stock to complete the gift on June 26, 2001.
Thereafter, in accordance with the terms of the Gift Agreement, OSU established the
Moritz endowment and renamed the law school “The Michael E. Moritz College of Law”.
{¶5} Decedent died on March 5, 2002, as the result of injuries he sustained in a
motor vehicle accident. Ivor H. Young administered Decedent’s Estate as the Executor
from the date of his appointment on April 1, 2002, through the settlement of the final
account on January 30, 2008. The Estate was briefly reopened on August 4, 2015, to
administer nominal newly discovered unclaimed funds held by the State of Ohio, and
reclosed on November 25, 2015.1
{¶6} In early 2016, after reviewing financial records, Appellant discovered OSU
was spending the endowment money in ways he believed violated the terms of the Gift
Agreement. Specifically, Appellant learned the $30.3 million gift Decedent gave to OSU
in 2001, had shrunk by $8.4 million over the years to $21.9 million, a decline of 28%. On
August 31, 2017, Appellant applied to the probate court to reopen the Estate and be
1 Appellant administered the Estate as Ivor Young had passed away.
Delaware County, Case No. 19 CAF 11 0060 5
appointed administrator. In his statement in support of his application to reopen,
Appellant explained he “wishes to take certain steps to ensure that the university has fully
complied with its obligations under the written agreement.” August 31, 2017 Statement in
Support. Appellant added, “Contemplated actions include investigating and negotiating
compliance with the agreement, and might include commencement of an action seeking
to enforce the decedent’s agreement through the Office of the Ohio Attorney General or
otherwise.” Id.{¶7} The magistrate scheduled a hearing on Appellant’s application for October
6, 2017. September 6, 2017 Judgment Entry. The magistrate sent notice of the hearing
to OSU and the Ohio AG. OSU filed a memorandum contra Appellant’s application to
reopen on October 6, 2017, to which Appellant filed a response on October 31, 2017, to
which OSU replied on November 13, 2017. The Ohio AG filed a brief objecting to
Appellant’s application on November 13, 2017. Also, on November 13, 2017, Appellant
filed a motion for order declaring party or nonparty status of OSU and the Ohio AG. The
Ohio AG and OSU filed responses to Appellant’s motion concerning their party status on
December 4, 2017, and December 8, 2017, respectively. The Ohio AG asserted he was
a necessary party pursuant to R.C. 109.25(A)-(D). OSU maintained it had a direct and
vital interest in the outcome of the matter and, as such, should be recognized as “already
a party to this proceeding.” The Ohio State University’s Memorandum in Response filed
December 8, 2017 at 5. Both the Ohio AG and OSU advised the trial court they would
seek to intervene if not recognized as parties.
{¶8} The magistrate issued two decisions on August 14, 2018. The magistrate
concluded “it should be declared that The Attorney General of the State of Ohio and The
Delaware County, Case No. 19 CAF 11 0060 6
Ohio State University/The Ohio State University Development Fund are, and have been,
since September 6, 2017 parties to these reopening proceedings, their status as parties
should be ratified.” August 14, 2018 Magistrate’s Decision (Declaring Party Status of
Attorney General and The Ohio State University) at 3, unpaginated. In a separate
decision dated August 14, 2018, the magistrate concluded Appellant’s application to
reopen and appoint fiduciary should be denied. Appellant filed objections to the
magistrate’s decision.
{¶9} Via Judgment Entry filed October 22, 2019, the probate court overruled
Appellant’s objections, and approved and adopted the magistrate’s decisions as orders
of the court. The probate court found Appellant failed to show good cause for reopening
the Estate. The probate court noted the gift was completed during Decedent’s lifetime
and was not part of the Estate. The court probate added the Gift Agreement did “not
retain any right to oversight or enforcement for the donor, his heirs, fiduciary or any other
personal representative.” October 22, 2019 Judgment Entry at 6. The probate court
further found the Ohio AG had the sole power to investigate and enforce the performance
of charitable trusts pursuant to R.C. 109.24.
{¶10} It is from the October 22, 2019 Judgment Entry Appellant appeals, raising
the following assignments of error:
I. THIS COURT SHOULD REVERSE THE JUDGMENT BELOW
BECAUSE IT ERRED AS A MATTER OF LAW IN RULING THAT
APPELLEE OHIO STATE UNIVERSITY IS A PARTY TO THESE
PROCEEDINGS.
