Kobal v. Edward Jones Secs.

[Cite as Kobal v. Edward Jones Secs., 2021-Ohio-1088.]
COURT OF APPEALS OF OHIO
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOHN E. KOBAL, :
Plaintiff-Appellant, :
No. 109753
v. :
EDWARD JONES SECURITIES, :
ET AL.,
Defendants-Appellees. :
JOURNAL ENTRY AND OPINION
JUDGMENT: AFFIRMED
RELEASED AND JOURNALIZED: April 1, 2021
Civil Appeal from the Cuyahoga County Court of Common Pleas
Case No. CV-20-928021
Appearances:
John E. Kobal, pro se.
Porter Wright Morris & Arthur L.L.P., and C. Darcy
Jalandoni, and W. Hunter West, for appellee Edward
Jones & Co., L.P.
Darren W. DeHaven, for appellee Kathleen Kobal.
MARY J. BOYLE, A.J.:
Plaintiff-appellant, John E. Kobal, appeals the trial court’s judgment
dismissing his claims against defendants-appellees, Kathleen Kobal (“Kathleen”)
and Edward Jones Securities (“Edward Jones”), and against defendant KMK
Consulting, L.L.C. Appellant raises seven assignments of error for our review:
1. Misuse of Res Judicata as an excuse/reason for dismissal of this case
due to fraud and misrepresentation. For res judicata to be properly
applied as an acceptable doctrine for dismissal, the litigation shall be
absent of fraud/misrepresentation. This case has numerous credible
examples of fraud/misrepresentation.
2. Misuse of Res Judicata as an excuse/reason for dismissal of the case
due to collusion/situational circumstances of collusion between
Plaintiff Attorney and opposing Counsel. For res judicata to be applied
as an acceptable doctrine for dismissal, the litigation shall be absent of
collusion and/or situations where collusion was evident considering
actions and/or inactions of the parties. Many credible examples.
3. Plaintiff[’s] claims are not barred by [the] statute of limitations.
4. Trial Court consistently finding ways to sidestep/avoid discovery
phase of the legal process in Mr. Kobal’s case(s) - including this case.
Discovery protects the integrity of a fair proceeding and a fair trial for
all parties.
5. Dismissal of KMK Consulting, L.L.C. was unjustified, improper and
legally abusive considering the overwhelming evidence, circumstances,
obvious identity differences regarding specific offenses for specific
defendants, prejudice and conflict of interest.
6. The actions of the Defendants and the Trial Court are abuse of
process.
7. Trial Court[’s] determination [that] Plaintiff failed to state a claim for
which relief can be granted is improper, inaccurate and not legally
sound when considering the evidence and circumstances.
Finding no merit to his assignments of error, we affirm the trial
court’s judgment.
I. Factual Background and Procedural History
This case is appellant’s latest attempt to relitigate his divorce case
against Kathleen, his ex-wife. A summary of the previous litigation, as explained in
one of appellant’s most recent appeals, will provide helpful context:
Kobal and Kathleen were married in 1976. In 2001, Kathleen filed for
divorce, but later voluntarily dismissed her complaint. In October
2006, Kobal was arrested for criminal charges involving a minor in case
number CR-06-487194-A. The same month, Kobal executed a general
power of attorney naming Kathleen as his attorney-in-fact. The
document provided Kathleen with various powers over Kobal’s estates
and affairs. In November 2006, Kobal and two of his business partners
assisted Kathleen in organizing KMK. According to Kathleen, Kobal’s
goal in organizing this entity was to create a vehicle to “protect the
family from financial ruin” related to his criminal case.
In March 2007, Kobal pleaded guilty to rape and other charges and was
sentenced to 14 years in prison. Kobal did not appeal his criminal
conviction. As of the date of this opinion, Kobal remains incarcerated;
his prison term is set to expire on March 18, 2021. Before Kobal was
incarcerated in April 2007, he transferred various assets, including an
Edward Jones investment account and an RBC Wealth Management
account, to KMK.
In December 2015, Kathleen again filed a complaint for divorce. In
December 2016, a contested trial was held before a magistrate judge.
