Addison Holdings, LLC v. Fox, Byrd & Co.

Citation2022 Ohio 4784
Decision Date20 December 2022
Docket Number21CA8
PartiesADDISON HOLDINGS, LLC, ET AL., Plaintiffs-Appellants, v. FOX, BYRD & COMPANY, P.C., ET AL. Defendants-Appellees.
CourtUnited States Court of Appeals (Ohio)

2022-Ohio-4784

ADDISON HOLDINGS, LLC, ET AL., Plaintiffs-Appellants,
v.
FOX, BYRD & COMPANY, P.C., ET AL. Defendants-Appellees.

No. 21CA8

Court of Appeals of Ohio, Fourth District, Jackson

December 20, 2022


CIVIL APPEAL FROM COMMON PLEAS COURT

Daniel R. Swetnam, Columbus, Ohio, and Michael R. Sklaire, McLean, Virginia, for appellants.

Richard G. Witkowski and R. Christopher Yingling, Cleveland, Ohio, for appellees.

DECISION AND JUDGMENT

Peter B. Abele, Judge

{¶1} This is an appeal from a Jackson County Common Pleas Court summary judgment in favor of Fox, Byrd & Company, P.C. (Fox Byrd), defendant below and appellee herein. Addison Holdings, LLC and Craig Donley, plaintiffs below and appellants herein, raise the following assignments of error for review:

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FIRST ASSIGNMENT OF ERROR
"THE TRIAL COURT ERRED BY CONCLUDING THAT PLAINTIFFS-APPELLANTS WERE NOT WITHIN THE CLASS OF PERSONS TO WHOM DEFENDANT FOX, BYRD & COMPANY, P.C. OWED A DUTY UNDER HADDON VIEW INV. CO. V. COOPERS & LYBRAND, 70 OHIO ST.2D 154, 436 N.E.2D 212 (1982)."
SECOND ASSIGNMENT OF ERROR:
"THE TRIAL COURT ERRED BY GRANTING SUMMARY JUDGMENT IN FAVOR OF DEFENDANT FOX, BYRD & COMPANY, P.C. SINCE THERE WERE GENUINE ISSUES OF MATERIAL FACT WHICH SHOULD HAVE BEEN DECIDED BY A JURY."
THIRD ASSIGNMENT OF ERROR:
"THE TRIAL COURT ERRED BY RULING ON AN ISSUE NOT RAISED BY DEFENDANT FOX, BYRD & COMPANY, P.C. IN ITS MOTION FOR SUMMARY JUDGMENT."
FOURTH ASSIGNMENT OF ERROR:
"THE TRIAL COURT ERRED BY GRANTING SUMMARY JUDGMENT ON THE ISSUE OF JUSTIFIABLE RELIANCE SINCE THERE WERE GENUINE ISSUES OF MATERIAL FACT WHICH SHOULD HAVE BEEN DECIDED BY A JURY."
FIFTH ASSIGNMENT OF ERROR:
"THE TRIAL COURT ERRED BY GRANTING SUMMARY JUDGMENT ON PLAINTIFFS-APPELLANTS' CONSPIRACY CLAIM."

{¶2} Appellants collectively invested nearly $3 million in a tire business that Jason Adkins owned, Landash Corporation (Landash). Appellants later learned that Adkins lured them into

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a Ponzi scheme. Appellants subsequently filed a complaint against appellee, the accounting firm that prepared financial compilations for two of Adkins' businesses (Midwest Coal, LLC and Landash) and a 2014 tax return for Adkins and his wife.

{¶3} Appellants asserted that appellee negligently or intentionally misrepresented the financial position of Adkins' businesses and that appellants relied upon the misrepresentations when they decided to invest in Landash. Appellants claimed that appellee is liable for their financial losses under the following theories: (1) negligence; (2) negligent misrepresentation; (3) intentional misrepresentation; and (4) civil conspiracy.

{¶4} After the parties conducted discovery, appellee filed a summary judgment motion and asserted that appellants could not demonstrate that appellee owed appellants a duty because, when appellee prepared the financial documents, appellee did not know that (1) appellants existed, (2) Adkins would provide the documents to appellants, or (3) appellants would rely upon the documents. Appellee further pointed out that it addressed the financial compilations to Adkins' businesses and contained disclaimers to inform readers that appellee did not audit the businesses and that appellee made no representations regarding the accuracy of the financial information.

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{¶5} Appellee also argued that appellants could not maintain their intentional misrepresentation claim because none of the evidence shows that appellee had any communication with appellants or made any representation to appellants. Appellee also asserted that it had no duty to disclose due to the lack of any relationship between appellee and appellants.

{¶6} Appellants asserted they are members of a limited class of investors and appellee specifically foresaw that appellants, when deciding whether to invest in Adkins' business, would rely upon the financial documents that appellee prepared for Adkins' businesses. Appellants therefore argued that appellee owed them a duty of care and that they relied upon the financial documents when they decided to invest in Adkins' business.

