H&H Farms, Inc. v. Huddle
| Decision Date | 22 May 2013 |
| Docket Number | Case No. 3:13 CV 371 |
| Court | U.S. District Court — Northern District of Ohio |
| Parties | H&H FARMS, INC., et al., Plaintiffs, v. JAMES HUDDLE, Defendant. |
MEMORANDUM OPINION AND ORDER
Plaintiffs H&H Farms, Inc. and Dwight Huddle filed a Complaint in the Henry County Court of Common Pleas seeking a declaratory judgment finding their lease agreement valid with respect to certain real estate. (Doc. 1-1). Defendant James Huddle, who lives in Colorado, removed the case to this Court and filed a Motion to Dismiss pursuant to Federal Civil Rule 12(b)(6). (Docs. 1, 4). James also filed a Motion to Stay Discovery, which the Court held in abeyance following the Case Management Conference. (Docs. 5, 8). James Huddle argues that even accepting the facts alleged in the Complaint as true, Dwight and H&H Farms have failed to state a claim upon which relief can be granted - namely that their lease is valid and enforceable. (See Doc. 4). H&H Farms and Dwight filed an Opposition (Doc. 11), to which James filed a Reply (Doc. 12). The Court has jurisdiction under 28 U.S.C. § 1332, and the parties consented to the undersigned's exercise of jurisdiction in accordance with 28 U.S.C. § 636(c) and Civil Rule 73. (Doc. 7). The Court heard oral arguments on the Motion to Dismiss on May 3, 2013. (Non-document entry dated May 3, 2013). For the reasons explained below, the Court denies James's Motion to Dismiss.
The dispute pertains to approximately 112 acres of farmland in Henry County, Ohio, known as "Overhome Farm." Some years ago, Overhome Farm was wholly owned by Dwight Huddle and his now-deceased wife, Hazel. (Doc. 1-1, at ¶ 4; Doc. 11, at 3). Over the years, Dwight and Hazel transferred undivided fractional interests in Overhome Farm to their son, James Huddle. (Doc. 1-1, at ¶ 4). Presently, James owns approximately 94 percent of Overhome Farm as an undivided fractional interest, while Dwight retains a 6 percent undivided fractional interest in the land. (Doc. 1-1, at ¶¶ 2-4). The parties hold the land as tenants in common. (Doc. 1-1, at ¶ 5).
Historically, H&H Farms was owned by Dwight Huddle and his other son, John Huddle, Sr. (Doc. 1-1, at ¶ 6). H&H Farms rented and farmed Overhome Farm for many years, paying cash rent to Dwight. (Doc. 1-1, at ¶¶ 6-7). Dwight collected rent from H&H Farms, paid for upkeep of the buildings, paid taxes and insurance, and distributed net rental income to the co-tenants (himself and James Huddle) in proportion to their interests. (Doc. 1-1, at ¶ 7). Since 2007, H&H Farms has been owned by John Huddle, Sr. and his son John Huddle, Jr. (Dwight's grandson and James's nephew). (Doc. 1-1, at ¶ 8). Dwight no longer owns any part of H&H Farms. (Doc. 1-1, at ¶ 8).
On June 27, 2012, Dwight entered into a Farm Ground Rental Agreement (Rental Agreement) with H&H Farms. . Dwight signed the Rental Agreement as one of the tenants in common of Overhome Farm. (Doc. 1-1, at ¶ 9). The Rental Agreement, which was recorded, granted H&H Farms the right to use Overhome Farm for eleven years in exchange for $150.00 per acre per year. . Through legal counsel, James alleged the Rental Agreement was not enforceable and threatened to treat H&H Farms and its owners John Huddle, Sr. and John Huddle, Jr. (his brother and nephew) as trespassers if they ever attempted to farmOverhome Farm. (Doc. 1-1, at ¶ 10). Dwight Huddle and H&H Farms ask the Court to declare their Rental Agreement valid and enforceable. (Doc. 1-1). James Huddle asks the Court to dismiss the Complaint for failing to state a claim upon which relief can be granted.
When deciding a motion to dismiss under Federal Civil Rule 12(b)(6), the Court tests the complaint's legal sufficiency. "In determining whether to grant a Rule 12(b)(6) motion, the court primarily considers the allegations in the complaint, although matters of public record, orders, items appearing in the record of the case, and exhibits attached to the complaint, also may be taken into account." Amini v. Oberlin College, 259 F.3d 493, 502 (6th Cir. 2001). The court is required to accept the allegations stated in the complaint as true, while viewing the complaint in a light most favorable to the plaintiff. Hishon v. King & Spalding, 467 U.S. 69, 73 (1984); Scheuer v. Rhodes, 416 U.S. 232, 236 (1974); Westlake v. Lucas, 537 F.2d 857, 858 (6th Cir. 1976).