Because Kobal was incarcerated at the time of the trial, he appeared by
video. At trial, Kobal initially claimed that he had no memory of
transferring an Edward Jones account worth approximately $160,000
to KMK. He ultimately testified that he had authorized this transfer,
but he claimed that he and Kathleen had a verbal agreement that the
funds were “not to be touched.” He also admitted that he transferred
an RBC Wealth Management account to KMK, and he admitted that
there was no verbal agreement regarding any limitations on Kathleen
using or retaining these funds.
The magistrate made numerous findings relating to the division of the
couple’s property. The magistrate determined that the Edward Jones
and RBC Wealth Management were Kathleen’s separate property by
virtue of her ownership of KMK consulting. In May 2017, the trial court
adopted the magistrate’s decision. The divorce decree stated, in
relevant part:
The Edward Jones account and the RBC accounts
presently owned by KMK Consulting shall be transferred
to [Kathleen] and shall remain her property free and clear
of any claim by the Defendant.
Kobal appealed, and this court affirmed the trial court’s decision.
Kobal v. Kobal, 2018-Ohio-1755, 111 N.E.3d 804 (8th Dist.).
Kobal v. RBC Wealth Mgt., 8th Dist. Cuyahoga No. 109775, 2021-Ohio-213, ¶ 3-6.
The instant appeal stems from a case appellant initiated in January
2020 against Edward Jones, Kathleen, and KMK Consulting. The complaint states
that when appellant was incarcerated in 2007, he assigned $160,000 in securities
from his Edward Jones investment account to Walmatt, Inc., d.b.a ABC Bail
Bonding “as collateral for his bond.” Appellant alleged that he instructed an Edward
Jones representative to return the securities to his investment account after the
bond period ended, creating an implied-in-fact contract. The complaint states that
Edward Jones breached the implied-in-fact contract when it “allowed” ABC Bail
Bonding to transfer the $160,000 in securities into an Edward Jones account held
by KMK Consulting without appellant’s “knowledge and express authority.”
Appellant further alleged that in the 2016 divorce trial, Kathleen, her
trial counsel, and KMK Consulting “knowingly and willfully misled” the trial court
to believe that appellant voluntarily transferred ownership of his Edward Jones
investment account to KMK Consulting. Appellant also claimed that KMK
Consulting never registered to operate as a business in Ohio, and all its account
activities with Edward Jones must be rescinded.
Appellant brought claims against Edward Jones for accounting,
breach of contract, constructive fraud, and “reckless negligence.” He brought claims
against KMK Consulting and Kathleen for fraud, unjust enrichment, and
constructive trust. He also brought a claim for “deception and misrepresentation”
against Kathleen. Appellant demanded an accounting, money damages, and
injunctive relief to prevent “further dissipation” of his assets. He also requested to
be held “harmless for any and all [f]ederal, [s]tate and local taxes from 2/1/2007[.]”
In February 2020, Edward Jones and Kathleen filed answers, in
which they denied appellant’s allegations and raised affirmative defenses. Both
answers raised the affirmative defenses of res judicata and failure to state a claim
upon which relief can be granted.
In March 2020, Kathleen filed a motion to dismiss appellant’s claims
against her pursuant to Civ.R. 12(B)(6) for failure to state a claim upon which relief
could be granted. She argued that res judicata and the applicable statutes of
limitations barred his claims, and he failed to plead fraud with particularity. Also in
March 2020, Edward Jones filed a motion for judgment on the pleadings pursuant
to Civ.R. 12(C). Edward Jones also argued that res judicata and the applicable
statutes of limitations barred appellant’s claims, and the claims were otherwise
defective. Appellant filed an opposition to Kathleen’s motion to dismiss but not to
Edward Jones’ motion for judgment on the pleadings.
In May 2020, the trial court granted Kathleen’s motion to dismiss and
Edward Jones’ motion for judgment on the pleadings. The trial court found that all
of appellant’s claims against Edward Jones and Kathleen are barred by res judicata,
barred by the relevant statutes of limitations, and failed to state legal causes of
action. The trial court further found that the defects with appellant’s complaint
likewise apply to the claims he asserted against KMK Consulting (which never
responded to the complaint), and the trial court sua sponte dismissed those claims.
Appellant timely appeals from this judgment.