Delaware County, Case No. 19 CAF 11 0060 7
II. THIS COURT SHOULD REVERSE THE JUDGMENT BELOW
BECAUSE IT ERRED AS A MATTER OF LAW IN RULING THAT
APPELLEE STATE OF OHIO THROUGH THE ATTORNEY GENERAL IS
A PARTY TO THESE PROCEEDINGS.
III. THIS COURT SHOULD REVERSE THE JUDGMENT BELOW IN
DENYING APPELLANT JEFFREY MORITZ’S APPLICATION TO REOPEN
THE MICHAEL MORITZ ESTATE BECAUSE THE JUDGMENT RESTS
ENTIRELY ON CONCLUSIONS OF LAW THAT ARE NOT YET
JUSTICIABLE, AND SHOULD BE VACATED AS SUCH.
IV. THIS COURT SHOULD REVERSE THE JUDGMENT BELOW IN
DENYING APPELLANT MORITZ’S APPLICATION TO REOPEN THE
MICHAEL MORITZ ESTATE BECAUSE THE COURT BELOW FAILED TO
APPLY THE CORRECT LEGAL STANDARD FOR GOOD CAUSE AND
BECAUSE JEFFREY MORITZ HAS SATISFIED THE CORRECT LEGAL
STANDARD.
III, IV
{¶11} For ease of discussion, we choose to address Appellant’s assignments of
error out of order. In his third assignment of error, Appellant maintains the trial court
committed reversible error in denying his application to reopen Decedent’s Estate
because the decision rests entirely on conclusions of law which are not yet justiciable. In
his fourth assignment of error, Appellant contends the trial court committed reversible
error in denying his application to reopen Decedent’s Estate as the trial court failed to
Delaware County, Case No. 19 CAF 11 0060 8
apply the correct legal standard for good cause and Appellant satisfied the correct legal
standard.
{¶12} An order of the probate court approving and settling a fiduciary's final
account has the effect of a final judgment, which can only be vacated under the limited
procedures set forth in R.C. 2109.35. In re Stropky, 5th Dist. Stark App. No.
2018CA00055, 2018-Ohio-5371, para. 14, citing In re Guardianship of Skrzyniecki, 118
Ohio App.3d 67, 691 N.E.2d 1105 (1997).
{¶13} R.C. 2109.35 provides, in pertinent part:
The order of the probate court upon the settlement of a fiduciary's
account shall have the effect of a judgment and may be vacated only as
follows: * * *
(B) The order may be vacated for good cause shown, other than
fraud, upon motion of any person affected by the order who was not a party
to the proceeding in which the order was made and who had no knowledge
of the proceeding in time to appear in it; provided that, if the account settled
by the order is included and specified in the notice to that person of the
proceeding in which a subsequent account is settled, the right of that person
to vacate the order shall terminate upon the settlement of the subsequent
account. A person affected by an order settling an account shall be
considered to have been a party to the proceeding in which the order was
made if that person was served with notice of the hearing on the account in
accordance with section 2109.33 of the Revised Code, waived that notice,
Delaware County, Case No. 19 CAF 11 0060 9
consented to the approval of the account, filed exceptions to the account,
or is bound by section 2109.34 of the Revised Code * * *
***
An order settling an account shall not be vacated unless the court
determines that there is good cause for doing so, and the burden of proving
good cause shall be upon the complaining party.
{¶14} The decision of whether to grant a motion pursuant to R.C. 2109.35 is within
the sound discretion of a probate court and will not be disturbed absent an abuse of
discretion. Id., citing In re Estate of Smith, 3rd Dist. Seneca No. 13-02-37, 2003-Ohio-
1910. 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 975 (1983).
{¶15} In his Statement in Support of Application to Reopen Estate and Appoint
Fiduciary, Appellant explained the purpose of the reopening as follows:
In June, 2001, less than a year before he was killed in a car accident,
the above referenced decedent, Michael E. Moritz, donated to the Ohio
State University, common stock valued at $30 Million. The donation was
made under a formal agreement which specified exactly how the recipient
university was to use the gift. On behalf of the Estate of Michael E. Moritz,
the Applicant Jeffrey Moritz, wishes to take certain steps to ensure that the
university has fully complied with its obligations under the written
Delaware County, Case No. 19 CAF 11 0060 10
agreement. Contemplated actions include investigating and negotiating
compliance with the agreement, and might include commencement of an
action seeking to enforce the decedent’s agreement through the Office of
the Ohio Attorney General or otherwise. Since the Applicant is only seeking
compliance with the previously negotiated gift agreement, it is respectfully
requested that any requirement of bond be dispensed.