Although a complaint need not contain "detailed factual allegations," it does require more than "labels and conclusions" or "a formulaic recitation of the elements of a cause of action." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, a complaint survives a motion to dismiss if it "contain[s] sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). And "[a] claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Hensley Mfg. v. ProPride, Inc., 579 F.3d 603, 609 (6th Cir. 2009) (quoting Iqbal, 129 S. Ct. at 1949). This standard for Rule 12(b)(6) applies to "all civil actions." Id. at n.4 (internal quotation omitted).
The Court must accept the Complaint's allegations as true for purposes of the Motion to Dismiss. Each side strenuously argues the law clearly establishes its assertions. In essence, the question boils down to this: Does Ohio law permit one co-tenant in common who owns an undivided interest in land to lease the entirety of the property in question without his co-tenant's assent? A review of Ohio property law reveals the simple answer to that question is "yes." Therefore, the Court cannot dismiss the Complaint for failing to state a claim upon which relief can be granted.
Ohio defines a tenancy in common as "a joint interest in property, the only essential element of which is a unity or right of possession." Koster v. Boudreaux, 11 Ohio App. 3d 1, 5 (Ohio Ct. App. 1982) (cited by F.D.I.C. v. Miller, 2007 WL 915129, *5 n.1 (N.D. Ohio 2007)). Each tenant in common has a separate and distinct title, and each holds his title independently of the other co-tenants. Id. Any co-tenant "has a right to enter upon the common estate[] and take possession of the property, subject only to the right of his co-tenant[] to take possession", and a co-tenant who takes possession is not subject to eviction even if his proportional share is less than that of the other co-tenants. Collins v. Jackson, 34 Ohio App. 3d 101, 103 (Ohio Ct. App. 1986) (citing Cohen v. Cohen, 89 Ohio App. 389 (Ohio Ct. App. 1951), rev'd on other grounds, 157 Ohio St. 503 (1952)).
A co-tenant out of possession is entitled to receive his share of the reasonable rental value of the property exclusively used by the co-tenant in possession, regardless of whether the co-tenants have a formal lease arrangement granting exclusive possession or use to one co-tenant. Modic v. Modic, 91 Ohio App. 3d 775, 779 (Ohio Ct. App. 1993) (citing Cohen, 157 Ohio St. at 503)). This right stems from Ohio Revised Code § 5307.21, which provides, "One tenant in common . . . mayrecover from another tenant in common . . . his share of rents and profits received by such tenant in common . . . according to the justice and equity of the case." See also Modic, 91 Ohio App. 3d at 779; Collins, 34 Ohio App. 3d at 103 (); Lipps v. Lipps, 90 Ohio App. 578, 579 (Ohio Ct. App. 1951) (). In Cohen, the Ohio Supreme Court analyzed § 5307.21's statutory predecessor and found "a tenant in common . . . who . . . has sole possession of the premises, is liable to account to his cotenants for their share of the reasonable rental value of such occupancy, possession and use." Cohen, 157 Ohio St. at Syllabus, ¶ 1.
The law presumes the possession of some co-tenants is the possession of all, and there must be proof showing an assertion of ownership to the exclusion of the co-tenant out of possession to establish a violation of that co-tenant's interests. See Ferenbaugh v. Ferenbaugh, 104 Ohio St. 556, 559-60 (1922). The facts alleged in the Complaint contained no indication James ever requested to physically possess the tillable farm land or was denied his ownership rights in Overhome Farm.1 Dwight's possession of the land thus was not contrary to James's ownership interest because the law assumes the possession of one co-tenant is the possession of all. As the co-tenant in sole physical possession of the land, however, Ohio law imposed on Dwight the duty to account for rents and profits, and to pay James his share of the reasonable rental value of the property - 94 percent of all net rental income.
Ohio law holds "[i]t is axiomatic that when an owner conveys a leasehold estate, the owner retains his fee simple interest in the property." Broerman v. Blanke, 1999 WL 280288, *2 (Ohio Ct. App. 1999) (citing Smith v. Harrison, 42 Ohio St. 180 (1884)). In Broerman, brother and sister Julius L. Broerman and Doris Blanke each owned 1/7 of the subject property, having inherited these shares from their parents. Broerman, 1999 WL 280288 at *1 n.1. Before the parties' parents died, Richard Blanke entered into a written lease with them allowing him to farm the subject property for a term of three years, automatically renewable in one year intervals unless either party gave a 90-day advance notice. Id. at *1. Mr. Blanke was thus a lessee of the property, but neither a co-tenant in common nor an owner in any...
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