II. Standard of Review
As an initial matter, we note that Kathleen filed her motion to dismiss
pursuant to Civ.R. 12(B)(6) after she filed her answer. Because Civ.R. 12(B)(6)
motions must be filed before a responsive pleading, we must construe her motion as
a motion for judgment on the pleadings under Civ.R. 12(C). See State ex rel.
Mancino v. Tuscarawas Cty. Court of Common Pleas, 151 Ohio St. 3d 35, 2017-
Ohio-7528, 85 N.E.3d 713, ¶ 8, fn. 2; Tennant v. Huntington Natl. Bank, 8th Dist.
Cuyahoga No. 108993, 2020-Ohio-4063, ¶ 8.
We apply a de novo standard of review to a trial court’s decision on a
motion for judgment on the pleadings filed under Civ.R. 12(C). Vinicky v. Pristas,
163 Ohio App. 3d 508, 2005-Ohio-5196, 839 N.E.2d 88, ¶ 3 (8th Dist.). Granting a
judgment on the pleadings is appropriate where plaintiffs have failed in their
complaint to allege a set of facts that, if true, would establish the defendant’s liability.
Walters v. First Natl. Bank of Newark, 69 Ohio St. 2d 677, 433 N.E.2d 608 (1982).
And, like a motion to dismiss, the factual allegations of the complaint are taken as
true, but unsupported conclusions are insufficient to withstand the motion. See
Moya v. DeClemente, 8th Dist. Cuyahoga No. 96733, 2011-Ohio-5843, ¶ 10.
“Civ.R. 12(C) requires a determination that no material factual issues exist and that
the movant is entitled to judgment as a matter of law.” State ex rel. Midwest Pride
IV, Inc. v. Pontious, 75 Ohio St. 3d 565, 570, 664 N.E.2d 931 (1996). Thus, a trial
court appropriately grants a motion for judgment on the pleadings when it “(1)
construes the material allegations in the complaint, with all reasonable inferences
to be drawn therefrom, in favor of the nonmoving party as true, and (2) finds beyond
doubt that the plaintiff could prove no set of facts in support of his claim that would
entitle him to relief.” Id. We will address appellant’s assignments of error out of
order for ease of discussion.
III. Validity of Claims
In his seventh assignment of error, appellant argues that the trial
court erred in finding that his complaint failed to state a claim for which relief could
be granted. In support of this argument, he maintains that fraud and collusion
“hijacked” the divorce case.
We find that appellant failed to state a claim for accounting,
constructive trust, fraud, constructive fraud, and “deception and
misrepresentation.” First, Kobal’s claims for accounting and constructive trust are
remedies, not independent causes of action. Graham v. Lakewood, 2018-Ohio-
1850, 113 N.E.3d 44, ¶ 58 (8th Dist.) (“A constructive trust is a remedy, not a cause
of action.”); Krohn v. Ostafi, 6th Dist. Lucas No. L-19-1002, 2020-Ohio-1536, ¶ 37
(“An accounting, like a constructive trust, is an equitable remedy, not a cause of
action[.]”).
Second, appellant failed to state a claim for fraud and “deception and
misrepresentation” against Kathleen and KMK Consulting because his complaint
does not plead these claims with particularity.1 A claim for fraud requires proof of
the following elements: (1) a representation or, where there is a duty to disclose,
omission of a fact, (2) which is material to the transaction at hand, (3) made falsely,
with knowledge of its falsity, or with such utter disregard and recklessness as to
whether it is true or false that knowledge may be inferred, (4) with the intent of
misleading another into relying upon it, (5) justifiable reliance upon the
representation or concealment, and (6) a resulting injury proximately caused by the
reliance. Russ v. TRW, Inc., 59 Ohio St. 3d 42, 49, 570 N.E.2d 1076 (1991).