{¶7} To support their claim that appellee owed them a duty, appellants relied upon the depositions and documents and contended that the evidence establishes (1) appellee knew that Adkins used investors and short-term financing to fund his business, and (2) this knowledge demonstrates that appellee knew Adkins would show appellee's financial documents to potential

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investors.[1] Appellants claimed this knowledge illustrates that they were a limited class of investors whose reliance upon appellee's representation was specifically foreseen. As such, appellants asserted that appellee owed appellants a duty.

{¶8} The trial court, however, disagreed with appellants and concluded that the evidence failed to show that appellee had any knowledge that Adkins intended to provide the financial documents to a limited class of investors. Instead, the court determined that the evidence merely indicated "that Adkins might show the tax returns and financial statements to the general investing public." The court additionally found that appellants did not justifiably rely upon the financial compilations because the financial compilations included disclaimers to warn readers that the compilations had not been audited and that appellee did not provide any assurances or opinions regarding the financial information. The court concluded that the existence of these disclaimers negated, as a matter of law, appellants' claim of justifiable reliance. The court further pointed out that appellants did not identify "what is actually false or misrepresented in the Fox Byrd documents" or "what

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misrepresentations they justifiably relied upon."

{¶9} Thus, the trial court concluded that no genuine issues of material fact remained regarding appellants' claims for negligence, negligent misrepresentation, intentional misrepresentation, or civil conspiracy. Consequently, the court entered summary judgment in appellee's favor. This appeal followed.

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{¶10} In all of their assignments of error, appellants assert that the trial court erred by entering summary judgment in appellee's favor. We therefore first set forth the standard of review that applies when appellate courts review summary judgment decisions.

{¶11} Appellate courts conduct a de novo review of trial court summary judgment decisions. E.g., State ex rel. Novak, L.L.P. v. Ambrose, 156 Ohio St.3d 425, 2019-Ohio-1329, 128 N.E.3d 209, ¶ 8; Pelletier v. Campbell, 153 Ohio St.3d 611, 2018-Ohio-2121, 109 N.E.3d 1210, ¶ 13; Grafton v. Ohio Edison Co., 77 Ohio St.3d 102, 105, 671 N.E.2d 241 (1996). Thus, an appellate court must independently review the record to determine if summary judgment is appropriate and need not defer to the trial court's decision. Grafton, 77 Ohio St.3d at 105.

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{¶12} Civ.R. 56(C) provides, in relevant part, as follows:

* * * Summary judgment shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, written admissions, affidavits, transcripts of evidence, and written stipulations of fact, if any, timely filed in the action, 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. No evidence or stipulation may be considered except as stated in this rule. A summary judgment shall not be rendered unless it appears from the evidence or stipulation, and only from the evidence or stipulation, that reasonable minds can come to but one conclusion and that conclusion is adverse to the party against whom the motion for summary judgment is made, that party being entitled to have the evidence or stipulation construed most strongly in the party's favor.

{¶13} Accordingly, pursuant to Civ.R. 56, a trial court may not award summary judgment unless the evidence demonstrates that: (1) no genuine issue as to any material fact remains to be litigated; (2) the moving party is entitled to judgment as a matter of law; and (3) after viewing the evidence most strongly in favor of the nonmoving party, reasonable minds can come to but one conclusion, and that conclusion is adverse to the nonmoving party. Pelletier at 13; M.H. v. Cuyahoga Falls, 134 Ohio St.3d 65, 2012-Ohio-5336, 979 N.E.2d 1261, 12; Temple v. Wean United, Inc., 50 Ohio St.2d 317, 327, 364 N.E.2d 267 (1977).

{¶14} Under Civ.R. 56, the moving party bears the initial burden to inform the trial court of the basis for the motion and

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to identify those portions of the record that demonstrate the absence of a material fact. Vahila, supra; Dresher v. Burt, 75 Ohio St.3d 280, 293, 662 N.E.2d 264 (1996). The moving party cannot discharge its initial burden with a conclusory assertion that the nonmoving party has no evidence to prove its case. Kulch v. Structural Fibers, Inc., 78 Ohio St.3d 134, 147, 677 N.E.2d 308 (1997); Dresher, supra. Rather, the moving party must specifically refer to the "pleadings, depositions, answers to interrogatories, written admissions, affidavits, transcripts of evidence in the pending case, and written stipulations of fact, if any," which affirmatively demonstrate that the nonmoving party has no evidence to support the nonmoving party's claims. Civ.R. 56(C); Dresher, supra.

{¶15} "[U]nless a movant meets its initial burden of establishing that the nonmovant has either a complete lack of evidence or has an insufficient showing of evidence to establish the existence of an essential element of its case upon which the nonmovant will have the burden of proof at trial, a trial court shall not grant a summary judgment." Pennsylvania Lumbermens Ins. Corp. v. Landmark Elec, Inc., 110 Ohio App.3d 732, 742, 675 N.E.2d 65 (2nd Dist.1996). Once the moving party satisfies its burden, the nonmoving party bears a corresponding duty to set forth specific facts to show that...

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