{¶16} Appellant’s intent is clear. He wishes to determine whether OSU “fully
complied with its obligations” under the Gift Agreement and enforce those obligations if
need be; he does not seek to reopen Decedent’s Estate to distribute an asset belonging
to the Estate. See, generally, In re: Estate of Kahn, 5th Dist. Guernsey App. No. No. 13–
CA–33, 2014-Ohio-4721. As the trial court found:
The generous gift that is the subject of [Appellant’s] complaints was
inter vivos and complete before Michael Mortiz’s untimely death. It was not
any part of the estate. The court is unaware of any power that the
fiduciary of an estate possesses to rescind, modify or enforce a
charitable gift completed during the life of the decedent that is not
afforded to any person under ORC 109.24 or other statute. Also,
Michael Moritz was an intelligent, educated, sophisticated lawyer and
business person. The court presumes he knew the nuances of this
transaction and his desires for his gift and its uses better than anyone.
Delaware County, Case No. 19 CAF 11 0060 11
{¶17} October 22, 2019 Judgment Entry at 5-6 (Emphasis added).
{¶18} The trial court added:
The inter vivos gift of Michael Moritz did not retain any right to
oversight or enforcement for the donor, his heirs, fiduciary or any other
personal representative. The Gift Agreement that originated the gift showed
that it was complete and final upon the delivery of the appropriate funds or
property. Unless a donor specifically reserves such a right of enforcement
or oversight, the donor does not have any particular or greater right to
enforce the terms of the charitable gift. (Citation omitted.) Id. at 6.
{¶19} The Ohio AG has exclusive authority pursuant to R.C. 109.24 to enforce the
terms of charitable trusts. R.C. 109.24 provides, in pertinent part:
The attorney general may investigate transactions and relationships
of trustees of a charitable trust for the purpose of determining whether the
property held for charitable * * * purposes has been and is being properly
administered in accordance with fiduciary principles as established by the
courts and statutes of this state. The attorney general is empowered to
require the production of any books or papers which are relevant to the
inquiry.
Delaware County, Case No. 19 CAF 11 0060 12
{¶20} We find the Ohio AG has exclusive authority to enforce the terms of the Gift
Agreement; therefore, it was not necessary for the probate court to reopen the Estate.
Even if the probate court reopened the Estate, Appellant as the fiduciary would not have
the authority under the law to enforce compliance with the obligations under the Gift
Agreement. Further, the issue of whether OSU met its obligations under the Gift
Agreement is a determination to be made exclusively by the Ohio AG.
{¶21} Appellant spends much of his Brief to this Court arguing the Gift Agreement
was actually a contractual commitment between Decedent and OSU and not a “gift”. We
find the probate court correctly found the issue was not yet justiciable. As Appellant
himself quoted in his brief to this court, we are bound by “the cardinal principle of judicial
restraint—if it is not necessary to decide more, it is necessary not to decide more.” State
ex rel. LetOhioVote.org v. Brunner, 123 Ohio St.3d 322, 2009-Ohio-4900, 916 N.E.2d
462, ¶ 51, quoting PDK Laboratories, Inc. v. United States Drug Enforcement
Adm. (C.A.D.C.2004), 362 F.3d 786, 799 (Roberts, J., concurring in part and in judgment)
(Internal quotations omitted). Again, such is a determination for the Ohio AG to pursue.
{¶22} Because Appellant failed to meet his burden of proving good cause to
reopen the Estate, it was not necessary for the probate court to do so.
{¶23} Based upon the foregoing, we find the probate court did not abuse its
discretion in denying Appellant’s application to reopen Decedent’s Estate.
{¶24} Appellant’s third and fourth assignments of error are overruled.
Delaware County, Case No. 19 CAF 11 0060 13
I, II
{¶25} Based upon our disposition of Appellant’s third and fourth assignments of
error, we find Appellant’s first and second assignments of error to be moot under the two-
issue rule.
{¶26} The judgment of the Delaware County Court of Common Pleas, Probate
Division, is affirmed.
By: Hoffman, P.J.
Delaney, J. and
Wise, Earle, J. concur