A plaintiff must state the circumstances constituting fraud with
particularity. Civ.R. 9(B). This means that a plaintiff must state “‘the time, place,
and content of the false representation, the fact misrepresented, and the nature of
what was obtained or given as a consequence of the fraud.’” Carter-Jones Lumber
Co. v. Denune, 132 Ohio App. 3d 430, 433, 725 N.E.2d 330 (10th Dist.1999), quoting
Baker v. Conlan, 66 Ohio App. 3d 454, 585 N.E.2d 543 (1st Dist.1990). Particularity
in pleading serves three purposes: (1) protecting defendants’ reputations from ill-
1 Ohio law does not recognize “deception and misrepresentation” as a cause of
action, but we construe this claim as another claim for fraud. See Swanson v. BSA, 4th
Dist. Vinton No. 07CA663, 2008-Ohio-1692, ¶ 17 (treating a claim pleaded as a claim for
deception as a claim of fraud).
defined accusations of deceitful conduct, (2) notifying defendants of the challenged
conduct, and (3) discouraging plaintiffs’ fishing expeditions for undiscovered
fraudulent conduct. Reinglass v. Morgan Stanley Dean Witter, 8th Dist. Cuyahoga
No. 86407, 2006-Ohio-1542, ¶ 20, citing Carter-Jones.
In his appellate brief, appellant argues that his attorney colluded with
Kathleen’s attorney at the divorce trial to deceive the magistrate. He also maintains
that he was tricked at the divorce trial into agreeing that he voluntarily transferred
his Edward Jones investment account to KMK Consulting because Kathleen’s
attorney misrepresented an Edward Jones financial document dated February 12,
2007. He argues he could have transferred securities worth no more than
approximately $14,000 because the rest of the securities from the investment
account were in the possession of ABC Bail Bonding at the time. Appellant attaches
numerous exhibits, including the February 12, 2007 document, to his appellate brief
and reply briefs as evidence of the fraud and collusion. However, we are not
permitted to consider exhibits or arguments that are not part of the trial court
record. App.R. 9(A)(1); see Morgan v. Eads, 104 Ohio St. 3d 142, 2004-Ohio-6110,
818 N.E.2d 1157,¶ 13. Indeed, the exhibits attached to appellant’s reply briefs were
sua sponte stricken, and we cannot consider them on appeal. When reviewing
motions pursuant to Civ.R. 12(C), we are constrained to the allegations in the
pleadings and any writings attached to the pleadings. Bradigan v. Strongsville City
Schools, 8th Dist. Cuyahoga No. 88606, 2007-Ohio-2773, ¶ 11.
The allegations of fraud in appellant’s complaint are vague and
conclusory. In his complaint, appellant alleged that Kathleen, KMK Consulting, and
Kathleen’s counsel “committed willful fraud upon the Court by providing misleading
and known false testimony” to trick the domestic relations court into believing that
appellant voluntarily transferred the investment account to KMK Consulting.
Appellant also alleged that Kathleen’s counsel misrepresented the value of the
investment account. In his affidavit in support of his complaint, appellant stated
that his divorce attorney engaged in collusion with Kathleen’s attorney.
Appellant’s complaint in this case does not present a claim for fraud
against either party’s trial counsel; the only allegations of fraud relevant to Kathleen
and KMK Consulting are that they presented false testimony. But appellant does
not identify the content of the allegedly false representations. See Johnson v.
Johnson, 8th Dist. Cuyahoga No. 108420, 2020-Ohio-1381, ¶ 28 (claimant did not
plead fraud with the necessary particularity by alleging the defendant misled the
court and other entities by spreading rumors, without further detail); Becker v.
Becker, 12th Dist. Clermont No. CA97-01-001, 1997 Ohio App. LEXIS 3650, 8-9
(Aug. 11, 1997) (appellant’s allegations that his ex-wife and her attorney made false
statements regarding marital debts at the divorce trial did not meet Civ.R. 9(B)’s
particularity requirement). We find that appellant failed to meet the heightened
pleading standard for his claims of fraud and “deception and misrepresentation”
against Kathleen and KMK Consulting.
Lastly, appellant did not plead his claim for constructive fraud against
Edward Jones with particularity. Constructive fraud is “a breach of a legal or
equitable duty, which, irrespective of moral guilt of the fraud feasor [sic], the law
declares fraudulent, because of its tendency to deceive others, to violate public or
private confidence, or to injure public interests.” Cohen v. Estate of Cohen, 23 Ohio
St.3d 90, 91-92, 491 N.E.2d 698 (1986). Constructive fraud does not require
fraudulent intent; “it is dependent on a special confidential or fiduciary relationship,
thereby giving rise to a duty to disclose.” Schmitz v. NCAA, 2016-Ohio-8041, 67
N.E.3d 852, ¶ 63 (8th Dist.). In a fiduciary relationship, “special confidence and
trust is reposed in the integrity and fidelity of another and there is a resulting
position of superiority or influence, acquired by virtue of this special trust.”
Federated Mgt. Co. v. Coopers & Lybrand, 137 Ohio App. 3d 366, 384, 738 N.E.2d
842 (10th Dist.2000).
In his complaint, appellant sets forth two paragraphs for his
constructive fraud claim. In one paragraph, he alleges that Edward Jones breached
its duty to appellant by allowing his assets to be transferred to KMK Consulting. In
the other paragraph, he states that KMK Consulting was appellant’s fiduciary agent
and breached a legal duty by accepting the securities from ABC Bail Bonding “under
a knowing and willful falsity of representation in a civil proceeding in 12/2016.”
These allegations do not set forth a “special confidential or fiduciary relationship”
between appellant and Edward Jones that would give rise to a claim for constructive
fraud. Appellant has failed to state a constructive fraud claim.
Accordingly, the trial court did not err in dismissing appellant’s
claims for accounting, constructive trust, fraud, constructive fraud, and “deception
and misrepresentation.” We therefore overrule appellant’s seventh assignment of
error.
IV. Res Judicata
In his first assignment of error, appellant argues that res judicata does
not bar his claims due to fraud and misrepresentation in the divorce trial. Likewise,
in his second assignment of error, he argues that res judicata does not preclude his
claims because his counsel at the divorce trial colluded with Kathleen and her trial
counsel. We will therefore address these assignments of error together. Because we
have already concluded that appellant failed to state a claim for accounting,
constructive trust, fraud, constructive fraud, and “deception and
misrepresentation,” we will address the application of res judicata to appellant’s
remaining claims for breach of contract, unjust enrichment, and “reckless
negligence.”
Res judicata precludes “‘the relitigation of a point of law or fact that
was at issue in a former action between the same parties and was passed upon by a
court of competent jurisdiction.’” State ex rel. Kroger Co. v. Indus. Comm., 80 Ohio
St.3d 649, 651, 687 N.E.2d 768 (1998), quoting Office of Consumers’ Counsel v. Pub.
Util. Comm., 16 Ohio St. 3d 9, 10, 475 N.E.2d 782 (1985). The doctrine of issue
preclusion is one of two related concepts, along with claim preclusion, within the
legal doctrine of res judicata. Grava v. Parkman Twp., 73 Ohio St. 3d 379, 381, 653
N.E.2d 226 (1995). Under the concept of claim preclusion, “[a] valid, final judgment
[] on the merits bars all subsequent actions based upon any claim arising out of the
transaction or occurrence that was the subject matter of the previous action.” Id. at
syllabus.
Issue preclusion, also known as collateral estoppel, provides that “a
fact or a point that was actually and directly at issue in a previous action, and was
passed upon and determined by a court of competent jurisdiction, may not be drawn
into question in a subsequent action between the same parties or their privies,
whether the cause of action in the two actions be identical or different[.]” Fort Frye
Teachers Assn. v. State Emp. Relations Bd., 81 Ohio St. 3d 392, 395, 692 N.E.2d 140
(1998). While claim preclusion prevents relitigation of the same cause of action,
issue preclusion bars relitigation of an issue that has been actually and necessarily
litigated and determined in a prior action. Id., citing Whitehead v. Gen. Tel. Co., 20
Ohio St. 2d 108, 112, 254 N.E.2d 10 (1969). Here, we are concerned solely with issue
preclusion or collateral estoppel.
In Thompson v. Wing, 70 Ohio St. 3d 176, 637 N.E.2d 917 (1994), the
Ohio Supreme Court set forth three requirements for the application of collateral
estoppel or issue preclusion:
Collateral estoppel applies when the fact or issue (1) was actually and
directly litigated in the prior action, (2) was passed upon and
determined by a court of competent jurisdiction, and (3) when the
party against whom collateral estoppel is asserted was a party in privity
with a party to the prior action.
Id. at 183, citing Whitehead at paragraph two of the syllabus. “The essential test in
determining whether the doctrine of collateral estoppel is to be applied is whether
the party against whom the prior judgment is being asserted had full representation
and a ‘full and fair opportunity to litigate that issue in the first action.’” Cashelmara
Villas Ltd. Partnership v. DiBenedetto, 87 Ohio App. 3d 809, 813, 623 N.E.2d 213
(8th Dist.1993), quoting Hicks v. De La Cruz, 52 Ohio St. 2d 71, 74, 369 N.E.2d 776
(1977).
We first note that res judicata is generally not a proper ground for
dismissal pursuant to a Civ.R. 12(C) motion because review of such a motion is
limited to the pleadings. See Hawke, Inc. v. Universal Well Servs., 9th Dist. Summit
No. 25056, 2010-Ohio-4730, ¶ 12. However, the trial court here was permitted to
take judicial notice of the divorce case judgments because the pleadings incorporate
them. See Hammerschmidt v. Wyant Woods Care Ctr., 9th Dist. Summit No.
19779, 2000 Ohio App. LEXIS 6166, 2 (Dec. 27, 2000) (trial court properly granted
judgment on pleadings based on res judicata and took judicial notice of a prior
judgment that was incorporated into the pleadings). The complaint and appellant’s
accompanying affidavit repeatedly refer to “the divorce trial – 12/19/2016” and the
magistrate’s decision. Both answers raise res judicata as an affirmative defense, and
Kathleen’s answer specifically stated that appellant’s claims have been addressed by
the Eighth District Court of Appeals, which opinion is publicly available.
In the divorce case, the trial court found that appellant voluntarily
transferred the Edward Jones investment account to KMK Consulting, and the
account was Kathleen’s separate property because of her ownership in KMK
Consulting. Kobal v. Kobal, 2018-Ohio-1755, 111 N.E.3d 804, ¶ 31 (8th Dist.).
Appellant appealed, raising an assignment of error that the funds in the Edward
Jones investment account were “his and his alone.” Id. at ¶ 16. This court overruled
his assignment of error. Id. at ¶ 33. We explained that appellant testified he
transferred his Edward Jones investment account to KMK Consulting to protect the
asset from liability related to the criminal charges against him:
[Appellant] testified that his mother left him money when she died in
2002, which he invested in the account with Edward Jones. He
estimated that at the time he was incarcerated in April 2007, the
account was worth approximately $160,000. At the time of trial, the
account had a value of $165,795.90. At trial, [appellant] initially
claimed to have no memory of transferring the money, claiming
“[Kathleen] moved the money from my [Edward Jones] account into
KMK Consulting.” On cross-examination, Kathleen’s counsel
presented [appellant] with a receipt of the transfer authorization with
his signature. [Appellant] then admitted to authorizing the transfer,
explaining that he transferred the account to KMK Consulting to
insulate this asset from attachment in any potential civil action related
to the criminal charges he faced. [Appellant] further testified that he
and Kathleen had “a verbal understanding that [the funds were] not to
be touched,” because it was his “inheritance money.” He admitted
there was no written agreement providing Kathleen could not use or
retain the funds. [Appellant] further admitted he had transferred the
Edward Jones and RBC Wealth Management accounts to KMK
Consulting to protect these assets.
Id. at ¶ 11.
Collateral estoppel applies here to bar appellant’s claims for breach of
contract, unjust enrichment, and “reckless negligence.” First, the issue of whether
appellant voluntarily transferred the investment account to KMK Consulting was
actually and directly litigated in the divorce case. Second, the Cuyahoga County
Domestic Relations Court, a court of competent jurisdiction over the divorce case,
determined that appellant voluntarily transferred the investment account to KMK
Consulting, and this court affirmed the judgment of the domestic relations court.
Third, appellant was a party in the divorce case, was represented by counsel, and
had a full and fair opportunity to litigate the issue. The transfer of appellant’s
investment account is the basis of appellant’s claims for breach of contract, unjust
enrichment, and “reckless negligence.” Indeed, the transfer underlies all appellants’
claims in this lawsuit except for his claims of fraud and “deception and
misrepresentation” during the divorce case against KMK Consulting and Kathleen.
Collateral estoppel therefore bars these claims.
Appellant argues that the doctrine of res judicata does not preclude
his claims due to fraud, misrepresentation, and collusion during the divorce case.
“A judgment obtained by way of fraud or collusion may not be used as a basis for
applying principles of res judicata.” Fought v. Fought, 8th Dist. Cuyahoga No.
54824, 1988 Ohio App. LEXIS 5189, 2-3 (Dec. 22, 1988). However, a party
attempting to avoid the application of res judicata by asserting allegations of fraud
must plead “this assertion with the required particularity.” Carman v. LeMasters,
4th Dist. Jackson No. 638, 1990 Ohio App. LEXIS 4472, 10 (Oct. 1, 1990); see also
Green v. Cumberland, 4th Dist. Highland No. 92 CA 801, 1992 Ohio App. LEXIS
5687, 10-11 (Oct. 28, 1992) (appellant failed to sufficiently allege fraud or collusion
in the prior judgment when he alleged only that the court colluded with the appellees
by preventing depositions and acting “unfairly”).
Appellant maintains that his counsel for the divorce trial colluded
with Kathleen and her attorney to present knowingly false testimony and to trick
him into testifying that he voluntarily transferred the investment account. However,
as previously discussed, although appellant’s brief provides more detailed
arguments of fraud and collusion, the allegations in his complaint fail to state fraud
with particularity. The allegations of fraud therefore cannot prevent the application
of collateral estoppel.
Accordingly, we find that the doctrine of res judicata bars appellant’s
claims for breach of contract, unjust enrichment, and “reckless negligence.”2
Accordingly, we overrule appellant’s first and second assignments of error.
V. Statute of Limitations
In his third assignment of error, appellant contends that his claims
are timely because he did not discover the defendants’ misconduct until the 2016
divorce trial. We first note that all of appellant’s claims either failed to state a claim
upon which relief can be granted or are precluded by the doctrine of res judicata (or
both). However, most of his claims are also time barred.
Claims for breach of oral contracts and unjust enrichment have a six-
year statute of limitations. R.C. 2305.07. Ohio does not recognize a claim for
“reckless negligence,” but negligence claims have a four-year statute of limitations.
R.C. 2305.09(D). Fraud claims also have a four-year statute of limitations.
2 Res judicata would likewise preclude his claims for accounting, constructive trust,
and constructive fraud against Edward Jones, for which appellant also failed to state a
claim upon which relief could be granted.
R.C. 2305.09(C). As previously discussed, accounting and constructive trust are not
causes of action, so we exclude these claims from our discussion.
Appellant’s claims for fraud and “deception and misrepresentation”
arise from the December 2016 divorce trial. Appellant therefore timely brought
these claims in his January 2020 complaint. However, appellant’s claims for breach
of contract, unjust enrichment, “reckless negligence,” and constructive fraud stem
from the 2007 transfer of securities from ABC Bail Bonding to KMK Consulting’s
investment account with Edward Jones. Therefore, the statute of limitations for
these claims have long since expired.
Appellant maintains that the statute of limitations for his claims did
not begin to run until December 2016 because he did not discover the defendants’
misconduct until the divorce trial. The Ohio Supreme Court has explained the
discovery rule:
Generally, a cause of action accrues and the statute of limitations
begins to run at the time the wrongful act was committed. However,
the discovery rule is an exception to this general rule and provides that
a cause of action does not arise until the plaintiff discovers, or by the
exercise of reasonable diligence should have discovered, that he or she
was injured by the wrongful conduct of the defendant.
Norgard v. Brush Wellman, 95 Ohio St. 3d 165, 2002-Ohio-2007, 766 N.E.2d 977,
¶ 8. “A court may invoke the discovery rule ‘in situations where the injury
complained of may not manifest itself immediately and, therefore, fairness
necessitates allowing the assertion of a claim when discovery of the injury occurs
beyond the statute of limitations.’” Cristino v. Admr., 2012-Ohio-4420, 977 N.E.2d
742, ¶ 40 (10th Dist.), quoting NCR Corp. v. United States Mineral Prods. Co., 72
Ohio St. 3d 269, 271, 649 N.E.2d 175.
We decline to apply the discovery rule to this case to extend the time
limitations for appellant’s claims for breach of contract, unjust enrichment,
“reckless negligence,” and constructive fraud. This is not a case “where the injury
complained of may not manifest itself immediately.” Appellant knew since 2007, or
should have known by the exercise of reasonable diligence, that ABC Bail Bonding
did not return approximately $160,000 worth of securities to his Edward Jones
investment account. Appellant did not bring these claims until 13 years later. We
do not believe that, under these circumstances, “fairness necessitates allowing the
assertion of a claim when discovery of the injury occurs beyond the statute of
limitations.” We find that appellant’s claims for breach of contract, unjust
enrichment, “reckless negligence,” and constructive fraud are time barred.
Accordingly, we overrule appellant’s third assignment of error.
Although his claims for fraud and “deception and misrepresentation” against
Kathleen and KMK Consulting would have been timely, he failed to plead them with
the required particularity, as we previously discussed.
VI. Discovery
In his fourth assignment of error, appellant argues that the trial court
improperly “sidestep[ped]” discovery in this case and in other, unidentified
proceedings. He requests that this court require discovery to be completed in this
case. However, appellant cannot challenge here the discovery proceedings from
previous cases. In this case, the magistrate properly found that appellant could
prove no set of facts in support of his claims that would entitle him to relief, and no
amount of discovery would change the outcome. We therefore overrule appellant’s
fourth assignment of error.
VII. Dismissal of KMK Consulting
In his fifth assignment of error, appellant argues that the trial court
erred when it dismissed his claims against KMK Consulting because it acted as both
the “defense lawyer and [the] judge.” “In general, a court may dismiss a complaint
on its own motion pursuant to Civ.R. 12(B)(6) only if the parties are given notice of
the court’s intention to dismiss and an opportunity to respond.” State ex rel.
Edwards v. Toledo City School Dist. Bd. of Edn., 72 Ohio St. 3d 106, 108, 647 N.E.2d
799 (1995). However, there is an exception to this general rule: “Sua sponte
dismissal of a case on the merits without notice is appropriate only if the complaint
is frivolous or the claimant obviously cannot prevail on the facts alleged in the
complaint.” State ex rel. Scott v. Cleveland, 112 Ohio St. 3d 324, 2006-Ohio-6573,
859 N.E.2d 923, ¶ 14; see also Beck v. Lally, 8th Dist. Cuyahoga Nos. 109374 and
109429, 2020-Ohio-4305, ¶ 31. Here, as previously discussed, appellant could
obviously not prevail on the facts alleged. Accordingly, the trial court did not err in
dismissing the claims against KMK Consulting, and we overrule appellant’s fifth
assignment of error.
VIII. Abuse of Process
In his sixth assignment of error, appellant raises a claim for abuse of
process against the defendants and the domestic relations court. Appellant makes
this argument for the first time on appeal, and as such has waived all but plain error.
Appellant, however, failed to invoke the plain-error doctrine on appeal, much less
make a showing that plain error occurred below. Under these circumstances, we
need not address it. See State v. Gavin, 4th Dist. Scioto No. 13CA3592, 2015-Ohio-
2996, ¶ 25, citing State v. Quarterman, 140 Ohio St. 3d 464, 2014-Ohio-4034, 19
N.E.3d 900 (an appellate court need not consider plain error where appellant fails
to timely raise plain-error claim); State v. Sims, 10th Dist. Franklin No. 14AP-1025,
2016-Ohio-4763, ¶ 11 (appellant cannot meet burden of demonstrating error on
appeal when she preserved only plain error and did not argue plain error on appeal);
In re A.R., 12th Dist. Butler No. CA2015-08-143, 2016-Ohio-4919, ¶ 33 (appellant is
precluded from raising plain error on appeal where he does not argue it in his brief).
Accordingly, we overrule appellant’s sixth assignment of error.
Even construing the allegations in the complaint in favor of appellant,
we find that he can prove no set of facts that would entitle him to relief on any of his
claims. The trial court properly granted the motions of Kathleen and Edward Jones
and dismissed the claims against KMK Consulting.
Judgment affirmed.
It is ordered that appellees recover from appellant the costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to said court to carry this judgment
into execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27
of the Rules of Appellate Procedure.
MARY J. BOYLE, ADMINISTRATIVE JUDGE
LARRY A. JONES, SR., J., and
MICHELLE J. SHEEHAN, J., CONCUR